Peyto Exploration & Development Corp T.PEY

New land for PEY at approx. $391/ac during Q2

[SecondhandGnus]

A few notes from the Q2 results/investor call:

1. Peyto paid $6mm for 24 sections ($391/ac for these leases), which is more than they have been paying lately--I mark this as forward-thinking, confident and positive, but those wanting quicker debt repayment or dividend increases would probably feel differently;

2. Darren Gee shot down variable dividends (which I agree with) and share repurchases (unfortunate in my view, if only to counteract dilution;

3. If you look at the hedging program over time it HAS NOT been fully mechanical.  I've said before that I don't mind the hedging program, but high debt has caused PEY to hedge more than usual under duress, which has been an anchor on the share price.  DG said that relative hedging to capital programs should decrease, however.

I couldn't be higher on Peyto's medium/long term prospects, but I suspect I'll have at 3-6 months before the next big leg up happens.  GLTA...

[sportstermathew]

Yes, yes, and yes  agree. I suspect prices will be improving all through the fall, I mean just look at  NYMEX today, but can PEY make any dough from it doing their basis deal with takeaway and no risk to transport. It is just going to look better and better. Has anyone determined what five rigs all year are going to do in numbers of wells? ARe drillers even going to build new rigs

[uncutgems]

$6m? you know peyto has to to find new places to drill right? I have been following peyto for years and am fully aware of their history. they hedge ONE WAY and one way only. They just dollar cost average their hedges. I mean they hedged gas at $1. And they have always had a leveraged balance sheet. it finally caught up to them in the last downturn. and it appears shareholders are still paying the

[SecondhandGnus]

Uncut, I was indeed praising this $6MM Q2 lease purchase, which is probably new AB Montney land (mentioned for the first time in about a year) or Chambers/Brazeau acreage (PEY's best area)--I'd venture to say that nobody on the Peyto board is as pro-growth as I am. As far as the hedging being mechanical or not, both the amount and relative hedging (including seasonality) have gone up

[uncutgems]

They drilled an AB montney well a few years ago and never completed the well. I would be stunned if they drill another. They are comfortable doing one thing. Drilling gas wells in alberta cretaceous targets. this is a company that rarely does anthing outside a very narrow comfort zone.

[SecondhandGnus]

They did complete the Montney well after a delay (easy to miss--see Nov. 2019 Peyto presentation)--it had the lowest IRR at the time of all of their well species (10%), but that was to be expected on a $7.5MM well on their first try.  With the AECO price crash they couldn't afford to fine-tune their drilling+completion recipe, but now they can, with much greater potential reserves if/when

[wreckhouse]

For our fine PEYTO shareholders out there in other parts of the world , to give you an idea how big a oil/gas field is go to google earth ,bring up Edson AB . Go south/west/north  and every one of those drill pads cost around 10-15 million to install and drill . Have a great day investing  and may the SUN rise before the almighty dollar ! BCRNW

[uncutgems]

I enjoy debating with you. It's clear you follow these companies and have a soft spot for peyto, as many do. There are a number of you out there that have a soft spot for Peyto, despite all their issues and screw ups, and despite clearly superior companies that are available at similar or cheaper prices. peyto has created that loyalty intentionaly. And it has worked for them. You are not an

[uncutgems]

I had a lot of typos in my last post. I enjoy debating with you. It's clear you follow these companies and have a soft spot for peyto, as many do. There are a number of you out there that have a soft spot for Peyto, despite all their issues and screw ups, and despite clearly superior companies that are or were available at similar or cheaper prices. peyto has created that loyalty