Michael, I post on a blog titled Energy Investing on the Investorvillage dot com website. When I post info from you I always attribute it to you as well. One question about Peyto was
(Balance sheets matter, not sure why he disregards this possibility.)
"Scotia iTrade is calling for Peyto (PEY.TO) to reach CDN$23 a share within a year and notes the company’s capital program and dividends are covered by the portion of production protected by Peyto’s hedge book, so risk of a dividend cut or a compromise to its capital program won’t happen this year
Peyto took on a bunch of debt with the Repsol acquisition. I would not rule out a dividend cut to a more reasonable level, 7-8% so that they can pay some of that debt off. He failed to mention that possibility, mgmt won't tell you until it happens. Their debt ratio is now much higher than they were with Debt/Ebidta at 1.5x, gotta think they want to work that down. Their dividend bounces all over the place historically so it's not like they don't have a history of adjusting their dividend. Balance sheets matter, not sure why he disregards this possibility.
I don't see the debt a problematic Scott. It is falling fast enough without cutting the dividend and I project fall below CDN$400 million by year end 2025 and gone completely by the end of 2026 at current natural gas prices and with the current hedge book. We wil see, of course.
I have a smallish position but 1 resolution is to reduce my number of positions. There are a number of gas plays, CR, PEY and BIR I put in a similar boat. I’ve owned them all, but now only CR and PEY. My big gas positions are TOU and TPZ, I’ll likely give PEY another look, divs are nice.
The big catalysts for Alberta gas are the pipeline and 3 NGas electric plants coming on line this year in Alberta. SU might slip into 2025, but I’m hoping the ceo gets out his ass kicking shoes:).
Dear Dr. Blair, thank for another great article.
As of 2024, I think, you are right. Peyto should be ok due to hedges.
Further years are a big question, as Natgas can get under continuous market pressure.
FYI New PEY presentation, showing Cascade drawing in Q1, with 100% starting Q2
https://www.peyto.com/Files/Presentations/2024/CorpPresJan2024.pdf
see page 26
Michael, I post on a blog titled Energy Investing on the Investorvillage dot com website. When I post info from you I always attribute it to you as well. One question about Peyto was
(Balance sheets matter, not sure why he disregards this possibility.)
"Scotia iTrade is calling for Peyto (PEY.TO) to reach CDN$23 a share within a year and notes the company’s capital program and dividends are covered by the portion of production protected by Peyto’s hedge book, so risk of a dividend cut or a compromise to its capital program won’t happen this year
Peyto took on a bunch of debt with the Repsol acquisition. I would not rule out a dividend cut to a more reasonable level, 7-8% so that they can pay some of that debt off. He failed to mention that possibility, mgmt won't tell you until it happens. Their debt ratio is now much higher than they were with Debt/Ebidta at 1.5x, gotta think they want to work that down. Their dividend bounces all over the place historically so it's not like they don't have a history of adjusting their dividend. Balance sheets matter, not sure why he disregards this possibility.
I don't see the debt a problematic Scott. It is falling fast enough without cutting the dividend and I project fall below CDN$400 million by year end 2025 and gone completely by the end of 2026 at current natural gas prices and with the current hedge book. We wil see, of course.
I have a smallish position but 1 resolution is to reduce my number of positions. There are a number of gas plays, CR, PEY and BIR I put in a similar boat. I’ve owned them all, but now only CR and PEY. My big gas positions are TOU and TPZ, I’ll likely give PEY another look, divs are nice.
The big catalysts for Alberta gas are the pipeline and 3 NGas electric plants coming on line this year in Alberta. SU might slip into 2025, but I’m hoping the ceo gets out his ass kicking shoes:).
one of my biggest holding!