Diversified Energy Company plc (LON:DEC) was discussed by Gervais Williams, Co-Fund Manager of The Diverse Income Trust plc (LON:DIVI) in a wide-ranging exclusive interview on what’s driven the Trust’s strong performance and the outlook for a number of its portfolio holdings.
DirectorsTalk asked: Diversified Energy recently announced another significant value-enhancing acquisition, and it maintains an almost double-digit dividend yield. How important are these developments for maximising shareholder returns going forward?
Gervais commented: The interesting thing about Diversified Energy is it’s actually principally operating onshore in the US. Gas supply in the US is plentiful, the price of gas is quite low, and it’s been an area where, if anything, people have been producing oil, and the gas has come alongside with it and there’s been a surplus of gas. That’s why the actual price of gas in the US is quite low.
They’ve done an extremely good job of consolidating many companies. The cash flow has grown beautifully. They do have a very nice big yield and in fact, if anything, they’re starting to be picked up by many US investors. So, more than 50% of the shareholder base is now made up of local investors, US investors, who bought it because they can see the upside on the share price.
In fact, what’s happened recently is they’ve now announced that they’re going to have their primary listing in the US, they’ll still have a UK listing as well. Hopefully, that will drive the share price a lot further because at the moment the share price is still very low, lovely yield.
We’re very excited about the ultimate potential for US gas prices to normalise to world prices as the LNG plants come on stream and that hasn’t happened in full yet, but it’s due to happen in the next few years.
