Payoff debt & Investors will comeLook at GXE a tiny company of 6000 B production. Since they have announced to become debt-free the stock is shooting up. Most likely they will become debt-free next month or in March.
Stock is trading like the energizer bunny that keeps going up. The market is giving it a debt-free premium. Most oil stocks are flat to down day. It is up 9.35% today.
Debt-free companies will reduce the risk to the company in the event the oil prices become soft again. Shareholders will feel confident in holding the company for the long term.
Pretty some the model for oil companies is going to change. Investors are going to demand returns while they hold the stock, instead of servicing banks the companies will have to service the long-term shareholder.
Massive FCF generating cash cow Oil companies will become like trusts. REITs that make payments to the shareholders on a month or quarterly basis. These companies will be added to dividend-paying funds and ETFs.