RE:RE:RE:About Peyto's forward salesGregC24 wrote:
"Stop with the stupidity. Borrowing money to pay a dividend is nothing like borrowing money to buy an asset that then produces more income than it cost to purchase."
Really?? Is it really THAT difficult to grasp that the end result is the same no matter the means achieved to get there?As an anology, If someone decides to liquidate someone else either directly or by hiring someone to do the dirty deed, is it really that different and should the punishment be different? The end result is that the person on the losing end is DED, in both cases. Would you argue otherwise? In this case, the debt of BOTH companies has gone substantially up due to NOT having sufficient revenue to cover everything. The MO is absoutely the same here, NO DOUBT about it! Just that Peyto did it in way that's smarter and doesn't raise RED FLAGS off the batto their motive.
If you can't handle that,don't get peeved off at me or anyone else for stating the truth & facts. I'm only a messanger of the good word & facts, and making people open their eyes & realize WTH is really going on here. If you don't like that or can't stomack constructive criticism.....well... that' stuff luck my friend, as you can't dispute pure, cold, hard facts & basic fundmentals.
"Second, since Repsol was purchased in September we can infer that those conversations were going on for months before that. So, by your logic, Peyto must have known that ng would be at all time lows almost one year early in order to time this purchase."
That's absolutely correct & spot on my friend. And i agree, that Peyto mgmt must have done their own assessment & risk mgmt and were most likely looking at several options besides acquiring the Repsol assets. Stuff like what Birch did by borrowing directly, and maybeeven just reducing the divvy & capex. But in the end, i surmise that they probably SAW what was happening to Birch and how the market was reacting and decided on a different path. Is their choice better? That's uknown at this time & up for debate. You can agrue for/against for both cases.
Folks got to remember that the Repsol assets are NOT Peytotype quality assets.But they could be something close to it,with time & money. There's a reason WHY Peyto is the lowest cost producer of NG in Canada, and it'snot by accident or luck. The Repsol assets were money losing assets when Peyto purchased them, and have been so for a quite some time before that. In addition, Repsol was wanting to GTHO of Canada's energy sector for some time now, so those asets were grossly neglected by Repsol and not maintained, as well as being mismanaged.
Peyto bought them because they believed that one, it was their best & most attractive option to achieve their two main goals, which is keeping the divvy intact & capex steady. And two, they also believed that they could greatly increase the efficiencies & synergies of those assets and make them profitable in time.And i believe this as well. I have nothing against the Repsol acquisition, i think it was adecent move by Peyto BUT i'm not blinded or ignorant of the resosns WHY it was done, as most people here, yourself included. Imho, with Ng prices this low, Peyto mgmt should have followed up with a "redcution" in the divvy right after or in concert with the Repsol asset purchase.
"Not only do they have enough money to cover the capex and dividend they even plan on reducing debt. That sounds exactly like Birchcliff borrowing money just to be able to pay the dividend. Oh wait...no it doesn't."
Like i stated, if you actually read & understood what i said, Peyto will bring in the SAME revenue with ~130k boepd that they did with 100K pre the Repsol acquisition. And as i've stated in the past, about year ago, Peyto NEEDS to produce AT LEAST $1B annually to servies ALL that. And they were precariously too close to that number last year and they KNEW that as well, and then the Repsol acquisition was magically announced! Like i said, this isn't rocket science, the smart folks werent surprised by this. It waseither doing what Birch did or taking a "slightly" altered, unassuming & less threatening path. One which could be more easily swallowed by the market & investors
Now comes the fun part........8)..... Since the Repsol acquisition, NG prices have tumbled another 50%. Respol's properties were already money losing assets before NG fell further at that time, so now they are losing more money than before and will NEED large amounts of further expenditures to get them in decent form, reduce costs & maximize their efficiencies.Which will take at least years to accomplish btw........................
So i ask you, who got screwed more here since last year, Birch borrowing DIRECTLY from lines of credit but not taking additional losses OR Peyto which has added to it's own losses with the Repsol purchase.....as NG prices have cratered?
I guess the story would have been totally different IFIFIF NG prices went the other way......BUT they did not!
GLTA