Diversified Energy Share Discussion Threads

[cassini] 18/1/2024 16:33

Indeed, if no one's seen Al Capone, sorry, Biden, threatening to end the Nordstream pipeline in what I'd call a turf war, watch this (for about 40 seconds).

Note the smirk at the end of his reply to the woman reporter. The plans were in the bag at that stage.

[whites123] 18/1/2024 15:30

topazfrenzy17 Jan '24 - 15:39 - 257 of 267

I see new lows have been reached.
I anticipated £8.00 this week, however it now looks like it will be next week £9.00 is breached and £8.00 beckons.

Jeeezuz Topaz, you dont half pick them.

[johnhemming] 18/1/2024 14:48

@scrwal I have not checked the details of the companies forecasting. The people who are funding the ABS (which are bankruptcy independent meaning no guarantees from the holding company) will have checked that.

The depletion rate itself reduces over time. I don't know precisely where to, but when I do my own forecasts I am only doing reasonableness forecasts over the next 5-10 years.

It remains, however, that to keep up the dividend they need to do acquisitions and I cannot think they will do an RNS on any acquisition (where any contract may already be signed) until they announce the annual results.

The issue with this sort of production is that the tail goes on for a long time and can be matched to an extent with interest bearing debt.

[parob] 18/1/2024 14:14

Bounced off the 955p area twice now. Let's hope that's the bottom.

[topazfrenzy] 18/1/2024 13:56

Imagine they actually increase the dividend this year! We'll soon be at 40% yield lol

[stevensupertrader] 18/1/2024 13:31

Goodness - what is the yield if old money was 48p ? Must be about 30%?

[loganair] 18/1/2024 13:25

Down to 48p in old money which is down circa 60% from its 1 year high and 70% from its 3 year high.

[scrwal] 18/1/2024 13:23

johnhemming
Re your post 7347 where you quote your depletion rate compared to those used by the company. Given said rates what is your view on the June 2022 ARO supplement where a major assumption is "4.5% long term production decline rate".

[brianblu] 18/1/2024 13:20

Finding this all strange company releases no reason for drop but wow what a constant drop mmm 🎣

[cassini] 18/1/2024 13:14

FUD - Fear, Uncertainty and Doubt...

[sandeep67] 18/1/2024 13:10

politics and uncertainty is driving the volatility here and everyone knows Mr Market does not uncertainty

[97peter] 18/1/2024 12:35

UK shareholders just need a little patience and once we get a week or 2 before x-divi date, the shortest and MM fraudsters will disappear and run to the hills as this gets back to £12 a share a week before x-divi date!!

[renewed1] 18/1/2024 12:33

Its interesting how all of the experts including presumably the equities shorting,investors chronical etc are so well informed about the profitability and cash flow of the business when they cant possably know the details of the hedging that has been taking place and is in place for the next two years. Rusty says there is no operational or company-specific reason for decline. The banks signed off the finances a few weeks ago!!!!
So unless that ex CFO knew something and has spilled the beans I cant see how so many people consider they know there is a financial problem/ or not within the company!!!!

[johnhemming] 18/1/2024 12:21

@riskvreward time will tell. I have done my own modelling. Form 20f is quite informative.

[riskvsreward] 18/1/2024 12:01

Every share buyback will save almost a third of today’s share price for the company in just one year and basically means the cash used to buyback shares at today’s price will pay it back in three years. Can one be 100% sure that any new investment in other assets will ensure a long term return of this magnitude? You also ignored the fact that buyback means less demand on the cash for future dividend payment. As long as the dividend payment is decreasing faster than the depletion effects of the current production assets, depletion is not an issue because by the time depletions is an issue, the shareholders have long been adequately awarded by the dividends. Of course, if share price increases significantly or the dividends is much reduced, the. The merit of capital deployment will be a different matter. So it is dynamic and the management is paid to manage such dynamic effectively.

[johnhemming] 18/1/2024 10:07

We can agree to disagree on this.

