Member Info for Andy144

I will run through this very simply for you then. I thought I had ealier but I guess it was too complicated for you.

You cannot tender ALL your shares. Just the amount EQUIVALENT to you divident entitlement. SO IF YOU HAD A DIVIDEND OF £100 YOU CAN TENDER ABOUT 10 SHARES. THAT'S ALL....NOT YOUR ENTIRE HOLDING.

So your argument about DEC being offered 47.58 million shares for tender is just plain incorrect. The most shares they will be offered is $42m divided by whatever SP they come up with. THAT'S ALL OK?? I guess about 4.2m shares, if all SH's tender their entitlement amount.

Your maths is completely flawed because you don't understand that you can only tender, basically, about 6.5% of your holding, NOT the whole lot....is this too tricky for you??

"

How many shares can $4.2m buy at 935p, can they buy the 10% of the 47.58m shares who elected to tender ? that would be 10% x 47.58m x 935p = £44.49m. Answer : No."

It's not 10% of 47.58 m shares fool

WTF

OK. lets say we both own DEC. you have 50% of the shares and so do I. You elect to sell your entitlement and I dont. I will get $21m in dividends. You will sell $21 million of your shares with a 5% premium.

That's about a simple as I can make it for you. Good luck with your GCSE's

I don't really know what you are driving at. Gavster.

Some proportion of $42m will be spend on shares tendered. The rest will be paid out in dividends. We don't know how much it will be. Any BB is good news even if it was 10% of the $42m.

Javaman.

"So . . . .If you tender 100% of your shares - DEC will buy them all off you and you will lose the lot - period!!!!! "

Your post contains many errors. The above is very misleading.

You can only tender your shares upto the equivalent of the amount of dividend you recieve from your whole holding. So, if you were getting £100 dividend for your entire holding you could tender about 10 shares to be sold at the premium. You would not get any other payment in respect of your retained holding (so no dividend on the rest). That's it. nothing more. Not complicated.

Many hundreds of companies have short positions. It's not an issue if the company in question is in basic good health. Even companies like Rightmove have 2% short interest. The chances of Rightmove failing are basically 0%, the shorters are just betting on short term weakness.

If you had 100 shares you would get about 65 quid in Divi. This would allow you to sell 7 shares or there abouts at 105% of the 5 day average SP from the dates given.

What is hard to understand?

Discount to US price. The big boys must be able to exploit that somehow.

The US market is very overpriced and has disjointed itself from fundamentals and reality. It is propped up by 7 stocks and endless Fed money printing. One only needs to look at the German Dax and Dow. They are basically identical. How can to completely different stock markets track each other? Germany is busy de-industrializing and is in recession. The US is the opposite. The answer? Endless central bank funding which ends up in the stock market.

DEC would fall with any stock market crash but produces something that is needed so would ride it out.

EI.

Great post. Articulate, grammatically excellent, well reasoned, insightful.

In most circumstances, loaned stock cannot just be called back on a whim. If it's a small outfit then they can borrow off a broker for an indefinite period. If a larger amount is borrowed from another II there will be a negotiated time period. There will also be an amount set aside for margin.

It is highly unlikley there will be a short squeeze as there is too much free float. You only get a squeeze if there is a shortage of shares and the short seller cannot actually buy back the shares they have borrowed. There should be a natural bounce in SP if a short seller buys back in, but this is not a squeeze.

Perfect Storm

BKV, short for Banpu Kalnin Ventures, began operations in Pennsylvania in 2016 with a plan to buy additional old gas fields from big oil companies, invest only enough to hold production steady, wait for prices to rise and – only then – invest in expanding production.

The moment appeared to arrive in mid-2022. As U.S. gas climbed to over $9 per thousand cubic feet, BKV's Kalnin launched a costly and ambitious expansion plan.

In July that year, he closed on a $750 million deal for Exxon Mobil gas properties in North Texas. The same month, he acquired a Temple, Texas, gas-fired power plant for $460 million. Weeks later, he followed that deal with a $250 million partnership with Texas-based Verde CO2 LLC to build a dozen carbon sequestration sites across the United States.

"We didn't see prices collapsing like they did," said Kalnin at the opening of his first carbon sequestration site in December.

Kalnin, a former McKinsey consultant who spent his early years in Thailand and later worked for the country's national oil and gas company, hasn't given up on his gas-to-power empire.

"(Gas prices) are setting up for another fly-up in the second half of 2024," Kalnin said in December, pointing to forecasts for rising LNG demand.

"There are micro windows for IPOs opening up," a spokesperson added on Tuesday. "We are hoping to stay ready for when that micro window opens. Market performances for IPOs and gas prices need to improve,” she added.

Associated gas, which comes out of wells alongside oil, yanked the rug out from Kalnin's vision. More than a third of all U.S. gas production comes from producers drilling for oil, according to government estimates. That figure is rising as wells mature and more gas comes up than oil.

BKV last year won a lifeline from its parent, selling shares to Banpu for $150 million to avoid breaching debt covenants. Most of the cash was put into a debt service account.

"You have this perfect storm. A warm winter plus too much gas supply, both primary and associated, and now, possible delays to new LNG export permits," said Blake London, a managing partner of private equity fund Formentera Partners.

(Reporting by Arathy Somasekhar in Houston; Editing by Gary McWilliams and Anna Driver) ((arathy.s@thomsonreuters.com; +1 832 610 7346; Twitter: @ArathySom;)

Clipped Wings

But BKV fell back to earth under prices suffering from a relentless expansion of U.S. natural gas output. Its profit fell to about $79 million in its most-recently reported nine-month period.

