Diversified Energy Share Discussion Threads

[bountyhunter] 30/8/2021 08:00

The question is why is the gas price so high in the US? It's not even winter yet. Obviously supply and demand are behind this but has demand increased because of the move towards greener fuels or is there another reason? This is important in considering whether high prices are likely to be maintained or not.

[lab305] 30/8/2021 00:19

NATURAL GAS
4.477 +0.089 +2.03%
Unbelievable . Anyone think this could be becoming a take over target? After the large dilutions over the past two years the management have now a very small percentage stake . Rusty has around 20m out of 849m so only 2.35%.
Just pick up the company for a song (present price + say 20%) . Wait for a couple of years until the hedge contracts expire and bingo triple profits. Since it costs around 1.5 to produce each unit of gas and they have hedged at 2.6 they make around 1.1. If gas rises to 4.6 which is now very close then a possible 3.1 profit could be made, almost triple the present.
Most pundits seem to think that the buoyant gas prices will continue
and even rise further.

[johnhemming] 27/8/2021 19:19

I look at buying shares as buying a share in a business. Hence I am not inclined to focus on the share price per se (which varies over time). I like this company because the strategy is a good one of making cash profits and paying some of them to shareholders.

The IFRS non cash losses are not material.

[fardels bear] 27/8/2021 17:43

Yeah, that's what I said but in fewer words.

[redtom1] 27/8/2021 16:58

I don't really get the perceived criticism of DEC that implies that they have 'sold off the silver' or that they have hedged to keep the share price between 90p and 110p. They have not done either.
To create absolute certainty on a percentage of future income, they have a comprehensive hedging program which allows the company to pay down their amortised debt, to pay a known but high dividend, to pay running costs and have cash left over to reinvest as they see fit. They should be commended for this approach. Just because the current NG price is higher than the hedge price is no reason to moan about the policy. What about last year when NG was 1.7 v today's 4.3?
The higher current price allows the company to hedge at higher prices further into the future which is great if you want some certainty about sustainable dividends and debt repayments. Whilst 2021 & 2022 are significantly hedged, only 30% of 2023 to 2030 is hedged. And please remember that the current hedged income drives a 50% margin.
You also need to remember that PV10 of year-end reserves increased by $1bn. That number will be even higher now.
Ignore the accounting losses as they are purely a function of the accounting rule for unmatched hedges. They only reflect one side of the equation.
There is an awful lot to be positive about DEC even if the current share price is not reflecting it yet.

[sunbed44] 27/8/2021 15:40

Ive spent a few years building quite a large value of shares by buying and selling shares for capital growth, none of which pay dividends yet. Im currently transitioning some of my funds to income shares and bought quite a few here recently in the 90s up to current price. I'm doing the same with SEPL.My opinion here is that the company is well positioned to grow by acquisition (not 100% convinced of their ESG strategy yet though). But I do think they are hell bent on paying higher dividends than a rising share price I see more acquisitions as the super seven and others divest to balance their books and work towards carbon neutral etc but I think that the enhanced profits will be paid away each year in distributions. If SO grows to 130/140p WIN WIN.

[lab305] 27/8/2021 15:21

sunbed44 All depends on your entry point. Nearly two and a half years ago they were above 130p. Even with the dividends since that investment would still be in loss. I have a load at 121p from just before the placing.
Why would they hedge to subdue the sp?

[sunbed44] 27/8/2021 15:07

Exactly, if they hedge to keep share price in the range 90p and 110p and retain a c.10% that will do me fine. If youre looking for capital growth, in my opinion there are far better places to invest. Of course I would like to see capital growth here but my main purpose of being here is for my 10%'s.

[lab305] 27/8/2021 14:46

NATURAL GAS
4.335 +0.151 +3.61%
We have sold off all the family silver for around 2.6 for the this year and much of the next year. No wonder the stock is dropping. The year end figures will look appalling as they will indicate losses on every unit hedged at 2.6 to the real price. It was interesting that the share rose as the gas price fell a little recently.

[cassini] 26/8/2021 23:19

Interesting side note: I had assumed the decline in share price from February-ish was due to the promise of extra acquisitions and the threat of dilution.

However, I've noticed the same underlying chart pattern on other shares now. FSJ gives the clearest example of this pattern as it's a share with no news to interfere ;0)

Other examples are NETW, WG. and MCRO, etc.

