East West Petroleum (TSXV: EW) is looking to provide a dividend to shareholders following the sale of its New Zealand oil and gas properties last month.
The company has indicated it intends to conduct a “reduction in the stated capital of the company,” to the tune of $3.0 million, which will result in a dividend of approximately $0.03 per share. The proposal, while on the surface may be appealing to investors, is curious given that as of May 31 the company estimated its cash reserves to sit at approximately $6.7 million.
The company itself meanwhile closed yesterdays session with a market capitalization of just $6.27 million, trading at $0.07 per share. The result is effectively a dividend yield of 42.86%, while the company will halve its cash position.
The capital distribution remains subject to shareholder and regulatory approval.
East West Petroleum last traded at $0.07 on the TSX Venture.
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