Peyto Exploration & Development Corp. · TSX:PEY

Peyto Exploration & Development — Non-Deal Roadshow (July 2015)

39 slides from Peyto Exploration & Development's roadshow presentation, Jul 8, 2015

  1. Slide 1: Peyto July 2015

    www.Peyto.com July 2015

  2. Slide 2: Advisory Regarding Forward-Looking Statements

    Advisory Regarding Forward-Looking Statements PEYTO Exploration & Development Corp. 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", "obj

  3. Slide 3: Peyto Profile

    Peyto Profile PEYTO Exploration & Development Corp. N TSX Listing: PEY N Shares Outstanding: 159 million, 4% insiders (as of Feb. 5/14) N Monthly Dividend: $0.11/share (incr. from $0.10 effective Nov/14) N Current Production: 0.54 BCFe/d (90,000 boe/d) N YE 2014 2P Reserves: 3.2 TCFe (531 mmboes) N

  4. Slide 4: The Peyto Strategy: What We Believe

    The Peyto Strategy What We Believe PEYTO Exploration & Development Corp. N “We believe nature’s gas is the fuel for the future.” N “We believe we can make a real profit by being the lowest cost, most efficient producer in the industry.” N “We believe in partnering with shareholders to make that prof

  5. Slide 5: The Peyto Strategy: How We Do It

    The Peyto Strategy How We Do It PEYTO Exploration & Development Corp. • Invest in our own ideas • Build it ourselves • Operate it ourselves • Focus on maximum return • Stay concentrated, lean & efficient 5 7/7/2015

  6. Slide 6: Superior Shareholder Returns

    The Peyto Strategy Superior Shareholder Returns PEYTO Exploration & Development Corp. $60 ~$700,000 $14 $50 $12 $40 Shareholder IRR $10 $30 $8 Future strip $20 $6 $10 $4 $1,000 $0 $2 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Share Price

  7. Slide 7: Profitable Business

    Peyto’s Profitable Business PEYTO Exploration & Development Corp.

  8. Slide 8: Profitable Business 15th 1998-2013

    Peyto’s Profitable Business 15th 1998‐2013 “Build it for less than we sell it” PEY 2015 Q1 PEY 2014 Land/Acq $13MM Seismic $8MM Drilling $312MM PDP FD&A $/mcfe (~$1.80)* ($2.25) Compl. Wellsite Facilities $183MM $54MM $120MM $690MM ∆PDP Reserves (before Prod.) 51.0 mmboes PDP FD&A $13.52/boe Cash Co

  9. Slide 9: Profitable Even Through The Lows

    Peyto’s Profitable Business Profitable Even Through The Lows PEYTO Exploration & Development Corp. AECO Monthly $10 Peyto Realized Gas Price ($/mcfe) $/GJ 37% Ave. "Profit“ Cum To Date $8 $6 Bonus $1.60 $4 Cash Costs ($1.08) $2 PDP FD&A ($2.25) $- Forecast Total Cash Costs per mcfe includes – Royalt

  10. Slide 10: Unique Assets

    Peyto’s Unique Assets PEYTO Exploration & Development Corp.

  11. Slide 11: Geographically Focused Core Areas

    Peyto’s Assets Geographically Focused Core Areas PEYTO Exploration & Development Corp. • 440,000 net acres R10 R5W6 R27 R22 R17 • 9 operated R12 R7W5 gas plants Cutbank ---(610 mmcf/d net capacity) • 1000+ km pipelines • 1000+ producing zones T60 Kakwa • 90,000 boe/d T60 Chicken Leland Processed by

  12. Slide 12: Deep Basin Permeability Segregation

    Peyto’s Assets Deep Basin Permeability Segregation PEYTO Exploration & Development Corp. Ante Ck FOOTHILLS STRUCTURES Elmworth GAS AS ING INCRE BILITY EA PERM WATER Kaybob TRANSITION ZONE WATER Kakwa GAS Gas INCREAH DEPT SE AREA OF GAS Window MATURATION Wild River Sundance Edson Bighorn Deep Basin T

  13. Slide 13: 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* 13 *NGL recoveries can increase by 15+ bbl/mmcf with deeper cutting processing facilities 7/7/

  14. Slide 14: 3-Dimensional Land Base Holds Large Potential

    Peyto’s Assets 3-Dimensional Land Base Holds Large Potential PEYTO Exploration & Development Corp. Cardium (357,618 net acres) 9.5% of land developed in 466 Vt/Hz producers (70 acres/well) 4.4% of land booked in 176 Hz locations (90 acres/well) 86% of land remains potential (307,859 net acres) Notik

