Diversified Energy Share Discussion Threads

[1knocker] 06/2/2023 20:15

lab, an orderly, not too elevated, market suits the most professional players. And especially those like DEC which maintain their reserves by acquiring operating wells.

I have a full (slightly over full) holding at an average of 101. As they are in a SIPP, the return on capital is very satisfactory, even at current inflation rates. Only portfolio discipline prevents me buying more.

I am not surprised that the average PI does not understand or feel comfortable with DEC. Basic due diligence revealing a double digit dividend and annual accounts losses is scarcely encouraging! I am surprised though that managers of income funds have not cottoned on though.

[lab305] 06/2/2023 18:31

1knocker you know you want to ! I bought more today but wouldn't have bought so many just a month ago. I reason that the collapse in the gas price will give them opportunities now which I had thought impossible over the last year. The high level of hedging which I hated is finally looking shrewd so all good . Seems perverse to buy in low gas price environment but times have changed so should strategy.

[1knocker] 06/2/2023 17:23

At this price there must be a number of us thinking about a top up ahead of the ex d date. I must resist temptation. I am already slightly over my intended holding. A welcome opportunity for those still building a position though. Nice to get a 'rebate' only a few weeks after a purchase!

[gary1966] 03/2/2023 11:39

Remember it is a two way street. If we are gaining on hedging we are losing on reserves value. Appreciate from an accounts point of view only the hedging profit/loss is reported.

[johnhemming] 03/2/2023 10:52

I think over 2022 the gas price went down slightly

[lab305] 02/2/2023 13:21

Well we can't make a profit next results as the gas price was above 4 on 31 December and that is the figure used. If gas prices can stay low though it may squeeze some producers enough for DEC to pounce.

[lord gnome] 02/2/2023 11:39

LoL LLB. We'll then get a load of posts claiming that we are only making a profit because of hedging and that we are a hedging company not a gas producer. I really think that the way this company's finances are structured is well beyond the understanding of some mortals.

[laurence llewelyn binliner] 02/2/2023 11:18

NG1 @2.492023 sales 85% hedged @3.63We are in danger of reporting a profit at this rate.. :o)

[1knocker] 01/2/2023 11:59

If the share price stays around the present level, those who generally sell before the ex d and buy back afterwards will need to think whether to make an exception this quarter. The argument for that strategy this quarter would be that if the share price remains depressed there may be a sufficient rush for the exit from those who have held off selling until the dividend is in the bag to led to a sharper than usual dip when DEC goes ex d, thus making that strategy particularly attractive this quarter. You pays your money and takes your choice, I guess. A two pipe problem.

[loafingchard] 01/2/2023 11:26

Thanks Spangle for the reads.

[spangle93] 01/2/2023 08:15

Dowgate capital has also released a note, but you need a subscription to download it

[spangle93] 01/2/2023 07:59

Latest Cenkos viewpoint, post-trading statement

[scrwal] 31/1/2023 20:22

The Energy Profile is also shown in the interims presentation.
30 June 2022 - 823 MMboe 4.9 Tcfe ( 2021 Finals shows Bcfe likely a typo).

[spangle93] 31/1/2023 18:33

"Now, does anybody here know what the proven reserves are "

Yes, the proved, developed, producing (i.e. 1P under production, or the smallest number, highest NPV class of reserves) was 4.6 TCFe at the end of 2021. The oil equivalent, for those who like that measure (to me it's pretty meaningless when over 90% of the production is gas), is quoted by the company as 774 MMboe

Given their scale of operation, there's probably only one official update per year, which in line with most US operators is the status as at 31-Dec, and which would be released with the annual report (probably March 2023 for end of 2022).


I guess if you want to have a stab before they release it, then keeping everything in BOE, they've produced 0.134*365 = 48.9 MMboe, and by a nice coincidence, made two acquisitions of 31 MMboe and 18 MMboe, i.e. 49 MMboe.

[1knocker] 31/1/2023 17:18

Please ignore anything bullish I have posted about DEC, greygeorge. I should hate to lead you up the garden path to invest in a company which will ruin you!

It might be different if I received commission on purchases of DEC shares (no doubt you would sympathise with me, on the grounds that such commissions were the only money to be made out of DEC shares), but sadly I do not.

I suggest tha you devote your time and energy (you seem to have o lot to spare of both) to analysis of shares you hold or contemplate buying. As I have said before, we are big boys, so you need feel no twinge of conscience about leaving us in ignorance to ruin ourselves investing in DEC.

