Diversified Energy Share Discussion Threads

[leoneobull] 29/5/2024 07:12

6% short. Plus any under the 0.5% radar. Something has to give as Rusty is going to be trumpeting DEC and the Russell 2000 stateside https://shorttracker.co.uk/company/GB00BQHP5P93/

[bountyhunter] 29/5/2024 06:31

Good points.

Diversified is to be included in the Russell 2000 Index effective at the open of US equity markets on Monday, July 1st, 2024 according to the preliminary list of additions posted on Friday, May 24th, 2024.

[laurence llewelyn binliner] 29/5/2024 06:30

Nice, now we are on the radar of funds/index trackers.. :o)Onward and upward..

[leoneobull] 29/5/2024 06:21

The Americans liked the director buys too judging by yesterdays close at 11.50 £ equivalent

[leoneobull] 29/5/2024 06:15

Shorters are going to love scrambling for shares once trackers start buying the stock due to its inclusion in the Russell 2000. And spot price 2.82 usd. Hedges 4.00 usd and highly cash generative with oodles of FCF. £15 imov by end summer latest

[tsmith2] 28/5/2024 17:12

lovely base formation going on here

[leoneobull] 28/5/2024 17:03

Sp now higher than when went xd to state the obvious, which is a particular gift

[bountyhunter] 28/5/2024 06:53

Yes but four directors are increasing their holdings, I see that as a plus. Also buybacks continue, at 1086p.

[bulltradept] 28/5/2024 06:12

Last of the big spenders eh with the latest RNS..

[blue square] 24/5/2024 10:51

I bought back in, lost £12 000 in
Potential gains selling at £9 but
made £24 000 elsewhere.
Happy with my entry at 1084p,in for
5000 shares, looking to hold longterm
main catalyst for me at the moment
the shorts reducing, very bullish about
gas prices long term.

[leoneobull] 24/5/2024 04:32

https://youtu.be/xLnMT80wQE8?si=n7z5WybFWtWm-BiXContango in gas prices bodes very well for dec hedging

[meanreverter] 23/5/2024 20:50

Adam Rosencwajg makes a bold call on US prices for natural gas:

[bountyhunter] 23/5/2024 18:57

Yes Leon, just catching up, XD 29c today and we go up 12p! Can't be bad.

[leoneobull] 23/5/2024 18:38

Amen Seeking Alpha.Valuation - $20+ Fair ValueI will base my valuation on the cash flows of the company because I think they are predictably stable and also resilient to natural gas price fluctuations. For 2024, I expect the company to be able to earn at least $200 million in free cash flow, by taking $50 million of free cash flow in the first quarter and multiplying it by 4 to annualize it out. Given the free cash flow came in at $74 million for Q1, I think $200 million in FCF for 2024 is reasonable as $74 million actual for Q1 2024 is much higher than my projected $50 million of FCF a quarter. Also, FCF for 2023 was $219 million according to their presentation, so assuming it can hold at around $200 million seems reasonable as the hedges do their work in keeping cash flows stable.Divide $200 million in FCF by shares outstanding of ~50 million gets me around $4 FCF per share. Multiply FCF by a below-average P/FCF of 5 gets me $20 per share fair value, with what looks to me incredibly conservative assumptions. Ultimately, the free cash flow is all that matters to me and I see it staying at the very minimum flat for the next year or two due to smart hedging and mature wells that don't deteriorate that quickly.I also find it unusual for a company that has historical acquisitions exceeding $2 billion to somehow have a market cap of below $700 million today. Those acquisitions seem to be value-add, as they increased the production capacity and cash flows of the company since they occurred. If I bought $2 billion of wells, oil producing assets and infrastructure, hedging contracts, and suddenly, it's selling on the market for $700 million today, I'd think the market is severely undervaluing my assets. That's exactly what, I think, is happening to Diversified Energy at this price, and thus believe the stock is probably undervalued.

