Diversified Energy Share Discussion Threads

[cassini] 22/5/2021 12:53

Gary1966's synopsis of the tax rules sounds correct to me but I note that in posts 105 and 106, wllmherk asks if he holds DEC in an ISA will he pay withholding tax and fardelsbear replies saying no, he won't, if he fills out a W-8BEN.

Gary1966's synopsis says 15% will be paid in an ISA, even with a W-8BEN, so is fardelsbear or Gary1966 right?

As I understand it Gary1966 is right, but if fardelsbear has some contrary info we should know about...

[spawny100] 22/5/2021 12:38

Iweb state very clearly on their website that they will apply a 30% withholding tax. Are you saying that this is not legal Gary? "UK listed shares paying US sourced dividendsOrdinarily if you complete a W-8BEN form you will only pay the 15% Withholding Tax rate instead of 30% on US listed shares paying US sourced dividends. For UK listed shares paying US sourced dividends a 30% Withholding Tax rate is applied even if you have a W-8BEN form in place.For example, you would receive $70 on a $100 dividend."

[gary1966] 22/5/2021 12:18

Money already raised for the next couple of deals of this size and then we have the big joint venture ones to come with management fees payable to us. We also have an increased dividend later in the year that I believe is pretty much nailed on now. In the 30/04 update they only had $204m of available credit. I don't know if that figure was adjusted for what they had to pay for the Indigo Minerals acquisition that completed after this date. So not sure they had loads of headroom. From the placing rns:

The Acquisitions and Proposed Fundraising are expected to leave the Company with an estimated Net Debt to 2020 Adjusted EBITDA multiple of 1.8x. Illustratively, based on these metrics, the Company could potentially assume a further $335 million in potential debt capacity whilst remaining at or below a Net Debt to Adjusted EBITDA of 2.3x, on the basis the $335 million was used to acquire assets at a purchase price multiple of 3.5x. The ability to support additional non-equity financing allows the Company to pursue additional acquisition opportunities and deliver further value for investors

Assess what they have done when that $335m has been spent, as I am sure it will be in the next 3-6 months. If you put all the deals together at that point, and based on net consideration, it means they would have paid $616m for assets at a reasonable discount to NPV, with $225m or 36.5% funded by equity. Doesn't seem outrageous to me and stops the balance sheet becoming overstretched, which none of us want as we all know how that usually ends up.

[gary1966] 22/5/2021 12:05

Then report them to the Financial Ombudsmen or threaten to as that normally does the trick. IG tried this on with me with regards to a company that was being bought in a peculiar way and made two payments to me totalling over £3k to compensate.

[bullsvbears] 22/5/2021 12:01

Pro S2009:-

Re witholding tax.

Lloyds/Halifax/IWeb pay minus the full 30% - claiming that this is due to "their
custodian - Crest".

From discussions elsewhere, it seems there could be a pattern of bank connected "brokers" not giving any credit for a completed W8-BEN in respect of this share.

[lab305] 22/5/2021 10:39

johnhemming . I agree with your synopsis. At first glance the fundamental profit figures year on year look dreadful. Cash flow not profit is the new metric but I fear convincing investors of that is an uphill struggle. I am very heavily invested here an have been for some years but yesterday was stressful . We had enough weakness with the fallout from the blogger and covid without self inflicted pain. Let's hope they can do something that will cause the share to rise 12p in a day !

[pro_s2009] 22/5/2021 09:43

Thanks Gary, info put into the header.

[johnhemming] 22/5/2021 09:37

lab305 "If they are doing so well as you imply how is this ?"

Lets start with the fact that I am a value investor. I invest in a company because that makes me entitled to a share of the profits and potentially any dividends.

The share price is a short term thing. Ideally I buy things cheaply and sell them at a higher price.

This company has a relatively unique hedging strategy which meant that last year when its price crashed in fact it was essentially protected against the price reductions.

I bought some at about 1.20 in 2019 and I bought more when the price crashed and my average price is 85p.

The stock is essentially partially hedged against inflation and commodity increases (because it is also hedged against commodity decreases). It is, therefore, a bit like an index linked bond (only a bit, however). So if we value it on yield it should be more like £2 rather than £1.10.

However, people have not built the confidence in the market for that. In part the fact that there was a reduction in the value of the hedges that had to be declared as a loss is also part of that. It is slightly complicated understanding the valuation of the stock.

