RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:At what point would cj cut the Div to 5 cents? sclarda wrote: CJInvestor wrote
Yep I just read a yahoo article that the Div is only 13 percent of profits after tax which makes it super safe. Like other posters said if anything they will trip new projects before cutting the dividend. Unless oil goes to 60 and stays there. Then maybe a trimming of a cent. So we are good!
----------------------------------------------------------------------------------
13% of after tax profits covers the dividend? Maybe at $200 oil.
In their budget for 2023 CJ states that they will generater aprox. $270 million in Funds Flow at $80 oil. If oil stays around the current price of aprox. $76 per barrel next year they will generate aprox. $252 million in Funds flow next year. Subtract aprox. $115 million for the 6 cent monthly dividend and aprox. $120 million for Capex and that would leave aprox. $15 million in Free Funds over for all of next year. At current oil prices CJ is spending aprox. 90% of its profits on the dividend. If oil drops $2 more CJ would be spending 100% of its profits on Dividends with no money left over for debt reduction etc. And while CJ at current oil prices is around Breakeven on a Cashflow basis after Capex and Dividend lets not forget about the 22 000 barrels of resources which are being used up daily which also have a considerable cost.
As we all know The price of oil makes all the differance. This year oil averaged around $92 i would guess. At the current mid $70s oil price CJ is basically breaking even after Capex and 6 cent monthly dividend. At $92 oil they could do the Capex and pay the dividend and still have aprox. $ 125 million per year in left over cash which is a huge amount for a small oil company such as this one.
Unlike so many experts both on Stockhouse and out in the real world i dont have a clue where oil prices are going.What i do know is that over the years especially the last one or two there always seems to be a lot of predictions on oil going to $100 plus from many analysts which are then posted all over Stockhouse and then Cheered on by oil stock investors as proof of $100 plus oil being virtually guaranteed.
And while that does happen occasionally as it did earlier this year if always seems to drop a lot from that price. And here we are again. Oil was well over $100 several months ago and despite endless talk of low world wide oil production and huge demand, Opec cutting 2 million barrels per day of production, China ramping up Russia etc we are now sitting with oil dropping for weeks on end with no end in sight into the mid $70 range.
After hearing this Sh#it about $100 plus oil for the last decade or more when in fact oil prices averaged closer to $60 over that time i am coming to the conclusion that maybe there is and never has been a huge worldwide shortage of oil and the average oil price will likely be a lot lower than $100 per barrel. everyday.
For CJ to be doing relatively well even with its low debt we need oil to average around $85 next year. At that price they can pay the current dividend, do Capex and still have aprox. $70 million per year left over for debt reduction, share buybacks and to replace oil reserves that are being used up
If it doesnt CJ with its debt nearly payed off will still be in a much better position than many other small oil companies and can cut Capex and trim the dividend if oil prices drop further and stay there next year.
Hopefully that does not happen and oil stays in the $80 plus range next year.
Good luck to all.
Sclarda, could I ask that you review some of the company decks, specifically where they define terminology, and check their definitions against your own use of terminology.
Simply put, you use company defined terminology incorrectly and doing so results in your messages being unclear and misleading.
I think your analysis is ok it just gets rather confusing to sift through the terminology
Thanks