Diversified Energy Share Discussion Threads

[croasdalelfc] 20/10/2021 23:58

https://www.bloomberg.com/news/articles/2021-10-20/gas-producer-diversified-energy-said-emissions-fell-now-it-says-they-didn-tPants on fire

[sunbed44] 20/10/2021 17:04

Chunky UTs on the buy side for a while but this week the UTs seem to be sells. Good to be around the mid teens now after the silly dip to mid 90's last week.I can still see this testing 52 week highs before CM day.

[scrwal] 20/10/2021 16:01

Don't blame me , the greater of 40% FCF or $26 MM in dividends is disclosed as a major assumption in the wind down model.

[cassini] 20/10/2021 13:26

I thought it was '...at least 40%...'?

[johnhemming] 20/10/2021 13:08

I don't really understand why the 40% has to be a maximum figure over time. One would expect there to be a sum payable for retirement and a sum payable for debt and the rest of the cash is then available for the shareholders and/or further investment.

What would matter to other parties (the public as a whole and the banks) is that the company fulfils its liabilities. After that it is up to the company.

[scrwal] 20/10/2021 13:02

The ARO Wind Down Model will need modifying as they are paying well over 40% of FCF as dividends but a major assumption is 40% Max.
Obviously current prices and acquisitions will change things but they need to be careful to make sure the dividends remain under control.
If they intend to move the pay rate higher then they should state the revised figure rather than disclosing the 40% which has been there for several years.
It's a bit pedantic but one of those things that if you freely disclose the info make sure it's correct or in the right ballpark.

[johnhemming] 20/10/2021 12:29

If you are doing to do a lot of well plugging it is worth having an in house team. They have estimated a total of USD1.7bn for well plugging for the earlier tranches of wells.

I don't think there is an ulterior motive for the Bloomberg article. I just don't think they understand the issues properly.

[mondex] 20/10/2021 11:37

Gary1966,

Thanks for this. I stand corrected (& surprised)

[gary1966] 20/10/2021 11:27

mondex,

From the interim results on 5/8:

Improved emissions monitoring and reporting through significant progress on data warehouse and asset inventory

-- Established an internal team dedicated to permanently retiring wells, reducing reliance on third-party services and driving further process quality and efficiencies

Permanently retired 14 wells in West Virginia at an average cost per well of $19 thousand, 25% below typical third-party costs

-- Permanently retired 65 wells in Appalachia at an average cost of $19 thousand per well

[professor john koestler] 20/10/2021 11:26

Sogoesit

Capital destruction as from the investors' point of view - not the underlying assets.

I would have thought that didn't need to be made explicit.

[mondex] 20/10/2021 11:24

Croasdalelfc, if you look at DEC's website under Smarter Asset Management, they give the following as their modus operandi:

"Smarter Asset Management in Practice

Because many of the assets we acquire were non-core to the seller’s portfolios, these assets often provide DGO with a variety of SAM optimization opportunities to improve or restore production from the wells via low-cost techniques. . Our large and diverse portfolio of assets affords us thousands of opportunities to deploy these techniques – techniques that have a proven track record of maintaining consistent production across our wells. SAM activities can generate favorable environmental impacts in a number of manners, including:


Lowering unchecked emissions and improving safety through continuous financial and manpower investment in the mechanical integrity of our operational equipment.

Eliminating unchecked methane emissions via proactive pipeline surveillance.

Reducing miles driven by our field operations team due to our geographic scale and well density.

Reducing water disposal costs with innovative mater management practices.

Reducing well visits and miles driven by installing monitoring and measurement equipment.

Lowering emissions by reducing inefficient operational compression due to scale and synergistic opportunities.

For more information on our Smarter Assett Management program, please visit our Sustainability Report"

As you can see, they try & limit site visits by the use of monitoring & measuring equipment.

On a related note, I very much doubt DEC do their own plugging & abandoning of wells. This sort of work is usually contracted out. It's regarded as too expensive to retain crews & equipment & it's really only NOC's who keep this facility in-house.

[sogoesit] 20/10/2021 11:15

"I think there is a likely chance capital destruction is going on here." (post #1593)

Well, at least the good Professor has cottoned on to the well known underlying investment case for a wasting asset is, indeed, capital destruction!

Well played sir ;-)

[professor john koestler] 20/10/2021 11:07

I don't think Bloomberg Green are there to compete with brokers and analysts. They came out with a news story that the public has the right to know about. I suggest some of you grow-up a little and stop taking it as a personal attack on your cosy little pensions and savings accounts. ;)

[lab305] 20/10/2021 10:58

PJK I did not accuse you of shorting and I acknowledge that your newly arrived boundless negatively must spring from pure altruism. I still maintain that the depth of knowledge exhibited by the broker research far outweighs the sensationalism of the Blomberg journalists. It is obvious from your fawning over them that you are far from a reasoned observer.

