Member Info for PIKEMAN

Thanks Rogue_Radar. Difficult to know where to begin with their analysis. Obviously they did not understand the value of fixed cost. asset backer borrowing, not the fact that the debt is amortised and not a bullet payment. Nor that they have acquired a big portfolio rapidly in a benign environment for investors. The old chestnut of the marked to market treatment in the accounts of derivatives not surprisingly caused confusion. It's clear that the vast majority of investors won't understand that DEC is run more like a real estate fund than a traditional O&G company, buying assets, securing fixed finance and maximising revenues from the properties, all whilst keeping costs under control. With regard to the future acquisition of new assets, the cost of finance will be reflected in the price DEC will pay for the assets. There will be plenty available to acquire, preferably from over leveraged, bank debt funded companies who find themselves in financial distress. Even if they can't find new assets, attractive returns from DEC in a "run down" of existing assets. Given the above, I don't expect DEC to trade on a 6-7% yield but happy to keep clipping and reinvesting my dividends. I certainly don't expect the broader market to offer consistent double digit returns over the next few years. As always DYOR but there is better analysis out there than this.

Jiffy . As you know the BB was never a "target". It was a notification only of the ability and the parameters of any such activity. We know at what price they are likely to implement it but that could change over the next 9 months.

I suspect that it's more likely to to be an opportunity. We know that Rusty felt that this year would be transformative. There has been no BB activity as you say for weeks and no insider activity either. Raising cash from non strategic assets and general FCF means that they are primed and ready to go for the right opportunity. Any moves back below 90p when the next dividend is paid would be am early Xmas present OMO. We will see....

The good thing is that as the loans are paid down (and as long as they can sustain production) the free cash flow should rise. Lots of hidden value here that most of Mr market has yet to realise. Must be frustrating for Rusty but he is not a seller of his shares and (like me) I assume to clip dividends for the next few years

The DEC debt is a little like a mortgage where the capital borrowed is paid down gradually over the life of the loan rather than at the end as with most normal bank loans. Much much less risk for the bank which otherwise relies on the lender having enough money to pay the capital on maturity or being able to refinance with another loan using this new money to repay it. As a consequence DEC can borrow at a lower interest rate.

Https://www.ft.com/content/0cf7beaa-2eb7-462e-af3d-56aa1be466c1 interesting times when the industry is under stress. Lots of companies scrambling for cash and asset sales...great opportunity for those with good stable cash flow and efficient production. Now who could that be?🤔

Recognition by the markets that interest rates have either peaked/will peak shortly and more likely fall when economy slows. In this environment the DEC yield becomes v attractive. Share price has been building a base for weeks and with weak longs having exited does not take much to move the share price sharply higher. Long may it continue.

With recent non-core asset disposals, free cash generated from normal ops plus renewal of borrowing facilities from it's banks, I suspect Rusty is planning on something major..... Perhaps a back door entry to a US listing? DEC is not alone amongst US gas companies trading at a discount..

Agreed. The non-core acreage sold looks to be just a tiny %age of that available to sell which is valued at basically nothing by most analysts. Probably a minimum $160MM-$300MM of hidden value. Extract these numbers from the current market cap and the value of the core business is ludicrously low. Patience required but with these divs well rewarded...

Jim800. I agree. The BB RNS is only another necessary Investor disclosure. It is very clear it's neither hype nor a commitment. I would imagine that under certain circumstances DEC will take advantage of the opportunity. It does indicate that the company feels it's shares are at or approaching a level that the company feels are significantly undervalued but it's for investors to determine whether or not they agree. DEC has a business strategy and it would appear that management is determined to execute.

Yes another piece of nice business which will go a long way to pay for any future buybacks or acquisitions. Can't help but feel that something interesting is "cooking"...

I remember when AMZN went public in the 90's (when basically was selling only books). I was managing/advising money at time. Clients complained re share performance as AMZN constantly reinvesting in logistics at expense of profits for years. DEC is no AMZN but all it can do is follow it's business strategy. Most investors don't have the patience but if you believe in the strategy and management at some point you will be well rewarded. Short term share price is a function of investor sentiment only. Long term performance is a function of strategy and management. That's the difference between the Buffet approach and the rest.

Maths good enough. Point well made. It seems that the logic is to use the buybacks to put a floor on the share price (0.85-0.86) which in theory should give new investors comfort also supported by the yield.

Well as someone once said, God isn't making any more of the stuff and global enviro/energy policies mean that what we have left will be subject to rationing. The likely outcome therefore is higher prices for those lucky ones that have it. Patience is required as anything O&G is now viewed by the institutional investment community like tobacco stocks. They all know there is value there but few are willing to admit and commit funds due to ESG constraints. Nothing wrong with collecting and reinvesting double digit dividends while waiting for a gradual change in sentiment....

I figure their broker will have the info on order patterns and particularly those of any weak insto holders. Remember most have position limits on prop trading and funds have redemption requests to deal with and I guess we have had lots of reluctant sellers the past few months as bond yields have risen. Unfortunately selling begets more selling. I doubt DEC will utilize all the 10% BB headroom but confident that they will pick their spot to get the most bang for their buck. In the meantime I just keep clipping those div coupons. It's not as if the broader market is on fire..

Yes the quick easy prime acreage plays in the Haynesville and Permian basin are basically finished which means several things.

1. New wells will be less productive and total domestic gas volumes will start to decline.

2. The cheap NG prices in the USA will be consigned to history.

3. Those companies set up to extract long term slowly depleting reserves will see the value of these reserves rise significantly.

4. For reasons of national energy security, US gov policy will continue to incentivise those keeping wells in production with tax breaks.

5. Lots of opportunities for those with the economies of scale to acquire assets from traditional E&P producers or conduct low cost infill drilling.

6. Can't think of a company that is set up to prosper in such an environment.....oh wait a minute!😁👍

Https://email.gorozen.com/permian-basin-is-depleting-1?ecid=ACsprvtFDGGr900sC5GiYBAHyd25k_XJU0v3Ubg4lPWIyCE0bTsAbsHbOP9W-3s6AYW5GnfW27d_&_hsmi=264629396&_hsenc=p2ANqtz-9JaMrwP03F1tLSEVZj0kRVi6AyLZnyhZ4bhaXneo51h4EiGPB_Xkg7H2pZB8JYTNuZA_P6n72Wk45qq9D4t7XeBgjQpg

"slow debt reduction"..the debt amortized, fixed rate and effectively non-recourse to the parent. On maturity DEC will own the assets debt free. No requirement to refinance.

With the formal announcement of the BB and DECs recent activity between £.83/84 any buyer of the stock at current prices has a very significant safety net just a few pence lower. We can also have comfort that the business is performing well otherwise I doubt that Rusty would have turned up in NYK to promote the business. With 3 years divs basically cooked in with the hedging that's an additional huge incentive. The question any investor must be asking at the moment is where else in the broader market can you find this risk/reward? I have searched but I can't find anything that compares.

Machin. Most of their debt is in fixed life, asset backed amortized structures. Early repayment of this makes no sense and would be impractical. They have very little in the way of a variable rate overdraft debt. The 15%+ dividend is a far greater financial expense to carry. I don't see this buy back as inhibiting their ability to do deals. It should soak up the sales of what I believe are institution reluctant sellers and should also give comfort to new investors. It's a big enough commitment to show that the board is serious but not too big to restrict their plans. I suspect that rather than asset purchases, this year may likely be the year of the merger...time will tell but doing nothing to support the share price was never an option.