Diversified Energy Share Discussion Threads

[stronghands] 11/1/2023 09:57

Voci, thanks for the post.

Have added recently and plan to have another nibble if price dips a little again.

[voci] 10/1/2023 13:52

Some analysis on DEC from Malcy here

This caught my eye:

....."even when the long term commodity price environment is being more ‘conservative’ the large amount of FCF generation from the aforementioned business model not only pays down the debt, retires all 72K wells (and retires some of those that are still economic) but also has the ability to pay the target base dividend for over 50 years AND still have ~$2bn of cash left over that can also be paid to shareholders"

hxxps://www.malcysblog.com/2023/01/oil-price-diversified-energy-touchstone-serica-and-finally/

[melody9999] 09/1/2023 17:09

greygeorge filtered

[1knocker] 09/1/2023 13:55

greyg, do you need help to tell the difference between , say, 'the nine o'clock news' and 'Not the nine o'clock news'? Lol.

[greygeorge] 08/1/2023 18:20

1knocker - '...an out of work youth with a bicycle chain is a lot cheaper, prefers to be paid in cash (no VAT!), and produces results far more quickly than any solicitor or accountant, however good!!...'

Yeah, I thunk we've discovered the reason for your VAT problems, right here.

[greygeorge] 08/1/2023 18:18

lab305, you really are a fool (:

[1knocker] 06/1/2023 17:46

Dovey, an out of work youth with a bicycle chain is a lot cheaper, prefers to be paid in cash (no VAT!), and produces results far more quickly than any solicitor or accountant, however good!!

[dovey21] 06/1/2023 16:11

With respect....you need a better accountant.

[greygeorge] 06/1/2023 16:06

Of course, as with all presentations estimates and forecasts, I'm assuming everything is 'best case' scenario, lol.

[1knocker] 06/1/2023 16:05

greygeorge,since you say you speak from experience, what IS your experience to which you refer? Have you had the experience of sending out an invoice for £10,000 plus £2,000 VAT and having to pay the vatman the £2000 without having received either the £10,000 or the £2000?

Fred, you can send out pro forma invoices, but they are not legal demands for payment (that is why they do not trigger an obligation to account for the VAT on the bill). Many creditors therefore simply ignore them. Delaying payment helps their cash flow. Others say 'send us an invoice (reasonable enough because they need that VAT invoice to reclaim the VAT on the bill as an 'input' in their own VAT returns, which they can do without first paying that VAT themselves). Unfortunately, sending the invoice does not always result in it being paid !!

People who can rely upon reeiving a monthly salary cheque, on a known day in a known amount, have little understanding of what the employer sometimes goes through to achieve that. If the salary did not arrive, and a query from the employee was met with a suggestion that if the employee agreed to accept a 10% cut a cheque would be put in the post but otherwise he would just have to wait, or an offer to pay in instalments starting in 3 months, or no response at all, or worst of all a response 'we wish we could pay you, but we can't until our debtors pay us and we don't know whether or when they will', I think those employees would not be happy bunnies, and certainly would not be modified by the knowledge that the money which should have been available to pay their salary had had to be paid to the VAT man in respect of VAT the employer had invoiced but not yet received!.

Anyhow, enough of this. Its off piste. One tip though. If you are ever so strapped for cash you cannot pay both a VAT and a tax bill, always prioritise the VAT bill. The powers in respect of recovery of VAT are far more swift and draconian than those in respect of unpaid tax.

[greygeorge] 06/1/2023 15:53

llb, I must be honest, I simply don't have time to read everything published by every company I own some shares in. I do know that it's 'complicated', lol - which is what drives me nuts when some idiot like lab305 makes assertions or accusations about the management of a company - especially given his posting record being a fanboy of so many failed companies that lured in mug punters with promises of huge dividends. Unfortunately his appetite for greed has jaded his view of this company, it seems. Now, I'm off to read page 34 of the November presentation. Thanks for that.

[laurence llewelyn binliner] 06/1/2023 07:30

#greygeorge, have you had a look at last years accounts or interims..? and not noticed that the accounting standards we adhere to paint a very unusual picture..?

The hedging model generates strong FCF, but from the numbers at 1st glance you could easily think we were loss making as spot prices used are not representative, the November presentation page 34 shows some very interesting figures for us to consider, with no further additions to the portfolio and business model..

[greygeorge] 05/1/2023 23:39

Also 1knocker, in my experience, the only people who fall fowl of vat and accounting rules are those who try to screw the taxpayer by bending and twisting said rules and whose penchant for criminal intent far exceeds their intelligence and ability to carry out said fraud and evasion.

[greygeorge] 05/1/2023 23:29

1knocker - WHAT ARE YOU TALKING ABOUT ??? What the f. are you smoking ?

[fred177] 05/1/2023 21:29

i thought pro forma invoices got around that ?

