Veren Inc T.VRN

FCF, Dividends, Debt

[geezer21]

Dividends are the last thing you want free cash flow going to. You do not want a few percentage return on your investment.  You want your investment earning a high rate of return through business operations of the company.  You also want a company to keep debt that is earning more in income than what is getting paid out in interest.

ERF and SES pay a dividend but are losing money.  Not a good use of company funds to give a dividend over using the money instead to generate profits. CVE, PEY, BIR,and TVE pay dividends but their earnings per share are less then a dollar.  Not a good use of company money to be paying a dividend. The money should be getting used to generate profits.

Only three mid-tier oil companies, CPG, TVA, and WCP pay a dividend but are  still able to maintain a good rates of return on equity.  CPG and WCP can be bought at a lower price to book than TVE.  Surge (SGY) has the lowest price to book at 0.9 and highest rate of return on equity.

SGY, OBE, BTE,  CJ and NVA do not pay a dividend, however they make up for that with high rates of return on equity of the mid-tier oil producers.  Rather than distributing money to shareholder they are using it to generate high rates of return on equity for shareholder that exceed what shareholders would get in a dividend yeild. These are better managed companies. SGY stands out with the highest rate of return on equity and lowest price to book at 0.9.

Dividends are the last thing you want.  You want your company growing profits,making money for you and not just giving measley percentage that you can get with risk free GICs.

You want a company using your money and bank money to generate profits far in excess of any interest or dividends you can earn on your money or interest paid to a bank. Bank debt is good when it is earning a return in excess what what it costs.

Key company data in the following chart comes from tmxmoney.com.  Oil companies report there financials to TMX. https://money.tmx.com/en/


OIL    (as of 11/11/2)
 
 
 $             EPS          P/E          P/B                         %           %        YIELD     
                                                                              RTN       RTN
                                                                           EQUITY  SSETS        
 


SGY         4.66         5.27         .9             1.54        178          27            -  

BTE          4.26         2.27         1.80         1.5          126.3       34.2         -
                               
OBE         4.83         4.62         1.1           .54           69.7         30.6         -
          
NVA         7.27         2.99         2.3           1.4           82.9         37.6         -

CJ             5.22         2.68         1.9          1.15         79.7         44.3         -

CPG         5.85         3.76         1.60         .64           54.3         27.9         2.05

BNE         6.59         4.14         1.60         .63           50            16.8         -

TVE          3.68         0.66         5.5           1.33         28.9         14.5         3.36

BIR          7.66         .33           21.5         1.2           5.6           3              0.28

WCP        7.25         3.28         2.2           1.25         87            38            3.72

PEY          10.95       0.64         16.7         1.1           6.6           3             0.37

HWX        5.15         .07           68.9         3.3           3.34         2.71        -
 
ARX         12.63       .74           16.9         1.61         5.7           2.89        -

VET          12.93       5.15         2.50         1.12         57.7         17.14       -

CVE         16.07       .35           45.3         1.36         4.22         1.98         0.88

MEG        11.17       0.19         56.3         .96           1.67          0.8           -       
 
 
SES          5.64         -.42          -13.7        1.4          -7.78        -3.4          .541

CR            3.30         -.06          51.8         .64          -1.24        -.71          -

ERF         12.83       -0.65        -19.4         4.8           -19.5        -6.4          1.3

[Rational43]

I wish I could give you 10 thumbs up for that post.  Bunch of nervous nellies and dividend speculators hoping to get a few % in dividends before this whole oil rally comes crashing down...pitiful, but expected after a long bear market.   I would rather every single penny of FCF be used to buy back shares at these absurdly low prices.   Better yet, cancel the dividend