Diversified Energy Share Discussion Threads

[greygeorge] 30/1/2023 14:00

Reading the actual report though, rather than the article posted by apollocreed1, looks like the biggest concern of the progressive environmental organisations' report is the government subsidies the Wells Servicing division the company is building up is going to be in line to receive under the IRA and other incentives to cure the problem of orphaned wells.

hxxps://ohiorivervalleyinstitute.org/diversified-energys-questionable-financial-practices-continue-in-2022/

[lab305] 30/1/2023 13:56

Bought another 20k.

[topazfrenzy] 30/1/2023 13:54

Cratering gas prices can suddenly shoot up again ...

[greygeorge] 30/1/2023 13:50

From an investment point of view, can anyone here tell me why low spot natural gas prices are in any way good for DEC ? You all seem to be piling back in at a time when the company is taking a hit on the 20% that's not hedged. The hedged production for this year has already been baked in, it's a known quantity, set against operating expenses. There's no downside on this hedging, and there never has been, except in the simple minded thinking of some posters here. But REALLY, cratering natural gas prices give you reason to pile back in at this time ???

[lab305] 30/1/2023 13:47

The article was days ago. Keep up.

[laurence llewelyn binliner] 30/1/2023 13:32

Also added, we do seem to be tracking the NG spot price south, but we are 80% insulated and hedged for 2023 against it at 30% above the current spot price..

Interesting week coming up for FX as FED/MPC rate decisions are pending 01st, and 2nd resp..

[greygeorge] 30/1/2023 13:27

apollocreed1, it's an interesting article. It seems partly a criticism of DEC, partly a criticism of Federal corporate 'welfare' (monies set aside for plugging orphaned wells), 'voodoo' accounting (that's the real worry - it reminds me of the saga of 'Afren', a Nigerian oil company that produced 'magic oil' at a price per barrel claimed to be well below industry average (company went bust of course).

lab305, I find it ironic that you've decided to throw even more money into this company on the day that the article pointed out the exact criticism you've been levelling at DEC for well over a year now, regarding their hedging policy. Oh well. Lol.

[apollocreed1] 30/1/2023 13:06

Here's a recent article criticising DEC from an environmental and accounting point of view. I'm very sceptical of their agenda, but worth a read anyway:

[lab305] 30/1/2023 11:53

1knocker I too bought another 20k shares this morning. The low gas price perversely makes me more optimistic for the company as the aggressive hedging is finally looking like a shrewd move and more importantly acquisitions must now become both available and affordable.

[1knocker] 30/1/2023 11:30

This drop is now significantly deeper than I expected. My limit order to buy at 112 (which I regarded as very optimistic when I placed it) triggered today. So that is my March dividend spent in advance. Today's purchase also takes me a little over my maximum for any single stock, so no more purchases here for me. Nothing is certain, so limits should not be (much) exceeded.

How low can DEC go? Search me, but unless the market knows something I do not, the drop looks to me to be an opportunity rather than a cause for alarm. Maybe that is easier for me to say than for some others, as I have been in for 5 years ( my initial investment was small; I have held a substantial holding though for 3 years) so I have recouped a lot of my outlay in dividends, and the present share price is still above my average buying price. I think it must be the case for all of us though that if our home gas bills drop and our DEC dividends continue, we shall not be complaining.

[lab305] 30/1/2023 08:19

NATURAL GAS
2.667 -0.182 -6.39%
How low can this go ?

[greygeorge] 29/1/2023 23:24

llb, don't you realise if it were that simple, oil and gas companies would never have to shut-in wells, with the associated risk and costs involved ? flow control is a short-term ie. for maintenance and emergency short-term shutdown. Constant reduction of flows would result in increased water, and other impurities, most of which are highly corrosive to the infrastructure of the wells. You don't just 'turn the tap down a bit' in the oil and gas industry.

[laurence llewelyn binliner] 29/1/2023 20:35

#GG, the flow control valves ensure the well is safe to operate, you can turn volumes up/down and off, pressure is regulated by the rate that the gas is extracted, pressure increases as volumes decrease and vice versa..

Consider the reservoir before it was drilled at all, oil/gas is locked in by the weight of everything on top of it, these pressures are static and enormous, they can be 100/200 Bar, which is why the burst pressure of well head valves (and blowout preventors) are made to withstand such high numbers when or if if they are shutdown for emergencies or maintenance..

Over time pressure drops as the well becomes depleted, and when it is neutralised there is no gas pressure left to push the gas out, it is capped and abandoned..

[greygeorge] 29/1/2023 18:32

Tell me something llb. When flow is reduced, for any period of time, what happens to the pressure ? How is pressure reduced ? What happens to the subterranean geology of the gas reserve ?

