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Dividends, deficits and debt … DEC results out today
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Phil 2
Posted: 28 January 2025 09:33:34(UTC)
#181

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John Bran;332408 wrote:
Peel hunt has a target price of £30...... fanciful

https://www.proactiveinv...-1065095.html?rel=scroll


Interview with ole Rusty with Directors’ Talk, worth a view (listen) eg “substantial debt reduction from FCF in next few years…” 👍 … location of new assets really close to existing.

https://www.directorstal...rtfolio-video/4121185047
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what me worry? on 28/01/2025(UTC), John Bran on 28/01/2025(UTC)
MarkSp
Posted: 03 February 2025 19:10:35(UTC)
#182

Joined: 02/02/2020(UTC)
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I had a look at the website for the new DEC transformational purchase

They quote three production blocks and they give the flow and life expectancy. It seems to be at quite a variance to what "Rusty" claims to have bought.
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Phil 2
Posted: 11 February 2025 07:23:31(UTC)
#183

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FY trading update. Would hate to be out of this over the weekend … GLA …🚀. Fear not Mark, everything is acrete, acrete, acrete baby (!)

Full version for insomniacs here: https://www.lse.co.uk/rn...nt-w1rn7p0q5nwdzda.html


Diversified Energy's Unique Strategy Produces Reliable Cash Flow and Strong Full Year 2024 Results

Seventh Year in a Row of Approximately 50% or Better Cash Margins

Cash Flow Growth Initiatives Contributed Over $50 million in Cash Flow

Company Returned Over $105 million to Shareholders in 2024

Diversified Energy Company PLC (LSE: DEC, NYSE: DEC) is pleased to announce the following operations and trading update for the year ended December 31, 2024.

Delivering Reliable Results

• Full-year 2024 average production of 791 MMcfepd (132 Mboepd)

◦ 4Q24 average production of 843 MMcfepd (141 Mboepd)

◦ December 2024 exit rate of 864 MMcfepd (144 Mboepd)

• 2024 Adjusted EBITDA(a) of $470-$475 million; Adjusted Free Cash Flow(b) of $210-$215 million

• 2024 Adjusted EBITDA Margin(a) of 50%and TTM Adjusted Free Cash Flow Yield(b) of 33%

◦ 2024 Total Revenue, Inclusive of Settled Hedges per Unit(c) of $3.21/Mcfe ($19.28/Boe)

◦ 2024 Adjusted Operating Cost per Unit(d) of $1.70/Mcfe ($10.22/Boe)

Cash Flow Growth Initiatives

• Announced fixed-price contract for gas delivery to a major Gulf Coast LNG export facility

• Generated ~$42 million year-to-date in cash flow through divestiture of undeveloped leasehold

• Recorded $8 million in impact to Adjusted EBITDA from Coal Mine Methane ("CMM") Revenues

Executing Strategic Objectives and Milestones

• Retired over $200 million in debt principal through amortizing debt payments

• Returned $105 million to shareholders, including $21 million in share buybacks(e)

• Completed $585 million (gross) in strategic and bolt-on acquisition during 2024

• Announced accretive bolt-on acquisition of southern Appalachia assets from Summit Natural Resources

• Announced transformative $1.3 billion acquisition of Maverick Natural Resources

• Marked one full year of trading on the New York Stock Exchange and as is customary, the Company expects to file a shelf registration with the US Securities and Exchange Commission

Next LVL Milestones

• The Company retired 202 operated wells in 2024, marking its third consecutive year to exceed its stated goal of retiring 200 wells per year

• Next LVL Energy completed a total 287 well retirements, including Diversified's wells and 85 wells associated with state-owned orphan wells and third-party operators

Rusty Hutson, Jr., CEO of Diversified, commented:

"Our team executed extremely well and continued to deliver solid results in 2024 that enabled us to advance our balanced capital allocation framework. Our strong results highlight our unique business model that strives to deliver consistent cash flow during the full range and volatility of commodity cycles. Aligned with our priorities, we generated significant cash flows, returned capital to investors, and paid down more than $200 million in debt principal, all while executing and integrating over $585 million in accretive acquisitions. Once again, our ability to deliver durable production and consistent cash flow throughout the year was a result of our team's relentless execution of our strategies. We are committed to lowering costs and improving operational efficiencies across the organization, along with providing innovative solutions to extract hidden value from our asset base. The results we have achieved in 2024 strike at the heart of our business model and strategy.

We believe that 2025 has the potential to be a transformative year for the Company as we work to execute our strategic initiative to become the premier public company focused on managing mature producing assets. The Company's previously announced accretive acquisitions of Summit Natural Resources and Maverick Natural Resources are proceeding as planned, and we have received encouraging comments from both shareholders and the public debt and equity markets. During the past year, we have seen our strategy and our previous investment decisions yield increased performance in all aspects of our business model. We are optimistic about our future and confident that our current efforts will continue to position us well to have a significant positive impact on shareholder value."
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Strangways on 11/02/2025(UTC)
Phil 2
Posted: 11 February 2025 07:30:43(UTC)
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Here’s the paragraph about hedging. Obviously really paying off when gas prices have been so low.

Diversified's consistent application of the Company's differentiated hedging strategy resulted in a 2024 weighted average natural gas hedge floor of $3.26/MMbtu and realized price of $2.49/MMBtu, providing insulation from historically low commodity prices and representing respective premiums of 44% and 10% to the 2024 NYMEX average Henry Hub settlement price of $2.27/MMbtu(h).

The Company enters 2025 with ~80% of consolidated production hedged, and stands to benefit from the recent improvement in the forward strip.

