Diversified Energy Share Discussion Threads

[scrwal] 10/3/2023 12:36

I don't see how they can continue the share buy back at this point in time since they have just done a share raise.
The price will recover but this is what happens to DEC when they do a snap placing and will do in the future. Continuing to do this will always unsettle the market and when other factors are in play, even if not sector specific, the price will get hit.

[1knocker] 10/3/2023 12:27

My post was tongue in cheek.I knew it was too good to be true johnhemming. The taxman always has a monopoly on the trump cards!!

It is a further demonstration though of how useless GAPP accounts are for a business like this. The bottom line does not even give a realistic guide to tax liabilities.

[lab305] 10/3/2023 11:09

How long before they act ? They have the mandate in place for a share buyback scheme of which they have only used a fraction. They were buying for a short time (28 days) at around £1.28. We are now 30% below that. The pound has risen around 10% so the shares are still considerably cheaper. The argument that they have stopped because of the pound dollar rate just won't wash. On top of that they can borrow at 6% when they are paying out at almost 15%. Having completely undermined the confidence of many investors with a lowly priced placing they need to get off their hands and support the stock. Good deals are not enough and we need more support.

[johnhemming] 10/3/2023 10:32

@1knocker it is the value of future production I am talking about not the value of the hedges. I expect them to declare a non-cash profit from the value of the hedges going up. Luckily this is generally not taxable. (nor are the losses allowed against tax).

[1knocker] 10/3/2023 09:41

'..they have to declare a loss when the value of the hedges goes down and cannot declare a profit when their value goes up..' That sounds like the dream scenario for minimising corporation tax. I wonder if there is some way I could build hedges into my income tax return? I must have a word with my accountant... One lives in hope !!

[bountyhunter] 08/3/2023 10:27

Back up at £1 + the divi in the bag makes this only a tad down from the 105p issue price, nothing to worry about imv. US gas already appears to have bottomed out. Ok there are hedges but the US gas price still has a strong influence on the price here.

[johnhemming] 08/3/2023 10:25

I don't know the current balance between conventional and unconventional, but the annual report 2021 has 67% conventional.

I always think it is worth challenging assumptions. The key drivers here are the long term production from the wells and the plugging costs. The company's assumptions on this will have been checked by other larger investors such as the securitised debt holders and Oaktree, but it is worth looking at these.

Hyperbolic reductions mean that revenue goes on for a lot longer than exponential. We can check the plugging costs through current plugging costs.

The business is really a cash based business and the accrual accounts are essentially meaningless. The fact that they have to declare a loss when the value of the hedges go down and cannot declare a profit when the value of future production goes up means the bottom line figure is meaningless.

However, we should check the assumptions for reasonableness. A while ago I looked at what cash might be left when the music stops (after finance costs, dividend costs and plugging costs) and came up with a figure of the order of the USD 2bn that others have come up with.

Looking at the charts DEC has bounced up and down for quite a while.

[spangle93] 08/3/2023 09:49

johnhenning, ref 371

I'm not sure how that nugget of knowledge changed your thoughts of investing in DEC in any way? ;-)

However in your link, which references the extreme case of shale well, it goes on to say
"The application of hyperbolic decline in unconventional reservoirs tends to overestimate the cumulative production. Therefore, the transition from hyperbolic to exponential decline curve at some terminal decline rate is assumed in unconventional reservoirs. For this example, terminal decline rate of 5% is assumed. That is when annual effective decline rate “De” is reached to 5% the hyperbolic decline will be a switch to exponential decline"

Most of DEC's wells are late life wells

[11_percent] 08/3/2023 09:32

11%
Don't forget that back in August last year this was 140p. Using that and fx of 1.2 you would have got $1.7bn so all that is needed is a couple of well planned share issues funding acquisitions and you will be in the $2bn ballpark.

=================

Mmmm......not sure I would go with that.

The share price is where it was back in 2018.....since then it has been down at 55p and up at 144p.....and everywhere in between.

The problem here is that the acquisitions don't add to the market cap on the long term basis......there is a low probability of getting a $2B MC and holding it.

Go for a NY listing now.....or near term when the sentiment improves.

[johnhemming] 08/3/2023 08:08

Looking at the USD market cap issue. From Stockopedia current market cap is GBP 958. I think ADVFN are not including the recent issue. That in dollars is 1,129m. That would require a share price of 175 to give the 2bn dollars figure.

The yield at 175 would be about 8%.

[johnhemming] 08/3/2023 07:16

I thought I would have a further look at the decline issues and it appears that conventional gas wells normally link to a hyperbolic decline rate rather than an exponential decline rate.