  15. Slide 15: Large Hz MSF Inventory

    Peyto’s Assets Large Hz MSF Inventory PEYTO Exploration & Development Corp. To Do Done1 Total Total Hz Hz Locations Total Total Locations Unbooked Vertical Hz Booked* Wells Wells 31 432 72 176 387 5 1 5 13 1 20 14 90 71 118 62 7 39 41 20 51 90 292 16 14 183 256 155 4 28 45 58 12 2 87 2 16 216 652 44

  16. Slide 16: Greater Sundance Area

    Peyto’s Assets Greater Sundance Area PEYTO Exploration & Development Corp. FF FF FCFCAF A AF FF AF AG F36 A G 36L F A AF A36FC31F GAF GCF AF AF AF AFFC36A FA31FAF AF AF AF F A CF AF FAFAFF AF AF A36FAF A31FAF F AF W FAF AF A LKG36K A 31 F G C FA A FF36FF31 G C F GCAF E31GEJ F C 36 31 AA GL GG LK CF

  17. Slide 17: Brazeau River Area

    Peyto’s Assets Brazeau River Area PEYTO Exploration & Development Corp. G F V V U F K U J M L E F VF FKeyera Brazeau S V E E UF F GG L F U G F K KAE F F G VV E M G GA G F EJ S EE E E FA KG KC F G JGA V W C E G E EE F FC UU F J U F A GVV F F C LF C G V F 1 G F KE Sour A E Gas Plant (1968) S A EE E A

  18. Slide 18: Facility Ownership and Control

    Peyto’s Assets Facility Ownership and Control PEYTO Exploration & Development Corp. R9 R4W6 R26 R21 R16 R11 R6W5 Cutbank Waskahigan W Chicken T60 W Smoky/Kakwa Cutpick Leland/Berland Oldman North T55 Wildhay W W Nosehill W W Sundance Galloway WW Swanson Ansell P/L Peyto Gas Plants 50km, 10", $10MM Y

  19. Slide 19: Incredible Returns

    Peyto’s Incredible Returns PEYTO Exploration & Development Corp.

  20. Slide 20: Peyto's Returns

    BT IRR (%) -50 -40 -30 -20 -10 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 03/02-32-054-21W5/0 02/04-13-055-22W5/0 00/04-26-053-20W5/0 00/13-13-055-22W5/0 00/01-08-055-21W5/0 02/02-03-054-20W5/0 00/16-11-056-21W5/0 00/11-13-055-22W5/0 00/01-25-053-20W5/0 02/16-11-056-21W5/0 00/04-15-056-21W

  21. Slide 21: Drilling Cost Performance

    Peyto’s Returns Drilling Cost Performance PEYTO Exploration & Development Corp. Greater Sundance Hz Spirit River 5,000 40 4,409 4,500 34.5 4,268 4,299 4,227 4,066 4,152 4,155 35 3,999 4,000 Drill & Case Cost / Depth 29.3 30 3,500 23.6 25 3,000 $3,193 22.5 21.8 Days 21.6 $2,926 20.6 $2,804 $2,752 $2,

  22. Slide 22: Completion Cost Performance

    Peyto’s Returns Completion Cost Performance PEYTO Exploration & Development Corp. Monthly Average Completion Costs $2,000,000 $300,000 $1,750,000 Total Completion Cost $250,000 2014 Avg = 1.7 MM$ $1,500,000 -43% $200,000 $1,250,000 Cost Per Stage Total Cost $1,000,000 $150,000 Completion Cost Per St

  23. Slide 23: 2015 - A Good Start

    Peyto’s Assets 2015 - A Good Start PEYTO Exploration & Development Corp. 2015 program results to date 23 7/7/2015

  24. Slide 24: Peyto's Returns by Well

    BT IRR, % 0 10 20 30 40 50 60 70 80 90 100 110 130 140 150 00/08-33-057-… 00/10-25-051-… 00/04-02-054-… 00/16-11-056-… 03/04-32-055-… 20% 00/02-25-051-… 02/05-14-055-… 120 2014 Q1 02/13-19-056-… 00/04-26-053-… 00/12-09-056-… 00/01-36-051-… 02/02-10-056-… 02/04-28-055-… 02/04-13-055-… 00/03-36-051-…

  25. Slide 25: High Returns On Your Capital And Equity

    Peyto’s Returns High Returns On Your Capital And Equity PEYTO Exploration & Development Corp. 60% $10 50% $8 40% $6 30% 16 yr Average ROE $4 19% 20% 13% 10% $2 0% $0 Return On Capital Employed (%) Return On Equity (%) Earnings/share Realized Gas Price ($/mcfe) 16 yr Average ROCE Return on Equity (RO

  26. Slide 26: Future

    Peyto’s Future PEYTO Exploration & Development Corp.

