Diversified Energy Share Discussion Threads

[meanreverter] 31/10/2021 21:25

According to the header, withholding tax is not payable on dividends from DEC shares held within a SIPP. Does anyone here know if the tax is payable for shares held in an ISA?

[gateside] 31/10/2021 19:10

dsct - If you're looking for a bit of extra diversification...

HFEL - UK Investment Trust focus on SE Asia/Australia pays almost 8% yield
FSFL - UK Solar - Expect little capital growth but rock solid 7% yield

[king suarez] 31/10/2021 19:06

You could add ATYM (copper miner just initiated maiden dividend of around 7% yield for the 9 month period only) and STCM (high yield cement company) and maybe RAVP - Russian warehouse preference share that is 10% yield.

[dsct] 31/10/2021 19:00

Hello ADVFN'ers

Having recently started investing in High Yield shares for a SIPP, this company is one of the investments.

The surprise (to me) was the annual income amount from these, which will be re-invested - into the same / similar.

So far, invested equally in these 10 companies - Hopefully fairly high yield and also diverse:
DEC DLG EVR IMB LGEN MNG POLY PSN RIO VOD

Investing yields (monthly) from these into ULVR and GSK to build up to the same percentage stake in all 12 holdings.

Rump holdings from before this strategy are : AJB, GRG, PTEC and SHOE - These may be sold to supplement her HY strategy.

Main reasons for posting - apologies for the repeated post on the boards of these main holdings.

1) I read these individual company boards, and would like to thank posters for their insights, thoughts and news.

2) Does this make sense ? - Are there any major problems regarding this scenario ?

3) With a 5-6 figure portfolio, is this putting too many eggs in one basket ? 10-12 shares.

4) Any HY shares missing, not in sectors covered ? - Would prefer not to diverge into non UK companies, unless there's a valid reason.

5) Is there a HY ADVFN thread that may be useful to read ? I used to enjoy The Fool HYP board, and do read quite a lot of investment HY articles.

6) Usually investing in smaller, more speculative companies, I find these large company accounts much more difficult to read/analyse, so leaving it to the yield aspect (mainly).

7) I am also starting to put together a 'fun' yield portfolio, from which I aim to obtain a daily dividend, but that's an entirely different subject ! lol

Thank you all, for your interesting and valuable posts, and for any suggestions I can research.

[1knocker] 30/10/2021 19:32

'Hedging' is a portmanteau term which covers a multitude of sins! It's a dark art. Where both deliveries of the product and the set price differ from day to day, and purchasers probably draw supplies from more than one producer, the overall effect of a hedging contract on the bottom line is not always as one might expect from a cursory perusal of the headline terms. Volume matters as well as price.

[bountyhunter] 30/10/2021 15:25

Yes certainly fixed price hedging but I don't recall seeing any details of floors previously.

[johnhemming] 30/10/2021 11:56

I have seen the hedging portfolio in prior years annual reports. They will be on the website.

[bountyhunter] 30/10/2021 11:53

Interesting, I wonder if they have just started using floors and collars wrt to hedging as opposed to fixed price hedging.

[johnhemming] 30/10/2021 11:51

Looking at this


Page 21

They are using collars as well as swaps.

[bountyhunter] 30/10/2021 10:03

Yes I know that, I just hadn't realised that the hedging was of the type with a floor enabling upside benefit as opposed to fixed price hedging and have not seen that discussed here previously, not that I've read all the posts.

[johnhemming] 30/10/2021 09:25

If you buy put options that has a cost, but enables benefiting from higher prices.

[bountyhunter] 30/10/2021 09:16

It's interesting that the hedging is stated to have floor prices which surely implies that there is benefit from potential upside?

[bountyhunter] 30/10/2021 09:14

A sensible hedging policy going forwards:

Hedging update

Diversified continues to protect its cash flows by taking advantage of a strong macro outlook and the recent commodity price upswing. Since 30 June 2021, the Company has hedged an additional 5% and 25% (nominal) of 2022 and 2023 natural gas production at average floor prices of $3.93/Mcf(g) and $3.30/Mcf(g) , respectively. Diversified's incremental hedging has increased total hedged production to 75%(h) at a floor price of $3.02/Mcf(g) for 2022 and 55%(h) at a floor price of $2.87/Mcf(g) for 2023, within Diversified's targeted hedge ranges of forecasted production.

