RE:RE:RE:RE:Anybody have some further thoughts on Repsol purchase?
PabloLafortune wrote: Good post Sports. There's a lack of understanding how corporate life altering this transaction is for Peyto. They were staring down the barrel of a lack of quality locations (thus the production not increasing despite quite a bit of capex) and now they increase those several fold for 10% dilution? Plus the boepd metric is misleading because Repsol hasn't been drilling thus the low decline. Its easily a sub $20K boepd transaction with normal drilling IMO.
Again, the only thing I'm wary of short term is the marketing and hedging. When Tourmaline bought all these companies a few years back, they didn't pay much but they also inherited some p poor hedges. Longer term they need to bring the debt back down and hopefully they will but with Peyto you never know, they might increase the dividend instead, LOL (this is actually what they have done historically - favor dividends over debt).
I agree, the biggest problem Peyto had was lack of quality drilling locations, capital efficiency will likely be realized as early as this winter's program which will see Peyto shift significant drilling activities to the Repsol assets.
Peyto is now a stronger investment with better growth potential or at least created a longer production horizon at roughly the same output because of this acquisition.