Any acquisition will be partly debt financed so there is also a gearing effect on the usage of working capital for an acquisition.

This is a situation where the future is known to have a reduction in revenues, the revenue reduction is linked to a cost reduction as well so there is not that much operational gearing.


In the end, however, with the right acquisitions the company can maintain the dividend. (not for ever, however)

The strategy of the company is about buying up gas wells and managing the decline in an effective manner finishing off with plugging the wells correctly.

[fordtin] 18/1/2024 08:58

I've read many articles suggesting the climate worriers are keen to reduce worldwide coal consumption and many other articles suggesting the US are keen to relieve huge parts of Europe and Asia from their dependency on Russian gas.

Banning US LNG exports seems like a good way to increase both of those dependencies!

[pogue] 18/1/2024 08:49

The reason Biden blew up the Russian gas pipeline was to get Europe dependent on US gas can't see him banning exports now the US is making a fortune on gas exports. Don't want the mug punters finding other sources.

[bountyhunter] 18/1/2024 08:20

"The climate fear mongers are pressuring Biden to ban natural gas exports." published on "mishtalk" whatever that is.

Given the size of the US LNG export industry I can't see that happening anytime soon even if Biden caries on.

[fordtin] 18/1/2024 08:17

re; “The additional point is that if show they can maintain the dividend the share price will at least double. Hence the equivalent yield of buy backs is only about 12%.”

That doesn’t make any sense. The saving from not paying dividends on cancelled shares is an accumulation of every future dividend paid until the company ceases trading.

[johnhemming] 18/1/2024 07:50

@riskvsreward If they intend to maintain the dividend over the next 5-10 years then they need acquisitions. The worst thing to do would be to spend limited liquidity on buy backs.

The key point about this is that there is depletion. I always do rough estimates using 12% for safety, but they quote normally 10% although the recent acquisition is a bit higher and will drive up the aggregate for a year or two.

The ABS amortising debt has two approaches, fast and slow. If it moves to slow the interest rate is a bit higher, but it protects the business against any refinancing issues.

However, to have spare cash to pay USD167m of dividend each year they cannot do anything other than acquisitions. Otherwise the dividend will reduce - maybe not in 2025, but definitely in 2026.

Over a 20 year timescale I would think the dividend would be reduced even with acquisitions. However, once they have actually cleared the ABS debt they will have quite a lot of spare liquidity which can be used both for retiring wells and retiring stock.

Hence I am pleased to see no RNS about buying back stock yesterday.


In terms of:
"What new purchase can ensure a return of over 25% long term to support the current dividend?"

It is not a single purchase, they can do multiple purchases as long as they start the trend, but they needed additional working capital because of the working capital movements. The shorting prevented getting working capital so they did the DP Lion transaction. They can do more of these if needs be (but only about three I think, they would then have to start selling the ABS subsidiaries which is not as cash flow effective).

The additional point is that if show they can maintain the dividend the share price will at least double. Hence the equivalent yield of buy backs is only about 12%.

[nigelpm] 18/1/2024 07:44

No shares purchased yesterday is interesting.

[riskvsreward] 18/1/2024 07:40

If they intend and can afford to maintain the dividend, then buyback at the current market price with a yield over 25% is the only sensible use of any capital. What new purchase can ensure a return of over 25% long term to support the current dividend?

[johnhemming] 18/1/2024 07:18

I think the market recognises that they need acquisitions to maintain the dividend. Hence I am quite pleased that they did not buy back any shares yesterday as that would imply they are not keeping the cash for one or more acquisitions.

Personally I think any announcements are likely to be on the same day as the Financial Report that will enable the directors to be not subject to any restraints on trading.

[joedjoed] 17/1/2024 23:07

Has this been mentioned? : hxxps://mishtalk.com/economics/biden-weighs-banning-natural-gas-exports-to-save-the-climate/
Clearly would have a big negative impact on US gas prices