Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Investor Presentation (September 2022)
57 slides from Peyto Exploration & Development's investor presentation, September 2022
Slide 1: Slide 1
Slide 2: New To Peyto? Who We Are
New To Peyto? Who We Are PEYTO Exploration & Development Corp. N 5th Largest Canadian Gas Producer ∼ 635 MMcfe/d N 10th Largest Canadian Gas Processor 970 MMcf/d capacity N Pure Play Alberta Deep Basin Multizone stacked resource, 5.4 TCFe 2P reserves NLong Reserve Life Asset 9yr PDP, 25yr 2P, sweet
Slide 3: 21 Year Growth Per Share
PEY.TO 21 Year Growth Per Share PEYTO Exploration & Development Corp. YoY +12% +5% +119% +53% Historical Per Share (or unit) and Shares (units) Outstanding numbers (end of period) have been adjusted to reflect the May 27, 2005 2:1 stock split (1) FFO is a non-GAAP financial measure or ratio. Refer t
Slide 4: Total Shareholder Return Model
PEY.TO Total Shareholder Return Model PEYTO Exploration & Development Corp. Organic growth for LNG exports? Future Prospects Past Profits 4 (1) Net debt/share is a non-GAAP financial measure or ratio. Refer to the heading entitled "Non-GAAP and Other Financial Measures" contained within the “Advisor
Slide 5: Invest Shareholder Capital For Profit Not Growth
PEY.TO Invest Shareholder Capital For Profit Not Growth PEYTO Exploration & Development Corp. $800 $700 $600 Peyto Capital $500 CTD Q2/22 $400 $0.70 Earning sper $1 $300 Capital $200 $100 Covid $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202
Slide 6: Return Profits to Shareholders with Dividends
PEY.TO Return Profits to Shareholders with Dividends PEYTO Exploration & Development Corp. $5,000 $4,500 The current environment and $4,000 strip would cause an inflection in $3,500 earnings power $3,000 ? Peyto Ctd. Earnings (MM$) $2,500 Q2/22 $2,000 $1,500 $1,000 $500 $0 Q4 2022F Q4 2023F Q4 2024F
Slide 7: We Heat Your Homes
PEY.TO We Heat Your Homes PEYTO Exploration & Development Corp. Natural Gas X X Safe Reliable Affordable 7 https://www.efficiencyalberta.ca 9/12/2022 http://www12.Statcan.gc.ca
Slide 8: Environmental Leader
PEY.TO Environmental Leader PEYTO Exploration & Development Corp. Emissions Intensity by Source Type for Canadian Oil and Gas (1990, 2005, 2020) Emission Intensity per Barrel (kg CO2eq/bbl) 119.8 91.7 79.7 80.3 75.1 62.8 56.0 48.6 50.4 42.4 45.6 40.8 19.4 19.0 18.8 18.6 18.1 1990 2005 2020 1990 2005
Slide 9: Continuously Improving Emissions
PEY.TO Continuously Improving Emissions PEYTO Exploration & Development Corp. Peyto Emissions Intensity 24.9 22.1 21.1 20.9 19.4 19.0 18.8 18.6 18.1 in GHG Emissions Intensity* 2013 2014 2015 2016 2017 2018 2019 2020 2021 Scope 1 Scope 2 9.32 Peyto Flared/Methane Emissions Intensity 8.34 8.19 8.07 7
Slide 10: Responsible Land and Water Use
PEY.TO Responsible Land and Water Use PEYTO Exploration & Development Corp. Land Use Reduction Cumulative Hectares/Well Water Injected per BOE1 by Operator, 2021 Water per 6-Month BOE (bbl/BOE) 2.10 1.90 2.5 1.70 1.50 2.0 Low water use intensity 1.30 1.5 1.10 0.90 1.0 0.70 0.5 0.50 2013 2014 2015 20
Slide 11: The Peyto Strategy
The Peyto Strategy PEYTO Exploration & Development Corp. 11 9/12/2022
Slide 12: Global Natural Gas Markets
Global Natural Gas Markets 385 BCF/d Global Marketplace in 2019* (pre-Covid) PEYTO Exploration & Development Corp. Half of all 28% of Russia (CIS) world exports market 83 BCF/d 56 BCF/d Europe North America 27 BCF/d Export 23 BCF/d 109 BCF/d Supply 54 BCF/d 102 BCF/d Demand 31 BCF/d 7 BCF/d Export M
Slide 13: North American Natural Gas
