Diversified Energy Share Chat (DEC)

Rrb, these clowns would much rather bask in the warm ignorance of their fiction - be it timelines. or accounts, the shorters, the democrats...greta thunberg - than deal with reality.

I mean, MrG, the DEC share price dropped by 24% immediately after DEC replied to the Committee, in a structured and factual manner (your words). Looks like the market saw something it didn't like when facts were provided to congress.

Asp1

Surely you aren't suggesting that maintenance cap ex be covered by anything other than cash? You mention, equity, debt and some cash.

if you are covering maintenance cost with debt or equity, they have another term for that, it is called a ponzi scheme.

Maintenance costs should be paid from cash.

2024, not 2014, lol.

'...GG the SP drop was due to a leak of a letter from politicians insinuating a problem at DEC. Followed by a shorter publication spreading a load of false information. All answered by DEC in a structured and factual manner...'

MrG, let's focus specifically at your last sentence, 'answered by DEC in a structured and factual manner'.

10th January 2014 DEC Share Price £11.14

10th January 2014 DEC issues reply to Congressional Committee

11th January 2014 DEC Share Price falls to £10,97, continues to fall until hitting £8.45 on 23 January 2024.

I'd say the reply may well have been structured and factual, so much so that the market sold off big-time on the letter, the DEC reply, rather than any rumour prior to that reply. I wonder why, MrG ?

'...GG the SP drop was due to a leak of a letter from politicians insinuating a problem at DEC. Followed by a shorter publication spreading a load of false information. All answered by DEC in a structured and factual manner...'

MrG you are lying. How does your timeframe of events fit into the reality of the share price decline, FACTUALLY outlined below ?

September 2022 - £26.00

9th February 2023 - Tanos II Deal Announced. The fix is in, and is exposed by me on this board.

March 2023 - £19.00

September 2023 - £17.50

March 2024 - £9.50

September 2024 - £8.50

October 2024 - £9.00

GG the SP drop was due to a leak of a letter from politicians insinuating a problem at DEC. Followed by a shorter publication spreading a load of false information. All answered by DEC in a structured and factual manner. Too late to stop the short term damage. However, as time passes without any negative evidence, it only supports DEC side of the story. So, the SP will recover and anyone brave enough will have bought some bargain shares. I see this as a fantastic opportunity. You see it as a fraud. We are both entitled to an opinion 😁

'...Wow GG after a very pleasant break your back with a good dose of posting diarrhoea, off your meds I take it...'

No, just tired of reading all the lies and BS posted by you and the other mugs that frequent this board.

"Terry, nobody on this board is worth my time, I just have to copy and paste these days."

Then don't waste your time posting, perhaps you could take up howling at the moon but you probably do that already.

Wow GG after a very pleasant break your back with a good dose of posting diarrhoea, off your meds I take it.

Terry, nobody on this board is worth my time, I just have to copy and paste these days.

'...Rrb - I don't care about the previous dividend reduction. It's irrelevant to the current price...'

Pickedpeck, using your logic, you should concentrate on buying penny shares, as they have far less to fall to hit zero than pound shares, so will only lose you a penny per share at most, rather than a pound if they go under. 🙄

GG your a laugh a minute, this boards very own insult generator, bring it on

Try his one it will help you

https://rusttips.com/insult-generator/

First few tries and I get

"You bitter sycophant"

"You dogmatic flatulence"

"You childish snowflake"

Seems to remind me of someone.

MrG, every time I think this board has got as dumb as it possibly ever get, someone comes up with something even dumber than the dumbest dumbness (so far). I mean, let's take this little gem of yours :

'...DEC reduced the dividend because the SP dropped...'

Now, MrG, pray tell me, WHAT was the cause of the SP drop that resulted in the dividend cut ? 🤣🤣🤣🤡

Lol, Terry, you sad deluded little man, look at the FACTS. I think you'll find it's not just me that agrees (in most aspects) with Rrb. Let's just repeat this FACT that I even went to the trouble of updating to reflect the HUUUUUUGE rise🤣 this past couple of weeks :

September 2022 - £26.00

9th February 2023 - Tanos II Deal Announced. The fix is in, and is exposed by me on this board.

March 2023 - £19.00

September 2023 - £17.50

March 2024 - £9.50

September 2024 - £8.50

October 2024 - £9.00

Well here we have it Roll up Roll up for Big Fight

In red corner we have Rrb1981 and GG. In the blue corner Blackrock, Barclays, many other IIs, Seeking Alpha, Oakbloke, many other share analysts and a lot of posters on this board.

Place your bets, what are the odds will you get.

The Red corner have come out with a storm of AROs, Chapter 11, old news of dividend cut, insults and doggy figures all parried away with no effort from the Blue Corner. In fact the Blue corner is just ignoring all attacks totally unharmed and going forward without any resistance.

Rrb1981, so referencing my earlier post, let me take the points you raise and use the latest mid year results and run through the logic again.

From the interim results presentation (slide 11). The average hedge price was $3,34 per Mcf while costs were $1,68 per Mcf meaning a $1.66 per Mcf revenue net of costs (LOE, SG&A, transportation etc.) resulting in an average revenue per well of ~$7,1K pa (12x1,66x360 days)

Taking the 64 wells per tender, this equates to ~460K net revenue. Since salaries are covered in SG&A and the debt interest & repayment stays the same at ~250K per tender, leaving ~$210K per tender net of debt and costs.

If I take the $55M dividend pa this equates to ~$785 per well ($55M/70K wells) or ~50K per well tender ($785x64 wells).