Viz:



"In hyperbolic decline as opposed to exponential decline (where the decline rate stays constant with time), the decline rate decreases as a function of the hyperbolic exponent with time."

[scrwal] 07/3/2023 20:37

11%
Don't forget that back in August last year this was 140p. Using that and fx of 1.2 you would have got $1.7bn so all that is needed is a couple of well planned share issues funding acquisitions and you will be in the $2bn ballpark.
The problem is getting there and currently management have kiboshed things with their preference for a snap placing - this scenario has played out exactly like a previous placing which hit the price even harder.
Things will improve but it won't be a rapid bounce back - everything is geared to steady cash flows etc which theoretically should minimise price downside but doesn't if the market is unsettled, something that Rusty by now should be aware of but seems to ignore.

[laurence llewelyn binliner] 07/3/2023 19:24

Looking pretty good here for our next dividend fix, typically announced 2 weeks before the payment date and the FX 2 days before that so expect the news 14th, and fix from the 12th and there is not much to shore up the GBP before the MPC vote on 23rd..

USD0.04375 could give us around GBP0.038.. :o)

[adg] 07/3/2023 18:15

Hilarious with all the experts coming out of the woodwork with doom and gloom scare stories as the share price wobbles

I mean ffs - for example one doommonger “Steven - super - trader” (being one )… what a really silly laughable stupid name to choose for yourself - says a lot really

Perhaps I should change my username to Iamatotaltitandthinkimthebesttraderintheworld or something equally as ridiculous

[cassini] 07/3/2023 17:45

Does anyone here own DEC via a Halifax SIPP?

I have a friend with a Halifax share dealing account thinking of setting up a SIPP with them too, partly because of shares like (and including) DEC on which he currently pays 15% withholding tax (WT)in a Halifax ISA.

I know the header says 0% WT in a SIPP but I also know there are problems with W8-BEN obligations being honoured by some bank-derived/parented brokers.

TIA if anyone knows if Halifax honours the 0% SIPP WT on DEC?

PS: I just found the thread search function and it's not looking good for holding DEC through Halifax...

PPS: Just ploughed through Halifax's SIPP terms and conditions and, no, they won't recover the full 30% of withholding tax for you on US stocks, best they'll do is 15%. Avoid.

[11_percent] 07/3/2023 16:58

scrwal7 Mar '23 - 13:08 - 4352 of 4363
0 2 0
11%
Rusty already has a plan as he has stated that there would be a dual listing when the market cap is $2bn.
Stevensupertrader7 Mar '23 - 14:07 - 4353 of 4363
0 0 0
current market cap is under 1B, so how to reach 2B???? Just all hype therefore dual listing won’t be happening !!!!

===============

We have more chance of stuck by lightning (10 to the minus 6) than DEC getting to $2B.

We need a NY listing ASAP.

[laurence llewelyn binliner] 07/3/2023 16:32

#1Knocker, an interesting month March, with the FED rate decision 22nd and MPC 23rd, if they go +0.5% (5%) which now looks more likely we could see further weakness here in Sterling until our vote next day, I think I will keep some powder dry for nearer decision time and try to pick up some more in the 95/97p range, a great opportunity to buy income.. :o)

Triple bottom from a TA slant, July21, Dec21, Feb23..?

[1knocker] 07/3/2023 16:04

It is 2021 since I was able to make a purchase at 97, and 2020 since I was able to get a chunk at 78. From recollection, those purchases were made on falls following scare stories, and the dividend was also lower then. Only a few weeks ago I thought 112 a gift of a price. If anyone buying gets a chance in the 95/97 range, I think he should consider himself a very lucky bunny. Double rather than triple figures is not an opportunity which comes around all that often.

[laurence llewelyn binliner] 07/3/2023 16:02

The FX is going our way for the next dividend fix but strong recent US jobs data and economy has given the FED more headroom to hike rates, so that is what they will do as I see it, and another +0.50% later this month shoring up the Dollar, so we will soften here in GBP terms..

[cassini] 07/3/2023 15:50

As I said yesterday, there has been support in the past in the 95p-97p range.

[gisjob2] 07/3/2023 15:45

Nothing to stop the slide now DEC has gone XD, any thoughts on the bottom before the scramble for the next divi ?

[scrwal] 07/3/2023 15:11

Never said "trust the plan" and considering this was my largest holding back in October to not holding at the start of the year suggests otherwise. In reality I took the view to sell out as other shares seemed to offer better gains and income which so far has been the case.

[cassini] 07/3/2023 15:10

Poor open in the US, so more weakness.