BTE management did say that but WTI is already well below $US80, and they would not even answer what they would do if WTI went to $US70. I would not assume that the so called "divvy" is safe here.
"Our 2015 plan is to manage a balanced CapEx cash flow program, with CapEx plus dividends in line with cash flow."
" Over the long-term, our objective is to fund our capital expenditures and cash dividends with FFO."
while marginal producer PWE says:
"We will give you a "divvy" no matter what."
Lightstream only down 9% on this "buyback news." It is Exhibit A as to why you should not announce a buyback while obviously having no capital to back it up.
Analyst Note 11/06/2014
Across Morningstar's coverage of over 1,500 companies, Penn West presently sits comfortably among the top 10 highest-yielding stocks that we cover. Currently trading in the $4 dollar range, Penn West’s dividend implies a yield on its stock of over 11%. The annual liability associated with this obligation amounts to roughly CAD 225 million in 2014 and rises to CAD 276 million in 2015, a truly remarkable commitment when viewed against our estimate of cumulative cash flow generated for the 2015-2018 period of negative CAD 21 million (excluding potential non-core divestitures, which appear likely if not essential to sustain operations).
Interestingly, when pressed on its earnings call regarding the sustainability of its quarterly dividend under a scenario of sustained lower crude pricing, not only did the company declare the dividend perfectly safe and essentially off the table for consideration, but also went a step further in implying it would sooner rein in investment in its assets than so much as consider a cut to its dividend.
Their is an investment case to be made here, but PWE, as a marginal producer, has to eliminate the "divvy" and go into the capital preservation mode. Lightstream and PGH recently continued their foolish "divvy" policy, "pay you while you wait", and they are getting crushed.
You left out this part of your cut and paste:
"Some oil executives have challenged that view. Marianne Kah, the chief economist of ConocoPhillips, said the price of oil would need to plummet to $50 a barrel “to really harm [shale] oil production.” Bob Dudley, BP’s CEO, said the cost of using the new extraction techniques has come down recently, and noted that the biggest victim of low prices are Russian oil companies, which have been caught in the middle of a dispute with Moscow and the West over the Ukraine crisis."
Lightstream's stock performance today is Exhibit A as to why PWE should eliminate the "divvy" on Nov. 5 rather than kicking the can down the road by borrowing/selling assets and diluting to pay it.
Yeah, but Ohio, Nelson says that traffic "has doubled" on the roads he drives on, and Georgia says that the gas station "is crowded" where he rides his mountain bike. This is groundbreaking research that no one has ever used before.
FACT IS that PWE's so called "Long Term Plan" generates NO FREE CASH FLOW through the plan period(2018) with WTI pricing assumptions well above the current strip is why you will see no buyback. Step 1 would be to suspend the dilutive Stock DRIP plan like ERF did but they won't even due that. Borrow, sell assets, and dilute is what 3 different CEO's at this company have done for 6 years.
This company spent approx. $340 mil. capital on a "'divvy" to "pay shareholders while they wait" when if they were really "conservative" like some "investors" say on this board, they would be in a better position today.
Working gas in storage was 3,205 Bcf as of Friday, October 3, 2014, according to EIA estimates. This represents a net increase of 105 Bcf from the previous week. Stocks were 359 Bcf less than last year at this time and 378 Bcf below the 5-year average
World renowned natural gas expert, Mr. Perv said, "My guesses are always wrong, but I continue to guess that natural gas will go higher." Asked whether he had noticed that weekly Natural gas injections had been trending approximately 20% higher than the 5 year weekly injections since late April, Mr Perv. said "That's data, I go by my guesses."
Gee, what will that do for PWE losses and the so called "divy"?
Amy Jaffe, executive director for energy and sustainability at the University of California, Davis, notes that U.S. oil production is still “outperforming expectations.” Were it not for the prospect of more Mideast turmoil, says Jaffe, she would forecast a price-plunge to well below $75.
The fact that U.S. recovery of shale oil is still achieving “efficiency gains that are increasing dramatically as a result of technological change and experience” continues to impress Citigroup’s head of global commodity research, Edward Morse. A $75 WTI price, he notes, would only marginally slow their development.
The investing ghouls are back. No hurricanes or wars to report? How about looking at PWE returns vs. cost of capital or how about their decline rate vs. average production/new well drilled?