What’s next?As WTI continues it’s march to $80, what do the unfortunate shareholders of CPG have in store?
I think Q2 will be pretty solid, but I still think CPG will underperform oil.
I don’t think Saxberg, who runs the company like he owns the whole thing, still gets it. He’ll continue doing what he’s done. He said “changes weee already made” which means that the path stays the same. Cash flow will cover the dividend and capex, debt will be lowered marginally, and excess cashflow will be spent on acquiring yet more land, paying executives more, and in higher expenses.
Does anyone here think we’ll get a buyback or dividend increase with $70+ oil? Definitely not. Will billions in debt be paid off? Definitely not.
I like what BTE and CVE management have been saying. BTE said they’ll use excess cashflow to pay debt, not grow. They also said that they will consider selling some of their Eagle Ford assets to repair the balance sheet. Eagle Ford land prices are skyrocketing, so they are smart to consider a sale to deleverage.
Same with CVE. Alex said that their #1 focus is paying off debt. Once they do that, they will eliminate their hedging prorgam completely. Only then will they consider expansion, and that will be in their refinery business, not upstream.
These are smart guys. I wish Saxberg could learn from them.