Diversified Energy Share Discussion Threads

[tag57] 26/2/2024 09:35

Fordtin, no I am just suggesting that cash included in NAV should surely be on a 1:1 basis therefore any change in the cash balance of the business (via payment of divis etc)should have a 1:1 effect on NAV. If this is the case then the discount applicable to the rest of the company assets is probably higher than just comparing NAV to market cap.
Just my opinion

[fordtin] 26/2/2024 09:33

I bought a few extra shares in the 920's this morning with the sole intent of offering them for tender.

"the Tender Price per Share not being less than £9.35".
A one month hold for a >1% return and further upside potential, with zero downside. Seems like a pretty good deal in the current market.

[bluemango] 26/2/2024 09:29

Note, btw, how every one of those reasons for current low valuation may legitimately be seen a temporary.

Whatever your views on him, Trump back in the White House should also work in shareholders' favour. November not so far away in the scheme of things.

[bluemango] 26/2/2024 09:24

I think the confusion here is that you clearly can't view the current situation with any of the 'normal' assumptions. When so many variables are out of kilter (the most obvious one being the current low valuation brought about by a combination of high interest rates, lower energy prices, ESG political correctness & income fund outflows) then analysis that attempts to follow usual conventions is made much more difficult.

[fordtin] 26/2/2024 09:00

Tag57 - not sure I follow. Are you suggesting cash is the only asset worthy of consideration?

[tag57] 26/2/2024 08:53

Fordtin, as the divi is cash leaving the business I would have thought the market cap should drop by the same amount, everything being equal.
This is assuming that as part of the NAV the cash position of the business is included in NAV on a 1:1 basis with the EV of the business just being more heavily discounted than when comparing NaV to share price The opposite would be true if in a negative cash position.
BWDIK.

[fordtin] 26/2/2024 08:37

nigelpm re; “All being equal it will fall by exactly the dividend amount. That's the point.”

The point is actually not that at all.
As the company is trading at such a massive discount to NAV, If the share price fell by exactly the amount of capital returned to shareholders, returning 30% of the NAV to shareholders would reduce the share price to zero but the company would still retain 70% of it’s NAV!

"All things being equal", share price should fall proportionally to the fall in NAV.
As all things are invariably not equal, some people are willing to sell their shares xd at a price which is roughly equal to the pre xd price less the dividend.
I guess the point should be; irrational behaviour is what makes a market.

[fordtin] 26/2/2024 08:11

A couple of points which are probably worth highlighting;

"(e) the Tender Price per Share not being less than £9.35;

(f) the total number of Shares purchased pursuant to the Tender Price being not more than 3,881,238 Shares"

[fordtin] 26/2/2024 07:42

RNS;




Circular;



"YOU SHOULD READ THE WHOLE OF THIS CIRCULAR, WHICH CONTAINS THE
MATERIAL TERMS OF THE RETURN OF CAPITAL, AND NOT JUST THIS SECTION,
WHEN DECIDING WHAT ACTION TO TAKE. IF YOU WISH TO RECEIVE YOUR
ENTITLEMENT TO THE Q323 DIVIDEND, YOU DO NOT HAVE TO TAKE ANY FURTHER
ACTION AND YOU WILL BE PAID YOUR ENTITLEMENT TO THE Q323 DIVIDEND ON
28 MARCH 2024."

[nigelpm] 26/2/2024 07:24

All being equal it will fall by exactly the dividend amount. That's the point.

[justiceforthemany] 26/2/2024 07:15

Nat Gas +5%

[grahamg8] 25/2/2024 18:19

Thanks for the explanation. I agree the share price will fall by less than the divi everything else being equal.

[bountyhunter] 25/2/2024 17:00

Warren Buffett on buybacks recently:

Buffett, who determines the level of buybacks at Berkshire, has repeatedly said he is price conscious, noting in his annual letter: “All stock repurchases should be price-dependent. What is sensible at a discount to business-value becomes stupid if done at a premium.”

We are certainly trading at a heavy discount here.

