Peyto Exploration & Development Corp T.PEY

Alternate Symbol(s): PEYUF

Energy Oil & Gas E&P

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).

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Peyto Exploration & Development Corp > Hedging losses

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Comment by uncutgemson Aug 15, 2022 6:13pm

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Post# 34897833

RE:RE:RE:RE:RE:Hedging losses

your thinking is muddled. not a surprise.

petyo is like the buyer that can't afford a DOWN PAYMENT for something they want.

so the bank asked for PROTECTION and more MONEY. that's mortgage insurance, you know the thing smart people tell you to AVOID?

In Peyto's case that protection is HEDGES. BAD HEDGES.

TOU is like the rich guy down the block who sees a house and goes and buys it for CASH.

He tells the bank to FO.

to close the circle, TOU is so wealthy they aint forced to do anything they don't want to do, like enter into silly hedges.

Finally PEY has a MINDLESS mechanical hedging strategy that anyone here could execute. they do the the same thing year in and year out. And it results in some terrible hedges.

Other companies DO think about hedging. Those companies shall be nameless but are easy to figure out. they have HIGH stock prices and wealthy owners.

Quintessential1 wrote: So people that do not have mortgages do not need mortgage insurance.

Brilliant.

I am pretty sure that is what I said.

GLTA Longs

uncutgems wrote: what?

you know who doesn't need mortgage insurance? people that paid CASH. you know who doesn't need mechanical hedging to protect their balance sheets? Companies with FORTRESS balance sheets. When was the last time someone complained about TOU hedges?

Quintessential1 wrote: I look at hedging like mortgage insurance. As long as you have a mortgage you should have mortgage insurance but no one ever wants to cash in on that policy.

Eliminate the mortgage and you also eliminate the need for the insurance.

The faster debt can be reduced the better for the company and for shareholders.

GLTA

TerribleEng wrote: The issue is that the market is demand driven now and is in backwardation. Hedging is very expensive in a market like this because even if Natural gas prices remain flat... you lose because you are always hedging out 18-24 months at large discount prices. Even if it were perfectly flat, market goes up and you lag the market and get punished. Prices fall, and you get punished for because your debt is high and reserves get derated. The conf call had several questions around variable dividends and reducing hedging to a level that protects the Capex plan and nothing more.