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Bullboard - Stock Discussion Forum Birchcliff Energy Ltd T.BIR

Alternate Symbol(s):  BIREF

Birchcliff Energy Ltd. is a Canada-based intermediate oil and natural gas company. The Company is engaged in the exploration for and the development, production and acquisition of oil and gas reserves in Western Canada. The Company’s operations are focused on the Montney/Doig Resource Play in Alberta. Its operations are concentrated in the Peace River Arch area of Alberta. The Company has a 100... see more

TSX:BIR - Post Discussion

Birchcliff Energy Ltd > I Think BIR Management Executed Very Well Until....
View:
Post by AlwaysLong683 on Jan 23, 2023 9:50am

I Think BIR Management Executed Very Well Until....

....they jacked the dividend by 900%. This gets headlines and boosts the share price as people look at the yield for an O&G E&P company and hop on board, but I think it's a mistake over time for an unhedged book (or even a hedged book).

There's a reason why BIR is the only company that has boosted its dividend 900% after substantially cutting debt. Look around. Many other Canadian O&G E&P companies have paid down a lot of their debt as well, but they know that the good times of 2021-22 won't last forever, so they increased their regular dividend by a reasonable amount and/or handed out one-time special dividend, but didn't go overboard.  Extreme moves are not usually a good sign for a volatile sector such as this, and I'd consider a 900% dividend increase to be an extreme move for a company, not to mention one with a no-hedge strategy in a sector that doesn't have regulated or reliable ongoing cash flow streams like a utility or midstream company. 

BIR trailing 12-month P/E included an extended period of $6 - $9 gas prices, so they benefitted more than any other company. Now at just over $3, it's the companies that hedged production at $6 - $9 that will reap higher prices for their products with BIR at the end of the line with its 100% unhedged book.

I think the best run NG company in Canada is TOU.

BIR would do well to employ a similar strategy if they want to achieve that kind of success over the long term.
Comment by PlutusofCrete on Jan 23, 2023 10:04am
I think TOU will be buying BIR sometime between 2024-2026) AlwaysLong683 - (1/23/2023 9:50:07 AM) I Think BIR Management Executed Very Well Until.... ....they jacked the dividend by 900%. This gets headlines and boosts the share price as people look at the yield for an O&G E&P company and hop on board, but I think it's a mistake over time for an unhedged ...more  
Comment by AlwaysLong683 on Jan 23, 2023 10:20pm
Tourmaline (TOU): Dividends: Didn't cut their dividend throughout the 2020 COVID crash, gradually increases their dividend each year, and uses special dividends when Natural Gas prices are high. Corporate Presentation January 2023: page 4:   Tourmaline has a free cash flow breakeven on a maintenance budget at US$1.50/Mcf. page 8: The majority of Tourmaline’s free cash ...more  
Comment by AlwaysLong683 on Jan 23, 2023 10:33pm
Might as well toss in TOU's Hedging Strategy as well: Since July 1, 2022, Tourmaline has continued to strategically enter into additional commodity hedges. Approximately 26% of 2023 average production is now hedged at a weighted average fixed price of CAD $5.26/mcf. Additionally, for this time frame, the Company has 110 mmcfpd of natural gas hedged at a basis to NYMEX of USD $0.12/mcf ...more  
Comment by Billybabin61 on Jan 24, 2023 9:26am
Yada yada, move on, the dividend has been announced.
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