Printed on July seventeenth, 2025 by Aristofanis Papadatos
Petrus Sources (PTRUF) has two interesting funding traits:
#1: It’s providing an above-average dividend yield of 8.7%, which is greater than seven occasions the common dividend yield of the S&P 500.
#2: It pays dividends month-to-month as a substitute of quarterly.
Associated: Record of month-to-month dividend shares
You may obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter like dividend yields and payout ratios) by clicking on the hyperlink under:
The mixture of an above-average dividend yield and a month-to-month dividend makes Petrus Sources a beautiful possibility for particular person traders.
However there’s extra to the corporate than simply these elements. Preserve studying this text to study extra about Petrus Sources.
Enterprise Overview
Petrus Sources is a Canadian oil and fuel producer that was based in 2015 and relies in Calgary, Alberta. It’s centered on the event of low-cost, liquids-rich pure fuel and lightweight oil belongings in Western Canada.
Its operations are concentrated in its core Ferrier space, positioned within the Alberta Deep Basin, the place the corporate targets the Cardium formation utilizing horizontal drilling and multi-stage fracturing. Petrus Sources maintains full operatorship and excessive working pursuits in its belongings and thus it achieves tight price management and capital effectivity.
The output of Petrus Sources is 33% oil and 67% pure fuel. Consequently, the corporate is very delicate to the dramatic cycles of the costs of oil and fuel, notably the latter. It has incurred losses in 7 of the final 10 years and has exhibited a markedly risky efficiency document, which has been clearly mirrored within the inventory value.
To offer a perspective, the inventory slumped 95% between 2017 and 2020. In 2015, it incurred extreme losses because of a steep lower within the costs of oil and fuel. The corporate initiated a dividend solely in late 2023.
However, Petrus Sources has some benefits in comparison with well-known oil and fuel producers. Most oil and fuel producers have been struggling to replenish their reserves because of the pure decline of their producing wells.
Supply: Investor Presentation
Petrus Sources vastly advantages from the top quality and low decline fee of its reserves within the Deep Basin in Alberta. As proven above, the corporate has grown its manufacturing by 56% over the past 4 years.
That is undoubtedly a formidable manufacturing development fee, which can’t be achieved by the well-known oil majors, akin to Exxon Mobil (XOM) and Chevron (CVX).
Within the first quarter of this 12 months, Petrus Sources reported a slight lower in its manufacturing over the prior 12 months’s quarter. Given additionally the impact of a major lower within the common realized costs of oil and fuel, the adjusted funds circulate per share of the corporate declined 18%, from $0.11 to $0.09.
As 67% of the output of Petrus Sources is pure fuel, it is very important look at the outlook of the U.S. pure fuel market. Complete U.S. manufacturing is anticipated to develop 3% this 12 months, to a brand new all-time excessive, however U.S. LNG exports are anticipated to surge to an all-time excessive as properly. LNG exports are anticipated to continue to grow subsequent 12 months.
As a result of growth in LNG exports, the U.S. fuel market has grow to be tighter this 12 months and thus the value of pure fuel has considerably elevated.
As per the most recent forecast of the Vitality Data Administration [EIA], the value of pure fuel is more likely to enhance additional subsequent 12 months, from an anticipated common value of $3.70 this 12 months to $4.40 subsequent 12 months.
This outlook definitely bodes properly for the enterprise of Petrus Sources. However, because of a major lower within the value of oil and a weak begin to the 12 months, we anticipate funds circulate per share to lower from $0.29 in 2024 to $0.25 in 2025.
Development Prospects
As talked about above, Petrus Sources has grown its manufacturing at a quick tempo over the past 4 years. As well as, it’s ideally positioned to learn from doubtlessly increased fuel costs subsequent 12 months because of a good pure fuel market.
Supply: Investor Presentation
However, traders ought to at all times take into accout the dramatic cyclicality of the value of pure fuel. That value skyrocketed to a 13-year excessive in 2022, shortly after the onset of the warfare in Ukraine, however plunged to pre-war lows in lower than a 12 months because of an abnormally heat winter. The value of pure fuel remained depressed till this 12 months.
We’ve got assumed flat funds circulate per share for Petrus Sources in 5 years from now as a way to be on the secure aspect, given the excessive cyclicality of the value of pure fuel.
Petrus Sources has an honest stability sheet. Its curiosity expense consumes 13% of its working earnings whereas its web debt is $79 million, which is 59% of the market capitalization of the inventory. Below regular enterprise situations, the corporate is just not more likely to have any drawback servicing its debt.
However, within the occasion of a extreme and extended downturn, the inventory of Petrus Sources is more likely to come underneath nice stress, as expertise has proven.
Dividend & Valuation Evaluation
Petrus Sources is presently providing an above-average dividend yield of 8.7%, which is greater than seven occasions the 1.2% yield of the S&P 500. The inventory is an attention-grabbing candidate for earnings traders, however they need to remember that the dividend is just not secure because of the dramatic cycles of the costs of oil and fuel.
Petrus Sources has an affordable payout ratio of 36%, which supplies an honest margin of security for the dividend underneath the prevailing enterprise situations. Furthermore, because of its promising development prospects, the corporate is just not more likely to lower its dividend sharply within the absence of a significant downturn.
In reference to the valuation, Petrus Sources is presently buying and selling for 4.1 occasions its anticipated funds circulate per share this 12 months. Given the excessive cyclicality of the corporate, we assume a good price-to-funds circulate ratio of three.0.
Subsequently, the present funds circulate a number of is increased than our assumed honest price-to-funds circulate ratio. If the inventory trades at its honest valuation stage in 5 years, it would incur a 6.1% annualized drag in its returns.
Bearing in mind flat funds circulate per share in 5 years from now, the 8.7% present dividend yield but in addition a 6.1% annualized headwind of valuation stage, Petrus Sources might supply a 3.1% common annual complete return over the following 5 years. The anticipated return indicators that the inventory is just not engaging proper now.
Closing Ideas
Petrus Sources has promising development prospects because of manufacturing development and anticipated increased fuel costs subsequent 12 months amid a good fuel market. The inventory is providing an above-average dividend yield of 8.7% nevertheless it seems virtually totally valued. Subsequently, traders ought to most likely watch for a considerably decrease entry level.
Furthermore, the corporate has confirmed extremely susceptible to the cycles of the costs of oil and fuel. Consequently, it’s appropriate just for affected person traders, who can endure excessive inventory value volatility.
Further Studying
Don’t miss the sources under for extra month-to-month dividend inventory investing analysis.
And see the sources under for extra compelling funding concepts for dividend development shares and/or high-yield funding securities.
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