Member Info for ragnarlothbrok

They are free to make an offer as long as its in accordance with the takeover code. Check out Toscafund and TalkTalk

By my calcs this adds an additional £10m in post tax cash flows and 1.5p in EPS in 2022 compared to 2020. Assuming performance from H121 is continued we could see the company with EPS of 5.5p, free cash after all interest and lease repayments of $25m pa, free cash per share of 3.5p and debt free in 2-3 years.

The building market has been buoyant to generate those numbers and HSS is a very cyclical business moving in line with the housing and construction cycle so there is a big assumption about business activity, but saying that the new strategy seems to be working and there should still be some upside, particularly on costs from network optimisation.

I can understand the markets lack of reaction, its impatient and doesn't really care about a penny value stock with extremely limited free float and a SP which has lost 90% of its value since the IPO. Its very much a patient value recovery play and not for everyone

"The Paris-based insurer will stop investing in and underwriting upstream oil greenfield exploration projects... The insurer also intends to reduce its investment and insurance exposure to unconventional exploration and production, strengthening its criteria regarding arctic oil, tar sands and shale oil and gas"

Under the current criteria DEC looks pretty safe for AXA. Its mostly conventional production and doesn't explore, and the small exploration package it owns would be considered brownfield if they were to drill it. But saying that a lot of these funds are being hounded by environmental organisations so will need to carefully balance ESG and returns

It seems so obvious now, you have a leak you fix it. Its a shame that they didn't come out with this announcement a month ago. I'm sure they'll do a much better job of plugging their leaks than Thames water

Below is the document if anyone wants some bed time reading.
https://www.whitehouse.gov/wp-content/uploads/2021/11/US-Methane-Emissions-Reduction-Action-Plan-1.pdf

While the focus seems to be on the oil and gas industry it looks like the order of priority is flaring, pipelines and then wells. There may be some changes under state legislation about the number of wells that need to be plugged. I'm hoping to see something in their capital markets day about how long it will take to get all 70k wells and 17k of midstream pipeline checked and repaired, I'm sure that's what all the institutions are waiting to see. Note AXAs policy below (5% shareholder in DEC). They still seem to be supportive of conventional production so far

https://www.bloomberg.com/news/articles/2021-10-29/axa-to-cut-fossil-fuel-investments-with-industry-in-crosshairs

Genuine question here... for H2 2021 and FY 2022 (6 quarters) i'm expecting an average distribution of 4.33c/3.2p per share for a total of 19.3p. That is based on a 6% uplift for 2022 (17.5c/13p) compared to 2021 (16.5c/12.2p)

So we all know that the SP likes to fall by the equivalent dividend amount on ex dividend day. Does that mean by the payment of the 6th dividend (in 2023) the SP will be 105p-19.3p = 85.74p? Giving a trailing 12 month yield of 15%. I don't think so

Now just under 85% with the latest Toscafund reduction

Exponent 33.8% 15/12/2020
Ravensworth 27.5% 27/10/2021
Toscafund 14.16% 29/10/2021
CIP Merchant Capital 3.6% 29/3/2021
Hestia 5.6% 28/10/2021

https://www.miningweekly.com/article/us-unveils-crackdown-on-methane-from-oil-and-gas-industry-2021-11-02

These new rules (whatever they might be) should throw up opportunities for companies like DEC, well funded, relatively low debt, conservatively managed, robust public reporting and willing to accept the cost of cleaning up some decrepit assets as part of a larger more profitable package. And they may need to do it a little faster now than before all the attention, which isn't a bad thing

All good points JG. And DEC will be given a chance to respond and address the problem rationally. They already probably have a lot of ideas and implementations as we type. Its definitely a problem, its so easy to say, everyone is having a turn, but who is actually going to deal with it. Companies like this. Just measuring the emissions and tracking them over time will be a problem in itself, they certainly can't rely on Bloomberg reports to go traipsing around the country with handheld detectors and notepads all the time

I don't have a huge amount invested here and have been in and out over time but I'm also interested in the problem at an intellectual level and think the DEC story has been a fascinating one to follow over the years, lots of ups and downs and plenty of detractors and doubters. From short attacks at one end to random bulletin board posters stumbling in and out of chats like drunkards throwing darts there has been a steady stream of critics. Rusty has met each problem and challenge head on and this won't be any different

Quite interested to hear the DEC response...

