Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Investor Presentation (June 2010)
38 slides from Peyto Exploration & Development's investor presentation, June 2010
Slide 1: Peyto June 2010
June 2010 www.Peyto.com TSX: PEY.UN Current Distribution: $0.12/month 120,982,602 units outstanding 10.5% yield on May 17/10 closing
Slide 2: The Peyto Strategy: 11 Year Track Record
The Peyto Strategy 11 Y Year T Track kRRecord d Prospect Generation Reserves Growth NAV Growth Profit Sharing (BCFe) (NPV5 Debt Adj/Unit) 1999 2000 2001 1999 1999 2002 2000 2000 2003 2001 2004 2001 2002 2005 2002 2003 2006 2003 2004 2007 2004 2005 2008 2005 2006 2009 2006 2007 2008 2007 2008 2009 20
Slide 3: Compound Annual Total Return
Com mpound Annual TTotal Return L 0% 100% 10% 20% 30% 40% 50% 60% 70% 80% 90% Largest Osisko Exploration Dec‐99 heaton Corp. Silver Wh Source: BMO Capital Markets Peyto Enerrgy Trust Pacific Rubialees Energy Silvercorp Meetals Inc. Thompson Creek M Metals Co Dec‐00 FNX Mining Com mpany Calloway REIT
Slide 4: Margins Matter
The Peyto Strategy M i M Margins Matter tt 100% 90% 80% enue 70% Margin as % of Reve 74% Operating 60% Margin 50% 40% 30% 56% Profit Margin 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Earnings Cashflow Field Netback 4 6/4/2010
Slide 5: Margins - Industry Comparison Q1 2010
The Peyto Strategy M i - Industry Margins I d t Comparison C i Q1 2010 80% $18 osts ($/boe) 70% $16 Q1 2010 Operating Margin 60% $14 $12 Operating Co 50% $10 40% $8 30% $6 Q1 2010 O 20% $4 10% $2 0% $0 Operating Costs include Transportation costs. 5 Operating Margin – Cashflow divided by revenue (bo
Slide 6: Peyto's Deep Basin Focus
Peyto’s Deep Basin Focus G Generall A Area off O ti Operations M Map • 227,000 net acres R10 R8 R6 R4 R2W6 R27 R25 •R235 operated R21 gas plants R19 R17 R15 R13W5 T64 • 750 km pipelines T64 • 600 producing wells C G F F CF F C F F F F GG Cutbank • 23,500 boe/d F C F W C FC T62 F C F F T62 C Chicken
Slide 7: Multiple Vertical/Horizontal Targets
Peyto’s Deep Basin Focus M lti l V Multiple Vertical ti l /H /Horizontal i t lTTargets t Sundance Area Reservoirs 12 7 6/4/2010
Slide 8: Tight Gas Resource Plays: Horizontal MSF Pilot Projects
Tight Gas Resource Plays H i t l MSF Pil Horizontal Pilott P j t Projects 8 6/4/2010
Slide 9: Cardium Resource Play: Pilot Project #1
Cardium Resource Play H i Horizontal t l MSF Pil Pilott #1 C di Cardium Gas G Fairway F i Pilot Project #1 Sundance Cardium • >4,000 sq miles • up to 65 TCF Gas in Place1 • ~ 2-3 TCF developed to date E Peyto Cardium Rights • >400 sq miles (gross) • 1.0 TCF developed to date (vertical wells only)2 D
Slide 10: Cardium Type Log and Reserves
Cardium Resource Play C di Cardium T Type L Log and dRReserves Volumetric Reserves AREA(Ha)= 256 (1 section) 23m Gross thickness H(m)= 15 15m Net Pay (using POROSITY(%)= 9 6% porosity cutoff) SW(%)= 18 TEMP.(Deg.C)= 80 PRES.(kPa)= 19000 Z= 0.8 Recovery Factor(%)= 85 Surface Loss(%)= 7 OGIP(BCF)= 19.