  27. Slide 27: 2015 Outlook: More for less

    2015 Outlook More for less PEYTO Exploration & Development Corp. Drill ~130 Gross Hz Wells (100% Hz-MSF, Liquids Rich Natural Gas) Expand & Extract Increase Processing Capacity & NGL Yield ~120 mmcf/d Increase Undeveloped Land Base Shoot Seismic 2015 Capital Program Acquire Additional Opportuni

  28. Slide 28: Drill Our Way To 100,000 BOE/D!

    2015 Outlook Drill Our Way To 100,000 BOE/D! PEYTO Exploration & Development Corp. 3% annual yield 120,000 +25%/sh CAGR growth ~96,000-100,000 120,000 28% CAGR total return boe/d exit over last 5 years! 100,000 85,700 boe/d exit TCPL Outage 100,000 75,200 boe/d exit 80,000 80,000 57,000 boe/d exit B

  29. Slide 29: Continuously Improve Profitability

    2015 Outlook Continuously Improve Profitability PEYTO Exploration & Development Corp. 2015 Goals* • 20% service cost reduction • Drilling off season PDP FD&A ~($1.80) • Longer laterals, more stages $/mcfe • Continuous operations • Natural gas heated water • Slow down facility pre‐builds ~($0.85) Cas

  30. Slide 30: Where to from here?

    Peyto’s Future Where to from here? PEYTO Exploration & Development Corp. 150,000 ~120,000 boed ~96,000-100,000 boed 100,000 $13,000 /boe/d BOED 13,500 /boe/d $17,500/boe/d $16,800/boe/d 50,000 $17,300/boe/d $15,100/boe/d $17,600/boe/d 2015 Budget 2016 CAPEX 2017 CAPEX $600MM $700MM $800MM Base Decli

  31. Slide 31: Appendix

    Appendix PEYTO Exploration & Development Corp. N Quarterly Track Record N Tax Pools N Payout N Hedging Strategy N Gas Marketing N FAQ 31 7/7/2015

  32. Slide 32: Quarterly Track Record

    Quarterly Track Record PEYTO Exploration & Development Corp. 2015 2014 2013 2012 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Operations Production Oil & NGLs (bbl/d) 7,456 7,632 8,077 7,502 7,568 7,375 6,376 6,984 6,295 6,374 5,840 4,778 5,286 5,236 4,480 4,101 Natural gas (mcf/d) 444,7

  33. Slide 33: Peyto's Tax Pools

    Organic Business Model Peyto’s Tax Pools PEYTO Exploration & Development Corp. $1,800 $1,600 $1,400 $1,200 Federal Tax Pools Millions $1,000 $800 Q4/14 $600 $400 $200 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 CEC UCC (25%) CEE (100%) CDE (30%) COGPE (10%) CAP

  34. Slide 34: Dividend Sustainability

    Peyto’s Payout Dividend Sustainability PEYTO Exploration & Development Corp. Peyto Dividend Sustainability $2,500 $2,000 $1,500 Peyto Cum. Earnings Q1/15 $1,000 $500 $0 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1

  35. Slide 35: Successful Hedging Strategy

    Successful Hedging Strategy Peyto Realized Price History PEYTO Exploration & Development Corp. 2003 2004 2006 2010 2013 2014 $16.00 2005 2007 2008 2009 2011 2012 Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto $7.51/mcf $7.38/mcf $8.78/mcf $8.48/mcf $8.42/mcf $8.64/mcf $6.44/

  36. Slide 36: Gas Marketing: Future Sales (1 of 3)

    Gas Marketing Future Sales (1 of 3) PEYTO Exploration & Development Corp. Financial Hedges - Gas Pricing 2013 2014 2015 2016 Da te contra cte d GJ/d ($/GJ) N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O 17-Feb-12 5000 $3.000 ● ● ● ● ● 27-Apr-12 5000 $2.810 ● ● ● ● ● Hedges b

  37. Slide 37: Gas Marketing: Future Sales (2 of 3)

    Gas Marketing Future Sales (2 of 3) PEYTO Exploration & Development Corp. Financial Hedges - Gas Pricing 2013 2014 2015 2016 Da te contra cte d GJ/d ($/GJ) A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O 09-Dec-13 5000 $3.700 ● ● ● ● ● ● ● ● ● ● ● ● 19-Dec-13 50

  38. Slide 38: Gas Marketing: Future Sales (3 of 3)

    Gas Marketing Future Sales (3 of 3) PEYTO Exploration & Development Corp. Financial Hedges - Gas Pricing 2013 2014 2015 2016 2017 Da te contra cte d GJ/d ($/GJ) N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O 28-Oct-14 5000 $3.570 ● ● ● ● ● 28-Oct-14 5

  39. Slide 39: Frequently Asked Questions

    FAQ Frequently Asked Questions PEYTO Exploration & Development Corp. 1. Peyto has had some spectacular growth over the last five years, how can that growth continue? The profitable growth in production, reserves and funds from operations per share that we’ve experienced over the last four years is t

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