[1knocker] 05/1/2023 20:44

Look into it greyg. The accounting conventions and taxation calculations for producers hedging sales are bizarre.

But then a lot of accounting and taxation rules are bizarre, and potentially very unfair to the taxpayer, such as the rule that you become accountable for VAT when you send out the invoice rather than when the invoice (including the VAT component) is paid, and that the price of work carried out but as yet invoiced (let alone paid for) at the end of your tax year is chargeable to tax as though it had been received. Take my word for it, it is not funny when the client is slow to pay, or defaults, leaving you out of pocketful tax and VAT pending an adjustment for a bad or doubtful debt. For example in the building trade a lot of small, decent, sound, sub-contractors go under because they are not merely struggling with a large bad debt (a pretty serious matter with their own wages, overheads, and suppliers to pay), but are also out of pocket for VAT which they have not received and tax on 'profits' which were in fact losses !! If they are up to their overdraft limit, the business folds before it the VAT and tax can be recovered.

[greygeorge] 05/1/2023 19:48

1knocker - '...So the sale price for tax purposes calculated at spot is not the price at which any producer will in practice sell much , let alone all, of its gas...'

That's not how tax on profits works, lol.

[1knocker] 05/1/2023 17:30

llb, fingers crossed for ECOR. My previous top up was at 126, and I recall that there was a lot of enthusiasm last year on the then bb (I can't find any new ECOR bb) when the share price rose sharply and many were claiming still to be buying at 180 and confident of 200. Perhaps because my account still records a purchase at 183 (in June 2014 !!) and that the bulk of my holding was subsequently bought bought at 83 (in December 2014 - what a ride that was !!) some of which were sold at 160, prior to the 125 top up, I was wary and held off. I confess though that I had almost given up on my 140 limit order which triggered today at 139.25.

A limit order also triggered today on Wynnstay. They were an amazing buy for me at 260 (so cheap that I was worried that my bird brain had missed something), and rose quickly until I sold out last April at 621. Today I bought back half at 535. The business looks better to me than when I sold last April, and the share price stayed remarkably steady around 600 during last year's volatility, so I had nearly given up hope of getting back with cash in hand. Will I get the other half back sub 500? Goodness knows, but todays triggered orders are a reminder that patience is a virtue. I guess one just has to embrace volatility and remind oneself that there is more money to be made in troughs than on peaks.

[asp5] 05/1/2023 16:48

I see alot of concern regarding recent price performance. I think its important to differentiate between value and price.

If we take the recently published ARO, DECs current portfolio has an estimated ~$8B of FCF of which ~$1,5B will be used to repay debt & ~$1,5B will be used for plugging leaving ~$5B for shareholders (i.e. dividends or buybacks).

The current DEC mkt cap is ~$1B. So lets assume DEC uses its FCF to buy back all its shares, then DEC could purchase all outstanding shares (at current prices) and still have ~$4B of FCF left. This equates to ~25+ years of dividends for free (using current shares outstanding at current dividend levels).

The above is clearly a great over simplification & not accurate - but I just want to illustrate the value that the current price is not reflecting.

DEC from my persepctive is a great value play for long term investors who are happy to ride out short term price movements and be paid a great yield while waiting for its value to be fairly priced. Assuming no fundamental changes to the business model & mgmt execution, I will be using any price declines as an opportunity to increase my position.

[adg] 05/1/2023 14:30

Looking very interesting here for both a high dividend and upside

Already own just under 25k but seriously considering (approx) doubling up

[greygeorge] 04/1/2023 21:44

1knocker, I'm not sure what you mean in your final paragraph, about the taxation of 'profits which were not in the real world capable of being made.' ?

[1knocker] 04/1/2023 17:18

It seems to me that the gas price dips which are occurring at present underline the good sense of the hedging. The security of cash flow is no doubt also instrumental in keeping borrowing costs low. Yet there always seem to be fewer posters praising the hedging model when prices dip than there are posters complaining about it when the price spikes.

Moreover, as was exhaustively explained on this bb a couple of moths ago, the 'spot' price only accounts for a tiny part of gas produced and burned, because purchasers need to buy forward so as to be able to be sure of supplies and to set their own prices no less than producers need to be sure of a market at an economic price for their planned production. As I have said before, think of the spot price as what you pay at the late night corner shop for those few items not anticipated when you did the weekly shop at the supermarket. A while back the price of crude oil briefly went negative, but the amounts bought and sold at that negative price were too small to move the price at the pumps. None of us was hastily emptying the garden pond to accommodate petrol, or heating oil, the petrol stations and heating oil retailers were paying us to take off their hands!

That being the way the industry works, my beef is with the tax system and accounting conventions. It seems to me to be iniquitous in the case of the former, and ridiculous in the case of the latter that a company is taxed on 'profits which were not in the real world capable of being made and that its 'true and fair view' accounts are calculated by reference to artificial conventions which bear no relation to what reaches the till !!