D2O - Duxton Water

Duxton Water Limited presents an opportunity to invest in Australian Water Entitlements. Income will be generated by leasing the annual Water Allocations, from purchased Water Entitlements, to primary producers over a 3 to 10 year term. It is anticipated that the Water Entitlements will appreciate in value as they are held over the medium to long term. Revenue streams are expected to be regular and predictable and demonstrating low correlation with traditional asset classes. Water Entitlements have historically generated a gross yield of 6%-7% per annum.

It is anticipated that D2O will list on the ASX during September 2016.

http://www.duxtonwater.com.au

Bought a few today @ 1.035, order part filled, has been sitting there for a few days..

Duxton water owns water entitlements that they have leased to related party primary producers on a long term basis and will generate a gross initial yield of 5.9% ~ floated a couple of weeks ago @ 1.10 ~ D2O will pay a dividend in the next 12 months and will pass on franking credits.

The Australian agricultural water market is valued at about 11 Billion, D2O is the only listed player, i figure big industrial farms need water thus they have to buy it or lease it, either way they have to pay, Govt's are buying back to improve river flows, no new entitlements will be issued so entitlements will grow in value over the years, always be in demand.

One of the Duxton property's that uses D2O water is called Merriment, here is a brief video of the property and farming practices below.
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So_Cynical said:

(Oct 4, 2016)D2O will pay a dividend in the next 12 months and will pass on franking credits.

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And with just a week and a half to go, at last the maiden dividend 0.023 CPS 75% franked.

The announcement says that the payment relates to 1 quarter ?? so they will pay quarterly? DRP discount of 3%.

http://www.asx.com.au/asxpdf/20170925/pdf/43mlxyngt9jsn0.pdf

Non Renounceable Entitlement Offer, 1 new Share for every 2 existing Shares at an Issue Price of $1.30, its a big cap raising, water is expensive, SP has been going ok and yield is good at around 4.2% ~ 70% franked over the last 3 dividends.

Water for irrigators - D2O is a kind of infrastructure stock, thus defensive.

So_Cynical said:

Non Renounceable Entitlement Offer, 1 new Share for every 2 existing Shares at an Issue Price of $1.30, its a big cap raising, water is expensive, SP has been going ok and yield is good at around 4.2% ~ 70% franked over the last 3 dividends.

Water for irrigators - D2O is a kind of infrastructure stock, thus defensive.

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I had a look at this back in March and the only thing that stopped me is I get the feeling water access/rights could be one of those things that gets caught up in politics of the drought & Murray Darling water flows. Although I am on the lookout for ways to invest in water I'm not sure this is the one for me.

CBerg said:

I had a look at this back in March and the only thing that stopped me is I get the feeling water access/rights could be one of those things that gets caught up in politics of the drought & Murray Darling water flows.

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Water rights and entitlements are very secure, if governments want to change things then they buy the entitlements at market, there is a somewhat robust water entitlements trading market in Australia, politics can make a difference for sure but the fundamentals around Ag production and water make the sector somewhat untouchable.

Murray Darling water rights have a current combined value of over 13 Billion, politically it would be very difficult to disenfranchise rights holders, political death to any party/govt that didn't tread very very carefully, as evidenced by pretty much nothing happening with the last lot of MDB reforms.

This is my top pick for the 2019 full year tipping comp.

Reasons: Short, intermediate, and long term trends are up with price recently breaking through some minor resistance. Price tightening up now, could be a little micro pattern with some further upside. I also love the fact that there is no left hand side price action to contend with. Let's see if, and where this one can run to in the next 12 months. Good luck to all!

Down over 9% in the past two trading days.

The company's business seems rather "boring" in that it's a fairly predictable, steady sort of business and not something where they're going to invent the smartphone or find oil etc. That being so, the price seems rather volatile.

Anyone know any reasons behind the recent plunge?

I don't hold, it's just one I've been following since noting more than one person picked it for the 2019 full year competition.

Smurf1976 said:

Down over 9% in the past two trading days....Anyone know any reasons behind the recent plunge?

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The share price was up 6.3% on the 23rd and 24th i suppose its asking a bit much for the price to not decline a little with all the MDB negative news of late.

I noticed this one on my 'defensive' watchlist had a good bounce today. I haven't looked a lot into the company.

D2O 3 MTHS DLY

Is this the same company that runs DBF? Duxton Broadacre Farms?

after one of the sharpest fall/ rebounds, D2O is puddling along (in a nice way)



announced today ... " D20 is pleased to reaffirm its intention to pay a fully franked 2.9 cent dividend in September 2020 and a fully franked 3.0 cent dividend in March 2021." "In addition, the Company has advised of a fully franked dividend target of 3.1 cents to be paid in September 2021 and a target of 3.2 cents fully franked to be paid in March 2022, giving our shareholders 24 months visibility in these uncertain times."

At 30 April 2020, Duxton Water Ltd is invested in approximately $326.8 million of water assets with the remainder of the portfolio held in cash and net current assets. The Company has approximately 169ML ($0.66 million) of water entitlements in its acquisition pipeline at 30 April 2020.

