Husky Energy Inc. cumulative redeemable preferred T.HSE.PR.B

Anyone get their calls returned from Investor Relations?

[wheeloffortune]

All I get is an answering machine.  Why isn't there an NCIB to stabilize the SP if there's $1.775B in cash and equivalents and the 5 year government bond rate is now only half a percent???

[autofocus111]

wheel What does NCIB stand for?

[wheeloffortune]

NCIB=A normal-course issuer bid.  A Canadian term for a company repurchasing its own stock from the public in order to cancel it.  In a normal-course issuer bid (NCIB), a company is allowed to repurchase between 5% and 10% of its shares back depending on how the transaction is conducted.  Case in point.  Artis Reit was a falling knife.  I bought in around $12.  It

[oilandgasmick]

Thanks for actually coming on here with a positive suggestion that makes sense. Yes, when you are sitting on this much cash you can certainly issue a buy back program. The buy back doesn't settle everything but as you say it makes the shorters step in and cover which tends to help the falling knife problem. I don't know what happened with regards to the sale of the service

[autofocus111]

O&G I've posted here for some time that I would prefer they prioritize share buybacks over dividend growth for some time now. I think management is still reluctant about touching the dividend after the fiasco last time they cut it. But yeah, selling retail would give them some much needed flexibility to revisit their capital allocation plans, and with the share price so low, they'd be

[pablo87]

At this share price, the max buyback of 30M shares would cost $150M.  Would be $$$ well spent (25-30 cents on the book value dollar) and would go a long way with real shareholders. Its a short term borrowing until retail is sold. For LKS it's great, you and your 30% partner spent $18B developing this incredible asset and now your desperate partner is willing to sell his share for 25 cents

[mrbb]

my guess is husky is not getting a good price for their gas stations. The anti oil, covid-19 have really put a negative sentiment on fossil fuel, something that no one can foresee. It is something more of a perception than reality. I don't see people driving less (in canada). In fact, i drive a 5800 lbs SUV, i probably drive more with the coming cheaper petrol prices. 

[Dogsbreakfast4U]

Management has stated on numerous occasions that share buybacks are not their preferred course of action because of the relatively small public float. They have stressed returns via dividends. Now, if oil prices stay where they are or go lower you can bet they will cut the div or take it away altogether like they did in 2015. If there was ever a time for LKS to take this puppy private it is now

[wheeloffortune]

If HSE cancelled 10% of the shares through an NCIB, LKS' percentage of ownership would also go up without having to personally buy anymore shares.

[mrbb]

that is a very good suggestion, that's what have kept the stock market buoyant for the past years.  I'm sure LKS is brainstorming as to what to do right now. 

[oilandgasmick]

Well, if he's doing some brain storming then its about time.The stock is now trading at 14% of its 2014 high. The deeper the discount to book is then the more attractive the buy back becomes especially for the majority owner. He knows that he's into it for the long term so chances are that down the road he eventually retrieves the book value which is somewhere around $20? I also

[mrbb]

with current yield close to 10%, LKS now has to compare his new investment return to hse's 10% yield.  Going private would save alot of admin cost too.  Vermilion just cutted their dividend by 50% and i read poster comments from their forum  wanting to see a bigger dividend cut because it would be better for the company.     

[autofocus111]

Dogs I set a GTC Buy order at $3 to double my position. I figured that was a reasonable target if news broke of a dividend cut. Do you think that's too high? I might lower it, but only if WTI heads into the 30's. WCS-WTI discount remains persistently high, even after SU's Syncrude operation suffered another 'unscheduled fire' event and partial shutdown today. Is it ever gonna

[autofocus111]

Lowered my limit price to 2. This chit is hitting the fan real hard.

[oilandgasmick]

Yes, I am kind of thinking the same. I am sitting on a fair bit of dry powder so 2 bucks sounds pretty nice. Just the value of cash on hand is around 2 bucks a share so sounds like a good opportunity. There is always a silver lining. Loving that yield now.

[autofocus111]

oilandgas Don't fall in love with that yield too much. HSE is going to have to cut it if oil prices stay down at the new levels for more than a couple of months. One look at the cash flow sensitivity (slide 19) and sources/uses of cash (slide 11) makes that pretty clear. No way the crack spread and FX are going to even come close to making up for a sustained drop in oil price of this

[wheeloffortune]

What you said doesn't work in practice. Take Hudson Bay for ex.  Hit $6.11.  Baker had 57% and minority holders wouldn't accept $9.45 to take it private.  Divy's less than half a percent and it's bleeding serious cash.  Easier for LKS to have HSE cancel as many shares as he can through an NCIB and then buy the balance.

[Scottie99]

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[autofocus111]

Okay got it. Per the conference call, management indicated their focus was on maintaining a sustainable dividend. That, along with capex spend to continue key project developments was the stated focus. I don't see how they could do all three (divie, capex, buyback). They did suggest they could trim the capex if necessary to adjust for a lower FFO but with the intent to support the

[wheeloffortune]

If they cancel shares, they don't have to pay the current 8.6% divy on those cancelled shares.  The 5 year gov't bond rate is now half a percent, a lot cheaper to borrow money now and cancel shares.

[Scottie99]

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[mrbb]

Since you claimed husky is still under SEC investigation for prior frauds, why would husky invite a glaring class action by going private right after a share price manipulation with a dividend suspension? it is more proof you're a spinner here.  

[Scottie99]

This post has been removed in accordance with Community Policy

[Scottie99]

This post has been removed in accordance with Community Policy