RE:Please read the numbers correctlyramman1 wrote: Payout ratio is currently 144 % meaning divi has to be cut 44% to prevent rise in debt, Without 2 asset sales of 43 Mil , debt had risen from 143 200 mil to 160 374 mil in the quarter. Capex required to retain operations is 18.3 mil. Production will drop slightly due to asset sales. Debt will be reduced temporarily due to proceeds from sale ,but has to go back up for divi payouts. '' Eliminate the divi''
You are looking backwards re the POR and ignoring the effects of what was done in 2105 going forward.
Surge reduced the Dividend substantially in 2015. The most recent reduction to $0.0125 / month didn’t take effect until the Dec / 15 payment.
In 2015 they paid $68.908m in Cash Dividends (there is no DRIP)
At the current Dividend rate and Share count they will pay abt. $33.3m Cash Dividends in 2016. That is a very substantial (abt. $35.6m) Y/Y reduction.
They are also doing a very good job reducing expenses.
The original 2016 Guidance was based on $40 USD WTI
AVERAGE for 2016.
Obviously WTI averaged quite a bit less than $40 in Q1 / 16.
The Q1 POR will most likely be not good but 1 Quarter does not make the year.
Don’t forget that there are 4 Quarters in a year and all indications support improving Oil prices for the last half of 2016 if not sooner.
Surge will be updating the 2016 Guidance after the Asset Sales have closed.
The Near Term will likely remain a bit challenging for Surge not to mention the entire Industry.
In my opinion Surge is doing all the right things to be positioned to do very well over the Mid – Long Term. They have a very good Balance Sheet and very good Assets.
For anybody that feels the need to be exposed to the Oil and NG Industry there a lot of worse places to be.
Surge is committed to the “DivCo” model.
Anybody that doesn’t understand or like that model or how Surge is navigating the current Oil and NG environment should look elsewhere.
I would classify Surge as a Relatively Low Risk Company with Excellent Management in a High Risk Industry.
As Always; Do Your Own Due Diligence; It’s Your Money !!