Post by
MyHoneyPot on Feb 13, 2022 1:51pm
Absolutely Pathetic 4th Quarter (Year End)
Go listen to the web cast. - 10 minutes to summarize the 4th quarter and the most transformational year in ARC history, the entire management team should be fired...
In a major year of recovery for energy all management could talk about was that they squeezed for cost saving out of Kakwa. I would say it another way they simply illusted to the investment community how they failed them in being able to get the best value out of the most capitial efficient asset in their porfolio.
Management failed to mention that they so called Convervative approach, which i have a few choice words to describe, but will spare you.
What i would say about their approach is that it is not conservative, not focused, and its not really associated with a strategy. They said it was a strong balance sheet approach where the balance sheet is not getting any better from what i could see and they even experienced production declines in one of your best pricing quarters, while you paid 290 million for you Risk Management Costs. (What a Joke)
Dividens Strategy ( Lack Of One in Reality)
It sounds like ARX has fixed the cash dividend at 40cents a year.
Thats about 280 million dollars anually.
The dividend is based on $55 dollar U.S. oil and $2.50 Aeco gas.
The dividend has no tie to commodity side upside.
They are saying all the additional capital will go into share buybacks and the balance sheet, and pet capex projects, nothing for the shareholder.
The dividend will ge reviewed in December.
Dividend Increases
Dividend increase will be equal to the percentage growth of production 5%
Plus the percentage in the number of shares purchased back.
Example Dec 2023 (Case in Point)
Production Flat basically 350,000 boe day ( 0% gain, no dividend increase )
Share buyback 5% from December 2022, roughly 35,000 shares 500-600 million dollars, equates to a 2 cent a share increase in dividends as a result of share buybacks.
2023 Dividend Forecast (Dec 2022 communicated)
So the dividend goes up 5%, 2023 dividend will be 42 cents because of the share buyback.
Reality
15 dollar stock 42 cents dividend 2023
Is equal to a 2.8% return is that a compelling reason to hold the stock
2022 Projected OUTCOME
This is the most likely outcome in 2023
1 billion in Risk Management cost
600 million in share buy backs (5%)
280 milion in dividends
800 million in debt buy down (Buy debt down to a Billion)
1.68 Billion dollars accounted for.
2023 will be the same all over expect attach will replace debt repayment
600 million in share buy backs (5%)
280 milion in dividends
600 million in Attachie Capex
So what i can tell you is just don't expect much changes and i don't see any reason for the share holder to get excited here.
They will continue with industry leading heading losses, and the share buyback will not drive meaninful dividend increases.
They fixed the amount they will payout for dividend by fixing the cost base at $55 WTI and $2.50 AECO gas, so they are only going to pay out 280 million dollars, and rest will go to capex, share buy backs, bank debt, and esg.
IMHO
Comment by
angelnicky on Feb 13, 2022 1:55pm
The BOD should not recommend a pay increase to senior leaders of this company or any Bonous until our full div that was slash from fixed income investors who relied on such div for income is reinstated. Management should be ashamed of themselves should they take a pay raise,