Peyto in 2023A few Boxing Day deals wrt to Peyto for those of you with room in your Christmas stockings:
--PEY has already made its major infrastructure investments in Brazeau/Chambers, unlocking its most profitable area for further growth;
--Despite bad hedges being a sunk cost, investors can't help but be affected by them when calculating future CF and multiples. The worst hedging is now over, which gives the company a positive tailwind as it goes from godawful, to really bad, to plain old bad and (sooner than we think) to a minor inconvenience;
--Some of the share price benefits were paid forward with Darren Gee's retirement gift of a dividend increase, but Peyto should get another bump once the new $$ hit shareholders' accounts at the end of Jan '23 (along with new ratio updates on investment websites);
--Debt reduction continues on a net basis, but especially so for the various debt ratios. Interest costs have rapidly decreased despite higher rates;
--Peyto is and has been growing, and the land purchases and small/mid-sized acquisitions will fuel reasonably-priced growth. I understand those who want faster debt reduction, but I've been pretty consistent in saying that their new land has been their best use of capital for the mid/long term;
--The market should start incorporating new gas powerplant direct service income within the next few months;
--Reserve values will increase significantly when released within a few months from both exploration success and higher future price assumptions;
Peyto is still cheap via essentially all metrics despite rising nicely in 2022. There are a few possible obstacles for 2023, but today isn't the day to ponder such things. My best to you all both within and beyond your investing profit and loss statements.