RE:RE:RE:RE:Miniscule changes to hedgebook March to AprilIf you all are sitting in the drivers seat as head of PEY do you place hedges or not at this time? if you don't and prices start falling, then you get burnt, if you do and they rise well at least you make money and have new production to get better money.
A while back GEE said that one rig can justabout replace production depletion based on the current efficiencies they are getting with new drilling techniques. Is this still the case?
So with 4 other rigs drilling (not all the time, they may have two during breakup) how can production not rise further than indicated? I am missing something here.
On top of this CAPEX can be used more wisely while certain wells pay off their costs in under one year, you just roll the money into the next well. As new wells production are either unhedged or hedged when initiated the payoffs have to be getting better and better RIGHT? Based on current prices the numbers probably break the calculators.
Will this last is anyone's guess. Best educated guess is that LNG is currently and for the foreseeable future the driver to take up any increase in production. In fact it is driving prices even further due to the huge spread between Asia and Europe and us in NA.
On top of this coal and Nuclear are supposedly decreasing with some being replaced by NG as per Peyto's new deal with the Cascades facility.
If you look at slide 54 they seem to have a block of grey associated with May 2023 starting. I always thought Cascades was late 2023?? if it does start in late 2023 then does this mean that block is not hedged at all? Down the road this will only be about 10% of PEY's production unless for some reason more will be needed by the generation facility or it is expanded.
In addition with CNQ and other Tarsands producers if they increase production substantially which will be no where near what the U.S. would like does this not require more and more NG?
So many variables to create the perfect storm. But what we need is consistency and profitability not willy nilly US frac drilling when the sun shines.
One other thing, it seems PEY will be paying down huge amounts of debt over the next 20 months by chart #51. It appears to me that since interest rates are rising it may be more beneficial to just pay off most of the debt and forgetaboutit. If things change they always have that ability to go back to it.