Blencowe Resources: Aspiring to become one of the largest graphite producers in the world. Watch the video here.
Edwardseaton; totally agree. I WANT the energy transition, believe it is right, needed. But I'm in TGA, and many other 'dirty' energy producers because of the price disconnect caused by the timeline realisation disconnect. Dirty stuff will be needed for 30 years, and thereafter always needed to a minimal point. Dirty stocks are priced as if their product is going to be redundant/run out in 5 years.
On the results - it is obvious that mgmt are clear that their product has lifespan, albeit within a reducing market (and also within a reducing supply), and they are managing that acceptance. It is also warming to see that, irrespective of a particular years profits, that their focus is to return whatever those profits are.
This will be my last post here.
I've been in DEC a couple of years. Initially attracted by a 10% yield, then further attracted by their proposition. I'm not tree hugger, but I am inherently green. And in DEC's proposition, I didn't see any hypocrisy. What I saw, was someone making something inherently bad for us environmentally, less bad. And undoubtedly better than new production, by stewardship, management of damage already done, and minimising ongoing damage (by utilising resource, by plugging it where necessary rather than let it just seep).
I was a big fan of that proposition; if they can deliver that proposition (I'm skeptical), I will be delighted. I think DEC IS undervalued if they can deliver on their projections, but I think their projections are skylining.
DEC was in recent times my single biggest holding, I believed in their offering that much. It is now an insignificant holding. I sold mostly out at a not insignificant loss, but at a point, where that sale looks like a genius decision now. I wish well for DEC, and it's holder's but I don't believe their 30-50 years production, and certainly not at levels that are profitable . What I do see, is a capping business that will provide a low margin but high volume long term sustainable, societally appreciated (hence SP appreciated) profit, utility like. The value in DEC is in their leveraging/IPOing/metaphorphasing into that, into long term sustainable income, rather than dirty, societally questioned gas production.
I'm not going to further post here, because, I don't want to be part of a happy clappy DEC to the moon cult. And it's prevelance here does investors an injustice. I'm not interested in likes, I make my contribution to aid understanding, not for fandom, but when you make a serious of posts discussing the fundamentals, barely acknowledged, whilst a more gungholy positive post receives considerably more 'likes', you have to accept you are speaking into a void.
I'm not here for fandom, I'm not here to contribute pointlessly against a euphoric cult. And there is a blind cult here.
Ace of clubs; just like to thank you for your posts. The content of which first alerted me, that DEC wasn't the Euphoria I thought it was. I've been maligned for my posts here, but insignificant to the vitriol you have received. Thank you for your pragmatism. And thank you for speaking against the cult, and saving me a fortune.
And Bismarck, I should say, I do think gas will rise long term, and whilst I think their may be a 18 month dividend reduction/hiatus, the debt/debt cost, falls away sharply over that time, meaning FCF will actually be free (dividend) cash.
Bismarck: you are welcome! I believe. Say what you see. And your posts here, and those I've seen elsewhere, are pragmatic. Not shouting to, or down the crowd. Always respectful. And in such tone, make people think a little more. Make people consider the post not trash the person, sadly rare on these boards.
Always happy for anyone getting a multibagger! Albeit, I do think a reduction/temporary hiatus on the dividend front may extend your timeline!
And thanks too your acknowledgement.
Bismarck; totally agree your post.
Current income (dividend) is protected by their in the money hedging - but it isn't all hedged, and the current spot price is less than their current cost of production, so they are losing money on unhedged production. And the 18mth forward price, just covers debt, it's not providing debt AND dividend cover going forward.
Blacksteel; I should further clarify, that they are overpaying on their 2030 timeframe, which in itself, is earlier (overpaying ) on the actual contractual end dates. So their is slack there - they could tone down their overpayments.
But I don't see this- I see the first ABS being settled, for the reason I mentioned before, but also because it releases them from the condition that they must pay in excess of the minimum requirement a (considerable) percentage of the FCF.
If you work that backwards, it's actually a positive - in that they do have FCF, just it is contractually prioritised to the debt. Clear ABS1, and you increase free FCF.
I don't see it as a major concern, just as you say, something that needs fiscally ma aging/prioritising.
Blacksteel; totally agree with your response.
I run a calculation on the ABS amortizations, through the last 2 financial updates, and they ARE amortising at greater than even their own stated 2030...from what I could discern, they were doing so on a straight line basis - I've previously posted that I didn't see a focus on prioritising overpayment of RCF/later ABS's, and minimising earlier (cheaper) costs, and that for the normally financial fleet of foot, they were missing a trick on this.
I mention the first ABS because it has been running the longest, and was a lower value, so wouldn't warrant a great amount of FCF to free up the assets, for frankly, reselling/re ABSing off books.
Sturm; totally agree with your comment, which is what I was trying to purvey.
I have a strong personal ethical whilst PRAGMATIC core. I want to make a profit. But I want to make a profit, not at any price. I want ALL to see benefit.
I don't avoid natural resource companies, I do avoid those that profit by raping and pillaging land and communities (Trafigura comes to mind).
I've been here about 6 months. Yes the production/profit/dividend profile attracted me - but most it was the community fund that cemented me buying. PTAL's inclusiveness/awareness/consideration, juxtaposing the prevent exploitative world.
