Cardinal Energy Ltd (Alberta) T.CJ

Is CJ buying shares?

[TheWokeLemming]

Looking into this.  It'd be interesting to see if the buyback has been continuing in this last month when insiders are buying.

[Billybabin61]

They can buy over 12 mil shares and I think that was approved in July. I don't believe they have bought anywhere near that amount, based on what I checked I think it was between 3 and 4 million to date. Great time for them to jump in for sure.

[TheWokeLemming]

As of Sept 30 they had bought 3.7 million, as per their getting outdated presentation.  Q4 financials aren't out until March 13, 2023, 4.5 months after Q3 was released.   

[Kherson]

According to Canadian Insider, the last time that Cardinal did a redemption or cancellation was November 1st, @ $6.93 each. Since the share price is now lower than that, I find it odd that Cardinal is no longer buying their shares for cancellation! Kherson

[Quintessential1]

Their last purchase that I see posted was in October at $6.93 for just over 24k shares. If that was their target price then, it may be that again.  They should have a good idea of excess FCF for Q4 and buying before the ex-div will save them 3 divi payments before the next ER. They did say in their report that the cost of borrowing money was roughly the cost of the div.  I wonder how

[vwbusman]

From the Investor Presentation, they indicated the priorities are as follows: Priorities for Incremental Adjusted Funds Flow 1. Eliminate bank debt 2. Increase shareholder returns i. Sustainable dividend increases ii. Share buybacks iii. Variable dividends 3. Capital Expenditures i. Enhance long term inventory 4. Acquisitions i. Improve long term sustainability I expect as they have not

[Kherson]

But Cardinal had been purchasing shares! Has their priorities changed? Kherson

[Quintessential1]

Good point.  The increased interest rates may have shifted priotities as paying down debt may return more value to shareholders than buying back shares.  Either one is fine with me as they both will refelct well in the next ER. GLTY and all

[sclarda]

At the  current oil price of aprox. $75  WTI and with the low  WCS price CJ is likely around break even after Capex and dividend so there is no excess money to pay back debt or re purchase shares. At the relatively low current oil prices you can not expect the company to pay a 10% plus dividend which costs them aprox. $116 million per year  and buyback shares and pay down debt

[steve957]

risk to reward is to good hear,,if it were spring time tomorow there wouldnt be enough oil fuel ect !! CJ should be trading @ 10 bucks

[Billybabin61]

I have a bit of a different take on their cash flow and how it is affected by current oil price whic h gives them gives them a buffer I believe: They are forecasting 170-180 mil in free cash flow in 2023 based on 22 K/barrels per day at $80 WTI which appears to be in sync with their levered cash flow as reported by Yahoo Fiance of 168 mil. So using 175 mil as FCF(after the bills are paid) and

[JayBanks]

  This is pretty much the model I'm understanding... The company seems super confident in the guidance at 80/oil, and all indications they give is that they are rather safe below this point and should show a payout ratio of 60-70% in the next quarterly.

[Billybabin61]

yes I agree, their board are no fools having Brussa as a founding member and plenty of skin in the game with his holdings and that os the rest of the board, Brussa has been around the block with several O&G companies. They also have John Gordon on the board who presently sits on Topaz as a board member, sitting next to Topaz board mebers like Mike Rose and Brian Robertson of TOU and Steve

[Quintessential1]

Okay so at $80 WTI everything runs smooth.  Cap-ex is covered debt is serviced and the dividend is safe.  Then debt gets paid off in say six months end of Q2 2023.  Then what? GLTA 

[vwbusman]

Directly from Cardinal Presentation 1. Eliminate bank debt 2. Increase shareholder returns i. Sustainable dividend increases ii. Share buybacks iii. Variable dividends 3. Capital Expenditures i. Enhance long term inventory 4. Acquisitions i. Improve long term sustainability As to what item 2 means - could be any combination of the three listed options or done individually

[Quintessential1]

It would be nice if item 2 remained at a 10% yield at the low end that being $7.20 per share right now. If the rest went entirely into share buybacks at below that level that would insure that CJ and its investors are getting a low price for their stock and at saving at least a 10% payout.  It would also establish a roughly decent floor. Now after Q2 with lower debt and higher returns the

[JayBanks]

Good discussion and I have a couple points to also bring in here... If everyone or most of the industry becomes debt free, bidding wars amongst companies for consuming companies, services and extras will become very prevalent and we begin a new cycle, similar when credit was cheap and easy and the solution was pump more to get revenues up so that banks will fund more. One major problem is that

[Burgersandfries]

I'm a recent buyer here ....the novelty of being debt free in this industry is amazing very few have done it can you imagine no debt maybe for once these companies will actually be in control of themselves and not beholden to banks...my opinion...build cash wait for soft spots in the market buy back shares the divi is more than handsome as it is.