Diversified Energy Share Discussion Threads

[johnhemming] 07/9/2023 07:05

It does, however, depend upon the price paid for the assets. In the end Tanos II will end up with a lower decline rate, but that will first have three years of more rapid decline. Cenkos have a forecast out between 2023 (141) and 2024 (130.5). That is a decline of 7.5% (as Tanos II moves slowly from rapid decline to slower decline).

[lab305] 07/9/2023 06:38

Yes John hemming they switched from buying conventional long life low decline assets to far faster declining shale wells. Now they will need to buy more assets quicker if they are to maintain production....like the hamster on the wheel. Meanwhile no buybacks yesterday and the share price dropped. Surprise surprise.

[johnhemming] 07/9/2023 05:44

>The 10% decline rate also unnerved me whereas that rate in the initial 3 to 4 years was virtually nothing.

One thing I track is the forecast declines by the tame brokers. The reason I pick the tame brokers is that their forecasts are likely to be close to those of the company (if not the same).

I have found that as we get closer to reality the forecasts don't move that much. That is a good sign.

It needs to be noted that the recent Tanos II transaction involved wells which were in a rapid period of decline (the decline rates reduce later) and the first year of DEC owning would be expected to go down by 23%. Hence as there are 17 Mbpoed that is about 4 Mbpoed of decline to add in the total of about 140 production. Which is a material percentage variation.

[lab305] 06/9/2023 12:12

They will have to be far more purposeful now if the buybacks are to be at all effective. Like the boy who cried wolf nobody believes them any more. I want them to succeed and prosper and to sell half my shares after 5-6 years was a big decision . The results were their chance to shine with hedging finally creating profit but were uunprepossessing.The 10% decline rate also unnerved me whereas that rate in the initial 3 to 4 years was virtually nothing. At least they have locked down a few wells untill the gas price is more favourable.

[skinny] 06/9/2023 11:55

asp5 "I cannot paste graphics into the chat so hope below text makes sense."

This may help :-

[oneillshaun] 06/9/2023 11:35

Makes great sense to buy back at these prices but how much are they willing to buy.

[fred177] 06/9/2023 09:20

they've started buy backs again

[11_percent] 06/9/2023 08:03

Opening gap now filled, same as yesterday.

Is this pattern.

[renewed1] 06/9/2023 07:53

Thanks asp for sharing your info.
interesting problem as to what they will do with the cash they are generating,
Divi currently costing about $137m /annum so a 5% uplift next year would only cost additional $7m not a large chunk out of $200m
Accounts to complicated for me but like you I consider the banks etc loaning the funds will have poured all over the accounts if they are comfortable Im happy to take the 15% return.

[laurence llewelyn binliner] 06/9/2023 07:48

Ozzy LNG strikes could have an impact for us..?

The US energy giant's Gorgon and Wheatstone plants in Western Australia account for more than 5% of global LNG capacity..

However, the threat of rolling full stoppages from 14 September could potentially have an impact on global energy markets..

[11_percent] 06/9/2023 07:15

Small gap down at the open again......it will get filled.

[11_percent] 06/9/2023 07:09

Yes, looks like 85p is the buy back trigger.

[johnhemming] 06/9/2023 06:48

Thanks to @asp5 for that analysis. It is nice to see the figures (apart from a few rounding errors) in sequence. It was pretty obvious that the shift in working capital (which made the company particularly flush with cash last year) was the driver for an otherwise unexpected movement in net debt. However, it is nice to be able to reconcile it.

It is also good as LLB says to see the BB scheme taken out of cold storage. The marginal debt costs for DEC are below the payments for dividends so there is an annual cash flow benefit to buy backs.

[laurence llewelyn binliner] 06/9/2023 06:25

I see the BB scheme got wheeled out yesterday, 175,000 shares bought, let's hope that puts a floor under the share price ... :o)

[asp5] 05/9/2023 20:09

Just following up on a point from a recent ARO post of mine. Looks like CCUS activity is starting to tick up.