… there’s a table of future hedging I won’t try to replicate here 🙃
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Strangways on 11/02/2025(UTC)
Phil 2
Posted: 11 February 2025 07:32:52(UTC)
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And finally…

2024 Annual Results and Conference Call Details

Diversified will release its 2024 full-year results on Monday, March 17, 2025 and will host a conference call that day at 12:30 PM GMT (8:30 AM EDT) to discuss the Annual Results.
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Strangways on 11/02/2025(UTC)
Strangways
Posted: 11 February 2025 10:44:06(UTC)
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I hope all DEC shareholders are watching Landman on Sky/Paramount+ :)
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Phil 2 on 11/02/2025(UTC)
Phil 2
Posted: 12 February 2025 06:01:23(UTC)
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Some interesting insights into Q4 2024 and 2025 prospects in the OB write-up such as increased Capex and increasing gas prices. As he says, we won’t know for sure until the results are announced on St Patrick’s Day.

https://theoakbloke.subs...c-2024-results/comments

Conclusion

March’s full year report will provide better visibility, so today’s news gives us assurance the wheels haven’t fallen off in 4Q24 but the FCF is going to be on the low side and this will likely be evidenced by higher Capex.

Overall, the outlook for US O&G in 2025 and beyond is improving and DEC’s aggressive moves to acquire Maverick places it really quite suddenly in a much bigger league than before - with much bigger cashflows, development JV prospectivity, scope for land sales, and development of CMM along with synergies - a 7KBoepd lift in 4Q24 is impressive - effectively more than cancelling out (at least for a time) the 10% declines to production.


He gives a detailed synopsis re FCF if anyone is interested…

Comments on declining cash flow and rising cash flow per $ of Debt:

1. In 2020 the average cost of interest expense was 4.2% while in the 2024 interim this was 7.72%. So we are comparing a ZIRP world with a more realistic cost of capital today (unless you believe a further Quantitative Easing cycle and Deflation is ahead of us).
2. 2023 was clearly a dip, capex was 50% higher compared to other years (+$25m)
3. Gas Prices were substantially lower in 2023 and 2024 and despite hedges this clearly has had an impact.
4. Dividends in 2020 were $100m a year, and grew, so by 2023 were $168m a year. (Reduced in 2024). Cumulatively if $500m of dividends from 2020 had paid down debt then FCF would be much stronger compared to 2020!
5. Hedges in 2020 comprised 50% of income - that was a very successful year for hedges.
6. Op.Costs per Mcfe were $6.92/mcfe in 2020 vs ~$10/mcfe in 2023-2025. Good ol’ inflation has impacted results.
7. Debt to adjusted EBITDA was 2.5X in 2020 and 2.9X proforma as at 30/09/24. But consider the Maverick adj. EBITDA and net debt and the combined ratio drops to 2.5X ($2.33bn / $0.937bn)
8. There are upside opportunities in 2025 like Coal Methane, NextLVL plugging and land sales which didn’t exist in 2020.
9. I’d particularly call out that in 2020 DEC was Appalachia only. Once the Maverick and Summit deals close the mix will be ~80% Gulf Coast and only ~20% Appalachia (it was 50%/50% until Maverick/East Texas II). The impact of that is the access to LNG sales and higher world prices.
10. To conclude, the adj.EBITDA to debt ratio is the one that makes me feel the happiest while I’ve otherwise given some mitigations why you are seeing an apparently falling FCF per share and rising debt to FCF.
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MarkSp on 12/02/2025(UTC)
MarkSp
Posted: 12 February 2025 07:43:24(UTC)
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It is beginning to look like an investment rather than a trade

It is in a lot better state than when it was trading at £24 so I can see some decent capital upside here.
Unfortunately, the SP volatility seems to have died a death so i will have to take my topys elsewhere but, I will sell some as i have 2800 and another 2000 in a trade at +60p which is about 6% of SIPP. in total. I think 2% is enough for something like this.
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Phil 2 on 12/02/2025(UTC), John Bran on 16/02/2025(UTC)
John Bran
Posted: 19 February 2025 13:34:45(UTC)
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Phil 2 on 19/02/2025(UTC), what me worry? on 19/02/2025(UTC)
Phil 2
Posted: 19 February 2025 15:55:55(UTC)
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John Bran;335010 wrote:
DEC issuing new shares

https://www.lse.co.uk/rn...res-xncky3w1mi7ovdh.html


RNS issued at 2:30pm no doubt with a nod to US opening … SP 7% down on the news. I think MarkSP was just a bit premature saying it’s no longer volatile enough for him to trade - he’ll be along shortly to prostrate himself I daresay.


Diversified Energy Company PLC (LSE: DEC; NYSE: DEC) ("Diversified" or the "Company"), an independent energy company focused on natural gas and liquids production, transportation, marketing and well retirement, today announces the launch of an underwritten public offering (the "Offering") in the United States of up to 8,500,000 ordinary shares (the "Shares").

Citigroup and Mizuho are acting as joint book-running managers and underwriters for the proposed Offering.

In addition, Diversified intends to grant the underwriters an option to purchase up to an additional 850,000 ordinary shares at the public offering price, less underwriting discount. The Offering is subject to market conditions and other factors, and there can be no assurance as to whether or when the Offering may be completed, or as to the actual size or terms of the Offering.

The Company intends to use the net proceeds from the Offering to repay a portion of the debt expected to be incurred by the Company in connection with the proposed acquisition of Maverick Natural Resources, LLC, as announced on January 27, 2025 (the "Acquisition"). In the event that the Acquisition does not close, the Company intends to use the net proceeds from the Offering to repay debt and for general corporate purposes. The consummation of the Offering is not conditioned upon the completion of the Acquisition, and the completion of the Acquisition is not conditioned upon the consummation of the Offering.
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