Different kind of risks1 - Operational risks
2 - Future cash flow risks
3 - Balance sheet risks
1 - Peyto is top percentile by operating in low permeability (tight), sandstone reservoirs that do not contain water.
2 - Their hedging and basis dealings cost way to much to reduce future cah flows. Why hedging so much? That program could be limited to a smaller amount of production, let's say 75%. When investors are buying shares of a company, it is firstly to have an exposition to the risks involved with the industry in which the company is operating. An investor looking for a low risk future cash flows strip would simply buy a bank or a fixe income security. Trying to reduce the volaility of future income reduce the value of the shares in the eye of an investors who wants an exposition to the Natgas industry.
3 - Excess leverage is the worst kind of risk any company in any sector can have. It is not desired by any kind of investor. This kind of risk destroys the share value of a company. If an investor is looking to have a bigger exposition to leveraged risk, he will do it by himself by buying shares with money borrowed personally.
If Peyto wants to create value to its shareholders, it must reduce it's hedging program to a level that insures cash flows, in order to keep its investments (capex) for the future of its activities. Segundo, reduce the balance sheet risk (debt), and finally keep doing an excellent job on the field!