North American Natural Gas Domestic and Export Markets PEYTO Exploration & Development Corp. LNG Canada 2 BCF/d 17 BCF/d Supply (2025) 11 BCF/d Demand Peyto 6 BCF/d Export (US) 95 BCF/d Supply 6 BCF/d Import (CND) 83 BCF/d Demand 18 BCF/d Export Europe needs 31 BCF/d of imports (27 BCF/d coming from
Slide 14: WCSB Natural Gas Market
WCSB Natural Gas Market Current Export Pathways PEYTO Exploration & Development Corp. AECO Gas Market 17 BCF/d Supply 9 BCF/d Demand 8 BCF/d Export (US) 1.5 1.0 Empress Emerson 2 2.0 1.0 2.5 Dawn Ventura Henry Hub 14 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and th
Slide 15: Bolster Alberta's Shrinking Gas Reserves
The Peyto Strategy Bolster Alberta’s Shrinking Gas Reserves PEYTO Exploration & Development Corp. https://www.aer.ca/providing-information/data-and-reports/statistical-reports/st98/statistics-and-data 15 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may n
Slide 16: Natural Gas Is The Solution
Natural Gas Is The Solution USA Has Made the Biggest Reduction PEYTO Exploration & Development Corp. Absolute Change in CO2 Emissions from 2009-2019 (million tonnes of CO2) China India Indonesia Vietnam Saudi Arabia Iran Russian Federation And help Turkey these guys South Korea Canada get off coal!
Slide 17: Profitable Business
Peyto’s Profitable Business PEYTO Exploration & Development Corp. 17 9/12/2022
Slide 18: Profitable Business: Build it for less than we sell it
Peyto’s Profitable Business “Build it for less than we sell it” PEYTO Exploration & Development Corp. 2021 2014 2015 2016 2017 2018 2019 2020 2021 Land/Acq/Disp Seismic Drilling PDP FD&A $/mcfe ($2.25) ($1.64) ($1.44) ($1.36) ($1.18) ($1.55) ($1.06)($0.97) Compl. Wellsite Facilities Cash Costs $365M
Slide 19: Lowering The Bar
Peyto’s Profitable Business Lowering The Bar PEYTO Exploration & Development Corp. AECO $10 Monthly $/GJ Peyto Realized Gas Price ($/mcfe) 35% Avg. $8 "Profit“ CTD Lowest realized price ever, but $6 also lowest total supply cost ever Bonus $4 PDP FD&A Supply cost down 45% $2 since 2010 Cash Costs 43
Slide 20: Peyto's Moat is a Low-Cost Advantage
Peyto’s Profitable Business Peyto’s “Moat” is a Low-Cost Advantage PEYTO Exploration & Development Corp. $2.06 $4.81 ($0.24) $1.22 BOE factor - 6 mcf = 1 bbl of oil equivalent 20 Data from Peter’s & Co. Gas producers include: AAV,ARX,BIR,CR,KEL,NVA,PIPE,PMT,PNE,POU,SDE,TOU Non-GAAP measures and rati
Slide 21: High Operating Margins
Peyto’s Profitable Business High Operating Margins PEYTO Exploration & Development Corp. 90% $9.00 80% $8.00 70% $7.00 60% $6.00 50% $5.00 40% $4.00 30% $3.00 20% $2.00 Peyto Operating Margin 10% $1.00 Last 21 Year Avg. 0% 2000 $0.00 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 FFO/Revenue Inte
Slide 22: Unique Assets
Peyto’s Unique Assets PEYTO Exploration & Development Corp. New P eyto Cham bers Gas P lant 22 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and
Slide 23: Geographically Focused Core Areas
Peyto’s Assets Geographically Focused Core Areas PEYTO Exploration & Development Corp. • 608,580 net acres (Q421) • 12 operated gas plants - Cutbank --(970 mmcf/d net capacity) • 2,000+ km pipelines • ∼1,700+ producing zones Kakwa • ∼105,000 boe/d Leland Of Production: Greater Processed by Peyto Sun
Slide 24: Deep Basin Permeability Segregation
Peyto’s Assets PEYTO Deep Basin Permeability Segregation Exploration & Development Corp. FOOTHILLS STRUCTURES GAS AS ING INCRE BILITY EA PERM WATER TRANSITION ZONE WATER GAS ASE INCRE AREA OF GAS DEPTH MATURATION 24 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and the
Slide 25: Multi Zone Stacked Sandstone Reservoirs
