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DEC Diversified Energy Company Plc

-0.45 (-0.69%)
01 Dec 2023 - Closed
Delayed by 15 minutes
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
  -0.45 -0.69% 65.05 3,917,803 16:35:17
Bid Price Offer Price High Price Low Price Open Price
65.25 65.30 67.20 63.35 67.20
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Crude Petroleum & Natural Gs USD 1.92B USD -625.41M USD -0.6458 -1.01 632.4M
Last Trade Time Trade Type Trade Size Trade Price Currency
17:52:59 O 356,501 65.045 GBX

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Date Time Title Posts
02/12/202308:47Diversified Energy Company PLC - High Dividend Yield6,445
12/10/202114:40 The Paul Kavanagh Appreciation Society39
09/5/200709:38Disasters Emergency Committee: Tsumani Earthquake2

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Diversified Energy (DEC) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
2023-12-01 17:30:4965.05908590.65O
2023-12-01 17:30:1264.7511,3347,338.31O
2023-12-01 17:30:1265.0525,21816,404.06O
2023-12-01 17:28:2465.177,4744,870.58O
2023-12-01 17:25:1665.06157102.14O

Diversified Energy (DEC) Top Chat Posts

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Posted at 02/12/2023 08:20 by Diversified Energy Daily Update
Diversified Energy Company Plc is listed in the Crude Petroleum & Natural Gs sector of the London Stock Exchange with ticker DEC. The last closing price for Diversified Energy was 65.50p.
Diversified Energy currently has 968,446,699 shares in issue. The market capitalisation of Diversified Energy is £632,395,694.
Diversified Energy has a price to earnings ratio (PE ratio) of -1.01.
This morning DEC shares opened at 67.20p
Posted at 26/11/2023 10:59 by carcosa
T34, Thank you for your interest in my comment. While I understand your eagerness for information, I strongly believe in the value of personal research when it comes to investment decisions. If you're new to this, there are several resources available online. I suggest starting with the company's website or the US SEC / EDGAR websites. Often just going back a few posts in the same thread also provides answers to current questions, which has the subsequent added benefit of not cluttering up a thread needlessly.

Once you have a basic understanding on where to access data then it will hold you in good stead for future research. Often posters write DYOR which contrary to popular belief does not stand for 'Delegate Your Own Research' or 'Delay Your Own Research' but in fact, 'Do Your Own Research'.

Skinny... great link :-)

Page 36, 87 and 122 are the relevant pages. Here are some extracts:

Because we may not pay any cash dividends on our ordinary shares in the future, capital appreciation, if any, may be your sole source of gains and you may never receive a return on your investment.

Although we historically declared dividends on our ordinary shares, in the future, our board of directors may decide, in its discretion, not to declare and pay dividends based on a number of factors...

Subsequent to our listing on the NYSE, while our Board’s evaluation of our ability or need to pay dividends will primarily remain a question of the foregoing factors, it will also take into account the performance of our ordinary shares, including relative to our peer group. There can be no guarantee that we will continue to pay dividends in the future on our ordinary shares.

We have not adopted, and do not currently intend to adopt, a formal written Company shareholder dividends policy prior to the consummation of this listing.

Now a lot of this could be attributed to legalise in the Form 20F. However the share price performance is clearly part of the decision tree regarding future dividend payments and having failed to increase the share price with an amazing yield there appears to be a pivot to drive the share price via other means.

Americans are not particularly keen on dividends so if the company really thinks the answer remains in share price appreciation then why have a dividend? I would therefore think that in a couple of years either the dividend remains as is but with a significant improvement in the share price, or if the share price remains moribund then cutting the dividend would suit the US market with eventual delisting from the LSE. Give it two years...

