Rusty, Running Out of Road?11 Mar 2026 10:52
The business model is undisputed, purchase always accretive assets with borrowed money or a debt/equity mix.
This relentless activity is meant to be for the ultimate benefit of shareholders – but this shareholder has experienced only declining dividends and share price. That is the past – but what of the future? Forget the Rusty narrative, what do the numbers, just published, tell those prepared to look to the future? All $ numbers (000’s).
The debt pile looms ever larger and more lethal. In a single year borrowings rose to $2,985,245 (+72%) from $1,735,573. and the interest liability from $124,954 to $225,941 (+81%). Weighted average, year end cost of debt rate rose from 7.2% to 7.6%. The cost of marginal debt rose to 9.95% (the nominal 9.75% Bonds were issued for 98% of face value). An obscure bond market demanding ~10% interest rates does not indicate a company considered financially stable and secure.
But what of it, you may well ask? Just look at all those accretive assets acquired, not just in the past year, but every year DEC has had a stock market listing!
At y/e 2022 DEC declared proven reserves of 5,050,177 Mcfe. and total borrowings of $1,498,166. At y/e 2025 DEC declared proven reserves of 6,082,483 Mcfe. and total borrowings of $2,985,245. In three years, borrowings have increased by 99.3% for the benefit of a 20.4% increase in proven reserves. Accretive – by what measure?
Look beyond the “management speak”, the “adjusted”, the “underlying”: it’s always the numbers that tell the true story.
Always DYOR and good luck - AceofClubs
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