Peyto Exploraton and Development (Symbol - PEY.TO)

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shellybear
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Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

Started a position in this one at 18.75 , and see its dropping again today to touch a new 52 week low. Appears Nat Gas spot prices down again last i looked and this likely the reason for the selling. Peyto however is one of the few in the Nat Gas arena based in Alberta that is actually still turning a profit. They just announced the dividend safe for the next Q at .11 per share, = a yield over 7%.
The Nat gas prices will rise as the cold weather sets in.... many analysts talking contango when it comes to Natural Gas.

Peyto earns $39.95-million in Q2

2017-08-09 14:43 MT - News Release


Mr. Darren Gee reports

PEYTO ANNOUNCES Q2 2017 RESULTS, MAINTAINS INDUSTRY LEADING CASH COSTS

Peyto Exploration & Development Corp. has presented its operating and financial results for the second quarter of the 2017 fiscal year. A 75-per-cent operating margin (1) and a 22-per-cent profit margin (2) in the quarter delivered an annualized 10-per-cent return on equity (ROE) and an 8-per-cent return on capital employed (ROCE). Additional highlights included:

Earnings of 24 cents per share, and dividends of 33 cents per share. Earnings of $40-million were generated in the quarter while dividends of $54-million were paid to shareholders. Dividend payments represented a before-tax payout ratio of 41 per cent of funds from operations (FFO), down from 53 per cent in second quarter 2016. The Company has never incurred a write down or recorded an impairment and this quarter represents Peyto's 50th consecutive quarter of earnings.
Funds from operations of 81 cents per share. Generated $133-million in FFO in second quarter 2017 up 31 per cent from $102-million in second quarter 2016 (29 per cent per share) as 11-per-cent-higher production was combined with 15-per-cent-higher commodity prices. For the first half of 2017, funds from operations were 8 per cent higher than capital expenditures, or $21-million of free cash flow (before dividend payments).
Total cash costs of 85 cents per thousand cubic feet equivalent (or 68 cents per thousand cubic feet equivalent ($4.11 per barrel of oil equivalent) excluding royalties). Industry-leading total cash costs, including 17 cents per thousand cubic feet equivalent in royalties, 24 cents per thousand cubic feet equivalent in operating costs, 18 cents per thousand cubic feet equivalent in transportation, five cents per thousand cubic feet equivalent in general and administrative, and 21 cents per thousand cubic feet equivalent in interest, combined with a realized price of $3.36 per thousand cubic feet equivalent, resulting in a $2.51-per-thousand-cubic-foot-equivalent ($15.04 per boe) cash netback, up 18 per cent from $2.12 per thousand cubic feet equivalent in second quarter 2016.

Peyto is down from 36$ a year ago, ( now at about 18.50) trading like they are going bankrupt, which is far from reality.
Perhaps the street doesnt believe they should continue to pay out the dividends , which are about 1.4 x earnings..
I believe this is a buy zone, and will continue to add in the months ahead.
Last edited by shellybear on 20 Oct 2017 12:45, edited 1 time in total.
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Re: Peyto Exploraton and Development (Symbol - PEY.to)

Post by Peculiar_Investor »

I don't have any specific viewpoint on the company, but do recall an outdated topic from the days when Peyto was structured as a trust,
see Peyto Energy Trust (Symbol-PEY.UN).
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Re: Peyto Exploraton and Development (Symbol - PEY.to)

Post by shellybear »

It appears i havent picked the exact bottom to start a position, but only picked up 500 shares for a starter. Likely will add more at month end , particularly if it looks like it has has bottomed out. I suspect NAT GAS prices will have to jump over 3.50 $ US for PEYTO to pop back up to a reasonable valuation. They are hedged in at profitable pricing for about 70 % of their 2017 production and slightly less for 2018.
I would imagine any pop up would entice them to hedge in again for 2019.... but these managers are patient and prudent , one of the reasons they have remained profitable.
I think this a case where the market throws out the baby with the bathwater.... anything weighted heavily in NAT GAS gets sold off...
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Re: Peyto Exploraton and Development (Symbol - PEY.to)

Post by AltaRed »

This one used to come up quite often on BNN's Market Call with positive commentary by the talking heads, but it's been pretty quiet lately. That is because of the continuing demise of the West Coast LNG projects. My understanding is PEY is one of the lowest cost gas producers in the basin but its 5 year chart suggests the last two peaks and valleys have been coincidental with LNG project euphoria and disappointment.