Slide 11: Pilot Project #1 – Sundance Cardium
Cardium Resource Play Pilot Project #1 – Sundance Cardium R23 R22 R21 R20 R19W5 W FFUUF F A U F U FL FU G CG F F G G C W F F C F FF F F F F D24 F U F U 21 F F C F 24 G F 19 U F F W E 24 L G G G UV 20 21 F 22 23 GV F F F F FC 21 UF UF G A 19 20 22 23 22 23 24 19 20 21 22 23 A 20 F F U F G N Cardium P
Slide 12: Normalized Cardium Production – Vertical vs. Horizontal
Cardium Resource Play N Normalized li d CCardium di P Production d ti – Vertical V ti l vs. H Horizontal i t l Average Vertical Last 10 years 10,000 Average Vertical Last 5 years 2-5 times i i i l rate initial on (mcfe/d) 1,000 Dailyy Gas Productio 100 Ave Cardium Vertical ‐ Last 10 yrs (00/04‐10‐05
Slide 13: Economic Comparison – Vertical vs. Horizontal
Cardium Resource Play E Economic i CComparison i – Vertical V ti l vs. H Horizontal i t l 8,000 Ave Cardium Vertical ‐ last 5 yrs (00/13‐20‐055‐22W5/0) 7,000 00/02‐15‐055‐21W5/0 Cardium HZ (1329m) 00/08‐22‐055‐21W5/0 Cardium HZ (1043m) 6,000 00/13‐06‐055‐21W5/0 Cardium HZ (967m) High Hz 00/03‐16‐055
Slide 14: Liquids Rich
Cardium Resource Play Li id Ri Liquids Rich h Peyto 00/02‐15‐055‐21W5/0 Cardium 1,000 200.00 oduction (bblss, boes) 900 180.00 Natural Gas 800 160.00 Liquids d 700 LGR (bbl/mmcf) 140.00 600 120.00 Wellhead Pro 500 100.00 400 80.00 300 60.00 This raw gas and condensate 200 turns into sales gas and NG
Slide 15: New Deep Gas Drilling Incentives
Cardium Resource Play N New D Deep G Gas D Drilling illi IIncentives ti 3,500-4,000 m MD Trigger depth for Natural Gas Deep Drilling Program 2,200 m TVD reduced from 2,500m TVD to 2,000m TVD 3,700-4,000 m MD 2,650-2,850 m TVD 4,200 m MD 2,750-2,900 m TVD *3,700m 3,700m Cardium Horizontal Well would
Slide 16: Cardium Horizontal Development: Potential Locations
Cardium Horizontal Development P t ti l L Potential Locations ti R9 R7 R5 R3 R1W6 R26 R24 R22 R20 R18 R16W5 F CF F FFF G CE G JF G FC ED F AEF AF C F G FF FCF KKGF CIK CGFCF CF D CL GC G FGFA G E G G G G CG L GF CG ECF F GF CI EF CJ CE EEE L S I E G J EEG EE F LLLG G GG G ILK LF F C FF G GG G EG K F
Slide 17: Sundance Cardium Horizontals
Sundance Cardium Horizontals Undeveloped Opportunities Peyto 8-22-55-21W5 Cardium Horizontal On Production Jan 7/10 T56 Peyto 2-15-55-21W5 Cardium Horizontal On Production Oct 8/09 Peyto HZ Cardium Locations (121) T55 HZ Drilled (5 Gross, 4.2 net) HZ Proved (72 Gross, 49.3 Net) HZ Probable (17 Gross
Slide 18: Notikewin Resource Play: Horizontal MSF Pilot #2
Notikewin Resource Play H i Horizontal t l MSF Pil Pilott #2 Peyto Notikewin Mineral Rights 18 6/4/2010
Slide 19: Notikewin Type Log
Notikewin Resource Play T Type L 1 Log 1-20-54-22W5 20 54 22W5 28m Gross Pay Volumetric Reserves 19m Net Pay AREA(Ha)= 256 (1 section) H(m)= 19 23m Gross Pay POROSITY(%)= 8 16m Net Pay SW(%)= 35 TEMP.(Deg.C)= 96 PRES.(kPa)= 32000 Z= 1.02 Recovery Factor(%)= 85 Surface Loss(%)= 4.5 OGIP(BCF)= 22 RGIP