U.S. gas firms last year cut drilling 22% to stem the gusher. But the flows keep coming: The U.S. will pump 105 billion cubic feet a day of gas this year, up 2.5 billion cubic feet a day in the last year. That increase is enough to fuel 12.5 million U.S. homes for a day.

In most industries, volume increases are good. More production equals more profit. But rising output has overwhelmed efforts to curtail drilling and even demand from frigid temperatures, leading to a price drop that knocked U.S. gas recently to less than a third of 2022's average $6.50 per million British thermal units. By contrast, benchmark WTI crude prices fell just 17%.

Oil prices have held steadier thanks to global supply cuts by major OPEC producers and their allies.

But soaring gas production, especially from oil companies who view gas as a byproduct of their output, has proven "relatively insensitive to prices," said Nicholas O'Grady, CEO of U.S. shale gas explorer Northern Oil and Gas.

Gas producers have been reluctant to cut output deeply on the prospects of giant new liquefied natural gas (LNG) plants opening this decade, he said.

LNG exports would drain the excess gas supplies and should return prices to levels that make gas profitable to drill again by 2025, O'Grady and BKV's Kalnin predict.

There are four U.S. projects with export permits on the drawing boards that would consume up to 6.3 billion cubic feet of gas that if they go ahead would be producing LNG later this decade.

The danger is that third wave of new LNG plants may be delayed or lost forever. President Joe Biden's administration last month indefinitely paused reviews of new gas-export permits, jeopardizing as much as 32 billion cubic feet per day of future consumption.

U.S. natural gas producer Comstock Resources said last week it would reduce the number of rigs in operation and suspend its dividend until gas prices rise sufficiently, while rival Antero Resources said it would cut drilling and drop project spending budget by 26%.

FOCUS – Tumbling US natural gas prices prove unstoppable, hurting producers

11:00

By Arathy Somasekhar

BRIDGEPORT, Texas, Feb 21 (Reuters) – For nearly a year, U.S. natural gas producers have slammed the brakes on production as prices fall. But relentless output gains including from oil companies that pump gas as an oil byproduct have unleashed record supplies.

In the oil versus gas contest, gas producers are losing out. Some are shutting in wells, canceling projects or selling themselves to rivals to avoid losses. Natural gas prices this month fell to an inflation-adjusted 30-year low of $1.59 per thousand cubic feet, benefiting consumers of the fuel like utilities, but hurting producers who are selling at nominal prices as low as they were in the depths of the COVID-19 downturn.

Nowhere is the pain of cheap gas as evident as Denver-based BKV Corp. In the last five years, it spent $2.7 billion to acquire 4,000 gas wells and two gas-fired power plants. It also pledged $250 million to build a dozen underground carbon capture and storage sites to make its gas more climate friendly.

The nosedive in U.S. gas prices has stalled BKV's plans for an initial public offering and scuttled the carbon joint venture with Verde CO2 to couple its gas and power plants with carbon sequestration. BKV last year narrowly avoided loan defaults with a $150 million bailout by its parent.

Majority-owned by Thailand power giant Banpu Public Co., the little-known BKV in 2016 began buying scores of U.S. gas wells, taking castoffs from oil producers' Exxon Mobil , Devon Energy and others.

"We absolutely want to be the biggest natural gas producer in the country. That's my ambition," BKV Chief Executive Christopher Kalnin said in an interview here in December at its first carbon-sequestration site.

BKV's profits soared to $410 million in 2022 on strong natural gas prices after Russia's invasion of Ukraine spurred huge demand for exports of liquefied U.S. gas. The company launched a plan to build a U.S. version of its Thai parent, tying together natural gas and power. The plan included an IPO to help finance the gas-to-power expansion and a complement of carbon-burying wells.

As usual, UK price fails to respond to US price

I don't think RH is thinking the share price will go up to 1380. He simply wants to buy back shares with the dividend money - 42m. He is offering a 5% incentive to do this. All being equal, the SP on ex divi day will drop by the divi amount. It has done this pretty much every ex divi date for 2 years. That being the case, as a holder, we are no better off finacially on the ex divi day (actually worse off as we pay tax in the divi).

So you take a gamble that the SP does not move up significantly between election date and ex divi date. I think some larger II's will go for it to a point. For PI's it's probably a bit of hassle. If you want to buy back in then there are fees, SP movements, and cashflow timings to consider.

I think the problem might be in dilution of the amount you might want to sell - oversubcription. I think the II's will like this and use it to pocket 5%

"This looks like a no-brainer to me. 5% premium on shareholder remuneration if you participate and then you can buy back more shares or use the cash for something else. Very shareholder friendly. Does anyone know whether the buyback is subject to a withholding tax? If not that's another benefit - 30% of the dividend value."

Agreed. Just buy some shares now and get 5%.

2 problems: it might drop by 5% and you have no guarantee that you will be able to sell them all via tender which might be oversubscribed

"Sorry Andy but I don't think that is right, otherwise they have just said you can either have your divi as usual or we will buy some shares off you with it, so you di t get it. That just doesn't make sense"

But that is exactly what they are saying to you. Take divi so sell your shares via tender.

It's pretty clever really. DEC want to try and buy back a big chunk of shares but don't have the cash. Instead of stopping the Divi they are asking to buy your shares with the divi payment.

So using Treks price, if the share is at 1000p they will pay 1050p for your shares. Traditionally the share will drop by divi amount on ex divi day. So 1000p becomes, say. 925p

If you have some cash reserves, you can sell to DEC and buy back again when the price drops. In theory you should be 50p per share better off.