High dividend yields as shares slide spooking investors, say oil and gas CEOs

CALGARY — Mid-sized Alberta oil and gas producers say their share prices have fallen so low that investors are starting to worry their rising dividend yields are becoming unsustainable.

CEO Grant Fagerheim of Whitecap Resources Inc. says the irony is that his Calgary-based company has no intention of reducing its monthly payouts to shareholders, which it has hiked three times in the past three years, and is instead looking at another increase this year.

A company’s dividend yield is determined by comparing its regular payouts per share with its current share price — when the price goes down, the yield goes up.

Fagerheim says nothing else has changed for his company but Whitecap’s share price has fallen by almost 30 per cent in the past three months — a situation he blames on worries about regulatory uncertainty and pipeline delays in Canada — driving its yield from about six per cent to eight per cent from its more typical four to six per cent.

CEO Tony Marino of Vermilion Energy Inc. says he is seeing the same investor worries as his company’s share price fell by 16 per cent over the past three months, boosting its yield to almost 10 per cent from about eight per cent, although there is no interest in cutting dividends.

Ian Dundas of Enerplus Corp. says his company could “easily afford” to increase its dividend but the low value of its shares — down 20 per cent in the past three months — makes buying them back and cancelling them a compelling alternative use for the company’s free cash flow.

“I think there is a disconnect (in the market),” said Fagerheim. “There is no risk that we’ll be decreasing our dividend. If anything, we’ll be increasing it on a go-forward basis.”

The three CEOs appeared on a panel Wednesday at the TD Securities Calgary Energy Conference.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

RCMP, city, health officials join forces in problem-property crackdown

Eastview property had generated recurring complaints to RCMP

Mag 7.7 quake hits between Cuba and Jamaica, but no injuries

HAVANA — A powerful magnitude 7.7 earthquake struck in the Caribbean Sea… Continue reading

Trump peace plan delights Israelis, enrages Palestinians

WASHINGTON — President Donald Trump unveiled his long-awaited Mideast peace plan Tuesday… Continue reading

GOP squirms as Bolton prepares to dish on Trump White House

WASHINGTON — For much of the last 20 years, John Bolton was… Continue reading

More than 200 cabinet-appointed positions remain empty, says memo to PM

OTTAWA — Prime Minister Justin Trudeau has been warned that more than… Continue reading

Country music fans enjoy free concert at Red Deer mall, ahead of ACMA awards

Fans like to get up close and personal and that’s exactly what… Continue reading

Your community calendar

Feb. 1 A Jump Rope Competition will be held at the Abbey… Continue reading

David Marsden: Let’s see success at Westerner Park

It’s encouraging that Westerner Park has admitted it needs the support of… Continue reading

Mag 7.7 quake hits between Cuba and Jamaica, but no injuries

HAVANA — A powerful magnitude 7.7 earthquake struck in the Caribbean Sea… Continue reading

Trump peace plan delights Israelis, enrages Palestinians

WASHINGTON — President Donald Trump unveiled his long-awaited Mideast peace plan Tuesday… Continue reading

GOP squirms as Bolton prepares to dish on Trump White House

WASHINGTON — For much of the last 20 years, John Bolton was… Continue reading

More than 200 cabinet-appointed positions remain empty, says memo to PM

OTTAWA — Prime Minister Justin Trudeau has been warned that more than… Continue reading

Alberta climate plan part of cabinet decision on oilsands mine: Wilkinson

OTTAWA — The federal cabinet’s decision on a huge new Alberta oilsands… Continue reading

Things for people in Canada to know about the coronavirus

Two cases of the new deadly strain of coronavirus have been identified… Continue reading

Most Read