Diversified Energy Share Discussion Threads

[rhubarbcrumble] 19/5/2023 13:41

Well Done Cassini.

[scrwal] 19/5/2023 12:11

Cassini
It's a quirk for all companies that report under IFRS not just the US.

[johnhemming] 19/5/2023 07:26

AIUI the issue is marking to market future hedges.

[lab305] 19/5/2023 07:02

Yes Cassini well done. The question also illustrates why many investors would not touch this with a barge pole. July will be interesting when the half year results should reverse a massive loss into a decent profit.

[lord gnome] 19/5/2023 06:23

I'd say that's a pretty good effort, Cassini. Top marks.

[t 34] 19/5/2023 06:12

Thank you.

[cassini] 19/5/2023 00:43

T34,

AFAIK, DEC hedges the price of its gas sales (futures contracts) way ahead, with the stated purpose of being certain of enough income to be able to pay off its loans taken out when acquiring new gas field resources.

The gas price in the last year skyrocketed due to inflation and the Ukraine war.
DEC could not profit much from this as it had hedged its contracts way ahead at a much lower price and was (largely) unable to sell gas at this elevated price.

A quirk of the US accounting system appears to be that those hedged contracts are viewed as loss-making instruments if the spot price is higher.

Say you are hedged at a contract price of $3/MMBtu and it costs you $1/MMBtu to produce the gas, then you've made $2/MMBtu profit. However, if gas is selling at spot in the market for $8/MMBtu then you could have made $7/MMBtu profit if you hadn't hedged. So the accounting rules say OK, you've made a $2 profit on every MMBtu ($3-$1) but you also made a $5 loss on potential profit ($8-$3) via the hedging contracts.

Netting it out, despite having actually made $2/MMBtu profit, the accounts will say you made a $3/MMBtu loss (+$2 - $5 = -$3).

Anyone else who can explain this better than me is welcome to correct my howlers.

[t 34] 18/5/2023 23:00

" Net loss of $620 million, inclusive of $668 million tax-effected, non-cash unsettled derivative fair value adjustments " ( a bit from final results ) - can someone explain to me ???

[lab305] 18/5/2023 18:17

NATURAL GAS
2.561 +8.29%
Today.....and ex div in one week. 91p ?????

[loafingchard] 18/5/2023 16:31

Thanks Ale

[aleman] 18/5/2023 15:51

Don't be put off by all the legal notes in this link. Filling out a W-8BEN form is quite simple once you work out which boxes you have to fill. It's basically a signed and dated declaration of your tax number within the UK (or wherever).



Expiration of Form W-8BEN-E.

Generally, a Form W-8BEN-E will remain valid for purposes of both chapters 3 and 4 for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form W-8BEN signed on September 30, 2014, remains valid through December 31, 2017.

[loafingchard] 18/5/2023 14:44

Something to be aware of, the W8-BEN form has to be renewed every three years (on the 1st of January I believe, someone correct me if I'm wrong).

[1knocker] 18/5/2023 13:36

Nice to see DEC creeping back above 90. It will be interesting to see what happens to the share price as ex div date draws near.

[clive7878] 18/5/2023 13:12

Many thanks for your posts to Lord Gnome and loafingchard,
I will follow your advice up and see if I can get any results.

[meanreverter] 18/5/2023 13:01

Thanks for the relevant and useful post, Croasdalelfc. Based on your number and the 2022 average US natural-gas production of 98 bcf/d, the new exports would remove 6% of the supply to the US market.

[loafingchard] 18/5/2023 12:21

Beat me to it LG. I'm with X-O (Jarvis) and pay 15% in my ISA.

[lord gnome] 18/5/2023 12:19

Short answer is ‘no’ Clive. If you hold in a SIPP, no tax is payable, otherwise get a form W-8 BEN from your stockbroker and the tax is reduced to a ‘mere’ 15%. Please note that some stockbrokers are apparently so incompetent that they will still withhold tax at 30%. I’m with ii, no such problems.

[clive7878] 18/5/2023 12:12

Question - I see that 30% of the dividend payable was with-held in tax, being a USA company. and me being a UK tax payer does anyone know if this can be re-claimed pleased.

[croasdalelfc] 18/5/2023 09:54

Dividend is protected until end 2025 . That is 11Qs from now . Or 39p a share .By end 2025 a further 6 BCF/d US LNG export terminals will come online. Golden Pass 1/2 . Plaquemines 1/2 and corpus Christie 3.Coupled with US shalers reluctance to drill - continuing war in Europe and European LNG terminal expansion I expect US LNG prices to range to the upside in 2024/5 ~ $3.5/4.5 . mcf.Holding for the dividends and some capital gain back to 100p plus .

[johnhemming] 18/5/2023 07:29

The lowest price was around 65p.

[lab305] 17/5/2023 17:45

mondex yes indeed gas prices have collapsed but three points are relevant . High levels of hedging protect DEC . When gas prices were low previously DEC share price was higher. Other US companies in the same gas sector have not experienced as significant a share price fall as DEC. Finally the recent stabilization and rise in gas prices has not been reflected in the share price in fact the opposite.

[asp5] 17/5/2023 06:45

Article in todays telegraph looking at some of the options available when renewables are not able to generate electricity due to weather conditions.

While various technology discussed, the author mentions that the likes of shell, Exxon, Saudi Aramco will succeed in slashing the cost of carbon capture making gas a viable backup source. He also mentions net power the company I mentioned in previous posts (who are able to build net zero gas power stations) are building the UK's first such plant on Teeside.

He ends by saying a range of technologies (net zero gas, nuclear SMR, hydrogen via electrolysis etc.) now exists to solve the intermittancy problem.

[aleman] 16/5/2023 16:20

Peeps here are comfortable that the double figure yield should be held for a while. Another share that some high income seekers might care to investigate is RBGP, which I have bought recently and topped up a couple of times. Commentary has seemed reasonable after a few specific issues that might be now getting resolved. A big seller (ex-director?) has been determined to dump lots of shares of late, despite driving the price down and the yield up. Buying volume has been rising in recent days so it's possible the seller might be exhausted soon. It's very much DYOR, of course, as sometimes such yields are traps.

[marksp2011] 16/5/2023 14:53

You are probably right Bluemango, they key is to have a little in a lot of places

On another board tere was a guy with over £500k in SMT..........be was very excited for the whole of 2020/1. he is less excited today