Hi, i appreciate your work, but i don't think the statement "If you bought at that price (£10.07) and reinvest dividends you double your money in 9 months." is correct: the dividend yield at that price (~25%) is on a yearly basis.
The latest announced dividend was "4.375 cents per share" (USD), pre 1:20 reverse split, for the Q2. Hence, 4.375 cents x 4 x 20 =3.50 USD p.a with a dividend exchange rate GBP 0.78185=US $1.00 as per Dec 15 RNS.
Hi Mr Schmidt thank you for your feedback. At today's price of £11.66 you're correct - it stretches to 12 months. But yesterday's article and my illustration was based on you (theoretically) buying at DEC's low price of £10.07, so $3.50 would yield more than 25%. I calculated it at 26.8%. Compounding this quarterly does arrive at over double after 3 quarterly dividend payments and I've updated the article to show my workings. I think we can agree regardless of whether 9 or 12 months, the illustration is stark - and the extent of the value on offer here is astonishing in my opinion. Not least when oil is being disrupted by Red Sea shipping attacks from the Yemen.
To clarify: I am not hung up on the 26 or 25% question. My understanding is that the dividend is 3.50 USD per year (or rather: it is the assumed dividend after annualizing the last quarter's) not per quarter.
Hi. Your comments are valid but ignore the elephant in the room which has always been the plugging costs. Is the $25k/well accurate. If it's $35k I don't see a problem but $100k is..... I believe that DEC can have the most competitive plugging rates depending on the ratio of third party vs portfolio AROs. Without this risk, the valuation is ridiculous. 8.5 million acres of leasehold for infill drilling and thousands of miles of pipeline together must be worth at least half of the current market cap in which case, the PDP assets are at a fire sale value. You still confident with their ARO calculations?
I see no outside entity with a vested interest in promoting DEC stock. DEC will need to woo Wall Street to build coverage and interest. It is a big company and those well purchases require ABS funding so there should be interest. Whether this IR department is up to the job remains to be seen ... so far I have not been impressed. That said, Douglas Kriss appears to have the credentials: https://www.linkedin.com/in/douglaskris/
I've looked at the share pricing on LSE vs NYSE and the spread is amazingly wide. Buy in London and sell in NY .... but the share volume in NY is far too low for effective arbitrage. I suspect that there is a bit more understanding of the industry and the politics among US energy investor.
The political ruckus is unfounded and does not sway me from my basic strategy which is to own shares for the immediate yield > 20% while waiting 1-2 years for a repricing. I suspect there will be enough of a price increase over the next 6 months to allow me to sell my highest cost shares at BE while retaining the lowest cost shares.
What do I watch most closely? The long dated natural gas futures out to 2029 which represents DEC's hedging. While 2024 futures are soft, longer dated futures are firm. What would change my view? A significant decline in the back end of the curve ('28-'29) which is currently priced $4.70-$3.20.
My largest holding. Didn't intend it to be, I had a large holding and then I tipped in some more funds as a parking place over Christmas 22, and dowwwwn went the SP.
But never mind.
Even though we Brits don't get all the divi - there's 15% WHT - it's still a great income share and nonsense like this 'report' is an opportunity to buy even more.
Hi again. Is it possible there's a simple typo in the CATF report? Someone typed a 7 instead of a 2. Maybe their print-out of DEC's numbers was smudged...
Spotted a small error with units again. 3.4 MT Co2e/MMcfe is 3.4 metric tonnes, not 3400. But there are only 177 boe/mmcf, so your calculation ends up correct :-)
BTW As Mr Schmidt has pointed out, the divi yield is annualised and not a quarterly yield as you have it.
What a beautiful day. Sold all $DEC yesterday at the close and bought it all back today trying to catch the bottom. Difficult to predict but I'm in now with an average of 1121 GBX. Should have shorted on the way down. That move was extremely predictable. Doesn't matter. I believe Oak and I'll hold and enjoy...
Hi, i appreciate your work, but i don't think the statement "If you bought at that price (£10.07) and reinvest dividends you double your money in 9 months." is correct: the dividend yield at that price (~25%) is on a yearly basis.
