Member Info for Bismarck

Not meaning to be rude Coaj, but I read and re-read the RNS 3 times before it completely sank in that DEC were really just offering charitable institutional shareholders the opportunity to lighten DEC's divi liability. Nobody spelled it out quite so plainly to me as I have to you tonight. If this is beyond your comprehension maybe you should consider investing in fully managed investment vehicles instead of individual shares.

"My understanding of this DEC statement is perfectly clear to me.

"This Return of Capital allows shareholders to be paid the same total amount of the previously declared Third Quarter Dividend"

True. So why in your example do you think you will be paid double if it's the same? $42m is $42m. It's not going to increase.

Correct. This is not aimed at PI's but the institutions who own most of DEC and want their divi liability to drop to more sustainable levels.

Coaj

I'm not sure you understand. You don't get paid twice. You forgo any payment that you would have received from the divi and just get paid for the shares you sell, at a 5% premium over the average SP for the stated period.

"A tender offer is something I've never encountered before, so if I accept the offer what can I expect to receive & be left with ?"

Most probably a similar amount of cash as you'd have received from the divi but you'll own 7% less shares.

Corrected -

Machin

Am I missing something?

"Is it not DEC’s policy to keep the dividend as same level and eventually increase it?"

That would be nice. There dividend policy is to return (a minimum?) of% FCF to investors -

Machin

Am I missing something?

"Is it not DEC’s policy to keep the dividend as same level and eventually increase it?"

That would be nice. There dividend policy is to return (a minimum?) of% FCF to investors -

2021 - FCF $228m Divis paid $130M Divi % of FCF 57%

2022 - FCF $219m Divis paid $143M Divi % of FCF 65%

2023 - FCF $160 to $170m?? Divis paid ~ $168M Divi % of FCF ~ 100%?

2024 - I find it hard to see how FCF can keep up with Divi payments at current level of $168M. Even if DEC make some major acquisitions this year they'll be selling that extra production at a low price, it won't be hedged at ~ $ 3 like much of their existing production.

@ pardariff

"I would like to see a dividend declared for the whole financial year 24/25 because at present there seems to be an air of " too good to be true " about the dividend "

FY 2023 Divi cost ~ $168M

FY 2023 H1 FCF $80m, so if FY 2023 H2 FCF increases to $88m then FY2023 FCF more or less matches the divi so divi ~ 100% FCF (not 40% as the divi policy)

I believe DEC's FY2023 ave realised prices were ~ 3.5 $/Mcfe and FY2024 will be lower. They have also sold producing assets and there is obviously a production decline that needs to be made up by acquisitions, none have yet been announced.

Would you be declaring divi's for FY24/25 yet if you were running DEC?

If all shareholders were given a vote on having the next 4 quarterly $42m shareholder returns split 50/50 between divi's and BBs (applicable to all shareholders) I'd vote yes.

Ah yes their FYQ4 is 31 March. I'm confusing FY and calendar year. But the question remains, surely EPS for the period multiplied by shares in issue cannot normally be almost as high as total income?

Trying to fathom out the accounts.

So 1 lakh = 100,000 rupee ~ £1000 and 1 rupee ~ 1p

Q4 23 income was therefore ~ £50m

Q4 23 profit ~£3.3m pre tax, ~£2.7m after tax

Q4 23 EPS ~11 Rupee or ~11p which is the same as SP

Mcap is £44m, ~404m shares @ 11p

So how can Q4 EPS X shares in issue be almost as high as total income from operations?

I'm struggling to understand the financial incentive for shareholders here

LOTM-13, thanks for your example below:-

"If you own 100 shares then the dividend you're going to receive is $87.50 or roughly £69.17 less withholding tax etc

If you agree to the tender offer instead, then they will buy £69.17 of shares of you at the average share price +5% over the 5 business days from 20th - 26th March. So if the share price average was £9.25 they'll pay you £9.71 for them instead.

Which means you'll now have 93 shares instead of 100.

All you need to do then is buy them back in the market if you want to have the same number of shares as you had previously. "

So this means you agree to forgo your divi and sell 7% of your shares at a slight premium, and of course you can buy them back if you choose so you still have 100 shares again, but no divi, right?

On the other hand you can just take the divi and use that to buy another 7 shares, so you now have 107 shares instead of 100. Also those 107 shares are now more valuable because many of your fellow, less selfish shareholders have kindly participated in the tender offer so there are less shares in issue.

Is this correct of have I misunderstood? I get the reasons/advantages for the company and shareholders as a whole, but does it not rely on some shareholders being more charitable than others?

I'm of the opinion that EV's will win over hydrogen vehicles. The main reason being the inefficiency in using electricity to create hydrogen.

I'm a Tesla driver but the largest holding in my portfolio is DEC. I have the Tesla for tax reasons (BIK) and I have DEC because I'm a follower of Benjamin Graham.

40% FCF into divis is or was the policy. However in 2023 the cash paid out to divis is close to of 100% FCF, ignoring cash from disinvestments

Easy mistake to make Terry, and hope I didn't appear to be condescending in my reply

But a 4% levy just puts the current BB rate up from £9 to £9.36 so not much impact

Not sure Securities and Exchange Board of India rules are relevant to DEC?

Divis have historically been based on 40% FCF. As Notrex and Andy have pointed out this is not connected to the SP. DEC can likely afford to continue returning 40% FCF to investors, unless you believe it costs $126K or whatever to plug a well.

I think the 40% FCF should still be returned to shareholders, but with the SP were it is I'd prefer my return to include more BBs and reduced divis.

Couldn't they put a temporary divi cut to fund BBs to shareholders for a vote?

Surely SP would hold up if a temporary divi cut was voted for?

No specials since I've been a holder, which is almost 4 years now.

Would delisting help defend against the shorts though? There's been relative parity between UK/US of late.