Diversified Energy Share Discussion Threads

[gary1966] 14/7/2023 15:16

Then why announce a buyback?

[johnhemming] 14/7/2023 15:08

I would think DEC want to do further deals. Hence they really don't want to spend cash on buybacks. They will be building up quite a bit of cash from the Tanos II deal, but they will need to hit a certain threshold before being able to do another deal.

[spawny100] 14/7/2023 14:39

Suggests the management maybe think the price is going lower?

[fred177] 14/7/2023 12:15

Are they waiting for the dollar to strengthen ? could be a long wait

[gary1966] 14/7/2023 07:14

I have never known a share buyback like it. 16 calendar days in and only two days of share purchases for in total 200k shares. Should we rename it share don’t buyback. No intent whatsoever.

[scrwal] 12/7/2023 13:09

Link for the First Berlin report

[drk1] 12/7/2023 12:37

Excellent summary courtesy of First Berlin Equity Research today.

"Analyst Simon Scholes reiterated his BUY rating and maintained his GBp 180.00 price target.

DEC looks set to be a prime beneficiary of a multi-year LNG-driven gas price rally, which is currently in its early stages, but will likely be sustained for the rest of this decade and beyond. In its Annual Energy Outlook published in March, the U.S. Energy Information Administration forecast U.S. dry gas production to move ahead 2% by 2030 and 15% by 2050 with the LNG export sector the fastest growing part of the market. As an established industry consolidator, and by virtue of its extensive and growing footprint in the 'Central Region' in proximity to the Gulf Coast LNG terminals, we expect DEC to clearly outperform these growth rates. Natural gas pricing has been rising in recent weeks as increased demand for gas in electricity generation and flattening production growth due to reduced drilling have pared swollen spring inventories. Q2/23 was the weakest quarter for NYMEX gas pricing (average of USD2.10/MMBtu) since the pandemic-hit Q2/20, but the NYMEX futures strip shows pricing rallying to an average of USD2.92/MMBtu in H2/23. Growing demand from LNG exporters (incremental capacity of 3.36 bcf/d in 2024 (+23%) and 2.74 bcf/d in 2025 (+15%)) is likely to tighten the market further. The NYMEX futures strip shows pricing of USD3.54/MMBtu and USD3.95/MMBtu in 2024 and 2025 respectively. 85% of DEC's 2023 gas production is hedged at USD3.54/MMBtu (2022: 90% at USD3.24/MMBtu). DEC thus looks set to achieve an adjusted EBITDA margin of ?50% for the sixth year in a row in 2023.

The stock's current yield of 15.7% is very attractive, as is the upside potential to our price target of GBp180"

[erocnelg] 10/7/2023 21:02

Thx for your input !Without good knowledge and experience investing is unlikely to butter my parsnips

[mondex] 10/7/2023 16:00

"Hart Energy -Gas Producers Stress Tested at Lower Prices Show Mixed Results


In another sign of greater capital discipline exercised by E&Ps, Fitch Ratings found resilience among the nine U.S. natural gas producers that the credit rating company submitted to a pricing stress test.

In another sign of greater capital discipline exercised by E&Ps, Fitch Ratings found resilience among the nine U.S. natural gas producers that the credit rating company submitted to a pricing stress test.

The test found the companies could withstand a multi-year period of lower natural gas and oil prices because they’ve toughened up with better cost structure, hedging intensity and fund availability under long-term credit facilities. Light hedging was also a threat to some companies.

However, some companies would face difficulties with debt repayment and others were dip into negative cash flow, the test found.

“There’s been a sizable amount of debt repayment across the space,” said Fitch Ratings Senior Director Michael Ainge. “There's been this meaningful change in the way that the industry and most of the individual companies within the industry manage themselves and think about capital allocation.”

Slava Demchenko, Fitch Ratings’ director of natural resources and corporates, shared additional numbers with Hart Energy showing capex among these nine companies went from 127% of cash flow from operations in 2018 to just 48% in 2022.

“They are in much better shape than they were in 2019 when, unexpectedly, the pandemic hit,” he said. “This time around the companies are more prepared. They have lower debt. Most importantly, some of them have quite in-depth hedging programs.”

