Q: I hold both Peyto and Arc Res. I feel it would be prudent to only hold one of these. Peyto yields 10.2% vs. Arc at 3.3%, Pey more oil, Arc primarily gas, PE ratios are nearly identical at 6.8. LTD levels are similar considering the size of the companies.
I also hold PXT which I could sell and invest the money in these 2 names. Any thoughts? Thanks
I also hold PXT which I could sell and invest the money in these 2 names. Any thoughts? Thanks
5i Research Answer:
Versus PXT, PEY is very much more gas than oil. We like all three, so it becomes a question of growth potential vs income, and what split of gas/oil an investor is targetting. PXT has some political risk, but considering its valuation, balance sheet, dividend and recent buybacks, we would not swap it for the others. Of the other two, ARX today looks a bit better to us, with a bit more potential long term (vs higher income now) and a more-balanced mix of production. Of note, ARX is now 63% gas and PEY is 89% gas.