Diversified Energy Share Discussion Threads

[cassini] 19/10/2021 19:55

Duplicate post.

[muddyfox0151] 19/10/2021 19:47

Don't listen to this idiot you will lose money ! History will tell you . GLA here .

[croasdalelfc] 19/10/2021 19:23

Review of our asset inspection program (averaging in excess of 100,000 well site visits per month) that informs our continuous review of asset operations.So 100 people doing 40 well site visits 6 days a week for a month - every month The company employs 280 people .....

[johnhemming] 19/10/2021 18:12

>something that might be of interest:

No news there sorry.

[scrwal] 19/10/2021 18:02

The dividend payout was intended to be circa 40% of the FCF but the latest First Berlin report on 23 July showed that increasing to 45% for 2021 and 49.9% in 2022. This is possibly getting a bit high but all their figures don't include the Tapstone acquisition or the latest price hedging.

[professor john koestler] 19/10/2021 18:01

John, something that might be of interest:

The sequencing trap that risks stagflation 2.0

[cassini] 19/10/2021 17:36

Isn't it DEC's stated intention that at least 40% of the ?profits? will be paid as a dividend.

Of course 'profit' is a bit open to interpretation via creative accounting.

I wish I could find the exact quote from Rusty Hutson now.

EDIT: Found it - he said 40% of 'Free Cash Flow'.

[johnhemming] 19/10/2021 17:10

I don't invest in tobacco for ethical reasons. Hence I have not really looked at those shares.

National Grid I think face some real political risks.

[professor john koestler] 19/10/2021 17:07

Thanks John. Good post.

I invest in tobacco. I understand it isn't everyone's cup of tea. When you are talking of billions of sticks, incredible margins, and an acceleration in the net revenue nicotine pool you tend to be spoilt on visibility. British American Tobacco has similar yields and steady projected free cash flow growth of circa 8%. Imperial Brands yields c9% and it still manages to retain 45% of earnings with excellent free cash conversion.

I like to study companies and accounts like this because I get great reward in understanding accounting and business generally. The skills I learn I can apply to all the companies I invest in.

I would be willing to put forward pedestrian National Grid as perhaps a better investment than DEC over a ten year period. Long time to wait and find out and the yield of 5.5% is good but not particularly exciting.





Have a good evening all.

[johnhemming] 19/10/2021 17:05

@PJK

>What timescale might you indeed be working to then John if you don't mind me asking?
>Courtesy of SharePad.

This, of course, is a good question. Obviously if a company is going to fall off a cliff in 10 years time then that is a factor that affects the share price now.

However, as a private investor I try to get a rough idea as to what is going to happen for the next couple of years. Broader economic factors will influence share prices as this becomes more obvious.

I spent some time reading up on Weimar and hyperinflation to understand the macroeconomic dynamics of moving out of Covid into recovery and concluded that Stagflation was most likely.

In those circumstances commodities are a good idea unless we hit the buffers with an economic crisis - a crash in tech is not an economic crisis.

So we now have the house broker forecasts.

Any sharepad forecasts are probably sources from Refinitiv. I used stockopedia for for bringing together information to give a rough idea. Stockopedia has an increasing yield, but I still think that ignores the recent acquisitions.

All the hedging makes the company quite predictable.

Cenkos are, therefore, probably not far off saying

Adjusted EBITDA (which is the right measure)
2021 - 336.9 2022 - 544.2
Dividend per share
2021 16.41 2022-16
Dividend Cover
2021 2.1 2022 3.4

If Gas prices stay high I expect the company to plough through paying off debt and be in a position to increase dividends as well as put funds aside for plugging where necessary. (which it can already do anyway).

EV/EBITDA 2022E is 3.7

My guess is that 2022 dividend will be increased from 16c.

[marksp2011] 19/10/2021 17:00

Guys

In case it has escaped the attention of everyone

This is an oiler that makes its money by buying up packages of assets from others and sweating them.

Visibility?

You tell me the price for hydrocarbons for the next 10 years, and you tell me what sweep up deals they can do going forward and you might get a meaningful forecast.
The only visibility there is .... is whatever they have sold forward at a known price.

This isn't Tesco and, that is why the yield is 10%.

[johnhemming] 19/10/2021 16:50

The big issue here, of course, is gas prices. Cenkos give a risked NAV of 176p per share. That is at roughly USD3 Henry Hub.

Because it is geared USD4 Henry Hub gives more than 1/3 more than this. I don't have their detailed assumptions on things like ... plugging. However, slotting the values from the company's non discounted cash flow analysis a price of USD4 would give something like £2.50 per share.

This is actually the share I hold with the longest term visibility. I hold banks as well and it is really difficult to predict beyond a year or so with banks.

[janhar] 19/10/2021 16:41

With gas prices showing no sign of falling and oil heading for 100 dollars this is unlikely to fall in the near term after last week's Bloomberg shocking report the rapid recovery speaks for itself

[professor john koestler] 19/10/2021 16:32

"So let’s assume share price remains flat for 10 years."

That is one huge assumption IMO.

[sunbed44] 19/10/2021 16:16

So let's assume share price remains flat for 10 years.100k invested with 10% dividends automatically reinvested for 10 years gives a stock valuation return of 259kInflation has to be mighty high to give a real terms lossIf youre out why not spend your time on the ones your in? Or do they all carry some risk and youre selling out of those too? PMSL

[professor john koestler] 19/10/2021 16:00

"The dividends are sustainable for the next 10 years."

OK, let's assume that they are. So, you get your 10 years and you look towards selling your share for today's price (plus 10 year's inflation).

Will you get your money back? I doubt it.

[scrwal] 19/10/2021 15:53

The dividends are sustainable for the next 10 years. After that it depends as that is when the ARO program starts to ramp up but hopefully by then all debt should have been paid off. This is all subject to any further substantial acquisitions and how they are financed.
Incidentally the annual cost of capping 1,000 wells at $25k is less than the current quarterly dividend.

[professor john koestler] 19/10/2021 15:50

"However, I am myself not working on that timescale."

What timescale might you indeed be working to then John if you don't mind me asking?

[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.