Slide 20: Pilot Project #2 – Greater Sundance Notikewin
Notikewin Resource Play Pilot Project #2 – Greater Sundance Notikewin R23 R22 R21 R20 R19W5 U WF FDV U U F C G F F F W G E Peyto Pine Ck 14-7-56-17W5 L GG FG IC F F FF FF F U F F C G UV F G F F FVU F F F UG F F G F FF F UF UF F I EU G E G U C F F C C FF E F F C V F F U FU F CU F C F FU F F FC CU C F
Slide 21: Normalized Notikewin Production – Vertical vs. Horizontal
Notikewin Resource Play N Normalized li d NNotikewin tik i P Production d ti – Vertical V ti l vs. H Horizontal i t l 10,000 Average Vertical Notikewin 00/08‐03‐056‐21W5/0 00/06‐27‐054‐22W5/2 Notikewin HZ (943m) 00/10‐15‐054‐22W5/0 Notikewin HZ (796m) Daaily Gas Producction (mcfe/d) 00/14‐03‐055‐21W
Slide 22: Notikewin Economic Comparison
Notikewin Resource Play E Economic i CComparison i – Vertical V ti l vs. H Horizontal i t l Average Vertical Notikewin 00/08‐03‐056‐21W5/0 10,000 00/10‐15‐054‐22W5/0 00/10 15 054 22W5/0 Notikewin HZ (796m) Hi h Hz High H 00/06‐27‐054‐22W5/2 Notikewin HZ (943m) 8,000 00/14‐03‐055‐21W5/0 Notikewin HZ
Slide 23: Wilrich Resource Play: Horizontal MSF Pilot #3
Wilrich Resource Play H i Horizontal t l MSF Pil Pilott #3 Nosehill Project Area Peyto Wilrich Mineral Rights 23 6/4/2010
Slide 24: Wilrich Type Log
Wilrich Resource Play T Type L 7 Log 7-5-56-20W5 5 56 20W5 Volumetric Reserves AREA(Ha)= 256 (1 section) JET 2825 H(m)= 16 FRAC 23m Gross Pay (-1578.4) POROSITY(%)= 8 16m Net Pay SW(%)= 35 TEMP.(Deg.C)= 98 PRES.(kPa)= 24000 Z= 0.92 Recovery Factor(%)= 85 Surface Loss(%)= 4.5 OGIP(BCF)= 15 RGIP RAW(B
Slide 25: Pilot Project #3 – Nosehill Wilrich
Wilrich Resource Play Pilot Project #3 – Nosehill Wilrich R21 R20 R19W5 F G 25 F U 29 28 27 F 26 30 29 F28 K 27 26 25 30 29 28 27 26 F F C Peyto 14-05-56-20W5 F G J I EE E F F G F F G G C E Wilrich Horizontal F F CG E IC W LGG F G 20 F F C 21 UF 22 23 24 19 20 21 22 23 24 GGUV 19 20 21 22 23 On Prod
Slide 26: Normalized Wilrich Production – Vertical vs. Horizontal
Wilrich Resource Play N Normalized li d Wilrich Wil i h Production P d ti – Vertical V ti l vs. H Horizontal i t l 10,000 Average Wilrich Vertical 00/02‐26‐055‐20W5/0 00/13‐25‐055‐20W5/0 Wilrich HZ (1500m) 00/12‐05‐056‐20W5/0 Wilrich HZ (1334m) 00/14‐05‐056‐20W5/0 Wilrich HZ (640m) Daily Gas Producc
Slide 27: Wilrich Economic Comparison
Wilrich Resource Play E Economic i CComparison i – Vertical V ti l vs. H Horizontal i t l 9,000 Average Wilrich Vertical 00/02 00/02‐26‐055‐20W5/0 26 055 20W5/0 8,000 00/13‐25‐055‐20W5/0 Wilrich HZ (1500m) High Hz 00/12‐05‐056‐20W5/0 Wilrich HZ (1334m) 7,000 00/14‐05‐056‐20W5/0 Wilrich HZ (640m) Ave
Slide 28: Wilrich Horizontal Development Opportunities