Also note that the Credit Facility covenants to be met prior to dividend payments. These are both operational and financial in nature meaning that if the Board consider taking on more debt or a large number of new leaking wells they may be prohibited from issuing a dividend. Stopping the dividend would be preferable to reducing company growth.
Posted at 22/11/2023 17:58 by aleman
It's not new but there are developments. Here are a few thoughts after a little reading.

It looks like there is LOTS of federal funding has already been passed to plug wells - over $5bn in funding to states and grants to operators - but the surge in financing has been thrown at an embrionic industry with lack of equipment and workers. The sudden excess of demand over capacity means they do the jobs that pay best in the market which will have risen in price and account for different numbers being chucked about.

DEC's defence will likely be that is is expanding plugging as fast as it can. It's growing plugging teams will gradually plug more but where they plug now will be driven by prices offered at state and private level. The limited number of plugging teams will naturally go where states or private companies offer highest prices, which will have been lifted by the a sudden flood of taxpayers' money into the market. DEC will likely not be plugging some its own wells where they are not easy to access or are not offered grants. The different actions at state govermenmt level in dispensing federal money - partly because of their own staff shortages with the right skills needed - seem to be distorting the market. Landowners in some of these areas will rightly feel aggrieved but if the plan is to get around to them when plugging teams are expanded sufficiently and/or when those states involved sort out their own inadequacies in dispersing funds, then I'm not sure how there is great fault with DEC. There's lots of money already there to get on with the job but it takes time to expand financial, administrative and physical infrastructure.

Again, there seems to be a lot of selective reporting going on but DEC will no doubt be making as much money as it can out of the sudden explosion in demand for its plugging teams. Private operators with grants available and at risk of prosecution will probably offer higher prices to plugging subcontractors than states that have older, more difficult, orphaned wells to deal with but nobody on the hook for them. Costs to plug and money available to do so will vary quite a lot from region to region. Why should DEC plug its own stuff if it gets offered more to plug someone else's. It already has legal agreements on some states for minimum levels of its own wells so any extra capacity there will chase the free market profit. Obviously potential fines in other states will make a difference but there are only limited numbers of plugging teams available and it's more of a case about which wells get plugged first until capacity expands. DEC will argue it is following court-defined minimum agreements and then following the state money and grants, doing its best in a confused new market. DEC is an easy target for journalists but it is states that look to have been slow to process funding and grants and put plugging specifications in place for pluggers to operate to, hopefully keeping out cowboys who will cause environmental damage.
Posted at 20/11/2023 17:29 by justiceforthemany
Diversified Energy Company PLC (LSE:DEC, OTCQX:DECPF) (DEC) is delivering consistent and reliable results and its shares are at a substantial discount compared to the oil firm’s American peers, according to analysts at stockbroking firm Cavendish.

In a note, following DEC’s most recent financial results released last week, analyst James McCormack retained a 150p price target – suggesting around 100% upside to the share’s current price of 73.45p.

McCormack highlighted a potential pathway to DEC securing a more competitive valuation as it heads for a stock market listing in New York.

“The board believes that the US listing will raise the group’s profile in the US, broaden the company’s potential investor base and increase its research coverage,” the analyst said.

“The dual list will align DEC with its US natural gas focussed peers and provide access to a larger pool of energy-specific investors, in turn providing an opportunity for DEC to narrow the valuation gap to its peers.”

McCormack added: “DEC trading at a c2.0x lower multiple to its US peers highlights the current dislocation and structural issues in the UK market, which are particularly prevalent in the small-cap sector … a listing on the NYSE could provide an opportunity for DEC to narrow this valuation gap.”
Posted at 17/11/2023 20:58 by aleman
The absurd US affection with high share prices is because the Dow is weighted by share price and not market cap so low share prices and the low weightings they bring are superficially linked to inferiority. Penny stocks will occasionally be assumed to be basket cases and overlooked by some. Note how heaviest-weighted UNH has about 3 times the weighting of APPL because its share price is 3 times as high - even though the APPL market cap is 6 times higher. It's a nonsense of an index yet many people, especially outside the USA, are unaware of its anachronism.
Posted at 16/11/2023 07:05 by garycook
16 November 2023


