Trading Symbol: (TSX-V: NWX)
VANCOUVER, BC, Nov. 12, 2020
/CNW/ - Newport Exploration Ltd ("Newport" or "the Company") is
pleased to announce its fourth quarterly cash dividend ("the
Dividend") in 2020 of $0.03 per share
to its shareholders of record at the close of business on
November 26, 2020. The Dividend
payment date is December 11,
2020.
The Dividend, fully approved by the Board of Directors, is not
subject to any changes and has been designated as an "eligible
dividend" for Canadian income tax purposes.
Increased Dividend
As discussed in a Company News Release dated August 12, 2020, the move from an annual dividend
to a quarterly dividend in 2020 has proved to be the right decision
as it has provided the Company with the flexibility to maintain its
financial position during a very difficult period. In a sector
where many companies are bowing to the inevitable toll of low oil
prices and are choosing to cut or eliminate dividends, Newport is keeping its pledge to return cash
to its shareholders in the form of a regular dividend. Furthermore,
the Company's strong balance sheet ensures that it has the ability
to not only maintain regular $0.01
per share quarterly dividend payments, but to increase the fourth
quarterly dividend for 2020 to $0.03
per share. This is being done for the benefit of all shareholders
and without taking on any debt or undertaking equity financing.
Newport's Dividend
Performance Since 2015
The following summarizes the Company's dividend performance
since 2015;
During the Financial Year ended July 31,
2015, the Company paid a dividend of $0.10/share. The average share price for the year
was $0.39, which resulted in an
Annual Yield of 26%. Earnings per Share ("EPS") for the year was
$0.03, for an Annual Return of
333%.
During the Financial Year ended July 31,
2016, the Company paid a dividend of $0.10/share. The average share price for the year
was $0.26, which resulted in an
Annual Yield of 39%. EPS for the year was $0.02, for an Annual Return of 500%.
During the Financial Year ended July 31,
2017, the Company paid a dividend of $0.05/share. The average share price for
the year was $0.27, which resulted in
an Annual Yield of 19%. EPS for the year was $0.03, for an Annual Return of 167%.
In September 2018 the Company
declared a dividend of $0.05/share
which was paid during the Financial Year ended July 31, 2019. The average share price for the
Financial Year was $0.29, which
resulted in an Annual Yield of 17%. EPS for the year was
$0.06, for an Annual Return of
83%.
In September 2019 the Company
declared a dividend of $0.06/share,
with two further dividends of $0.01/share declared earlier in 2020, for a total
of $0.08/share paid during the
Financial Year ended July 31, 2020.
The average share price for the Financial Year was $0.35, which resulted in a Yield of 23%. EPS for
the year was $0.06 for an Annual
Return of 133%.
The $0.01/share dividend paid in
September 2020 and the $0.03/share dividend to be paid in December 2020 will be recorded in the Financial
Year ended July 31, 2021, along with
further dividends to be paid in early 2021.
Newport's dividend payout
ratio, being the cash dividends per share of common stock divided
by the earnings per share of common stock, compares favorably with
that of other yield stocks, particularly those in the energy
sector.
Investors are cautioned that historical results are no guarantee
of future performance.
Management Strategy
Management believes that stability, profitability, and paying
shareholder dividends has been a responsible corporate strategy and
recognizes that the Company's ability to pay over the long term is
very important to existing shareholders and potential investors.
The proposed dividend strategy has enabled the Company to retain a
margin of safety to maintain dividend distributions despite the
sector downturn in 2020.
Management has received overwhelming support throughout 2020
from shareholders for its dividend policy, and many shareholders
have expressed the sentiment that paying out a regular dividend at
this time is a priority. The decision to increase the fourth
quarterly dividend to shareholders at this time is preferred by
Management and the Board of Directors rather than risking the
Company's treasury by incurring acquisition/exploration risk, or to
the more controversial practice of conducting a share
'buy-back'.
The Company has an advantageous business model with a 2.5% Gross
Overriding Royalty ("GOR") over permits in the Cooper Basin,
Australia, with strong technical
fundamentals and with excellent operators in Beach Energy ("Beach")
and Santos Ltd ("Santos"). The Company already has built in
exposure to significant potential growth at zero risk to
shareholders as there is no time limit or expiry date on the GOR
assets, and no cost to the Company to retain them.
