Diversified Gas & Oil Share Discussion Threads

[rolo7] 30/5/2020 08:41

has dgoc got to be on main market for a few months before going into fste 250 so to soon for june or is just a listing required?!

[pro_s2009] 29/5/2020 02:11

140p is a fair target at the moment.

[lab305] 28/5/2020 22:29

From today....
Diversified Gas & Oil will see increased investor interest as a standout dividend payer
It is rated as a 'buy' with a price target of 140p per share.

Diversified Gas & Oil PLC - Diversified Gas & Oil will court increased investor interest as a standout dividend payer
Diversified Gas & Oil PLC (LON:DGOC), as a dividend payer that’s imminently headed for the FTSE 250, will be the subject of increasing investor interest.

That’s the view of stockbroker Mirabaud Securities which today repeated a ‘buy’ recommendation, with an improved price target of 140p (from 135p).

It has been a busy time for DGOC after it stepped up from AIM to London’s Main Market, closed to asset acquisitions and is now set for inclusion in the FTSE 250 index.

READ: DGOC closes second asset acquisition
“The fact so much has been achieved during a period of unprecedented volatility in financial & commodity markets is demonstrative of the resilience of the business model and stability of the underlying cash flows,” Mirabaud analyst Tim Hurst-Brown said in a note.

“In a world where dependable income affords a scarcity premium, we believe that DGOC’s dividend credentials (11.3% CY21 yield) will drive increasing interest in the stock, alongside the Main Board move and FTSE250 membership.”

On Wednesday, DGOC announced the completion of its second recent asset acquisition – picking up 6,100 wells from Carbon Energy for US$110mln.

[gary1966] 27/5/2020 07:17

Well they’re not hanging around, second acquisition and financing tied up and both acquisitions at lower price than originally indicated. Roll on opening up shut in wells, cost synergies and well enhancement initiatives.

[gary1966] 26/5/2020 10:08

I acquisition done and 10 year hedging taken out to cover the loan that is being used to buy the business. Wells that were not taken into consideration when agreeing the price will be brought back online to boost returns and looks as though they can get more out of the existing wells. All looks good and look forward to the completion of the Carbon Energy assets.

[gary1966] 24/5/2020 18:31

One of the main criteria for acquisitions is that it sustains and increases the dividend cover and so the divi is not going to be cut here. Dividend and debt cover is the reason for extensive hedging, particularly at the time of acquisition and whenever debt is taken on. Debt increases in line with production and normally at distressed prices and so I am more than happy for them to continue to grow the business in such a prudent manner. Do not forget that they have been buying back shares and these are being used as part of the consideration. They were bought back at a VWAP below the recent placing price and so good business was done. 40% of their production is hedged for the next 6 years at a level that supports debt and dividend payments. I think you will struggle to find a more prudently run company out there but that probably comes from Rusty’s accountancy background.

[lab305] 24/5/2020 07:40

They have always promoted the dividend pointing it out in company presentations and taken pains recently to assure the market that the dividend is safe some time into the future . They would hardly do that and then lose all their credibility buy cutting it so the idea is a specious one.
Some think that their debt is too high but the recent article in the IC stated .....
"Looking at similarly-sized oil companies Tullow Oil (TLW) and Kosmos Energy (KOS), their net debt-to-cash-profit ratios were 3 times, and almost 4 times, respectively. DGO’s net debt-to-cash-profit ratio was 2.3 times as of 31 March."
So even if you don't rate the IC facts are facts and on that metric debt is not too high.
Where I will agree with dnb 368 is that the pound will continue to devalue against the dollar and so dividends will rise via currency as they have for the last two years. The latest acquisitions will also generate more cash and dividends will more than likely rise by December.
If anything is unsustainable here it is the share price which should be somewhere around £1.60+ and I continue to hope that new investors will be drawn to the success story in the FTSE250.

Daily Mail punt of the week yesterday . Sorry no link .

[arshadte] 23/5/2020 22:54

For my 2 pence worth.

I'm only investing my money in this stock for the dividend, it's a bonus if the share price increases.

If I was looking for growth there a plenty of better companies out there. If the dividend is cut many like me will leave.

