Peyto Exploration & Development Corp T.PEY

NG NEWS

[wreckhouse]

• The EIA expects the Henry Hub benchmark price to average $4.90 per MMBtu this year.  BCRNW

[malx1]

That's good news for the Peyto gang 

[houbahop]

$4.90??? How about $3.00? https://www.naturalgasintel.com/eia-slashes-2023-henry-hub-forecast-as-supply-growth-seen-outpacing-demand/?v=DG_PopPosts The “significantly warmer-than-normal” weather in January depressed space heating demand and padded storage inventories, EIA said in its latest Short-Term Energy Outlook (STEO), published Tuesday.  The latest STEO modeled an average Henry

[wreckhouse]

, EIA said in its latest Short-Term Energy Outlook (STEO), published Tuesday.  The report I posted was from Friday !  Come next week it will change just like the weather and they will have a new set of numbers . We are very lucky that MSN isn't doing the reporting because they would give you the price of coal from the 80's .  EIA 's had 2 report's with

[Quintessential1]

It might be a self correcting problem as US NG rig counts are down 5% this week.   "US Natural Gas Rig Count is at a current level of 150.00, down from 158.00 last week and up from 116.00 one year ago. This is a change of -5.06% from last week and 29.31% from one year ago." https://ycharts.com/indicators/us_gas_rotary_rigs#:~:text=US%20Natural%20Gas%20Rig%20Count%20is%20at

[stockmarket1]

That's great news! This should propell the share price back to its recetn highs I would think. Take advantage of these cheaper share prices and I believe Peyto's share price has been over sold. 

[Quintessential1]

I don't know about that but I think NG should fnd a decent balance between supply and demand (as a free market should) and provide low cost producers with decent returns.  Just want to note that low cost, low debt producers should fare even better. Now add to that this little weather breaking news and maybe the end of winter won't be the riviera of the north that most were expecting.

[Quintessential1]

I should probably start a new thread but the header here just fits the subject so nicely. "Natural Gas: Fasten Your Seat Belts The buffers that keep America’s natural-gas price fluctuations at bay are eroding" https://www.wsj.com/articles/natural-gas-fasten-your-seat-belts-5c0fcdf4 WSJ either making or breaking the case for hedging and smoothing out price fluctuations? I didn

[wreckhouse]

Investing.com -- The selloff in natural gas paused Friday, with the market posting its first weekly gain in eight, as bears in the market reassessed their positions after taking the heating fuel to 2-½ year lows in the previous session. I should probably start a new thread but the header here just fits the subject so nicely. "Natural Gas: Fasten Your Seat Belts The buffers that

[TerribleEng]

Hedging waters down the stabilizing price signals that the market gives. Let's take the case where the industry as a whole is highly hedged. When prices fall because the market is well supplied, funds from cashflow allow producers to maintain or increase production as if the move never happened. When prices rise because the market is in need of new production, no one has money to increase

[malx1]

Or hedging provides stability and certainty of cash flow for varying commodities producers.     Any co's with large capex commitments or other material future expenditures can benefit from hedging programmes.    

[TerribleEng]

Your missing the takeaway. If everyone wants to hedge... not one can hedge. The market relies on people speculating and closing demand gaps and surpluses.  Otherwise the spot price would go to zero and spike to absurd levels. The volatility is a product of hedging and lack of storage that other commodities don't face like metals and to a lesser extent oil. 

[malx1]

If you were a producer of a crop or commodity in any serious volume, you'd understand.      Better to keep your people paid and bankers away when you have certainty of cash flow.    

[sportstermathew]

Re the JOnes ACT article I was able to get it up under INCOGNITO, right click on it, open in INCOGNITO and then refresh and stop X quickly, after a couple of tries I was able to get the article to load. This is how I get a lot of Globe or New York Times articles. Sometimes it works others some times don't. Basically the US does everything under the guise of FREE TRade but then does

[Ozhoks]

Catch 22. But I like the way it creates trading opportunities time to time.  The question is, how to establish a stable growing income stream for shareholders in this environment. And it looks like Peyto's "highly hedged low cost producer" motto is not a sufficient answer. Something more is needed for that. I wonder if any other company in the sector found out that. 

