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Another excellent update from The Oak Bloke on substance. Those concerned regarding the depletion rate, the sustainability of the dividend and the dragging "weight" of the overdraft facility costs should find it interesting. Pretty clear from his excellent analysis that DEC first priority is to ensure it does not breach its banking covenants even if this means that it must refrain from large scale retirement of expensive equity. It confirms my view that DEC may be forced to digest it's recent acquisitions before returning to the buffet table for more. Many on this board who have been with DEC for years will be comforted that Rusty has not abandoned his risk averse strategy. Those looking for a rapid return to £1.00 -£1.20 may have to wait til interest rates fall substantially. Assuming that the dividend remains a priority over capital growth they should be well rewarded for the wait. With a UK GE on the horizon, persistent wage led inflation, millions of mortgages due for renewal at 'punitive ' rates and UK government debt spiraling out of control Mr UK Market will be starved of liquidity for the foreseeable with sterling under pressure. Not many places to hide!

Last target price from from them was £1.00...been that for some time

Https://www.naturalgasintel.com/questions-loom-over-haynesville-production-as-lng-export-capacity-surge-nears/?v=LDC%20GC%20RoundUp. No wonder Rusty is frustrated. Shortage of gas forecast to meet LNG demand. These LNG plants need to run 24/7 to make money..

Reading the Oak Blokes substack again (better than any analyst report) I focus on the cash flow. DEC threw off approx $174MM in cash flow from operations (before acquisitions) last six months, with margins of approx 50%. DEC has constantly generated these types of returns since the IPO but the reporting of costs associated with the acquisitions can be confusing. Deduct $84 MM from this for dividends leaves plenty of wriggle room. There are other investment costs including lease payments. However for a company throwing off over $300 million annually in cash flow with fixed amortised debt and a multi bank credit facility this is not a company in crisis IMO. The current share price will likely mean that acquisitions may be off the table for a time but I can live with that (and the next financials may be easier to analyse). I suspect that we are seeing selling from institutions dealing with redemptions. Mid and small cap stocks are getting hammered as are the VC trusts. So many good companies trading at ridiculous discounts to NAV. The good news for DEC investors is that it will not need to borrow to fund operations. I have been involved professionally on the financial markets for over 30 years. I have seen this reaction from investors a dozen times (usually in response to a debt crisis) and I feel this is just another example. US NAT has is the cheapest energy on the planet currently. DEC owns a lot of it purchased at attractive rates. It has largely insulated it's borrowings from interest rate risk and I suspect can squeeze costs even more if it needs to. We are all annoyed at the slow BB, the recent equity issuances but I don't believe the basic business model is under threat. Read the Oak Blokes analysis. Make your own mind up

Average_Down. I agree. If only governments around the world were as prudent as DEC in management of their debt. Trillions of dollar, sterling and Euro debt will require rolling over in the next few years by governments, corporates and mortgages at rates 2-3X higher than when issued. For this reason I don't see the global equity markets being particularly attractive for the foreseeable.. Surprised that Mr Market is being so harsh towards DEC given its efforts to mitigate interest rate and revenues risk. It may be that we will be facing a period when DECs growth aspirations will be restricted but as long as they stick to their knitting, investor sentiment will eventually change. Demand for copper, iron ore or motor cars will be dependent on the health of the global economy. Natural gas and on particular US NAT gas is in a sweet spot, the cheapest scalable reliable and transportable energy source on the planet. Sharing the returns with a generous dividend policy will be an attractive attribute particularly at the current share price

Worya. DEC is like any other mining, O&G or resource company. The assets deplete year on year as they are extracted. The difference is that most resource companies have to take the risk of exploration, infrastructure investment,. permitting etc.....DEC does not...the simple fact is that we'll depletion rates are pretty accurate. DEC does not want to run it's business as a "run off"...it has a unique strategy which it believes can be grown substantially over the next decades. For the moment it looks like the window for new acquisitions may be closed. It will reopen for sure, maybe in three months or perhaps three years. Frustrating but the simple fact is that it does not need new acquisitions to sustain its current business.

