KANSAS CITY: CorEnergy Infrastructure Trust announced that Cox Oil has provided notification of its intent to suspend payment of rent, beginning with the April payment, on the Grand Isle Gathering System (GIGS) owned by CorEnergy.
Cox attributed the decision to its plan to shut in production on all of its wells in the Gulf of Mexico due to the reduction in the price of oil in the current global economic and health crisis.
Dave Schulte, Chief Executive Officer, said, “We are in discussions with Cox regarding their plans while also taking steps to protect CorEnergy’s interests under the lease on behalf of our stockholders. Rent continues to accrue whether or not oil is being shipped.”
Commenting on dividend paying capacity, Schulte said, “We continue to closely monitor the challenging market conditions for potential impact to our upstream producer tenants. Ultra Petroleum delayed the filing of its most current 10-K and disclosed that it is presently in discussion with its lenders. Based upon the adverse impact of current market conditions on our material tenants, we expect to recommend to the board a reduction in the next quarterly common stock dividend to $0.05. At such time as rent is received, we will consider various means of returning capital to our stockholders, including further adjustments to the dividend consistent with prudent coverage ratios. The Company intends to comply with the REIT taxable income distribution requirements. We anticipate recommending declaration of the regular quarterly cash dividend for the first quarter on the Company’s Series A Preferred Stock.”
Schulte continued, “Our balance sheet is strong, with approximately $119 million in cash as of March 31, over 5 years remaining until the maturity of our convertible bonds, and manageable amortization and near-term maturities of secured debt. We believe preserving liquidity while addressing these near-term challenges will allow us to maximize the long-term value of our assets for our stockholders, including consideration of potential new investments.”
CorEnergy Infrastructure Trust is a real estate investment trust (REIT) that owns critical energy assets, such as pipelines, storage terminals, and transmission and distribution assets. We receive long-term contracted revenue from operators of our assets, primarily under triple-net participating leases.