Member Info for pickedpeck

Meanwhile 10m shares is £10k. Going up a penny would be a ten bagger. Strangely if significant gold mineralisation is found that's not entirely impossible even relatively short term, but a 5x would be more likely.

Combined with GROC it's possible longer term to see the share price above a penny, or maybe even more.

Blacksteel,

Buybacks have a couple of interim benefits though, not least in terms of reducing dividend outflows. Not many other choices with free cash are going to have an in year 30% return.

The company has also likely made commitments to major investors to maintain the dividend. To do so the company may well choose to liquidate more assets particularly as it continues to trade at a large discount to NAV.

All this mean that whilst status quo structure would lead to revenue and profit decline, there is no sign that the company will suddenly decide to be a company content with status quo. History suggests constant change here acquisitions, disposals, buy backs, equity raise, and even organic growth via NXTlvl. It's hard to point at one event the management have executed which has been negative but the amount of churn has made it difficult to forecast what next.

One thing that could happen, indeed if the share price continues to tank, is a private equity take out. PE would be more than happy with the return levels on offer here, and at this price the company may be a sitting duck for a PE offer. An instant 50% premium to the current share price may not get board recommendation, partly due to Rusty's personal holdings, but I think a lot of holders may well take it if offered. Full return in 4 years is a massive carrot for PE, with an ongoing IRR of 30%+. On top no single big defensive holding, debt/equity under control, huge discount to NAV, stable hedged profit.

So watch for the signs of a bid, now that really would fry the shorters. At this price a bid will come.

Both thoughts are absurd.

Yes I have worked in oil and gas in the US. Yes there really are that many wells. In the oil and gas fields they are literally everywhere. You see them in fields as you drive by alongside the cattle.

I used to work just up the road from this location (off McHard Road, Pearland, Texas.). If you look in the fields you can see the shadows of the pumps (nodding donkeys). The pin is right on top of one, make sure you're in satellite view to see the shadows.

https://www.bing.com/maps?osid=0d2f3da0-ddf6-42d5-9963-6704f80c4616&cp=29.582495~-95.486185&lvl=20.08&style=h&pi=0&imgid=2c0ce19f-d670-4e38-930d-4bce29143d96&v=2&sV=2&form=S00027

See how many wells are in that field alone? They are stripper wells, producing oil but only just.

You also realise that DEC bought all these wells off someone else. They didn't drill any of them. Do you think they bought a load of fictitious assets with borrowed money?

That's the level of thinking you're at? Do the Wells exist?

Imagine for a moment a blue chip company like Conoco Philips would sell non existent wells to DEC. Or that the EPA wouldn't notice soemthing fishy in the emissions statements. Or that the 14 different banks lending against the estate wouldn't notice it was missing.

If it sounds absurd, looks absurd, on even the most trivial level of thinking seems absurd then guess what... It is actually absurd.

There is a really good question about when you HAVE to retire a well. That seems to underpin all of this.

If you're a big company with large operating expenses, loads of contractors, and high production targets then maybe you retire wells that are still flowing but only at a small percentage of their original production.

If you're a small company with low overheads, what is compelling you to shut down that same well? If it is still flowing, producing measurable output, its not leaking, and your well maintenance costs are lower than the value of the production why would you shut it down?

This is where you have to get the calculator out. Asset amortisation, maintenance costs, workover costs (if any), and ARO amortisation all intersect on a graph somewhere where the well becomes uneconomic.

All the arguments are about where that intersection is and when you incur the ARO costs. DEC are arguing that their maintenance costs and ARO liability are lower than industry norms, so their intersection point is further in the future with costs offset by lower levels of production. Some people obviously don't like that as it seems like sharp accounting practice or a fraud, but is really pretty simple. Oak blokes second hand car analogy is pretty close to the mark, although he would have been better using a Nissan Micra than a BMW, no chance of future classic status there!

The big wildcard and the other focus of attention is the evolving ESG requirements for older wells. That's why DEC have focused heavily and in advance of changing regulation on not only accurate measurement of emissions but also proactive elimination of them. Their answer to congress was strong on that front I thought, if not on all others.

