Birchcliff Energy Ltd T.BIR

From BNN Bloomberg

[AlwaysLong683]

Courtesy Amber Kanwar in her morning newsletter:

Birchcliff finally announced it is cutting its dividend by 50 per cent yesterday. I say finally, because the dividend yield was screaming past 13 per cent with many calling that unsustainable. A dividend cut is not a total surprise, and even with the cut, the yield is still north of seven per cent. These are all moves taken by the new CEO, who took the helm at the beginning of the year.

Long-time CEO and founder of the company Jeff Tonken stepped aside and made way for Christopher Carlsen. Natural gas prices have been a sore spot and Birchcliff is famously unhedged. Tonken once said to me, the road to hell is paved with hedging. Instead, the company says they can deal with lower commodity prices through cost cuts. Indeed they said they have the option to cut spending by $80-90 million this year if prices don’t recover. Carlsen took the opportunity as the new guy to make a real kitchen sink announcement. Not only was the dividend cut, the cash flow outlook was reduced and its product forecast was also lowered. Will this be enough for investors to believe Birchcliff is now on a sustainable path? 

Interiew with new CEO Christopher Carlsen
 

[AlwaysLong683]

So Chris Carlsen seems to be a Tonken Kool-Aid drinker. Same strategy, no problem, 100% unhedged going forward, etc. etc.   The bottom line is: IF you implement a REGULAR dividend like BIR did and then proceed to cut it in half a mere ONE YEAR later due to (surprise!) low NG prices, not only did you made a big mistake, but you also appear to have no clue as to what it means to offer

[TouchDown12]

It's blind pride now! They think that b/c they were right once (unhedged when NG was on the way up when they paid off their debt); it entitles them to be right again. Sorry - don't work that way. You have to recycle your wits everyday. The thing that bothers me is how highly paid some of these folks are; and the are bascially letting the general NG market determine their performace alone

[PabloLafortune]

Even when activity based costing dictates not to drill complete and tie in, US producers still do because they have these in the money hedges in their back pocket to stabilize cashflow. Which means it takes a lot longer for oversupply to correct itself.  Exacerbated by associated gas which is constantly growing. So not hedging + sizeable dividend = formula for ___.

[Sugaree]

Pablo, I know HP loves KEL, I see you post a bunch here as well. I have been looking around the space to get my feet wet after being out of O&G for a couple months now. Kinda glad I waited out the week. Do you like KEL at these prices $5.30 or so? My concern is a falling knife but nobody can time a bottom.

[Sugaree]

Sorry, wrong board.

[NGinGWN]

They don't care - they just gave themselves 200,000 more stock options at the end of the year at $6 because they've done such a great job

[barneyj44]

Insiders don't have enough skin in the game. I also hold Whitecap that has been in the doldrums lately but at least the Ceo is constantly buying 10k blocks of shares. (Now yielding 8.5%) If memory serves me Amber asked about a possible Strategic review but Carlsen swiftly evaded the question. Birchcliff will continue to be a long hold at least until Lng starts shipping to to Asia.