Dividend talk
They dividend is safe for holders on record April 2. However, if oil prices stay like this they won't pay the next one. They're only paying this one because they already announced it and have more than ample cash resources to do it. Generally they don't want to pay dividends when Brent is below $60.
I'm told costs have been coming down for a variety of reasons, higher cost production is shut in, about 28,000 bbl/d has a $58 Brent floor, and the midstream investments will be divested. They generate strong dividends of about US$100 million annually, so they should command a good price even in this market.
28,000 bbl/d * 365 * $30 netbacks = US$306,600,000.
Plus January and Feb at over 70,000 boe/d have been very strong months.
70,000 boe/d * 60 days * $35 netbacks = US$147 million.
So.... before panicking, considering the fundamentals, which really are quite robust.
Agreed oil is in a rough situation now and going foward, but fundamentally they're in a very strong position with good cash resources, low debt, and majority ownership of CGX.
US$ 197 million is the carrying value of the investments in associates (pipelines and related).
Latest financials show 2018 dividends from those associates of US$ 102 million.
The book value of associates takes into account a big impairment on Bicentenario of over US$ 130 million.
"During the year ended December 31,2018, the Company recognized an impairment charge of $131.0 millionon its investment in Bicentenario primarily as a result of changes to cash flow projections resulting from the Company’s exercising of its contractual right to terminate its transportation contracts due to a justifiable event, given that Bicentenario had not transported the Company’s oil for more than six uninterrupted months (Note 28). The carrying value of Bicentenario was reduced to its recoverable amount which was based on its VIU using a discounted dividends cash flow model."
So the book value of that is a rock bottom estimation, which is good.