With apologies to the bashers, management is actually managing here. They think the dividend cut is needed temporarily to preserve cash and that would seem to be a prudent decision. Oil and nat gas prices won't stay down forever and the dividend is likely to rise again. Thanks to the sale of their U.S. division, they have more than enough cash and their tax losses should allow them to sustain a decent dividend far into the future, even after it shifts to corporate status. I bought this $3 ago, which doesn't look brilliant now. But it's a screaming buy now.
The crux of their problems is hedging the spread in the mid-stream operation. The way that they do is gambling not hedging. That said, with the decline in crude prices, they might even be able to close out the positions with a reasonable loss now. They were almost $450 mil under at end of September versus $700 mil+ under as of June. Their bankers cannot be thrilled by such a stupid performance.
Sorry Jim, I just don't agree with you, if they have plenty of cash they should be able to continue without cutting the dividend thus supporting the shareholders as well as the stock price - I really think the management has let us down - I would still like to know what they will pay themselves this year as a bonus as a reward for this ' good decision '.
You might like it even better at $4.
Management just told shareholders that distribution isn't sustainable with falling oil and gas prices.
Next month do we get another decrease in distribution because prices have gone even lower?
If they couldn't support the distribution with last months higher prices what are we to think?
I'm sticking with them. 15% divi is actually not that bad (of course I could get 2% at the bank). I noticed we got no immediate downgrade and our stock will probably never reach it's scarry low of $4.89 again. While some PVX holders have watched the unit price tank over the last couple of months, you gotta think that they will stick since moving to another divi that has yet to reduce thier divi isn't too smart. At least you know what PVX's future is now.
Got to admit that reducing the divi was pretty tough decision for these guys since they have been consistant all of these years. That's another reason that I do not see a reduced divi in the future. If you were lucky enough to get this stock in the $5's, good for you!
Still worried that sticking with PVX is a mistake, take a look at ALD and it's propects.
The last distribution cut (from 15 cents to 12 cents) was back in Nov '03, five years ago. At that time crude oil was $30 and rising and natgas was $5.
Previous to taht cut, Provident monthly distributions varied between 20-30 cents per month in 2001 and then lowered to 15-20 cents in 2002. The trend is down. Good luck expecting a distribution increase in the future!
Nine cents is a new low. Just wait for the corp. conversion for the next cut. If you're not married to this trust, there are better prospects for sustainable distributions and share growth elsewhere.
some of us have owned this for nearly 6 years when oil was well below $40, the unit price was high $6 to $7 and the div was much higher than today (.20). PVX has continued to reduce its distribution numerous times, all the while the price of oil and NG have gone up. We have just come off the greatest quarter in energy history and the big guys at PVX have decided to cut div payout once again with absolutly no transperancy. How about giving us some insight as to why!!!! They might be good at running the company but they suck at communication.
I agree. The financials are impressive and they are trying to do some reinvestment in reserves at a time when drilling is relatively cheap. This bodes well for the future cash flows and may also turn this sleepy income producer into a growth story.