Diversified Energy Share Discussion Threads

[pogue] 25/12/2023 13:41

Oak Bloke's choices for 2024 came in an email today. His standout choice is DEC, his reasoning below,
I recommend looking for him in Substack his views are there and he said he may update them later, there are 10 companies recommended in total. Right back to the drinking.

Diversified Energy DEC probably needs no introduction to my readers. Being able to recommend this at sub £11 and 26% yield is a dream opportunity at the end of 2023. A stock picker’s fish in the barrel. Reader, I make no (fish) bones - this is my number 1 idea. As readers will know, I’ve scoured the accounts for and found hidden value in its undeveloped acreage in DEC-ember burn, I’ve analysed the current political methane probe, then dug deeper still, and satisfied myself it’s vexatious, I’ve run due diligence on its Asset Retirement Obligation, I’ve considered the current and future price of gas, I’ve considered buy backs and the impact, I’ve considered the sustainability of its dividend, I’ve considered read across valuations to peers like EQT and tackled the myths that seem to hold DEC back - the myth that it is “running out of resources”, and also explained the rather complicated hedging and how IFRS9 affects the accounts. In my opinion this is a (very, very) high yield defensive play for 2024.

[kaos3] 25/12/2023 11:31

Gary ... true ... thank you for correcting me

i assumed it was not a perfect hundert percent cover ... as it usually it is not

[leoneobull] 25/12/2023 11:29

A 25% dividend and it's overvalued according to some... LOL....selling forward production to hedge at a much higher premium to henry spot prices is a perfectly legitimate practice.

[11_percent] 25/12/2023 11:22

Hate to say it.......but i can see this going lower.

The shorts are in full swing......putting out the false info and scamming the share....ie, shorting.

DEC is new to the US market and it will take a while for the true picture to emerge from the lies.

When this turns it could be the bargain of the century.....dont know when it will turn like.

[tsmith2] 25/12/2023 11:11

There's every chance rates will fall, that's behind the recent stockmarket rise, especially in small caps space?

[gary1966] 25/12/2023 11:05

Point 4 a non starter as that is the whole point of asset backed finance. Production has been hedged for pretty much the whole term of the loans to ensure that they are repaid. There will not be refinancing of the asset backed loans.

[kaos3] 25/12/2023 10:56

risks that i see are mostly non dec bod related

- if oaktree is behind all this
- whole industry in US regulations changes
- derivative counterparty risk
- debt servicing costs .... if interest rates keep going up ... can they unwind enough debt in due time

[1knocker] 25/12/2023 10:45

DEC is an expensive stock to short because of the huge dividend. Anyone shorting it had better be right.

[kaos3] 25/12/2023 10:23

very time focused, coordinated on both sides of atlantic, quite convincing but not exact

probably not the end of it

[11_percent] 25/12/2023 10:18

You have to hand it to shorters......this is one of the best scam jobs I have seen.

[renewed1] 25/12/2023 10:16

Does anyone recall when the original Conoco loans were due to have been repaid.
We must be getting close.

[lab305] 25/12/2023 07:16

I may have missed this on here but just came across it . How right was this guy last month ?

"I believe DECPF equity is significantly overvalued. Given these risk factors as well as their heavy dependence on the futures market, I rate DECPF shares a SELL rating with a price target of $0.47/share."

[cassini] 24/12/2023 20:04

Boogaloo II

[loganair] 24/12/2023 12:17

The Facts don't matter - It's all about dirty American politics.

[action] 23/12/2023 22:52

Who will be in white hse next year may decide DEC fate next year

[justiceforthemany] 23/12/2023 21:10

Various studies show the median cost of plugging a well is indeed $20,000, which is what DEC estimate. So who's telling the truth?

[kaos3] 23/12/2023 18:11

thank you for the cfd, short, divi info
very useful

[bluemango] 23/12/2023 15:28

Just for info, the next ex-div date is 29th February, before the 28th March payment of the (already declared) Q3 dividend. Therefore for anyone still greedy/complacent enough to be still shorting then, expect something of a short squeeze in the lead up to 29th Feb.

[fluffchucker1] 23/12/2023 15:21

See attached video which deals with this specific issue and generally

hxxps://youtu.be/-NfRXZ-OZ3o?si=XWxvx_HhJMzx4PNh

[riddlerone] 23/12/2023 13:21

Dont forget this as well...not cheap with the dividend paid by DEC

"The dividend due on CFDs is calculated on the close of business the day before the stock's ex-dividend date. An investor holding a ''long'' position will receive 90% (due to tax implications) of the dividend due, while an investor holding a "short" position is liable to pay 100% of the dividend due".

[bountyhunter] 23/12/2023 13:08

Yes, so we may need to wait until the new year, unless they do all clamour for the gate at once!

[aleman] 23/12/2023 11:47

The worst squealing in a shorting campaign happens not at the start but when they need to get their shorts closed before the price rises significantly again. Hopefully that is where we are now. Closing shorts over the holidays with low volume would be difficult, though.

[profitaker] 23/12/2023 09:57

Extract from the letter...

Diversified Energy’s rosy projections also appear to affect cost estimates for plugging wells. While Diversified Energy reports it costs approximately $21,000 on average to plug and cleanup its wells, researchers’ and regulators’ estimates vary widely based on myriad factors such as a well’s type, location, and state of repair. Reports indicate that Diversified Energy may employ an unusual method for estimating marginal wells’ remediation costs that may underestimate future liabilities. For instance, when Diversified Energy acquired wells from CNX Resources Corp. (CNX Resources) in 2018, CNX Resources estimated remediation would cost $197 million. Diversified Energy determined remediating the same wells would only cost $14 million. However, when examining approximately $12.6 million in plugging agreements between Next LVL Energy—a Diversified Energy subsidiary—and the West Virginia Department of Environmental Protection funded by federal grants and covering 100 orphan wells, researchers determined that Next LVL Energy’s average plugging cost could be as high as $126,000 per well. While orphaned wells can be more expensive to plug and clean up, this is a major cost discrepancy that casts doubt on Diversified Energy’s claims that it can remediate its wells at a lower cost than previous well owners had estimated.

Researchers examining Diversified Energy’s accounting practices found that agreements with states would allow the company to defer environmental liabilities that they estimated at more than $2 billion. Deferring and underestimating environmental liabilities would provide Diversified Energy the appearance of profitability on paper, which would allow your company to payout hundreds of millions of dollars to creditors and shareholders over the next decade without ensuring adequate funds to cover those liabilities.If this analysis is accurate, it is highly unlikely that Diversified Energy will have adequate funds to clean up all of its marginal wells when they should be retired.