16:55:09 EDT Wed 17 Jul 2019
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Energy Summary for Jan. 4, 2019

2019-01-04 20:14 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for February delivery added 87 cents to $47.96 on the New York Merc, while Brent for March added $1.11 to $57.06 (all figures in this para U.S.). Western Canadian Select traded at a discount of $12.64 to WTI, up from a discount of $12.81. Natural gas for February added 10 cents to $3.04. The TSX energy index added 4.32 points to close at 144.41.

Alberta gas producer Peyto Exploration & Development Corp. (PEY) added 23 cents to $7.82 on 1.31 million shares. It has closed a $100-million private placement of notes due in 2026, using the proceeds to repay a different $100-million set of notes that matured yesterday. The company continues to have $620-million in notes outstanding. Its next maturity date, affecting $120-million worth of notes, is Dec. 4, 2020.

This is the second year in a row that Peyto has begun with a debt financing. Its latest press release is almost identical to the one that it put out on Jan. 2, 2018, which was also about a $100-million note placement. Investors will have to hope that next week does not bring a repeat of the press release that Peyto put out on Jan. 11, 2018. That day, the company slashed its 2018 budget by about 40 per cent and lowered its monthly dividend to six cents from 11 cents. The new dividend represented a yield of 5.5 per cent at the time, given Peyto's closing price on Jan. 11, 2018, of $13.19. The stock has since fallen to $7.82 and the yield has risen to 9.2 per cent. Naturally, this has raised questions about the possibility of another cut. When Peyto released its preliminary 2019 budget in November, it said it expected cash flow to cover both the budget and the dividend payments, with some money left over for debt repayment. Of course, it said exactly the same thing when it released its preliminary 2018 budget in November, 2017, only to do an about-face three months later.

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