Diversified Energy Share Discussion Threads

[scrwal] 18/10/2021 15:50

DEC does hold restricted cash in respect of

A) State governmental agencies to be utilised and drawn upon if the operator should
abandon any wells.
B) Held as collateral by the Group's surety bond providers.
C) Certain reserves for interest payments related to asset backed securitisation.

[deadly] 18/10/2021 15:37

'That is all I'm going to say for now. Have a good day.'

You just can't give it a rest can you.

[professor john koestler] 18/10/2021 15:27

It sounds all very well and wonderful but will it be enough to satisfy the powers that be with the electorate breathing down their necks.

Oh, credit due, but one shouldn't expect all because an issue has been addressed by the few it is an issue fully resolved and given mandate by everyone.

Go back and indulge in the quote from Seth A. Klarman.

[johnhemming] 18/10/2021 15:21

The states need to look at what to do about the abandoned wells. That was referenced by DEC in its annual report.

"Leveraging our well retirement expertise and the platform afforded by West
Virginia’s industry association, a legislative bill was successfully passed into law
to create the Abandoned Well Plugging Fund, the first of its kind in dealing, and
funding, orphaned wells across the state. "

[professor john koestler] 18/10/2021 15:12

So if no one is fixing them what they might do is bring in a tax that covers the cost in retiring all wells, for example. That would seem fair and obvious to me.

[johnhemming] 18/10/2021 15:09

@scrwal

The point about extraction companies is that doing accounts on an accruals basis is substantially meaningless. Its all about cash. There will be a point at which cash needs to be placed in some form of account for plugging. We are not at that point for the vast majority of wells. Cash has been put aside for some wells.

DEC do have a policy of finding leaks and fixing them. The big issue in terms of methane emissions is the wells that DEC are not responsible for because they have no-one responsible for them as no-one is fixing them.

[scrwal] 18/10/2021 15:03

redtom1

Thanks for your reply 1500.
I recognised that after thinking about it the asset is depreciated over the much longer life of the asset . However I think it is still akin to a form of window dressing as it gives the impression that a decent provision has been made so why not just make a sensible provision via the income statement each year. I think I am becoming a bit pedantic this.

Edit - they do have an accounting policy for it so they will say everything is fine.

What we will never know is a true number of wells that should be capped. DEC will obviously never disclose that.

[professor john koestler] 18/10/2021 15:03

Dovey

Who says I am angry?

I did write that I am an investor of DEC. Did you miss that?

Methane and beef production does need to be addressed. Part of the issue is that methane sits under the ocean floor and will be released causing a feeback loop that will not be stopped if we don't do something about these issues.

So, as investors, we need to be more open-minded about political risk especially with respect to methane emissions IMO. Writing a business plan over decades and expecting the status quo for the next 70 years isn't going to happen. That is why DEC need a more aggressive attitude towards these risks and so do many investors here, so it seems.

[dovey21] 18/10/2021 14:54

If Methane is your concern..stop eating meat and address the UN regarding global population. Venting your anger for these issues on a relatively small energy company is like blaming a nail producer for your puncture!

[johnhemming] 18/10/2021 14:47

Methane, however, comes from the ground as well as from leaking pipes.


"GHG emissions from soils need to be better quantified for global budgets, since 35% CO2, 47% CH4, 53% N2O, and 21 % nitric oxide (NO) of the respective total annual emissions relate to soil degassing (IPCC, 2007). "

[professor john koestler] 18/10/2021 14:18

" Coal creates twice the CO2 gas does."

Methane has more than 80 times the warming power of carbon dioxide over the first 20 years after it reaches the atmosphere. Even though CO2 has a longer-lasting effect, methane sets the pace for warming in the near term. At least 25% of today's warming is driven by methane from human actions. - EDF

[fardels bear] 18/10/2021 14:04

At what point does UCG become viable? Can it be scrubbed sufficiently?

[dovey21] 18/10/2021 13:06

I think you've made your point. Thanks. Meanwhile...as the gas supply shortage continues, the world is ramping up coal generated power to accommodate. That is a far more damaging issue. Coal creates twice the CO2 gas does.

[aleman] 18/10/2021 12:57

There was some transparency on older assets that had been through court assessment. They'd only just bought the assets under question. Transparency requires assessing them properly first. I'm sure we will get more transparency soon. Until then, arguing about it seems a bit pointless.

Does anybody know if DEC have previously hedged oil and near gas liquids in the past? The latest acquisition increases those a bit so I'm wondering if they are exposed to spot oil prices. (I think they were up to about 5-6% oil and a few % ng liquids overall. The oil price is still going up. Gas is down a bit on shorter contracts but does not look to have fallen beyond two years where DEC will be doing most of its hedging.)

