RE:RE:RE:RE:dramatic debt reduction continuesThere are currently restrictive covenants on both the bank debt and BDC debt that prevent a dividend from being re-introduced.
It should be noted that BNE already has enough room in its banking line to pay out the BDC debt. But I suspect from a conservative point of view BNE will not do that at this time.
BNE has spent most of its CAPEX (50-55 million of 70 million)for the year and will now see a tsunami of cash flow.
The re-determined credit Facility Provides ample room for flexible decision-making going forward assuming oil remains above $100 a barrel. At that level BNE is generating $20 million of free cash flow a month. I suspect that BNE Will create additional flexibility in its operations.
When management feels they have Enough flexibility in the banking line, I would not be surprised to see management pay out the BDC debt prior to the end Q4. In order to do that management would have to pay out the BDC debt and negotiate the relaxation of the restrictive covenants on the debt in October 2022. If the bank would not Eliminate that restrictive covenant… Then I would expect management to eliminate the bank line altogether prior to the end of Q4.
I would don't be surprised to see a 2 to 3 dollar dividend in the future. Two dollars if oil is around $80-$90 and three dollars if it's over 100. They stock should be headed back to $20 at a minimum in the short term and $40 once it starts paying the dividend with a target of $60 longer-term if the market recognizes the structural deficit that exists for production going forward