Member Info for Andy144

This is a total con job. HUR has more cash in the bank than this deal and all it has to do is pump oil for 5 years. Shareholders on the other hand 'might' get more money than the initial dividends. I'll be surprised if the SP goes anywhere near 12p

Personally I would say it's a bit of a con. They are getting the company for nothing as there is more cash in the bank than the initial dividends. We don't know, as yet, what the conditions are.

Botak. I was with Schlumberger and Halliburton as a DD. You? A lifetime ago now.

Good point. I could well be wrong but the previous 2 buy backs (the last one very short lived) were funded with debt for the most part. I would gladly be corrected on this because at the time I could not find out how they were funded. (only that DEC never have much cash on hand)

Yes Botak. They are on strike 2 at the moment.

If you were paying 15.5% interest (the current SP dividend) and you could be paying it off with a 5% loan (or even, god fobid some actual retained cash!) why would you not be doing this? - I mean forget trying to make more deals, you would be hard pushed to make a better one than the above.

The dividend is now 13% after WHT of 15%. The dollar / Sterling exchange will make a difference for those taking the divi in sterling but it can work both ways.

With the current SP fall one can conclude 3 things: 1) the divi is unsustainable. 2) DEC's model is unsustainable. 3) the market has it completely wrong and this is a gift. 1 ans 2 are basically the same so take your pick.

Gas prices have increased from their recent lows but DEC continues to fall. I would like to see a statement from the company. They have gone very quiet. Share buyback really should be in full swing.

We have just hit the post Bloomberg article price of 95p. Hoping this might give a little support.

DEC selling off for 6 staight months. Looks like no II's interested in the 13% divi after WHT. If the divi isn't going to hold this up then it could go much lower I suppose.

back in August last year. I guess one should never underestimate how low a share can go. In the wider market a 31% drop might not be as bad as some shares. The falling gas prices notwithstanding, perhaps this sharp decline will eventually show management that dilution to fund asset purchases is a false game. Another aspect of that is that the II's who bought in at 105 will not be quite so keen to participate next time.
Finally, why isn't the company following through with the share buyback scheme which is still open? They could be saving themselves nearly 15% "interest" - as they obviously don't pay WHT!

I did the same type of calculation a year ago. If you assume 5% divi increase and 3% share increase the numbers look good. I used this calculator:
https://www.buyupside.com/calculators/dividendreinvestmentdec07.htm

There are issues: Share dilution being the main one, which really gives a kick in the nuts of any assumtions.

so far today. Which I think is the largest rise (out of very few rises recently) for some while. The increased credit facility is interesting in the light of the share raise. I also quite like the quote in the RNS that there is potential for further development of the latest aquisition. One assumes this means drilling, which could be third partied out should gas prices make it a no-brainer. It is a further asset if nothing else.

I am, at the moment, ever so slightly less annoyed.

In a very simplistic way I think of hedging as fixing your mortgage rate. You lock in for a certain period and rates may be higher or lower than your locked in rate but at least you know what you will pay and can budget around that.

Perhaps £1 is the floor at the moment. The recent discussions have been of a high calibre and it has been helpful. Cheers to all.

Thanks Damo. The numbers will probably vindicate the purchase at a later stage.

Let's hope these asset buyouts arn't just smoke and mirrors keeping us from seeing an underlying problem with the company's formula.

Well I guess the institutional buyers at £1.05 will scratch their heads and wonder why they bothered. Might well dip below the £1 mark if markets and gas fall more this week. If I was management I might seriously consider cutting the dividend and retaining some cash. A 14% dividend makes this share look like a bit of a basket case. What, one might ask, will actually drive this share forward? Because it certainly isn't deals like the last one, and it isn't the prospect of a high yield.

rdx. The SP will reduce by the dividend amount on the ex dividend date and this is a well known occurance when a company pays a dividend. The SP will also be affected by whatever other factors move the SP on that day. This is not a guess and not unique to DEC. The reason the SP will not go to zero is growth in the company. In an ideal world the company will grow more than it pays in dividends. If a company does not grow at all, and it continues to pay a dividend then yes, it will go to zero. Before that happens, of course, the company will cut dividends. This is all pretty much basic investing stuff.

"Also in 2ks we are all getting 3.5p dividend per share"

Yes, and the SP will reduce by 3.5p on the Ex Div date.

Agreed. I will also be reducing my holding if we get back into it's 120 + trading range. I thought this company was better than this.

Danger. What you say is perfectly fine and cycles are expected in the business. My point is that management, not prices of gas, have really dented my confinence. Would you be happy if they continually issued shares for every purchase and the SP stayed the same or fell? The divi would go up, but in that senario it would be an erosion of your wealth.

My main point is, and I suggest that the market might feel the same, is that management said they would be very careful issuing more shares for asset purchases after the previous debacle. They have now done this again with the last purchase. So will they do it again, and again, and again?

If they do, there is no point in holding this company in my view. Companies that continuously issue shares invariably head south continuosly. It doesn't really matter what divi they pay in this situaltion. It's a bit like hyper-inflation.

Looking rather like one now. There used to be a time, 4 years ago or so, when an asset purchase increased the SP. Not any more. I've always like the dividends but with the recent dilution, when I cannot see why any was needed, the SP is being eroded at the expense of the dividends. This is now starting to make no sense. If DEC's assets are as good and long life as they claim, there should be no real need to keep buying more assets with share offers. Just hold back the cash and use some debt if needed.

There is only one (good) reason, I can see, for issuing more shares recently; and that is that they have another deal in the pipeline which is going to use the debt facility / Oaktree.

The share issue has seriously shaken my belief in this company. They have until the end of the year. If nothing has improved I will be offloading my not inconsiderable holding.

Wishing everyone well.

1) This is not, by a long way, DEC's largest purchase so why the use share captical?
2) I thought they had credit facilities much larger that $250m
3) Why buy your own shares at £1.15 but not at £1.05?
4) What has happened to the funding partner (I didn't think that capital had been fully used)
5) I am sure management said they would be reluctant to use share capital for future purchases (after the last debacle)
6) I am well f***ed off with management.
7) read 6 above