Will the Market Understand ?Peyto Management excellence is reflected in many ways and borne-out in costs effectiveness, production growth, reserves growth, overall investment returns,.....
Their summer 2016 production strategy is another example of their focus on optimizing overall returns for shareholders, "that effectively defers the production from newly drilled, high flush rate production from the current low summer prices until the fall" (a strategy that was successfully utilized in 2012 and 2013 in similar environments) ...... "Based on current futures pricing the economic return generated by new wells significantly improves by delaying their onstream date for six months. Therefore, Peyto has elected to hold approximately 10,000 boe/d of new 2016 production additions offline from April to October to capture this improved return. In addition, the company has received Board of Director approval to increase the pace of its near term hedging program, up to 85% of forecast volumes, in order to secure these winter prices for the 2016 new production additions."
Should gas prices recover over the course of the summer, Peytohas indicated that it has the facility capacity and flexibility to respond quickly and bring on stream the shut in volumes. While Peyto’s operating cost are low enough to make positive operating income from these new wells, even at these low summer prices, the total return on the capital invested in these new wells is enhanced considerably through this proven hold-back strategy.
Source of extracted quotes : Peyto published Q1, 2016 MD&A May 10, 2016 Sedar
Peace,
Good Decision-Making to All,
ElJ