Diversified Energy Share Discussion Threads

[marksp2011] 04/9/2023 11:37

No, I didn't buy at 1.05
I did buy today at sub 86p

[aleman] 04/9/2023 11:28

asp5
1 Sep '23 - 15:59 - 5323 of 5355

From my point of view a few quick notes on the results.

The positives:
- Total Cash Costs per Unit down 10% to $1.66/Mcfe
- Average Realised Price of $3.56 /Mcfe (locking in a ~1.9 /Mcfe gain for 2023)
- H1 Adj EBITDA of $283M which is ~$566M FY23 vs $505M for 2022 a 12% increase
- Production at all time highs of 142Mboepd
- Good progress on both ESG & ARO
- Dividend confirmed and looks secure for 2024 & 2025 based on current hedges in place

The negatives:
- I do not understood the net debt dynamics.
- Net debt at end of 2022 was $1435M, then:
- $250M Acquisition of Tanos II, via $160M equity & $90M draw from RCF
- Planned $135M reduction in ABS debt due to amortization effects
- $40M cash recieved for sale of non strategic assets
- Net FCF of ~$130M derived from $283M (EDITDA) - $27M (Depreciation & Amort) - $41M (Interest) - $85M (H1 divis)

I would expect net debt to be around 1435 + 90 - 135 - 40 - 130 = ~$1220M, however net debt is $1509, a ~$290M delta.

What am I missing?? I would certainly appreciate any guidance / feedback whether there is a break in the logic above ....

Debt amortisation is effectively a debt payment from cash so it does not reduce net debt. You need to drop the -$135m figure out (unless ABS debt was amortised by increased alternative debt). Then there was a $102m absorbed by working capital - an increase in short-term assets that might well reverse soon.

[stevensupertrader] 04/9/2023 11:18

£1.05 Feb 2023

[stevensupertrader] 04/9/2023 11:14

Wmarksp2011. So I presumed that you didn’t subscribed for DEC shares at £1.05 last Feb. 2022 then?

[stevensupertrader] 04/9/2023 11:06

Fully agreed with your way to play this counter . This is the way forward

[marksp2011] 04/9/2023 11:03

Steven

I am in profit
This is a great trading share and I thoroughly recommend it. The key is remember to sell when the price swings up and buy back when the price swings down.

The price drops post divi and then rises into the next. I don't take the divi. I have made 27% in a year - what's not to like about that?

[stevensupertrader] 04/9/2023 10:18

Everyone can promise - promise is one thing actually doing it is another .
Many here need to learn the hard and painful way in order to get to know .

[stevensupertrader] 04/9/2023 10:13

Told everyone here on Friday morning after the announcement of H1 result that it was not great - debts kept on increasing year after year and no extra cash to do buybacks - many never 👂 listen . Anyone that bought since then are nursing with a big loss even the dividend is completely wipe out .

[lab305] 04/9/2023 09:56

The "enjoyable ride" promised is anything but and the swathe of deals promised likewise. Where are the buybacks ???????

[oneillshaun] 04/9/2023 09:48

This is really not pretty, as great as the divi is if you bought in at around 100p you are hurting this is now my 5th dividend and I am in the red plus I have bought a few extra on the way.

[fordtin] 04/9/2023 09:39

I guess we could be about to find out if the buy-back scheme is still active.
Highest buy-back price paid this year was 86.95p

[asp5] 02/9/2023 15:53

Hi Scrawl

My reasons to be happy on ARO:

- Confirmation the asset retirement (AR) service is sufficiently good (service + cost) to win competitive tenders for state orphan well programs
- The operational experience gained & efficiency improvements from execution of these orphan well programs will benefit our own ARO
- DEC are hitting or on track to hit their ESG targets (at least those which would cause penalties to be paid) without the need to accelerate (AR)
- As lomand01 mentions it is beneficial for shareholders if the ARO porgram takes a steady as you go approach in these early years and not just for the tax benefits. See my next point
- I believe carbon sequestration (see my previous posts on net power) will be a service in demand in a few years time. Non producing wells then convert from being a liability to a potentail asset. Why accelerate and shut down wells ahead of confirming if this demand is going to come through. 2026 is when the first industrial scale plant with CCCUS is operational from Net Power with an agressive plan to replace all current US gas & coal power plants with their new net zero gas plants. Based on previous references DEC are fully aware of this opportunity.
- Revenue created from the orphan well program will offset our costs which is currently not reflected to the ARO modelling. I would like to get a year or two sample size to be able to estimate impact, but the update shows this is moving ahead steadily.

Hope this helps

[bluemango] 02/9/2023 09:44

This is largest of my four main holdings. Very happy with the yield (especially as in a SIPP so no WHT) and am content with waiting for the market to catch up to the value here meanwhile.

[lomand01] 02/9/2023 06:12

No problem. In response to scrawl's comments, what most do not understand that there are hugely valuable tax breaks for DEC to keep even the most marginal wells in operation which would encourage them to delay AROs. DEC is unique & can't be valued like a trad E&P company (hence low valuation). It is more like a publicly traded private equity fund. It's all about discipline, sweating the assets and squeezing every dollar of value & minimising price risk. In the past 7 yrs they have delivered but with many UK institutions fleeing fossil fuel investments, it is not being appreciated. I view it as a 10-15 yr investment,re-investing divs when sentiment is particularly bad. As always DYOR.

[kaos3] 02/9/2023 05:47

to simply click on the video

[retirementplan] 02/9/2023 04:25

lomand01: great video (see below) & really clear explanations. Thanks.

Emeth value Diversified energy - copy and paste this into YouTube.

[lomand01] 02/9/2023 02:53

Fixed coupon with the capital repaid over the life of the loan (like a mortgage)rather than most other corporate loans where a bullet repayment is paid at term, (usually requiring the loan to be refinanced often at higher rate). Assuming no additional debt taken on DEC will own the assets 100% & be debt free in approx 7 years. This is attractive to banks along with DECs hedging strategy) allowing DEC to borrow at attractive rates). Lots more moving parts with DEC which is run (very professionally in my view) which creates attractive cash flow and equity. Watch "Emeth value Diversified energy" on YouTube for the best objective explanation of their strategy.

[scrwal] 01/9/2023 21:36

asp5

Why do you think there is good progress on the ARO?
The KPI on page 4 of the interims shows that DEC only retired 100 wells this half year compared to 117 H2 2022 and 97 H1 2022. The LVL figures are numbers relating to 3rd party wells retired by DEC.
The last ARO supplement has a 10 year target of 4500 ie 450 pa so DEC is currently way off the pace. The following 10 years has a target of 14500 ie 1450 pa.

The current spin used by the company is that the LVL work offsets its own ARO costs but this slows down their own targeted numbers and in order to catch up all LVL operations need to be solely retiring DEC wells resulting in no revenue coming in now and for the future.

[t 34] 01/9/2023 19:44

Fixed amortized.????????????????????????????? Explain.

[fred177] 01/9/2023 19:04

Sort term voting machine long term weighing machine markets are never right either way imo happy to take the dividend and wait

[lomand01] 01/9/2023 18:26

Fixed amortized.

[holts] 01/9/2023 18:20

Is much of their debt fixed or floating ?

[fordtin] 01/9/2023 18:13

US market opens and ~5% is wiped off the market cap despite rising oil & gas prices.
Does this indicate that US short-sellers understand this business better than UK investors, or are they just gambling on UK investors’ naivety?

Given their ability to batter the share price of foreign equities, is a US listing really worth pursuing?