[leoneobull] 23/5/2024 17:40

Seeking alpha new articleBuy Diversified EnergyRarely have I seen a company with such good cash flows trading at such a low price. I'm rather impressed by the hedging, mature wells, and overall free cash flow the company generates. Management seems to be pretty smart about acquiring assets that fit the business model, so with over $2 billion in historical acquisitions, I think the market is severely underpricing the company today. Investors should look to Diversified Energy for its solid income and cheap assets at a bargain price.

[leoneobull] 23/5/2024 17:34

Closed up on ex dividend day. Did shorts close somewhat?

[tsmith2] 23/5/2024 13:36

nice base formation at 11

[ramellous] 23/5/2024 09:27

There was for the first 5 mins of the day.. Must have been bought up.albeit very quickly..

[croasdalelfc] 23/5/2024 08:48

Wot no drop? Hmmm weird!

[this_is_me] 23/5/2024 07:37

XD today. The share price sems to have become stuck in a trading range.

[aleman] 22/5/2024 22:35

DEC is adding additional hedges for 2026 & 2027, where forward natural gas prices are around US$4/mmbtu ...

But that's my point - these forward prices have been rising back to their value of 15 months ago AND spot is back to or above the level of 15 months ago - that's a big rise in hte the residual unhedged 15% or whatever production selling now and likley most of production being sold forward - yet the share price is saying "meh", rising only from 950p to 1100p, conpared to 1700p+ last time were at similar prices. There seems to be a lot scepticism about the rise in prices as if they won't stick or go higher, despite chat about booming Asian demand for air-conditioning in years ahead as being the driver.

The October 26 contract was $3.60 at the end of March but is $3.91 now. Spot has gone from $1.80 to $2.90+. DEC will be selling at both of these so I'd say prospect look a lot brighter than a few months ago, with some suggestions futures will keep rising - though agreed rather speculative. The strength of Asian demand does seem to have caught some out, though, and there is increasing export capacity from the USA to feed it. It looks likely US prices will rise as more is exported, but DEC shares do not seem to agree (yet).

[tag57] 22/5/2024 21:31

BH, yes they will continue to increase their hedging on a constant rolling basis. Hopefully well north of $3 and paying down large chunks of debt!

[bountyhunter] 22/5/2024 20:15

Surely the level of currently arranged hedging tails off by the time you get to 3 years out or even by 26/27, so presumably there would be new hedging yet to be arranged to be progressively layered onto existing hedging?

[justiceforthemany] 22/5/2024 20:04

Natural Gas up at 3 USD
That's big.

[kaos3] 22/5/2024 19:04

aleman

because in a discount model - the most impact of a positive change in NG prices is closer to now. the further out in time you go, the less impact /prices to dec start to rise 4 years later/. dec production is hedged out 3 years and only after that time the impact starts to kick in. and even then it is diminished by the time value of money.

so you are right in general, but full impact of the ng rise now will be strongly dilluted

but if they get non hedged new production now /bought/ the impact of the rising NG price will be felt strongly and in full for the new production

oak bloke
The 1Q24 hedge floor price was US$3.36Mcf ($20.16BOE) so 40% higher than the average settled price and $2/BOE higher than my model assumptions - that’s where the 48% margin was achieved! DEC tell us the 2024 average natural gas hedge floor is US$3.41/Mcf which is a 65% premium to the US$2.04/MMBtu active contract at the end of Q1 (it is $2.24 today). This boosts my revenue assumptions by $2/BOE. As part of the Oaktree acquisition DEC will acquire a hedge portfolio that carries a c14% premium to the 2024 remaining DEC hedge floor. DEC is adding additional hedges for 2026 & 2027, where forward natural gas prices are around US$4/mmbtu ...

eg ... 3,36 - 4 us/mcf range is almost fixed for the next 3 years .... so why should rising prices now meaningful impact cash flow now or in the next 3 years ..... beyond that i agree