George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
I wonder how the Mason's feel having handed over £0.5m 7 months ago?
I've never put the numbers into a spreadsheet to compare cumulative returns, but it's obvious to me that foreign divi yielding shares subject to withholding tax go straight into the SIPP if there is a tax exemption.
The SP has an African "haircut" for sure, like many mining companies operating in that continent. Ironically it was another well run company in Africa, Caledonia Mining that I sold out of today to top up here, and did so only because I can see short-med term upside here with this deal which is not priced in.
I've just sold up elsewhere and topped up here today. Hard to believe the SP has not moved on all this news. The market seems to have an unbelievably indifferent attitude towards this share. Makes me wonder whether the deal, which now looks very likely to go through will be transformational to the SP or not.
"Strong macro natural gas fundamentals. Natural gas storage levels have normalised on the back of record high natural gas fired power generation, strong LNG exports and US natural gas exported through pipelines to Mexico. At the same time, we anticipate US natural gas production growth will be limited in the coming months following the dramatic decrease in natural gas drilling rigs (37 fewer rigs YoY, a c24% YoY reduction). We believe this strong fundamental backdrop will support and strengthen the forward natural gas curve. Further, with the start-up of an additional 2.7Bcf/d of nominal LNG export capacity by the end of 2024, we see increased premiums for DEC’s Central Region assets relative to NYMEX. "
I repost what I posted a couple of days ago regarding decline rate -
"50 YEAR COMPLETE PORTFOLIO RETIREMENT SCENARIO" on P33 of the September presentation they use a 4.5% long term production decline rate.
So what is the correct decline rate? , 10%, 4.5% or something between?
last year was circa 7% 144 vs 134.4 (Mboepd)as AOC pointed out.
Huge difference between 4.5 and 10.
I don't think it's all about the dividend and most here will agree I'm sure. It's about total return. If it so happens that DEC's SP remains fairly flat indefinitely but there is a divi of >12% based on the historic SP that also tracks inflation indefinitely, I think most would be happy with that.
I have another investment, GSL paying 8% divi with a dive cover of >5X (P/E = 2) and I've had a real dilemma of late deciding whether to buy more of that or of DEC. I decided DEC for now at least while SP is depressed, I bought a fair few in late 60's on Monday so now I can enjoy the divi, wait for SP no normalise (hopefully) then sell out half once it returns to £1+ and maybe buy GSL if the metrics are still favourable.
DEC has generally traded in the £1.00 to £1.20 range over the past 5 years, except for a few months during covid and during this past 9 months. This most recent drop, which I think has been caused by a number of factors, drop in commodity price, some institutions exiting fossil fuel investments, concerns about sustainability of the business model/dividend etc etc I think has been well overdone and I see no reason why the SP will should not return to historic levels within the next 12 months as long as they keep the money flowing in, the divis flowing out and can keep their hedged rates for future years above $3....
Well if DEC maintain their 17.5c divi for the next 30 months that will return about the same as their 47c target price to shareholders. Clearly Seeking Alpha's software is confused by their accounts, as am I. However I don't do daft things like telling people the shares are only worth 47c.
For anyone who's interested, DEC has a 97.4 Magic formula score % Percentile.
The Magic Formula is a value investing strategy invented by the hedge fund manager Joel Greenblatt in the bestselling and highly recommended Little Book that Beats the Market. It focuses on finding quality value stocks using a blended ranking system (the Magic Formula rank) composed from two fundamental ratios: Return on Capital (which Greenblatt argues is the best determinant of whether a business is a good one) and Earnings Yield (his favoured measure for cheapness). He summarised his philosophy with the maxim "buying cheap stocks at bargain prices is the secret to making lots of money". In the fourth edition of his book Greenblatt claimed the top scoring portfolio of 30 stocks appreciated by 30.8% each year over the previous 17 years, though he stressed that the strategy could underperform during periods of up to two years. Having now sold hundreds of thousands of copies, the "Magic Formula" is credited for reinvigorating the practice of value investing.
You need to decide whether you believe their business model stacks up, or whether you think it will come crashing down like a house of cards. I'm in the first camp. I'll admit that I struggle to understand their accounts, but Rusty is an accountant and has millions of his own money in this.
@Soldtoosoon
I would expect BBs to have the opposite effect of keeping the SP low.
Remaining shares will be worth more
Company will either be financially healthier in the long run OR will distribute the extra FCF to the remaining shareholders in the form of higher divis. Both are positives for shareholders.
Market will see that the company has spare cash to throw around and is using it wisely
All reasons for the SP to rise IMO
Sorry, that should say page 33 not 32.
I keep thinking about the paying off debt VS buyback argument. Surely the most financially sound approach given that divis are currently about 4 X higher than the interest on much of the debt would be -
Hold the divi at 17.5c for a couple of years (disconnecting it from FCF)
Use surplus FCF for BBs rather than additional debt repayment, releasing further FCF from the reduced dividend liability, allowing further BBs.
After a couple of years, maybe review the divi rate but generally continue this approach until such time as there is near parity between dividend % rate and interest repayment % rate, then once this exists switch the strategy from BBs to additional debt repayment.