The latest announced dividend was "4.375 cents per share" (USD), pre 1:20 reverse split, for the Q2. Hence, 4.375 cents x 4 x 20 =3.50 USD p.a with a dividend exchange rate GBP 0.78185=US $1.00 as per Dec 15 RNS.
https://polaris.brighterir.com/public/diversified_gas_and_oil/news/rns/story/w3p3ydx
https://ir.div.energy/news-events/us-press-releases/detail/158/diversified-energy-announces-third-quarter-dividend
Hi Mr Schmidt thank you for your feedback. At today's price of £11.66 you're correct - it stretches to 12 months. But yesterday's article and my illustration was based on you (theoretically) buying at DEC's low price of £10.07, so $3.50 would yield more than 25%. I calculated it at 26.8%. Compounding this quarterly does arrive at over double after 3 quarterly dividend payments and I've updated the article to show my workings. I think we can agree regardless of whether 9 or 12 months, the illustration is stark - and the extent of the value on offer here is astonishing in my opinion. Not least when oil is being disrupted by Red Sea shipping attacks from the Yemen.
Addendum: The part about the value on offer, I agree with 👍
Hi, thanks for the quick response
To clarify: I am not hung up on the 26 or 25% question. My understanding is that the dividend is 3.50 USD per year (or rather: it is the assumed dividend after annualizing the last quarter's) not per quarter.
I've corrected the article - Back to School for the Oak Bloke.
Thanks, no worries.
Hi. Your comments are valid but ignore the elephant in the room which has always been the plugging costs. Is the $25k/well accurate. If it's $35k I don't see a problem but $100k is..... I believe that DEC can have the most competitive plugging rates depending on the ratio of third party vs portfolio AROs. Without this risk, the valuation is ridiculous. 8.5 million acres of leasehold for infill drilling and thousands of miles of pipeline together must be worth at least half of the current market cap in which case, the PDP assets are at a fire sale value. You still confident with their ARO calculations?
I see no outside entity with a vested interest in promoting DEC stock. DEC will need to woo Wall Street to build coverage and interest. It is a big company and those well purchases require ABS funding so there should be interest. Whether this IR department is up to the job remains to be seen ... so far I have not been impressed. That said, Douglas Kriss appears to have the credentials: https://www.linkedin.com/in/douglaskris/
I've looked at the share pricing on LSE vs NYSE and the spread is amazingly wide. Buy in London and sell in NY .... but the share volume in NY is far too low for effective arbitrage. I suspect that there is a bit more understanding of the industry and the politics among US energy investor.
The political ruckus is unfounded and does not sway me from my basic strategy which is to own shares for the immediate yield > 20% while waiting 1-2 years for a repricing. I suspect there will be enough of a price increase over the next 6 months to allow me to sell my highest cost shares at BE while retaining the lowest cost shares.
What do I watch most closely? The long dated natural gas futures out to 2029 which represents DEC's hedging. While 2024 futures are soft, longer dated futures are firm. What would change my view? A significant decline in the back end of the curve ('28-'29) which is currently priced $4.70-$3.20.
My largest holding. Didn't intend it to be, I had a large holding and then I tipped in some more funds as a parking place over Christmas 22, and dowwwwn went the SP.
But never mind.
Even though we Brits don't get all the divi - there's 15% WHT - it's still a great income share and nonsense like this 'report' is an opportunity to buy even more.
Hi again. Is it possible there's a simple typo in the CATF report? Someone typed a 7 instead of a 2. Maybe their print-out of DEC's numbers was smudged...
Spotted a small error with units again. 3.4 MT Co2e/MMcfe is 3.4 metric tonnes, not 3400. But there are only 177 boe/mmcf, so your calculation ends up correct :-)
BTW As Mr Schmidt has pointed out, the divi yield is annualised and not a quarterly yield as you have it.
I now see the error! I've recalculated at the correct 6.7% equivalent quarterly rate.
Never let the truth or logic get in the way of a political argument.
What a beautiful day. Sold all $DEC yesterday at the close and bought it all back today trying to catch the bottom. Difficult to predict but I'm in now with an average of 1121 GBX. Should have shorted on the way down. That move was extremely predictable. Doesn't matter. I believe Oak and I'll hold and enjoy...