[greygeorge] 31/1/2023 16:58

asp5 - '...Given the current state of gas reserves...'. Fantastic, please let me know the amount of reserves you're alluding to.

[greygeorge] 31/1/2023 14:13

spangle93 - Re expenses and costs. Apart from inflationary pressures, I'd guess that the head-scratching is a result of DEC accounting practices. I've attached to the bottom of this post the Texas Tax Credit Schedule (other states have similar) for low-producing wells. If they have a lot of low-producing wells, that could account for 1knockers' claim that they're one of the 'lowest-cost natural gas producers'. If they're getting compensated for low prices by tax credits, then they deduct the tax credit from 'production costs', if they have a massive number of low-producing wells, their 'production costs' will undoubtedly be lower than producers with better-producing wells that have no tax credits to offset against costs. As the price of natural gas rose last year, the tax credits dried up. Pushing up production costs to a more realistic 'actual' cost.

hxxps://comptroller.texas.gov/taxes/natural-gas/low-producing-wells.php

[greygeorge] 31/1/2023 13:21

1knocker, I read your earlier post, but chose to ignore statements regarding DEc being one of the 'lowest cost producers'. This claim is made time and time again by investors in companies (and the companies themselves of course) to magic away the awkward questions, like 'what makes it a low cost producer'. You also stated somewhere that the lower the price of gas, the better it was for DEC. I assume then the rise in production costs (even excluding the production tax rise) makes the lower the price of natural gas, even better for DEC as it reduces the profit for all other producers even further. Great news for DEC ! Lol. One plus point though is the tax credits they're receiving for low-production wells - for as long as the government of the day in America decides it's going to pay them, of course. Anyway, all good for now, still don't see this as a LTBH share though. But then again, I don't believe in LTBH for any share.

Now, does anybody here know what the proven reserves are ? any ideas at all ? How about probable reserves ?

[laurence llewelyn binliner] 31/1/2023 09:22

Following Diversified's vertical integration of its asset retirement capabilities through investment into its wholly-owned Next LVL well retirement subsidiary, the Company safely retired 200 wells in 2022, including 72 wells by Next LVL. accordingly, Diversified achieved its goal of retiring 200 wells per year ahead of its goal to begin doing by 2023. In addition to achieving this important milestone, Next LVL has largely completed its integration of the retirement companies it acquired in 2022. Next LVL will open its regional headquarters in Bridgeport, West Virginia, in early February 2023 as it continues to win additional revenue generating well retirement contracts for 2023. To date, Next LVL has been awarded >150 generating well retirement contracts for 2023 to retire state orphan wells and wells for third-party operators.

Growing the business through acquisitions adding plugging capacity.. :o)

[woodhawk] 31/1/2023 08:37

Not always, not all platforms - my SIPP still subject to 15% witholding tax.

[rik shaw] 31/1/2023 08:31

If you hold in a SIPP it's nearer 13% tax free yield (11% after tax in an ISA) at 110p

[rimau1] 31/1/2023 08:09

Impressed with the further hedging, i had 80% of 2023 at $3.53, we are at 85% at $3.63. The rise in costs seems to have been mostly attributed to rising production taxes and some variable production costs. All good, i’ve taken a maiden position this morning at a smidge over £1.10 into the SIPP. 10% tax free yield.

[spangle93] 31/1/2023 07:48

While DEC itself focuses on margin between hedged price received and total cash expenses, which is increasing as the hedges raise, the expenses seem higher than I expected.

Slide 28 of the May preentation shows costs ranging from $1.30/Mscf for FY18-21 and a statement about benefits of efficiencies of scale. So it's a head-scratcher to see $1.73/Mcf for FY 22.

It will be interesting to see the breakdown - perhaps it's because as price received has risen (not shown in expenses), so has the taxation element (shown in expenses).

But one to keep an eye on if future years' prices aren't so buoyant

[laurence llewelyn binliner] 31/1/2023 07:11

Protecting our cash flow and, in turn, our dividend and debt payments have always been core to our strategy. We opportunistically capture higher natural gas prices as we add additional hedge protection. We begin 2023 again on solid footing, with 85% of our natural gas production hedged at an average floor price of USD3.63/Mcf, with downside protection 27% better or $0.78 higher per Mcf compared to the values reported as of year-end 2021..