RE:RE:New President's Letter A high paying job gives me the ability to take additional risk knowing that the capital can have a longer timeline and I can ride out short term trends. The last 3 years has done marvelous things to my ability to no longer need that for much longer.
One thing to mention here, look for companies with obscured FCF. The dividend will come after that use for cash isn't needed. In your analysis, production rates need to be taken into account. At 100KBpd, Peyto can generate $500Mm in FCF at $3.50/GJ with current interest rates, no growth capital and no debt repayment.
They will grow into their existing plant capacity of 130-135kbpd over the next two years (I think Gee accelerates this to offset bad hedges and guarantees he can get the higher ROA of full infrastructure). This should also lower Peyto cash costs as running facilities full spreads the overhead and maintenance on more barrels. For transport it is also customary to have a fixed and variable component.
With 130kbpd, with are looking at another 130-140mm in FCF, which further reduces leverage and is very capital efficient. At that point I am hoping the boys at Peyto slow down and just print some money before going the expensive route of building out new plants to support further growth. I would be ok if they spent part of what they were spending in debt reduction and slow, market supportes growth. I am hoping the debt fueled benders of the past are done.