"Large oil and gas producers, such as the U.S. and Canada, can deploy effective, relatively inexpensive technology to plug industry leaks today. But for France, Brazil and other countries whose methane emissions are largely tied to livestock and harder to cull, reductions would be slower. “Countries have widely varying methane emissions profiles and reduction potential, but all can contribute to achieving the collective global goal through additional domestic methane reduction and international cooperative actions,” the EU and U.S. said in a joint statement"... Despite the low bar for entry, the EU and U.S. weren’t able to convince super-polluters Russia and China to back the pact. Countries in the agreement now represent 15 of the world’s top 30 emitters, including Indonesia, ****stan, Argentina, Mexico, Nigeria, Iraq, Vietnam and Canada.

The pledge is for a collective goal of reducing global methane emissions by at least 30% from 2020 levels by 2030. I'm pretty sure that DEC will have a plan to cut methane emissions to almost nothing by 2030, and well before then, probably within the next couple of years. They may have to spend a little more on maintenance but we will find out a lot more about their plans at the upcoming capital markets event. If I was a farmer I would be much more worried about this pledge than a gas producer

The price movement today implies a huge reduction in gas demand or a significant increase in costs. I don't think either of these are likely. Gas is the most important fuel for the US, they simply can't cut off supply, not in 10 years. DEC have already proven that they can reduce emissions significantly on neglected acquired wells with simple routine maintenance.

Regarding the dividend, it looks like Cenkos have made an assumption that DEC will pay down debt rather than increase the dividend. Net debt falls to 1.6x, well below the target of 2.1x, while the payout ratio falls well below 40%. I don't know why they wouldn't apply company guidance

Slide 37 of the latest presentation below shows how FCF is calculated. Cenkos does appear to be using a different basis in history but looks right for 2022. If you believe the 2022 Hedged Adjusted EBITDA $544m thats a good starting point for the calc.

New investor presentation
https://d1io3yog0oux5.cloudfront.net/_b6b19a19b861612ff852f50bad67cf1d/dgoc/db/557/4517/pdf/DEC_Investor_Presentation_October_2021.pdf

I'm pretty sure you can sign up and read it for free. It says a lot of nice things about DEC and has some large numbers. I don't usually pay much mind to broker targets

A badly received trading update from another sub scale peer today. £14m MCap, £15m revenue, £3m EBITDA. After a period of very strong growth the pandemic looks to have knocked the wind out of their sails. Doesn't look to be a bad business, seems a bit of a harsh reaction

https://www.investegate.co.uk/sysgroup-plc--sys-/rns/trading-update-and-notice-of-results/202110290700056419Q/

With the exception of a couple of busy days in October average value traded was less than £50k. Pretty tight for this size company

Toscafund it is..updated holdings below. That covers the Hestia purchase but still a mystery where the rest came from. So 87% held by the top 5 holders

Exponent 33.8% 15/12/2020
Ravensworth 27.5% 27/10/2021
Toscafund 17.02% 29/10/2021
CIP Merchant Capital 3.6% 29/3/2021
Hestia 5.6% 28/10/2021

MillerJackson Cenkos has free cash flow for 2022 at $456m in its recent broker note. Assuming the payout is maintained the dividend would be 20% higher than your number. But their dividend forecast assumes a lower payout ratio

That announcement made me chuckle. I sold but I promise I'll buy them back if I can get them at a lower price sometime in the future hahahahahah

This disposal was for estate planning purposes and it is Mr. Peterson's intention to rebuild a shareholding in the Company by buying shares in the market, subject to applicable guidelines and regulations.

Of 700m issued shares, 40m on Wednesday and 80m on Tuesday = 120m or 17% of issued shares in 2 days seems awful strange. We know who bought (some of them) but who sold them...

I went through the TR1s for the last year. Date for each as below. There was also for Standard Life/Aberdeen on 5th Feb saying they dipped below 5% so they may still hold some as well. Add ins some employee shares and a few other bits and pieces means there is almost no free float.. surely the two recent additions must have come from either exponent or Tosca? 10% couldn't have been bought on-market in a couple of days

Exponent 33.8%___________15/12/2020
Ravensworth 27.5%________27/10/2021
Toscafund 22.4%___________1/4/2021
CIP Merchant Capital 3.6%___29/3/2021
Hestia 5.6% _______________28/10/2021