MIDAS SHARE TIPS UPDATE: Diversified Energy gas shares a bargain as sales soar
Diversified Energy also seeks out unloved assets, specifically shale gas and oil fields in America.
Set up by veteran oil man Rusty Hutson, the group has grown at pace since joining AIM in early 2017.
Midas recommended the firm that same year, when Hutson was producing the equivalent of 11,000 barrels of oil a day and the share price was 71p.
By 2019, the shares were £1.13 and production had soared to 70,000 barrels a day.
Going cheap: Midas recommended Diversified when the share price was 71p
Since then, Diversified has moved to the main London market, joined the FTSE250 and increased production to the equivalent of more than 130,000 barrels a day, 95 per cent of which is gas.
At the beginning of last week, the shares were trading at £1.29.
On Wednesday however, a report was published, alleging that Diversified's wells are leaking methane gas and damaging the environment.
Hutson hit back, pointing out that the report focused on a tiny fraction of the firm's 60,000 wells and highlighting Diversified's environmental track record, under which emissions have been falling significantly year-on-year.
But investors ran scared and by close of play last week, Diversified shares were trading at £1.07.
At this level, the stock is a buy. When Hutson floated the business, he promised to pay generous dividends to shareholders.
He has been true to his word. Payments have risen steadily each year and analysts forecast a 16 cent (11.5p) dividend for 2021, putting the stock on a yield of almost 11 per cent, supported by robust profits and cash flow.
Midas verdict: Diversified has become one of the leading gas producers in the US and sales are soaring as gas prices rocket.
The methane allegations have hit the shares hard but Hutson is fighting back and the stock should recover. Existing shareholders should hold and take comfort in the dividend yield. New investors could also find the stock attractive at current levels.
Traded on: Main market Ticker: DEC Contact: div.energy or 001 205 408 0909
Most watched Money videos
- Iconic Dodge Charger goes electric as company unveils its Daytona
- Mercedes has finally unveiled its new electric G-Class
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Land Rover unveil newest all-electric Range Rover SUV
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- How to invest for income and growth: SAINTS' James Dow
- MailOnline asks Lexie Limitless 5 quick fire EV road trip questions
- Paul McCartney's psychedelic Wings 1972 double-decker tour bus
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- London's Alternative Investment Market sees liquidity...
- Billionaire Czech Sphinx bidding for Royal Mail 'would...
- RUTH SUNDERLAND: Investors pulling money out of UK funds...
- Former business minister urges officials to roll out red...
- Britain 'must lay out red carpet' to retain top tech firms
- CITY WHISPERS: Are Darktrace's big shareholders prepared...
- Water firms drowning in sea of debt as borrowing 'bigger...
- Baroness Bowles: Nationwide using sneaky tactics to avoid...
- Older workers will sustain growth, says HAMISH MCRAE: We...
- Savers withdraw £5bn from current accounts in bid for...
- Secrets of the new King Charles bank notes that took ten...
- Disney set to report jump in profits just weeks after...
- Shipping firm Clarksons set for EIGHTH pay revolt as boss...
- ODYSSEAN INVESTMENT TRUST: Newcomer's knack for seeing...
- Should you take out insurance to spare your family from a...
- Elderly father duped into £25k debt by scam company Marks...
- Are MPs paid silly money? I don't think so, says Tory...
- MIDAS SHARE TIPS UPDATE: Cohort is reaping the benefits...