MCRO and DEC give very muddy examples of the basic pattern (due to divis in DEC's case or news in MCRO's case), which is a peak in Feb/Mar, a decline to July, then a V-bottom rebound, but they all share the basic underlying trend.

Not all shares follow this pattern, neither do any of the UK indices, so I'm slightly puzzled by it, unless it's some algo or trading bot thing, or even money being rotated between different types of investments.

[simplemilltownboy] 26/8/2021 20:58

The hedging is the issue with the share price 2022 and 2023 will be very interesting IMO and rusty also said this. As said before oddly I don't won't the company to increase the divi as it's better served buying other companies. With respect to US, they have circa 650M in the revolving credit facility and oak tree so would expect this to be used in the next 12 months. This will increase the company value, after 3 years they have the option to buy the oak tree stakes if they want to sell. This is a slow burner IMO. GLA

[podgyted] 26/8/2021 20:07

Now at $4.2 - weird how the London market ignores this.

No wonder Rusty wants a move to the States.

[lab305] 26/8/2021 17:05

NATURAL GAS -
4.107 +0.210 +5.39%
Gas up over 5% in one day , over 60% since April. As one astute poster wrote you would think we were buying gas not selling it !

[skyship] 26/8/2021 09:02

Quite an interesting chart - an elongated Reverse Head & Shoulders - a bullish sign. So if it breaks 111p then 120p very much on the cards.

Personally I took the turn yesterday at 109.7p; but watching to re-join if any pullback.



free stock charts from uk.advfn.com

[gary1966] 26/8/2021 07:50

Personally I can see it growing for quite some time. New central area growing production. Hedges should be renewed at higher prices. Share of JV production should grow to 60% without any additional outlay.

[sunbed44] 26/8/2021 00:09

Gas prices are really strong and poo rising again. I've tried and tried to work out the exact net effect to us of rising energy prices and our large hedging position. I simply can't work it out as its too complicated for me and above my pay grade. I'm still happy holding for dividend and will be continuing to add here as I trade a few smaller cap oil and gas stocks. I do like the very high yield here and can see it being sustained for quite some time.

[sunbed44] 24/8/2021 16:35

tt - I think I'm just going to hold these and let divis run for a few years and just hope we see some capital growth as well. I'm similar with SEPL which is paying decent dividends as well. TXP and SAVE are other decent holdings of mine as well. I expect SAVE to initiate a dividend in 2022 with TXP following suit the year after. I will be targeting tax free divis on average to give >7% which will provide a decent pension which I'm beginning to put together. For every 100k of capital invested, 7k dividend is not too shabby IMO

[t-trader] 24/8/2021 15:52

Sunbed44

I sold out prior to the big divi on RIO, was very tempted to hold due to the large divi but took the gamble. Bought back in last week at £52.96 .

Also have BHP, but as its already took a tumble after the results….will stick with it for the divi this time. Gutted I didn’t sell for £25 on results day (was thinking about it doh!)

As with these (DEC) I just sit and hold and take the divi each time.

[johnhemming] 24/8/2021 15:43

>That quarterly hosing with money is very calming to the nerves!
I am above my average price even though I started buying at around £1.20.

However, in the end one can more easily be patient when there is income.

[theapiarist] 24/8/2021 14:37

Knocker. My ex might take issue with you on that one!

[1knocker] 24/8/2021 14:06

Dividend investors are easy to live with compared with moonshot hopefuls, subbed, especially when the share price falls a bit as from time to time every share price does. That quarterly hosing with money is very calming to the nerves!

[cassini] 24/8/2021 13:31

TheApiarist, 115p is just a pre-dividend trading target. I'd buy back in later on any weakness. Anyway, the price is very sluggish this time around compared to before so it might not make 115p before we go ex in which case I'll just hold.

[theapiarist] 24/8/2021 11:18

Agree Cassini. In my view RIO overshot to the downside after going EXD for the interim and special divis. I bought sub 52 in the last couple of days and am comfortable with that.
The Chinese don't have much Iron ore and what they do have is low quality - they have to import and the only place that can supply in the quantity and quality they need is Australia. For Australia read RIO.

I feel you may be a little cautious with your 115p. DEC has only been listed in UK for 4 years. Hopefully, given a steady stream of increased dividends, in time the market may lose it's reticence towards the unusual business model. I'm certainly happy to hold for the long term.