Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Shareholder Meeting (May 2018)
44 slides from Peyto Exploration & Development's shareholder meeting presentation, May 10, 2018
Slide 1: Annual General Meeting May 10, 2018
www.Peyto.com Annual General Meeting May 10, 2018
Slide 2: Plain Language Advisory Regarding Forward-Looking Statements
Plain Language Advisory Regarding Forward-Looking Statements PEYTO Exploration & Development Corp. “I am going to tell you about my vision of Peyto’s future today. I will also tell you where I think commodity prices are going to go. These are called forward looking statements. I am being truthful an
Slide 3: Management Team
PEY.TO Management Team PEYTO Exploration & Development Corp. 53 Employees Darren Gee 10 Consultants Pres/CEO JP Lachance Scott Robinson VP Eng/COO Exec VP New Ventures Kathy Turgeon Tim Louie Dave Thomas Lee Curran Todd Burdick VP Finance/CFO VP Land VP Exploration VP D&C VP Production 3 5/10/2018
Slide 4: History: Successful Track Record
Peyto’s History Successful 19 Year Track Record PEYTO Exploration & Development Corp. 120 Aug. 2016: $10 $2 Billion dist/div 100 Feb 2010: $1 Billion $8 dist/div 80 $6 60 $4 40 $2.13 Oct. 23, 1998: $2 20 Peyto Exploration & Development Corp. begins $0.075/share $0.74 0 $- Peyto Production ('000 boe/
Slide 5: Peyto Is The 5th Largest Gas Producer In Canada
Peyto’s History Peyto Is The 5th Largest Gas Producer In Canada PEYTO Exploration & Development Corp. 1.8 1.6 1.4 1.2 (Bcf/d) 1.0 0.8 0.6 0.4 0.2 0.0 YE 2016 YE 2017 Source: NBF, geoSCOUT; assumes 15% gas shrink 5 5/10/2018
Slide 6: Peyto Turns BANANAAAAA!
Peyto’s History October 23, 2018 - Peyto Turns 20 PEYTO Exploration & Development Corp. BANANAAAAA! (THAT’S MINION FOR HAPPY BIRTHDAY) 6 5/10/2018
Slide 7: Invest For Profit Not Growth
Peyto’s History Invest For Profit Not Growth PEYTO Exploration & Development Corp. $800 $700 $600 $500 Peyto Earnings $400 CTD Q4/17 $300 $177 $200 $100 $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CAPEX ($MM) Earnings ($'000) Peyto Capital CTD Q4/17 7
Slide 8: Dividend Sustainability
Peyto’s History Dividend Sustainability PEYTO Exploration & Development Corp. $2,500 $2,000 $1,500 (MM$) Peyto Ctd. Earnings Q4/17 $1,000 $500 $0 Q4 1999 Q4 2000 Q4 2001 Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Cu
Slide 9: Build it for less than we sell it
Peyto’s History “Build it for less than we sell it” PEYTO Exploration & Development Corp. 2017 PEY 2014 PEY 2015 PEY 2016 PEY 2017 Land/Acq/Disp Seismic Drilling PDP FD&A $/mcfe ($2.25) ($1.64) ($1.44) ($1.36) Compl. Wellsite Facilities $521MM Cash Costs $/mcfe ($1.08) ($0.81) ($0.76) ($0.83) ∆PDP (
Slide 10: The Price Bar Is Now Very Low, We Must Be Lower
Peyto’s History The Price Bar Is Now Very Low, We Must Be Lower PEYTO Exploration & Development Corp. AECO $10 Monthly $10 $/GJ Peyto Realized Gas Price ($/mcfe) 36% Avg. "Profit“ $8 CTD $8 $6 $6 Bonus $4 $4 PDP FD&A 35% $2 $2 40% Cash Costs 25% $- $- Total Cash Costs per mcfe includes – Royalties,
