Surge Energy Inc (Alberta) T.SGY

share price dichotomy

[bugleboy]

Market cap of SGY is $112 million, debt is $350 million. For every $1 of "equity" you buy, you also buy $3 worth of debt. Who in their right mind would buy that?

But....Paul will be hedging production like crazy right now to ensure profitability over the next several months. Let's say Surge decides to bring back a dividend of 1/2 cent per month or 6 cents per year. The cost of that would be $20 million/year. They are currently profiting more than that per month and the hedging will make the profit sustainable for let's say a year, even if the oil price tanks. The half cent dividend, if shares are bought today will pay 15%, a very sustainable dividend for a year regardless of future oil price. Who in their right mind wouldn't buy that?

[Chris007]

dunno how much leeway Paul has in regard to dividend reinstatement/buybacks. The company did take those government backed loans and the bank syndicate seems to be keeping the company on a pretty short leash  

[Dibah420]

With WTI hovering around $55 USD and the trend up, there is no doubt some serious cash flow sloshing around.  However, my pref. would be to repay a big chunk of the syndical debt before PC even thinks about any dividend.  There is no guarantee that by fall WTI will still be trending up if we can't best these mutant variants that are spiking here there and everywhere.

[pointer]

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[Chris007]

Thats because the balance sheets of most producers aren't really "ironclad"...not many can pull a CNQ or XOM, when oil prices take a nose dive...that being said, even XOM's fortress balance sheet isn't looking as robust as it once was.

[Trader124]

all those oil companies took advantage of the covid to remove dividend. yes i understand when price of oil is below 45$. But even if we remain above 55$ for the year they won't resume the dividend. Dividend is always easy to remove not that easy to resume. So forget about the dividend even at 6 cents.

[scienceguy36]

"They are currently profiting more than that per month" Not sure how you come up with that figure. Break-even between $47-48 so 17,000bpd x $7 = $119,000/day x 31 = $3,689,000 per Month on the conservative side.  If they were raking in $20 million a month no way this SP would be held down. IMHO

[bugleboy]

More than $20 million/year. My bad. Of course that's over and above debt repayment and all other expenses, etc. Still too much debt for me, maybe not for others. Looking interesting though. The sector needs to come alive first.