[laurence llewelyn binliner] 29/1/2023 09:12

#GG, this is exactly what flow control valves are for, to regulate flow and control pressure to keep it safe for the down stream infrastructure to deal with, well pressure you get what you get coming up but it has to be regulated by flow..

Gas delivered to the hub is metered in, stored and then sold, but when your units are metered out is up to the supplier to sell when he wants to sell, nearly all gas is sold on forward futures contracts and outflows are pretty constant though as the storage facilities only hold so much..

NG1 spot USD2.84 @27.01.2023
2022 hedge positions for 90% at USD3.47 Mcfe as per the November presentation
2023 hedge positions for 80% at USD3.53 Mcfe
2024 hedge positions for 70% at USD3.14 Mcfe

We are way ahead of the spot market so far.. :o)

[greygeorge] 29/1/2023 00:12

johnhemming - '...In any event they can reduce unhedged production now and sell it for a better price later in the year...'

Is that actually a thing ? In the real world ? Turning the well pressure down to reduce production ? I'd love for you to provide a source for this revelation.

[greygeorge] 28/1/2023 23:44

asp5, your arguments make no sense whatsoever. For example, here you contradict yourself entirely.

'...The issue with holding DEC is that while you earn a great dividend, you have to understand the company sufficiently well in order to stomach the price volatility. In my view DEC has to bought with a long term (multi year) investment horizon. A number of factors are at play that can impact the share price short term...'

[asp5] 27/1/2023 14:54

As of Nov 22, DEC had 80% of 2023 production hedged at $3,53. Looking at Henry Hub today, all months for 2023 apart from Nov & Dec 2023 are priced below this hedge price . This should help to avoid the hedge accounting discussions which tend to pop up when DEC report their numbers aover the course of 2023.

The issue with holding DEC is that while you earn a great dividend, you have to understand the company sufficiently well in order to stomach the price volatility. In my view DEC has to bought with a long term (multi year) investment horizon. A number of factors are at play that can impact the share price short term. From my persepctive these include:

1) Funds with restrictive ESG policies that need to reduce their positions will eventually be replaced by funds/investors with less restrictive ESG policies that are focused on returns.
2) Additional LNG export capapcity that will come on stream over coming years (increase of over 25%) that will reduce spare shale production capacity in the US gas market and reduce the frequency of short term peaks of oversupply as now.
3) Roll out of technology (as I have linked to previously) that significantly reduces the carbon footprint of natural gas based energy plants making it ESG compliant and open to more investors (see point 1)
4) An audited data track record to show well emmissions can be reduced and a track record to show wells can be retired economically. The latest scare story is here and will continue to impact price until it can be rebutted with data & logic.



In my opinion DEC should provide not only a healthy dividend but also a healthy capital return as the above topics plays out in its favour. However if short term price volatility is a significant issue then DEC is probably not the share you should be invested in. I treat these pullbacks very much as an opportunity to add at a great value point. Good luck to all and DYOR.

[fordtin] 27/1/2023 14:37

With falling gas prices we could see a few more aquisitions.

[johnhemming] 27/1/2023 13:10

In any event they can reduce unhedged production now and sell it for a better price later in the year.

[1knocker] 27/1/2023 13:01

The world burned 8bn tons of coal last year. That is the highest tonnage in history, including all those decades when coal was the main fuel of industry, electricity and gas generation, shipping and rail transport, and (in industrialised countries)domestic heating.

The world needs fossil fuels, not least to power the (very energy intensive) transition to renewable energy. Gas is greener than coal. With new technology, it can become greener still. There is huge room for expansion of gas use even if it only replaces part of that coal consumption. Gas is not going away.

In the longer term, a fall in gas prices is good for a company like DEV. Firstly, lower gas prices reduce the incentive to open new wells and flood the market with new supply. Secondly, lower prices make gas a more attractive fuel for big energy consumers to use, thereby increasing demand. Thirdly, DEC has demonstrated that it can make a lot of money at gas prices which other suppliers would not be profitable.

[bluemango] 27/1/2023 12:30

Depends on your time horizon Clive, but yes frustrating meanwhile.

Seen same drift with other O&G companies eg I3E with similar business, but predicted rising energy prices again later this year should eventually start to be reflected in strengthening valuations.

[clive7878] 27/1/2023 12:12

Keeps drifting day by day - could get to £1 at this rate.
Buyers come in, then it drifts further.
The dividend then becomes irrelevant, when one is losing
more on the share price than receiving in dividend.
.

[greygeorge] 26/1/2023 23:58

lab305...lol. Idiot.