Alessandro. Approx 80% of DEC debt is both fixed rate and importantly amortised. The capital and interest payment schedule is shown on recent company presentations. Early repayment of this debt would be both impractical and illogical. The long term hedging strategy of the company is to match revenues with liabilities. By around 2030, assuming no further acquisitions DEC would be debt free.

Notrex. Plugging is a low tech business. Major cost is manpower and concrete. The key to reducing costs is arranging the schedule to ensure that crews are actually plugging rather than driving around the state. DEC has a huge advantage in that it can bid for work where it wants and organise it around plugging its own wells . Lots of the orphan wells to be plugged by states are orphans, abandoned for years, difficult to access and also requiring additional remedial work. DEC is uniquely placed to pick the ripest fruit driving efficiency and keeping costs low. Nice business if you are organised

Malcy X post theoakbloke.substack.com/p/dec-the-halls..... finally an interesting clear explanation of DECs hedging strategy which explains the massive "losses" of DEC when NG prices rise!

"Malcy response (written when DEC share price significantly higher)...."Very interesting, I wrote something similar but not so technical a few months ago. The bottom line is that you could stop the company now and still pay the dividends for 5 years and then the company would be bigger than it is now." DYOR and GLTA!

Https://blog.gorozen.com/blog/natural-gas-markets?_hsmi=277112110&_hsenc=p2ANqtz-808DMXRnS-wfr-jhuHPDQS9f4KVgj_rNZr7q3lrABpoUTJA8eqX5v3m122lbtDnx2aZeOxULS04ybXkJv6YmyIIImHPg. Old but nothing has changed.

Alessandro. It came up on investing.com but has disappeared

Jeffries analyst just updated opinion on DEC. I don't have access to the full statement. Anyone have it? (Jeffries have always been ultra cautious on DEC. Previous target price was £1

Watching the past few days action it seems to me that the rising interest rates have been a bloodbath for many funds particularly for open ended income+growth funds dealing with redemptions. PI's see the drop and bail out and we enter a vortex. Put a couple of bits of news like the departure of the CFO and the stock falls. The UK funds have been haemorrhaging assets over the past few years . Those that remain tend to focus on the FTSE 100 . I am sure DEC are perplexed at the extent of the drop and how fickle is the UK market. Looks like DEC will churn around at these levels for some time. I hope they just focus on the biz extracting value from their portfolio whilst their ABL commitments run off. Once short interest rates start to fall ( will they?) hopefully confidence will return.. I see sterling continue to weaken as a GE approaches which should make DEC particularly attractive. GLTA

100% agree. There is currently no headroom for acquisitions and a placement is out of the question. A div cut would be a disaster but I suspect Rusty is keen to avoid any claim of panic measures. It's in his DNA. I suspect he wil be on a plane to London to meet with his top 10 shareholders to calm their nerves. My biggest concern remains that a predator comes on and gobbles the company for 90p

Gavster. Agreed. A lot of damage has been done over past couple of weeks. Many investors will not return.

DEC operates in a risky business. It can't help that but it's strategy from day1 is to take out all the risks it controls.

I would love them to do a million share BB but that's not their style. They will look in their piggy bank every morning and decide what they need for that day and just hoover up a few more shares.

Rusty wants to buy assets. He knows that all tier1 acreage has been drilled and that over the next 5-10 years NG prices will rise. New drilling will become increasingly expensive and face opposition and DEC will own a big portfolio of boring , fully paid for reserves that he can draw down over the next 20+ years. Meanwhile he will be plugging the million+ old wells paid for by the government.

There is not much to dislike. He must be frustrated as hell with the current situation. A raise in the US and access to US inst money would have turbo charged the business.

But that's life...

Well anyone entering today has an extra 20% downside coverage with the current yield. The pipelines they own are worth more than that and the $2 billion of gas...zero..

Yes but that's 20% of the debt. With respect you were arguing for repayment of the fixed

Lukee. "Reduce it's fixed rate debt"? Why would it do that? It's fixed rate at rates far lower than current rates and the cash flow from underlying assets repays capital and interest. The market is concerned about it's short term variable rate debt!

Spelac... 80% of their debt is fixed rate at lower rates and is amortised

Andy. I agree. They have their emmisions at super low levels. Could be great news for their plugging business though. This is madness for a company generating $500 million EBITDA