Thanks OB. I think that's arguably your best DEC article yet. I've been utterly bamboozled about the SP drop, ostensibly due to the Mav. acquisition at first, followed by continued doldrums for even less explicable reasons. Yes the SP often seems to weaken with warmer seasons (bit weird) but in 2025 from here, that would be daft. Donald-daft. Hard to see any downside at these levels but the market is nuts remember. Keep up the brilliant articles.
hi o/b just a thought on valuation with a depletion rate of 10% we need the price of gas to increase by 10% just to stand still....a discount rate on the share price of 10% would be wiped out by next year
Hi Brian, EBITDA ignores depletion but net profit doesn’t. DD&A is depreciation, depletion and amortisation and is taken into account when I say adj.Net Income of $100m 2024 and forecast $250m-$350m in 2025.
I cover this concept in a past DEC article, but no you don’t need 10% higher prices each year to stand still.
Do you follow Doomberg substack? Very interesting on all thoughts energy. He seems to think Trump will give out leases to producers for $50 oil in shorter term. Seems OPEC also broke a couple weeks back that doesn't seem to get any light.
Lots of free yt interviews with him for anyone interested.
Yes I do like Doomberg although don't subscribe. He talks a lot of sense although I don't agree the notion that there is limitless amounts of shale oil and gas (due to technology). Vast yes. Limitless no. OB
PS RozenGo is a contrary view and is worth reading too.
Hi OB thanks for this in-depth coverage. I can't trace RozenGo, would you mind pointing please? I always like to read contrasting analysis... Helps keep my optimism in check!
I should add probably not an issue operationally for DEC if 80% hedged although sentiment might weigh on SP if oil does get weaker. Oil Gold ratio is currently only 2nd to Covid. It makes you think can oil go much cheaper in $ terms while currency is continuing to be depreciated.
Yes heating oil and diesel currently cheaper than for a couple of years here in Northern Ireland!
I’ve heard low oil is QE for the masses! (which made me chuckle). If only the UK would switch on the low cost energy taps and the economy might go a bit more gang busters.
I only added a small position this week when it dropped to £8.50p (when everyone was looking at gold haha) but its done 8% this week so i think takeaway is it was oversold and just re-rating.
On the message boards there seems to be a love hate with Rusty (and board) seemingly because shareholders are not the first priority and i wonder how much this weighs on the SP.
Thanks. That's an interesting one...I vaguely remember a bunch of helium articles in moneyweek a few years ago but then the media seemed to go quiet on it.
I think you're article is really top class and really educational.
I unfortunately took a reckless spreadbet on NG futures at an average price of 4.10
At the current price of about 3.09 I'm sitting on a very painful loss of nearly £4k. I'm trying to think of a way to make the loss back in the long term via a safer and more predictable investment, such as closing my spreadbet and transferring the notional value of about £16k into something like DEC. Does that sound like a good idea to you?
Hi team, there are strong views against DEC so you might want to consider the counter view by visiting the usual chattersphere ADVFN, LSE etc. I haven't speculated on NG Futures and it's not really what I'd consider a one-sided bet (i.e. you are dependent on a weather forecast).... I think there are some excellent opportunities in the market right now. I hope that helps. OB
Yes thanks.. I've seen some of the counter views on advfn. I'm realising that being undiversified with little margin of safety is a very risky way to invest.
Thanks OB. I think that's arguably your best DEC article yet. I've been utterly bamboozled about the SP drop, ostensibly due to the Mav. acquisition at first, followed by continued doldrums for even less explicable reasons. Yes the SP often seems to weaken with warmer seasons (bit weird) but in 2025 from here, that would be daft. Donald-daft. Hard to see any downside at these levels but the market is nuts remember. Keep up the brilliant articles.
I have lots of practice, y’know :) OB
hi o/b just a thought on valuation with a depletion rate of 10% we need the price of gas to increase by 10% just to stand still....a discount rate on the share price of 10% would be wiped out by next year
bryaz
Hi Brian, EBITDA ignores depletion but net profit doesn’t. DD&A is depreciation, depletion and amortisation and is taken into account when I say adj.Net Income of $100m 2024 and forecast $250m-$350m in 2025.
I cover this concept in a past DEC article, but no you don’t need 10% higher prices each year to stand still.
OB
Hi OB,
Do you follow Doomberg substack? Very interesting on all thoughts energy. He seems to think Trump will give out leases to producers for $50 oil in shorter term. Seems OPEC also broke a couple weeks back that doesn't seem to get any light.
Lots of free yt interviews with him for anyone interested.
Yes I do like Doomberg although don't subscribe. He talks a lot of sense although I don't agree the notion that there is limitless amounts of shale oil and gas (due to technology). Vast yes. Limitless no. OB
PS RozenGo is a contrary view and is worth reading too.
Hi OB thanks for this in-depth coverage. I can't trace RozenGo, would you mind pointing please? I always like to read contrasting analysis... Helps keep my optimism in check!
Philip, apologies it was GoRozen!
I've not been able to fault the evidence they give although I've sought to do so.
Nor have I with Doomberg. Which is an interesting, if irreconcilable quandry.
https://www.gorozen.com/commentaries/2024-q4
Enjoy
OB
WIll check out RozenGo - thanks! :)
I should add probably not an issue operationally for DEC if 80% hedged although sentiment might weigh on SP if oil does get weaker. Oil Gold ratio is currently only 2nd to Covid. It makes you think can oil go much cheaper in $ terms while currency is continuing to be depreciated.
I would point out that Oil in countries outside the US is cheaper due to the USD FX rate. $1.33/£1 in the UK for example.
That will support Oil demand I suspect and I wouldn’t say Oil can (profitably) fall much below todays $60ish - we will see contraction of supply.
The US SPR will also probably get increased at cheap prices too.
So I don’t think a falling Oil price is a cert…. it’s conflicted.
OB
Yes heating oil and diesel currently cheaper than for a couple of years here in Northern Ireland!
I’ve heard low oil is QE for the masses! (which made me chuckle). If only the UK would switch on the low cost energy taps and the economy might go a bit more gang busters.
I only added a small position this week when it dropped to £8.50p (when everyone was looking at gold haha) but its done 8% this week so i think takeaway is it was oversold and just re-rating.
On the message boards there seems to be a love hate with Rusty (and board) seemingly because shareholders are not the first priority and i wonder how much this weighs on the SP.
As you say OB fundamentals are very solid.
Thanks. That's an interesting one...I vaguely remember a bunch of helium articles in moneyweek a few years ago but then the media seemed to go quiet on it.
I think you're article is really top class and really educational.
I unfortunately took a reckless spreadbet on NG futures at an average price of 4.10
At the current price of about 3.09 I'm sitting on a very painful loss of nearly £4k. I'm trying to think of a way to make the loss back in the long term via a safer and more predictable investment, such as closing my spreadbet and transferring the notional value of about £16k into something like DEC. Does that sound like a good idea to you?
Hi team, there are strong views against DEC so you might want to consider the counter view by visiting the usual chattersphere ADVFN, LSE etc. I haven't speculated on NG Futures and it's not really what I'd consider a one-sided bet (i.e. you are dependent on a weather forecast).... I think there are some excellent opportunities in the market right now. I hope that helps. OB
Yes thanks.. I've seen some of the counter views on advfn. I'm realising that being undiversified with little margin of safety is a very risky way to invest.
DYOR but Helix Exploration a better bet than DEC short term and a likely multi bagger going in to helium production late summer