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Whist we have seen retracement in permanent entitlement values over the last three months, the value uplift experienced over the last 36 months reflects long-term drivers rather than the recent drought conditions. Irrigators have over the last 10 years, significantly enhanced their marginal return per megalitre through both more efficient use of water and conversion to higher value commodities.

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At the same time, we have seen significant steps taken to return water to the environment through the Government buyback program which has returned between 20-22% of entitlements that were previously available to the consumptive pool. The combined impact has seen stronger demand for a reducing available water supply and subsequent increase in water prices. Irrigators themselves have been the greatest beneficiaries from this capital appreciation as they collectively own the majority of water entitlements on issue in the Southern Murray Darling Basin (MDB) .

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A similar story comes from the Argyle Water Fund, as diclosed in BAF monthly report

After many consecutive months of gains, the Argyle Water Fund’s NAV value declined 2.3% in April 2020 reflecting a range of factors. The pullback represents the largest monthly decline to the Fund’s value since inception, but was not at all extraordinary by comparison to other asset classes in the period. Put in context, NAV has declined to January 2020 levels and remains up 13.0% FYTD

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The Water Fund’s performance in April cannot simply be interpreted as a result of rainfall across the southern Murray-Darling Basin, however there is no denying this has had an impact on sentiment. In the first week of May, the Murray River system’s weekly inflow was the highest since mid-August 2017. So far however, the accumulated rainfall has not contributed greatly to critical upper catchment irrigation storages in the sMDB, which remain lower than at this time last year (sMDB at 35% capacity).

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Current BOM forecasts indicate an above average chance of exceeding median rainfall across much of southern Australia into August 2020. Irrigation farmers are therefore optimistic the three year-long drought phase has abated and expected winter rainfall will fill storages in order to guarantee higher water allocation announcements for the 2020/21 Summer irrigation season. Time will tell if this scenario plays out. But for now, there is limited buying interest for remaining water allocation volumes for the 2019/20 season, but good demand to carry any water allocation volumes forward into the 2020/21 season in case the forecasts are proved wrong.

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The prospect of greater water availability for next season has removed buying pressure from water entitlements in the near term. This has been exacerbated by capital market turmoil. Buyers with appetite to invest in water entitlements have stood aside for the time being, reflecting their continued risk appetite for this asset class relative to others which have experienced far greater price volatility. However, there is no evidence of any panic selling of entitlements – volumes on offer have indeed been very limited. The price correction is more characterised as a reflection of buyers’ standing aside in a cautious approach after many months of consecutive gains. The Water Fund is currently finalising another cash distribution to be paid in June 2020 reflecting income generated from leases of water entitlements and water allocation sales achieved in the 2019/20 season.

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Prices for permanent water entitlements in south-eastern Australia have surged to record highs .... This comes despite a wet year sparking floods and filling the major dams that serve capital cities and the Murray-Darling Basin. The Bureau of Meteorology has warned of more flooding as a wetter-than-average summer befalls an already saturated landscape in eastern Australia.

Water releases from the second-biggest storage on the Murray River, the massive Hume Dam near Albury-Wodonga, have accelerated in recent days as a flood mitigation measure. The dam is 98 per cent full while Melbourne and Perth water storages are at 25-year and 29-year highs. Even the Menindee Lakes near Broken Hill have overflowed in recent weeks.

But the abundant supply of water across the Murray-Darling Basin has failed to stop a rally in prices for the “permanent” water entitlements that give owners a perennial right to extract a certain volume of water from that river system.

Permanent water prices in the Murray River zone between Echuca and the South Australian border hit a record high of above $8000 per megalitre [million litres] on Thursday, and the chief executive of water brokerage company Waterfind, Tom Rooney, said prices in SA and parts of NSW were also close to record highs.

Mr Rooney said the record prices were partly influenced by banks’ demand for agribusinesses to get a greater proportion of their water from “permanent” entitlements, rather than the highly volatile “temporary” water market, where prices are far more sensitive to dam levels.

“You have got cheap money, you have got large demand from agribusinesses that have planted a lot of ground without permanent water backing it, and you have got the banking industry wanting growers to have better security on their water,” he said. “We see continued upward pressure on the permanent water price. They’re not making any more of it, in fact they are making less of it.”

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The record prices have come despite the fact the federal government is no longer buying back water entitlements in the Murray-Darling to boost the environmental health of the river system.

Prices for temporary water in the Murray-Darling have slumped in recent weeks, reflecting the abundant supply in the system. Temporary water in Victoria’s saturated Goulburn River system was last week selling for close to $70 per megalitre, down from $350 per megalitre a year ago.

The recent wet season hasn't diminished trading on water rights. In fact, the ability to make a dollar seems to have been bolstered.

D20 has been buying back shares, as they probably think they're undervalued: "By 30 June 2022, the Company has bought back a total of 1 million shares at an average price of $1.56 per share since November 2021. The Board believes buying back shares at the current discount to NAV is in the interest of all shareholders."