One last mad thought. The big drop in the share price is actually good for shareholders who intend to hold rather than sell. The low share price effectively prevents equity dilution being used to raise capital for acquisitions, and the company will instead have to focus on debt reduction and profitability of the existing estate. That could well result in a much stronger company coming out of this drama than one which is tempted to over extend with more acquisitions.

How long for lab test results do we think? This isn't a ten ton low grade bulk sample so should be pretty quick I would have thought.

'Test what's in that bucket will you?'

'Can I do it after my tea break?'

'So long as you don't eat all the chocolate digestives.. '

'I'll have it done by lunch time!'

It would be a good promotion, but in order to make a statement on grades they need to send the samples to a lab for formal testing. One nugget doesn't make a mine, have you ever seen the film 'Gold'?

:)

Last message on the matter as I am starting to sound like the antigeorge.

There is a huge difference in per well cost for teams and equipment between a business retiring one well a year, one retiring 20 a year, and one retiring 250 a year.

The first two you have to hire not only equipment at retail, but also hire in Contractors as you won't have your own teams either, and probably not even your own SOPs and risk management plans. Everything will be done with the huge E&P upstream margins applied, no contractors think 'Oh, it's an oil and gas company, best knock the price down as they will be skint.'

By the time you get the economies of scale to be running a reasonable sized business with teams, execution templates, and equipment in house massive economies of scale kick in.

If that's not blatantly obvious I don't know what is.

Guess what, as demand grows they might even have to hire more staff tk drive the extra diggers. Imagine that.

Cross charge ex margin, or at fixed non commercial internal margin, also isn't unheard of.

And on top of that, why would anyone assume steady state for NXTlvl?

Surely as well retirement as a business accelerates they will be planning growth?

It's like 'thou shalt only have four JOHN deere diggers, and four will be the number of diggers you shall have for all time. Yeay, indeed shouldst thou consider expanding to five diggers you will be strucketh down by the God of capital amortisation, and your worldly estate will immediately revert to the sacred number of four diggers.'

Jeez. Hardly rocket science expanding a relatively low cost capital asset base to align with demand growth.

Nope, they don't have ARO obligations for 3rd party wells, why would they imply anything about them other than it's a profitable business line?

Why wouldn't they use their own equipment running their own business, the comparison is against their E&P peers that don't have their own equipment because they don't have asset retirement commercial businesses.

That's a bloody silly assumption of the worst case if you ask me.

By the way, having been in commercial engineering for E&P an 80% gross margin as bid is far from unhead of, my business unit would target 60% across all projects including the ones that went TU.

This nonsense about project margins and own equipment vs hire equipment is just FUD hype.

The earth moving equipment thing is a hilarious discussion.

Big companies need to work with big companies to rent equipment. That carries a massive premium, and is often not agile. You may end up hiring a digger, a loader, a dump truck, a drill etc for two weeks for a job that in reality take a day, but you have to book in advance as you won't know the exact schedule day and need the kit on site and available to work with your very expensive people when needed. Think $500 per day per item, x 4 x 10 - 14. $20,000 + of kit hire.

Compared to having your own equipment, your own delivery trucks, and combining a people team with kit as an integrated whole it's massively expensive to hire on a day basis, but cheaper if you are only using the equipment sporadically.

Buying, amortising over 5 or 6 years, and using intensively is much much cheaper, but you could only do that if you have a company or regular business to use the equipment intensively.

The difference could easily be in the $10,000+ bracket per job.

Oh dear oh dear rover. That's a real p1ss take.

:)

For once, and probably only once, I agree with George that the LSE is tighter than the circus that is the NY stock market. Some rules, like quarterly reporting, are good. Some are definitely derived from 'The Old West'.

Have none of you realised that 'Wolf of Wall Street' and 'Gold' are perilously close to documentaries?

Either way, the short attack is based on a right load of old bow locks dressed up as fact. Even George hasn't gone as far as the snowshoe guys.

