Q: In your December 6th reply to Lina about Peyto Exploration (PEY), you wrote the following:"It is clearly one of the better names out there, in our view. It is susceptible to weak gas prices, but we think it still has some decent potential."
It's Peyto's susceptibility to gas prices that has me concerned. Right now, because of the unusually frigid temperatures in North American, the price of natural gas is higher than it's been in years, and Peyto is benefiting from it. But it won't be long before warmer weather returns and Peyto will start to pull back. Adding downward pressure on its stock price will likely be the arrival of other producers who shut down their operations a few years ago and are now ready to return to the market place given the higher natural gas prices. If Peyto is sensitive to natural gas prices, which in turn is tied to the prevailing temperatures and the quantity being produced, would now be the time to lock in my profits?
It's Peyto's susceptibility to gas prices that has me concerned. Right now, because of the unusually frigid temperatures in North American, the price of natural gas is higher than it's been in years, and Peyto is benefiting from it. But it won't be long before warmer weather returns and Peyto will start to pull back. Adding downward pressure on its stock price will likely be the arrival of other producers who shut down their operations a few years ago and are now ready to return to the market place given the higher natural gas prices. If Peyto is sensitive to natural gas prices, which in turn is tied to the prevailing temperatures and the quantity being produced, would now be the time to lock in my profits?
