Diversified Energy Share Discussion Threads

[2wild] 30/10/2023 17:59

Would love to see these at 60p. On a yield of 24%. Picked up another tranche today at 67.98p. Yielding over 20% in my sip.

Last year, I picked up marks and spencers at 98 pence after falling from over 2 35p some months earlier. I think they fell another 10% soon afterwards. Now up 108%. Hopefully DEC will do something similar. Fingers crosses.

[cassini] 30/10/2023 17:25

Might do a double bottom with an intra day 66p?

[oneillshaun] 30/10/2023 16:18

This is looking desperate and without any news or updates we will soon be knocking on 60p what a disaster.

[mondex] 30/10/2023 10:00

Thank you Asp5, an excellent explanation.

[asp5] 30/10/2023 09:47

Hi Scrawl, been busy with work, but just wanted to provide my thoughts re your post #6018

Firstly DEC operate two types of well, conventional and unconventional. It is the conventional wells which average ~21K to plug, while the unconventional wells are in the 40K-60K range. From memory a signiciant majority of wells are conventional with the minority unconventional (Unfortunately I do not have the time to validate. Does anyone have the numbers/references to hand for this??).

Conventional wells follow an exponential decline path before reaching a steady decline phase. The unconventional wells have a parabolic decline path (steeper) before reaching this steady decline phase. So more gas is produced in the early years. This skews both the production mix and decline rates. So even though there are only a minority of unconventional wells they represent ~45% of gas produced (p4 of the sustainability report from april 23).

When banks lend to purchase assets they will need an official reserve auditor to assess the wells. As I understand it, these numbers are used in the financial reports. So if the terminal decline rate is quoted as 9% this would be the decline rate prior to applying DEC's operational improvement techniques aka SAM which should have a meaningfull impact on the decline rate (as its their core competency - running wells more efficiently than others). Its a bit like the bank provides a mortgage based on their assessment of the current value of a house and not based on the plans you have to do it up and add value to it after purchase.

I treat the 4,5% decline rate assumption in the ARO as the long term decline rate, so only when a well is in the steadily state decline phase (for example after 15 years) and after SAM techniques have been applied. Just to underline this, in the previous ARO report, 75% of wells had a decline rate of under 6%, before SAM techniques applied (slide 9) which indicated the age & type of the wells purchased at that time and how the mix has changed since then.

Now in terms of capping capacity they have increased it from 40 in 2021 to 450 in 2023, thats a x10 increase in 2 years. DEC have committed to increase this further over the coming years. This should increase inline with the 3rd party plugging contracts DEC win. Given that DEC have 10-15 year agreements in place with the various states that sets a minimum plugging rate of 80 per year, DEC have considerable flexibility on how best to economically deliver on ARO for the first 10-15 years.

I do not think the ARO is behind the reason of the CFO's departure. I suspect it is more related to the US listing, and how the debt has been financed/managed and dropping the ball when it comes to creating financial headroom for continuous acquisitions that the business model is founded on. I think the previous CFO simply messed up and Rusty has the finance background to call it out and solve it.

[croasdalelfc] 30/10/2023 09:11

Bearish: NG inventories are 9% higher than 2022 and 5% higher than 5 yr average.US gas production is at record levelsEU gas storage is 99% full and capacity is 5% higher than 2022.Weather in EU is mild.Bullish: LNG exports remain close to record highs.US weather turning colder for next 7 days .Imo bears and bulls will cancel each other with swings between $3.2 and $3.5 / mcf

[croasdalelfc] 30/10/2023 08:56

They bought 500k in one day earlier in Oct.5m bought back since February placing .Approx 4% of placing stock at 25% discount

[owenski] 30/10/2023 08:44

Aleman, agree, gas prices have been trending up since the April 23 low point. I'd suggest they're going to start accelerating as gas use starts kicking in over the winter period.

[cassini] 30/10/2023 08:39

350,000 buy-back on Friday - largest yet that I've seen.

[valuehurts] 29/10/2023 23:43

So who would buy them? Maybe private equity but they would need to keep Rusty and the team on board to manage the business or find a very experienced operator.

[lomand01] 29/10/2023 15:29

That's why buying an entity that has the personnel,scale and know-how to do it and make money may be so attractive.there will be tens of thousands of wells with declining production in the next decade which will require management and plugging whilst new wells will be more expensive and less productive, (the best ones having been drilled already). A tasty morsel is our DEC...just saying..

[valuehurts] 29/10/2023 11:18

The majors haven't sold all these assets to Dec to manage only to try buying them back. Its a headache to deal with the complexity of the accounting, the personnel and all the states involved. Only Dec can really do this.

[fardels bear] 28/10/2023 17:00

Not an easy one for a predator to swallow I'd have thought.

[grum9] 28/10/2023 13:07

Worry less about share price and guess which predator will come knocking?

[lomand01] 28/10/2023 13:07

hxxps://open.substack.com/pub/theoakbloke/p/gassing-on-about-dec-part-2?utm_source=share&utm_medium=android&r=19pp7m. For those that are still worried about the viability of DEC

[cassini] 27/10/2023 14:10

The usual selling at the US open...

[scrwal] 27/10/2023 11:23

Rusty has said over $3 the company makes decent money but that was some time ago and definitely before inflation jumped so it should now be $3.30-3.50.

[aleman] 27/10/2023 09:42

There's been a host of announcements from banks this year that they will no longer finance new oil and gas development. Is the recent rise from this starting to affect the supply side and push prices up? (I honestly don't know.) Prices might look weak against Ukraine disruption but they're starting to look pretty solid on a longer term scale.


free stock charts from uk.advfn.com

[renewed1] 27/10/2023 09:39

Thats what I understood.

[aleman] 27/10/2023 09:22

It looks like the cold snap might be starting to affect short contracts now - on top of an underlying rising trend. Central Texas is expected to drop about 20C between now and Monday and the snow and cold will then work its way northeast. 9-month high:


free stock charts from uk.advfn.com


The average of the 2027 contracts, which will be the area where DEC will likely be doing most selling, average just shy of $4 over the 12 months and it look to be slowly edging up in the last couple of months. Isn't DEC supposed to make lots of money just selling at $3?

[tag57] 27/10/2023 08:48

It wouldn’t surprise me if the price starts to tick up, it shoots up as there must be plenty of investors waiting to try to pile in at the bottom.
I have come close to selling several times over the last few months but managed to stay my hand up until now.
Fundamentals have not changed too much and my decision to invest for income hasn’t changed. Just wish I had invested at today’s price not £1!

[catabrit] 27/10/2023 08:24

A very high value thread by the way. Thanks to everyone for contributing and providing so much background. Got me up to speed very quickly. I bought some more this morning.

[owenski] 27/10/2023 07:59

Well, they're certainly getting bang for their buck on the buybacks.

[fordtin] 27/10/2023 07:38

Fun fact for those still invested;

2023 buybacks to date will save £157,541 off the quarterly dividend bill. That’s enough to fund buybacks of an additional 230,361 shares per quarter at current share price.