Calima Energy Ltd (ASX:CE1) will roll out a half-yearly dividend program, following the strong performance of its production assets during the 2021 and 2022 development drilling program as well as increasing energy prices.
The initial dividend will total A$2.5 million, reflecting a half-yearly yield of 2.4% at the current share price. The company will share the timing of the dividend roll-out in due course.
Any subsequent dividend distributions will be determined by capital expenditure, energy prices, well performance and the maturity of the current hedge book that rolls off in December 2022.
“Calima’s strong operating performance in the last quarter, combined with the reduction in bank indebtedness and the outlook for the remainder of the year, has contributed to a strong capital position for the company, allowing us to announce this dividend and buy-back program," Calima CEO Jordan Kevol said.
"I am looking forward to meeting shareholders during my trip to Australia commencing May 25, 2022."
On-market buy-back
Calima will also undertake an on-market buy-back of ordinary shares and can buy-back up to 10% of its issued capital in any 12-month period without requiring shareholder approval.
Through the buy-back, CEI hopes it can improve the value of the remaining shares on issue, as it does not believe its current share price accurately reflects the underlying value of the company’s assets.
The share buy-back is expected to improve return on equity, cash flow per share and earnings per share for all shareholders who continue to hold shares in Calima.
This is expected to start from June 1, 2022, for up to a 12-month period. The timing and actual number of shares to be purchased will be subject to market conditions.
The share buy-back is not expected to restrict activities, will be funded from operations and will not adversely impact the balance sheet.
Calima's board is also assessing options to distribute additional surplus capital, particularly if it can monetise the inherent value of its Montney assets.