Ju­nior com­pa­nies cut­ting div­i­dends, out­put as prices re­main de­pressed

Calgary Herald - - FINANCIAL POST -

A pair of ju­nior Cal­gary oil com­pa­nies are cut­ting pay­outs to share­hold­ers and re­duc­ing pro­duc­tion be­cause of cur­rent steep dis­counts on western Cana­dian oil prices.

Car­di­nal En­ergy Ltd. and Gran­ite Oil Corp. say they can’t af­ford to wait and see if out­put cuts im­posed by the Al­berta govern­ment start­ing Jan. 1 will work to drain a glut of oil and thus al­low prices to re­cover.

Car­di­nal shares fell by about eight per cent at the close in Toronto after it an­nounced it would tem­po­rar­ily cut its monthly div­i­dend from 3.5 cents to a penny per share in view of “em­bar­rass­ingly low prices” in the fourth quar­ter.

Gran­ite stock fell by as much as 4.7 per cent after it an­nounced it would sus­pend its monthly div­i­dend of 2.3 cents per share.

Car­di­nal said it has de­cided to cut what had been record pro­duc­tion of 22,000 bar­rels of oil equiv­a­lent per day by 15 per cent (about 3,300 boe/d) to avoid net losses due to low prices. Gran­ite said it has stopped pro­duc­tion of about 200 boe/d after post­ing third-quar­ter out­put of just un­der 2,000 boe/d.

“Our lack of pro­vin­cial and fed­eral govern­ment lead­er­ship and fail­ure to act in get­ting new ex­port pipe­lines built is cost­ing not only Al­berta, but all Cana­di­ans sig­nif­i­cant rev­enue and fu­ture in­vest­ment in our coun­try,” said Car­di­nal in a news re­lease.

“Although we don’t think that the cur­rent pric­ing dif­fer­en­tials be­tween Cana­dian bar­rels and U.S. bar­rels will be per­ma­nent, we are ob­li­gated to our share­hold­ers to pro­tect our busi­ness and our bal­ance sheet un­til Cana­dian prices im­prove.”

Ju­nior oil firm Bon­terra En­ergy Corp. said last month it would cut its monthly div­i­dend to a penny from 10 cents per share. Bon­terra and sev­eral other Al­berta oil firms have said they will de­lay an­nounc­ing bud­gets and pro­vid­ing guid­ance for 2019 un­til Jan­uary.

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