Further further....
What I think you will see, to alleviate the crunch, is temporarily the dividend being cut, to divert the FCF to settle the first ABS (despite being below the average cost of debt). This freeing the covenant other assets, to facilitate an identical transaction to the last, selling the assets to a PE outfit, retaining a small stake/operator ship, and loading up with a new SPV ABS.
Further to my post below, whilst DEC hark on about 50 years of production, I see more like 15 years of profitable production, and on my time span, I previously calculated that DEC need a price of $3.33 to pay dividends at current levels, retire debt, and retire assets.
The current 18 month average is $2.907, so I don't see the forward hedges supporting the dividend going forward. Even an acquisition at those forward prices wouldn't alleviate the crunch that is coming, unless spot prices rise soon
Good to see some thoughtful, insightful posts today. Thanks Bismarck/Blacksteel. Makes a change from wading through "time to average down/burn the shorter posts" for the nuggets that actually help us all, whatever our view.
Bismarck; totally agree the yield is irrelevant and the FCF is pertinent. Also agree price (today's is below cost of production) and volume likely to be down. Production reduction may positively surprise (the YouTube Bod explaining how they had benefited from buying wells that just needed turning on), albeit why would you maximise production at current price (at a loss)?
Blacksteel; agree your points too, and yes they are deleveraging/reducing interest cost at a gallop.
Generally, I feel the hedges covering the period are very much in the money, and support the next dividend, but with the current/18 month has price, they will be struggling to cover the debt and dividend (not the debt, but both). So I do see the subsequent dividend being halved (which looks an easy decision on its current 'yield'), and appearing within their stated policy on dividends not being set in stone, but related to FCF.
Ghgo; think you've rather nailed the reason!
What is it with this current vogue to do buybacks instead of dividends. Another buyback in lieu of the dividend.
Show me the money. The dividend money
I voted against the wind down . I'd rather they took 10 years passively running the current assets out.
If they can't obtain scale, the reason for wind up, why not merge with CORD, to aid scale, and economies of scale. At least then those of us who believe in DGI9's assets can see and reap their fruition.
Rodger Rodger; whilst I agree with the generality that the US increasingly will dictate the SP of DEC, I do think your view on its positive impact on by banishing shorters , is from a very narrow prism.
In that YouTube talk, the DEC man was quite specific, almost angry, to the UK investor base being the problem of the SP fall. Tthe US understanding/liking of oil/gas will only aid a US producer. But US private/small/individual investors (not just institutions) are also far more understanding and active in shorting stocks. And holders (believers) frequently employ options/short to manage positions. I hold a number of US stocks, fundamentally sound, that are frequently and considerably shorterd. It's prevalence of use by small investors is exponentially greater than the UK, almost mainstream, and as such, I disagree the shorts will be nullified - they will magnify. Normalise. Albeit within what holders would hope is a more knowledgeable/appreciative market
Scandiexpat; also, do you have a view here? On the wind down.
The lack of 'action' supports my view that it will take quite a while (3 years), and frankly I'm quite happy with that, both in that it's likely to provide the same level.of income for some time, and that they aren't firesaling their positions but maxamising into natural rundown, an elongation that will see much of the NAV discount narrow and materialise, yes, in to lower yield, but returns of capital. As a patient investor, I've actually wondered whether adding here, as I do think most of that NAV discount is real.
Hi Scandiexpat; you really are a globetrotter.....from UK, in Scandinavia, with a Swiss broker! Are the deeds of your house held through a nominee shell company in the Cayman Islands?
Jokes aside, hope you/your investments are well.
We don't know how the spill will plan out, and whilst obviously not a positive for such an environmental sensitive place, I do see positives here.
It's our oil, but not our barges, so PTAL could just ignore and hold their contractor to contract/account and distance themselves from someone else's failings. Yes, PTAL could be questioned, blamed for say, using cheap barge operators, but the double hulled barges suggests they weren't/aren't cutting corners. The proactive provision of provisions to affected areas/communities shows a responsible operator.
I invest in stocks to make money yes. And whilst investing in oil whilst having a moral/societal compass may seem an oxymoron, I think PTAL doing assistance rather than waiting until forced to do, shows (along with the community fund), their awareness, astuteness, that all, (investors, communities, environment) are integral, not a tokenistic fop, to prosperity. For all. That we all should, and can, share prosperity.
Just.my views, and I know it's early days on exactly what happened. But that's my gut. That PTAL do not think providing assistance is a cost, but an investment.
No. A share purchase to satisfy employee share options is a standard thing. Arguably, if it is open to all staff (i.e. not just an executive/high level mgmt 'incentive/performance' plan), it is actually a vote of confidence in the wellbeing of the Company, as rank and file employees are putting their own money in (tax advantages amongst other upsides), for which these purchases are being set aside, normally for 3 to 5 years to cover the 'vesting' duration..Signals thqt the workers think its doing well.
I see a 27p divvy. They could afford more easily, and i don't see a special. It's just not their style.
I do like their steady and sure style - never promising the earth, but always delivering the goods.
(For what it's worth, I actually think they could deliver a 25o dividend too).