Member Info for Jim800

Dirty realise - not erase.

Is that an ironic post by Palumbo or does he not realise that he and EQT have none of the quoted key ingredients for success.

If he doesn’t erase that this BoD are part of the problem then he shouldn’t be allowed out to meetings.

Spondy, not really a review of DEC, more a TA of historic share price movements. Given the various reasons expounded on here for the falls (interest rates, gas prices, lack of investor confidence in BoD, debt levels, volume of BBS etc etc) I have little confidence TA can predict future movements for such a company. Indeed their final statement admits as much.

Pikeman, I think the one thing that might keep us safe from hedge funds etc is DEC’s inability to significantly ramp up output due to NLG infrastructure. In the recently posted Rusty interview he highlights the difficulties getting NLG to end users or export if you have to cross state borders. Typified by a refusal to allow a pipeline to the east coast despite importing LNG to Boston!

AoC - are there two uses of decline in DEC reporting which then causes confusion?

If you look at the net production figures on Page 7 of Interim report they show an increase in production of 4% in Nat gas, and increase of 15% in NGLs and a decrease of 6% in Oil from H2 2022 to H2 2023.

This is obviously not a decline in production (and nor should it be with the Tanos acquisition). I read that it is production decline cited in the Sep report assumptions at 4.5%.

Decline is also used to describe the reduction in reserves in existing wells in operation - and I think this is the 10% figure you refer to from Interim report.

Obviously DEC may have declining assets in current producing wells but if they're also bringing more wells on line then production needn't be falling. Many of the Tanos acquisition wells have reserves but are not yet being exploited.

I think all this shows that the DEC model is complex and difficult to understand, differing assumptions mixed across different reports and acquisition, derivative accounting and step debt level changes make period on period comparisons difficult.

Notrex, it’s not a lack of argument at all.

They’re doing what they r said they’ll do - or following their strategy. If you have mis read or mis understood the RNS then that’s your issue not DECs.

They can’t afford to borrow more - less than 120mn of RCF left and I’m guessing that’s already allocated.

Again, short term cashflow and reducing debt is key here - borrowing more for 5 years really to fund BBS really isn’t smart.

In my view best option is let the finances do the talking - hopefully Q3 interims will show an improvement in debt and cashflow and give the market confidence,

Patience required or abandon ship.

Read the RNS - they gave themselves the flexibility to carry out BBs subject to market conditions and a whole load of other factors (detailed in the RNS). Current decision appears to be that targeted buy backs at low prices which do not require additional borrowing is the way forward.

If you don’t like the strategy why invest here?

That was an AGM resolution prepared in advance of AGM to allow a vote - so probably 9 months ago.

As others have said, they only set a maximum buy limit - there was no minimum.

The resolution as voted for allowed them the flexibility to buy up to a certain level when they were happy to do so.

That’s what they’ve done. Elaborate enough for you? If you read the issued company documentation rather than continuing emotional outbursts you might make more sense and understand what is going on.

Notrex, how many times do people have to point out to you (and Alessandro) that DEC’s available cash is limited and probably ear marked for op costs. They haven’t the money for massive BBs (last set of accounts had them with 4Mn in cash at hand).

Although the return from BBs is good at this price and it might (stress might) support share price a little, borrowing yet more for BBs (which will take about 5 years to pay for themselves) makes debt worse and cashflow more difficult to manage.

There isn’t a BB money tree in DEC’s garden!

Terry - it’s only your worst performing share if you sell. Share prices aren’t really relevant if you don’t want or don’t need to sell.

Buying high and selling low is bound to give you poorly performing shares. Hold for about 5 years and you get your money back in dividends.

Alessandro - once again you fail to understand simple numbers or the business strategy!

DEC have about 970 million shares, a dividend of 4.375 cents per quarter and a total debt of about 1,500 million dollars (actual numbers from interim accounts, not an opinion or made up point of view).

So if they ceased dividend completely, it would take almost 9 years to pay the debt off in full (using just dividend money). Once this was announced the shares would be worthless.

Now the total debt is made of different chunks: A term loan, an RCF and 6 ABS loans - again read the accounts for details and interest rates on each.

The strategy is (and always has been - even when SP was 140p) to hedge output to give cashflow certainty to enable debt to be repaid on schedule (all ABS notes are amortized - look it up if you don't understand), operating expenses to be met and dividend to be paid.

2023 has been more complex than usual with an equity raise and an increase in borrowing to part fund a big acquisition along with a few disposals - all of which make comparing accounts year on year difficult (even without interest rate increases).

