PetroBakken

[dan_s]

A question I get a lot is "Can PetroBakken keep paying its monthly dividends?" My answer is that as long as oil prices stay above $80/bbl I think they should have no problem? For a longer answer, see info below which I cut from their Q1 earnings release.
Dan

LIQUIDITY AND CAPITAL RESOURCES
PetroBakken’s strategy is to provide a reasonable dividend payout to shareholders combined with an accretive
long-term growth-oriented business plan. We are focused on securing appropriate levels of capitalization to
support this business strategy. As commodity prices fluctuate, we have the ability to alter our capital program
and/or dividend payments in order to maintain acceptable debt levels. We will continue to monitor our plans and
forecasts and make adjustments required to maintain acceptable levels of capitalization.
As at March 31, 2013, PetroBakken had $1.1 billion of bank debt drawn on our $1.4 billion credit facility. Our credit
facility is with a syndicate of banks and has a maturity date of June 2, 2016, which was extended from June 2, 2015
in April 2013. Generally the credit facility is not subject to periodic reviews unless significant asset dispositions
occur. The credit facility has covenants with respect to secured and total debt to EBITDA levels adjusted for certain
non-cash items, and a total capitalization covenant. The Company is in compliance with all these covenants. The
credit facility has an accordion feature providing that at any time during the term, on participation of any existing
or additional lenders, the Company can increase the facility by $100 million to $1.5 billion.
At March 31, 2013, the Company has US$900 million of senior unsecured notes (“Notes”) outstanding. The Notes
bear interest at a rate of 8.625% per annum and mature February 1, 2020. The Notes contain covenants that could
limit the Company’s ability to issue additional debt, pay dividends, and repurchase stock, among other restrictions.
The Company is in compliance with all of these covenants.
As at March 31, 2013, PetroBakken had convertible debentures outstanding of US$6.6 million with an annual
coupon of 3.125%. This is a US$293.4 million decrease from December 31, 2012, as the holders exercised their
right to have the Company repurchase their debentures under the one-time early put option with a repurchase
date of February 8, 2013. PetroBakken elected to repay the debentures in cash rather than shares, which was
funded from our $1.4 billion credit facility. The convertible debentures have a financial covenant that limits the
amount of security and encumbrances to 35% of our total assets. The Company is in compliance with this
covenant.
The Company had $0.3 billion of available liquidity at March 31, 2013.
In addition to the liquidity noted above, other possible sources of funds available to PetroBakken include the
following:
• Funds flow from operations;
• Increases to our existing $1.4 billion credit facility;
• Issuance of common shares of PetroBakken;
• Dividend reduction;
• Issuance of additional subordinated or convertible debt;
• Adjustments to capital program; and
• Sale of producing or non-producing assets. Cash generated from a sale may be reduced by any required
debt repayments.
We expect to satisfy ongoing working capital requirements with funds flow from operations and available credit.

[dan_s]

Capital Plan
The $675 million capital plan for 2013 will focus on the development of our Cardium light oil properties in central
Alberta, development of our Bakken and conventional Mississippian light oil properties in southeast
Saskatchewan, and delineating our new light oil properties in Alberta, focusing primarily on the Swan Hills area.
Dividends
The Company currently pays a monthly dividend of $0.08 per share or $0.96 per share per annum. The dividend
paid represented 27% of the funds flow from operations in Q1 2013 before the DRIP/SDP participation is
considered, with the cash dividend representing 19% of first quarter funds flow from operations. In the first
quarter of 2013, approximately $14.1 million of the $47.0 million of dividends were paid in shares. The dividend is
expected to remain unchanged for 2013 based on internal forecasts, which are based on $90.00 per bbl WTI price
levels combined with a 10% price differential.
The capital plan and dividend are expected to be funded from operations, shareholder participation in the
DRIP/SDP and available capacity under the credit facility.