Gear Energy Ltd T.GXE

GXE

[traderlong2]

One Alberta junior used its financials as a chance to unveil a "new strategic direction." Don Gray's Gear Energy Ltd. (GXE) lost four cents to 69 cents on 1.18 million shares, after releasing the results of a fairly ho-hum quarter, the highlight of which was the appointment of a new president and CEO. Kevin Johnson took over from the retiring Ingram Gillmore in April. In May, he made a brief mention of "re-establishing momentum" for Gear, but has otherwise stayed mum about his plans. Today he finally made his pitch.

It is still a very preliminary pitch. Mr. Johnson's "vision" is to turn Gear into "a leading junior ... renowned for differentiated profitability, operational excellence and meaningful value creation for shareholders." What this means is that Gear will take some time to evaluate its current assets and identify "the very best ideas." What this really means is that Gear is slashing its budget to $40-million from $57-million, dropping most of the remaining wells from this year's drill program (with just five wells on the docket in the second half of the year, down from 14), and lowering its production guidance to about 5,500 barrels a day from 6,000.

One item that Gear is stubbornly clinging to is its dividend. Mr. Johnson was clear that "no changes are expected with Gear's monthly dividend at this time." The monthly payout is a mere half a penny, but given Gear's share price of 69 cents, this represents a generous yield of 8.7 per cent.