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 > Scotia Target $26. Divy increase very positive

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Comment by newcoinon Jan 03, 2023 8:53am

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Post# 35200316

RE:Scotia Target $26. Divy increase very positive

PEY is safe at $2.50 Henry Hub if it were ever to get that bad. It won't, so all is good.

Moreover, we estimate PEY’s 2023 capital program (our forecast, which is above the company’s guided range) and increased dividend will break-even at less than US$2.50/mmBtu Henry Hub (assuming US$75/bbl WTI) (strong positive).

Westcoastenergy wrote:

Peyto Exploration & Development Corp.

PEY-T: C$12.33

Target: C$26.00

Rating: Sector Outperform

Solid Q3/22 Results; 120% Dividend Increase

OUR TAKE: Positive. PEY’s Q3/22 release had some of the “adventure quality” typical of the company’s quarterly prints, but on balance looks to be a big win for investors. Adjusted Funds Flow and Free Cash Flow came in ahead of consensus on lower-than-expected cash costs (we were ~5% high on top line natural gas realizations despite our best efforts), while the 2022 and 2023 budget and guidance updates will likely bring Street estimates slightly down (our 2023 CFPS is down <2%). However, PEY’s 120% dividend increase was the biggest news by far. The revised dividend will give investors a double-digit yield on the current share price. Importantly, we expect the dividend to consume just ~40% of free cash flow on current strip prices, with the 2023 capital program and dividend payments sustainable below US$2.50/mmBtu Henry Hub (a testament to the stability hedging can provide). We continue to like what the stock has to offer with a 1) superior, sustainable, and consistent shareholder returns, 2) a deleveraging balance sheet, 3) risk managed natural gas exposure, and 4) ongoing development of the high-return Chambers / South Brazeau assets.

KEY RESULTS

120% dividend increase. PEY will increase its monthly dividend to .11/share (from .05/share) effective January 2023 payment (payable in February 2023), resulting in an ~11% yield on the current share price. The increase is significantly ahead of our forecast for a 20% increase. We estimate the increased dividend will use just ~20% of annual cash flow and ~40% of annual free cash flow through 2025 (on strip pricing), making it highly sustainable. Moreover, we estimate PEY’s 2023 capital program (our forecast, which is above the company’s guided range) and increased dividend will break-even at less than US$2.50/mmBtu Henry Hub (assuming US$75/bbl WTI) (strong positive).

Solid Q3/22 results. Production and capex were previously reported in the October 2022 and November 2022 President’s Monthly Reports (note: actual production was slightly [<1%] below the pre-reported volume). AFF per share of ~$1.13 was moderately ahead of consensus on lower-than-expected cash costs. Free cash flow came in ~13% ahead of consensus on the back of the AFF beat. See Exhibit 3 for detailed results versus consensus expectations (positive).

2022 capital budget increased. PEY raised its 2022 capital budget ~$75M to $450M. This compares to us at ~$460M and the Street at ~$430M. The additional capital will support the company’s shift to drilling longer wells and deeper horizons, as well as additional pads, pipelines, and gas plant connections in the Chambers area (slight negative).