Slide 11: What We've Done Over Years
Peyto’s History What We’ve Done Over 19 Years PEYTO Exploration & Development Corp. N Goods and Services Purchased = $5.7 Billion N Land Purchased = 585 sections N Wells Drilled = 1,471 N Reserves Discovered = 5.8 TCFe N Production Recovered = 1.5 TCFe N Royalties Paid = $832 million N Profits Gener
Slide 12: Contribution: Society Is Asking
Peyto’s Contribution Society Is Asking PEYTO Exploration & Development Corp. 12 5/10/2018
Slide 13: We Heat Your Homes
Peyto’s Contribution We Heat Your Homes PEYTO Exploration & Development Corp. “Alberta Energy states that typical Alberta households use approximately 120 GJ of natural gas per year. As the 5th largest gas producer in Canada, in 2017, Peyto provided the natural gas to keep all the homes in AB and SK
Slide 14: We Heat and Power Your Hospitals
Peyto’s Contribution We Heat and Power Your Hospitals PEYTO Exploration & Development Corp. “Hospitals run 24/7 and consume more energy than almost any other industrial sector. Peyto’s natural gas production in 2017 provided enough energy to heat and power all of Canada’s public and private Hospital
Slide 15: We Power Your Supermarkets
Peyto’s Contribution PEYTO “Grocery stores are the We Power Your Supermarkets largest commercial consumer of energy ‐ Exploration to keep& all that Corp. Development food refrigerated, shopping space warm/cool and bright lights on. Peyto’s natural gas production in 2017 provided enough energy to run
Slide 16: We Support The Community
Peyto’s Contribution PEYTO “With every operation Peyto We Support The Community conducts in the field we help fund emergency services Exploration that Corp. & Development the whole community can use to make us all safer.” 16 5/10/2018
Slide 17: Peyto's Gas Is The Cleanest Choice Today
Peyto’s Contribution Peyto’s Gas Is The Cleanest Choice Today PEYTO Exploration & Development Corp. Industy Peyto 17 5/10/2018
Slide 18: Gas Market For Canadian Exports Is Gone
What’s Happened To CND Gas? Gas Market For Canadian Exports Is Gone PEYTO Exploration & Development Corp. Room for Canadian gas exports in the US market has completely disappeared. Yet Canada still has close to 4 BCF/d of excess supply. US Natural Gas Canadian Natural Gas Supply/Demand Supply/Demand
Slide 19: Canadian Gas Prices Have Collapsed
What’s Happened To CND Gas? Canadian Gas Prices Have Collapsed PEYTO Exploration & Development Corp. Historically we could compete with the US gas producers because we received the same price. Now our price is severely discounted to theirs. Relative North American Gas Prices $8.00 $6.00 $4.00 $2.00
Slide 20: US Is Ramping Up LNG Exports
What’s Happened To CND Gas? US Is Ramping Up LNG Exports PEYTO Exploration & Development Corp. https://www.eia.gov/todayinenergy/detail.php?id=32412 20 5/10/2018
Slide 21: Can Gas Producers Get A Better Price?
