They just BARELY got by......For what is required by Peyto in order to maintain sufficient (or at least what was intended/budgeted) CAPEX and still payout that generous divvy. Based on those numbers, we can safely assume that the divvy will stay intact at least until year end, as i previously stated. As long as most of those "nice" hedges are in still in place, they're good to go till xmas. Maybe even until Q1 of 2024........maybe, without any drastic actions taken to their divvy payout or CAPEX levels.
If energy prices still are stagnant even well into 2024, which i strongly believe they will be up until the elections and unless there's somekind of blackswan event, the worst that could happen is Peyto having to choose in a slight reduction between capex & their dividend. Hopefully if it comes to that, sanity, logic & smarter minds prevail at Peyto HQ and they'll choose the latter.
The quarter itself was basically what one expected, with no surprises on either end. The only blemish, if one has to be picky & thorough, is the slight reduction in production compared to the previous qtr. But this is easily explainable, probably due to Alberta wildfires which resulted in temporary shutdowns earlier this year and nothing else. But based on these figures, one can easily see that even someone as experienced, efficient & low cost as Peyto is struggling to keep a "generous" payout AND spending enough resources on capex to at least maintain current production. It's a very difficult balancing act to find a the sweet spot in keeping investor interest in your company/stock and maintaining a viable, profitable ongoing operation.
If investors are deciding whether to buy or sell here, solely for the passive income, i strongly suggest you based yourself on energy prices being flat, the same throughtout all of 2023 and well into 2024 until the election cycle is done. Which is WTI ~$75 & NatG just under $3. The latter of which is the more critical of the two & to be kept there, as long as possible, by the powers that be, to both save the EU by not putting it out of business and BK Russia at the same time.
With all this said, i continue to preach that anyone looking for a substantial ROI through a passive income model, without taking a high degree of risk, then you won't get better than Peyto or Cardinal Energy in the Canadian energy space. Or for any sector for that matter when it comes to dividends & managing your risks.Two very different companies in terms of operations, even though they operate in the same sector, BUT in terms of investment risk/reward/return very similar.
GLTA