DEC
Diversified Energy Company PLC
$12.71
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Strong
·
Conviction
Overvalued
Trading 153.6% above fair value
You pay
$12.71
Bear
$0.00
Fair
$5.01
Bull
$127.54
Bear
$0.00
-100.0%
FCF $196M × 8x
Fair
$5.01
-60.6%
FCF $280M × 11x
Bull
$127.54
+903.5%
FCF $364M × 14x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
14.0x
Summary
Our base-case estimate uses a valuation based on free cash flow under different commodity price assumptions and a valuation multiple. We then blend that result with the average analyst price target of $20.50 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $5.01 per share.
Warnings
Debt per share ($41.45) is significant relative to the stock price. Even small changes in the debt figure meaningfully shift what each share is worth.
If oil drops to $60/barrel, the stock could fall -100%. Check whether the company can survive at low prices and still pay its dividend.
Where you think oil prices will settle long-term drives over 80% of this valuation. The biggest risk isn't the company itself — it's getting the commodity price wrong.
Wall Street's average price target is $20.50 (from 6 analysts). Our estimate is 94% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — commodity volumes do not compound
- Geopolitical premiums are real but historically temporary
- Reserve replacement ratio below 100% for 3 years is existential