Author Topic: PEY.TO - Peyto Exploration & Development  (Read 4624 times)

ABM

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PEY.TO - Peyto Exploration & Development
« on: August 30, 2015, 10:31:16 AM »
I learned about this company from this blog which provides great observations on the MLP complex, btw. 

https://medium.com/@hedgeyeenergy/pey-comment-on-counter-cyclical-e-p-investing-ac7abae14463


Management writes monthly shareholder letters that read like value porn. 

http://srv-web.peyto.com/PMR.aspx

It looks like over the past 10 years they have outperformed the TSE by a hair on a total return basis and I was just wondering what people may be thinking about picking up a higher quality E&P in this downdraft. 

Dings on the stock are the DRIP which drives constant dilution, no buybacks, and low insider ownership.  While pluses include outsider type language used by management, somewhat conservative capital structure, and apparent low cost producer (though unverified from my seat). 


influx

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Re: PEY.TO - Peyto Exploration & Development
« Reply #1 on: September 17, 2015, 11:59:26 PM »
Don sold nearly ~$20M of PEY.to shares..
Where is he going to allocate? :)

notorious546

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Re: PEY.TO - Peyto Exploration & Development
« Reply #2 on: October 15, 2015, 07:13:01 AM »
Don sold nearly ~$20M of PEY.to shares..
Where is he going to allocate? :)

when did he sell?

influx

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Re: PEY.TO - Peyto Exploration & Development
« Reply #3 on: October 15, 2015, 11:41:44 PM »
https://www.canadianinsider.com/company?ticker=pey
Sep 15th - Oct 7th
931419 shares
Make it C$29 each, though I think the average is more..
~ C$30 million

influx

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Re: PEY.TO - Peyto Exploration & Development
« Reply #4 on: November 17, 2015, 12:02:59 AM »
https://www.canadianinsider.com/company?ticker=pey
Sep 15th - Oct 7th
931419 shares
Make it C$29 each, though I think the average is more..
~ C$30 million

Another ~C$5M ..
I am mentioning this because it is interesting to follow his thought process which is reflected in his actions.

wellmont

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Re: PEY.TO - Peyto Exploration & Development
« Reply #5 on: December 09, 2015, 10:16:36 AM »
https://www.canadianinsider.com/company?ticker=pey
Sep 15th - Oct 7th
931419 shares
Make it C$29 each, though I think the average is more..
~ C$30 million

Another ~C$5M ..
I am mentioning this because it is interesting to follow his thought process which is reflected in his actions.

Filing
Date   Transaction
Date Insider Name   Ownership
Type Securities Nature of transaction   Volume or Value Price Dec 3/15   Dec 3/15 Gray, Don   Direct Ownership Common Shares 10 - Disposition in the public market   -118,000 $26.49
Dec 2/15   Dec 1/15 Gray, Don   Direct Ownership Common Shares 10 - Disposition in the public market   -120,600 $27.72
Dec 1/15   Nov 30/15 Gray, Don   Direct Ownership Common Shares  Amended Filing 10 - Disposition in the public market   -79,400 $27.27
Nov 19/15   Nov 19/15 Gray, Don   Direct Ownership Common Shares 10 - Disposition in the public market   -91,300 $27.04
Nov 19/15   Nov 18/15 Gray, Don   Direct Ownership Common Shares 10 - Disposition in the public market   -108,700 $27.47
Nov 17/15   Nov 17/15 Gray, Don   Direct Ownership Common Shares 10 - Disposition in the public market   -50,100 $27.82
Nov 16/15   Nov 16/15 Gray, Don   Direct Ownership Common Shares 10 - Disposition in the public market   -178,100 $28.61 - See more at: https://www.canadianinsider.com/company?ticker=pey#sthash.JhYmymJj.dpuf

thought process is simple. sell at over 2x book. buy at under book.

Wilson-TPC

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Re: PEY.TO - Peyto Exploration & Development
« Reply #6 on: December 09, 2015, 05:39:58 PM »
Don Gray bought 533k shares of GXE.TO.

