Diversified Energy Share Discussion Threads

[loafingchard] 07/1/2024 18:08

Good post Pogue, thanks for your thoughts and laying out your research.

[pogue] 07/1/2024 17:20

If you have not read the latest OakBloke write up on Substack I post a chunk below and a link, well worth subscribing to.
Anyway with all these O&G companies wanting to dispose of assets going forward due to the Methane Emissions Reduction Programme (MERP) OakBloke's suggestion of buying and repackaging old wells as Special Purpose Vehicles as they have just done with some of their own assets has to be a no brainer. Buy, tart up, resell...



'.....I’ve been doing some more reading around the subject of methane in the USA.

What I conclude is that it’s a strange time to launch this probe when existing legislation i.e. Inflation Reduction Act is a game changer on methane. Part of the IRA is the Methane Emissions Reduction Programme (MERP) which has several prongs.

1. FINES
One is to fine O&G firms for methane emissions. Starting in 2024, at $900/ton of methane, increasing over time to $1500 by 2026. The charge is only assessed on emissions exceeding thresholds aligned with industry-set targets. It’s not clear what those targets are.

Assuming DEC’s industry-set target is ZERO methane emissions (it’s not) then the cost of this would be $17m in 2024 and $28m in 2026. (536,000 Co2e / 28 = 19,142 tonnes of methane). Painful enough to force further change.

Whilst this is a negative for DEC in one sense it’s a huge positive too.

How so?

Well, for a start small “mom & pop” operations (like Rusty was back in the day) or maybe large O&G firms who don’t want the hassle may throw in the towel. Sell out. Get rid. DEC might benefit from selecting hoovering up these at attractive rates. Why was the Conoco, East Texas and Tanos acquisitions at such attractive rates? How could the seller be so stupid? Are Conoco fools? Nope. They didn’t want the hassle. Look at how DEC’s 2022 emissions went up on the back of that acquisition. Offload the dross.

Like a gassier version of “homes under the hammer” where your house with a lower EPC sells for 14% less, is it not a GENIUS STRATEGY to use your proven expertise in SMART ASSET MANAGEMENT (SAM) to buy up those wells, make those wells a “do-er upper” and flip them to a special purpose vehicle at a profit (after getting two local estate agents to give their opinions of course).

(Or like Billy Beane trading Baseball players like in DEC-a-dance - you can pick your analogy, reader)

Also because DEC are ahead of the curve and have been proactively investing into SAM to improve the efficiency and emissions, the impact of the fines into the future should be less and heading lower.

And did you know reader, DEC aren’t they only ones realising there’s money in fixing methane. This story is from a not dissimilar company to DEC called Triple Crown.

Their war story was finding and fixing a 3.5% leak had $0.4m costs yielded $3.5m in additional gas revenue…. it was “Wildly Profitable”. Ironic the people covering this positive methane story are none other than our friends over at Bloomberg.


What else does MERP Provide?
More funds to States for detection
Why is that positive? Well, it exposes the bad players. Not all O&G firms are striving for gold standard compliance like DEC is. Exposing dishonesty reveals opportunity. Because the offender now is faced with expensive fixes or offload the assets for what they can get. Reserves to be sold to the highest bidder with no reserve.

More Federal Grants.
In DEC-a-dance I pointed out the $176m tax credits. Well guess what? More where that came from, reader…. courtesy of MERP.

MERP allocates $700 million specifically for “marginal conventional wells,” provides additional funding for plugging wells that complements and reinforces EPA’s ongoing regulatory efforts to reduce emissions from these wells and ensure proper closure. Does DEC have any marginal wells that can be plugged to claim credits for?

Protecting health
A laudable part of MERP is to use funds to mitigate the health effects of methane and associated pollution in low-income and disadvantaged communities. Rightly so. There’s no financial benefit to DEC-hands but there is the knowledge that the law helps to drive equity to those affected by unscrupulous operators.

Conclusion
In every cloud is a silver lining. In DEC’s cloud is a genius business strategy which is proving itself before your eyes.

MERP offers further reasons for optimism but also a shield to DEC - since it already provides appropriate measures to control methane - what does the probe expect to achieve on top of this?'.....

[bountyhunter] 07/1/2024 16:38

Recent YouTube videos are now in the header as well as the most recent Oak Bloke link which I posted yesterday.

[cassini] 07/1/2024 15:36

Part of the reason DEC has its own niche is that no one wants to be lumbered with plugging wells when they come to the end of their life.

I guess this is why the focus on well-plugging plans/funds. DEC is the last stop on the road.

