The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Meh,
'A 2016 study by Brookings Institution senior fellow Paul C. Light found that of 100 (Congressional) investigations undertaken between 1945 and 2012, only 16 produced a great deal of impact on a problem, while 24 produced a fair amount, 31 had some impact and 29 had little or no effect.'
60% chance of not a lot happening then.
That's 60% chance of not much happening if they manage to finish the investigation inside this electoral cycle, which given the timing there is a slim to zero chance of.
Why are you celebrating this like a dog that's just grown an extra dick George? I've always assumed you are still hanging around because you're trapped sitting on a big loss and are as bitter as cheap vinegar about it, but it could just be a dose of schadenfreude I suppose.
Either way, meh.
Leon,
Just to be clear, you want me to read past news to predict a macroeconomic future influence? I mean not to point out the entirely obvious too vehemently, but we are all trying to predict the future rather than review and pontificate on the past right? You can't make money on past share price movements unless I have missed something.
For example, when the El Nino conditions started to form in September / October it would have been reasonable to predict a problem by December with the Panama Canal, and also a milder than normal Northern US winter. In October there was no news articles about the problem, because there wasn't one to report on then.
Its also normal in an El Nino year for Northern Europe to be colder than normal and have significantly higher gas consumption. That isn't in the news yet, but give it until late January or so. Possible a good year for skiing :)
You could also have predicted a month ago that Iranian backed Houthis would expand their attacks on shipping as it got them in the headlines. Could you have predicted that the expanded attacks would close the Red Sea to large ships? Let's see what happens if they successfully sink one.
Asia buys a lot of its gas from the US. Can you predict what will happen if the two obvious canal based routes from the US east coast to Asia for LNG tankers are restricted? The routes via the Capes are long and expensive, reducing effective tanker capacity available and raising transport costs.
Can you also predict what happens in Europe if LNG tankers from Qatar can no longer use the Red Sea and Suez? The Cape route is a very long extra distance.
The US LNG sector moves with the HH LNG price. DEC are part of that sector regardless of their hedging position. US LNG prices respond to storage levels weather, and macro economic factors influencing supply.
Oh forgot to add, if the US exporters are impacted by the Panama canal being restricted surely that implies the Asian export terminals are on the East coast, and big enough to normally supply the Asian market. It's doesn't take much of a leap to use those same terminals to export to Europe instead.
Worya,
Its not Suez that's closed to shipping, it's the Yemen end of the Red Sea. Around 8% of world LNG shipping would normally pass through that choke point. I'm not sure I'd fancy driving an LNG tanker past Yemen just now.
https://www.hellenicshippingnews.com/red-sea-chokepoints-are-critical-for-international-oil-and-natural-gas-flows/
All it takes now is the Iranians to get snotty again about the Straights of Hormuz and there will be a shock to the price. A cynic might even suggest they would be encouraged to do this by the countries most likely to benefit (US, Russia).
I know I have been rattling on about El Nino for weeks but the Panama Canal water level things happens every time there is a strong El Nino, and yes in past years that has impacted the LNG price. This year there is a European export market which in the past was supplied from Russia, so the impact is not as bad a sit would be otherwise.
With regards to Sue, no US LNG goes West - East via Suez, Qatari and Australian gas would normally come the other way to Europe. Actually Qatar, UAE and Saudi gas exports to Asia will most likely be impacted, so Asia is up LNG sh*t creek with Panama canal restricted and Red Sea a no go for the big shipping companies. Australia will not be able to supply all Asian demand.
How this will all play out is very different than previous El Nino years, so many different factors. Russian gas, Suez, US Export to EU, the new abundance of LNG tankers,
Worth keeping an eye here:
https://oilprice.com/futures/natural-gas/
Short put on probably everything in the natural gas sector, although could already be showing as a massive oops. US gas prices had plummeted to $2.25 on Wednesday, but have bounced more than 10% since then and are back above $2.50 now.
Looks like the mild winter is being offset somewhat by export demand. Who knew.
All the futures contracts started climbing today too after a pretty awful month, still 33% in a month down despite the rally since Wednesday.
El Nino always sees off some unhedged players, in 2015 it was a bloodbath. Good for constraining future supply though.
I suspect it will be Monday now.
At the current dividend pay out rate, if maintained, you get all your capital back as dividends in 4.5 years, plus whatever residual value exists then. The current price bets they go to zero in less than that time, or can't maintain the dividend. I can understand them not being on a pe in double figures, but a pe in the region of 1 seems excessively harsh.
One of the things about decline models is they are non linear. A 10% annual decline is 13kboe, then 12kboe, then 11k, 10k etc. That leaves production at 100kboe after 4 years rather than 3... In fact after 10years of 10% decline rather than zero production (10x10) production would be nearly 50kboe.
We can only really argue about decline rates and production in hindsight though, right now the reported figures all line up with what the company is saying.
George,
Its not a wide group that can see it though either is it? Only showing as 0.66% shorts, if it was 'known' market news surely the shorters would be here in droves. You've slated all and sundry here for thinking they are outsmarting the market, but isn't that exactly what you're doing too? Have you put money where mouth is and put a CFD short on?