Both BC and Ottawa have succeeded in perfecting the art of project (and thus GDP) destruction, albeit LNG has always been a fleeting opportunity. LNG opportunities have to be taken advantage of quickly and exited quickly and by the time the projects go through NEB processes, the horse has left the barn. I've seen these ideas come and go a number of times in my career.
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Re: Peyto Exploraton and Development (Symbol - PEY.to)

Post by shellybear »

I suspect you are probably right , but if you overlay Peyto's chart with the NAT GAS price the past 3 years ,you will see a very strong resemblance there as well. The low gas price for Alberta gas is indeed a north american phenomenon, the Eurozone price for Nat Gas around 5.50, nearly double the 2.87 we have here . Being able to ship and transport NG to those markets would and should have been an easy decision here... but we all know the drill here in Canada, if it makes sense and creates jobs, lets throw in some roadblocks, particularly if the $$ to build it are coming from Asia....
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Re: Peyto Exploraton and Development (Symbol - PEY.to)

Post by AltaRed »

Yes, nat gas price and gas companies like PEY have a strong correlation. That's been known for the 40 years I've been in the patch as well. We are just at the long end of the supply chain, i.e. the tip of the tail on a dog, and it can be a very tenuous roller coaster ride.

We can't compete in Europe LNG markets pure and simple because it costs too much to get the gas to eastern seaboard. We have to pick Asia because of pipeline transportation costs and LNG market price there is tied to the price of oil. We've been trying to makke a Pacific LNG project go since the 1980s at least. Every time we are about there due to a long term price uptrend in oil, the oil price crashes and the projects fall apart.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

Peyto is one of the few dividend stocks that i have in my portfolio that is in the red.... Nat gas prices struggling to break 3$US here in NA.
Seems the analysts for the most part are very down on the sector, and this means selling off even the profitable NAT GAS plays , such as Peyto.
Winter coming tho and lets hope NAT GAs prices get a bump here.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by deaddog »

My 2 cents;

Technically the stock is in a down trend. And worse it is in a down trend while the rest of the market is in an uptrend.

The dividend is probably holding the price up but it is more than the earnings.
What would happen if PEY was ever to reduce or cut the dividend.
Bottom fishing can be very lucrative or it can tie up your capital for a long time.
Part of your trading plan should include what you will do if the stock doesn't preform as you hoped.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

Yes , for sure . Only started with a 500 share buy first time around at 18.75 , so down a bit more than what the dividend will pay. Will keep an eye on the market for nat gas... and see where this goes. Bottom fishing has been profitable for me.. picked up AIMIA, after the Air Canada announcement, and bought 7000 shares at 1.65 average. Sold them not long after for 2.25 , bought the preferreds and sold those for a profit as well.
Another bottom fish buy was TECK about a year and a half ago... didnt catch the exact bottom, but did manage to sell for a double in about 6 months. And of course didnt hold it for the continued run up to 34$.
Anyways , the point is many of these get oversold because of generally bad sentiment , despite a good business and profits.
Patience is the key.....Teck continued down after my first 2 buys , but bottomed not long after and turned north bigtime...
Will wait a few months before adding to Peyto, ... the dividend has been announced for this Q, so 3 to come and winter will arrive right on schedule.
LOL
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by deaddog »

AIM was my worst trade this year. Bought on a breakout over 8.50 just before the dive. Got out the day after at 3.60. :(

Can't win them all.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

You werent alone on the Aim trade i can assure you. There was some heavy dumping especially after they suspended divvies...
I decided to grab some under 2$ and traded it a few times on the big volumes.
But i guess this is the Peyto thread and here's to bottom fishing... :beer: :beer: :beer:
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

Looks like some stoplosses got taken out today..... hopefully this is getting close to bottom. Will perhaps be adding next month.... lets see where NAT GAs is trading....
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by deaddog »

What make you think stop losses were hit?

