PHX Energy Services Corp T.PHX

Jul 4: PHX Buybacks Re-Started in June

[JohnSP]

PHX today recorded Share Buybacks of CAD1.6 mln in June, 2023: https://ceo.ca/api/sedi/?symbol=phx&amount=&transaction=&insider=

 

First buybacks since Dec 2021 (when Base Div was 1/3 of current) and part of their new ROCS (Return of Capital Strategy) which will allow up to 70 percent of 2023 excess cash flow (defined as free cash flow less growth capital) to be used for shareholder rewards:

• Maintaining a strong balance sheet with little to no bank debt. • Growth capital expenditures will be available for expanding the fleet in the most attractive basins. • Base dividends will be a focus. • Special dividends can be triggered with available excess cash. • Share buy backs may be considered if deemed accretive.

Press Release including ROCS: https://www.phxtech.com/_files/ugd/389610_3851494523e04b81b5fb7d79f78c3a55.pdf

 

Base Divs are already huge with 9.9% forward yield. So looks like they are currently choosing Buy Backs over Special Dividends.

 

CAD1.6 mln / CAD311 market cap annualized is 6.1%.

 

So 9.9+6.1 = 16% representing 70% excess cash flow, so reverse calculating, total (current) excess cash flow is 16/0.7 = 23%. Wowsa.

[JohnSP]

In Q2 Results PR PHX says: CAD8.1 mln of share buybacks in Q3 (1mon + 1week), annualized that's roughly CAD92 mln or 25% of their market cap (+8.5% div yield), no way they can keep that up . . . . meanwhile Net Debt went from CAD4.5 mln at end of Q1 to CAD7.6 mln at end of Q2.

[JohnSP]

Looking further at numbers, I think they bought ton (for them) of buybacks in Q3 YTD as 1) existing NCIB expires Aug 16, 2023 and new annual NCIB applied for but not yet approved, and 2) declining CapEx required as ordered lots last year and rig count declining.

[JohnSP]

PHX just filed their Q3 YTD buybacks of 1,242,000 shares as per their Q2 Results PR: https://ceo.ca/api/sedi/?symbol=phx&amount=&transaction=&insider=