Diversified Gas & Oil Share Discussion Threads

[nimbo1] 01/3/2019 15:43

yes I listened to the whole interview - its why I bought back in. At least one is paid handsomely over the next 6 months to sit tight and see if their next deal gives this price a boot up the backside. Plus there has been director buying around here etc. Still some overhang from somewhere clearly.

[shanklin] 01/3/2019 15:42

cfro

And indeed that so far they very much appear to have been practising what they preach.

[cfro] 01/3/2019 15:33

It is very comforting to know the management are so shareholder orientated.

In the presentation they categorically state:

"Returns are at the forefront of every decision"
"A strong balance sheet is integral to protecting cashflows"
"Pay dividends at 40% of free cashflow"
"Leverage no more than 2-2.5 times"
"Strategically acquire properties that provide outsized shareholder returns"
"Further retire debt and accumulate dry powder for the next transformative acquisition".

[nimbo1] 01/3/2019 13:45

market doesn't seem to love this story - but Im back in again. just can't make my mind up here but at least it often goes from here to 120 : ) and the next 2 dividends are v close now.

[mad foetus] 01/3/2019 13:19

'We re looking at acquisitions today that could have a double digit impact on our dividend per share'. At 45 mins.

[shanklin] 01/3/2019 10:53

Carcosa posted a link to the results presentation on stockopedia



Its 52 minutes in all with the last circa 10 minutes being Q&A with analysts.

[lab305] 01/3/2019 04:45

News Acquisitions Drive Significant Growth For Diversified Gas & Oil LONDON (Alliance News) - Diversified Gas & Oil PLC on Thursday reported significantly increased ...
Alliance News28 February, 2019 | 11:23AMEmail Form
LONDON (Alliance News) - Diversified Gas & Oil PLC on Thursday reported significantly increased financials after series of acquisitions during 2018.

The company has oil and gas assets in the "prolific" Appalachian Basin onshore US.

For 2018, DGO's revenue soared to USD289.8 million from just USD41.8 million in 2017, while pretax profit was USD261.8 million from USD29.7 million.

The company completed USD938 million worth of acquisitions during the year, helping production climb to an average 41,000 barrels of oil equivalent per day from just 6,600 barrels a day in 2017.

At the end of 2018, DGO's exit rate production was 70,000 barrels of oil equivalent per day, from 10,400 barrels at the end of the prior year. Cash costs fell to USD8.55 per barrel from USD10.74 per barrel.

The acquisitions also significantly increased DGO's reserves, which now stand at 474 million barrels and proven reserves at December 31 from 55 million barrels a year before.

DGO began quarterly dividends during 2018, and paid out a total of 11.23 US cents compared to 5.4 cents in 2017.

"These results reflect a year of rapid growth as the company continued to capitalise on opportunities in Appalachia to complete a number of material acquisitions consistent with our stated growth strategy," said Chief Executive Rusty Hutson.

"Despite the strength of these financial results, they only partially reflect the financial capabilities of the business going forward."

"DGO is now a substantial producer generating strong free cash flow that enables us to maintain a healthy balance sheet, invest in organic growth and deliver exceptional value to our shareholders through our reliable quarterly dividend," Hutson continued.

"The near-term objective will be to leverage the scale of our expanded footprint to extract maximum operating synergies and cost efficiencies. We continue to consider a robust pipeline of opportunities that fit with our operating profile and acquisition criteria."

Shares were 3.9% lower on Thursday at a price of 112.50 pence each

[lab305] 01/3/2019 04:42

Rusty Hutson said his US-based company, which is denominated in dollars, will see little negative impact of Britain’s exit from the European Union, and might even see an upside.



“I think Brexit is in some way benefiting us because we are dollar denominated. So a lot of the uncertainty around Brexit has not impacted us as much simply because our businesses is onshore in the US. It's not really relying upon anything in the UK,” he told City A.M.

His comments came after Diversified showed adjusted earnings before interest, tax, appreciation and amortisation (Ebitda) jump a massive 912 per cent to $162m (£122m).


This follows a year where the company made four acquisitions totalling just under $1bn, helping to push up revenue nearly 600 per cent to $290m. This year could be “as good, or better” for acquisitions, he said.

The company pushed up its production of gas, oil and natural gas liquids to nearly 15m barrels of oil equivalent, a 523 per cent increase.

Most notable was a more than 2,800 per cent rise in gas liquids production.

However, shares reacted poorly, dropping 3.85 per cent at just past midday to 112.5p.

Hutson said he is frustrated by the reaction from the market in recent months, especially considering its 9.5 per cent dividend yield.


