Diversified Energy Interim Results for the Six Months Ended 30 June 2022.

[idpickering]

Period Highlights

• Declared 2Q22 interim dividend of $0.0425 per share (2Q20: $0.0400 per share, +6%)

• Paid $72 million of dividends to shareholders

• Record average net daily production: 136 MBoepd (+29% vs 1H21: 106 MBoepd), exit rate of 139 MBoepd

• Maintained industry-leading consolidated corporate decline rate of ~8.5%(a)

• Achieved 1H22 Adjusted EBITDA(b) of $224 million (+48% vs 1H21: $151 million) with Cash Margin(c) of 48%

• Net Loss of $935 million which includes $1.2 billion (pre-tax) of non-cash hedge valuation losses

• Free Cash Flow Yield(d) of 22%

• Leverage ratio of 2.2x(e) (Adjusted Net Debt of $1.1 billion(e))

• Completed $970 million in Asset Backed Securitisations ("ABS") at a blended fixed rate of 5.3%(f)

• Liquidity of ~$469 million

• Closed ~$60 million in complementary Central Region upstream and midstream acquisitions(g)

• Recently announced $240 million (gross) upstream acquisition from ConocoPhillips in Central Region

https://www.investegate.co.uk/diversifi ... 02061700V/


Issued separately for some reason?

Second Quarter Dividend Announcement.

Diversified Energy Company PLC (LSE:DEC) is pleased to announce that the Board has declared an interim dividend of 4.25 cents per share in respect of 2Q22 for the six month period ended 30 June 2022, consistent with 1Q22 and a 6% increase over 2Q21 (4.00 cents).

https://www.investegate.co.uk/diversifi ... 00071698V/

Also posted on Company News here; https://lemonfool.co.uk/viewtopic.php?p=520650#p520650

Ian.

[Ricksure]

Thank Ian, I have a small holding of them in my ISA


Ex-Dividend Date 24-Nov
Payment Date 28-Dec

Not too late for the last for the first quarters $0.0425
Ex-Dividend Date 01-Sep-22
Payment Date 26-Sep-22

[88V8]

Thank Ian, I have a small holding of them in my ISA

One of my largest HYP holdings.
They seem to have a nice niche in the gas market, and a 9%+ yield subject to WHT.

V8

[Hallucigenia]

The RNS only has the headlines, the real interim report is at
https://ir.div.energy/financial-info

It's worth noting that the heavy hedging needed to support the borrowing to support their model of growth-by-acquisition is really hurting at the moment but that's their model, they're aiming to appeal to HYP types rather than those wanting a bet on current "crazy" US gas prices (that are about 20% of European prices)

[idpickering]

Thanks for your input guys, and kind words.

I don’t hold these but must admit I have been tempted to buy the stock in the past.

Ian.

[Dod101]

Trying to read their Half Year Report is an exercise in translating their use of (presumably) industry jargon. There is also an awful lot of financial engineering. Maybe the high yield is for a good reason.

Dood

[kempiejon]

The yield has been high since the company started with dividends, reaching double figures in 2019 and having more or less stayed around or above 10% since. They have increased dividends every year and have a 5 year history of increases, up from 11c to 17c. I did glance over them a couple of years back but I think I decided I didn't like the look of their debt. Are they one of those cigar butt investments or picking up pennies from in front of the steam roller?

[Hallucigenia]

There is also an awful lot of financial engineering. Maybe the high yield is for a good reason.

The yield has been high since the company started with dividends, reaching double figures in 2019 and having more or less stayed around or above 10% since. They have increased dividends every year and have a 5 year history of increases, up from 11c to 17c. I did glance over them a couple of years back but I think I decided I didn't like the look of their debt. Are they one of those cigar butt investments or picking up pennies from in front of the steam roller?

To be fair, it's not a particularly high yield in the context of what they're trying to do, which is to give London investors the option of something similar to the oil royalty trusts that are a common component of HYPs across the pond, they're sort of an oily equivalent of REITs. So yes they use debt, but it's secured against the assets so it's like a REIT having mortgages.

Yes they're selling to a volatile market - but their lenders insist on extensive hedging to protect against the downside of not being able to pay their debt, even if it means sacrificing a lot of upside.

And yes they have wasting assets - it's like a REIT is setting fire to 9% of its property every year, so they need to pay into a sinking fund to replace those assets.

On the flip side - there's great deals to be had for fans of cashflow to pay for all of the above. Some of DEC's recent deals have included buying $35m of annual EBITDA for $50m, and $82m of EBITDA for a net $210m.

Partly that's a result of these assets being out of fashion, partly for general ESG concerns, partly because they are buying the oily equivalent of Victorian terraces in Doncaster from corporates who would rather own 500 identical flats in a brand-new tower block in Shoreditch. Yes the terraces are less "cool", they're "bitty" and so are more work, and have higher maintenance costs - but the purchase price more than reflects that.

[Dod101]

There is also an awful lot of financial engineering. Maybe the high yield is for a good reason.

The yield has been high since the company started with dividends, reaching double figures in 2019 and having more or less stayed around or above 10% since. They have increased dividends every year and have a 5 year history of increases, up from 11c to 17c. I did glance over them a couple of years back but I think I decided I didn't like the look of their debt. Are they one of those cigar butt investments or picking up pennies from in front of the steam roller?

To be fair, it's not a particularly high yield in the context of what they're trying to do, which is to give London investors the option of something similar to the oil royalty trusts that are a common component of HYPs across the pond, they're sort of an oily equivalent of REITs. So yes they use debt, but it's secured against the assets so it's like a REIT having mortgages.

Yes they're selling to a volatile market - but their lenders insist on extensive hedging to protect against the downside of not being able to pay their debt, even if it means sacrificing a lot of upside.

And yes they have wasting assets - it's like a REIT is setting fire to 9% of its property every year, so they need to pay into a sinking fund to replace those assets.

On the flip side - there's great deals to be had for fans of cashflow to pay for all of the above. Some of DEC's recent deals have included buying $35m of annual EBITDA for $50m, and $82m of EBITDA for a net $210m.

Partly that's a result of these assets being out of fashion, partly for general ESG concerns, partly because they are buying the oily equivalent of Victorian terraces in Doncaster from corporates who would rather own 500 identical flats in a brand-new tower block in Shoreditch. Yes the terraces are less "cool", they're "bitty" and so are more work, and have higher maintenance costs - but the purchase price more than reflects that.

Thanks, That is all very helpful. And an investor will probably get some currency benefit as well since their Accounts appear to be reporting in USDollars.

Dod