Member Info for TerryM1

Notrex

"pro-actively engage with the issues and start asking the awkward questions"

Messaged back IR at DEC after a this bland reply

"Appreciate your note and engagement around the share price. We do recognize the importance of share performance and the interests of our shareholders.

We constantly evaluate of our capital allocation strategy and will continue to monitor current market dynamics as balance return to shareholders through dividends with share repurchases, along with strategic accretive acquisitions."

Asking them for their explanation why they are not Buying Back more shares as it will save a lot in dividends given borrowing costs, also asked for a proper reply not some general statement, don't think it will do any good but what else can we do except sell out at a loss.

Another share which is a disaster I have is Capita, board was full of people who were fans of the company like is was their local football team. After one too many problems and latest SP collapse almost all have changed their mind or gone away with the tail between their legs. The moral is don't fall in love with a share, ask difficult questions and do not fully trust the BOD, as PIs you are a long way down the pecking order.

Broomtree

"Will be watching in particular if they continue to state the next divi when they announce, that could tell us a lot"

Agreed, with lack of any other news I have also been thinking about this. If DEC can hold or just perhaps increase the divi we will have a good sign, if it goes down (don't know why it should) we will no doubt be given an explanation why this has happened and will throw some light why we have this SP. However if it does go down dread to think what will happen. fingers crossed.

Clued

"Notrex, are you also, like TerryM1, advising we should all sell out before the inevitable hedge fund take out or simply collapse to zero ?"

I repeat, I am NOT ADVISING YOU OR ANYONE ELSE TO DO ANYTHING or that DEC will collapse to zero.

IMO if it does not buy anymore O&G wells it will run down, debts will be paid off in a few years leaving plenty left for shareholders until it has used up all it's O&G and will make a tidy profit on capping other wells on the way. Perhaps not the best out come but as shareholders we should do fine.

I am saying the lower the SP goes the more chance it gets taken out by a predator at a low ball price which is not fine by me.

Thehickster

Yes,hard to believe the SQZ tailwind deal went through as it is so terrible, we all knew this and has been proved by the current SP but still the IIs pushed it through. Unfortunately it is a good example of what a BOD can and will do to protect themselves, if Kistos or someone else took them over the BOD would be gone, disgusting situation.

Clued

I am not giving advice you must make up you own mind, also I am not saying DEC is on the way out.

This is all just my opinion .

DEC ia a public listed company so the BOD has a duty of care to the shareholders and that includes the SP.

In DECs case the SP is very important as from time to time it raises money in the markets to buy assets and as it's assets demish daily as it does not drill, it has so far been able to borrow money for this same purpose. However in this brave new ESG world borrowing for O&G is getting more and more difficult. Without new assets (unless it turns itself into a capping company) it will eveitable run down which should be OK for shareholders. But the elephant in the room is the chance it gets taken out by a predator at a knock down price if SP keeps falling, the IIs will do their own deals alone with the BOD and some of IIs will just be happy to cut their loses and get out due to ESG policies and redemptions which show no sign of stopping.

Clued

"TerryM1, aren't the Buy Backs supporting the price somewhat ?"

Probably a small amount as the SP rises a little on the days when it happens but are sporadic and anaemic and are a tiny fraction of what was passed which was 10%.

I seen companies taken private saying the market is undervaluing us so no point is staying listed. As always PIs get shafted. In many cases the company could have prevented the under valuation but why do that when you can get the whole lot for a song and then perhaps re-float in a few years time win win for them.

" The risk I see is that Rusty gives up on the fickle public markets and hitches his cart to a PE group. No more market compliance, accounting headaches, AGMs etc...bliss!"

This is something I have been considering is going on, don't support the SP letting it drop, do a sweetheart deal with PE at a low SP. What's not to like unless you are one of those PIs losing hard earned money.

"Rusty will just get trampled underfoot by II's in the stampede for the (relatively) lucrative exit."

If my experience is anything to go by Rusty will be offered a sweetheart deal in the new company the IIs will arrange their own deals and the PIs will be left out to dry has as happened twice this year to me. Also with SQZ which not yet taken over but went into arrangements to buy very overpriced assets for a large part of the company and a huge pile of cash and SP collapsed. PIs angry, lost shed loads of money but the BOD are doing very well.

This is a brutal business and the PIs always come off worst.

"The company can't be taken over by a predatory hedge fund."

Tell that to the shareholders of 2 companies that I owed which were taken over at knockdown prices this year, take a look at KAPE and BOTB, both taken private, PIs were against it but had no power. Also have another 2 going soon at better but still not good prices.

