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Honestly, this is pathetic. It's not going to move the SP.
As a LTH with 42% dividend tax, I prefer at better balance between buybacks and dividends to get better compounding. They fail on this. I have around 0.1% of the shares in #PTAL; would like to increase this based on fundamentals, but post tax the return is better elsewhere, especially since it's risky Peru. At least half of any extra dividend should go to buybacks until they have a P/E of 4; then they can revisit the strategy.
"PetroTal intends to purchase up to 14,600,000 Common Shares, representing approximately 2% of its issued and outstanding Common Shares as at May 10, 2024, over a 12-month period commencing on May 24, 2024 and ending no later than May 23, 2025". What they've done so far is just to put a band Aid on the PSU and warrants gift-shop. Guess 2024 will be the same as 2023: "In 2023, PetroTal declared a total of $55.6 million in dividends and repurchased 11,326,806 Common Shares pursuant to the NCIB for a total of $6.5 million." BAD balance for LTH's.
"The Company believes that, at times, the prevailing share price does not reflect the underlying value of its common shares ("Common Shares") and the repurchase of Common Shares for cancellation represents an attractive opportunity to improve PetroTal's per share metrics and thereby increase the value of the Common Shares"
No poop Sherlock. Then bring a bigger axe and try harder!
@Sturm where are you located that has such high dividend tax? That’s pretty brutal!
I thought you were UK based this entire time :D
I tend to agree although TSX might have dictated annual limit. But, if the maximum $12m is utilised, it will exceed the past 12 months' aggregate. I have, however, stopped adding to PTAL until next steps become clearer. Focus has mostly been transferred to PGMs' recovery.
[GGG - I prefer not to add further comment. Being in touch with more than one Canada/USA CEO is useful at times and yesterday's o/t was because there are a couple of TXP investors here.
I checked back - outstanding PSUs are 2% of shares.
All warrants were exercised in 2023. Gone. Obviously they were issued in response to field closure during covid, but no more warrants now. I'm looking at page 27:
https://petrotalcorp.com/wp-content/uploads/2024/03/Q4-Reporting-Package.pdf
So I agree buy backs won't move the share price, but IMO growth companies shouldn't be buying back shares. Growth companies should be prioritizing cash. So paying employees in shares is a good thing if they are instead pumping that cash into growing the business.
I'm sure I'm not only one here who's received bonus shares and cheap shares (Sharesave) from a UK company. It's a benefit for employees (tax break because government thinks it's good idea) and encourages loyalty (you lose out if you don't stay 3 years). Peru will be different, but Petrotal's PSU scheme much more linked to key shareholders interests I think - share price, production growth, safety. I'm pleased Petrotal has performance related pay because it drives the right behaviour.
So I think its normal for number of shares to increase in public companies. The key thing is to grow your company faster than you issue shares!
I'd say Petrotal's problem has been limited options to grow. Progress on other parts of block 95 and on block 107 has been slow, though should come together in next 2 years, but block 131 sounds drill ready. Three drill targets identified I believe!
I noticed in webcast both Manolo and FD were both asked for more details on 131 and both declined saying they don't want to say too much until deal completes.
Really hoping for more deals though and for that I think they should use mostly cash. Having cash on balance sheet boosts the share price. It adds to NAV per share, just like buy backs, but it also reduces perceived risk. But production growth is the key objective IMO.
BTW I find Manolo's accent difficult, transcript useful to me but can't always find it:
https://seekingalpha.com/article/4692480-petrotal-corp-ptalf-q1-2024-earnings-call-transcript
@Somekindofnut "but IMO growth companies shouldn't be buying back shares. Growth companies should be prioritizing cash"......... So... I suppose you're 200% against dividend since that's worse when it comes to limiting take over threats and access to raise capital at reasonable prices?
But I guess we also disagree on the premise: IMO #PTAL isn't a growth company. Its a high growth, cash flow positive and profitable company with 0 debt. Not a company trying to scale up with money from banks and investors.
Also, some PSU may hold more than 1 share. "each PSU will entitle the holder to acquire, for nil cost, between zero and two common shares. The "nil cost" is of course a mistake (should be e.g. last 10 days SP minus 10%, vesting in 3 years; that's good governance; nil cost is IMO not). The "between zero and two" common shares really doesn't help for clarity.
I know investor warrants are gone and I also know they missed the opportunity to buy them with cash before we got the last 60 million+ investor warrants released. The dilution from PSUs might be balanced by share buybacks, but... they're certainly not really buying back shares, but just controlling/mitigating dilution.
@LSE202020: Denmark.
Hi viable, probably a stupid question but what do you mean by o/t?
Sturm- I wasn't talking about what I wanted, I was talking about growth which is what you wanted because you were complaining about tax on dividends?
Dividends are cash going out the door- so they don't grow the company do they. But I'm happy receiving dividends!
What I'm saying is that Petrotal now has increasing options to grow production and that should be how they grow the share price, not buy backs. I'm hoping for 3 wells on block 131 ASAP.
Petrotal have used Black Scholes to calculate how many shares the PSUs equate. It has to be a variable though as it wouldn't be performance related pay if the amount due didn't vary according to performance.
If production doesn't go up (or whatever) they don't get the shares. This is the only way i know of bonus' working. I've never heard of companies saying that if you put in the extra work, you then you don't get extra reward, you just qualify to buy shares.
Anyway, take that $5m. In practice it'll be less, but in theory they are spending it on block 131. That could have been spent on increasing dividend to 2cents or on buy backs. I'm saying the best use of cash is production growth which will hopefully lead to both share price growth and dividend growth.
Anyway, you don't have to agree. ;-)
@somekindofnut - I didn't write about growth.
But my wealth will grow much faster from share buybacks than it will from (taxed) dividend. Unless you're not paying tax, compounding 10% vs 10% minus 42% is a HUGE difference. Double your money in 7 years or only add 50%??
It honestly makes no sense when a company is priced like PTAL with a EV/2024 Adjusted EBITDA of 2.4x NOT to buy the maximum number of allowed shares back - and use any excess funds for dividend (or acquisitions for that matter).
I prefer to pay tax when I need the money (buy selling shares), not when PTAL choose to pay dividend. EV/EBITDA of 2.4x explains perfectly why buy backs should be priority 1. Just look at what the oil majors are doing, and their EV/EBITDA is much higher. But then again, people don't understand what share buybacks do, so I should probably just refer to my earlier post here instead.
Sturm- and indeed buy backs mean less shares to pay dividend on.
But odds of Shell increasing production by a third look small. Small companies can do it though.
So Petrotal could get 5.5k from Block 131. I think I read it'll cost 3 x$12m for 3 wells. So maybe $80m to get that 5.5k?? It's going to need cash anyway.
However older Bretana wells have already returned 5 or 6 times over and will keep producing for decades. I expect the same from 131 especially as it's lighter oil. So drilling beats buy backs imo.
Just a small observation that not everyone invested at PTAL are subject to such extreme dividend taxes and are quite happy to be given both buybacks and the opportunity to reinvest dividends here or elsewhere at my own discretion..