Peyto Exploration forms trust with a twist

Petroleum News Staff

Peyto Exploration & Development has joined the stampede to the income trust fold in Canada, but has broken with tradition in the process. Peyto, which has a market-cap of C$600 million and produces 14,000 barrels of oil equivalent per day from its core west-central Alberta properties, said only 50 percent of its cash flow will be distributed to unit holders. The balance will go back into exploration and development drilling, compared with the 5 to 10 percent reinvested by most trusts. Peyto chief executive officer Don Gray said the conversion will save his company about C$38 million in taxes this year.