If back in Dec when stock was $24.00 and paying 2.82 if dividend is cut 50% shouldn't stock be selling for approx $12.00???. Any thoughts on this. One way or another I believe the stock will have to sell off.
No because the market is already expecting the cut and it is mostly priced in. You argument would only be logical if you based the 50% price cut on the price at a time before the market expected the cut. 50% of $35-40 brings us down to today's price.
My suggestion would to to take the distribution you expect them to pay and then apply a 10% yield and there's your target price. And the result would not be much if anything below today's price. Maybe $14 at the worst case and that would probably mark the lows and it would gradually move up from there.
If a 8% dividend is sustainable for the long run - and if the weather is "normal" next winter, it could go back up, then I think the current price around 16 would be an attractive entry point - the real problem here is speculation - how much will they cut, when, etc. etc.? Wall Street HATES uncertainty.