PEYTO EXPLORATION AND DEVELOPMENT
Over the past five years, the last commodity that you would want to be a producer of in North America was natural gas. The flood of natural gas from shale wells has resulted in prices so low that drilling natural gas wells has been an excellent way to destroy shareholder value for almost every company. Apparently, Darren Gee and his colleagues at Peyto Exploration didn’t get the memo.
Since 2010, while natural gas producers have floundered, Peyto has grown its production fivefold from 20,000 boe/d to more than 100,000 boe/d. More importantly, it has done so profitably. While every oil and gas producer aims to be the lowest cost, most profitable producer in the business, Peyto actually achieves it. From 1998 through the end of 2015, Peyto wasn’t just the best performing energy stock on the TSX, it was the best performing stock, period.
Gee and Peyto have resisted the urge to chase opportunities in different plays and have instead stayed focus on the tremendous assets the company has. Peyto’s assets are in the best part of the Deep Basin. On each section of land, Peyto has up to 80 billion cubic feet of resource through stacked formations (Wilrich, Fahler, Notikewin, Cardium, Bluesky). By using horizontal drilling and pad efficiencies, Peyto can get a lot of gas out on less invested capital. The result is incredible economics.
Peyto has only 51 employees and controls all of its own infrastructure. The combination of these factors allows Peyto to generate a positive investment return drilling wells at lower natural gas prices than its competitors. In fact, low natural gas prices help Peyto in that they lower service costs. At higher gas prices, Peyto can mint money. That makes it hard for this company to lose.
PEYTO CEO DARREN GEE