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Penn West Petroleum Ltd. Message Board

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  • manylumen manylumen Feb 25, 2009 11:50 PM Flag

    Are we expecting another dist. cut?

    If oil does not climb to >$45 this month i think a dividend cut is likely but wont be as big as last one. I think this is more than priced into the stock. If pwe winds up with a 15% yield at $40.00 oil that is just fine. It has lower cost high quality oil and not expensive oil sands bitumen like Has nice r.l.I. My question is does anyone know what the current pay out ratio is. I thought i had read it was something like 85% but that would indicate no dividend cut was necessary. The por is a moving target with the price of oil even with the hedges. It could be the por i saw was based on trailing earnings and not the present price of oil. If oil goes back to $50 this spring/summer pwe, i agree with the poster pwe goes to at least $15. The good news is if pwe cuts dividend here and oil goes back to say $60 sometime in 2009 the dividend goes back up.
    Meanwhile capital spending is being cut like all the oil companies are doing, will help bring supply/demand back into balance.

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    • Trailing 12 months payout ratio was 80%. PWE management says that they can maintain the dividend (@ C$0.23) and CAPEX from internal funds flow IF the 2009 average NYMEX oil price is US$45/BBL. The current NYMEX oil price, within a trading range whose bottom is US$35 and increasing throughout 2009, PWE's assumption should be met. That means a forward POR of no more than 80% and a dividend maintained at C$0.23/unit.

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