BONAVISTA ENERGY $6.56 - Toronto symbol BNP

BONAVISTA ENERGY $6.56 (Toronto symbol BNP; Shares outstanding: 203.4 million; Market cap: $1.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.4%; www.bonavistaenergy.com) explores for oil and natural gas in Alberta, Saskatchewan and British Columbia. Its production is 69% gas and 31% oil.

In the three months ended September 30, 2014, Bonavista’s cash flow per share fell 1.6%, to $0.60 from $0.61 a year earlier.

Production rose just 1.5%, to 74,720 barrels of oil equivalent a day from 73,632. However, that’s because Bonavista sold heavy-oil projects, which are less of a focus for the company.

Bonavista’s natural gas price increased by 34.7% in the latest quarter, to an average of $4.00 per thousand cubic feet. Realized oil prices fell 9.7%, to $80.75 a barrel.

The company just cut its monthly dividend by half, to $0.035 a share from $0.07, to conserve cash. The shares now yield 6.4%. Based on the new rate, Bonavista now pays out just 18% of its cash flow as dividends.

The stock trades at just 2.5 times the company’s forecast 2015 cash flow of $2.64 a share. However, like Peyto, that estimate will fall if oil prices remain low.

Bonavista Energy is a buy.

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