PIKEMAN

“TerryM1. Dividends are rewards for investors. Why would DEC seek to cut them unless absolutely necessary”

Wrong they are not rewards for being good or something else they are an essential part of owning shares in a company like DEC, why else are we here. Who is said DEC is going to cut the dividends, given how fragile the SP is I dread to think what would happen, could end up half of where it is now or worse.

“ Investors buying here believe they will be well rewarded as they should be”

What investors, can’t be many of them at present otherwise the SP would not be crashing on low volumes. They are staying away as there is no support for the SP which at best means you can buy cheaper later and keep you cash on deposit. The idea that investors will buy for a big dividend when the SP is going down a lot faster than the dividend is farcical.

“The RCF is for operational purposes not for supporting the SP.”

What are these operational purposes? I thought you said DEC can cover its debts and dividends so why does DEC need a potential large pile of cash just to keep it going. As far as I can see all expenses and dividends are well covered by selling Gas and Oil without the need to borrow, if not we are in serious trouble.

"DEC will be judged how it manages its business not the share price"

Really, who are these judges, is it some type of beauty competition, I judge a share on total return which I believe is the accepted way to judge performance, nothing else makes sense and DEC is failing badly. You may think are doing a great job but the market clearly does not.

The comparison with Amazon may well prove my point, Amazon was growing by investing money in new infrastructure, DEC by its nature is shrinking and requires new assets to keep going. With the share price this low is cannot raise funds in the market to buy these assets and it will become more and more difficult to borrow money for O&G projects as time goes on so unlike Amazon if this continues DEC will shrink to nothing as the O&G run out.

PIKEMAN

DEC passed a resolution to BB to BB 10%, but not sure it would even need to go anywhere near 8% (which is just a guess) to have a significant difference in the SP, this is based on the effect of buying a few hundred thousand a day has on the SP when they get round to doing this. Most days the volume is around 2m give or take so if they BB 10% per day around 200,000 every day that is tiny in the great scheme of things but will make a significant difference partly by adding back more confidence.

Cant see why it is Madness to save a huge amount of cash on each dividend compared to the interest being paid, as I say Just simple arithmetic. This will all be a mute point if taken over for bargain basement price.

Jim800

For a start there is the RCF and I am sure that get more from elsewhere as you say

"They didn't seem to have much issue increasing the RCF in March"

So you are saying you are happy to get dividends while the SP drops much more than the dividend, in which case I have some swamp land in the Mississippi to sell you.

Jim800

SP now 67p getting close to all time lows, at what point for you does this become a crisis,

60, 55, 50. Please let me know how low you think this should go before action is taken or do we all just ignore the price and say don't worry about all the money you lost you get some back in dividends and perhaps all of it in time if not takeover for a knock down price.

Jim800

“Your simple arithmetic is so simple it has forgotten the repayment of the capital you borrow to enlarge the BBs to the level you want.”

Not at all, just simple maths, the saved dividend cash does not disappear, to help you understand I will explain in more detail.

Borrow money at say 8% buy shares saving 20%, left with 12%, use 12% to pay back capital, debt reduced by 12%, as capital is paid back every quarter so interest payments are reducing every quarter leaving more saved dividend money to pay back even more capital, bit like a repayment mortgage, the longer it runs the more payments (dividend saving) are used to pay back capital. Interest rates are predicted to drop in the medium term giving even more bang for your bucks reducing debt further and quicker. When this debt paid back use money saved from dividends for more acquisitions or pay off other debt, it is what is called long term planning. You can even keep shares in treasury and if/when market improves sell them off and repay debt or use to buy more assets. Not difficult.

“Where would you stop? Buy back all the DEC shares except for yours and mine?”

No just one which is mine, I will be worth a fortune, but in real life when the SP reaches a realistic level, perhaps when dividends are 20% above the cost of interest.

“The BoD are there to run the company and make a profit, not spend all their efforts and money we don't have artificially trying to manipulate the SP. What you are really saying is "Increase the BBs so SP rises and I can sell out" - not Rusty's top priority!”

Tell this to Shell, BP et all where is working well. The BOD has a duty of care to the shareholders not run it as a private company and ignore the shareholders and SP, this will end in tears and a probable takeover at a low price.

“They didn't seem to have much issue increasing the RCF in March as this is dependant on cashflow to repay the debt, not market sentiment.”

