RE:RE:RE:Should payoff debt first
I agree 100%.
I'm surprised juniors don't use Special Dividends.
It would allow the company to throw shareholders a bone if the quarter is above projected WITHOUT putting a noose around the company neck to meet the ongoing obligation.
I guess every company will handle it differently but debt is a company killer and many oil names have just been handed a "get outa jail card" with oil in the $70's and now $80's. We as investors have to vote with our wallets as to which ones are doing a good job.
glta
jmo
PUNJABI wrote: This stock is still in the penalty box. There were too drastic swings in the value of the company. It was like a casino. Oil prices were a major factor but buying other companies/ assets with debt at the wrong time.
Even when they were paying dividends it did not prevent the stock fo tanking. It became a huge dividend trap for those who did not sell because of the high dividend yield.
Oil is a highly volatile sector you cannot guarantee that the oil prices will not crash. for these tiny oil companies, the fundamentals can change too fast and can fall into a death trap. In the long run, the dividend model has not worked for these tiny companies. It takes them a long time to recover in case there is a collapse in oil prices for a long time. Quite a few did not survive.
When you have debt it is the creditors that are protected and they call the shots. They add conditions that can be detrimental. They are not interested in the survival of the business all they are interested in is recovering their debt. When there is too much debt shareholders get nothing when liquidated.
With little to no debt, the chance is that the performance of share price would be better as the balance sheet will be much healthier. Cash remains on the balance sheet. The discount of carrying debt and its risk will be gone. It is better for me to have a better share price than a tiny dividend that can cause pain for the company in future.
For income, I would go to dividend-paying ETFS or blue chips will a record of 30 yrs of paying dividends. Companies like SGY are speculative play at best.