Diversified Energy Share Discussion Threads

[bothdavis] 03/1/2023 10:17

No greygeorge, I was surprised that DEC would move 10% either way considering the hedging system they operate, which should/could smooth out investment returns,

Still very surprised by the lack of buying in this share when you consider the yield?!

[greygeorge] 02/1/2023 22:02

And yet, bothdavies, having chosen your entry point, you come here bemoaning your as-yet unrealised loss. Have you spent the past 40 years sweating the small movements in every share you've bought at the wrong time ? I can't imagine living for 40 years with that kind of stress. Nor would I.

[cassini] 02/1/2023 19:44

Spangle,

You have found me out, I'm from Devon and was just busking it really ;0)

[cassini] 02/1/2023 17:54

The stated aim of the hedging as far as I understand it, is to be able to pay off any acquisition loans with certainty, and not get into fiscally embarrassing positions when times are hard, unlike a lot of small oilers who have had to get down on one knee with the begging bowl out when they can't make the next loan payment.

There's owt for nowt though and DEC having adopted this strategy, the downside is that when the good times come, there's no bonanza either.

Anyone investing in this company ought to consider this when they buy in. It's an unusual, financialised strategy, but it's DEC's strategy and there it is, I don't see Rusty Hutson changing it any time soon.

[bothdavis] 02/1/2023 16:52

Ah, greygeorge, you have to enter the market with each share at sometime. Who knows if its the top, or merely on its way further upwards?

Been investing for some 40 years now, so certainly NOT 'amateur' in longevity, but DEC is certainly an 'unusual' investment for me!

[1knocker] 02/1/2023 16:09

If you doubt yourself on every holding you have which is paying a safe dividend of 10%+ but is currently down 10%, you are in for a very worrying time in this market, and many of your holdings (such as the ones without the large safe dividend) will be a cause of much greater self doubt than your DEC holding. Perhaps you would sleep better with a portfolio of short dated AAA rated bonds which you will hold to maturity, upon which you can be confident of a very small [nominal] capital and dividend 'profit', and a near certain real capital loss? Or cash paying a couple of per cent?

[greygeorge] 02/1/2023 16:09

lab305. Please explain '...You may also perhaps recognise that hedging too much can almost be as big a gamble as hedging too little...'

I mean, you do know what the defintion of a 'gamble' is, don't you ???

1) 'play games of chance for money; bet'.
2) 'take risky action in the hope of a desired result.'

[greygeorge] 02/1/2023 16:06

bothdavis - Can't comment on your choice of purchase, but buying at the top ? Yeah, pretty amateur investor, aren't you ?

[bothdavis] 02/1/2023 13:55

Still 10% down myself even with dividend reinvested.....now doubting myself as to my choice of purchase.

[greygeorge] 01/1/2023 21:53

New year, same old lab305.

Lab305, explain to me, and everyone else here, how if DEC produces gas at a certain price, and sells at a higher price, how do they make a loss ?

By your reasoning, if I have £500 cash this week, and decide NOT to bet the £500 on today's ante-post favourite running in the Grand National in April, but put the £500 in the bank, and maybe make a £1, if that horse eventually wins, I've made a LOSS of £499. you want DEC to gamble. If you want your money to be gambled away, F off to Corals. Idiot.

By the way, lab305, how did your view of CARILLION, the excellent management and continued borrowing to fund their business model pan out ?

[erocnelg] 30/12/2022 20:56

find a stock that has a repeatable business model, makes reliably high returns on capital that it can reinvest at similarly high rates of return and is trading at a reasonable valuation relative to its growth rate, it’s one to buy and hold: you get the magic of compounding without the risk that a fall in valuation will cancel out the benefit.
Such opportunities are incredibly rare but less so when gloom dominates, as it does now.

[erocnelg] 30/12/2022 20:32

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[rbewes] 30/12/2022 17:05

Erocnelg, thank you for your answer.

[johnhemming] 30/12/2022 09:15

I think Simply Wall street produce accounts which include the non cash movements on marking to market the hedges. Because the hedges go down in value as the market price of gas (and oil) goes up relying on those figures is meaningless.

The non cash movements are for the future hedges for many years not just the current year.

[lomand01] 30/12/2022 03:51

Lab305. There are many influencing factors affecting availability and cost of acquisitions other than gas prices. This video explains several of them. hxxps://youtu.be/-NfRXZ-OZ3o

[lomand01] 30/12/2022 03:48

Lab305 not so necessarily. The hedged sales prices received are marked to market at the prevailing prices at the time of filing the accounts. Some of the gas futures prices are down ~ 50% from their recent highs and far closer to the prices received on hedging

[lab305] 29/12/2022 23:52

CASSINI good summary. The snag is that the next year end figures will look appalling since we have sold most of the gas off at less than half of its value and for part of the year a third . The loss created will be astronomic .
The only comfort is that potential acquisitions must be now falling in price and maybe Dec may get some reasonable purchases .

[cassini] 29/12/2022 23:27

The thing is, I understand that because DEC hedges forward quite vigorously, and the accounting rules oblige them to subtract from their accounts the amount of profit they could have made if they didn't hedge but they didn't make because they do hedge, then it looks like they make less than they actually do.

Something like that anyway. Perhaps one of our more balance-sheet savvy members who reads all the company reports can put me right if that isn't the gist of it.

Have to see a link to this Simply Wall Street article really.

This thing about the share price drifting down and knocking out the divi is only really a problem if you bought high...

My other energy stocks aren't exactly knocking the ball out of the stadium at the moment either.

[clive7878] 29/12/2022 20:59

Simply wall dec
Says divi now 12%, not well covered
Expected - no profit in next 3 years?
Analysis expected share price to rise
Company is 62% undervalued against fair estimate
Snowflake says - highly undervalued company with imperfect balance sheet.
What is concrete is share price has been currently drifting, more than knocking out the current high yield. A buy or a sell is the $64 question ?

[scrwal] 29/12/2022 20:51

US Limited Partnerships are a complete nightmare for UK holders

[1knocker] 29/12/2022 19:59

Cross border tax seems to become more and more of a problem. A couple of months ago HL forced me to sell a couple of US o&G limited partnerships(Energy transfer and another) held in my SIPP because they said their agents were not willing to wrestle with new US tax regulations. Bloody annoying, as they were two of my best performers, and looked set to continue their good run!

And as for Swiss withholding tax, relevant when I held FXPO, the universal consensus seemed to be that it was nort even worth trying to recover it.