Love what Rusty is doing but at the end of the day it appears to be small beer to PI’s and a lot of hassle if you’re a long term holder. Just take the divi. IMHO it’s designed for the II big boys. Some on the chat rooms don’t realise it’s just LSE. It would also appear from the tender offer these Buy Backs come under the current Buy Back programme and not over and above. Happier days but a long way to SP recovery
In your DEC-imals and decibels' survey, 7% wanted buybacks. Presumably they'll all be waiving the dividend and tendering their shares. Time for another survey?
Hello DEChands, Douglas Kris, the Director of Public Relations for the company, gave an last week interview on the podcast Chuck Yates Needs A Job. You may view it on YouTube.
Sounds like non-producing wells in WV are similar to Bloomberg's estimate in PA: 1 in 10. If you extrapolate that to the company, it has over 7,000 non-producing wells and is retiring a measly 200 per year. Abhorrent !
Regarding "And this model isn’t costing Dusty a cent over the $42m he was going to pay anyway."
The circular says,
"Shareholders can choose to:
• elect to do nothing, and such Shareholders will be paid their Entitlement to the Q323 Dividend on 28 March 2024;
or
• waive some or all of their Entitlement in consideration for the ability to tender their Shares in the Tender Offer for purchase to receive cash in consideration of such purchase, up to their waived Entitlement."
If the company buys back the maximum amount of shares [“the total number of Shares purchased pursuant to the Tender Price being not more than 3,881,238 Shares” (~ 8% of the shares in issue)] at £9.35 [“the Tender Price per Share not being less than £9.35”] it will cost ~us$45.767m (3,881,238 x £9.35 @ forex £1=~us$1.265)
The ~92% remaining shares will receive their unaltered dividend entitlement of $0.875 (~69.16p)
47,575,929 shares currently in issue - 3,881,238 tendered buybacks = 43,694,691 shares remaining to be paid $0.875 dividend, resulting in a total dividend payment remaining of $38,232,855.
Adding the ~$38.233m resultant dividend payment to the cost of buying back 3,881,238 Shares @ $45.767m would result in a total outlay of ~$84m.
Hopefully I’ve demonstrated that it will actually cost up to $42m [~4.2 billion cents] more than he was going to pay anyway.
As I understand it, In the UK a W8BEN is not needed for investments in a SIPP because the IRS recognise UK SIPPs as authorised retirement schemes and do not tax the income at all. This has been confirmed to me by ii and aj bell. Presumably this affects your calculations? Great article.
Love what Rusty is doing but at the end of the day it appears to be small beer to PI’s and a lot of hassle if you’re a long term holder. Just take the divi. IMHO it’s designed for the II big boys. Some on the chat rooms don’t realise it’s just LSE. It would also appear from the tender offer these Buy Backs come under the current Buy Back programme and not over and above. Happier days but a long way to SP recovery
Hi O B.
In your DEC-imals and decibels' survey, 7% wanted buybacks. Presumably they'll all be waiving the dividend and tendering their shares. Time for another survey?
Hello DEChands, Douglas Kris, the Director of Public Relations for the company, gave an last week interview on the podcast Chuck Yates Needs A Job. You may view it on YouTube.
https://seekingalpha.com/article/4651590-diversified-energy-company-headwinds-derivatives-book#comment-97347268
Sounds like non-producing wells in WV are similar to Bloomberg's estimate in PA: 1 in 10. If you extrapolate that to the company, it has over 7,000 non-producing wells and is retiring a measly 200 per year. Abhorrent !
OB, Thank-you for your excellent analysis and updates on DEC. This is very valuable.
What is an II? Thanks
Regarding "And this model isn’t costing Dusty a cent over the $42m he was going to pay anyway."
The circular says,
"Shareholders can choose to:
• elect to do nothing, and such Shareholders will be paid their Entitlement to the Q323 Dividend on 28 March 2024;
or
• waive some or all of their Entitlement in consideration for the ability to tender their Shares in the Tender Offer for purchase to receive cash in consideration of such purchase, up to their waived Entitlement."
If the company buys back the maximum amount of shares [“the total number of Shares purchased pursuant to the Tender Price being not more than 3,881,238 Shares” (~ 8% of the shares in issue)] at £9.35 [“the Tender Price per Share not being less than £9.35”] it will cost ~us$45.767m (3,881,238 x £9.35 @ forex £1=~us$1.265)
The ~92% remaining shares will receive their unaltered dividend entitlement of $0.875 (~69.16p)
47,575,929 shares currently in issue - 3,881,238 tendered buybacks = 43,694,691 shares remaining to be paid $0.875 dividend, resulting in a total dividend payment remaining of $38,232,855.
Adding the ~$38.233m resultant dividend payment to the cost of buying back 3,881,238 Shares @ $45.767m would result in a total outlay of ~$84m.
Hopefully I’ve demonstrated that it will actually cost up to $42m [~4.2 billion cents] more than he was going to pay anyway.
As I understand it, In the UK a W8BEN is not needed for investments in a SIPP because the IRS recognise UK SIPPs as authorised retirement schemes and do not tax the income at all. This has been confirmed to me by ii and aj bell. Presumably this affects your calculations? Great article.
"....then you get £3.31 dividend 3.31p x 100)....." Surely it's 93 x 3.31 having tendered 7?