The only thing you can know for sure is as the day went on any one who wanted to sell had to keep dropping their price to find a buyer.
14% of the volume moved in the last hour and price remained stable. That might mean that sellers were able to find buyers or it could be the day traders who were short were covering.

5yr low. Lots of overhead resistance. Unless you get a V bottom you could tie up your capital for a while.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

Just had that look to me as i watched the trading intraday... altho there was selling off today in resource related stocks . I also had Sherritt on my watch list, and they dropped over 8.7 % today, altho they had been on a tear of late. Peyto selloff did not seem to be part of a bigger general move down in all Nat Gas stocks, as most were only down slightly on my watchlists.
PONY was another gassy play taking a beating today down 4.24%.
Tourmaline only down .75%,
Birchcliff about the same, down .04 , or about .79%
Epsilon actually up on the day.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

NAT GAS price has bounced back over 3$, for the time being. Perhaps in the spring it drops again, however with colder weather looming , more nat gas customers than ever in NA, i think NAT GAS could climb to 4$ at its peak this winter. Peyto has had a nice bounce off the bottom, but still not back to my initial buy. Had a target of 16.75 to make a 2nd buy in , and was hoping for mid november , but doesnt appear my guess will come to happen.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

Up to 19.14 now and well above my buyin. Only wishing i had added more at the bottom here. Cold weather bringing out the buyers...
NAT GAS holding up above the 3$ US range. Pipeline issues in Northern Alberta improving and so is the direction of Peyto's stock.
Still thinking there may be some downside coming with tax -loss selling, but moved my sell up to 20 $ range.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

I thought Q report was good. And they sensibly are cutting back on capex ......
Peyto earns $44.81-million in Q3



2017-11-08 14:53 MT - News Release


Mr. Darren Gee reports

PEYTO ANNOUNCES Q3 2017 RESULTS, EARNINGS PER SHARE UP 93%

Peyto Exploration & Development Corp. has presented its operating and financial results for the third quarter of the 2017 fiscal year. A 76% operating margin (1) and a 25% profit margin (2) in the quarter delivered an annualized 10% return on equity (ROE) and 8% return on capital employed (ROCE). Additional highlights included:

Earnings of $0.27/share, dividends of $0.33/share. Earnings of $45 million were generated in the quarter bringing year-to-date earnings to $125 million. Earnings per share of $0.27 were up 93% from the $0.14 in Q3 2016. The Company has never incurred a write down or recorded an impairment in its 19 year history and this quarter represents Peyto's 51st consecutive quarter of earnings which is the best evidence shareholder's capital has been invested profitably.

Funds from operations of $0.85/share. Generated $139 million in FFO in Q3 2017 up from $128 million in Q3 2016 (up 9%/share). Year to date in 2017, funds from operations have totaled $412 million while capital expenditures have totaled $387.

Total cash costs of $0.76/Mcfe (or $0.67/Mcfe ($4.03/boe) excluding royalties). Industry leading total cash costs, including $0.09/Mcfe royalties, $0.26/Mcfe operating costs, $0.17/Mcfe transportation, $0.03/Mcfe G&A and $0.21/Mcfe interest, combined with a realized price of $3.24/Mcfe, resulting in a $2.48/Mcfe ($14.85/boe) cash netback, or a 76% operating margin.