Wilrich Resource Play H i Horizontal t lDDevelopment l tOOpportunities t iti Peyto HZ Wilrich Locations (138) HZ Wilrich On Production (2 Gross, 1.5 net) HZ Wilrich PUD Locations ((19 9ggross, oss, 18.70 8 0 Net) et) HZ Wilrich PA Locations (1 gross, 0.75 Net) HZ Wilrich Possible Locations (116 Gros
Slide 29: Other Resource Plays: Horizontal MSF Pilot #4 and on
Other Resource Plays H i Horizontal t l MSF Pil Pilott #4 and d on 29 6/4/2010
Slide 30: Technical Challenges
Technical Challenges H i Horizontal t l MSF Di Directional ti l Drilling D illi Geo-steer down to Geo-Steering & Drilling Hazards avoid popping out of sand. Once out is difficult to get back down. drape Geo-steer down to fi d sand find d if crossed d small fault Geo-steer down to find sand using 3D
Slide 31: Logistical Issues
Logistical Issues S Summer vs. Wi t C Winter l ti Completions 31 6/4/2010
Slide 32: Our Conclusions
Tight Gas Resource Plays H i Horizontal t l MSF Pil Pilott P Projects j t – Our O Conclusions C l i • It’s still early • Results so far are veryy encouraging g g • Optimization work yet to happen • More zones to be tested • Ability Abilit tto operate t in i summer a bi big plus l • Returns for Peyto
Slide 33: Peyto Full-Cycle Gas Supply Cost
Turning Upside into Value P t Full-Cycle Peyto F ll C l G Gas S Supply l CCostt $10 $10 s Price ($/mcffe) cf) $8 $8 s Price ($/mc $6 $6 Cnd$/mcf Before AECO Monthly Gas Realized Gas Tax Profit (46% ave) $4 $4 PDP FD&A Peyto R G&A Interest G&A, I t t $2 $2 Royalties Op Costs (incl. Trans.) $- $ $- $
Slide 34: Full Cycle Supply Cost Industry Comparison
Full Cycle Supply Cost I d t Comparison Industry C i 2009 Low Cost Producer 100% s Cash+FDA PP ($/boe) / Tottal Revenue 90% 80% 70% 60% 50% boe) ($/b 40% 30% 20% Total Costs 10% 0% 34 6/4/2010
Slide 35: 2010 Outlook
2010 Outlook Increased Capital Budget • Capital p Expenditures p ($225 - $ ($ $250 million before DRC)) • Drill & Re-Enter New Gas Locations (Hz and Vert.) • Expand Gas Gathering & Processing Infrastructure • Expand Undeveloped Inventory • Evaluate Impact of New Technology on Other Zones • Take Adva
Slide 36: 2011 Outlook
2011 Outlook Evolving Corporate Structure $500 Peyto Exploration Peyto Energy Millions Peyto Energy and Development Corp. Trust $450 Corp. $400 Growth + Growth E&P Growing Trust Optimized Profit Income E&P Sharing $350 ? $300 $250 $200 $150 $100 $50 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 20
Slide 37: Gas Marketing
Gas Marketing F t Future Sales S l Financial Hedges - Gas Pricing 2009 2010 2011 2012 0-Jan-00 GJ/d ($/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 From To 1-Apr-09 p 31-Oct-09 5000 $ $7.850 ● ● ● ● ● ● ● 1-Nov-08 31-Mar-09 5000 $9.700 1-Apr-09 31-Oct-09 5000 $8.120 ●
Slide 38: Advisory
Advisory R Regarding di F Forward-Looking d L ki St Statements t t 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", "ongoing
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