Diversified Energy Share Discussion Threads

[scrwal] 18/4/2023 19:36

LLB

You are correct - a bit sloppy by me but I was out early Jan and only bought back in after the placing but that's no excuse.

The 12 rigs increases capacity by 360pa of which at least 150 are allocated to 3rd party jobs so there is potential for 200 in house jobs but they are not giving any clear guidance over how many of their own wells are going to be retired even in 2023.

The $40-60k P&A appears in the circular small print (which I hadn't read) but nowhere else - not surprising as that is much higher than any previously quoted figures as average cost for 2022 per the presentation was $21k. I believe the higher figure probably relates only to the acquisition but I'm not convinced the wells themselves are significantly different from previous acquisitions so the new figures are concerning in relation to the $21k which would have been used for the ARO model.
These costs are likely to be incurred in the longer term but to ignore them is foolish and makes the plugging provision look too light.

Even in the placement circular reference was made to there being probably minimal short term plugging "With a long life of productive capacity remaining in the acquired wells, at 17 years on average, Diversified does not expect any significant near-term cash requirements in relation to plugging and abandonment ("P&A") activities, as the Company is not currently required to enter into any Company wide state level P&A agreements in connection with the Acquisition"
This indicates the intent to do as little plugging as possible whilst ignoring the 4,500 year 10 target.

I'm not an expert but on the balance of probabilities DEC must have a decent number of basket case wells that should be plugged in the immediate short term even though the company may well argue these could be brought back into use - well they didn't when the gas price was at the rates it has been so why will it happen in the future.

I just am a bit wary of the language being used to justify current low plugging rates - even though they are higher than the statutory obligations - and the netting off of income from 3rd party jobs which covers current plugging costs thereby hiding the figures. It's all a bit disingenuous to me.

[laurence llewelyn binliner] 18/4/2023 18:57

#fred177, FYI - 21.03.2023 - recommending a final quarterly dividend of USD0.04375 per share..

21.03.2023 - Notice of the AGM of the Company to be held at 2 pm on 2 May 2023.

Ordinary resolutions - 2 - that the Company declare a final dividend of 4.375 cents per share for the year ended 31.12.2022 payable on 30.06.2023 to shareholders on the companies register of members at the close of business on 26.05.2023.

Panic not... ;o)

[fred177] 18/4/2023 17:30

why no Divi announcement yet, recently its been posted at least a QTR ahead ?

[laurence llewelyn binliner] 18/4/2023 13:18

#Scrawl, have DEC not just acquired a plugging/abandonment company to increase our capability as part of the recent Tanos deal..? or have you included this increase in capability..?

08.02.2023 - the Company estimates costs for P&A activities to be in the range of US$40,000 - 60,000 per well..
March 2023 presentation - 30 wells plugged per crew per year / c350 plus 150 contracted out = c500

[scrwal] 18/4/2023 12:55

Is the dividend that sustainable?
Having re-read the Asset Retirement Supplement for 30 June 2022 there are concerns.
Page 5 is all about Expanded Asset Retirement Capacity which looks good but is flawed.
Page 9 is about costs and for 2023+ claims that 3rd party revenues offset DEC costs which is true but deflects from the flaws.
The company is keen to show it is retiring more wells than their statutory requirements which is true but flawed.

Why do I say the word flawed - it is because the 50 Year Complete Retirement Scenario on page 11 clearly states the cumulative retirements by year 10 should be in the region of 4,500 wells.
This is an average of 450 wells yearly. The in-house capacity is only 450 wells and they are only retiring 200 a year to meet their legal obligations so are currently behind the curve to reach 4,500.
They are stating cash revenues from 3rd party work covers current plugging costs but the in-house capacity should be fully utilised on DEC's own retirements to cover 450 wells yearly so this revenue will not be available. Furthermore they haven't shown capping costs per well in their large graphs for 2023 onwards they just state there is significant offsets as shown on page 10 which happens to include 3rd party retirements which won't be available because they don't have excess capacity over 450 wells annually.

These are figures provided by and used by the company.

Will they be able to increase in-house capacity i don't know but all other oil/gas providers will be seeking their own solutions to asset retirements so will this cause significant upward pressure on costs? - maybe but only time will tell which applies to a lot of what I've written above.However it does not affect the reality that the company is not intending to plug anywhere near the annual 450 wells in the near future when its own model is using that.

[marksp2011] 18/4/2023 10:25

lab305

Do you think markets are efficient?

Look at PSDL. Last I looked it was on a 55% discount to NAV with a continuation vote coming next year

Look at OCI, a cracking portfolio of very energetic, cash generative and profitable portfolio companies running at a 32% discount to NAV

VSL - a 10% yield, 20% discount and being wound up

I am very happy for DEC to fall further, 50p with a 10p sustainable dividend div would be very nice thank you. market inefficiencies are where you make money. If of course it isn't an inefficiency but it is the truth, things aren't so funny

Does anyone think gas prices will stay low forever?

