Member Info for JonnyGee

That did make me LOL.
What makes it even more incomprehensible is that the US tax incurred is offsetable in UK tax returns so ultimately makes no difference anyway and is a storm in an (uninformed) teacup. Such is life.

To give you a more specific answer, automatic US Witholding Tax deduction is 30% (assuming your holding is not in the US). You should be able to reduce the withholding to 15% courtesy of the double taxation treaty between the US and UK (assuming your based in the UK) by filling out form W8 BEN. There is however a wrinkle in that many UK brokers are holding client stocks in mingled accounts and so cannot/ will not apply the reduced rate for you (its a long running battle a lot of investors here have talked about) Trotsky may be correct about the ISA gross payment implications , I cant comment on ISA related, though have a sneaking suspicion that even with an ISA you may run into the same lack of UK broker co-operation. Good Luck!

Thanks Ragnar - can you say whose note it is - any chance of someone posting it?

Thanks Ragnar - can you say whose note it is - any chance of someone posting it?

Well explained and I think your last point is the most pertinent - communication. Whilst I think the management team is operationally very good and generally good at shareholder communication I think the last placement was not well flagged. I think there were very good reasons for the placement - it was obvious to me and probably many of those on here that DEC needed a warchest for any Oaktree related acquisition and had to prime the pump before any announcement , but it did cause some temporary heavy dilution which the market puked all over. As a public company they have to be very careful about any acquisition announcements, so am not sure what else they could have done except highlight more the acquisition funding imperative. Any, we're now back to those pre placement SP levels - admittedly with a Gas Price twice as high but such is life with a small cap.

Agreed. There are clearly some different dynamics in the Central region with higher decline rates on all of the acquisitions there but also higher realisable prices and its too early to see any SWM benefit and other synergies - should be an interesting 6-12 months going forward to see where that all settles

Thanks Ragnar - I see now. Thank heavens for that! I ran the numbers at the current forward 12 months of ~4.30/MCF with 17% year 1 decline and $11.69/boe cash cost which gives a 3.2x multiple - reasonably OK though if you were to run it at a historical $3/MCF (and where current futures are averaging from '23 to '33) you end up with a 7x multiple so they clearly paid a full price for this - especially as it is still declining at 13% 3 years out.

Didnt realise there was a detailed acquisition report that you posted - thanks for that. Will have a look through

Be careful with "low multiple" the 1.8x they indicate is disappointingly misleading (these guys have historically been pretty transparent) as it is applying their ~200mio consideration amount for 50% interest to 100% of EBITDA - its actually a 3.6x multiple . As you note it is also a multiple of forward (NTM) EBITDA which is at extremely elevated pricing (though declining into '22 as you note) so definitely need to see more detail on this (including decline rate and look through working share) to figure out how good an acquisition it is.

Just to be clear, I think this is a very good, disciplined team, so am not criticising them , but really need to get a better understanding of the deal parameters in order to figure out its real attractiveness

Agree with RedTom. If you are (a) US resident and (b) your shares are in a US brokerage, then there should be no WHT in your case. The point of WHT is literally to withhold tax on dividends (and sometimes other flows) being transferred abroad, which isnt your case.

Hi guys/girls, I just bought into BOO when it dropped below 270 as it seemed too compelling. That said, has anyone seen the Morgan Stanley research report as MS are the most bearish with a 290 TP . They're one of the few shops I respect as a former i-banker so would be interested to know the basis for their assessment if anyone's seen it?

Fair comments @Redtom and I agree that the 20% share placing came as a bit of a surprise and hit the company hard until investors see the benefits of the acquisitions - though does make sense in the likely context of more acquisitions coming down the pipe.
I'd be a little cautious about assuming dividend increases as 7% annual depletion (even with their SWM in place, where they're coming to the end of that road in the Appalachians) means they are in a constant race to replace around $20-30mio of EBITDA each year just to keep standing still - achieved with Blackbeard/Indigo/Tanos but with the aforementioned 20% dilution it means they have bought themselves around 1-2 year's relief but will have to be acquiring again in the next 12-18 months. My gut feel says they're likely to hold dividends at 16c for the foreseeable future , using additional cash to pay down debt, make acquisitions and even do some more share buybacks.
On the US listing, whilst the US does tend to have higher multiples than equivalent European listings, shale is definitely not flavour of the month/century (yes, I know their capex model is notionally different though depletion means they do still need to invest a chunk to stand still) and possibly more importantly, the company is still subscale. I recall an interview with Rusty stating they need to have a market cap of $2bn+ for the US to make sense and get on investors' screens and Id agree with that assertion. Given a fair acquisition run in the new geography they're going to have to issue a fair few new shares and 1.2bn shares out at , say £1.20 share price gets you to $2bn market cap, but means a further 40% dilution to get there. I am sure the company will maintain acquisition discipline and make sure it financially makes sense and generates value including on a diluted basis, but expect that the market will take a while to get used to it