Peyto’s Assets Multi Zone Stacked Sandstone Reservoirs PEYTO Exploration & Development Corp. *NGL recoveries can increase by 15+ bbl/mmcf with deeper cutting processing facilities Reserves are 2P recoverable in a section at 85% RF Up to per section* 25 Non-GAAP measures and ratios do not have any st
Slide 26: Cecilia Acquisitions
Peyto’s Assets Cecilia Acquisitions $35MM – Effective Jan 1/21 PEYTO Exploration & Development Corp. • YE21 Rates: • Base: 2,750 boe/d Cecilia Gas Plant 12-34-56-22W5 Ownership: 100% WI • New: 12,650 boe/d (20 new Original Throughput: ∼16mmcf/d sales and 10 bbl/mmcf wells online, 3 reactivations) Ca
Slide 27: Brazeau PrivateCo and Area Growth
Peyto’s Assets Brazeau PrivateCo and Area Growth PEYTO Exploration & Development Corp. Brazeau PrivateCo Acquisition • $22 million, effective Jan 1, 2022 Aurora W • 82 Gross (73.0 Net) sections of land in total • 850 boe/d at YE 2021 from 20G/20N wells • Underutilized 45mmcfd Gas Plant Property Acqu
Slide 28: Whitehorse/Minehead ERHs
Peyto’s Assets Whitehorse/Minehead ERHs PEYTO Exploration & Development Corp. Sundance Whitehorse/ Minehead Whitehorse Brazeau Timeline: • 2017-2018: Drilled ten, 1-mile horizontals Minehead • 2021/2022: Successfully tested three extended reach horizontals to improve the economics of the play, bough
Slide 29: Large Hz MSF Inventory
Peyto’s Assets PEYTO Large Hz MSF Inventory Exploration & Development Corp. Done1 To Do Total Total Total Total Hz(Vt) Hz Locations Vertical Hz Locations Unbooked3 Wells Wells Booked2 2 (2) 440 200 474(10) 480 5 1 5 16 1 2 31 90 197 200 90 7 75 58 32 117 148 121 2 40 15 409 301 176 4 44 54 41 12 2 8
Slide 30: Deep Basin Lands Go A Long Way
Peyto’s Assets Deep Basin Lands Go A Long Way PEYTO Exploration & Development Corp. Net Peyto Sections Peyto Lands 1,200 1,000 Net Sections 800 600 400 Net Sections of Cardium, Dunvegan, Notikewin, 200 Falher, Wilrich, Bluesky, Cadomin, Montney & Duvernay - 1999 2000 2001 2002 2003 2004 2005 2006 20
Slide 31: Deep Basin Lands Continue to Turn Over
Peyto’s Assets Deep Basin Lands Continue to Turn Over PEYTO Exploration & Development Corp. Spirit River Expiries Sections - Possible Spirit River land expiries (drilling validation dependent) from 2022 - 2025 P eyto lands in yellow Montney Expiries Sections - Possible Montney land expiries (drillin
Slide 32: Increased Facility Ownership And Control
Peyto’s Assets Increased Facility Ownership And Control PEYTO Exploration & Development Corp. Cutbank Kakwa Peyto Gas Plants Cecilia YE 2020 WI Oldman (with Deep Cut) W & Oldman North 1 Oldman 125 mmcf/d 100% Wildhay 2 Nosehill 125 mmcf/d 100% Nosehill 3 Wildhay 90 mmcf/d 100% 4 Galloway 60 mmcf/d 8
Slide 33: Unique Infrastructure Location
Peyto’s Assets Unique Infrastructure Location PEYTO Exploration & Development Corp. Cecilia Alliance Oldman & Oldman North Nosehill Big Sunny Wildhay Galloway Swanson Highway 16 Greater Sundance Area Cascade Power Project Location Advantages: ISD mid-2023 • 900 MW Combined-Cycle • Nova/Alliance Supp
Slide 34: Alberta's Gas Developer
Peyto’s Assets Alberta’s Gas Developer PEYTO Exploration & Development Corp. 9,000 8,000 7,000 6,000 1,993 26% (TCFe) 5,000 CAGR 1,571 4,000 7,655 15% 3,000 CAGR 1,823 2,000 TCFe of 1,000 2,234 Discovered Reserves 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 35: What Shareholders Currently Own
Peyto’s Assets What Shareholders Currently Own PEYTO Exploration & Development Corp. Tangible Infrastructure (Replacement Value as at Jun 30, 2022) 92 Compressors ($3.6 MM each) $331 MM 20 Inlets ($2.0MM each) $40 MM 23 Refrigeration plants ($5.7MM each) $133 MM 14 Power Generation Sets ($2.4M each)
