RE:CJ better not limp out on our dividend
Rational43 wrote: 50% of FCF once you hit $100M debt CJ, that's what you've said the whole time.
You should be at $100M by end of May.
You put FCF on the screen, At $100 oil our 50% is a 96 cent dividend, at $90 is 84 cents.
CJ better be delivering a double digit dividend yield to start by end of June.
You gotta adjust your mindset about the dividend, The company cares little to not at all about the current running dividend yeild, that's reliant on the market movement. Only time I've heard yeild referenced by a company is when Pembina management referenced it in an answer on a quarterly when they basically said 'there was no reason to up the dividend when it's yeild is way above its historical average because the market was undervaluing the stock, so it didn't make sense to increase the dividend at the time', it was a better plan to invest in the buisness and pay down debt to improve the company's sentiment on the market. I've never heard of a company trying to hit or maintain a yeild target on payouts.
The yeild only matters to your personal purchase price. Mine is $4.84, I'm getting a 17.4% yeild if they announce 7 cents, I pretty much get 10% at 4 cents or more, but these numbers only matter to myself and no one else.
The Company usually runs off a Payout Ratio when considering a dividend rate or other measurable points off thier balance sheet or outlook and usually reference the FCF.
If you want 10% yeild according to the upcoming payout, get in within the price range that makes that likely don't depend on the company.
Also, I agree with the idea that they have givin the market solid projections on what the payout will be and that they need to stick to that plan and not limp into it with 2-4 cents and step up as they go like some recent posters have discussed. If they are hitting the projections they had that achieves a 6-7 cent payout, it would likely be a major issue if they do not payout like they said they would. I think legally they covered themselves by labelling them as 'projections' and there is likely the note somewhere 'management reserves the right to deviate', but the smart money in market would likely react poorly to the company bobbing and weaving from the laid out plan. (I as a shareholder would be very disappointed, but I wouldn't sell my shares over it and if I did my holding would not move the market at all.)
That said, those projections were based on the FCF needed to meet those targets NOT the oil price, they just added the oil price to the projections as the scenario that they project will achieve the FCFs they expect according to thier plans so that the market had somewhat traceable ballpark reference points. There are moving parts like the oil price, gas price, material/employee costs ect that are liquid that may move around within the guidance but it's only the FCF number announced when calculated that matters.
I've also mentioned it before, if your trying to measuring the average oil price the company will announce at earnings, your playing a fool's game. Everyone I see is projecting based on WTI, which is not the grade that CJ/Alberta/Saskatchewan produces, the company itself produces a lighter grade that isn't even WCS (Western Canadian Select) to the best of my knowledge, so tracking that doesn't work either, tho it might be closer as they usually report an average price achieved below the average WTI numbers in the timeline. They throw out the WTI number projections as a reference point just because it's the leading market indicator. Your also trying to smooth out a 3 month period like everyday is weighted the same, your average WTI prices don't take into consideration wells that go down or offline or those that come online. They maybe useful to yourself as a guide in that the oil prices today are about 20ish% higher that they were when they reported near the end of the year, the company's price achieved is likely to closely mirror that rate gain, but comparing your references to company reports will likely disappoint you if you are firmly entrenched in your projections.