Now lets address replacement costs re the 9% decline rate. DEC purchases average at ~x3 EBITDA and are all accretive. Using the 2023 EBITDA of $543, approx. $49M pa needs replacement ($543x9%) at a cost of $147M pa ($49x3). This cost will be met by a mix of debt, cash & equity. Lets assume 50%, 25%, 25% (however you can play with this). Meaning a cash cost of ~37M ($147Mx25%). This translates to a per well cost of $528 ($37m/70k) or a per tender cost of ~$34K pa ($528x64).

So DEC over the next 10 years can cover all its costs, pay off its debt, keep paying dividends and replace declines and is still left with $126k per tender pa of headroom ($460k-$250k-$50K-$34K).

In addition DEC has state level agreements in place for the next 10-15 years with a low level plugging rate (immaterial costs). On renewal of contracts, assume a higher linear plugging rate of 1750 (70k wells / 40 year remaining well life). This translates to ~$39M pa costs or ~$580 per well ($39M/~67K wells) or ~$37k per tender ($580x64)

In addition at the end of this 10 year period, DEC would still have ~$735M of new debt ($147Mx50%x10 years). Assume this is repaid over 5 years or $147M per year or ~$2190 per well ($147M/67K wells) or ~$140K per tender.

This means net revenue headroom per tender would then revert to ~200K per tender pa ($460k-$50K-$34K-$37K-$140K).

I believe this addresses the points you raised and covers your concern re “hand waving and saying, everything is ok” and this is without factoring all the potential upside revenue opportunities from next Lvl revenue , mid stream revenue, land sales, in fill drilling, carbon capture etc. I see DEC as a strong value play.

The consensus on this board is yes, you know you've had your investment spanked by Rusty, and yes, you know you've had your dividend spanked by Rusty, but the spankings are ok, keep them coming, and don't anyone admit that they don't actually like being spanked by Rusty, but here they are, red buttocked victims of their own inaction.

'...Sadly, the stock markets promote greed and profit based on untrue manipulation...

And yet, here you are, being untruly manipulated. 🤔

I mean, doesn't really matter does it, the share is down from £17.50 last September to £9.00 today. Suck it up, buttercup.

Rrb - I don't care about the previous dividend reduction. It's irrelevant to the current price.

Regardless of may of the very dubious maths you keep 'sharing' you skipped the 'why post only on this share?' question.

Your maths is still way off by the way, it has so many holes in it the Swiss would call it cheese.

Try doing a sensitivity analysis to gas price with forward consensus numbers. There is huge variation in FCF for relatively minor changes to sales prices achieved. Costs are (relatively) static, margin variable.

You are clearly posting with an agenda. The ARO is the spit all you kinda managed to stick to the wall, thing is it's sliding down already, it's unconvincing to anyone that can actually do sums.

DEC reduced the dividend because the SP dropped. 10% is still a leader in the segment so no need to pay 30%. If the SP rises, so will the dividend. In the meantime DEC will use the saving to cover debt, share buybacks and/or acquiring more assets. All adding value, rather than giving it away.

As for all the other conspiracy theories, they are just that, a made up load of rubbish. With every day that passes, it's plainly clear that the business model is as good as the day it was started. If the SP was based on fundamentals it would be 3x what it is today. Sadly, the stock markets promote greed and profit based on untrue manipulation.

Pickedpeck,

You see, it isn't a simple fact that the AROs are covered by earnings "over time". The reality is that DEC couldn't cover the $3.50/share dividend and was thus forced to reduce it by 2/3.

We've already noted that even DEC initially claimed to need a sinking fund in their presentations, then, conveniently removed it and began stating they didn't need it. We also noted that, their own model calls for dividends to begin declining as wells are abandoned. No one seems to like to discuss this but it is in DEC's presentation. No discussion on how the route density model collapses once they start retiring wells in Appalachia, both from the falling production but also from the high ARO cost.

The only way Rusty can keep dividends flat (and he only promised 3 years at the now reduced rate) is for him to keep making acquisitions and of course, cut the dividend to a "sustainable" level.

With natural decline at 9%, they need to replace about 76,000 mcf/day of production (855,000 mcf/d x 9%). The recent Crescent Pass deal was $106 million for 38,000 mcf/day of production. So, in essence, DEC needs to make 2 of those deals per year just to hold production flat. They even acknowledged as much during the Oaktree deal in saying it accounted for more than a years decline. In the case of that deal, it was about 1.6 years of decline and dividing the $377 million dollar price by 1.6 comes out to $234 million. It's easy to see that maintenance capital is e$200+ million annually.

'...Rrb1981 , I appreciate the more constructive tone (vs GG)...'

Please accept my apologies for treating the figures you've plucked out of mid-air and manipulated to arrive at a figure you deem positive enough to help you sleep at night *with the derision and ridicule they deserve*, asp1. 🤣

(Sorry was laughing too hard to type properly the first time round)

'...Rrb1981 , I appreciate the more constructive tone (vs GG)...'

Please accept my apologies for treating the figures you've plucked out of mid-air and manipulated to arrive at a figure you deem positive enough to help you sleep at nigh asp1. 🤣

Rrb1981 , I appreciate the more constructive tone (vs GG) . Do I take it that the revenue analysis is reasonable from your perpsetive (although it excludes land sale opportunities, in-fill drilling revenue, next lvl & midstream revenue)? I can look into refining the cost angle to cover some of the points you raise - but the logic will hold (that DEC can cover all its costs & more).

Buy now, but will update my post.