RE: Gavster-NBC - You're so so close to 'getting it'.22 Sep 2023 14:25
TheTrotsky, first up, the only reason I mentioned my wife's family's link to oil and gas industry in Texas was to give a bit of background as to why my suspicions of what DEC is up to are not founded totally on speculation and conspiracy theory.
Second, I agree with you about the well capping costs, low producing wells, the opacity of all their accounting. And the rate at which these wells need to be capped over the coming years.
As for hedging, I think the strategy was an excellent one, and still would be now IF DEC actually had the daily production to meet their commitments. IF they had the reserves they claim, and IF they really could extract the last cubic metre of gas that other companies over the history of oil and gas exploration and production seemed unable to achieve at any sort of profit. This is NOT a conspiracy to defraud the shareholders that Rusty hatched at the very start of DEC's inception. Rusty had an idea. It was an ok idea. For a while, it may have succeeded. It must have, for the company to be going for so long. And for as long as it was an AIM company, nobody paid much attention to what was going on, what was developing. Long term and at scale, Rusty's idea just isn't achievable. But it's been heading to failure for a while now, and things are unravelling.
The thing is, DEC isn't producing the amounts of gas it says it is. While NG was, say, $2 per MMBtu and trading in a fairly tight range (pre 2022) DEC was able to make money on days when the spot price rose, and lose money on days when the spot price fell. It was able to conceal the shortfall in declared output, and basically yes, make a profit because a large part of the gas it was selling was indeed produced by its' own wells, so everything was peachy. But then 2022 said hello, and whereas IF DEC had been able to produce the gas it claimed to be able to produce, things would have been great. A majority of its' output would have been pre-sold at a price way below the spot price throughout 2022, but that would still have given it a profit, and the small amount left to sell at spot would have been a nice little bonus, which would have shown up by now in its' accounts. Only. Well, that didn't happen.
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