Is the Peyto Dividend Safe?it seems that Fai Lee and I have the same concerns.....
some of the things the peyto CEO has said recentley make
me Wonder?
opinions on this Welcome....
Fai Lee
Just in terms of your new exploration plays at Montney and Duvernay have -- given they thought to -- if the results turn out to be where you expect, how the financing plan will work around that? Are you going to reallocate capital from your existing operations or would you finance on a standalone basis; just one point on how you're thinking about that?
Darren Gee
We've got -- I guess lots of different sources of funding to allocate. We've got our cash flow, we do have some available bank lines that we could use so long as we can bring cash flow on fast enough and grow cash flow faster than debt would be growing, and I'm happy to look at what available funding we have from the banks. As always it's a competition for capital around Peyto, we're looking to put capital to the highest return projects; so looking across our portfolio of opportunities we're going to be ranking and allocating as usual, putting stuff to where we feel we're going to get the best returns. So it's going to have to compete with our Cardium results, and as our Cardium results get better and better, it's going to have to get better and better too in terms of the opportunities or it will sit on the sidelines as well as some of our other Spirit River opportunities.
So it's all a competition here at Peyto; we've obviously got a good amount of cash flow to work with, if things look really, really exciting perhaps we'd be going back to shareholders and asking to reinvest some of the profits and the earnings that we have that we're currently dividend-ing out. Maybe we ask shareholders should they want to reinvest that in some of these opportunities because they are just too exciting and there is too much opportunity there that we should be capturing and not waiting on. But arguably, you can put a profile together of just spending our cash flow on it or you can look at external funding if you want to accelerate if the environment is right. I think a lot of that obviously has to do still with gas prices because even though these are liquids -- more liquids rich opportunities than they are leaner gas opportunities, they still require some gas price, it still -- gas has the energy source to produce these wells.
So we still have to think about the impact of the seasonality of gas prices and where it's going long-term.