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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 SecondhandGnuson Aug 15, 2022 3:57pm
123 Views
Post# 34897447

RE:RE:RE:RE:Hedging losses

RE:RE:RE:RE:Hedging lossesIronically enough TOU has plenty of bad nat gas hedges, but they came with companies that took them on due to too much debt and thus over hedges before selling out to Tourmaline on the cheap.

For those piling on Quint, calling mortgage insurance an inverted analogy, Uncut is correct in saying that highly levered mortgages (and by extension O&G producers) need them, so less indebted companies are both superior investments and are free from outside interference in tough times.  You can't get a low down-payment without mortgage insurance, and overlevered companies like Peyto were required to hedge by bankers under threat of having bank lines pulled/cut. Job-loss insurance and the like are often added to major loans, so the analogy is appropriate.

So what does this mean for shareholders today?  My guess is 5-7 months of underperformance due to these terrible hedges (approx. $1.85/share anchor to NAV), followed by a cash-flow snowball beginning with Q4 results.  The new reserves report, also to be released in early 2023 will another late Christmas gift.  If you're selling today I'd be royally ticked off, but patience will be rewarded.
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