Just a curious question... Do they need to RNS buy back every day or can they aggregate over a period, for example weekly? Seems the latter would save money on RNS posts, and really make no actual difference to the SP.

I'm not saying you didn't warn George, I am asking why you were there in the first place? Are you some sort of market philanthropy saint, wandering message boards to give naïve investors the heads up on falling stocks? Seems unlikely. Maybe you're just unlucky, 3 of the four companies you have posted about having sharp drops. Even I am not that unlucky! So, that leaves shorter, either independent or paid mouth piece. My bet is on independent.

You're right. I should have read what you post before. History of popping up on distressed company message boards? A few select quotes of yours:

Game - GMD.L

Can't believe the mugs who have buying into this con. I can't believe either that the company has been allowed to do it, again. Kiss goodbye to this punt, if you were dumb enough to believe a leopard can change it's spots, more fool you.

AFR.L

I'm here because I like a good comedy, and the comedians here are some of the best. As to the statement that '.....afren was a ftse listed company and this supposedly guarantees protection against fraud...' Yeah, right, just like 'the catholic church is a church and that supposedly guarantees protection against paedophilia'

AFR.L again

I know you're a sponge (meant as a compliment), absorbing as much info as you can, questioning, debating. You'll have a good future in investing. The others here ? I bet in the next 3 to 12 months they'll be ******** about one (or more) of their speculative punts that hasn't paid off. the sheep here are destined to be fleeced time and time again. And I have no sympathy for any of them. There's just no excuse for stupid.

George's firs DEC post

I'm surprised nobody here can see what's going on. DEC is being set up to file for Chapter 11 Bankruptcy. It's gpoing to run up its' debit, default, then 'reorganise' under the protection of chapter 11. Rusty keeps the company, shareholders get wiped out, a new DEC emerges from the ashes. It's that simple. Sorry to be the bearer of bad news guys

Looks a very similar set of messages to what you post here. Either you're a Jonah, rocking up on every sinking ship just in the nick of time to point out the leak... or something else.

That DEC post doesn't mention fraud though does it? When you started here you were posting about Chapter 11. Now that doesn't look likely given the company just recently improved liquidity you've moved on to something else.

Interesting you even briefly had time to slate Aviva, but that didn't last, a bit big to be affected eh?

If there is a fraud here george, you look like you're part of it rather than pointing it out.

George, that would involve me reading what you write, which given the number of hours in my life are finite... other priorities and all that.

Clued, George claims to still be a holder which beggars belief given what he posts here.

The drop today is plainly a short attack, no other possible reason. Even if what george says was true and accurate, no news in the public domain, no news coverage at all in fact, gas prices being up on the month but down on the day, and coinciding with US markets being closed for the day, all points to only one cause of the large shift so far today.

In the current markets it is crazy how shorters can sow doubt, employing a few loud mouths to spread disinformation. Look at some of the responses here.

Gar prices rise - Sell DEC as we are over hedged

Gas prices fall - Sell DEC as the hedges won't hold

Acquisition - Sell DEC as they have overpaid

Disposal - Sell DEC as they are selling key assets

Dividend is held - Sell DEC as the yield is too high

Dividend is cut - Sell DEC as they can't afford the dividend anymore

Rebuttal letter is comprehensive - Sell DEC as politicians have an agenda that will ignore the facts

Its colder than expected - Sell DEC as spring is not that far away

Consolidation - Sell DEC as the share price is too high

No Consolidation - Sell DEC as share price is too low and looks like a penny share

US Listing - Sell DEC as where are the shares coming from?

London only listing - Sell DEC as London doesn't like oil and gas

The thing is the company is continuing to make money, buy back shares, pay dividend, and has issued a solid rebuttal to the senate letter. You can ride this out and collect the dividends, currently more or less 7% a quarter. Next xd 29th Feb I believe.

Dear lord. Genius insight like that should be shared more widely. If only we had all had that insight before.

Looks like Grey George is right about some of the IQ levels on this board.

Jeez.