Member Info for TerryM1

Rumpel

My point is “General corporate purposes” should not be that large whatever it is but DEC liquidity currently stands at approximately $440m, the question is why do they need this amount of liquidity to have taken out a loan at 9.75% to achieve this unless there is something very large hidden in the phase “General corporate purposes”.

Or in other words why sit on $440m and pay 9.75% interest on loans taken out to get the $440m, unless there is something they are not telling the shareholders which is most likely Rusty’s off on a spending spree.

Sorry typo, should be

"which is -ve for DEC"

Asp1

"If you look at Dec’s 2023 FY financials (link below) on p205, you can see the average swap rate for 2028 is $2,79 while average HH prices for 2028 are currently $3,57. So by closing the current hedge position and taking out a new one, DEC could realize a ~30% price gain."

What I do not understand is how DEC can close a hedge position which is $2.79 when current hedge position are $3.57 and not incur a loss on the closed position which will be offset by to the gain on the new position so end up neutral but end up paying more interest on the loan which is not -ve for DEC, what am I missing?

Just sold out my small trade at £10.39, small profit but every little helps, wanted cash back in the account in case it drops tomorrow.

Decided to buy a few more at £10.26 as below US closing price and should see some more BBs today as 41,876 BBs Friday, hoping for quick trade but who knowns what might happen.

Would have bought a few for trading as below NY price but with all this goings on I think it best to keep my head down.

Would not be surprised of Andy144 choice of selling out is correct although we have had issues since the attacks and insults I must say he does seem to be making the right moves for the right reasons.

Worya

"the key point is the debt is leverage neutral"

Just reread the RNS and it does say that but I am not so sure given it is 9.75%, DEC have do not have a good history telling the truth.

Also from the RNS

"The net proceeds from the senior secured notes will be used for repayment of existing debt and for general corporate purposes. The new class of debt provides increased liquidity, which currently stands at approximately $440 million inclusive of the proceeds of the note offering, is leverage-neutral, and will enhance cash flow, allowing flexibility for continued investment in high rate of return opportunities."

Would be good to know what "general corporate purposes" means given they already have free cash so why do they need more and "investment in high rate of return opportunities" is almost certainly Rusty speak for more deals.

If they are sitting on $440m they are not getting anything like the 9.75% the new debt costs and far too much for BBs applying Occam's razor Rusty rides again, more deals on the way.

Worya

So you believe this is the debt from Maverick passed onto DEC as part of the deal, makes sense.

I really wish DEC would tell us what is going on and not treat us like mushrooms which will not help the SP.

Asp1

Then the question is why not just close the current hedge and take out a new one and pay less interest on the loan.

IMO this has been done to push the repayment date back to add more cash for acquisitions in the process increases the loan costs but Rusty does not care how much the deals cost (as can be seen from Maverick deal

c***up) as long as he builds his empire and of course if he losses money on the SP falling he can just give himself and his mates more shares for a doing such a good job trashing the SP and loading DEC with high priced long term debt.

If this deal was so good DEC would have told us how much is saves, instead just limited information which tell us nothing on the financial implications.

DEC have become expects at at confusion and using the mushroom system for treating shareholders, I am a bit concerned NY markets are not going to like this, we will see soon.

Soon Malcy and Oakbloke will be tell us "this time next year we will be millionaires" again.

"3rd yesterday BB was low at 7500, but the general market volume was very low so it likely limited how much shares can be repurchased"

Yesterday the BB price was cheaper than the on 27th so you would have thought they should have bouget back more or is it a regulation thing, I think there is some sort of limit on the % you can BB compared to volume.

I cannot work out why you would BB shares yielding around 8.5% and buy fixed priced debt paying 9.75% especially as it for 4 years (I assume it is not amortising) when interest rates very likely to fall unless there is some advantage with hedging but I am yet to be convinced.

Asp1

I understand what ABSs are.

"If those loans are repaid and replaced with new loans then the old hedges are closed"

Can you just close a hedge, I thought these hedges are like futures not options as they can appear on the books as liability if gas prices rise.

Are you saying if an ABS is repaid the hedges just go with the ABS and the liability for a hedge is born by the company that made the loan. I thought they are separate to the loan but have to be there as part of the contractual agreement in which case DEC is liable for any losses on the hedge. Someone must take the losses as far as I can see.

Asp1

I am not certain I understand this, from my understanding repaying a loan does not remove the hedge that was taken out as part of the loan agreement. So how do you reset a hedge other than to sell it and buy a new one in which case you take a hit on the old hedge. Am I missing something?

Take out "*"

https://www.d*i*r*e*c*t*o*r*s*talkinterviews.com/diversified-energy-company-successfully-placed-300-million-of-new-senior-secured-notes/4121189545

https://www.***************************/diversified-energy-company-successfully-placed-300-million-of-new-senior-secured-notes/4121189545

"successfully placed $300 million of new senior secured notes. the new notes are due to mature in april 2029 and will pay a fixed coupon of 9.75% per annum"

looks like building a war chest for more deals, get ready for sp to tank.

you have to ask yourself what is the logic of bbs which save around 8.5% dividends to pay 9.75% interest, it makes no sense especially in an environment where interest rates are almost certainly going to fall and if new deals contain shares.

On a different subject I mentioned SRT as on here before as worth looking at, up 25% today on great results and looks like a way to go yet but as always DYOR.

Great update, onwards and upwards.

Try accretive, spilling chequer.

However "seriously accretive" is a bit of an oxymoron or not really grammatically correct but you known what I mean.

More BBs yesterday, 12,000 shares. Hopefully this is a sign that Rusty is not planning more acquisitions in the short term otherwise they would keep the cash and also there a decent amount of cash coming in to be confident enough for decent BBs. Hopefully they can keep this up for a time or at least while BBs make more financial sense than reducing debt which IMO they should do switch to if yield on debt greater than dividends.

Just a pity did not do this when SP was in the £8s, that would have been seriously accreditive.

Agreed will miss the informative posts from Muck been a good source of info.