RE:RE:RE:RE:RE:A bunch of you guys are getting pretty gloomy here lolOh I agree and as I stated debt reduction is THEIR goal and balance sheets can always be improved but it doesn't require repairing as it s not broken.
As is still stated on their Corporate Summer Presentation reducing debt ia a goal and I can only assume from previous statements that they want to take it to zero which kind of pigeon holes them into doing it.
Continue to reduce debt
Increase production volumes ~22,000 boe/d
Continue to optimize existing asset base
Execute focused drilling program (17.6 net wells) Increase annual CO2 sequestration >300,000 tonnes
Maintain exposure to commodity price upside Maximize direct shareholder returns
Perhaps they should change the "Continue to reduce debt" to Continue to keep debt reduced.
They are within their target debt level and I agree the more important challenge may be adding to existing reserves in order to keep the good times rolling.
GLTY and all
JohnnyDoe wrote: Quintessential1 wrote: "That said, I think we're going to need to see wti in the 90s for this stock to really get moving."
I am not sure about this. As long as CJ can fund cap-ex,increase production, pay the divy and pay down some debt I think you will see a slow grind upward. We will probably still see price swings as commodity pricing is volatile but at these over $80 WTI levels CJ is earning some excess FCF. Their goal was to get debt to zero but as has been pointed out that isn't necessary for shareholder returns but if it does occur there are few places left for the funds to go except cap-ex for increased production or a war chest for M&A. As the balance sheet improves and production increases the share price should rise accordingly.
GLTY and all JohnnyDoe wrote: Pottsy wrote: Thanks Jay, I agree but don't see a breakout soon, CJ has changed, the investors have changed, it is difficult to determine what is going on. I am now a trader don't care about the divi but at 10 % I would be very cautious, use STOP LOSS at every trade...
Typically yes a 10% dividend is something to be very cautious about.
In CJ's situation all you need to do is pay attention to wti and the WCS spread. They are currently running ahead of the company budget so there's no cause for concern whatsoever. That said, I think we're going to need to see wti in the 90s for this stock to really get moving.
On the wti downside, CJ can hold production flat with limited capex and can cut back Aro expenditures so it is likely that there's no threat to the dividend with wti in the low 70s for a 6 month run. Obviously things are more comfortable at 80. currently there's no imminent threat that would warrant a significant price drop.
But the balance sheet doesn't really need repairing. I'm going off the top of my head but loosely compare CJ, BTE and CPG
CJ - 20K production, 60m debt
BTE - 155k production, 2.5B debt
CPG - 165k production, 3 B debt
Both BTE and CPG are trying to pay down debt rapidly and then have plans to increase shareholder returns once they hit their debt targets.
Cj doesn't really have a debt issue and can only grow production modestly. I think the dividend is pretty safe but I wish they'd kept it at 5 cents or maybe even 4.5 cents. The additional fcf saved could have enabled them to build a warchest to acquire additional production