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Penn West Petroleum Ltd. Message Board

  • wxman69_999 wxman69_999 Apr 27, 2013 9:50 AM Flag

    For better or worse, earnings MAY 2nd...

    So we will know Thursday if this heads back to 10 or 8.
    IMHO market is expecting a 50% cut (to yield 6%) ...most CanRoy's are yielding 5-7%
    If they don't cut's back near 11
    If they cut it only 25% it's at least 10
    If they cut it 50% it probably trades down to lows then sits in a range 8.50-9 for now

    Unless there is a HUGE miss....the risk is definitely to the upside.
    Worse case scenario is they cut divi and NG/oil prices plunge this summer...then it will slowly crater over time, but that's not likely to happen.

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    • I don't disagree with your analysis except management has been explicit that unless there was a dramatic drop in energy prices they would keep the dividend where it is at until pipeline capacity would be available to take added production. At that point they would consider using some of the dividend. They also seem ready to sell some assets for liquidity which would pay down debt and increase their cash flow. If they pay down debt, energy prices stay up and their capital efficiency efforts are working then the dividend payments may not result in exceeding cash flow. Obviously the dividend cut has helped this stock to trade down and the stock price probably already reflects a cut. If PWE shows that their financial viability is improving and dividend is manageable then I think the stock price could bounce back to $12-$14 quickly.

      Sentiment: Strong Buy

    • They may cut the dividend but gas prices are twice what they were last year and oil prices are not low either, so cash flow wise they may be able to keep it in place. They have some lower priced hedges in place but they are still in the mid $3 area and going forward Gas looks like it will maintain $4. Rig count dropped bigtime on Friday. What would keep the shorting down would a monthly dividend dividend ex date with quarterly payments. This thing always gets hit hard after the ex date.

    • ador Apr 27, 2013 5:15 PM Flag

      there will be NO divi cut for at least end of year - if ever.

      Sentiment: Strong Buy

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