RE:RE:RE:RE:GuessGiven Peyto's hedges, right now it's about the long-term futures curve, at least in terms of fundamentals.
I have seen basis deals signed for around 80-90 cents to NYMEX recently. NYMEX is $3 or better terminally, out to 2026. Peyto will print money at those rates. They are currently hedged 70%, and at some pretty low prices. The AECO curve has come down a lot, but we are pretty much around a $2.90 terminal value there, so the US and Canadian curves are in agreement. Long term this pig should fly at these prices. They are paying out a 5 cent monthly dividend and are going to have record FCF in Q4...while having some of the worst hedges in the industry.
25% of their production is hedged at $1.44 (NYMEX - less than third of what the Dec settled at) and another quarter was hedged $2 lower than current AECO monthlies.
Long term this thing is going to drift toward $20 at the current strip, but short term it's sentiment driven. People can't see past the fact that NYMEX is falling, and that the pricing we were seeing was completely irrational. We are in a surplus, and LNG capacity is limited so what happens in Europe/Asia shouldn't impact US pricing. $6 was free money, any producer who didn't throw on hedges there just doesn't like money. There is an unlimited amount of gas available at $3 in N.A., the supply curve is almost flat. I for one am happy to see NYMEX come down as it was going to encourage all sorts of silly capex plans.
OPEC pulled a power move today, by maintaining 400K increases and supporting lower prices during capex season, should setup growth in future pricing. I think nymex is going to test support at $4 flat, and N.A. better get some cold weather to improve sentiment. Oil drifts back to $75 before year end if Omicron is no worse than Delta.
Peyto goes to $11 by year end if things are flat from here. If lockdowns expand and there is a general market correction, things could retrace back to support and the long term up-trend at $8. If things stay warm, you could see nymex/aeco hit $3. It was $3.50 today (AECO).