Net cash - is a dividend possible? likely?

Per the last quarterly report (released 23 April, HZN is in a net cash position - USD3m net cash as at 31 March 2020. As at 31 March it had USD28.4m in cash, and USD25.4m owing on the seniro debt facility.

Net operating cashflow was USD15.8m in Q2 and USD13.85m in Q3. Presumably cashflow will decrease from these levels, given lower oil prices and less favourable hedging. But with cash operating costs of less than USD15/barrel, HZN will continue to generate cash.

What is HZN presently doing with its cash? What are its cash requirements? (all info from the quarterly report):
- Some cash is being applied to paying down the senior debt facility.
- HZN states that it is "in a favourable position as we evaluate appropriate growth opportunities." .
- USD2m is required in calendar year 2020 for the Beibu WZ 12-8 East Development. HZN's share of capital costs for the entire WZ 12-8 East Development are forecast at less than USD12m.

What will HZN's cash position be by the end of Calendar 2020?
Assume for discussion purposes that HZN generates, say, USD10m cash in Q4 (favourable hedging), then USD5m in each of Q1 and Q2 FY21. This gives net cash of USD23m (3+10+5+5) by the end of calendar 2020.

What will HZN do with this cash:
- repay more of its senior debt? Probably, but this is likely be be incremental (eg. recent USD4m repayment).
- retain cash towards the Beibu WZ 12-8 East Development? Yes probably, but not all the cash is needed for this purpose - and most of the cost will not be incurred until 2021, 2022 by which time further cash will have been generated.
- buy into another project, or buy more of an existing project? Maybe.
- corporate activity / M&A? Maybe.
- retain some for legal costs etc re PNG? Probably
- use for developing PNG assets? IMHO unlikely in the near term.
- other?

Dividend
My point is that given its current business and financial position, HZN does not have a compelling need to retain/use all of this cash.
Assume 1.3b shares. A AUD0.01 dividend = AUD13m = USD8.56m (at current rates).

HZN could easily pay a 1c dividend and retain sufficient cash for its existing business and requirements. Further, this would reduce shareholders' exposure to fines or etc arising from PNG issues (as the cash would be in shareholders' pockets).

IMHO the only good reason not to pay a dividend would be if there was a compelling need to retain cash for specific high-quality development or corporate opportunities.

Do I expect HZN to declare a dividend in the near future? Not really. But I think it should.


The above is based on publicly-available information (particularly the most recent quarterly report) and my own thoughts. Obviously no-one should pay attention to anything I say, and you should do your own research!!