Diversified Energy Company PLC (LSE:DEC, OTCQX:DECPF) is a safe haven in a volatile world, so says stockbroker Peel Hunt, which today repeats a ‘buy’ recommendation for the US focussed gas and oil producer.
With a 160p price target the broker sees close to 40% upside to the current share price of 115p.
Peel Hunt expects DEC will continue to be acquisitive with two debt securitisations in the first quarter providing more than US$400mln of liquidity.
“With low-cost and low-decline production, limited capex, and a strong hedging portfolio, Diversified Energy Company’s11% dividend yield is underpinned by one of the lowest-risk FCF profiles in the sector,” Peel Hunt analyst Matt Cooper said in a note.
“Recent ESG updates have been positive, and reduced plugging costs area clear upside. After updating for the latest guidance at the FY results.”
The analyst added: “DEC has increased hedging to take advantage of the current attractive commodity pricing:90/70/55% of 2022/23/24Egas production is now hedged at weighted average prices of US$3.26/3.15/3.00/Mscf, up from US$3.17/3.07/2.85/Mscf in February.”