RE:RE:RE:RE:RE:RE:RE:Homework timeBenZodiac wrote: Sure they have more shares to pay out dividends far than they did 6 months ago, but they also have 400+ more wells producing oil than they did 6 months ago. I expect another 200+ wells were drilled since last quarter and probably with 100% success rate. Then there is issuing new shares to fund aquisitions which makes sense when the aquisistions generate more than enough to pay the dividends on the shares used to buy them.
The question is how much more cash flow will they bring in with these new wells that are currently producing and will it more than offset the increase in the number of shares outstanding and the prices CPG will receive going forward....as far as potential new drilling on their now expanded lands, that costs money, and I believe Mr. Saxberg has stated that he will cut CapX to protect the dividend....I think this is dangerous strategy.......sure, delay new projects/output because of low oil prices, but, as I think I mentioned in an earlier post on another thread, dividends are supposed to be paid from excess cash flow that a company doesn't need to fully fund operations, not something that must be maintained at almost any cost......because of their hedging program, CPG may indeed have more "dividend staying power" than other oil companies that have already cut their dividend, but if oil prices remain in the $50-$70 range over the next 12 months as more and more of CPG's hedges come off, CPG will not be immune to a dividend cut, and I think it would be prudent of them to cut sooner rather than later to protect the financial health of the company.....in other words: err on the side of caution in this market......