Slide 36: Incredible Returns
Peyto’s Incredible Returns PEYTO Exploration & Development Corp. 36 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and Other Financial Measures"
Slide 37: Production Performance by Vintage
Peyto’s Returns Production Performance by Vintage PEYTO Exploration & Development Corp. Year Over Year Performance - All Cardium Year Over Year Performance - All Wilrich 5,000 7000 Gross Recombined Gas Rate (mcf/d) Gross Recombined Gas Rate (mcf/d) 6000 4,000 +60 bbl/mmcf 5000 +19 bbl/mmcf 3,000 NGL
Slide 38: Extended Reach Horizontals
Peyto’s Returns Extended Reach Horizontals PEYTO Exploration & Development Corp. Peyto’s Extended Reach Horizontals (ERH) continue to be a large part of the Wilrich capital program with 10-15 more wells planned in 2022. 38 Non-GAAP measures and ratios do not have any standardized meaning under IFRS
Slide 39: 2021 Best Year Ever
Peyto Returns 2021 Best Year Ever PEYTO Exploration & Development Corp. 2021 Wells Sorted by Species Price Deck: 2021 Actuals + Feb 8, 2022 Strip 500% 450% 2021 Capital Program IRR = 121% Included $750k/well for FLS 400% 350% 300% Full Cycle BTAX IRR [%] 250% 200% 150% 100% 50% 0% -50% 39 Non-GAAP m
Slide 40: Updated Template Economics At Recent Strip
Peyto’s Returns Updated Template Economics At Recent Strip PEYTO Exploration & Development Corp. June 29 AECO WTI Strip $C/GJ $US/bbl Jul-Dec 2022 6.04 104.29 2023 4.91 91.45 2024 4.31 82.84 Brazeau / Chambers Greater Sundance 2025 4.35 76.78 2026 4.41 72.51 Cardium Notikewin Wilrich ERH Notikewin W
Slide 41: High Returns On Your Capital And Equity
Peyto’s Returns High Returns On Your Capital And Equity PEYTO Exploration & Development Corp. 60% $12 50% $10 40% $8 23 yr Avg ROE to 2021 30% $6 20% $4 10% $2 0% $0 Return On Capital Employed (%) Return On Equity (%) 23 yr Avg ROCE to 2021 Earnings/share Realized Price ($/mcfe) Return on Equity (RO
Slide 42: Future
Peyto’s Future PEYTO Exploration & Development Corp. 42 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and Other Financial Measures" and "Non-GAA
Slide 43: 2022 Outlook
Peyto’s Future 2022 Outlook PEYTO Exploration & Development Corp. Drill ~90Hz Wells (Liquids Rich Natural Gas) vs 91 in 2021 Expand Infrastructure New Chambers Gas Plant (prepaid equipment) Increase Opportunities Expand Undeveloped Land Base Diversify Markets Continue to Evaluate New Pipe/Basis
Slide 44: Steady Production Growth With Less Than Cash Flow
Peyto’s Future Steady Production Growth With Less Than CF PEYTO Exploration & Development Corp. $9 $8 $4.19 $7 100,000 $17,500/boe/d $5.51 $20,600/boe/d $17,300/boe/d $16,800/boe/d $6 $15,100/boe/d $10,900/boe/d ∼$9,000/boe/d $12,000/boe/d $3.48 AECO 7A ($/GJ) $11,600/boe/d 2012 $5 WI BOED Capex $61
Slide 45: Lower Costs to Preserve Profit
Peyto’s Future Lower Costs to Preserve Profit PEYTO Exploration & Development Corp. PEY 2014 PEY 2019 PEY 2021 PEY Goals 87% Gas @$3.43/GJ*1.15 HC 13% NGLs@$53/bbl 88% Gas @$4.00/GJ*1.15 $5.04 $2.23 $3.61 ∼$5.45 12% NGLs@$70/bbl=(70%of Revenue $4.52/mcfe $0.91/mcfe hedge loss $100 CND WTI) $/mcfe $3
Slide 46: Appendix
Appendix PEYTO Exploration & Development Corp. N Gas Marketing N Quarterly Track Record N Tax Pools N Leverage 46 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section ent
Slide 47: The Future of Gas Prices
Gas Marketing The Future of Gas Prices PEYTO Exploration & Development Corp. 47 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and Other Financia
Slide 48: Rising Gas Prices?
