RE:RE:RE:RE:RE:Putting the "dividend cut" debate into perspective
If the conditions in the Western Canadian natural gas market over the past 6 months were permanent, I'd agree with ceremony that a dividend cut would be prudent.....
However, I believe that things will improve over the next 4-6 months for reasons previously mentioned (winter season, increased natural gas demand, increased AECO prices, pipelines firing on all cylinders, etc)......
True, the dividend was not covered by earnings last quarter, and PEY may post a similar result in the current quarter, but one has to weigh an impulsive cut to the dividend against the damage it will do to PEY investor sentiment and what will transpire moving forward.......
If PEY cut their dividend today, then 3-4 months later begin to reap the benefits of the aforementioned conditions and were making more money per unit on higher volume with higher forward price hedges in place and are once again making plenty of earnings / cash flow to support an 11 cent a month dividend, the damage would already be done in terms of losing investor confidence unnecessarily as the dividend would be lower even though the original dividend would be well covered once again........The market will likely take it to mean PEY cannot adequately plan their cash flow to cover dividends and expenses over an annual / investment cycle and are flying by the seat of their pants with dividend cuts / possible reinstatement, etc. and the market would be right.....PEY stands out from the pack because of the reputation of their management and stability, and cutting the dividend would harm that image....