Does Diversified Energy have strong potential?
This London listed oil company, a big player in US oil wells, has partially recovered from a significant sell-off in 2023. Independent analyst Alistair Strang looks at the charts to see what the future might hold.
8th January 2025 07:23
by Alistair Strang from Trends and Targets
There’s a series currently on telly called “Landman” which has become a reliable excuse to waste an hour every week, watching the dramas of a mid-level oil company. It’s not “Dallas” (thankfully) and a developing storyline caught my attention.
One of the workers, receiving a large settlement from his employer, has a cunning plan. He’s chasing after oil wells which have dried up, believing if he can get around 50 locations, he’ll be able to attract fracking companies to squeeze out what’s remaining. One dry well will not interest a fracking operator but 50 well sites will get their attention.
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This brought an article we wrote about Diversified Energy Co (LSE:DEC) three months ago to mind, when we noted they are the ‘largest owner of oil wells in North America'. We’d assumed the company was building a land bank, due to their ability to decommission wells at a substantially lower price than everyone else. But what if they were awaiting a US President coming, one whose tagline was “Drill, Baby, Drill” and is due to be crowned in just 12 days.
We’d be amazed if DEC were to be the inspiration for the “Landman” storyline, but in the real world, since our previous analysis, their share price has risen from 983p to 1,427p, achieving our primary and secondary targets with remarkable accuracy.
Now above 1,429p calculates with the potential of a lift to an initial 1,630p with our secondary, if exceeded, working out at 1,764p and some probable hesitation. Rather impressively, should – in the long term – the share price close above 1,764p, it enters a realm where a future 3,023p shall be seen as exerting an influence.
Of course, we’ve a converse scenario tucked away, just to make folk miserable. Below 1,200p now suggests a potential for weakness to an initial 1,061p and hopefully a proper bounce. Closure below such a level opens up a threat of travel down to 940p and a need for us to utterly revamp all our calculations.
Source: Trends and Targets. Past performance is not a guide to future performance.
Lee Wild, head of editorial at ii, owns Diversified Energy Company shares.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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