RE:Letter sent to CJ Management todaySome thoughts on the current approach CJ is taking. Buybacks helps to stabilize your portfolio value because less shares are in hands of day traders and more in the hands of people like yourself for divy. Secondly this company is doing quite well on the debt front it brought down its debt substantially over the past 2 years and that still leaves Q4 2022 yet to see how much more is gone. They spend most of their Capex and ARO for 2022 so Q4 should see a larger debt reduction. Additionally they already communicated they will preference debt reduction before anything else in their last press realse for Q3.
As well their ARO is not mandatory so their is room to cut back and use the funds towards debts. When a company debt is way below .50 of cash flow its doing quite well. At $80 oil we have $37M free cash flow with about $60Mil in total debt without Q4 reduction. I believe the company is prediting oil to average above $80 for 2023. At $85 dollars they will have about $70M free cash flow so Debt will be gone in 2023 if that plays out. I am hoping they will shift their 2023 budget should oil price decrease materially by cutting back ARO and they might cut back the growth wedge and decrease Capex just running production flat.
Never the less its great you communicated your concern. Good luck to all.