Diversified Energy Share Discussion Threads

[professor john koestler] 19/10/2021 15:48

Free cash flow 244.6 +32.2% 274.5 +12.2% 285.5 +4.02%

Slowing free cash flow growth (consensus)

Dividend (p) 11.7 +5.18% 11.6 -0.50% 11.6 0.00%

Flat-lining dividend growth (consensus)

EPS (¢) 22.2 -11.20% 20.5 -7.66% 19.1 -6.67%

Falling EPS (consensus)


Courtesy of SharePad.

[johnhemming] 19/10/2021 15:47

There is nothing solidly visible in a real long term. We have a 75 year forecast for packages of wells with DEC which is an unusually long timescale. However, I am myself not working on that timescale.

[janhar] 19/10/2021 15:35

I'm holding at least until 150p. Still a bargain at these levels. Clear earnings visibility and a tidy income. What's not to like?

[professor john koestler] 19/10/2021 15:35

By-the-way, I will be watching. I like to see whether my view holds. One needs feedback to improve investment thesis.

I'm sure some of you will be welcoming the fact I will be 'hanging around', especially you adg.

TTFN.

[professor john koestler] 19/10/2021 15:32

"given that the dividends are paid out of free cash flow I am comfortable in concluding you are wrong about this"

This year, next year, year after, sure.

I'm looking for something more visible long-term and I want the guarantee (as close to) that when I want to cash in my chips I have a very good chance of getting my capital back.

I respect your view and wish you all the best.

[adg] 19/10/2021 15:03

Thanks for those kind words and best wishes.
So that'll be you off now - goodbye & good luck to you too in your next venture.

[johnhemming] 19/10/2021 14:41

PJK - given that the dividends are paid out of free cash flow I am comfortable in concluding you are wrong about this.

[professor john koestler] 19/10/2021 14:09

I've sold down to zero. The more questions I answer the more questions I have. Time after time plenty of mixed messaging going on. Who knows what the well capacity decline truly is? Debt, placements, acquisitions all play into the fudge which makes it incredibly difficult to see underlying patterns. Then we have the multiple calls on the declining assets and [collateralised debt] on the best assets (????). I don't know how much of this is going on - it would be my next stage of research - but once I hear the word in the modern world it tends to ring alarm bells. Nothing like Fannie Mae and Freddie Mac of old (not 2008 versions).

Don't forget once you have all your dividends you'll need to have assets remaining that keep up with inflation or you are in effect getting back your capital in those dividends.

I think there is a likely chance capital destruction is going on here. If it was so great why would others sell out these wells? They aren't stupid. I'm sure Rusty isn't the modern-day alchemy magician he perhaps allows you to think he is - turning lead into gold. That's not to say he isn't competent, just sometimes it is easy to get over-optimistic within a business you are so personally entrenched. I've been there myself.

I've seen it all before. High-dividend keeps the punters interested and eventually the underlying cash flows driving valuation and retained earnings don't materialise.

You will not see dividends continue at this rate IMO and once they fall, they will fall along with the share price You have been warned.

Of course, this is just my opinion, and I wish all holders here good luck.

IMO & DYOR.

[fardels bear] 19/10/2021 13:43

He has been here for months.

[elpirata] 19/10/2021 11:15

its usually a symptom of seller remorse ;-)

[adg] 19/10/2021 11:10

CMD notification and associated narrative with the RNS has certainly helped along with the IR appointment - cant disagree that a new all time high could well be within reach, if it does it'd be likely after CMD (assuming it goes well that is) - many a time i have seen a negative reaction to CMD's

Oh BTW - looks like we have a deranged demented downticker appeared on this thread systematically giving everybody the thumbs down - bloody hilarious innit

[bountyhunter] 19/10/2021 09:31

wow, I expected a strong recovery but it looks like this is heading for a new all time high at this rate!

[fozzie] 19/10/2021 07:53

Storm in a tea cup, as usual, just glad I had some funds to take advantage sub 100. I would anticipate 130 being achieved before Christmas at worst. If the Bloomberg piece served as a catalyst for even greater transparency from the company then all good.

[bountyhunter] 19/10/2021 07:39

Capital Markets Day

on 17 November 2021

with an emphasis on outlining

the Company's ESG achievements

and initiatives

[lab305] 19/10/2021 07:39

Diversified Energy to give analysts an ESG deep dive with November asset tour
The company said it intends to highlight the expansion of the company's asset retirement programme which, the company said, includes the retirement of approximately 115 wells in 2021 to date.