And Ingram just bought more today.

http://www.gearenergy.com/insider-holdings
No Pain. No Gain.

oec2000

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Re: PEY.TO - Peyto Exploration & Development
« Reply #7 on: December 06, 2017, 09:59:00 AM »
It's been a really long time since my last post. Drifted away from following the forum after the content started to move away from what used to be a more tightly focused value orientation. Not meant as a criticism but just found that it was too time consuming to sift though posts to find interesting gems because I was busy with other stuff. (This is still the best investment forum that I know. :) Thanks, Sanjeev!)

Case in point - Peyto.

I've been following the collapse in Peyto's price and taking advantage of it to buy a very well managed business at a reasonable (arguably, a cheap) price. This is one situation I thought would spark off a lively discussion on CoBF. A quick search showed that I was wrong - being able only to find this thread which was started to discuss Peyto but which ended up being hijacked by GXE.TO.
 
This provided sufficient impetus for me to end my hiatus on CoBF. :D

So, despite the plunge in AECO gas prices, PEY remains profitable and appears to be in good shape heading into 2018. Mr Market thinks that PEY's dividend is at risk and that their debt load is too heavy. Is Mr Market right, or is this a great buying opportunity?

I believe this is a rare opportunity to buy PEY at a good price. The two key risks are that they have to trim the dividend and/or reduce capex to reduce debt (and thus cause a decline in production). In his recent PMR's, Darren Gee has discussed the options they have to deal with these issues and it is by no means a certainty they will have to resort to cutting divs or capex. The risks do get higher if gas prices stay low into 2019.

But, even if the cuts occur, they result in a temporary valuation loss for investors, not a permanent loss. The cure for low gas prices is low gas prices and PEY with its super low cost structure will survive the downturn and benefit from the subsequent recovery in gas prices. Meanwhile, investors will get paid with attractive dividends (even if cut) while waiting. What's not to like?

Contrary views, please.


 

StevieV

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Re: PEY.TO - Peyto Exploration & Development
« Reply #8 on: December 06, 2017, 10:22:45 AM »
Quote
I believe this is a rare opportunity to buy PEY at a good price. The two key risks are that they have to trim the dividend and/or reduce capex to reduce debt (and thus cause a decline in production). In his recent PMR's, Darren Gee has discussed the options they have to deal with these issues and it is by no means a certainty they will have to resort to cutting divs or capex. The risks do get higher if gas prices stay low into 2019.

But, even if the cuts occur, they result in a temporary valuation loss for investors, not a permanent loss. The cure for low gas prices is low gas prices and PEY with its super low cost structure will survive the downturn and benefit from the subsequent recovery in gas prices. Meanwhile, investors will get paid with attractive dividends (even if cut) while waiting. What's not to like?

I initiated a small long position in Peyto a couple weeks ago.

I think the risk is that Canadian natural gas is simply not a good business for an extended period of time.  It hasn't been for a while and I think that can continue.  First, there is a lot of natural gas in North America and it is relatively quick to bring it online.  Secondly, Canada has not been friendly to the infrastructure needed to bring the Canadian gas to market.  Also, there can be competition from liquids-rich producers.  So, even if you are the cheapest dry gas producer, you can be undercut by producers who make money on the liquids.  I think Peyto is a good name in the space, but the space itself may be in the garbage pile.

Of course, all that being said, I started a small position.  Why?  As you point out, the company is not in financial distress.  With some improved pricing and optimism, I think that Peyto can double from recent prices.  If it hits $30 USD in the next 3 years, then that is a great return.  The sooner it does, the better the CAGR.

It could certainly take a significant hit on the downside in the shorter or medium term, but I don't expect them to go out of business.

Uccmal

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Re: PEY.TO - Peyto Exploration & Development
« Reply #9 on: December 07, 2017, 07:24:27 AM »
Hi oec2000, nice to see you back.

I think Cdn. Nat. gas, at the moment, is a crappy industry.  I am unsure is it ever gets better in the near term.  This is despite the continuous building of nat. gas plants and conversion of Coal to nat. gas projects (See Tampa Electric for an example). 

Right now many operators in Western Canada treat gas as a toss off. 

It always seems like there is more supply than demand, no matter how much demnd increases.  It is pure speculation whether this ever ends at least in our time horizons. 

I have no opinion on Peyto, except to say that when yields get that high there is almost always a dividend cut coming.  Management gains nothing by punishing the balance sheet in the face of adversity.  I have had this lesson repeated to me several times. 
GARP tending toward value