A pair of junior Calgary oil companies are cutting payouts to shareholders and reducing production because of current steep discounts on western Canadian oil prices.
Both Cardinal Energy Ltd. and Granite Oil Corp. say they can’t afford to wait and see if production cuts imposed by the Alberta government starting Jan. 1 will work to drain a glut of oil and thus allow prices to recover.
Cardinal shares fell by more than six per cent in early trading on the Toronto Stock Exchange after it announced it would temporarily cut its monthly dividend from 3.5 cents to a penny per share in view of “embarrassingly low prices” in the fourth quarter.
Granite stock fell by as much as 4.7 per cent after it announced it would suspend its monthly dividend of 2.3 cents per share.
Cardinal said it has decided to cut what had been record production of 22,000 barrels of oil equivalent per day by 15 per cent (about 3,300 boe/d) to avoid net losses due to low prices.
Granite, similarly, said it has stopped production of about 200 boe/d after posting third-quarter output of just under 2,000 boe/d.
“Our lack of provincial and federal government leadership and failure to act in getting new export pipelines built is costing not only Alberta, but all Canadians significant revenue and future investment in our country,” said Cardinal in a news release.