They must cut the divRather than take on debt to fund it:
lobe says investors seen being cautious on Birchcliff
2023-04-12 08:20 ET - In the News
The Globe and Mail reports in its Wednesday, April 12, edition that Raymond James analyst Jeremy McCrea downgraded Birchcliff Energy to "market perform" from "outperform" on Tuesday in response to the impact of a "steep" drop in gas prices on its free cash flow. The Globe's David Leeder writes in the Eye On Equities column that Mr. McCrea says, "Given the higher dividend obligation (that some debt is required to fund when including maintenance capex requirements), we believe that investors would likely stay sidelined until we see higher natural gas prices." Accordingly, Mr. McCrea trimmed his share target by a loonie to $11 (all figures Canadian unless otherwise stated). Analysts on average target the shares at $11.10. The change coincided with an adjustment to the firm's commodity price assumptions, which saw an increase to its 2023 and 2024 West Texas Intermediate projections (to $78 (U.S.) and $73 (U.S.) per barrel) and a "meaningful" reduction to its natural gas estimates. The Globe reported on Jan. 12 that National Bank rated Birchcliff "outperform." It was then worth $9.14. The Globe reported on March 30 that Canaccord had reaffirmed its "buy" call for Birchcliff, which could then be had for $7.55.