[dhb368] 23/5/2020 22:11

They said that about RDSB until even they realised that borrowing to pay a dividend was not sustainable. I acknowledge that DGOC is a different animal but income is no use to anyone if it comes at the expense of capital with the exception of those looking to drawdown from a pension. I just think the balance is wrong at circa 10% dividend but appreciate I am in the minority here.

[fardels bear] 23/5/2020 21:43

Absolutely.

[lord gnome] 23/5/2020 21:25

Can't agree with you dhb. I invest here for income pure and simple. This is a top quality income play. I really don't want my dividend cut. The company does not appear to have been hampered by a lack of money if the right acquisition has come along. Debt is manageable although slightly higher than I would like. Cash flow is more than adequate even at low prices. Nothing is broke. Nothing needs fixing.

[dhb368] 23/5/2020 18:17

Spangle. Unfortunately for some whilst I do expect the share price to rise I would also like the divi to halve to around 1.25p/qtr. I think that this would still be an acceptable yield for ftse350. Last year the choice for management was to sit on cash or return it to shareholders as asset prices were high. Now we have a potential fire sale of quality assets I would rather DGOC spent the money on. I am uncomfortable with borrowing millions of $ to pay a dividend. I would like to be correct but I rarely am :)

[fardels bear] 23/5/2020 18:17

There are many oil companies out there that don't pay a dividend, but prefer to use the money for acquisitions. Not many of them actually acquire anything. Shareholders understandably can get impatient, and actually like something that's a bit different.

[spangle93] 23/5/2020 12:03

DHB: "I do think that there will be a significant short-term drop in the dividend yield and would prefer that to happen and for them to use that on acquisitions"


It's a valid opinion. I would counter that if they moved to the main market and then promptly reduced the dividend, it would alienate a whole raft of institutional investors that are finally able to include DGOC in their income portfolios.

Of course, if you meant that the share price is about to double, thus creating a signficant drop in the dividend yield, then I'm loving what you're saying. ;-)

[fardels bear] 23/5/2020 09:28

No you're not wrong about the calculations.

[lab305] 23/5/2020 06:43

arshadte depending on your tax position and if you have enough then the foreign tax already paid is taken into consideration against dividend tax.

[arshadte] 23/5/2020 00:32

Thanks for all the replies.

I don't think I'm wrong about the calculations. 3.5c x 100 = 350cents = $3.50

I've already filed a W8-BEN as I own US stocks already.

In terms of the withholding tax, do we still have to pay income tax on the dividend even though it's been taxed already ?

[fardels bear] 22/5/2020 22:15

And you need to file a W8-BEN I believe to get the div in a sipp gross if withholding tax. And also to get the reduced US-UK treaty reduced rate of 15% withholding tax in non-sipp accounts.

[gary1966] 22/5/2020 22:06

If outside a SIPP you need to deduct withholding tax as well.

[fardels bear] 22/5/2020 22:00

Don't forget the withholding tax on the div.

[dhb368] 22/5/2020 21:38

Edit: Doh. Meant 10%

You are buying and valuing on a weak £, I suggest allowing for a 10% devaluation of the $ at least.

I do think that there will be a significant short-term drop in the dividend yield and would prefer that to
happen and for them to use that on acquisitions.

[arshadte] 22/5/2020 20:42

Hi,

Thanks for you reply.

So are you saying if you had 100 shares it would be $3.50 per quarter

equiv to $14 a year. So that would be £11.46 using today's exchange rate.

Thanks,

TA

[simplemilltownboy] 22/5/2020 20:08

Divi paid on 26 June and every 3 months thereafter

[simplemilltownboy] 22/5/2020 20:08

HiDividend is secured by the hedging programCurrently pays 3.5 cents per quarter yield is circa 10%Nothing is guaranteed, however this in my opinion is relatively safe for at least 6 quarters Hope this helps

[arshadte] 22/5/2020 20:05

Hi,

I'm seriously thinking of investing here.

However I would like to know the following questions ?

1. Is the dividend guaranteed ?

2. How much is the dividend ?

3. When is it paid ?

Thanks in advance,

TA