Gas Marketing Rising Gas Prices? PEYTO Exploration & Development Corp. Demand Driven Demand Driven Supply Driven Market Market Market ? 48 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities.
Slide 49: The Future of Gas Prices
Gas Marketing The Future of Gas Prices PEYTO Exploration & Development Corp. 49 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and Other Financia
Slide 50: Future Market Diversification and Gas Price Protection
Gas Marketing Future Market Diversification and Gas Price Protection PEYTO Exploration & Development Corp. Peyto realized gas price ($/GJ) at $US5.00/MMbtu Henry Hub, $4.00/GJ AECO, $120/MWh : $2.92 $3.76 $3.99 $3.79 $3.91 $4.66 $4.98 $4.82 $4.83 $4.77 $4.71 $4.67 $4.67 $4.68 Lower Empress service d
Slide 51: Successful Hedging Strategy Smoothes Volatility
Gas Marketing Successful Hedging Strategy Smoothes Volatility PEYTO Exploration & Development Corp. Gas Price ($/mcf) $10.00 $10.00 $9.00 Peyto has beat the AECO $9.00 $8.00 monthly price in 12 of the $8.00 last 16 years using a $7.00 methodical hedging strategy. $7.00 $6.00 $6.00 $5.00 $5.00 $4.00
Slide 52: Quarterly Track Record
Quarterly Track Record PEYTO Exploration & Development Corp. 2022 2021 2020 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Operations Production Oil & NGLs (bbl/d) 13,411 12,273 11,653 11,038 11,164 12,289 12,138 11,308 11,256 11,263 11,126 11,585 Natural gas (mcf/d) 541,030 535,660 476,387 517,606 473,0
Slide 53: Peyto's Tax Pools
Organic Business Model Peyto’s Tax Pools PEYTO Exploration & Development Corp. $1,800 $1,600 $1,400 $1,200 $1,000 $800 Federal Tax Pools Millions $600 $400 Q4/21 $200 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021* CEC UCC (
Slide 54: Blend of fixed term and revolving debt
Peyto’s Debt Blend of fixed term and revolving debt PEYTO Exploration & Development Corp. $65 4.26% End of $0.95B Revolver Oct ‘23 $100 3.70% MM$ $100 3.95% $100 4.39% $40USD 3.98% Debt in CND$ unless otherwise indicated 54 Non-GAAP measures and ratios do not have any standardized meaning under IFRS
Slide 55: Advisories: Forward-Looking Statements
Advisories PEYTO Exploration & Development Corp. Forward-Looking Statements This presentation contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective",
Slide 56: Advisories: Funds from Operations
Advisories PEYTO Exploration & Development Corp. Funds from Operations "Funds from operations" ("FFO") is a non-GAAP measure which represents cash flows from operating activities before changes in non-cash operating working capital and provision for future performance-based compensation. Management
Slide 57: Advisories: Oil and Gas Metrics
Advisories PEYTO Exploration & Development Corp. Oil and Gas Metrics This presentation contains a number of oil and gas and finance metrics, including "FD&A cost", "cash costs", "supply cost", "full cycle netback", "reserve life", "payout", "IP12 rates", "internal rate of return (IRR)", "corporate d
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