Keep in mind that PWE remains "committed to the dividend model and improving capital efficiencies" BECAUSE it is cutting the capital budget almost in half. Frankly, it was excessive capital spending that forced PWE to load up on long-term debt, since the cash flow from operations did not support all of the capital investments (and payment of the dividend). The fact that PWE is "right-sizing" its business and "investing" dollars that generate immediate profits is exactly what they should have been doing over the last 18 months. Instead they invested a lot of money to figure out that they have a lot of oil, much of which cannot be developed profitably, particularly until Canada begins to ship oil/LNG from the west coast to Asia. It is nice to see that the adults on the PWE's Board have decided to worry about cash flow and not exploration, particularly since the assets (oil in the ground) will be available for development in the years ahead.
Stock is down because of the Bonavista dividend cut as well as speculation that PWE will cut its dividend. It aooears that the current CAPEX budget will allow for the dividend assuming oil stays at current prices. From the conference call the dvidend was on thminds on the officers in the CAPEX budget.
Tom, great post. Yes, Dividend is safe. Hedges are in place, securing the future against oil price drops.
Also, price action today will be telling us a lot. After hitting a low of 10.10, dipping below 10.25 low of 11/16/12, price has been move up, at 10.50x10.51 as I type and especially as DOW has given up about 45 points. So, If, and that a very big if, we close anywhere close to yesterday’s close, then we have seen a very important bottom.
Longs can do nothing but wait. It looks good to me.