An unlisted fund reported near-20% returns, stating that an abundant supply of water across the Murray-Darling Basin has failed to stop a rally in prices for the “permanent” water entitlements that give owners a perennial right to extract a certain volume of water from the river system.

“In a wet period like this, you would expect the devaluation of the entitlement. But outside of that little glitch at the start [of the year], they have just continued to trend up,” Kilter Rural chief executive Cullen Gunn said.

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“That’s driven by the market becoming more sophisticated with a more mature outlook about what’s going to happen. “In the past, the market was quite short-sighted ... they would say ‘it’s wet now, it’ll be wet forever’ and prices will come off a lot. That’s happened with [the price of] allocation in the spot water market at the moment. But the entitlements have trended up this whole year. That and the lease rates have helped our performance.”

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La Niña is dead, long live el Niño.

Duxton has just held a pro rata non-renounceable entitlement offer on the basis of one (1) Share for every four (4) existing Shares at an issue price of $1.50 per Share to raise approximately $44,230,806 (before costs)

What did they buy?


And how are they going? Three year chart;

that's a shame , i was hoping to add more at $1.50 ( or less ) which is still 'averaging up ' for me oh well keep the order in and hope

Treasury Wine Estates exercises Call Option to acquire NSW water entitlements from Duxton Water Limited

Duxton Water Limited (“Duxton Water” or “the Company”) refers to its announcement from 3 July 2023 where the Company noted that it had provided call options to Treasury Wine Estates (“TWE”) to buy back the 4,770 megalitres of NSW and Victorian water entitlements that it previously acquired from TWE, before 30 June 2024 (“Call Option”)

ASX Announcement: D2O Acquires $39 million of Water Entitlements).

The Company wishes to advise that it has received formal notice from TWE that it is exercising its Call Option to buy back the 2,799 megalitres of NSW high security water entitlements from Duxton Water.

In accordance with the terms of the Call Option, it should be noted that the lease to TWE in relation to these NSW water entitlements terminates.

Upon settlement of the sale of these NSW water entitlements, proceeds from the sale are expected to initially be used to offset against the Company’s debt facilities.

Company then expects to use these funds to acquire additional water entitlements as well-priced acquisition opportunities present.

Further information in relation to the sale of these NSW water entitlements, including the price paid (which is to be determined in accordance with the terms of the Call Option), will be communicated in due course.

i hold D2O

hmmm maybe that $1.50 top up target is back on the table ( but do i want to throw in an order ? )

Monthly Update

Portfolio Managers’ Update

On 26 April 2024, Duxton Water will pay a final 2023 dividend of 3.6 cents per share.

The Company would like to thank its shareholders for their continued support.
The Company is pleased to offer its Dividend Reinvestment Plan (“DRP”) for the upcoming dividend. Under the DRP, shareholders will receive new shares in the Company at a 5% discount to the 5-day VWAP leading into the record date of12 April 2024.

In early April, Treasury Wine Estates (“TWE”) formally exercised its call option on the NSW water entitlements, which were acquired by the Company last year.
TWE will purchase 2,799 megalitres (“ML”) of NSW high-security entitlements from Duxton Water.
As per the call option terms, the lease associated with these entitlements will be terminated.
Further information can be found in the official ASX announcement issued on 5 April 2024. 1

Proceeds from the sale of these entitlements are expected to be offset againstthe Company’s debtfacilities initially.

This will provide the Company with additional flexibility to acquire well priced water entitlements as opportunities present.

Regarding March 2024,the water portfolio increased in value to $394 million, up from $389 million in the previous month.
The Company remains focused on expanding into water zones that fit well within the current target portfolio composition.
The collective value of entitlements in the southern Murray Darling Basin (“sMDB”) increased by approximately 1% during March, driven primarily by general security and low-reliability entitlements.
This is likely due to increased interest in carryover space and the expectation thatthese general security/low reliability water entitlements will receive a strong allocation in the 2024-2025 water year.
In the spot market, allocation prices increased compared to last month due to warmer and drier weather in March across the sMDB. That being said, prices remained low given that the peak irrigation season had now ended.
Looking ahead, the weather outlook for May to July 2024 indicates rainfall to be close to the long-term average and temperatures to be above average.
Climate drivers are expected to remain neutral until at least April 2024.
Beyond this, there is more uncertainty about how the main climate drivers in the Pacific and Indian Oceans will affect Australia's climate. In addition, the NSW government released its opening allocation outlook for 2024-2025 on 15 March 2024.
High security entitlements are expected to open at 95% in the Murrumbidgee and 97% in NSW Murray.
General security entitlements are expected to open at 5% and 30% in NSW Murray.
General security entitlements are expected to increase gradually throughout the water year, depending on climatic conditions.
Finally, business operations are focused on the upcoming water year.
The Company has sold most of its 2023-2024 allocation holdings and is working with customers to support their 2024-2025 water strategy.
The Company has executed a number of forward contracts for next year and continues to work on strengthening its lease portfolio.

i hold D2O

part of a much larger document

hmmm , i don't participate in the DRP . currently

will think about changing that over the weekend