[lab305] 18/4/2023 08:43

NATURAL GAS 11 mins
2.278 +0.13%
Gas up again share price down. Nearly 90p now and to a very large extent engineered by the company. The share price is a disgrace and those who bought in 5 years ago at around 130p are now only marginal with the dividend. Its a bit rich to blame gas prices when for years the much vaunted high levels of hedging are supposed to protect us from them.

[greygeorge] 17/4/2023 22:50

No amount of money could give me the same satisfaction of seeing lab305 sweat and panic, lol.

[mondex] 17/4/2023 16:32

"Natural Gas Market Still Searching for Bottom as May Tests Sub-$2 Territory Early"

hxxps://www.naturalgasintel.com/natural-gas-market-still-searching-for-bottom-as-may-tests-sub-2-territory-early/

[laurence llewelyn binliner] 17/4/2023 13:37

Excess cash is better put to use building the asset portfolio IMO and growing revenues/profits for the longer term.. :o)

[lab305] 17/4/2023 13:33

NATURAL GAS 11 mins
2.204 +4.26%
Gas up share price down.No more excuses . Start the bloody buybacks.

[1knocker] 14/4/2023 17:59

GreyG, I do not believe that I have ever suggested that this board, or anyone posting on it, can move the market. So have no fear, you can safely put your shorts on DEC without the least concern that I or anyone else here will shift the market to cook your goose!

[greygeorge] 14/4/2023 16:27

1knocker, you over-estimate the power and relevance of this little backwater forum. You honestly think any poster here has the audience to influence the share price ? You really do have an inflated ego if you think more than a dozen people read this particular board. Even the sale of redlab305's almost million pound investment wouldn't move anything but his bowels.

[1knocker] 14/4/2023 15:56

Presumably you have some substantial shorts on, GreyG ?

Or are you just a keyboard warrior, all mouth and no trousers?

We all look forward to seeing the state of your anatomy which will be revealed when settlement day arrives and those shorts come off. Notwithstanding the late great Frankie Howard's entreaty 'Don't mock the afflicted', we must take our pleasures where we can. A bit of a laugh does us all good, and helps us to remain calm and patient while banking 4 hefty divis a year.

[johnhemming] 12/4/2023 19:07

Investing.com have conflicting information on their site


The page is a data driven page with an error in it anyway. Hence there may be a data error somewhere on their site.

All other sites report the consensus figures around the £1.50 mark.

[fordtin] 12/4/2023 16:58

I tried to find the Jefferies analysis via their website.

All I found was an admission on their home page that anything they publish will always be biased.

"Clients First—Always"

[1knocker] 12/4/2023 15:57

Well. 110 would do to be going on with.

I am here for the dividend, highly unlikely (fingers crossed) ever to be a forced seller, and although I am a couple of percent in the red on a capital basis, on a total return basis I am very substantially in the blue. Were I still building a holding in DEC, I would welcome any sub 100 period as an opportunity to buy. As it is, I am actually a bit over my limit, but it would take more than 110 to convince me that it was time to apply rigorous portfolio discipline and pare back the holding. I guess most here take a similar view.

I think all that this report tells you is that if you rely upon market price forecasts for investment guidance, you are in for a lot of surprises, most of them disappointments. I only ever read them for the analysis. Sometimes that draws my attention to things I have missed. Unless there is something new and convincing in the analysis, I take no notice at all of a change in the price forecast. That way, at least I make my own mistakes rather than someone else's.

[skinny] 12/4/2023 11:27

The 145p TP dates back to 22nd March :-

[carcosa] 12/4/2023 11:22

" Diversified Energy Company Plc DEC.L : Jefferies cuts target price to 110p from 145p"

Are you sure? The report I read was $1.10 i,e ~90p

However only yesterday Jefferies reportedly said " ...set a target price of 145 GBX"



Make me wonder if someone incorrectly applied some currency exchange values in their reporting???

Anyone got a definitive source from Jefferies?

[skinny] 12/4/2023 11:14

Maybe tails won this time....

[fordtin] 12/4/2023 10:00

Hi spangle, ever thought of becoming a weatherman?

Any thoughts as to why Jefferies have decided to confess they were so wrong?

Admitting they think they were out by ~£340 million must be worth a bit of mickey taking by their colleagues (despite that type of behaviour being frowned upon by HR)!

[spangle93] 12/4/2023 09:38

Nope, I once had a forecasting job like that too. If you were right, you were a hero, if you were wrong, then people put it down to unexpected natural causes...

Looking back, I'm not sure why I left it, d'oh