During the earnings call they stated ~25% of natgas sales was set at AECO price of $2.17 I believe in a 3 month contract, so higher prices currently will help the remaining 75%. Also, they closed on the $405mil unsecured notes which buys time for any dividend reduction. I am surprised the shares are near levels seen nearly ten years ago and the 2009 lows. I think the risk reduction in all commodities has driven many smaller caps to very low levels, which is the nature of beast in small cap land. When fear and de-risking subsides and if ERF still delivers on the growth the bounce on the upside can be as ponounced as the decline. Look at PGH as well similar move to ERF. Also, in the U.S. check out the carnage in SFY over the last few weeks, although they didn't deliver on their quarter.
kmp oil pipeline to canada west coast is 68% overbooked. they plan to build a second pipeline. they state that service on the second pipeline will begin in 2017. that is the big problem with western canada oil--very difficult to get it to market efficiently.
Why Then is the price droppingas oil falls? If NG matters most of all, it seems, as though the ERF PPS should at least be stable. It isn't so my observation is that Oil prices matter more. With the share price. Irregardless of the the order of their words in the statement. The result today, at least, as oil falls so does ERF PPS.
It always makes sense to buy low, and one would think that this stock has gone about as low as it can. But who knows, especially given that nat gas appears weak for at least another year.
My big question is the dividend - how can they sustain at 15%? Has anyone done a cash flow analysis to see if the dividend is safe? Seems likely that there will be a cut by mgmt ...
Appreciate any feedback!
I think the dividend will have a lot to do with oil prices, natural gas obviously is a dead fish for now. Macro isn't looking too great for oil which could put a second stake in oil companies. It's hard to believe that Qe4 or whatever number we're on won't happen though and that would save erf. imho.
Just my opinion, but I think a divi cut is more than priced in already...in fact the uncertainty has likely contributed to this fearful plunge in the SP. When the divi cut is announced and market knows exactly how much, the SP will probably rise! Even if the divi is cut in half, we're looking at a 7+% divi!