sclarda wrote: projectleopold wrote
he should have cut the dividend 80%-90%.
now he lost credibility and will have to cut again...
this company was a classic PONZI.
and widows orphans and pensioners Pay the price!
jermoguy wrote:
Years ago, I owned Crescent Point. Monthly dividend of 23 cents. Stock was in the $41.00 range when I bought it. With some weakness in the oil and gas sector and some other issues with debt and dilution of shares, the price dropped....and dropped...and then they cut their dividend. The price kept dropping....and dropping. I got out around $8.00. Big loss. I just checked yesterday and it was at $1.65. Yikes.
The dividend cut for Vermilion was inevitable. And I get it, that the oil and gas sector are all down today, but the whole Crescent Point experience is in the forefront of my mind today. Big difference is that Vermilion has more international exposure. Still, the trajectory of the drop is troubling....
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I would not say that a dividend cut was inevitable here. Just a couple of months ago oil was over sixty five dollars. If it stayed at that level or higher the dividend would have been fine. The problem is that was a blip. If the dividend would have been cut five years ago when oil prices dropped and have averaged in the low fifties ever since. VET would have over one billion dollars more cash than it does now. They would only have aprox. 1 billion of debt today instead of two if they had done that.
The biggest mistake they made was not cutting the dividend like they just did five years ago after it became apparent that the days of high oil prices were not coming back anytime soon. To be fair they cut the dividend before the Russia, Saudi situation and oils complete collapse in price. If they had known that that would happen i am sure they would have cut the dividend a lot more if not completely and announced major capex cuts also. Both of which could happen soon if things dont turn around for oil prices.
Also a couple of weeks ago when the CEO was interviewed and said that the dividend was fully funded and the company was meaningfully over funded was not smart as the Corona virus problem was in full swing then and things were not looking good. Then a couple weeks later he cuts it in half. Looking pretty foolish doing that.
He should have just kept his mouth shut and said we are assessing the situation on a daily basis and will act according to how things unfold as we have to protect the companies finances before anything else in these type of extremely volatile situations and we will update investors as soon as we get a better grasp of where things are headed.
The one advantage VET has over many other companies is that if things dont improve they can cut the dividend completely and slash capex by half which would allow them to break even down to an oil price in the low twenty dollar range. Forget about dividends, sharebuybacks and debt repayment. Its all about survival of the fittest right now.
Many including me thought that although the last five years were tough in the oil business that things were going to slowly start improving and then along comes one hopefully last big Corn%holing and here we all are wondering where are money went.
Kind of makes an oil investor wish for the good old days of the last five years to come back.