RE:the economic limit of peyto's wellsJumpytarmac is right about the advantage Peyto shareholders have....
- On the downside when Ngas prices experience downward pressure, Peyto can retain profitability(hold-out in the black with buttoned-down Capex) longer than their competitors in NGas production and
- On the up-side when NGas prices trend higher, they can(through higher avg. rolling-horizon hedges and higher-trending weekly NGas prices) show larger profit margins.
- Their recent infrastructure development strategy to maximize the extraction of NGas Liquids is also a Peyto advantage
However, the current very large disadvantage of Natural Gas compared to Oil in North American marketplace pricing ,
in terms of equivalent BTU's ( i.e. 6000 mcf of NGas = 1 BBl of Oil) does still cause light and medium Oil producers to get much more favourable
Cash flow Netback per boe than even Peyto....... (example Crescent Point{91% oil in product mix} reported $50.02/boe in Q3, 2013 compared to Peyto{89% NGas in product mix} reported $19.55/boe in Q3, 2013.
From an energy-content engineering point of view, the boe pricing discrepency between Oil and NGas should narrow somewhat, but we have been thinking this for years and perhaps will occur only when LNG is exported in significant quantities from North America at some point during the next 10 years ! ?
Peace,
Good Decision-making to All,
ElJ