("Diversified" or the "Company")

Additional Listing on the New York Stock Exchange

Publication of Circular and Notice of General Meeting and Registration Statement

Diversified Energy Company PLC (LSE: DEC) announces that it intends to seek an additional listing of the Company's Ordinary Shares on the New York Stock Exchange (the "NYSE") (the "US Listing"). No new Ordinary Shares are being offered or sold in connection with the US Listing, and there will be no change in the total issued share capital of the Company following the US Listing.

Following its announcement on 5 October 2023 that the Company was no longer pursuing its previously communicated desire to list its Ordinary Shares in the US given the equity market dynamics, the Board and management consulted with their advisors, along with various US and UK institutional investors on alternative paths forward without the need of a structure incorporating a capital raise to achieve a US listing. After careful consideration of the feedback received, the Company has decided to pursue a direct listing of its Ordinary Shares on the NYSE. The direct listing achieves the Company's previously stated goal of a dual listing, without offering or selling any new Ordinary Shares. The Board and management believe they have chosen an approach that both supports existing shareholders and provides US investors the opportunity to more easily access an investment in the Company's Ordinary Shares.

The Board believes that the US Listing, in the near-term, will be beneficial for the Company and its shareholders for multiple reasons, including raising the Group's profile in the US. The Board expects that the US Listing will facilitate broadening the Company's access to high quality equity investors (including domestic US funds) and will also increase the Company's ability to attract a broader group of equity research analysts, as there are a comparable set of peer companies listed in the US which have a strong US equity investor base and are covered by a broad group of equity research analysts. The Board also expects that the US Listing will enhance the Company's daily trading liquidity and potentially provide it access to additional financing options which can be used to continue the Company's acquisitive strategy.

The Company will continue to be listed on the premium listing segment of the Official List of the Financial Conduct Authority and its Ordinary Shares will continue to be traded on the Main Market of the London Stock Exchange. Further, it is expected that the Company will also continue to be a constituent of the FTSE 250 index in the UK and the Board will continue to adhere to its standards of governance and corporate responsibility as required by the UK Corporate Governance Code.

Due to NYSE requirements, prior to the US Listing taking place, the Company will effect a consolidation of the Company's existing ordinary share capital at a ratio of one new ordinary share of nominal value of GBP0.20 each for every twenty existing ordinary shares of nominal value of GBP0.01 each (the "Consolidation"). Therefore, to implement the US Listing, shareholder approval is being sought to pass certain shareholder resolutions to (i) effect the Consolidation, and (ii) adopt new articles of association to allow for the settlement of trades in respect of the Ordinary Shares in the US and UK following the US Listing (the "Resolutions"). The implementation of the US Listing is conditional upon the approval of the Resolutions by the shareholders at the General Meeting. Further details regarding the proposed US Listing, Consolidation, the proposed new articles of association and the Resolutions are set out in the Circular.

Further to this announcement, the Company has posted a circular (the "Circular"), notice of general meeting and form of proxy to shareholders convening a General Meeting ("General Meeting"). The General Meeting will be held at the offices of FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD, United Kingdom at 1:00PM (GMT) on 4 December 2023. A copy of the circular and notice of general meeting will also be made available on the Company's website hxxps:// . Capitalised terms used but not otherwise defined in this announcement have the same meaning given to them in the Circular.

In connection with the US Listing, the Company has also filed a registration statement on Form 20-F ("Registration Statement") required for the US Listing of its Ordinary Shares for review by the U.S. Securities & Exchange Commission ("SEC"). The Registration Statement has not yet been declared effective. Subject to approval of the Resolutions at the General Meeting and certain other regulatory conditions (including the SEC declaring the Registration Statement effective), admission and commencement of dealings in Ordinary Shares on the New York Stock Exchange is expected to commence on or around 11 December 2023.

