Toronto, Canada. August 25, 2022 – Ninepoint Partners LP (“Ninepoint”), one of Canada’s leading alternative investment managers, announced today a significant increase in the monthly distribution for the Ninepoint Energy Income fund, increasing the annual target by 40%, from 5% to 7% effective August 2022.
With global oil demand having recovered to pre-pandemic levels and structural supply growth challenges enduring for the foreseeable future, there are many supportive reasons to suggest that we are in a multi-year structural bull market for oil. Resulting from a change in business strategy from growth-seeking to return-seeking, energy companies are awash in free cashflow. If companies reach their ultimate leverage targets in the coming quarters, they may continue to increase dividends, thereby benefitting the holdings of the Ninepoint Energy Income Fund.
“We have entered a golden era of free cashflow for the energy sector. A bullish macro backdrop combined with companies pledging to return the majority of free cashflow back to investors makes this a sector ideally suited to generate meaningful income,” remarks Eric Nuttall, Partner and Senior Portfolio Manager, Ninepoint Partners. “This, combined with our covered call writing strategy which we meaningfully increase annualized income beyond just dividends makes us believe that we will be able to further increase our annualized payout to unit holders in the coming quarters.”
The thesis behind the Ninepoint Energy Income Fund is that oil prices will reach levels that discourage discretionary consumption over an extended period of time. The effect will be to restore balance to the market and give super-producers the confidence to start investing in oil exploration once more.
In the meantime, we believe Canadian dividend-paying oil producers are well positioned to continue returning meaningful capital to shareholders, as those producers enjoy low financial leverage and record free cashflow. This outlook on the energy sector supports continued upward pressure on the price of oil, and further supports rewarding investors in the Ninepoint Energy Income Fund with this increased monthly distribution.
About Ninepoint Partners
Based in Toronto, Ninepoint Partners is one of Canada’s leading alternative investment management firms overseeing approximately $8.4 billion in assets under management and institutional contracts. Committed to helping investors explore innovative investment solutions that have the potential to enhance returns and manage portfolio risk, Ninepoint offers a diverse set of alternative strategies including North American Equity, Global Equity, Real Assets & Alternative Income.
The monthly distribution amount may be adjusted by the Manager without notice throughout the year as market conditions change. Monthly distributions will be comprised of net income, net realized capital gains and/or return of capital. Any net income and/or net realized capital gains earned by the Fund in excess of the monthly distribution will be distributed to unitholders annually in December.