RE:RE:RE:anyone think CJ will announce a dividend on Nov 4 2021 ?When the price goes from $70 to $80, the cash flow does not increase by $10/$70...it increases by $10/30, because the first $40 covers the costs.
So, very roughtly, at $70 they are making $30 per barrel in operating cash flow. At $80 they are making 33% more, or $40 a barrel.
Second, Free Cash Flow is what is left after capex is paid for. When the price goes up, extra operating cash flow is all in excess, unless they ramp capex up as well (at which point production should go up).
So at 22,000 BOE per day, and $10 a barrel price increase, less royalties there is an additional ~ $25M in FCF generated over the second half of the year, so ~ $100M FCF.
That's in HALF THE YEAR.
For 2022, at these prices, about $220M of FCF (Not having to pay income tax is great) so ~ $1.50 per share in FCF
So, you could reduce net debt to zero, hold production flat, and pay out ~ 10% dividend in '22.
Or cut net debt to $80M, buy back 10% of the float, and pay a 10% dividend...
Cut net debt to $100M and buy back 22% of the float...
Lotta good options.