[Yasch22]

This post has been removed in accordance with Community Policy

[Quintessential1]

So as an individual strategy the hedge attempts to even out a company's price exposure to fluctuations in the market price all the while on a macro basis it actually causes the very price volatility it seeks to avoid when many companies adopt the same strategy? One would have to assume that if there were no hedging (say the options did not exist) that the price volatility in the market would

[TerribleEng]

Yeah it can't be proven other than in simulation. There are markets that come close (ETF creation redemption). In general as the penetration of market hedging increases, it makes moves to the downside and upside more violent with a greater percentage of bankruptcies or adverse events (windfall taxes). In a perfectly competitive market where management was quick to evaluate capital decisions

[Quintessential1]

Well I will defer to greater minds than mine.  I am just happy to have grasped the concept and that it could be completely theoretical. I will also use a line to thank you for you thoughtful response and explanation. It is most appreciated I will also use this post to comment on and thank Yasch for his article as it seems the companies that believe in hedging are very busy trying to build a

[wreckhouse]

Some U.S. natural gas producers that didn't hedge their output this year are having to sell their gas at prices that are below their breakeven price. At less than $2.50 per million British thermal units, natural gas prices have fallen more than threefold over the last six months with no immediate prospect of a reversal. And supply is about to tighten. After reading your post and

[Yasch22]

This post has been removed in accordance with Community Policy

[Yasch22]

This post has been removed in accordance with Community Policy

[TerribleEng]

Well this answer depends if you want your company speculating on the market.  If you believe that Peyto did the right thing by missing out on over $1B in profit due to hedges and now they are in the money...then yes you should sell out.  A hedge is a side bet. It has nothing to do with production and Peyto reports it as such. Producers should be lowering production if you are selling

[malx1]

The fact is that shareholders complain all the time. When hedges work, the company should have hedged more. When hedges didn't work, the company should never have used them. Goes back to original discussion, if shareholders don't like the hedging strategy, they are free to exit their holdings and buy a diff company. Nobody here can guess with any certainty what the price of NG will

[houbahop]

"Hedging is prudent if done correctly." Well, there you go... The problem is their hedging program should be improved. It is not a matter of heging or not hedging, its simply not working properly. Some more brain should be put to work to make it smarter. Bad basis deals Too much AECO exposure Too much % production hedged at low levels. Too much capex at wrong times Those were/are

[TerribleEng]

I have been pretty consistent on this topic.  Shareholders should go to the Keg when the companies operations are making money. They should be eating McDonalds when times are tough. You also shouldn't be investing in production when the physical gas you are selling to the market at a loss.  Unfortunately, Peyto is unique in that it is the lowest cost producer, that communicates

[sportstermathew]

I believe debt will eventually go down, and will continue to do so each and every quarter, even if say 50 million or less it still is shrinking and over time will be under $500 million. Will they go to zero?  it all depends upon whether they have huge profits above and beyond what they want to spend on capex and new plants, pipes etc. I have not been paying much attention lately as prices

[malx1]

Systematic debt reduction and discussion of debt targets would be beneficial for Long Term shareholders.   Back to the hedging, even if PEY had zero debt, I'd guess they would continue to build out hedge book to ensure cash flow for capex and maybe the dividend.     I still think this dividend rate is too high.     We should all be aware that it can be

[Quintessential1]

Yeah I rather enjoyed loonietunes repostings of Stockwatch Energy and tried to like the posting everytime I pilfered it (LOL)  and supply him with the credit (blame).  Alas he is not reposting it in 2023 and I am wondering if he is tired of it, asked not to, or if the article itself has stopped being published. It was an interesting article on hedging and I am still not sure if CVE did

[TerribleEng]

Thanks for the link Yasch. That was a good read.