Cardinal Energy Ltd (Alberta) T.CJ

Divy vs NCIB vs debt payment

[Luckyguy777]

I admit, I have not gone back and analyzed every word in the reports but here is my understanding of where things stand:

1) Debt repayment was the priority until it got to 100M.  At that point they announced the divy.

2) Shortly after they also announce NCIB.

3) Have stated that when debt gets to $50M they will revisit shareholder returns (may have indicated a divy increase).  They stated they expect this to occur in Q3.

4) Have recently said they would like to have all debt paid by the end of the year.

5) Have increased CAPEX for second half of 2022.

With all that said, my view is they said they would like to get debt to zero by end of the year but I do not believe that is the top priority if there is better use for the cash.  For example, if they believe the share price is to low maybe they direct more to buy backs.  They also said that when oil was much higher than it is today.  I believe they are comfortable now with the debt level and will look to deploy capital in the best interest of the shareholders.

So, what do I expect?

A) I am guessing they are allocating a good portion of cash flow to share buybacks vs paying down debt.  If that is true, maybe debt is not yet below $50M.

B) I expect we will see an announcement on the dividend by at least the release of Q3 results.  We might see a small increase (because they said they would) but I kind of hope they keep buying shares at this level vs a small increase. 

C) I don't believe debt to zero by year end is the priority.  Does it really matter if we get to absolute zero at year-end vs sometime in 2023?

D). I expect to see oil price increase through the rest of the year and into 2023 and at some point we will reach that magical $14 target and people will be adjusting up to a different target with a larger divy.

E).  If all that is true, CJ will be a great investment but from an appreciation perspective we may well be passed by some others that are not paying dividends, have more liquidity and are buying back more shares.  I am okay with that as even though this is my largest holding, I own the others as well.

GLTA, I have been enjoying the ride.  Hopefully it keeps going for another few years.

[Alwayslongs]

Very good comments!

[MohelJFox]

Well said !

[JohnnyDoe]

the problem with buying oil stocks for income is, unlike most product producers, oil companies do not control the price of their product. Oil stocks got hammered in 2014 and in 2020, in part because dividends were cut. In my opinion the oil companies have all learned. Emphasis is no longer on drill baby drill. The entire industry has been focused on balance sheet repair. The big issue with the

[CJInvestor]

Completely am in alignment with these suggestions. If you look at the wild success of tou they have kept dividend conservative while doing a number of special divvy payments. They are light years ahead of Arx which has not dispensed any special dividends and has a slightly higher general dividend. If Cj can maintain a yield around 6-7 percent and also do special dividends when flush with cash we