[professor john koestler] 18/10/2021 12:54

At Bloomberg I saw two journalists who came across very professional and driven in what they were doing. Kudos to them.

The issues of well-capping need to be addressed properly and transparently and not just swept under the carpet as perhaps some here would wish.

I would advise some here to indulge in the words of Seth A. Klarman : "Greed also manifests itself as undue optimism or, more subtly, as complacency in the face of bad news."



That is all I'm going to say for now. Have a good day.

[redtom1] 18/10/2021 12:51

Scrwal,

I meant to answer one of your questions days ago about the accounting for the asset retirement provision.
Essentially, the debit goes to the cost of oil and gas assets with the credit going to provisions. Whilst one would normally expect a provision to be created by hitting the income statement, for long life assets such as these the 'cost of retirement' is initially added to the value of the assets BUT.... these assets are impaired over time so that the provision element hits the P&L over the life of the wells (ie each impairment charge includes a bit of the retirement provision). This is sensible otherwise you would be hitting the income statement far too early in relation to a cost 20/30/40 years into the future.

[scrwal] 18/10/2021 12:42

Another thing - stop mentioning that the yield is high because of the fall in the share price , it was high at 130p but this is effectively a US company quoted on the LSE. Yields for US companies have always tended to be lower than their UK equivalents with more emphasis on capital growth - that is what prompted the Bloomberg ignorant whinge about excessive dividends.

[scrwal] 18/10/2021 12:36

I'm hoping there is a shift by Rusty regarding well retirements in so far as he doesn't use as a excuse the fact that they are doing more than the legal minimum as per the various State agreements. I'm not an expert but I reckon the capping levels that should be done is probably 2 to 3 times higher than what is currently done.

The dividend increase should be kept to 3% and more of the excess cash flow used for capping. They could ramp up production on a batch of wells also to create capping cash.

The sensationalist article at least will focus minds on the leakage/maintenance and ARO aspects such that hopefully the board will realise that their actions must be seen as proactive rather than just meeting minimal requirements in this day and age.

[cassini] 18/10/2021 12:33

I was watching some 'journalists' on video at some White House press briefing when Trump was in office. They were all sat there wearing masks of course. As usual they were all tearing into Trump any way they could.

Trump asked one of them to remove his mask as he couldn't hear what the question was. The reporter refused.

Come the end of the briefing, when Trump had gone, the press room security camera picked up these journos at the back of the room milling around in close proximity to each other laughing and joking, most having now discarded their masks! The video was released by the White House Press Secretary of the time.

That's our beloved, intrepid, fearless journalists for you. Just hypocrites.

Many are fakes with no integrity and an agenda/orders to follow. It's a competitive business and they know fear sells and they have a particular audience to pander to.

I'm all for investigative journalism, but the characters of some of the people involved is too poor to give us what that should be.

There's another video on Youtube of CNN reporter up to his waist in floodwater in I think Georgia, USA. He's talking to camera, banging on about climate change and flooding. The thing is, a bypasser was videoing him on his mobile phone and we could see that the reporter was presumably standing in a roadside ditch as there were only a few inches of water in the road itself and the sidewalks were above the water. The actual CNN video crops all this out with a tight shot on the reporter.

That's why I don't trust these people. They do lie, deceive and misdirect.

Independent journalists such as Glen Greenwald can operate with more integrity I reckon.

[fardels bear] 18/10/2021 12:08

I think your white charger could do with some fodder, sir.

[adg] 18/10/2021 12:08

Interesting that you name yourself after a fictional MIT astrophysics professor played by (of all people the master Muppet Nicholas Cage) could perhaps be suggestive of 'your character' and why you are desperate to have a non existent academic title as your bb name is beyond me....

I knew you weren't a real professor last week - a real professor knows the difference between 'there' and 'their'

As for my finances - you know nothing - isn't that a a bit arrogant and presumptuous of you ? That also perhaps is suggestive of 'your character' is it not?

This bunfight isn't for the bb - take it private if you want and we can have handbags at dawn via PM

[professor john koestler] 18/10/2021 11:42

Dovey

Sure, but let us respect opposite opinions and maintain objective attitudes even though it may have personal financial consequences. If we don't behave in this manner we are effectively 'bought' humans.

[dovey21] 18/10/2021 11:36

I agree with your sentiments entirely however, the company have addressed those concerns and confirmed that there is continuing work going on with repair and EOL containment. We also had an industry expert post here who stated what was observed was perfectly normal across the industry. Fossil fuels are with us for decades to come..we can't get away from that need overnight.