The companies selected to represent the entire U.S. natural gas industry were chosen due to more than 35% of their production volumes being natural gas. Companies tested were Antero Resources, Ascent Resources Utica Holdings, Chesapeake Energy, CNX Resources, Comstock Resources, Coterra Energy, EQT Corp., Gulfport Energy and Southwestern Energy Co.


Gas prices recently nudged up slightly, but long-time lows prompted Fitch to do a stress test of a further price drop.

The companies were tested at average Henry Hub spot prices of $2.25/thousand cubic feet in 2023-2025.

The testing found Antero, Chesapeake and Comstock would have negative free cash flow if gas prices dropped to $2.25/thousand cubic feet. They also have the lightest hedging programs among the nine companies, according to Fitch. Fitch’s commodity forecast for natural gas prices in 2023 is $2.50/Mcf.

Comstock has sufficient liquidity, but it could be pinched by a 3.5x leverage maintenance covenant to maintain access to the credit line they have with a syndicate of banks.

Coterra, Gulfport and Ascent came out on top as the most resilient in Fitch’s stress test.

Antero, Chesapeake, EQT and Southwestern Energy did not have excessively high leverage, but could exceed their downgrade sensitivities under the stress test, according to Fitch.

Despite the test, the New York- and London-based rating agency said it expects gas prices rise this year, according to its June 22 stress test report.

Fitch’s prediction is based on a number of factors, including a declining number of active drilling rigs, increased LNG gas feeds following the restart of the Freeport LNG plant and increased switching from coal to gas.

Demchenko said gas prices bumped up a bit recently because of high temperatures demanding more energy."

[laurence llewelyn binliner] 10/7/2023 14:22

#lab305, it is frustrating being underwater, me too, but I am up on a total return basis, and as a keeper share for 10 years or more we have to take this view on it really and try not to get too distracted by the headline share price .

[lab305] 10/7/2023 13:05

Indeed llb you are correct and the subject comes up often. My point however was that 15% of a 15% dividend is dwarfed by the 40% drop in the share price It will take years to get that back in dividends.

[laurence llewelyn binliner] 10/7/2023 12:39

#lab305, not at all, WHT damage limitation is something holders can effect by informed choices, unlike the share price and buybacks which we cannot influence (at all) and take care of themselves..

[alotto] 10/7/2023 11:57

With the US dollars devaluing against the sterling the dividend yield goes down.

[lab305] 10/7/2023 11:49

Worrying about withholding tax is like rearranging the deck chairs on the Titanic.

[skinny] 10/7/2023 10:13

Jefferies cuts Diversified Energy price target to 100 (110) pence - 'hold'

[laurence llewelyn binliner] 10/7/2023 07:00

Q.., could a US or dual listing present an opportunity to navigate some/all the WHT..?

If a UK citizen holds the US stock inside a trading account or ISA on whatever US exchange it might get listed on instead of the UK listed stock on the LSE would this be subject to a different WHT level, or would it make no difference for us here..?

Running a separate ISA with II just for DEC stock adds GBP120 a year of costs, and moving the lot loses some of the benefits from leaving it where it is.. :o)

#Howard Moreton, I also now have a R something reclaim form on its way from Barclays SI, and am exploring if the additional 15% WHT taken is recoverable through our UK annual self assessment, or not..

[poggy120] 09/7/2023 23:32

lab, I've been holding DEC for years. I am down a bit on the share price currently, but still well up on a total return basis. I guess most who have held for a while will be in the same position. Those who have bought recently are in clover. Only the odd investor who bought his holding at the top of the market will be nursing losses on total return basis. We just need to exercise patience here.

[podgyted] 09/7/2023 23:10

A US dual listing looks pie in the sky to me - but no worries - the ones I've been involved in bring no benefit. People think they will, but unfortunately in my experience they don't.

[erocnelg] 09/7/2023 20:10

Thank you I For your reply.

[scrwal] 09/7/2023 17:57

If DEC does its extensive buybacks then I think an US listing is remote as the forward market value of the company is unlikely to hit the $2bn Rusty wants to begin a listing.

If the shares were US listed and you buy them then wht should apply as normal for any US quoted company share registered in the US - some shipping companies and others can be registered in other tax regions eg Bermuda ,Marshall Islands etc and there is no wht.

[erocnelg] 09/7/2023 11:38

I would like to buy the US listed shares to see if I get taxed on that holding for divs