Diversified Energy Company PLC - Diversified Energy to give analysts an ESG deep dive with November asset tour
Diversified Energy Company PLC (LSE:DEC, OTCQX:DECPF) confirmed it is to host a Capital Markets Day event in Texas, including a tour of assets in its ‘Central Region’ to showcase examples of its Smarter Asset Management and ESG operating initiatives.

The company, in a statement, said the event will take place on November 17.

"I am looking forward to offering our shareholders and the analyst community a deep-dive into our strategy driving our rapid growth and highlighting the important work we are undertaking to address sustainability in all facets of our operations,” said chief executive Rusty Hutson.

It follows an article by Bloomberg which according to DEC failed to reflect the positive environmental, social and economic benefits stemming from its investments into, and stewardship of, its assets.

DEC added that the event will feature recent environmental achievements and new ESG initiatives, including safety enhancements, asset integrity and replacement, emission reductions, production optimisation and financial stability, as well as our industry-leading performance in retiring mature assets.

Specifically, it intends to highlight the expansion of the company's asset retirement programme which, the company said, includes the retirement of approximately 115 wells in 2021 to date.

It will also highlight the company’s investments in upstream and midstream emissions reductions efforts and the use of Leak Detection and Repair (LDAR). Along with a review of the company’s asset inspection programme, which it says includes in excess of 100,000 well site visits per month.

DEC also noted the appointment of Jim Sheehan as its new vice president of investor relations and Teresa Odom, who previously led investor relations and ESG efforts, takes up the new role of vice president of ESG & sustainability, part of an expansion of the company’s ESG capabilities.

[lab305] 19/10/2021 07:39

Well they are combatting the criticism head on now. The outlook is much better than last week with very favourable media coverage and analyst research. They may turn this whole argument around demonstrating that far from the villain of the industry they are the best and safest custodians of older assets.

[johnhemming] 19/10/2021 06:08

Seth Klarman does identify an aspect of cognitive bias which does need consideration. However, I have difficulty working out what in the Bloomberg report is actually "news".

[johnhemming] 19/10/2021 06:05

"WASHINGTON – In its October Short-Term Energy Outlook, the U.S. Energy Information Administration forecasts that natural gas spot prices at the U.S. benchmark Henry Hub will average $5.67 per million British thermal units (MMBtu) between October and March, the highest winter price since 2007–2008."

[adg] 18/10/2021 22:15

I had to look up didactic - brilliant one that about sums it up

[cassini] 18/10/2021 21:06

I had 'sanctimonious' and 'supercilious' but also had 'holier than thou' and 'didactic'. Do I win a prize?

[adg] 18/10/2021 21:04

Sanctimonious, ostentatious, supercilious, opinionated, argumentative, misinformed/deluded?, pedantic and obnoxious

[johnhemming] 18/10/2021 20:17

The Well Life report has declines in the 3-4% range. The DEC plugging estimate assumes 6%. That seems OK to me.

The difficulty with Tom Loughrey's analysis is that he says "There is always an effort to put a declining asset into a perpetual cash flow instrument and distribute it."

But that is not what is happening as far as the company is going. It is not selling perpetual cash flow instruments.

The company is forecasting a declining cash flow for paying off debt. However, that process is proceeding. The main error I see in the forecast is that the gas price is too low.

[scrwal] 18/10/2021 18:18

Here is a link to the 2018 Long Well Life - Terminal Decline Review and Property Abandonment Study



This is the Tom Loughrey blog post referred to in the Bloomberg stuff



Just some extra reading but the study does show the DEC plugging and abandonment schedule.

[johnhemming] 18/10/2021 16:40

I do wish to speak in support of the right of PJK and Scrwal to say things on this board that other people don't like. Human beings have a bad habit of looking for things that confirm their decision rather than challenging their decisions to see if, in fact their views are wrong and should be changed.

This is particularly dangerous when it comes to investment decisions as it results in people making the wrong decisions.

Hence it is important to encourage people to express well argued views even if they are viewpoints that others find uncomfortable.

My own view is that the company has done a good job in this particular area in reducing methane emissions and that Bloomberg picked on the wrong target and reported a number of opinions that were wrong. I have not seen any evidence based arguments that I think challenge that assessment.