“I feel like we’re very undervalued at this point. Our dividend yield, which we announced in December, a fourth quarter dividend of 3.4 cents, which was slightly higher than what consensus believe we would be paying," he said.

Robin Haworth at Stifel, said: “Our thesis on Diversified is that the gap to our 160p net asset value will close as the market gains comfort in the business model. This we would expect to take a period of time and a few clean sets of numbers following a number of acquisitions

[sogoesit] 28/2/2019 23:01

What’s the FCF here and, associated with that, what are “Gains on Bargain Purchase”?
Anyway, as I see it, 2018 was FCF negative and the year ended with $1.37m in cash.
Hmmm...
2019 should be better, FCF wise, unless our Rusty buys a bunch more assets... with the debt headroom! Something that is implied in the wording.
But the Gains on Bargain Purchases, a not insignificant amount, are not recurring imv. Take away that item (32usc/share) from stated EPS and 120p starts to look “full” as a valuation.
This must be where the risk lies, and probably what folks (the market) don’t like, albeit that the earliest debt maturity is 2023. But the picture can change rapidly if prices change!
Let’s hope the deleveraging continues apace too.

[bushranger] 28/2/2019 22:28

Echo what had been said re huge volume today. 23.5 million shares changed hands per London Stock Exchange. Very, very large sells gone through. My take is some large inst. taking advantage of the great results to sell off and take profits. I am ecouraged that despite such heavy selling the share price has not dropped that much. It actually has stayed within its holding range over the last few momths. I think when the seller/s are gone this will move higher.

[mo2550] 28/2/2019 20:49

Ref Market Watch (Drawing parallels to DGOC being "haves")You might have heard analysts and investors saying the U.S. stock market is in the "late innings" of the bull cycle.Tom Plumb, who runs the Plumb Balanced Fund, says instead that the market is "bifurcated" into "haves" and "have nots." The "haves" are companies that "generate tremendous free cash flow with recurring revenue streams," he said. (Free cash flow is cash flow after planned capital expenditures.)The "have nots" include slow growers, even if they are considered value stocks, and the cyclical companies that have been replaced "as the most important movers of the markets," he said in an interview Feb. 27.He made it clear that the "haves" are still where investors should look for profitable investments.

[poleaxe] 28/2/2019 20:16

xd for 3Q 8 march.

[podgyted] 28/2/2019 19:11

Have to admit I'm a bit sanguine about this.

With their startling cash flow (after Rusty and his team has put all the acquisitions together) then if the market doesn't recognise the value private equity will - never thought I say that but what the hey!

[podgyted] 28/2/2019 18:55

Something is definitely going on here with 22m shares traded today.

I'm just going to collect the dividends and watch.

[shanklin] 28/2/2019 17:57

deuchar

p25 of today's results presentation suggest DGOC have paid off $70m of debt over the last five months to end Feb-19. No idea whether this is accurate, as some of the numbers they have used have not seemingly been divulged in RNSes and I think they may mean over the 4 months since 31-Oct-18.

[deuchar] 28/2/2019 16:23

Thanks alotto

[alotto] 28/2/2019 15:03

The ratio equity to liability is around 1 to 1. That may explain what prevents the share price to raise

[shanklin] 28/2/2019 14:55

The last time I acted on what seemed a sustainable a yield over 9% was GAW in Jun-17 when the share price was below £10. It subsequently dipped below £9, before starting its ascent to as much as £40 at one point.

[deuchar] 28/2/2019 14:54

weird reaction to this morning's announcement

[mad foetus] 28/2/2019 14:51

Lots of stock suddenly moving

[shanklin] 28/2/2019 14:44

Thank you alter ego.

I have corrected the link so its to an RNS from 03-Apr-18 which includes:

"The Board remains committed to the stated dividend policy that the Company will pay not less than 40 per cent of operating free cash flow by way of its dividend."

They have also stated in page 31 of today's Powerpoint presentation that they have a progressive dividend policy.

So, per my earlier post, I guess they think that in some sense free cash flow is circa 25p/share.

[alter ego] 28/2/2019 14:29

Shanklin, your link doesn't work, try this one.



In fact the latest Q4 dividend is 3.4 cents but I'm unsure if that will apply going forward.

[shanklin] 28/2/2019 14:15

So, based on

...by paying a dividend of circa 3.3USc/quarter, i.e circa 10p per year, DGOC are saying their annual free cash flow could be as much as 25p/share?

[mo2550] 28/2/2019 11:27

Dipped nibbled too - fingers crossed patience will be rewarded - GLA

[lab305] 28/2/2019 11:18

Unsurprised by this reaction but disappointed. What do they have to do to gain support ?