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@notrex: "AoC: You write a lot - but say little?"
AoC: 12 posts in last 30 days, 6 on DEC.
notrex: 344 posts in last 30 days, 69 on DEC.
Nothing else needs writing or saying.
AceOfClubs
The current cost of any new equity for DEC is not the result of a rapidly expanding dividend it’s purely a rapidly declining share price – the significance of the difference is huge. The last equity raise was at £21 a share so the current ongoing cost to the company of that was nearly half the 24% being written about today.
Payment of debt interest and capital is a fixed obligation not a management discretion. Cash paid out for BB’s or dividends is management discretionary expenditure.
Debt interest is paid out of pre-tax earnings, capital debt repayments and dividends out of post-tax earnings.
I think DEC should be focused on ensuring it can meet its debt obligations, particularly with NG struggling to $3 - in mid-winter.
AceOfClubs
@Andy144
We are informed the proceeds of ~$200m reduced net debt by ~12% - $200m is ~12% of $1,650m.
I do wish we had been informed if DEC was booking a profit or loss on the disposal and how much. "Value Enhancing" is a subjective and valuless statement when discussing £sd - the lack of clarity only brreds mistrust - at least with me.
AceOfClubs
All DEC asset acquisitions are labelled “Accretive” and all asset disposals “Value Enhancing” – we should expect no less from Rusty. The DEC RNS is opaque and leaves out a lot of basic information that should have been included. Why are virtually all the figures labelled approximate? Were the retirement obligations also transferred to the SPV or left with the operator, (DEC)? When did this deal close? I will assume it was at the end of December and the financial effects will be recorded in the financial results y/e 2023.
It has all the characteristics of old fashioned financial “window dressing.” In this case the benefits of owning the assets for the 12 months will be reflected in the P&L account and the benefits of the asset sale, right at the year end, in the Balance Sheet. Moving forward; DEC retains a 20% equity stake in the profitability of the SPV going forward but what value will that equity interest generate when the SPV is loaded with “Asset Backed Securitization” debt at a blended rate of 8.8%? Sale of 80% of the equity in the SPV generated only ~$30m: that values DEC’s remaining 20% stake at ~$7.5m – chump change. This indicates the assets are expected to generate very little surplus to the demands of the ABS.
We are informed that proceeds (net of transaction related costs – which are undisclosed but likely to be proportionately expensive) result in an approximate reduction in net debt of 12%. I calculate net debt at ~$1,650m immediately prior to the transaction, up from $1,505m at 30 June.
Lion Equity Partners is not a first or second line source of finance. It is not the type of operation to accept the rough end of any deal – its “fees” on any part of the transaction will not be cheap. It looks for “Businesses experiencing financial, operational or industry-driven challenges”: which apply to DEC?
Happy and prosperous New Year to all. AceofClubs
"DEC will use this opportunity to prove the great work they have/are doing on the ESG topic. "
Other opinions on DEC's ESG credentials are available:
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwj8yqSiz56DAxUSUUEAHdyQCF0QFnoECBsQAQ&url=https%3A%2F%2Fohiorivervalleyinstitute.org%2Fwp-content%2Fuploads%2F2022%2F04%2FDiversified-Summary.pdf&usg=AOvVaw31nT810THcgBi2S78cOHYv&opi=89978449
This report is dated April 2022 so the issues surrounding DEC are not new and comes from knowledgeable people, on the ground, where DEC has operated for years.
The very recent foray by DEC into the well capping business leaves them with miniscule resources compared to their challenges.
DEC is a small operator in the US NG business by production (estimated at 15% of Marcellus Basin output), even smaller in the well capping business (think Halliburton, Baker Hughes et.al). The only area it dwarfs its competitors is in the sheer number of wells it is ultimately responsible for. That may not be a comfortable place to be longer-term and now has raised DEC's profile to an uncomfortable degree short-term.
AceofClubs
FYI.
https://seekingalpha.com/news/4047836-entain-is-seen-potentially-selling-betmgm-stake-to-mgm-resorts
https://seekingalpha.com/news/4047176-entain-expected-to-add-activist-ricky-sandler-to-board-report
I do hope holders are not sold out cheaply - but with no respected CEO and the never ending list of "compliance" issues it could happen.
AceofClubs
Biden, Trump - mere also-rans in the dangerous idiot stakes.
The undisputed World and Olympic champion - Slick Willy Clinton.
His list of trophies:
Gramm-Leach-Bliley Act - which repealed the Glass-Steagall Act
Commodity Futures Modernisation Act - exempted credit default swaps from regulation
Amended the Community Reinvestment Act 1995 - which forced banks to mortgage the un-mortgagable.
The above gave us the 2008 financial crash.
His crowning glory: US-China Relations Act 2000 - the effects of which have raised China to the position of pre-eminent World Power.
AceOfClubs
Dear Ms Blanc,
The ESG credentials have been highly polished and loudly proclaimed. However, there appear to be a few other issues worthy of your attention on the analysts' AVIVA scorecard (please see below).
This shareholder would appreciate some effective management attention to them.
Thank you.
AceofClubs
Summary
1.) Overall, the company has poor fundamentals for a medium to long-term investment strategy.