I emailed Doug Kris at the company about the listing in NY and just got this reply:
'We anticipate trading to commence in the next week or so. Unfortunately, Government entities tend to work at a snails pace, especially around the holidays. The symbol on the NYSE will be “DEC”.
Thanks, Doug'
OK George, I'll bite.
Your position is that DEC is fraudulently overstating it's production and reserves and understating it's decline rate. It's making good on it's hedged supply contracts by buying on the open market, effectively betting that gas prices will be below its hedged rates so it can hide its production shortfalls. If gas prices rise above its hedged rates then it is screwed and loses money fast. To further obscure production shortfalls it keeps buying wells of questionable status and claims to have a smart well workover program more agile than the majors which brings extra production online from these tired wells. Recent resignation of the CFO is also an interesting point.
Does that sum it up?
I'm guessing you're still invested here though, having bought in at a much higher price. I've looked back through your posting history and recently it seems to be just on DEC.
So...
It's an interesting theory, your only evidence seems to be the hedge adjustment loss made in 2022. We don't actually know the nature of the adjustments that caused that loss but it is a tricky one to explain. There could be more than one cause though. Having sold hedges into the spike, having to lower them through renegotiation quickly once the worst of the price hike had subsided being the obvious one. The spike didn't last all year so there was a lot of activity on the way up as well as down. Lots of burnt fingers.
Secondly where is audit and accountability? Lots of people would have to be complicit and be bale to keep the secrets, although I agree a huge and fractured estate naturally obscures the data. Chief though would be the bankers lending against the asset backed securities, surely they have to do at least some diligence post 2008? It's not sub prime, but they would have to be giant mugs to lend against worthless assets - again.
Third - Why dual list? Surely the scrutiny in the US on this will be tighter, with more native expertise and closer to home ability to whistle blow.
So it's either a massive fraud and you're the only one to see it, or the company is what it says on the tin and is making a healthy profit doing what it's doing.
I'm a tourist here, my average is under 70p /1400p, I'm holding for a few months to see the effect of the US listing and will probably see final results. What would you hypothesise on those given the recent gas price lows and slow recovery?
That UT is a banger. Good buy after the bell though, wonder if it is more BB.
Will the buy back continue on LSE or switch to NYSE trades. IT looks like the buy backs happen in the afternoon so are maybe being run from the US, why wouldn't they just continue after London closes? Does it matter?
Having indicated the 11th they would have had to RNS a delay. There or abouts is in case if unforeseen delays to the registration. You have to think 1300 is a contrived price for Monday listing too, it stuck to 1300 like glue on Friday afternoon.
He does post some rational thoughts, trouble is the market is irrational.
Georgi, you appear only able to criticise the thoughts of others and offer absolutely nothing of your own either positive or negative. That's either because you don't have any of your own thoughts, or those that you do have are not credible enough to share.
So unless you actually have something interesting to say I suggest saying nothing.
Joed,
I agree it is not showing in the prices at the moment, but bear in kind traders are probably anticipating a year like 2016 where gas prices hit a near 20 year low. My point is that expectation may be misplaced and prices might fall nowhere near as much as traders are currently anticipating.
I think at a macro level there is a market movement that is different that the market has not factored in. The best example of this is the case between Venture Global and Shell/BP/Repsol
https://www.reuters.com/business/energy/bp-edison-shell-ask-us-eu-intervene-venture-global-lng-dispute-2023-11-11/
Basics of the case aside it shows that the O&G giants are short enough of supply to have to consider legal action against a US exporter for not fulfilling their contract. It also shows Venture Global either having a preferable home market or being unable to export at the rate required, or both. It also shows huge demand either way for export of US LNG , the quote 'Shell accused Venture Global LNG of diverting resources into building a second LNG export plant rather than completing repairs to its first plant' is absolutely telling. Venture Global can't build infrastructure fast enough to cope with demand.
I've been harping on about El Nino and winter weather. US LNG prices and markets are hugely influenced by weather forecasting in a way that's incomprehensible if you are not part of that system. El Nino literally makes gas traders Sh*t Bricks. Do your own research on it, but the article below has a general tone.
https://about.bnef.com/blog/el-nino-foreshadows-new-challenges-to-global-gas-market/
This one shows it is not just me...
https://seekingalpha.com/article/4640435-predicting-different-flavors-of-el-nino-for-natural-gas-market
Reconciling massive export demand vs El Nino year weather shows a major LNG market shift that has not existed before. In previous El Nino years the LNG market has been massively disrupted, either through Panama Canal flow being restricted or lower than normal US domestic demand. This year there is an easy to access export route to Europe, contracts for spare capacity will be taken up by Europe.
Longer term is where it could get really interesting. Reverse the Venture Global case. Once their export infrastructure is built, and VG is able to sell to Europe at premium prices, domestic supply at lower prices will become restricted. Prices in the out years will rise significantly due to more constrained US supply.
Needless to say this all affects DEC hedging strategy and future income.
It's because a mild winter is forecast in the US due to the strong El Nino. Last time there was a strong El Nino in 2015 it wiped out large parts of the US LNG and fracking industry.
DEC is more than 85% hedged for 2024 already and likely has deals into 2025 now. They themselves have said prices rise into 2025