Peyto Exploration & Development Corp T.PEY

Hedges

[Maxmoe]

Hedging gas prices way, way above spot did nothing to prevent peyto from crashing below $1 a share. Likewise, I see no logical reason having hedges at 50 cents to $1 below spot will hold peyto under $10 this winter when storage is below average and spot moves to $4 +. Hedges saved the company last year in a black swan event. More typically hedges just smooth prices seasonally and cyclically with little lasting impact on the stock price. I still have my sleeper position in nat gas plays, mostly pey. With oily names exploding I'm looking at shifting some profits back to gassy names before the crowd notices gas is over $3 off season and some oil stocks are up 5 fold or more in 7 months. Nuttal keeps saying on BNN he's not in nat gas right now which tells me he's looking at doing the same thing I am.

[shenty46]

And the biggest problem for peyto, which Darren GEE was worried about is also now sorting out, the future strip was in backwardation, has now moved smartly by more than twenty percent in last two months, am expecting it to just go berserk to the upside in few months, opening a slot for announcement of higher dividend.

[Oldnagger]

Good point, as long as nat gas prices move up in line with WTI, the Share price changes should move accordingly. For 2020, the ratio of WTI to Nymex gas was 20  to 1. Now WTI has the lead, but whether it can maintain the lead thru next winter is an interesting concept !! Picked up a few shares just now, with a note to check back in September .

[Yasch22]

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[Yasch22]

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[houbahop]

Yasch, about your point # 3. (b) : (b) Peyto followed up on that commitment by forward selling that 207,500 at US$1.24. How were they able to sell that low when July 2020 Natgas contract never traded below $2.40 on the Nymex?

[Yasch22]

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[houbahop]

Yasch, I need some clarification on your thinking: ..."but I think there was some serious backwardation at the time." In July 2020, July 20221 contract was trading around $2.50 on the NYMEX. (hope this link works): https://www.barchart.com/futures/quotes/NGN21/overview while the spot was around $1.70/mmBTU. Is this what you call serious backwardation? When they entered these basis

[sportstermathew]

In the end Peyto ended up with more land, another plant, pipelines, production, huge potential to increase, as they have already that production purchased ++, new hedges at much higher prices going forward, better environmental situation, more efficiencies in drilling, higher capex, new LNG initiatives hopefully and the Cascades power plant. So in essence yes they messed up during one of the

[Yasch22]

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[Yasch22]

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[houbahop]

Last summer, Natgas prices were in deep contango. Spot was at $1.25 and next year futures were trading at $2.50.

[Yasch22]

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[houbahop]

Good morning Yasch, I took the time to go through the various Corporate Presentations. Oddly, there is no Gas Marketing Table in the last one. In your first paragraph: "...Peyto paid $1.40 USD/mmbtu to ship 257,500 mmbtu/d. Peyto sold 20K mmbtu/d at $0.89/mmbut. Ultimate price received was $1.27/mcf CAD...." The $0.89usd/mmBtu is probably net of the $1.40usd/mmBtu transport meaning

[sportstermathew]

Whenever you do commodities trades it always sucks as they are treated differently accounting wise I believe.  When you gain, most don't pay attention and when you lose, well you know the story. The idea was prices sucked back then, Peyto had no idea as all others did not know either, that things were going to hell, and they just wanted to lock in any prices at all at the time, that were

[Yasch22]

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[sportstermathew]

I agree 100% with Yasch's last comments. As a past floor trader in Alberta, early 80's, many traders had to take losses on some bad positions over time and reduce them with new positions in the same stock or other stocks to aleviate the pain. They of course were not sure of total defeat by Saudis, Russia, TC Energy AECO conflict, and Covid. I also think most companies are in the same

[houbahop]

"Hey Houba. I once thought along the same lines as you did, and that the price Peyto received for the basis deals was the total netback..." ??????????? A basis deal was never meant to be a total netback! Where did you get this? I will try to be as patient and clear in my explanation as you. : >) When you do a basis trade in a futures' market, you buy a future contract AND you

[Yasch22]

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[Yasch22]

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[sportstermathew]

Basically they sold AECO short which then went up and hurt bad. I fail to see looking in the rear view mirror so much as a help other than to understand how these things work.  I have always found that trying to understand accounting etc. in a physical manner much easier if you have examples and pictures, love pictures, just like Trump, especially ones you can use a Sharpie on. Current

[houbahop]

....Peyto added to their hedge as H1 unfolded. They obviously got prices that were a fair bit better than $0.89, but for whatever reaso  they still weren't anywhere near US$2.50..... Yasch, are you implying they did not got price anywhere near US$2.50 or you read it somewhere? If they forward sold 20,000 mBtu/d in March 2020 and locked $US0.89, their position in the basis is reduced

[Yasch22]

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[Yasch22]

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[Yasch22]

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[houbahop]

"...In other words, this is all based on the presumption that Peyto is not taking a loss on its forward sales of $0.15 (US$1.39/mmbtu minus $1.24 forward sold)  but is netting that $1.24 from forward sales of roughly $2.63/mmbtu." Voil!