Given the large portfolio of wells DEC owns as well as its mid stream assets, there is a reasonable chance that ARO assumptions could be turned on their heads (positively of course).

A long way to go but just highlights the potential upside for DEC and mainly of interest to long term investors.

[asp5] 05/9/2023 14:15

Hi All

I recieved feedback from the company regarding the net debt question I raised in a recent post. I cannot paste graphics into the chat so hope below text makes sense.

The net debt uptick is driven by the Effect of Working Capital Outflow & the Net Impact of Tanos II Investing Activities, both of which are non recurring events. A reconcilliation is provided below based on the recently published interim report.

DEC according to my calculations is generating around $100M in cash every 6M (so $200+M per annum) after paying interest & the divi. The real question is how best to leverage this cashflow i.e. more acquisitions, paying down debt increased dividends etc. to maximise shareholder returns over the long term. I believe the board have an excellent track record in this regard.

Finally I would like to add that DEC has a consortium of banks happy to lend to it for acquisitions. If DEC was in the dire situation that I have read in some of the recent posts you can be rest assured these banks would be pulling their facilities asap. The covenants linked to the ABS notes mean that DEC financials will need to be provided to the bank on a regular basis.

As always with DEC it does require additional effort to get your head around the numbers. Good luck to all & DYOR. I will be continuing to invest in DEC.

6 Month Change in Net Debt
Net Debt at 12.31.2022 ($1,435.4)
Net Debt at 6.30.2023 ($1,509.8)
Change in Net Debt ($74.4)

Sum of Cash Flows to Change in Net Debt
Cash Flow from Operations $276.1
Effect of Working Capital Outflow ($101.7)
--------
Net Cash Provided by Operating Activities $174.5
Capital Expenditures ($32.3)
Interest Expense ($59.4)
--------
Free Cash Flow $82.7
Net Impact of Select Investing Activities ($59.4)
Dividend Distributions ($84.0)
Other Cash Flows ($13.7)
--------
Change in Net Debt ($74.4)

[fordtin] 05/9/2023 08:52

11_% - They did make a couple of token-gesture purchases;

28 June 2023


10 July 2023


It seemed to me like they’d fired a couple of warning shots across the bows of any would-be short sellers and drawn a line in the sand iro 85p.

Hence my earlier suggestion that failure to fire any more shots at current share price would hint at insider trading prior to other corporate action.

[11_percent] 05/9/2023 08:27

@ 11_%

re #5368 "Why do people think there will be buy back"

27 June 2023
"Diversified Energy Company PLC (LSE:DEC) announces details regarding the parameters of a Share Buyback Programme (the "Programme")."

======

Fordtin,

OK.....cheers......trying to get up to speed here.

June.....seems like a crazy idea now.

[stevensupertrader] 05/9/2023 08:17

Read my message properly - I stated the word WILL - if you understand English then is a fact not an opinion

[fordtin] 05/9/2023 08:04

@ 11_%

re #5368 "Why do people think there will be buy back"

27 June 2023
"Diversified Energy Company PLC (LSE:DEC) announces details regarding the parameters of a Share Buyback Programme (the "Programme")."


"
The Company intends to conduct the Programme concurrent with the following parameters:

• The maximum number of Shares repurchased shall not exceed 97,410,000 Shares

• The total consideration of Shares repurchased under the Programme shall not exceed an aggregate market value of £97.4 million

• The Programme will expire at the earlier date of the 30 June 2024 or the Company's 2024 Annual General Meeting of its Shareholders
"

[tag57] 05/9/2023 08:01

SST, it may drop further, it may not. That is opinion not fact as you have stated.

[11_percent] 05/9/2023 07:57

Gap down at the open there .......was a no brainer it was going to fill.....easy trade.

[11_percent] 05/9/2023 07:56

Why do people think there will be buy backs.

[stevensupertrader] 05/9/2023 07:22

Dec will fall further - the way the share price moves yesterday . Those investors think buying high yield shares id no brainer , then they don’t know what is coming for them .