What’s Happened to CND Gas? Can Gas Producers Get A Better Price? PEYTO Exploration & Development Corp. Full Path 2018 Transport Market Cost Net Price Transport Price (Firm+Fuel) Received Costs as % Market CND$/GJ CND$/GJ CND$/GJ of Price NYMEX (US$/MMBTU) $2.83 To AECO $1.40 $0.19 $1.21 14% $? To E
Slide 22: Too Much Gas, Not Enough Pipe
What’s Happened To CND Gas? Too Much Gas, Not Enough Pipe PEYTO Exploration & Development Corp. NGTL Field Receipts (mmcf) 13,000 +0.75 BCF/d 12,000 11,000 Deep Basin, Montney, 10,000 Duvernay Fairway 2014 2015 2016 2017 2018 2019 NGTL Field Receipts (mmcf) 1.6 BCF/d 1.9 BCF/d 12 BCF/d 2.5-6.5 BCF/d
Slide 23: Future Strip Collapsed Last Fall
What’s Happened To CND Gas? Future Strip Collapsed Last Fall PEYTO Exploration & Development Corp. AECO $Cdn/GJ Historical and Future Curve over time $4.000 $3.500 $3.000 Future Strip (Jan 1, 2017) $2.500 $Cdn/GJ Future Strip (Jan 1, 2018) $2.000 $1.500 $1.000 Future Strip (May 9, 2018) Actual Price
Slide 24: The Good News, Pipe Is Coming
What’s Happened To CND Gas? The Good News, Pipe Is Coming PEYTO Exploration & Development Corp. 24 Source: TCPL 2017 Q4 Conference Call Presentation Feb 15, 2018 5/10/2018
Slide 25: The Big Prize
What’s Happened To CND Gas? The Big Prize PEYTO Exploration & Development Corp. 25 5/10/2018
Slide 26: The Glass Is Half Full
What’s Happened To CND Gas? The Glass Is Half Full PEYTO Exploration & Development Corp. The sheer size of the North American market relative to its very short reserve life means any excess supply could be very short lived NORTH AMERICA R/P 20 15 10 yrs 5 0 1980 1990 2000 2010 North America is one o
Slide 27: Assets
Peyto’s Assets PEYTO Exploration & Development Corp. 27 5/10/2018
Slide 28: Template Economics At Strip
Peyto’s Returns Template Economics At Strip PEYTO Exploration & Development Corp. Species IP Avg. EUR D&C IRR @ IRR @ IRR @ IRR @ IRR @ MMcf NGLs BCFE $MM Jan 4 Dec 7 $2.00 $2.50 $2.50 bbl/M Strip Strip Flat Flat esc M Sundance Wilrich 5.3 10 2.6 2.8 4% 4% 6% 15% 18% Nosehill Wilrich 5.5 10 3.3 3.0
Slide 29: Multi Zone Stacked Sandstone Reservoirs
Peyto’s Assets Multi Zone Stacked Sandstone Reservoirs PEYTO Exploration & Development Corp. Detailed Petrophysical work on the Spirit River sands revealed >30% more reserves per section Up to per section* 29 *NGL recoveries can increase by 15+ bbl/mmcf with deeper cutting processing facilities 5/10
Slide 30: Large Hz MSF Inventory
Peyto’s Assets Large Hz MSF Inventory PEYTO Exploration & Development Corp. Done1 To Do Total Total Total Total Hz(Vt) Hz Locations Vertical Hz Locations Unbooked Wells Wells Booked* (2) 2 (3) 440 74 174(13) 414 5 1 5 8 1 2(2) 20 90 174 160(2) 69 7 74 40 8 111 162 319 2 20 14 381 378 182 4 39 54 48
Slide 31: The "New" Cardium Play – Abundant Opportunities
Peyto’s Assets The “New” Cardium Play – Abundant Opportunities PEYTO Exploration & Development Corp. Oldman & Oldman North 02-21 04-10 14-07 Nosehill Wildhay 16-34 Swanson Galloway 01-17 Total Greater Sundance Cardium Resource* Proven Resource: 350 BCFe cumulative recovery to YE 2017 (Less than 15%
Slide 32: The "New" Cardium Play – A Double
Peyto’s Assets The “New” Cardium Play – A Double PEYTO Exploration & Development Corp. Old Cardium Hz Well Design 10000 EUR 2.75 BCFe IP30 1.8 mmcf/d raw gas C5 25 bbl/mmcf Daily Production Volume (boe/d) Jan 4 Strip ($60 WTI) C4 10 bbl/mmcf 2018 - $1.32/GJ 1000 C3 12.5 bbl/mmcf 2019 - $1.53/GJ 2020