This strategy continues and is widely accepted by the banks funding the RCF.

Now DEC haven't been perfect: the equity raise annoyed investors (who didn't really get a chance to join in), the BB has been intermittent and the use of derivatives complicates the accounts and isn't well explained - BUT the strategy is still the strategy and as long as DEC can manage short term cashflow within the RCF it will still work.

If you don't like the strategy then invest elsewhere - but don't criticise from a stand point of ignorance.

Turkish group buy cut price shares in a company whose future revenue streams are controlled by …… yep Turkey and their pipeline.

Follow the money!

Yep, someone knows something we don’t know.

Https://d1io3yog0oux5.cloudfront.net/_1e67323ef872d6d1f97137868a48ffe1/dgoc/db/581/5825/pdf/DEC+Corporate+Presentation+%28Sep+2023%29.pdf

Interestingly, in parallel with lots of comments on here about the difficulties encountered trying to interpret DEC's audited financial results, DEC obviously recognise the issue. The link is to September's Corporate Investor Presentation (available on DEC's website if the link doesn't work).

In here they requote the interims but also suggest some more appropriate metrics that smooth out the "one off" events such as derivative costs, acquisitions, asset sales etc.

These include:

Adjusted EBITDA (slide 39)

Net debt to adjusted EBITDA (slide 40)

Revenue inclusive of settled hedges (slide 41)

Adjusted EBITDA Margin (slide 41)

Free Cash Flow (slide 42)

Adjusted Operating Costs / Barrel (slide 42)

The alternative metrics may assist some (or may be taken as evidence that this is all a cult by others).

Notrex, can you really not differentiate between a Company’s performance (as measured in audited results) and share price (subject to all sorts of macro economic factors, many if not most of which are outside the BoD’s control and a whole load of investor fear and greed).

If 2033 final results are on a descending trajectory then your calls for change may be justified.

Should all Directors of all companies have been fired after covid or Ukraine invasion? Nearly all Share prices fell!

It’s largely the same BoD and definitely the same strategy as when SP was 140.

Blimey this is hard work! They only have 120 M to spend then that’s it: overdraft fully used up, all credit cards maxxed out and savings all spent. Wasting all of the at will end in a company with no money.

Hope someone else finds the finances in your house.

I know logic suggests them at BBs should support SP but there are loads of cases where it doesn’t! It also shows the market that the company has little imagination, little strategy and can’t think of anything productive to do with the money. Probably worth a gamble if you have a large cash pile - DEC most certainly don’t and need to improve cashflow / debt levels before next results - that’ll help the SP.

Rusty is running the business not the Share Price.

There are all sorts of reasons why the market doesn’t favour the shares at the moment - cashflow and debt bring two of them. However the company is still profitable and if you aren’t selling then SP doesn’t matter.

There isn’t any positive cashflow left after op costs, debt, interest and dividends. That’s why they only have 120M left from the 425M RCF.

No chance of any more acquisitions in the near term.

Sorry that should have been lend - not end.

As for BBs being a no brainer please explain how borrowing money at 10% to save 20% and wrecking your fragile cashflow is a good idea.

Yeah you’ll save 10% a year but have to repay the capital borrowed as well so likely to take almost 10 years before it pays for itself - 120M of liquidity won’t last anywhere near that.

So little BBs when price slides ok, BBs at the magnitude you suggest would be suicidal - guess that’s why they aren’t doing it.

Still, I’m sure your multi billion pound company is doing just fine with your decision making. Chimp!

Notrex, so do you really think the principal aim of a company should be buying its own shares to support the SP?

How about quietly getting on with managing cashflow, reducing debt and making the next set of financials an improvement over the last ones?

Or do they just keep borrowing money to buy their own shares ad infinitum til no one will end them any more?

Management not the issue here, Rusty has been on the same strategy for 6 years if you don’t think it’ll work out then sell up and move on.

They’re here to extract and sell gas not artificially mess about with the SP.

All the advantages of BBs are in the future - their immediate issue is managing cashflow to cover Op costs, debt repayments, interest and dividends. Even though BBs would cut dividends immediately, they’d be spending 100% now to save 15/20 ish % per annum whilst reducing liquidity even more. If share price is chugging up anyway I think they focus on cashflow for now.

There ain’t an acquisition in the near future with only 120M of credit currently available. Doubt they’d borrow more and a placing would be suicidal.