Based on Petrobank’s current ownership and PetroBakken’s current annual dividend of $0.96 per PetroBakken share, Petrobank expects to receive $105 million of dividends annually from PetroBakken, paid monthly. PetroBakken has instituted a dividend reinvestment plan (“DRIP”) in 2012, which allows shareholders to reinvest monthly cash dividends in new shares at a five percent discount to the then current market price. Petrobank has received two monthly dividends totalling approximately $8.8 million in cash and approximately 588,000 PetroBakken common shares from the DRIP. Due to Petrobank’s significant positive working capital balance, we are electing to participate at a 100% level in PetroBakken’s DRIP starting with the March dividend. We believe that receiving additional shares in PetroBakken is an attractive investment at this time. Petrobank may change its participation level in the future. Petrobank currently expects to fund our working capital requirements and HBU capital expenditure program with available cash and cash from operations.
This will reduce PBN's payout ratio significantly. In Q4, PBN CF was 1.24 per share, dividend 0.24. With PBG 59% in DRIP, assuming same CFPS as in Q4, it will reduce POR from 24% to 10%. I think there are also other shareholders who participates in DRIP, such as me, though small in number.
The next increase in SP performance may come when they increase dividend, which may take a while as in the last BNN interview PBN did not seem enthusiastic on dividend increase yet. However, since their main competitor is CPG, who pays 0.23 per month with high DRIP participation rate, and attracts many dividend investors, a higher PBN dividend will boost SP substantially. A gradual increase of 0.01 per month every quarter will do wonders.
