December 14, 2018

Peyto Exploration & Development Corp (PEY)

 

 

Peyto Exploration & Development Corp (PEY) is a mid-sized Canadian natural gas exploration company.  They specialize in unconventional natural gas reserves centered around Alberta’s Deep Basin.  They claim that their industry-leading cost structure and focus on profitability make them unique within the energy industry.  The company converted from an energy trust to the current corporation model going into 2011 just like many of the other oil and gas energy trusts that dominated the sector, because of the new Canadian tax laws.  The vast majority of Peyto’s natural gas properties and associated pipelines are located right next to the Rocky Mountains.

 

Peyto (PEY) was first created in 1998 by Rick “Buck” Braund and Don Gray.  In 2000 the company built their first natural gas facility at the Sundance Field (initial capacity was 10 million cubic feet per day).  Like many Canadian energy producers, Peyto converted to an energy trust in 2003 in order to take advantage of Canada’s tax laws.  In 2004 the company surpassed the 20,000 boe/d mark, and processing capacity reached 100 million cubic feet per day.  The company began to form its current leadership structure in 2006 when they hired Daren Gee as President and CEO, while in 2008 Don Gray stepped into the role of Chairman of the Board of Directors.  In 2010 Peyto (PEY) was proud to announce that overall distributions hit $1 billion, and production escalated to 30,000 boe/d, and a processing capacity exceeded 245 mmcf/d.

 

Peyto (PEY) recently raised $100 million worth of capital by selling 4,260,000 shares of the company (at $23.50 per share).  BMO Capital Markets took care of the underwriting responsibilities.  Company management has stated that the new funds will primarily be used to strengthen Peyto’s balance sheet by lowering their debt ratio, and the balance will fund on-going capital expenditures.  The final closing of the stock sell off occurred on Dec. 16, 2011.

 

Shares of Peyto (PEY) are currently trading around $25.50.  This price is near the top of its 52-week trading range, with a high of $26.33 and a low of $17.83.  The company is currently paying a dividend of 72 cents a year, which gives it a dividend yield of 2.9%.  The future of the entire natural gas sector is so hard to predict right now.  I don’t like this price point for Peyto.  It’s Price-to-Earnings ratio is 24.74, which is way too high for my liking in an industry that is looking pretty battered.  It’s balance sheet isn’t great, and the dividend is not competitive with many of the other Canadian energy options.  I’d stay away from this natural gas exploration and production company for the time being.

 

Peyto (PEY) Technical Analysis:

PEY trend analysis

PEY is trading on a major down trend, CLICK HERE to get your free trend analysis on PEY

 

Peyto (PEY) Stock Graph:

TSE PEY

Peyto (PEY) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PEYPeyto Exploration & Development Corp19.823.63143.850.1455887-4.364751-16.66667