Capital investment of $135 million. A total of 44 gross wells (42.5 net) were drilled in the third quarter, 37 gross wells (35.0 net) were completed, and 42 gross wells (39.5 net) brought on production. Over the last 12 months the 138 gross (128 net) new wells brought on production accounted for 42,000 boe/d at the end of the quarter, which when combined with a trailing twelve month capital investment of $517 million, equates to an annualized capital efficiency of $12,300/boe/d.

Production per share up 6%. Third quarter 2017 production of 612 MMcfe/d (101,951 boe/d) was up 6% (also 6% per share) from Q3 2016. Peyto elected to temporarily shut in production during periods of low gas prices in the quarter, which deferred approximately 3,500 boe/d of production from the quarter.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

Well apparently the market didnt like the report and PEYTO dropping hard. Got stopped out and broke even on this.... Will revisit this if Nat GAs prices make a big bounce up...
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by hboy43 »

shellybear wrote: 09 Nov 2017 09:47 Well apparently the market didnt like the report and PEYTO dropping hard. Got stopped out and broke even on this.... Will revisit this if Nat GAs prices make a big bounce up...
-2.5% is "dropping hard"? You paid a buy and sell commission to watch this bobble around up and down a few percentage points? I think you need to recalibrate your understanding of equity investments.

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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

Was down about 4.5 % , 30 minutes into the day and setting stops protects you against these big drops, and preserved a profit.
I can buy back now if i choose and make about 300 $ on the trade. But i am on the sidelines for now....nat gas plays in Northern Alberta are not in the buyzone just yet , But jmho
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by deaddog »

hboy43 wrote: 09 Nov 2017 10:29
-2.5% is "dropping hard"? You paid a buy and sell commission to watch this bobble around up and down a few percentage points? I think you need to recalibrate your understanding of equity investments.

Hboy54
Investing and trading are two different animals.

The way to prevent a big loss is to take small losses. If a stock doesn't perform how you expect it to then take your loss and wait for another opportunity.

Commissions today are negligible.

Cut your losses and let your winners run.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

Peyto touching new 52 week lows,, yield now well over 8 %....
Taxloss selling i would think affecting it here.... market doesnt seem to be happy that they are not interested in lowering their dividend payout.
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by shellybear »

Well thought i would revisit this one, as it has continued to tank, i would imagine tax loss selling herd and shortsellers probably getting close to done .
I do not think there is much more downside til the bottom is reached.
PEY is hedged in at a profitable rate for much of 2018, but after that we may see dividend cuts if the NAT GAS price continues to stagnate. But others in the space will have more pain than PEY going forward, if that comes to pass.
I think worthy of a small gamble here in the next few weeks.... attractive dividend to collect while we wait for a rebound in the stock price.
SHORT position now over 3%...
Short Positions for PEY
Symbol Report Date Volume Change Shares Issued % Float
T : PEY 2017-11-30 5,083,597 829,524 164,874,175 3.08
T : PEY 2017-11-15 4,254,073 240,242 164,874,175 2.58
T : PEY 2017-10-31 4,013,831 215,530 164,874,175 2.43
T : PEY 2017-10-15 3,798,301 109,994 164,874,175 2.30
T : PEY 2017-09-30 3,688,307 -98,860 164,874,175 2.24
T : PEY 2017-09-15 3,787,167 691,009 164,874,175 2.30
T : PEY 2017-08-31 3,096,158 349,101 164,874,175 1.88
T : PEY 2017-08-15 2,747,057 -36,846 164,874,175 1.67
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Re: Peyto Exploraton and Development (Symbol - PEY.TO)

Post by snowbound »

Not much comment on this stock, but it has dropped quite a bit in the last few days and I can't find a good reason for it. I'm not very experienced but it seems pretty solid with a +8% dividend, earnings per share well over dividends per share, and a book price well over the stock price. I added today at $8.40. Gas price seems pretty good compared to the last year or two and the potential NGL terminal is in the future. Am I missing something with this stock?
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