If DEC didn't exist you'd have to invent it.

[bluemango] 07/1/2024 12:53

".. and there's more to come, we're not done by any stretch, this is the first step, we've got more to do, more to do this year so strap it on and let's get ready to do it as we go through 2024 thank you"

[fluffchucker1] 07/1/2024 11:21

Grahamg8. DEC is a viable investment even if it never did another acquisition. However just like any successful resource company like shell or BP the assumption is that they will replace depleted reserves. It's so odd that DEC is being priced by Mr market as of it would never make another acquisition! Amazing considering that each day more and more potential assets become available and DEC is basically the only buyer out there. We will look back on 2023 in 5 years time wondering why we ever doubted it. Evidence again that markets are driven by emotions and not by logic?

[bountyhunter] 07/1/2024 11:06

It has now :)

Rusty is on from 1hr 12m

[grahamg8] 07/1/2024 08:53

MERP looks like an opportunity, as described in detail in the OakBloke article. I can also see 'non core' asset disposals coming from the M&A activity of the big players. DEC seems to have potential for replacing all those clapped out wells that it needs to cap each year.

[tom111] 06/1/2024 18:51

Yes the video will come up eventually

[bountyhunter] 06/1/2024 17:49

No I've not found that, I'll have a look.

This one?

[tom111] 06/1/2024 16:24

Pleased to oblige,trust you spotted the other video where Rusty is interviewed its under Yahoo/Finance BH

[bountyhunter] 06/1/2024 15:49

The latest today from "The Oak Bloke"..

[bountyhunter] 06/1/2024 15:00

Thanks for the pointer Tom. Found it.

[fordtin] 06/1/2024 14:35

For the time poor, follow this link to cut out a lot of waffle and go to the bit Aleman has quoted from.




Also worth a look;

"- And, Rusty, while I have you, I got to ask you about these headlines, these reports. We saw, Rusty, that House Democrats from what I'm reading, they opened an inquiry into the company. And it sounded like, Rusty, the concern among some was just your, well, retirement and emissions practices at these more mature wells that you all focus on. What is the story there, Rusty?

RUSTY HUTSON JR: Yeah, we received the letter. We obviously have been reviewing it and crafting our response, which we take as an opportunity, really. I mean, we think that being able to respond and tell the story of what we do from an emissions reduction perspective on a daily basis and all the capital that we deploy to not only identify but to reduce and eliminate emissions within our portfolio-- we also have the largest asset retirement company in the Appalachian basin.

We're retiring more wells on an annual basis than anybody else, not only for ourselves, but for the states through their Orphaned Well programs that we bid on their work. So we have a great story. We'll respond in a way that we've responded in the past to these same types of questions. But we think it's a big opportunity to let our constituents and the people read and understand exactly what we do and why we're the right company at the right time to handle-- to manage these wells"





I'd appreciate it if anyone subscribing to Fox could give a summary of this one;

[huckers] 06/1/2024 12:11

For interest. Oil.com review of 2023 HH gas prices: oilprice.com/Latest-Energy-News/World-News/Average-US-Natural-Gas-Prices-Plunged-by-62-in-2023.html

[justiceforthemany] 06/1/2024 10:01

Wouldn't want to be short here...company profile raised ++ last night.
Wall Eye and Adage in league with the crooked Democrats?

[tom111] 06/1/2024 09:43

If you go over to Lse some good late posts including Rusty ringing the closing bell on Wall Street on U TUBE

[tom111] 06/1/2024 09:41

After hours trading WALL STREET $16.14

[bountyhunter] 06/1/2024 09:33

Recovered later, particularly in New York after the London close, closing less than 1% down on the day in New York.

[topazfrenzy] 06/1/2024 09:21

It closed at $16.14 after hours! Erased all the day's losses and then added over 2%

That's £12.70 share price converted

[justiceforthemany] 06/1/2024 08:23

Rusty rang the closing bell last night on NYSE last night. Came across well IMO. Seems a determined man.
Can see US investors piling in and volumes are rising.
LSE price lagging NYSE by £1 again!

[leoneobull] 06/1/2024 06:47

https://archive.vn/2024.01.06-000331/https://www.ft.com/content/4e40d392-df28-4131-9a0b-4281a0c0ce53M&A activity in O&G in US....now affecting natural gas sector too.From the FT

[aleman] 05/1/2024 21:57

"We want to be part of the M&A consolidation efforts that will take place in our industry this year."

[justiceforthemany] 05/1/2024 21:38

CEO has sat down with Yahoo Finance also.