BONAVISTA ENERGY $13.57 (Toronto symbol BNP; Shares outstanding: 176.9 million; Market cap: $2.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.1%; www.bonavistaenergy.com) explores for oil and natural gas in Alberta, Saskatchewan and B.C. Bonavista’s production is weighted 61% to gas and 39% to oil.
In the three months ended September 30, 2012, the company’s cash flow per share fell 42.9%, to $0.48 from $0.84 a year earlier. Gas prices declined by 38.0%, to $2.56 per thousand cubic feet from $4.13. Production also dropped 8.6%, to 65,464 barrels of oil equivalent per day (including gas) from 71,636 barrels.
Bonavista has cut its monthly dividend by 41.7%, to $0.07 from $0.12. That will help the company conserve cash to invest in its exploration and development program. The new annual rate of $0.84 a share still yields a high 6.1%. As well, Bonavista will now pay out just 39% of its cash flow as dividends, so further dividend cuts are unlikely.
The stock trades at 6.3 times Bonavista’s forecast 2013 cash flow of $2.15 a share. The company’s long-term debt of $755.3 million is a reasonable 31.4% of its $2.4-billion market cap.
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