We are NOW at the 50% level, Capital Return to ShareholdersAccording to the report, we are now under the threshold of 9B debt, and moved into the 50% payback zone.
The companys Board of Directors has approved tripling the base dividend starting with the second quarter of 2022, as well as a plan for additional increases to shareholder returns. Beyond the base dividend increase, Cenovus will target to return 50% of quarterly excess free funds flow to shareholders when reported net debt is less than $9 billion. The company will do this through share buybacks and/or variable dividends while also continuing to pay down the balance sheet. Cenovus has adopted an ultimate net debt target of $4 billion. When reported net debt is at the $4 billion floor, Cenovus will target to return 100% of that quarters excess free funds flow to shareholders through share buybacks and/or variable dividends. We have consistently delivered on our commitments to our shareholders, said Alex Pourbaix, Cenovus President & Chief Executive Officer. After rapidly deleveraging our balance sheet, we are now able to provide a much clearer picture of how we will position Cenovus for the longer term as a leader in delivering total shareholder returns. First-quarter results highlights Total upstream production of approximately 800,000 barrels of oil equivalent per day (BOE/d)1. Total downstream throughput of 502,000 barrels per day (bbls/d). $1.4 billion of cash from operating activities, $2.6 billion of adjusted funds flow, $1.8 billion of free funds flow. Total long-term debt of $11.7 billion and net debt of $8.4 billion as at March 31, 2022.
This means to me, although they just tripled the base dividend to $.42 / yr, we should start to see a lot more special dividend cash and buybacks immediately. Tell me if I'm wrong please.
Prior to the release, to take advantage of a play on good earnings, I had bought 500 contracts of CVE May 20 2022 $15 calls on the US side at around $2 avg for the easy money on a beat. I expected at least a double, but they are now only $3.00 with a long way to run yet IMO.
However, with cheap $100 WTI, and today's apathetic response to the stellar news along with a technical gap down price move in the first few minutes of trading to near yesterday's close, I'm still holding the calls to give the market more time for the good news to sink in.
During the ridiculously cheap gap play opportunity, I also bought another 20,000 shares on the US side (far cheaper price with the current US/CAD exchange rate) to add to my core position of 40,000 shares on the CDN side. If oil rises and CAD gets stronger, it gives an additional boost of a few more points.
As the general market dies and withers, while our fundamentals in the energy sector keep getting better and stonger, our day will come, and be hard to ignore.