[johnhemming] 30/10/2021 08:27

>why last year and in the early part of this when prices were on the floor for a period of 12 months no deals were done.
Most people selling in that environment would want to hang on for prices to improve in the hope of getting a better price. Its only those about to go bust that are forced sellers.

[1knocker] 29/10/2021 22:45

That is a much more pertinent question, lab. I don't know the answer, but I do trust this management. I think we can safely assume that if the opportunity was recognised by you and me, it will have been in the board's mind too. Indeed Rusty's words indicate that it was. Perhaps it was a question of finding the right deal, with synergies?

[lab305] 29/10/2021 21:47

Yes they have to hedge but it's a question of degree. If it is gambling not to hedge , it is also a risk to hedge so much. Many will argue that hindsight is wonderful but these guys have a much greater insight into the business than we do and they will have detected forward demand much sooner , being one of the bigger producers now gives them an edge on this.
Putting aside the hedging debate what I find really difficult to understand is why last year and in the early part of this when prices were on the floor for a period of 12 months no deals were done. During this period I watched the company closely and Rusty several times commented that the period presented once in a lifetime opportunities. None were taken even though the Oaktree deal was in place. Any insights into this would be welcome as deals were being done in this period, notably the Chevron deal in Appalachia.

[johnhemming] 29/10/2021 18:11

I remain a supporter of hedging. I would prefer a guaranteed good result rather than a random choice between a better result and collapse.

[1knocker] 29/10/2021 18:02

Lab, any wise purchaser will want to hedge. It will itself have gas to deliver at an agreed price, not at spot on the day of use! Year on year, it will probably pay its supplier a shade more for certainty, as its profitability depends upon it having gas to sell at a higher price than that at which it purchases. In order to achieve a fixed (hedged) price, it will need to contract to purchase an agreed quantity. If it fails to do so, it will be required to pay a penalty for gas not taken. That suits the producer. All commodities are forward sold, including the crops, Unexpected demand and excess production are bought/sold at spot. Its the difference between business and gambling. When a producer makes profits and pays dividends of the scale and regularity DEC does, year on year, it is operating its business very well. I wish all my shares were giving me a gulag annual total return in excess of 10%

[lab305] 29/10/2021 16:28

Excellent article mondex. Agreed we had a decent year for one year when gas prices were low but Diversified's heavy hedging strategy doesn't look so great now. Share price over the year has been poor especially as gas prices are up over 150%+.

[mondex] 29/10/2021 15:46

"Appalachia gas producers Antero, EQT, and CNX diverge on hedging strategies

Executives at three Appalachia natural gas producers Oct. 28 revealed three different takes on how to hedge for the uncertain market ahead.

Regaining investment-grade ratings was a stated goal by executives at all three producers in third-quarter earnings calls, with maximizing free cash flows and paying down debt highlighted as key objectives for the next several years. Hedging programs were touted as the pathway to accomplish these balance-sheet goals.
Executives at Antero Resources and EQT were bullish about where prices are headed and structured their hedging programs to have more exposure to higher possible future prices. An executive at CNX Resources, however, expressed a more cautious view, given the market's past volatility and the possibility that even relatively minor shifts in the basin's production could substantially alter the pricing landscape.

The past several years have brought immense volatility to regional gas prices, with Appalachia benchmark Eastern Gas, South – formerly known as Dominion, South – trading above $5/MMBtu in recent trading sessions and falling as low as 52 cents/MMBtu last October.

The Eastern Gas, South forward curve shows strong pricing for remainder-of-winter 2021-22, with expected prices falling into the $3-$4/MMBtu range for 2022 and $2-$3/MMBtu for 2023.

Antero Resources
Antero Resources management team laid out a strategy to hedge 50% of 2022 production and to be "essentially unhedged in 2023 on all commodities and going forward," CEO Paul Rady said in his opening remarks.

"We're looking forward to being completely unhedged to take advantage, obviously, of the high prices, and that will accelerate our de-levering," Rady said.

