RE:2020 & Silly Dividends I agree on you on dividends but not for the reasons you cited. The insiders will get paid one way or another (salaries, options, dividends) and whether their total comp is excessive or not is another conversation. But for the rest os us, dividends should be the last thing we look for from our E&P investments. We invest for growth. If I want income I can get 5% from Exxon, right? So the first priority should be investing in the business assuming it has an attracive recycle ratio (after tax netbacks / total F&D costs).
Then comes the question of fonancing the business. During the risky exploration phase this should be done with equity. For development and infrustructure one can justify some debt especially if you have long term stable pricing like CNE's gas contracts. But the energy business is still risky and I prefer to have zero debt to survive the tough times or take advantage of opportunities. So pay down the debt as fast as possible.
Finally, comes the issue of returns for the shareholders. I don't like dividends because they are rigid, tax inefficient and undemocratic. Once you start them you are stuch with them If you ever have to reduce them or skip them you pay a heavy price. The shareholder is subject to taxes and transaction costs for reinvesting. I prefer my gains to compound tax free and to be realized in the form of capital gains at my discretion. If the company has excess cash, no attractive reinvestment options and no debt, then I can see a stock buyback if the stocjk is undervalued. It is more flexible and tax efficient than dividends. If the stock is overvalued, then sell stock to buy assets or takeover undervalued companies. That' s the only reason to be a public company - to arbitrage the stock market value and the property value.
So IMO Charle should have the following priorities:
- Invest to grow the business
- Pay down all the debt
- Buy back stock if and when it is undervalued. Sell stock to buy assets or use it for mergers if it is overvalued
- Pay dividends as a last resort if all the other options are exhausted