Malcy - extraordinarily cheap!1 Sep 2023 16:42
Comments only…
“ Diversified Energy headlined their webcast presentation with the banner ‘Right Company Right Time’ a moniker it has justified by time and time again in the six plus years that it has been here in London.
Today’s figures were excellent, belying the industry cost inflation, lower gas prices and fewer potential acquisitions as DEC came in with a first class set of interims. Record production of 142 Mboepd which was 144 Mboepd at the quarter end and lower unit costs, by 10%, led to revenue that thrashed the whisper and EBITDA a top of the range $283m.
This strong operational performance was born in the Smarter Asset Management team where core efficiencies delivered 1H23 Adjusted EBITDA Margin of 52% beating this time last year by 4 basis points and the company describe as being ‘robust’. Indeed some gas wells were shut in to come back to at higher prices.
And as I mentioned earlier, this performance was achieved on the back of lower gas prices but still achieved Net Income of $631 million, which includes $761 million (pre-tax) of non-cash hedge valuation gain, yet again proving that hedging has proved further added value, this time 15% higher than the strip.
Finally the company also announced the interim dividend with today’s figures, at 4.375 cents per share for 2Q 2023 that is an increase of 3% over this time last year and for a company I have yielding C.15% for this year and 17% for next.
DEC has continued to deliver excellent figures year after year, whatever the background whilst all the time backed by a strong balance sheet and aggressive dividend payments. A while ago I worked out with the company that they could pay the dividends for many years and still the company would not lose any value, quite some tribute to the management and the model they have established.
For the future there will be more acquisitions, the company has been waiting for deals to come to them as the market has been a bit toppy as vendors are yet to come to terms with the higher costs and expectations are maybe a bit too high, DEC don’t want to overpay, nor will they.
DEC are extraordinarily cheap, whilst they are off the bottom, at 91p they carry a substantial, 15 yield, directors have been buying stock and I can’t think of any companies better placed to take advantage of current market conditions, they are indeed resilient and consistently execute the model which has worked very well for them. ”
https://www.malcysblog.com/2023/09/oil-price-dec-san-leon-jadestone-and-finally/
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