[professor john koestler] 20/10/2021 10:28

lab305

Never shorted in my life, and neither have most here. Those who think they are shorting are spread-betting that the share price will fall - completely different thing. The spread betting companies generally don't trade the underlying stock unless they find themselves with large betting asymmetry which doesn't happen often because they have other tools to limit/stop this from happening.

Apart from the odd exception, the real shorters - whose pockets are deep because they are loaning stock from pension houses and other institutions - would mount a more serious negative offence than what you find on ADVFN. They employ a smorgasbord of good accountants who can generally tear a set of accounts to pieces better than any singular person on ADVFN is likely to do. Trust me, the share price wouldn't be dilly-dallying around like it is if they were on-board.

[spangle93] 20/10/2021 09:50

Croasdale - have you factored in that a sizeable fraction of their wells could be on multiwell sites..... ;-)


lab305 - yes, as the hatchet job was delivered while I was on holiday, it's taken quite a while to wade through 300 or so posts. Curious that many of the more negative ones were delivered by people with a very short posting history on ADVFN. It's almost as if there were a link.


The main point that flags Bloomberg's article as not a shock-horror exposee on a "dirty" industry is that it only targets DEC. If you consider slide 4 of the recent Cotton Valley presentation, there are 16 operators there, all interwoven in a patchwork quilt of wells and licences, some dividend payers, some private. I'm sure a similar patchwork would be found in the NE states too. It's a leap of the imagination to suggest that none of these competitors' wells emits any gas, or that they all have billions of cash set aside for capping old wells.

[mondex] 20/10/2021 09:25

(Bloomberg) --Banks are gradually offering more credit to U.S. shale oil and natural gas producers as the industry recovers from last year’s contraction and energy prices rally.

So-called borrowing bases will increase as much as 20% during the imminent round of talks between drillers and lenders, according to most respondents in a survey conducted by law firm Haynes & Boone LLP.

The findings indicate a continued improvement after the dire conditions experienced in the oil and gas sector last year, when the pandemic and global gluts led to a slump in energy prices and prompted banks to cut back on lending.

The previous Haynes & Boone survey, published in April, indicated borrowing bases would remain flat or rise by 10%. Lending against crude and gas reserves, a key source of capital for explorers, typically sees twice-year retederminations, in which bankers reassess their commitments.

[lab305] 20/10/2021 09:16

Farrugia .Their initial reception was much warmer in the UK and they found a number of institutions here that were willing to back them. The US favours larger companies and so as they are so much bigger now they may benefit from a US listing. The company is debating this at the moment. Ironically the move to the main market here was done partly at least to counter an earlier semi journalistic attack by making the company more open to scrutiny and demonstrating that it was following all the rules. Also at the same time new higher profile auditors were appointed again to demonstrate the company was being run properly.

[farrugia] 20/10/2021 08:14

I do have a question about this company - why did they choose to list on AIM - a light regulated exchange when basically all their gas assets are in the USA. Why didn't they list on the New York Stock Exchange instead!? It baffles me!?

[bountyhunter] 20/10/2021 07:40

Agree completely lab305

[croasdalelfc] 20/10/2021 07:17

Or maybe it's 300 people with 300 pickups doing 10 well site visits A DAY every Day - hmmm that's only 90000 a month - needs to be in excess of 100000.That Opex bill ? Ouch ! Or they are full of ....

[johnhemming] 20/10/2021 05:55

@lab305 although I filter some of the negative posters on advfn because they don't actually provide any reliable information I would prefer to have well argued negative points as it makes it easier to work out what the true position is. I don't myself have any reason to believe this is associated with shorting, but I accept that it might be.

ADVFN is one of a number of places where such stocks are discussed and although I think it is generally one of the best informed places and, of course, all the people reading it can (and almost certainly do at times) make investment decisions based upon what they read I am not persuaded that a ramping/deramping campaign based purely on posting on ADVFN would achieve much.

[cassini] 20/10/2021 01:42

It's a technique that's as old as the hills:

[lab305] 20/10/2021 00:54

Every time a negative media attack on a company takes place, suddenly new posters appear on threads like sharks in a feeding frenzy. Usually this activity is associated with shorting . If they had a valid point of view and were as knowledgeable as they profess they would have been here earlier instead of jumping on the coat tails of half truths and opportunistic sensationalism.
I would much prefer to believe the broker research that has taken time and diligence to prepare from researchers who nail their colours to the mast than the totally slanted, laced with innuendo piece from last week. It was noticeable however in how carefully it was crafted to avoid legal action , pointing out several times that DEC were abiding with their legal obligations.

[cassini] 19/10/2021 19:55

They say they employ 1,107 people...