Slide 33: Strategies to Increase LGR to bbls/mmcf
Peyto’s Assets Strategies to Increase LGR to 40 bbls/mmcf PEYTO Exploration & Development Corp. Deep Cut adds another 10-15 bbls/mmcf Forecast Q4 2017 NGL Split YE 2019 forecast NGL Split Condensate (C5+) 6,489 bbls/d (62% of liq.) Condensate (C5+) 10,000 bbls/d (67% of liq.) Butane (C4) 2,073 bbls/
Slide 34: New Ventures
Peyto’s New Ventures PEYTO Exploration & Development Corp. 34 5/10/2018
Slide 35: Facility Ownership And Control
Peyto’s Assets Facility Ownership And Control PEYTO Exploration & Development Corp. Cutbank Kakwa Oldman & Oldman North Nosehill Wildhay Galloway Swanson Peyto Gas Plants YE 2014 YE 2015 YE 2016 YE 2017 YE 2018 WI Whitehorse 1 Oldman 125 mmcf/d 125 mmcf/d 125 mmcf/d 125 mmcf/d 125 mmcf/d 100% 2 Nose
Slide 36: Unique Infrastructure Location
Peyto’s Assets Unique Infrastructure Location PEYTO Exploration & Development Corp. Alliance Oldman & Oldman North Nosehill Wildhay Galloway Swanson 240 kV Power Lines Highway 16 Greater Sundance Area Bickerdike Location Advantages: • Nova/Alliance Supply Backstop • CN Rail (export) • Paved Highway
Slide 37: Potential For Additional Liquids Extraction
Peyto’s Assets Potential For Additional Liquids Extraction PEYTO Exploration & Development Corp. Oldman and Nosehill Oldman North Wildhay Propane Gas Phase Value C3 Value ($/bbl of liq eq.) $20 Condensate Swanson via Pembina $15 $10 Galloway $5 $0 $1.00 $2.00 $3.00 $4.00 Gas Price ($/GJ) CN Rail to
Slide 38: Future
Peyto’s Future PEYTO Exploration & Development Corp. 38 5/10/2018
Slide 39: 2018 Outlook
Peyto’s Future 2018 Outlook PEYTO Exploration & Development Corp. Drill ~50-60Hz Wells (Liquids Rich Natural Gas) vs 142 in 2017 Expand & Extract Increase Processing Capacity & NGL Yield Increase Undeveloped Land Base Shoot Seismic 2018 Capital Program Acquire Additional Opportunities and Partn
Slide 40: Lower Supply Cost Before Returning to Growth
Peyto’s Future Lower Supply Cost Before Returning to Growth PEYTO Exploration & Development Corp. Budget for summer In this scenario, gas price 15% of Q4/19 $6 production weakness? would be liquid (~16,500 boe/d) $17,500/boe/d $17,600/boe/d $17,300/boe/d $16,800/boe/d $5 $15,100/boe/d 100,000 $11,60
Slide 41: Lower Costs and Increase Liquids to Preserve Profit
Peyto’s Future Lower Costs and Increase Liquids to Preserve Profit PEYTO Exploration & Development Corp. 40 bbl/mmcf new adds in 2018/19 increases liq to 12% PEY 2017 PEY 2018 Goals PEY 2019 Goals 91% Gas @ $2.30/GJ 90% Gas @ $1.40/GJ*1.15 88% Gas @$1.55/GJ*1.15 Revenue AECO*115% 10% NGLs @ $78/bbl*
Slide 42: Future Market Diversification and Price Protection
Gas Marketing Future Market Diversification and Price Protection PEYTO Exploration & Development Corp. $6 2017 2018 Budget 2019 Forecast Capex $521MM $200-250MM $250-375MM $5 100,000 $4 Includes 70,000 mmbtu/d summer NYMEX exposure via basis deals. BOED $3 50,000 $2 Target 40% AECO 40% US Markets 20
Slide 43: Who We Are
PEY.TO Who We Are PEYTO Exploration & Development Corp. N 5th Largest Natural Gas Producer in Canada N Pure Play Alberta Deep Basin – 100‐110,000 boe/d Gas & NGLs N Returns Focused Strategy – Avg ROCE 16%, ROE 30% over last 19 yrs, among highest in industry N Long Reserve Life Asset ‐ 7 yrs PDP, 18
Slide 44: Questions?
Questions? PEYTO Exploration & Development Corp. 44 5/10/2018
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