Part of the company's comfort with greater exposure to the market and confidence in capturing higher prices can be attributed to its sizeable firm-transportation portfolio, which Rady said allows Antero to sell 100% of its production out of basin into more premium markets.

In light of a difficult legal and permitting environment for pipeline development in the Northeast, takeaway capacity remains a risk to Appalachia basis spreads should production increase at a faster pace than pipeline capacity.

CNX Resources
CNX expressed the most conservative philosophy of the three companies on hedging, with 91% of CNX's gas production hedged for the fourth quarter.

Although CNX executives declined to expand on the details of their 2022-2023 planning, they were firm that the company remains committed to fuller coverage.

"We fundamentally believe that natural gas prices are impossible to consistently predict," CNX CFO Donald Rush said about the company's hedging strategy.

"You might guess right every once in a while, but not each and every year for decades. So we believe in the long run, you will catch any gas price upside in the forward markets. And over long periods of time, you will not miss out on gas price upside and we'll still protect the downside for consistently forward hedging over decades."

EQT
EQT took a middle path between Antero and CNX, hedging 65% of 2022 gas production and less than 15% of 2023 production.

Executives announced that EQT had recently restructured its hedge book for the fourth quarter of 2021 and full-year 2022 in order to capture more upside exposure to prices.

The company repositioned by "purchasing a significant number of winter call options at very attractive prices and strike levels that are currently in the money," as well as buying swaps in 2022 "at points on the curve we felt to be undervalued," CFO David Khani said.

EQT CEO Toby Rice expressed a bullish macro outlook for gas prices, positioning the company's new hedges as part of its strategy to tackle financial goals.

"Our reasons for hedging 2022 production at the levels we did while continuing to keep 2023 exposure open is simple: We believe that regaining our investment-grade rating and reducing absolute debt levels best positions EQT shareholders to fully capture these thematic, long-term tailwinds in the commodity," Rice said.

Production outlooks
All three producers emphasized their commitment to maintenance programs, eschewing intentional production growth to focus on paying down debt and returning cash to shareholders.

Antero CEO Paul Randy asserted that the company plans on keeping production flat.

CNX Resources revised its fourth quarter production guidance slightly higher, but Rush noted that the company plans on maintaining a "one rig, one frack crew" operation, with any fluctuations in production attributable to those teams' performances.

Earlier in the year, EQT grew its output through consolidation, acquiring Alta Resources and Chevron's Appalachia assets. When asked in Q&A about whether EQT plans on increasing production to take advantage of higher prices though, Rice said that EQT is "not contemplating growth."

Q3 financial results
For the quarter ended Sept. 30, EQT had a net loss of $1.98 billion ($5.55/diluted share) compared with a net loss of $600 million ($2.35/diluted share) in the year-ago quarter.

Antero had a net loss of $549 million ($1.75/diluted share), compared with a net loss of $536 million ($1.99/diluted share) in the third quarter of 2020.

CNX Resources had a net loss of $873 million ($4.05/diluted share), compared with a net loss of $354 million ($1.61/MMBtu) in the year-ago quarter."



hxxps://www.spglobal.com/platts/en/market-insights/podcasts/focus/102821-north-america-global-gas-markets-storage-us-canada-shale

[gary1966] 28/10/2021 09:05

Really pleased that 25% of 2022 production still not hedged but hedged price already averaging over $3. Expect further small dividend increases going forward as still targeting 18-20c pa.

[sogoesit] 28/10/2021 08:08

Good update. Execution (acquisitions and AROs) going to plan.
Let's hope we can get over the 120 line for a new channel over winter, with less hedging, but will depend on next acquisition (and therefore potential equity placing/raise when debt gets out of kilter).
GLA

[adg] 28/10/2021 07:14

Dividend raised 6% to 4.25 cents
Production and fcf figures very healthy

[1knocker] 26/10/2021 16:23

I hold all of them (have done for years) save Phoenix and M&G. They have all done very nicely for me save BATS, which unfortunately I bought before the bib fall a couple of years ago was complete - my mistake - but even on that one I am in the blue on a total return basis. I would suggest yo also have a look at FXPO. Huge dividends (including numerous specials), the only fly in the ointment being Swiss withholding tax which Houdini would not manage to get out of - the recovery process is more trouble than it is worth.