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Peyto Exploration & Development Corp T.PEY

Alternate Symbol(s):  PEYUF

Peyto Exploration & Development Corp. is a Canadian energy company involved in the development and production of natural gas, oil and natural gas liquids in Alberta's deep basin. The Alberta Deep Basin is a geologic setting situated on the northeastern front of the Rocky Mountain belt in the deepest part of the Alberta sedimentary basin. It acquired Repsol Canada Energy Partnership (Repsol Assets), which included around 23,000 barrels of oil equivalent per day of low-decline production and 455,000 net acres of mineral land. The acquisition includes five operated natural gas plants with combined net natural gas processing capacity of around 400 million cubic feet per day, 2,200 kilometers (km) of operated pipelines, and a 12 MW cogeneration power plant. These assets include Edson Gas Plant and the Central Foothills Gas Gathering System. The Company has a total proved plus probable reserves of approximately 7.8 trillion cubic feet equivalent (1.3 billion barrels of oil equivalent).


TSX:PEY - Post by User

Comment by TerribleEngon Apr 11, 2022 9:13pm
212 Views
Post# 34595607

RE:I had

RE:I hadIf you are that bullish have you considered going with a margin position instead naked options? You are tieing up $3.6, of which $1.72 is extrinsic value which will get vaporized over the next year and losing at least $0.60 in dividends, most likely much more. You could enter into a similar position with let's say 50% equity so $6.94, which will earn at least $0.60 in dividends , while costing $0.12 in interest. Meaning you have a fairly large positive basis on the position of at least $0.48 or 7% yield . Versus a 64% negative carry on your investment with options. With a maintenance margin of 30%, you would be safe from margin calls until $10, which everyone as of recently thinks is an impossibility. At that price your options would be a total loss anyways. If you were risk adverse you could take your positive carry and insure half of your position by buying 12 Sep Puts reducing your near term risk through the next 2 earnings reports and the injection season. For no out of pocket outlay. Hell if you wanted to let her buck, you could use the positive carry to buy naked calls yo get you almost the same level of exposure as your current options play for the same cash requirement without the extrinsic value premium. Do as you wish, but just wondered if you considered any other options. You are effectively paying a 22.3% interest rate to get that long exposure.
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