Peyto Exploration & Development Corp T.PEY

cibc analyst - model update : Light Production In December

[perplexed01]

Neutral

PEY-TSX, Sector: Energy Current Price (1/3/23): C$12.48 Price Target (12-18 mos.): C$17.00 Previous: C$18.00

Our Conclusion

Peyto’s monthly President’s Report indicated that Q4/22 production will come in lighter than Street estimates due to extreme cold weather in December that hampered drilling and completion activities. Capital spending for October and November was also running ahead of our estimate and Street, and while we expect December spending to be light, we see consensus spending estimates rising on the back of this update. We have also adjusted our marketing assumptions for Q4/22 and beyond with Peyto’s recent marketing disclosure. We expect the production miss to be taken as a slight negative for the stock, and with the recent move in natural gas pricing we have lowered our price target to $17, which represents a target 2023E EV/DACF on strip of 4.3x versus peers at 5.4x. Peyto is currently trading in line with peers at 3.4x 2023E EV/DACF on strip.

Key Points

Extreme cold impacts December volumes, moving fourth quarter production lower. Production of ~106.5 MBoe/d is in line with our previous estimate of 106.7 MBoe/d and below Street at 108.7 MBoe/d while capital spending during October and November totaled $89MM versus our prior estimate for the full quarter of $89MM and Street at $92MM. With this update, we are assuming a lighter spend in December due to crew downtime and increasing our spending estimate for the quarter to $109MM.

[brewster123]

Dividend in excess of 10% should hopefully support the share price.

[wreckhouse]

1/  Nobody got injured during the Chritmass break ! = 2/  .11 cent divi starting Feb/15 ! = 3/  Demand from Cascade year end ! =  If these are my biggest problems today !  Man  I  am good shape !  BCRNW

[stockmarket1]

Peyto, imho, is ( below $12 ) in way oversold territory. Gotten ridiculous now. Huge buy!