The expected timetable for the General Meeting, the Consolidation and the US Listing is set out below:

Event Expected Date/time(1)
--------------------------------------------- --------------------------

Latest time and date for receipt of 30 November 2023
Forms of Proxy and CREST electronic
proxy appointment instruction
1:00PM (GMT)

Voting Record Time for the General Meeting 30 November 2023
for Shareholders Close of Business (GMT)

General Meeting 4 December 2023
1:00PM (GMT)

Consolidation Record Time 4 December 2023
Close of Business (GMT)

Admission of Ordinary Shares (being 5 December 2023
the ordinary shares in the capital of
the Company following completion of
the Consolidation) to listing on the
premium listing segment of the Official
List and to trading on the London Stock
Exchange's main market for listed securities
and commencement of dealings in Ordinary
8:00AM (GMT)

Expected date CREST accounts are to 5 December 2023
be credited with Ordinary Shares in
uncertificated form(3)

Expected time and date for admission on or around 11 December
and commencement of dealings in Ordinary 2023
Shares on the New York Stock Exchange
2:30PM (GMT)

Expected date for the issue of DIs to on or around 11 December
CREST participant accounts to allow 2023
shareholders to continue to transfer by 3:00PM (GMT)
and settle their interests in Ordinary
Shares through CREST

Expected date for payment (where applicable) On or around 14 December
of fractional entitlements for Ordinary 2023
--------------------------------------------- --------------------------

Notes :
(1) All dates and times are based on the Company's current
expectations and are subject to change. If any of the dates
and/or times change, the Company will give notice of the
change by issuing an announcement through a Regulatory News
(2) Only those Shareholders entered on the register of members
at close of business (GMT) on 30 November 2023 or, if the
General Meeting is adjourned, on the register of members
at close of business on the day which is two business days
before the time of the adjourned meeting, shall be entitled
to attend and vote at the General Meeting in respect of the
number of Existing Shares registered in their name at that
(3) Share certificates in respect of the Ordinary Shares
following completion of the Consolidation will not be despatched
to Shareholders who hold their Existing Shares in certificated
form immediately prior to the Consolidation owing to the
short time between the Consolidation and the transfer and
deposit of certificated shareholders' entitlements to DTC
at the Effective Time (as described in the Circular). Any
existing share certificate(s) will be invalid. In the short
time period between the Consolidation and the US Listing,
should a new share certificate be required for trading purposes,
please contact Computershare Investor Services PLC on 0370
702 0151 and they will arrange for one to be issued to you.
For further details on your entitlements following completion
of the US Listing, please refer to the section of the Circular
entitled "Shares held in certificated form by Certificated
Shareholders" in Part III (Settlement and dealings in Ordinary
Shares following the US Listing).
Posted at 31/10/2023 17:03 by asp5
I have read a number of posts lamenting a raft of issues surrounding DEC including:

1) Management & execution of buybacks
2) Concerns over debt levels
3) Worries over the sudden departure of the CFO
4) Poor hedging strategy and how it is impacting profits
5) Risks associated with DEC's ARO commitments
6) Problems with purchasing assets from the market given the higher interest rate situation
7) Lack of communication from the company
8) Decline rate of the wells over time and impact to revenues over the longer term
9) Tanking of the share price currently and the current market perception of DEC

In my opinion, all the above issues and any others I may have missed, can be discussed and argued but are essentially irrelevent from a value investing perspective. What I believe makes DEC a compelling investment case for long term investors (those willing to hold till the end of 2027) are the following:

a) DEC has hedges in place for the next 3 years that secures the current dividend. Furthermore henry hub futures prices for 2027 are in the $3,5 - $4,8 range which if locked in would comfortably secure the dividend.

b) If I invest today (assuming in a SIPP) and DEC do not cut the dividend (as per hedge strategy & committed by the founder & CEO) by the end of 2027 my initial invest will have been repaid. Whatever the DEC share price at the end of 2027 (which is unknowable now, but should be above zero) will be pure profit.

c) None of the issues listed above impacts points a & b.

