We would love to hear your thoughts about our site and services, please take our survey here.
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.
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.
So based on your understanding George there's no correlation whatsoever between NG futures at a given time and the rates at which DEC could hedge their future production at that given time. One may just as well compare future banana transport costs and anyone who considers otherwise is a moron.
Sustained lower gas price would surely result in less investment in new wells, resulting in an eventual increase in prices towards historically higher levels. There would also be cut price wells to be bought up by DEC.
George,
I copied and pasted nothing. I actually went to this site https://www.tradingview.com/symbols/NYMEX-NG1!/contracts/ and manually input the current day's monthly futures contract prices from Jan to Dec for each respective year into columns on an excel spreadsheet and used the "AVERAGE" function to arrive at a yearly average. So "today's" rates are the rates for the day of my post. What day's rates do you think I'd post, April 1st? Idiot.
Seeing that the price has been reasonably stable past few days I wonder what they are planning or expecting to happen next to affect the price? Presumably if they expected no further drop from here they'd have already closed their positions.
Angels
I've read Slater's book too. If you've not already read it I strongly recommend Benjamin Graham's book "The Intelligent Investor" While many of his examples predate WW2 most of the principles discussed are still relevant today.
@ Trek,
"And the unit costs are below 1.9 and that’s allowing extra for plugging!"
I assume this is their operating cost including debt and plugging, excluding divi & profit? I think I read that they need $3 to make the business model work comfortably and pay current divi, anything above $3 being a bonus?
It was almost 20p when they started commissioning last spring. If it can make this work I expect a lot more than 20p for all the risk, worry and previous losses I've experienced with this roller coaster company. I'll either be exiting at 30p+ or cutting my losses at 3p by the end of 24, LOL