Hey there. I actually answered a question on Peyto not too long ago. My opinion hasn't changed. Here is my answer from the other question:
The company certainly wouldn't be my first go-to if I was simply looking for oil and gas exposure.
The company has stated that it plans to target the low end of its capital expenditure guidance in an effort to reduce debt levels, maintain the dividend, and finance current operations. It said it is intentionally doing this, expecting natural gas prices to pick back up in the back half of the year and in the event that happens it can ramp up spending again.
On a trailing twelve month basis, the company has earned around $1.96. Analysts expect the company to close out 2023 with earnings in the $1.60 range. As of right now the company pays a $1.32 dividend. So although the dividend still looks to be safe from an earnings standpoint, payout ratios are getting tight, especially from an FFO basis.
The issue here is when we look to the dividend from a funds from operation basis, the company is pretty much paying out all of its FFO towards the dividend and capital expenditures. In fact, FFO payout ratios come in at 99% through the first six months of the year.
To be honest, I'm puzzled here as to why management would increase the dividend by 120% in January of 2023, only for the company to be sitting on FFO payout ratios of nearly 100% just 7-8 months later.
The balance sheet seems solid, but it could quickly deteriorate if natural gas pricing doesn't recover.