I think it was Warren Buffet who said the first rule of investing is not to lose money. The second rule of investing is not to forget rule 1. With DEC the risk/reward balance is heavily skewed in favour of investors who invest at these levels. The rest to my mind is frankly noise and those who can be patient should be well rewarded.

I continue to invest into DEC and am happy to constructively discuss the above logic (my time permitting). Good luck all and please ensure you DYOR.
Posted at 31/10/2023 14:56 by cassini
I'm wondering if the rise in interest rates hasn't just lumbered DEC with a bit of extra interest on its non-fixed rate loans, which apparently aren't more than 12% of their entire debt, but has changed the whole business model somewhat?

DEC started up in times of ZIRP, but those days are gone.

DEC's strategy was to acquire declining fields by a mix of issuing new shares and using their RCF, then to hedge most of their future gas sales to guarantee they could pay off their debts.

On the face of it, having 12% of debt in non-fixed rate loans doesn't seem to alter things fundamentally.

However, as it buys wells in decline, DEC's strategy is to continue to acquire gas/oil wells to replace declining production. There would be a run-off phase in the distant future, where presumably the share price would decline continuously to discount the falling worth of what was left in the existing wells, but that wasn't to be the case for a long time.

Now, interest rates have risen precipitously, so has the cost of borrowing therefore, so acquiring new assets going forward is going to hit the potential profitability of any new acquisitions as servicing the debt will be more expensive.

So, are we therefore looking at a step-change in DEC's business model? Is maintaining production by debt-funded acquisitions no longer a sustainable option, at least, not at the current dividend levels?

This either brings the run-off phase nearer or it hits the dividend. Hence the recent whackjob on the share price.

I expect this theory is full of holes but I put it out there for comment.
Posted at 30/10/2023 09:47 by asp5
Hi Scrawl, been busy with work, but just wanted to provide my thoughts re your post #6018

Firstly DEC operate two types of well, conventional and unconventional. It is the conventional wells which average ~21K to plug, while the unconventional wells are in the 40K-60K range. From memory a signiciant majority of wells are conventional with the minority unconventional (Unfortunately I do not have the time to validate. Does anyone have the numbers/references to hand for this??).

Conventional wells follow an exponential decline path before reaching a steady decline phase. The unconventional wells have a parabolic decline path (steeper) before reaching this steady decline phase. So more gas is produced in the early years. This skews both the production mix and decline rates. So even though there are only a minority of unconventional wells they represent ~45% of gas produced (p4 of the sustainability report from april 23).

When banks lend to purchase assets they will need an official reserve auditor to assess the wells. As I understand it, these numbers are used in the financial reports. So if the terminal decline rate is quoted as 9% this would be the decline rate prior to applying DEC's operational improvement techniques aka SAM which should have a meaningfull impact on the decline rate (as its their core competency - running wells more efficiently than others). Its a bit like the bank provides a mortgage based on their assessment of the current value of a house and not based on the plans you have to do it up and add value to it after purchase.

I treat the 4,5% decline rate assumption in the ARO as the long term decline rate, so only when a well is in the steadily state decline phase (for example after 15 years) and after SAM techniques have been applied. Just to underline this, in the previous ARO report, 75% of wells had a decline rate of under 6%, before SAM techniques applied (slide 9) which indicated the age & type of the wells purchased at that time and how the mix has changed since then.

Now in terms of capping capacity they have increased it from 40 in 2021 to 450 in 2023, thats a x10 increase in 2 years. DEC have committed to increase this further over the coming years. This should increase inline with the 3rd party plugging contracts DEC win. Given that DEC have 10-15 year agreements in place with the various states that sets a minimum plugging rate of 80 per year, DEC have considerable flexibility on how best to economically deliver on ARO for the first 10-15 years.