Things starting to make more sense now - and frankly what I suspected was going to happen as the 20% dilution and significant deleveraging for Indigo and blackbeard made no sense - so suspected/hoped at the time there must be some significant acquisition activity they were priming the cash pumps for. Good to see activity now happening with Oaktree and this brings leverage back up around $100mio net which rebalances their capital structure closer to optimal and still gives them a good chunk of dry powder for further acquisitions. Now whether we see any positive SP reflection on any of this is sadly a rather different matter - even with gas around $3.70...

If you run the numbers, bearing in mind it was almost all equity funded and Blackbeard has a 14% first year decline rate these 2 deals are barely accretive which is why I think the market has puked all over it - combined with some touhj news flow for Big Oil. I initially found the equity raise surprising but my gut says they have a significant Oaktree deal coming along which needs to be 50% funded by DEC, hence their premptive equity raise in order to prime the coffers. Hope Im right since otherwise they shot themselves in the foot, which is pretty atypical for these guys

Thanks - Interesting article - particularly on the Haynesville field which is what DGOC has just bought into and seems to be the next big thing after the Appalachian Basin with good Co2 numbers and preferential Gulf coast pricing. Smart move by Rusty & team. Downside of the article is the increasing (record) gas volumes expected to be produced in the US in '22 which usually means price pressure

Agreed. The irony is that if anyone were really paying attention, they would realise that low WTI actually works in DGOC's favour as it dampens shale production, which is DGOC's main pricing competitor as gas is a byproduct for the shale guys which gets dumped on the market and depresses US natural gas prices. Anyway, not my problem - sold some of my DGOC at 130 knowing that it wasnt going to hold there so will buy back (more shares) at 1.11. Thank you Mr market .

Thanks - interesting. From what I read in MI, they have the rights to current and historic tailings dumps of the 6 sites, and the Momentum Investor piece states these locations have a remaining life of 7-10 years. You are correct that Semancor is a major operator with numerous other sites, but there is indeed no visibility of future additional contracts. Ultimately, if they cant obtain new sources, then this is a run off play of these locations, which would explain a relatively low apparent multiple (though a large part of the multiple being so low are the eye watering price levels their PGM content has reached - if these arent maintained and there is a reversion to pre 2020 price levels, then the multiples wont look so low) . They have indeed upgraded their recovery tech, reducing talings volume used by 20-30% on half their sites, so that helps but ultimately means there is a finite volume of tailings to be processed.

Thanks for the tips. Price of course spiked on Monday before I could sort this out but hopefully there will be a few bumps down like today. I do however have another more fundamental question on SLP which you guys who are obviously tracking it more may be able to answer. I came across them reading The Momentum Investor coverage which was positive plus the IC piece. One thing that does concern me though is the very finite tailings supply they have with the 6 Semancor sites only having a remaining profitable life of 7-10 years . No visibility on additional site agreements with Semancor and with the metal prices going where they are there is a significant risk of miners keeping this to themselves. Any of you guys have some gen new supply sources - comments from the company on this?

Quick question to you guys - have been following SLP for a few weeks now and decided to buy some stock, but discovered I couldnt find any on the Saxo trading platform I use. Where do you guys trade it?

Hi guys - am new to this particular thread but have been in DGOC for a while and do my own analyses (Im a professional investment guy) which has raised some questions I have which maybe someone here has an answer to:
1) My base assumption for their gas price is Henry Hub - I noticed however significant discounts in their realised unhedged price in Q3 2019 vs HH spot price (DGOC's 1.91 reported vs HH Q3 average of 2.34- around 19% discount). There were much lower discounts in Q1 and Q2 19 (2%) though Q3 and Q4 '18 also showed mid teens discounts. Anyone have any idea what is happening here? My working assumption is that they are selling into locations with pricing discounted vs HH hence their pipeline acquisition strategy to redirect to higher priced locals, but they haven't been particularly transparent on this despite talking about it in general terms. Anyone here have better info?
2) Has anyone seen any actual capex figures for their SWM program? I very much like their apparent ability to sustain the volumes of legacy assets but the question is at what cost/ return. The $19mio H1 capex cannot be all SWM or they would be heavily negative NPV territory. I note the H1 19 report states they are getting SWM payback in days or months, which is reassuring but am curious to therefore know (a) actual SWM costs and (b) what the rest of the capex is going on - anyone have data?
3) anyone figured out what is going on with their NGL prices - they are way different to any market pricing I can find, hedged or unhedged

Thanks in advance to anyone who has looked into this