Pine Cliff Energy Ltd T.PNE

Ink Research

[retiredcf]

August 1, 2023

Morning Report: Pine Cliff insiders continue to bet on the company's strengths

With Energy stocks starting to regain some traction this summer, today we revisit natural-gas-focused Pine Cliff Energy (PNE), last featured here on January 19th. The stock is up 8.3% since that report. During the period, it also paid a monthly dividend of $0.01083 per share. Based on its August 1st close of $1.56, the stock offers a prospective dividend yield of 8.3%. Given the high yield, investors still seem to have some skepticism about the dividend's sustainability. We will have to see if sentiment firms following the release of Pine Cliff's Q2 results after the close on Tuesday.

Pine Cliff reported Q2 cash flow from operating activities of $12.5 million while paying out just under $11.5 million in dividends. Q2 capital expenditures were $4.4 million as it drilled one gross (0.7 net) oil well in central Alberta which was placed into production along with 1.4 net wells drilled in Q1. The overall capital budget for 2023 remains unchanged at $27.9 million even as it shifts the drilling of a remaining scheduled 0.7 net central Alberta oil well to 2024 in favour of recompletion work elsewhere.A Pine Cliff also narrowed its guidance to 20,000 to 20,500 barrels of oil equivalent per day (85% natural gas) from 20,000 to 21,000 boe/d previously. Q2 production of 20,198 boe/d was impacted by wildfires which reduced production by an average of 250 boe/d. Pine Cliff's revenues were hit by weaker commodity prices, but it believes it has an ace up its sleeve, a low production decline rate of 7%. That can allow the company to be nimble when it comes to capital expenditures and acquisitions. Another ace up its sleeve may be its bank account. As of August 1st, Pine Cliff reports having $48 million in the bank and no debt. Meanwhile, the stock returned to the July Energy Top 30 in the #11 spot due to strengthening price momentum and continued accumulation by current insiders who continue to bet on the stock's prospects.