I do not think the ARO is behind the reason of the CFO's departure. I suspect it is more related to the US listing, and how the debt has been financed/managed and dropping the ball when it comes to creating financial headroom for continuous acquisitions that the business model is founded on. I think the previous CFO simply messed up and Rusty has the finance background to call it out and solve it.
Posted at 25/10/2023 21:18 by asp5
scrawl, you are correct that the previous ARO supplement assumed the need to have an ARO sinking fund. However as lomand mentions in the latest ARO, DEC believe it can be covered by operational FCF. The basic logic is as follows (using approximations to keep things simple):

1) Average cost to plug a well ~21K and with ~70K this means ~$1,5B cost to plug all
2) Most wells (~95%) are to be plugged from year 10 (after the ABF financing repaid)
3) Allow 30 years to do this, then ~2200 wells would need to be plugged per year
4) Yearly cost would be $21K x 2,2K = ~$46M per year including in the 30th year
5) Clearly cost inflation will impact cost to plug over time, however likewise the cost of the service DEC provides to 3rd parites will increase over time so some netting out effects will take place. Also optimization efforts / technology improvements may also help to mitigate cost iflation.
6) The long term decline rate is assumed to be 4,5%, which would mean in year 30, revenue (assuming constant gas price) would be 25% of current levels.
7) The latest First Berlin report estimate FCF for 2023 of ~390M. So in 30 years it would be 25% of this level (~98M FCF), more than enough to cover ARO.
8) Now is a 4,5% long term decline rate reasonable? Well back in 2017 when DEC only had a mature portfolio the decline rate was between 3%-5%. The prior ARO report had 50% of the portfolio at a 4,5% decline rate so it is definitely not unreasonable. Clearly the current decline rates are skewed by recent acquisitions which contain many non-mature assets, which will settle down over time and especially by year 10.

The above provides the basic logic why ARO will be operationally expensed. However, I think the risk is even lower.

1) There are ~2+million orphaned wells in the US. Funding has been passed to start the plugging work and DEC have already won bids for this.
2) Now if DEC maintain a 25% margin, they should be able to generate net revenue of ~$5K per well. So for every 4 wells they plug for 3rd parties, they are able to plug one of their own wells at zero incremental cost.
3) If DEC plug a cumulative ~275K 3rd party wells starting in year 10 over the next 30 years (~9K per year) then DEC's ARO costs would be fully covered. This would represent ~15% market share of the orphaned wells.
4) Now clearly this is a highly positive assumption, but I do see a scenario where the real exposure of the ARO is significantly less than what is currently assumed. However this will only become clearer in a few years.
5) There are also other mitigating assumptions that would impact the ARO exposure, such as if the unit price of gas converges upwards to the level of the international gas price as export capacity comes online from 2025 onwards. Also I would assume there are significant opportunities to use some wells for CCS and generate fee income from this and avoid plugging costs altogher.

Based on above logic, I am fine with the assumption to expense the ARO and not set up a sinking fund. Happy to get constructive feedback. As usual DYOR.
Posted at 24/10/2023 12:05 by scrwal
Any US quoted company doing a buyback having given the criteria for the buyback would now be going at full speed buying back the maximum they could in the position DEC finds its share price at. The revenue is hedged so they know the level of cash coming in and should have a good idea of the FCF and the share price is well below 100p being the average price per share of the £97.4M to be used. It's a complete no brainer based on their own parameters and even if they believe there may be further price weakness so what as you can't be certain and if they don't buy now then if the price does recover then logically they cannot spend any more on buybacks. It's a mess entirely of their own making at this point in time.

The market will be confused about the mess and may well be expecting another snap placing based on what happened when the previous buy back was scaled back and we all know how the market reacts to DECs snap placings.
Diversified Energy share price data is direct from the London Stock Exchange

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