Share Name Share Symbol Market Type Share ISIN Share Description
Diversified Energy Company Plc LSE:DEC London Ordinary Share GB00BYX7JT74 ORD 1P
  Price Change % Change Share Price Shares Traded Last Trade
  -1.50 -1.32% 112.00 6,743,793 16:29:51
Bid Price Offer Price High Price Low Price Open Price
111.90 112.00 114.70 108.80 114.70
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Oil & Gas Producers 745.06 -407.38 -30.32 953
Last Trade Time Trade Type Trade Size Trade Price Currency
17:21:26 O 32,962 110.7223 GBX

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Date Time Title Posts
25/6/202223:13Diversified Energy Company PLC - High Dividend Yield3,014
12/10/202115:40 The Paul Kavanagh Appreciation Society39
09/5/200710:38Disasters Emergency Committee: Tsumani Earthquake2

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Diversified Energy Daily Update: Diversified Energy Company Plc is listed in the Oil & Gas Producers sector of the London Stock Exchange with ticker DEC. The last closing price for Diversified Energy was 113.50p.
Diversified Energy Company Plc has a 4 week average price of 108.60p and a 12 week average price of 108.60p.
The 1 year high share price is 129.20p while the 1 year low share price is currently 94.40p.
There are currently 850,548,478 shares in issue and the average daily traded volume is 3,495,653 shares. The market capitalisation of Diversified Energy Company Plc is £952,614,295.36.
asp5: Despite the dilution from various equity raises since 2017 IPO - DEC share price has moved from 0,65p to ~1,18p now an 81% uptick over 5 years or ~16% pa. The fundamentals for at least a similar share price increase are clear - in fact analysts currently have share price targets that validate this. Add in the current 11% div then DEC provides a realistic and conservative ~27+% pa return opportunity over the coming years with low downside risk. Hedging is a core part of delivering this with DEC having made this clear from before their IPO till today (see my previous post). Given the economic env we are entering (high inflation, increased interest rates, dollar strength etc.), the value of these hedges becomes even more important as it is the mechanism that allows DEC to secure financing & grow. In short if you like these returns then you have to accept the hedging it is not an optional extra. Otherwise the only options left are to convince the board to change strategy (good luck with that) or go invest elsewhere.
asp5: Currently Bitcoin down over 10%, FTSE 250 down over 2% and pound now below 1.22 . Cannot think of a better share to own right now - real assets, with real cashflow that is protected providing a real return vs inflation with plenty of dry powder to make accretive acquisitions. DEC share price has held up well (relatively speaking) over last 6 months.
asp5: Fully agree lomand. The last equity raise was in May 21 which raised $225M but represented 20% of the Company's existing ordinary share capital. That's a sizeable dilution (even though acquisitions were accretive). It also built on top of previous equity raises in 2018 & 2019. Given DECs model relies on acquisition, I have been impressed with management pivoting towards an ABS approach to secure capital rather than an equity raise approach especially given the share price response to the last raise. I strongly believe the old capital raising strategy plus all the sustainability related topics are still hanging over the current share price. Its only been over 12M or so since that last equity raise and even more recent since the Bloomberg articles. Once DEC demonstrates its ability to grow in a non-dilutive manner via actual results and releases its first sets of independently audited sustainability reports then a lot of the drag on current share price performance will be removed. Its very difficult to say when that will be exactly, however as many have mentioned we are being paid handsomely via the dividend while the penny drops and the share price re-rates. I would also add, given the hedges being taken out (wisely in my view) - even if a significant recession/downturn occurs with the associated demand destruction - DEC will not be materially impacted. This is a great from a risk and shareholder perspective.
asp5: Cenkos are predicting FCF to grow ~32% in 22 to $327M (from $248,5M). This does not factor in the acquisitions that are planned which should increase this further. DEC is in deep value territory in my opinion and I would not be surprised with further target share price increases. A lot of market factors are also supporting an increase in the DEC share price. It is not possible to time any correction upward in share price however over the last 6 months the share price is up ~20%. Add in the dividend of ~11% and returns compare very favourably. Huge amount of upside potential from here in my opinion. The beauty is DEC's model allows this growth to be maintained systematically for many years to come. So real multi bagger potential if they continue to execute as they are doing.
