Peyto Exploration & Development Corp T.PEY

Reason the market hates it

[TerribleEng]

While everyone else in the sector will be cash flush and debt down to almost zero by year end... Peyto is vulnerable to a downturn. I think the odds of that happening are remote but if gas prices go back to $3 and oil to $70, then Peyto is back to being high debt to EBITDA and can't invest counter cyclical. They basically lost money on a lot of their production this quarter. $1.83 in cash costs plus $1.37 of DD&A selling for 300mmcf/day of gas for less than $2.50 isn't really compatible. I really wish they bought back all these bad hedges when the front end of the curve collapsed into during the Freeport explosion. When you compare stocks looking out at balance sheets to next summer Peyto really sticks out.

[SecondhandGnus]

So far as I know the company has never directly addressed their flexibility or lack thereof due to high debt levels.  Perhaps they are not allowed to add $299MM of debt to get rid of these hedges, but ever if they could it isn't in their corporate DNA. Unfortunately Q3 will mirror Q2 (essentially the same hedges other than a bit less on the oil side), but FFO should go up significantly

[sportstermathew]

I think a lot of people take PEY the wrong way. Name one company that tells you as much all the time. Many companies everyone is just guessing and either surprised very negatively or positively.  PEY has had its positive moments. Many shareholders don't tell you the truth either, many are in short-term, want changes, huge growth or huge dividends immediately and then vamboose gone