Stockchase InsightsGear EnergyGXE.TOBUYSep 15, 2021

Company share price is reflective of lack in interest in small energy names (market cap too small). Company needs to sell itself in order to generate value. Better options for investors out there. 

Right-sized the dividend by 50%, which alienated a lot of investors. The base dividend should never be cut, and most quality companies will base that on a very low, defendable oil price. 19% free cashflow yield. Value trap. Can't see a catalyst.

He thinks their CEO is resigning and they cut their dividend, though trades at 2x cash flow 2025. Balance sheet is fine. But there's a lot of noise here, and investors are looking elsewhere.

The stock is cheap, and the balance sheet is fine, and it is not without potential. It still pays its (lowered) dividend. It is buying back stock. We would not consider it a disaster, but it is a small company, in a struggling sector, with negative momentum, and annoyed investors (no sale and the dividend cut). The numbers are not hugely reassuring. But a sector rally would likely still move it nicely. It is up 3% YTD despite all the news. We think we would 'target' it for a sale as new ideas show up--i.e. use it a source of cash. But we do not think a sale has to be rushed, immediate, or full. Depending on one's risk profile, a small position could still be kept. 
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Seeking strategic alternatives for the second time, aka "looking for a buyer". Dividend is not sustainable. Trading at 2.2x, so a premium on a sale is possible. If no sale, dividend will resize.

Small energy stock that is "for sale".
Recent cut of dividend not good.
Company hoping to take advantage of higher oil prices in order to sell.
Company cheap, but so are other (better) names in sector.

Small energy company (prefers larger companies).
Stock performance done well the past year.
Strong dividend.
Likes WCP and Headwater Exploration more.

It was fashionable to have a flashy dividend, but then energy prices were weaker than people thought. A company should never cut its base dividend.

Small player in energy space ($270 MM market cap).
Believes dividend is sustainable (~11% yield).
Not many large funds buying.
China re-opening will increase oil price and lift share price.
Good for retail investor.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Generally likes the stock. Has done well, yet remains relatively cheap on most metrics. Offers growth and decent dividend. Balance sheet is strong and debt is less than 0.5x current cash flow. Unlock Premium - Try 5i Free