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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 cos-un.to. 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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