2.) From a short-term investment perspective, the company presents a deteriorated fundamental configuration.
3.)The company has a good ESG score relative to its sector, according to Refinitiv.
Weaknesses
As estimated by analysts, this group is among those businesses with the lowest growth prospects.
The company sustains low margins.
For the last twelve months, the trend in sales revisions has been clearly going down, which emphasizes downgraded expectations from the analysts.
For the last 12 months, analysts have been regularly downgrading their EPS expectations. Analysts predict worse results for the company against their predictions a year ago.
Sales estimates for the next fiscal years vary from one analyst to another. This clearly highlights a lack of visibility into the company's future activity.
"I suspect there's a number of mediocre, white men on here!" Lost the argument, wheel out the denigration of those with a different view.
I am not sexist at all, I currently work for a female boss for whom I have the greatest respect: because she is good at her job. My wife is a full time Clinical Medical professional whose work I value much higher than mine and that is reflected in our priorities.
I used the word fragrant as a juxtaposition to the stance of how dare anybody think Amanda Blanc could possibly practice discrimination - and then boast about it: she can and she does.
AceofClubs
"So it's not discriminatory for old white men to get a job SIMPLY because they attended the same public school as somebody who is doing the hiring? Right got it! "
It is a bit sad when somebody is reduced to setting up an Aunt Sally and knocking it down to further their argument. One has to assume a certain level of competence in the AVIVA recruitment process for senior roles that SIMPLY attending the right school no longer secures the role. It shouldn't need the intervention of the fragrant Amanda to ensure that. However, she will intervene if the preferred candidate fails the Amanda sniff test, white, male, - possibly something not right here! If she isn't going to black-ball anyone why intervene?
I have explained precisely, in just a few sentences, why the practices at AVIVA are discriminatory and aimed at a defined cohort. if understanding that is beyond you I can offer no further assistance.
AceofClubs
All she said was: "SENIOR hires of WHITE MEN are signed off by her OR the head of HR because she wants to make sure that the process followed for that recruitment has been diverse, has been properly done". So that means ensuring that the job was open to everyone and not just the OLD, white men who went to the right school.
Amanda Blanc stands condemned by her own words as discriminatory on the grounds of race and sex, to which her defenders now appear to have added age and attending the wrong school!
The only otherwise successful applicants who run the risk of being black-balled by Amanda Blanc are white men: possibly too old, wrong school tie. Wrong, wrong and wrong again.
AceofClubs
It is now apparent that AVIVA has the highest paid HR assistant in the UK and possibly worldwide. If only she was fulfilling the role she was employed to do. Where are you BoD?
AceofClubs
The fanbase of DEC appears to be growing ever more desperate to explain the decling share price - it's been everything else in the past few weeks so no surprise it is now described as yet another "victim" of Brexit!
"It just seems that most of this has its routes (sic) in Brexit." But maybe not: "I don’t want a Brexit debate as it could just be coincidence. "
The DEC financial modelling is based on two major assumptions: 1.) a $4.66 Nymex strip for NG over 10 years - then rising to $4.91. 2.) A 4.5% annual decline rate in the production output of their existing wells for their whole life. If you believe both of those assumptions you will be a very content holder, the dividend is safe and the market is wrong. If these assumptions prove to be optimistic then the Free Cash Flow collapses and the first in line will be the dividend.
A less immediately pressing issue is well retirement costs. DEC's assumptions and declared experience to date are circa $20,000 average per well. All of the third party evidence shows much higher costs - but DEC could be super efficient in this process?
AceOfClubs
Rob Wood - CFO:
Share sales since November 2021 have realised £2,255,109 - buys total £24,000. CFO's can usually add up.
AceOfClubs
Decent performance again in the current macro climate. A minnow in the asset management sphere - it's a pity they don't get a chance to show what they could do with 3x the FUM. So much in the hands of serial non-performers like AVIVA/M&G/STJ and the clearing banks.
AceOfClubs
Https://seekingalpha.com/news/4037390-walgreens-boots-close-to-5b-pension-deal-report
Always very wary where both parties to a strictly financial deal declare it's profitable for them, it can take decades to find out who was right.
AceOfClubs
Many thanks Andy414 for the tip on those big blue letters and numbers on the left of each post - who would have guessed it!
I take it from your use of the Royal "we" that behind your handle lies the Duke of YorK? Only joshing! I'll let you get back to Sarah now.
AceOfClubs
Comparing where DEC is at 30 September (or Currently) 2023 with 2022.
Exit Rate of Production (Mboepd) 2023 - 134.4 2022 - 144.0
Realised Prices ($Mcfe) 2023 - $3.46 2022 - $3.65
Adjusted Operating Cost Per Unit ($Mcfe) 2023 - £1.63 2022 - $1.63
Current Liquidity ($Millions) 2023 - $135 2022 - $400
Make your own judgements.
AceOfClubs
Good results in the macro climate of the past 6 months. A well managed business under private investors radars so very little interest on LSE!
AceOfClubs
"yet again,certain traders.fund managers etc had advanced knowledge of an RNS"
It's not a Regulatory News Statement. It is a meaningless piece of PR puff generated by a self-appointed, self-important PR company called Unicepta.
Anybody who thinks this can move share prices.....
AceOfClubs