RE:Peyto November Monthly ReportFrom the report...
"Figure 2 shows the before tax internal rate of return (BT IRR), generated by each well under a flat price deck of $3.00/GJ and US$70/bbl WTI for all the wells onstream to date. The entire 2024 program is forecasted to generate an IRR of 50% under these conditions, far exceeding our cost of capital."
It's baffling to me (though not really, given Peyto seems more concerned with lowering unit costs than producing the marginal MCF profitably) that they would spend $80M in the past two months on D,C,E,T to bring on 10K boe/day when effectively every NG hub is trading sub $2.00/MCF, some pretty considerably. Using a $3.00/GJ price deck at this point is absurb. They may be receiving that, but only because of their hedged production. Why produce marginal BOEs at this point though?? Put that money to work deleveraging. I was encouraged by their curtailing rhetoric from October's newsletter, but clearly that isn't happening anymore. This marginal production also appears to not be heading to Cascade, as those generators appear to be under maintenance.
On a positive note, really good to see their well productivity numbers. Hopefully as increased egress, and perhaps cold weather, come to pass, the improved metrics can make for some great "unhedged" profitability. Anyway, GLTA.