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
Billybabin61 on Jan 24, 2023 9:26am
Yada yada, move on, the dividend has been announced.