RE:New land for PEY at approx. $391/ac during Q2$6m? you know peyto has to to find new places to drill right?
I have been following peyto for years and am fully aware of their history. they hedge ONE WAY and one way only. They just dollar cost average their hedges. I mean they hedged gas at $1. And they have always had a leveraged balance sheet. it finally caught up to them in the last downturn. and it appears shareholders are still paying the price. Petyo hedging strategy works when the curve is in Contango. It works poorly when it's in backwardation.
what will be interesting to watch is can they deliver returns without LEVERAGE. they have yet to be tested on that. they have always been a highly leveraged firm.
SecondhandGnus wrote: A few notes from the Q2 results/investor call:
1. Peyto paid $6mm for 24 sections ($391/ac for these leases), which is more than they have been paying lately--I mark this as forward-thinking, confident and positive, but those wanting quicker debt repayment or dividend increases would probably feel differently;
2. Darren Gee shot down variable dividends (which I agree with) and share repurchases (unfortunate in my view, if only to counteract dilution;
3. If you look at the hedging program over time it HAS NOT been fully mechanical. I've said before that I don't mind the hedging program, but high debt has caused PEY to hedge more than usual under duress, which has been an anchor on the share price. DG said that relative hedging to capital programs should decrease, however.
I couldn't be higher on Peyto's medium/long term prospects, but I suspect I'll have at 3-6 months before the next big leg up happens. GLTA...