Hence it is a buying opportunity at the moment. I have a reasonably big holding, but if the price remains this low when I have made some profits on other stocks which I am holding whilst their price goes up I will recycled some of that into this stock.

[fardels bear] 22/5/2021 09:12

Sorry, hadn't read further up.

[fardels bear] 22/5/2021 08:48

Yes, we know that.

[dpadmore] 22/5/2021 08:43

II don’t charge SD on these.

[gary1966] 22/5/2021 08:38

It might be worth compiling a list of brokers that charge and don’t charge stamp duty. To kick that off I can deal with the following:

IG-no SD

Hargreaves Lansdown-charge SD

X-O.co.uk-charge SD

[gary1966] 22/5/2021 08:30

If held in a SIPP:

Stamp Duty: Depends on which broker you use to buy them
Withholding Tax:None

Outside of SIPP:

Stamp Duty: Depends on which broker you use to buy them
Withholding Tax: 30% without a W8-BEN and 15% if one completed.

W8-BEN has to be completed every 2-3 years

[pro_s2009] 22/5/2021 01:41

Would someone like to write a definitive guide to :

Stamp duty, ISA, W-8 BEN etc... for DEC shares.

A short simple summary that I will then copy and paste into the header - as has been pointed out to me, we seem to go through phases of the same questions being asked - so if someone can write a simple summary then I will add it to the header.

[lab305] 22/5/2021 00:32

dpadmore no I have not . The dividend was not so high then and it equates now to around 9.5p per year after 15% withholding tax. So will be close to 17p. Its not far off but still lower +two years of inflation.
This placing was wealth destructive and diluting to existing investors. It was totally unnecessary and done at a miserable price. They had enough finance in place to do the deal eight times over without trashing the the share price. The fire sale offer was over before most had even heard of it , done at a very preferential price of around 109p if you include the dividend.
Step back two or three years to when this company required money for acquisitions and placings were done at or even above the share price. Anyone here remember those ?
I will believe that Rusty can walk on water as most of the rest of you if we can get back to 128p achieved in February and March this year. Meanwhile unimpressed.

[fardels bear] 21/5/2021 23:17

No you don't, as long as your broker is switched on and you have submitted a signed w8ben form.

[wllmherk] 21/5/2021 22:43

If I hold these in an ISA do I pay a withholding tax on the dividends as that would substantially reduce the yield?

wllm :)

[cassini] 21/5/2021 22:22

Before we compare the share price from two years with that today, we ought to bear in mind there was a pandemic and collapse in consumption in the way, yet DEC has fared much better than the likes of BP or RDSB in terms of share price.

Also there was that report on the costs of decommissioning wells that weighed on DEC, which may have been just a bit of political activism...

[dpadmore] 21/5/2021 22:16

And in the mean time you have taken 22p or so in dividends have you not?

It's nice to see John's comment. The day he goes short on this will be the day I know to head for the door.

[lab305] 21/5/2021 19:33

johnhemming Let's take the long term share price then. Two years ago they were 133p. Today 112p.If they are doing so well as you imply how is this ?

[johnhemming] 21/5/2021 17:43

Energy prices tend to follow each other. I am OK with this placing as it benefits me as a shareholder even though I have not participated.

I take a bit of a traditionalist view of stocks in that the value is based upon how well the company is doing rather than the short term share price.

[w1ndjammer] 21/5/2021 15:04

sorry wrong thread, but NGL`s not to be sniffed at, 10% think......

WJ.

[fardels bear] 21/5/2021 14:46

Yeah but DEC is a gas company. There's very little oil in the portfolio.

[w1ndjammer] 21/5/2021 14:08

BUZZ – Bets on Dec 2021 Brent at $100 jump – JP Morgan
10:57
* Option bets on Dec Brent rising above $100 per barrel of oil (bbl) jump after last week's strong U.S. Consumer Price Index data, with open interest on calls nearly tripling in May, JP Morgan says
* Oil demand will have to average above 102.6 million barrels per day (bpd) in Q3 2021 and grow to 103.6 mbd in Q4 to reach $100, barring any OPEC+ action

[gary1966] 21/5/2021 12:50

More than doubled an already sizeable position at 111.4p. Just think the market will appreciate the next acquisition more if/when paid from the funds now put in place via the RCF. Account transfer completed today to IG and a really pleasant surprise that they too don't charge SD on purchases. Expecting an increase in the dividend later in the year with the increased production.

GLA