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If it was our director John Wright reducing we would have been told (PDMR-RNS). I don’t mind selling as people need cash for whatever reasons but his timing has been awful. He won’t be getting my vote!

As for TXP at last it’s an easy buy/hold from here. Why because the finance is sorted.

Plus energy is a pretty good place to be in an unstable world and NG as a transition fuel also helps. Then we have sleepy T&T which despite all its woes isn’t a bad place politically to be invested.

Playing a long game here with a path to expand production and to fund onshore exploration with our fantastic rocks TXP is a pretty ‘safe’ investment imo. At last!

And yet the SP is on its knees which makes for a compelling buy and tuckaway at this price. Defo one for a SIPP/ISA and come back in a few years. I think we could be very much surprised. Could even be paying an income!

Usual caveats

Trek

Hi Silver,

Imo the crux is that DEC following the TANOS acquisition are suffering due to the higher interest rates. Prior to that the SP was doing ok and in line with the market. Since then rates have gone up putting more pressure on its debt repayments.

Interest rate payments at full year were $59m compared to $33m beforehand. That remains higher even though ABS1 has been paid down by $153m. But the crux is the finance mix.

Before the aquisition 99% of borrowing were in fixed rate ABS structures. Currently that’s 88%.

So basically thats an extra 11% of debt exposed to market rates. Hence as the Fed get hawkish DEC dips.

Atm SOFR is 5.3% that’s the holding premium that’s linked to some of our debt plus the agreed spread facility which varies.

So basically with a now higher percentage of variable debt we are linked to interest rate woes. We do though pay off ABS lumps quarterly. So as each month passes the debt becomes inherently manageable.

On an operational front and asset decline debt amortisation model nothing has really changed. Indeed volumes of sales, which are often overlooked as people focus on hedge and spot price have been up significantly yoy. So it’s the debt cost that’s key.

My view is DEC have enough liquidity to see us through. We know that from the hard cash following the divestments and then okey cokey $97m BB pot!

December we get another lump of debt off the books. l still can’t find that line as was it was in an older ppt but was significant.

I don’t see the fed raising again. That’s a matter of opinion and with macro as is I think DEC with US gas assets and a near 20% yield is a good risk reward for parking cash. But I have traded down so it’s easier for me to say that but I am buying at this level and will add more if holds below 70.

No hiding from the SP though but someones losses are opportunities for others and it may come back up in the months ahead. If gas does go up though we then have the ‘IFRS opportunity loss’ with next years hedges but potentially gain further downstream. That means a revisit to the old debate about ‘to hedge or not to hedge’. But that’s what Dec is and they have never pretended to be otherwise.

You can read whatever you want here but I think that’s a pretty reasonable assessment. Some may view this company as too risky, oversold or whatever. I Couldn’t care less the market has a range of views and atm the bears have it and indeed it could go lower. Things can turn though and it could just be one comment from Jerome or 1 RNS to update on debt position.

Hope that helps

Usual caveats

Trek

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