[grahamg8] 25/2/2024 14:37

Fordtin, if you take assets out of the Company eg as dividends or to pay for share buy backs the NAV goes down. It is wrong to just keep the NAV constant in these circumstances. But the general principle is correct taking shares off the table at a discount will certainly increase the discount, as long as the share price doesn't begin to rise because there is a shortage of stock on offer.

[laurence llewelyn binliner] 24/2/2024 15:35

#Grahamg8, we recently doubled the size of the plugging capability with the Tanos deal so it is an expanding part of the business, and will continue as demand for the service picks up, we win 3rd party plugging contracts and now do Gov owned orphan/abandoned well contracts they want plugged too..

The period of maximum productivity may be in the first ten years, but we buy up old wells past their best and can keep them ticking over for decades..

We are part of the solution not the problem - right place, right time sweeping up the mess (for a price).. ;o)

[grahamg8] 24/2/2024 12:11

Until now I've rather dismissed the LVL Energy business as being a bit of a side line. Nice to have, reduces retirement costs by keeping the work in house, and a bit of pocket money on the side from services to third parties.

I think my interpretation is right that FY2023 568 wells were processed, 384 in house and 184 external. But if DEC have 60,000 wells and their life is 10 years then the retirement capability needs to ramp up accordingly. In the presentation to WV Energy Committee it was stated that there were 6000 orphan wells in the State. And now the Client Earth article is suggesting there are 2.1m abandoned and unplugged wells in the USA.

Sounds like "Right Company, Right Time" has it just about ........Right.

[tag57] 24/2/2024 10:43

FT story about abandoned wells in the US. DEC gets a mention.

[sbb1x] 24/2/2024 08:09

Yes it will be.

[elpirata] 23/2/2024 21:33

linking into above (and 4 yrs & 6 yrs respectively since the EQT acquisitions) this surely gives the lie to the bear case as DEC ramp up plugging out of cashflow while providing a profitsble 3rd party plugging to WV State amongst others



The plaintiffs allege that, instead of plugging the wells, the company knowingly sold them to a privately owned Texas shell company that was designed to go bankrupt and shed the cleanup liability....The plaintiffs argue the transfers of these oil and gas wells to a small private company deliberately designed to go bankrupt was fraudulent, and consequently the responsibility for plugging the wells must remain with the previous owner

[elpirata] 23/2/2024 21:25

An unintended consequence of the McEvoy plaintiffs action is to draw into the litigation a number of 'intervenor defendants' who are mineral rights owners in the allegedly abandoned & orphaned wells, and whose rights to any future royalties would be terminated if the wells were to be plugged by order of the Court, even if the wells were dormant and required rehabilitation.

The motion to cojoin with DEC & EQT as defendants was opposed by the McEvoy plaintiffs

eg In the Third Amended Class Action Complaint [Doc.322], for example, plaintiff Joan Medley alleges that according to the Office of Oil and Gas, the well's operator has not reported natural gas production in any amount since 2018 for well 047- 039-02361.
According to the Office of Oil and Gas, the well 047-039-02361 has not produced oil since 2018.
Without any mineral production on those wells, there is no purpose and no legal justification for the continued presence of the wells or their associated equipment

The Court granted Judgement for the intervenor defendants thus

The Intervening Defendants all have mineral interests in Well 047-039-02361. The WV DEP Office of Oil and Gas website lists Well 047-039-02361 as an "Active
Well." Moreover, plaintiff Medley's allegation that the well has not reported gas production in any amount since 2018 is simply untrue. As the chart shows below,
Well 047-039-02361, even if only marginally, produced 18mcfg of gas in 2022.

Plaintiffs filed the Third Amended Complaint on June 16, 2023. Upon further review, some of the allegations concerning some wells in the Third Amended Complaint appear to be unsupported

Its not a good look for the class action lawyers if they cant even get their facts right before (if) it even goes to full trial!

[97peter] 23/2/2024 18:05

Yes and state the obvious, but then it will recover. Especially whenQ4 divi announced same rate as Q3, plus annual results put to rest the shorters and de-dampers false news and scaremongering!! Them and you can then crawl back under the de-tampers and shorters unscrupulous rock.

[bountyhunter] 23/2/2024 17:44

On it's way up again in New York, only 3 trading days left before XD 87.5c.