Management continues to evaluate opportunities that arise and
are confident that if necessary, funds could be raised through
equity financing, and most importantly for shareholders, without
affecting the current dividend policy.
Guidance
After Saudi Arabia and
Russia waged a short but brutal
oil price war in early 2020 that resulted in the biggest oil price
drop on record, the COVID-19 pandemic also provoked the collapse in
global oil demand. Global investment in future supply has also
collapsed and returns for many producers have fallen below the cost
of capital. This has resulted in several producers shutting in
wells, delaying projects, slashing investment in exploration and
development, as well as cutting or eliminating dividends.
Meanwhile, as reported in a Company News Release dated
October 26, 2020, Beach continue to
achieve extraordinary exploration success (particularly in oil
fields on ex-PEL 91), and have maintained very low production
costs. In doing so, Beach has achieved both reserve replacement and
positive cash flow. Also, Beach's exploration success, reported oil
reserves, and low production costs have allowed it to limit
spending without threatening future output from licenses in the
Cooper Basin, over which the Company has its GOR. Accordingly,
Management is confident that shareholders of the Company should
continue to be rewarded with dividend continuity. Beach's
confidence in the Cooper Basin is illustrated by their proposed
acquisition of the Cooper Basin assets of Senex Energy for
AUD$87.5M (Beach News Release dated November
3, 2020).
As stated previously by the Company (News Release dated
July 22, 2020), it is material
information for shareholders of Newport that Beach report that revenues from
their gas sales cover their group operating and stay-in-business
costs and that their reported break-even oil price is less than
US$0.00/bbl. As reported in the same
Company News Release and by Beach in its Quarterly Report released
on October 23, 2020, their crude
sells at a material premium to Brent.
Newport has no control over
operating decisions by Beach. Accordingly, this prevents the
Company from commenting on Beach's current financial status and/or
operating plans going forward. The Company recommends that
shareholders and potential investors access material information
relevant to the Company as released independently by Beach and
Santos in order to keep current during exploration, development and
potential production of all the licences subject to the Company's
GOR.
The Company receives its GOR from Beach which is not a reporting
issuer in Canada, therefore
Newport is not able to confirm if
the disclosure satisfies the requirements of NI 51-101 - Standards
of Disclosure for Oil and Gas Activities, or other requirements of
Canadian securities legislation.
About Newport
Newport holds a 2.5% GOR on
several oil and gas licences and permits in the Cooper Basin in
Australia. These permits are
currently being operated and explored by Beach and Santos, both
major Australian oil and gas producers.
The Company currently has 105,579,874 common shares issued and
outstanding and $6.9 million in the
Treasury (comprised of cash, cash equivalents and short-term
investments), and no debt. The Company expects to receive the next
royalty payment from Beach prior to the payment of the fourth
quarterly dividend to shareholders on December 11, 2020.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the accuracy or
adequacy of this news release.
Cautionary Statement on Forward-Looking Information
This news release is intended to provide readers with a
reasonable basis for assessing the future performance of the
Company. The words "believe", "should", "could", "expect",
"anticipate", "contemplate", "target", "plan", "intends",
"continue", "budget", "estimate", "may", "will", "schedule" and
similar expressions identify forward-looking statements.
Forward-looking statements may pertain to assumptions regarding the
price of oil and fluctuations in currency markets (specifically the
Australian dollar) and future dividend payments. Forward-looking
statements are based upon a number of estimates and assumptions
that, which are considered reasonable by the Company, are
inherently subject to business, economic and competitive
uncertainties and contingencies. Factors include, but are not
limited to, the risk of fluctuations in the assumed prices of oil,
the risk of changes in government legislation including the risk of
obtaining necessary licences and permits, taxation, controls,
regulations and political or economic developments in Canada, Australia or other countries in which the
Company carries or may carry on business in the future, risks
associated with developmental activities, the speculative nature of
exploration and development, and assumed quantities or grades of
reserves. Readers are cautioned that forward-looking statements are
not guarantees of future performance. There can be no assurance
that such statements will prove to be accurate and actual results
and future events could differ materially from those acknowledged
in such statements.
The Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new
information, future events or otherwise, except to the extent
required by applicable laws.
© 2020 Newport Exploration Ltd.
SOURCE Newport Exploration Ltd.