spangle93: Bluemango While elpirata gets his thoughts together, I'd offer a view as I hold both. It's simplistic to look at "the oil and gas sector" as one homogeneous group of companies seeking to make shareholders a return through investing capital to develop this natural and necessary resource. It's fair in some senses, for example, the attractiveness of the sector depends on the global price for oil, and the price companies can get for gas in their respective regions However, in reality, there's a wide span of risk. At one end of the scale are the prospectors - explorers who secure licences in virgin territories and seek to do remote sensing and background work to attract partners to pay for an exploration well. These companies can make investors lots of money if they hit pay, but as seen in EME in the last couple of weeks, it doesn't look pretty when such wells aren't successful. At the other end of the spectrum, there are companies that have production generating cash flow, and which use this cash to seek to manage the decline of existing assets rather than deliver new ones. They have less downside risk, and many pay dividends, but conversely, they aren't going to go up 4-fold at 8.01am after reporting a discovery. DEC is at the extreme edge of the spectrum, in that it doesn't drill new wells at all. You could even view it as a type of utility. The fate of one single well has no bearing on the share price when you operate thousands! It hedges the sale of much of its production at prices that more than cover its operational and corporate costs, so the dividend is as secure as could be imagined. I3E is towards the same end. Two years ago, it became a player in the west Canada sedimentary basin by buying two producers, and has added a third tranche of assets from Cenovus. So like DEC it has grown through acquisition and now has a large land position, and operates many wells that throw off considerable cash at these elevated product prices. Both also operate some infrastructure that provides revenue from third parties. Where it differs is 1. It says it will pay dividends at 30% of FCF, so these could fall if there is a marked drop in product prices. 2. It pays dividends monthly rather than quarterly, in UKP. 3. Moreover it's listed on TSX as well as AIM, so there's no W8-BEN to complete and no withholding tax. The monthly dividend has just been increased - but it remains lower than DEC.... I think it's around 6% at current prices. 4. Its model is to drill wells in known area when the oil and gas prices are high, and to acquire cheap assets when the oil price is low. (edit) 5. While DEC is almost exclusively a gas producer, I3E produces roughly 15% oil, 35% NGLs and 50% gas Finally it has made discoveries in the Central North Sea in the past, and plans to appraise one of these discoveries in Q3, so there is an element of significant upside, should this well prove the field to be larger than currently booked. Either way this well should point to a development route for the discovery. That's just a brain dump - someone else can tell me what I missed, and what I've overstated.
asp5: A very interesting read - just highlights the huge potential upside for DEC and others producers if US gas prices converge to European levels. The current share price strength when markets are currently highly volatile is comforting to see. We are also expecting acquisition announcements over the coming weeks/months that should help to support share price appreciation. DEC share price is up ~12% YTD plus a div yield of ~11% (depending on purchase price) translates to a 22% return at present with plenty more upside potential plus a secure dividend that protects downside risks. The good thing is that DEC can keep following this growth model for many years to come.
ceaserxzy: The movement of dec share price in £ terms this year is actually mostly accounted for by the depreciation of £/$ so very little is reflected of the significant increase in NG price, which surely will be baked into hedges of income in future years. Just checked on google finance, over one year actually £/$ depreciated by 9% while dec price increased only by about 1%.
asp5: Cassini - on slide 26 of the 2021 final results presentation, DEC highlighted that 20 acquisitions totalling ~$2,3B have been made since IPO in 2017. These acquisitions were accretive and executed at good price points - in other words DEC did not overpay for these assets. However, the current share price puts DEC market cap at ~$1,25B (a near 50% discount on NAV as it were). It would take a share price of ~2,15 GBP (at current exchange rates) to value DEC at the level of assets purchased since IPO. I see significant potential for steady share price appreciation over the short to medium term especially given the recent announcements, fine tuning of the business model and progress management has made on execution.
asp5: Scrawl, again I am not sure I agree with your conclusions. In May 2020 DEC raised equity representing 10% of the issued share capital at the time resulting in ~700M shares outstanding. A 1,50 price target in Oct 2020 assumed a dividend pay-out of 40% of FCF and valued DEC at ~1050M GBP. Again in May 2021 DEC raised equity representing 20% of the issued share capital at the time. DEC today has ~850M shares outstanding. The current 1,50 price target assumes a reduced dividend pay-out of only 30% of FCF and values DEC at ~1275M GBP. This represents a 21% increase in the valuation of the company in spite of a reduced dividend assumption and is not in my view a sign of reduced enthusiasm. It would be higher on an apples to apples comparison. Turning to the dividend assumption, given that DEC has explicitly stated that the dividend will not be cut, the current dividend will cost DEC ~144M USD (850 x 0,17). Given the $419M EDITDA estimate - this puts FCF at ~328M USD meaning the dividend represents ~44% of FCF. So this 30% assumption clearly does not hold water. In addition to the journalism issue you raise, the share price has in my view been hit by the dilution based growth model which has now been changed to a securitization based growth model. This should get reflected in a higher share price in the not too distant future especially as DEC execute on the things they have said they will do.
asp5: scrawl - not sure I fully agree with your assessment. Agree this is a secure income play as hedges ensure debt and dividends are paid. However as DEC acquires assets then these assets should all things being equal be reflected in the share price i.e. EDITDA will continue to increase resulting in steady share price appreciation. Not fintech level growth but highly respectable growth. Just looking historically share price doubled from 60p at IPO to over 1,20p - very roughly 20% pa growth. Share price has been hit by negative sentiment on ESG topics, costs of ARO, dilution etc. which DEC have addressed. As this becomes evident then I expect share price appreciation to continue. When exactly this happens - who knows, however I feel these levels do provide an excellent value buying opportunity. The analysts covering dec have price targets in the range of 1,50 - 1,70 based on conservative estimates which I believe will be exceeded (see my previous post). Achieving analysts targets would represent a 30% - 45% appreciation in share price from where we are now.
Diversified Energy share price data is direct from the London Stock Exchange
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