Significant price volatility for crude products in the Canadian energy sector has had a major impact on the industry, the province and the country. The volatility is a result of slowing international economic growth and Canada’s lack of access to international markets outside of the United States. These and other factors have significantly impacted West Texas Intermediate (“WTI”) prices, down nearly $15 USD per barrel since the beginning of 2020, and Canadian oil price differentials.
While Razor expects improvement in both WTI and Canadian oil pricing through the second half of 2020, the Company believes it is fiscally prudent to take decisive steps to maximize the strength and flexibility of the Company over the long-term. To this end, management and the Board of Directors of Razor have unanimously decided to suspend the payment of dividends effective February 2020 until further notice. Razor views its monthly cash dividend as a component of its business strategy and a key part of its total return offering to shareholders; as such, Razor will continue to monitor the broader commodity price environment and resultant corporate cash flows and contemplate dividend reinstatement when prices warrant and a more balanced supply-demand picture improves industry stability.
In the interim, the Company will prudently manage cash outflows and reallocate this capital to debt repayment, thereby enhancing the Company’s balance sheet and better position the Company to capture acquisition opportunities and improving economics as commodity prices recover. The revised dividend strategy will provide Razor with the flexibility in the event that low prices persist for longer than anticipated. Razor will continue to utilize its existing Normal Course Issuer Bid (“NCIB”) to buyback shares when the Company believes the Common Shares are undervalued in the market.
Razor is a publicly-traded junior oil and gas development and production company headquartered in Calgary, Alberta, concentrated on acquiring, and subsequently enhancing, producing oil and gas properties primarily in Alberta. The Company is led by experienced management and a strong, committed Board of Directors, with a long-term vision of growth and distributions to shareholders, focused on efficiency and cost control in all areas of the business. Razor currently trades on TSX Venture Exchange under the ticker “RZE”.