That was March, wake and smell the ESG coffee the future is changing and bank lending is changing due to activist EST Funds which hold shares in banks, see how many banks have banned O&G lending and take a look at the trouble Barclays are having with ESG shareholders. I would not like to have to raise funds in a few years time for O&G project. "The Times They Are A-Changin'"

“What they shouldn't be doing is borrowing more money to increase BBs whose effectiveness is not proven.”

It is proven by the maths see above let alone securing a better future for DEC, without a takeover.

Jim800

I don’t think you understand what I am saying, I will make it plain, I like a number of others will sell if this situation continues and the only way at present to stop this is to increase BBs. As I have said Shell, BP, many companies and financial analysts understand the situation and it is not regarded, as a knee jerk reaction. I want to be a shareholder but there is no point in getting great dividends if the SP drops more than the dividends, financial madness and then perhaps followed by a takeover at a very low price; I am not here to lose money. DEC is at present my worst performing share and it is caused by a BOD out of touch with the markets unless there is some undisclosed serious problem.

Not only does “saving a 20% dividend year on year looks attractive” it is very attractive when you are paying under half that to borrow the money just simple arithmetic. Everything you save on dividends in excess of the interest can be used to pay down debt so that will also reduce in time along with interest payments, do the maths.

It also helps with confidence and leaves the option open for raising money on the markets in the future as they will find it harder and harder to borrow money as time goes on because of ESG policies so enter an managed decline.

Clued

"If HMG was sincere about ESG then they wouldn't even charge for such Wind licences"

HMG think they should tax/make money on everything including the wind.

PIKEMAN

I take your point but I say it is crazy not to either add to or pay back less debt when interest costs are less than half of the cost of the dividends and while DEC can still borrow money. Interest rates are set to fall in the medium term so giving an even better return on BBs when the SP is so low, it is accretive and just simple arithmetic. We are in a new era with less money to invest in O&G mostly due to ESG policies and also less money available in general, Shell, BP and many others understand this so are on huge BB programs and it is working well, unfortunately the BOD does seem to understand times have changed.

Agreed many other shares are at crazy low prices but how many are yielding over 20%, none that are not dividend traps so nowhere near this crazy price and in fact very few less than 10% because many are using BBs to limit the damage.

The SP will bear the scars of what has happened for a long time to come, I was going to increase my holding at some point but now I will reduce at the right time because of this debacle. I have seen a number of posts on ADVFN where large PIs have sold out as they have lost confidence in DEC due to inaction by the BOD on BBs, the market for DEC shares is shrinking fast due to lack of confidence, ESG and lack of money in general. IMO the best option and perhaps the only sensible option is to reduce the size of market for DEC shares with BBs like many other O&G companies.

The SP crash leaves DEC in a difficult position because the SP will not support another capital raise without seriously diluting shareholders funds, more pressure on the SP. So if DEC is to buy more assets it has to borrow the money, although interest rates will reduce the old days of ZIRP are gone for good or at least a very long time. Also because of ESG policies it will become more difficult and expensive to borrow for O&G projects, we are seeing this now with many banks refusing to lend for these projects and others under a lot of pressure to stop this leading.

DEC does not have to buy more assets and can just run down what it has and do fine but this is then a shrinking company and will eventually disappear or is taken over/goes private at a low price.

This like many companies especially in O&G (ESG issues from funds) share prices are under a lot of pressure due to a big sell off in funds. However ones like Shell, Glencore (ones I own) and many others have BODs which understand the market and have decent BB programs to counteract this problem which is working well.

No matter what happens DECs share price will always be under this cloud as investors know when things get serious there is no proper BB program to stabilise the SP in times of market trouble. This makes it very difficult for DEC to raise funds in the market without diluting existing shareholders. As this company relies on replacing demissioning assets this is not a good situation.

In general I do not like BBs but if ever there was a time to do this it is now.

The last 2 days have seen steading of the SP, the reason that this probably occurred was because of BB.

25 Oct - Volume 2.8m, BB 200.000, BB 7.1%, avg 69.33p last BB at 4.26 69.15p

26 Oct - Volume 3.32m, BB 300,000, BB 9.4%, avg 68.39p, last BB 4.14 68.5p

Average BBs per day 8.17%

So not that much below the 10% maximum allowed given you don't know the total volume until to end of day so difficult to get to 10% without going over and also the SP may not be at such a good price. Looks like an attempt to buy not far off from the maximum for a couple of days, not definitive proof but a good indication BB approaching 10% are required to steady the ship and my SIPP at least for a time.

Also saving a huge amount of dividend payments this and every year to come.