Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Investor Presentation (April 2024)
41 slides from Peyto Exploration & Development's investor presentation, April 2024
Slide 1: Corporate Presentation April 2024
www.peyto.com Corporate Presentation April 2024
Slide 2: Who is Peyto | Highlights
WHO IS PEYTO | HIGHLIGHTS 25-year publicly traded company focused Focused Assets exclusively in the Alberta Deep Basin ALBERTA 5th Largest ~127,000 boe/d (~13% liquids) Canadian Gas Long reserve life assets (10yr PDP, 30yr 2P Producer @ 2023YE) Deep Basin 1.1 million net acres Operate and control pr
Slide 3: Acquisition | Early Successes
ACQUISITION| EARLY SUCCESSES Early Success on 2023 Acquisition Lands 14,000 12,000 10,000 7 bcfe per well, $0.76/mcfe (DCET) 8,000 MCF/D 6,000 4,000 2,000 - 0 30 60 90 Days On Production 2020 (64) 2021 (96) 2022 (95) 2023 PEY (57) New Lands (8 wells) Acquisition Reserves Metrics(1) Gross Well Count
Slide 4: Acquisition | Field Integration
ACQUISITION| FIELD INTEGRATION Reactivate pipeline to Pipeline header modification to Field integration projects that have integrate Cecilia and Wild send Dunvegan gas to Wild River River and allow gas to flow for better liquid recoveries and been completed or in-progress to between the two faciliti
Slide 5: Why We Do It | Natural Gas
WHY WE DO IT | NATURAL GAS Fossil fuels represent 80% of the Demand for Natural Gas Continues world’s energy consumption. Natural gas can play a significant role to displace coal in the World Energy Consumption by Source (1965-2022) future and reduce emissions while doing so. 650 550 450 Exajoules 3
Slide 6: Why We Do It | Nat Gas Is the Solution
WHY WE DO IT | NAT GAS IS THE SOLUTION Global Carbon Emissions (2021) Absolute Change in CO2 Emissions from Fossil Fuels (2011-2021) (million tonnes of CO2) Rest of World China India Rest Vietnam China 21.7% Saudi Arabia 30.9% Iran Asia Indonesia Turkey Russia There is a great Pakistan Philippines o
Slide 7: Why We Do It | Growing LNG Capacity
WHY WE DO IT | GROWING LNG CAPACITY • Current North American LNG export capacity is 11.4 bcf/d • By end of 2025, capacity is expected to grow to 20 bcf/d and approach 25 bcf/d by the end of the decade Source: U.S. Energy Information Administration, Liquefaction Capacity File, and trade press, https:
Slide 8: How We Do It | Deep Basin Advantage
HOW WE DO IT | DEEP BASIN ADVANTAGE (1) $6.00 2023 YE PDP FD&A ($/mcfe) Average Injected Water per(3) Well by Formation, 2022 $5.00 Fit-for-purpose, nimble rigs (telescopic 500,000 doubles) decrease cycle time and lowers Water per Well(bbl/Well) costs which leads to better returns Better reservoir q
Slide 9: How We Do It | Focused Core Areas
HOW WE DO IT | FOCUSED CORE AREAS ✓ 1.1MM net acres of Alberta Cutbank Deep Basin Lands ✓ 17 gas processing facilities with over 1.5 bcf/d of gross production capacity Kakwa ✓ Proximal to major pipeline egress (NGTL, Alliance) ✓ Over 1,300 horizontals drilled to date across 13 discrete Greater Sunda
Slide 10: How We Do It | Own and Control
HOW WE DO IT | OWN AND CONTROL Gross Gross Raw Net Capacity Gas Plants Capacity Throughput (MMcf/d) (MMcf/d) (MMcf/d) 1 Edson (WI: 83%) 275 228 96 2 Swanson 130 130 73 3 Nosehill 125 125 73 4 Oldman (Deep Cut) 125 125 85 5 Brazeau 120 120 62 9 6 Oldman North 105 105 85 7 Wild River (WI: 81%) 100 81
Slide 11: How We Do It | Profitable Reserves Growth
HOW WE DO IT | PROFITABLE RESERVES GROWTH Annual Reserves Per Share Reserve Life Index1 (by Category) 8.00 (Reserves/ Q4 Annualized Production) Reserves per Share (boe/sh) 7.00 6.73 35 29.8 6.00 30 Reserve Life Index 5.00 25 4.00 20 3.00 15 10.1 2.00 10 1.00 5 - 0 2001 2003 2005 2007 2009 2011 2013
Slide 12: How We Do It | Cost Control
HOW WE DO IT | COST CONTROL Peyto has been successfully controlling supply costs to preserve margin >30% on average during last 10 years. $/mcfe 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 PDP FD&A(1) $2.25 $1.64 $1.44 $1.36 $1.18 $1.55 $1.06 $0.97 $1.41 $1.21(3) Cash Costs(1) $1.08 $0.81 $0.7
Slide 13: How We Do It | Continuous Improvement
HOW WE DO IT | CONTINUOUS IMPROVEMENT Average Well Production by Spud Year Unit Drill and Complete Costs 8000 $1,000 7000 $900 6000 $800 $700 5000 $600 MCF/D 4000 $500 $400 3000 $300 2000 $200 1000 $100 $0 Year Year Year Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 0 2019 2020 2021 2022 2022 2022 2022 2022 2023 202
Slide 14: Returns | Robust Results
PEYTO’S RETURNS| ROBUST RESULTS 2023 Drilling Program Individual Well Results 200% Wells On Stream to end-Dec: 72 gross / 67.8 net Price Deck: 2023 Realized Unhedged + 2024+ Realized Hedged (Feb-07-2024 strip) 2023 Capital Program IRR YTD = 34% 150% Includes ~$1,180k/well full cycle costs DNVG IRR =
Slide 15: Returns | Dunvegan HZ
PEYTO’S RETURNS| DUNVEGAN HZ Dunvegan Type Well The recent acquisition expands an emerging 6,000 Dunvegan play. Peyto has approximately 10-15 wells planned for 2024. 101 DNVG 5,000 Booked(1) 4,000 Locations MCF/D 3,000 2,000 1,000 6 PEY Drills 0 0 12 24 36 48 60 to Date Months on Production Type Wel
Slide 16: Returns | Return on Equity
PEYTO’S RETURNS | RETURN ON EQUITY Investors rarely get to participate 60% in the wells themselves, making $12 type well economics somewhat meaningless. ROE and ROCE are 25% 50% the returns investors get, after $10 deducting corporate costs. 40% $8 25 yr Avg ROE to 2023 30% $6 20% $4 14% 10% 0% $2 $
Slide 17: Returns | Dividends
PEYTO’S RETURNS | DIVIDENDS $4,000 Earnings are profits and Peyto returns those profits to shareholders through dividends. Peyto applies hedge accounting, so earnings are not skewed by $3,500 large unrealized gains or losses during a quarter. $3.4B Over time, Peyto expects to match dividends to $3,0
Slide 18: Future | Undrilled Inventory
PEYTO’S FUTURE | UNDRILLED INVENTORY(1) Booked Inventory (Volume weighted) Average IRR by Species (3-year plan) 6% $3.00/GJ and US$70/bbl WTI 25% 120% 109% 105% Cardium 100% 24% Dunvegan 83% 80% Notikewin 60% 60% 52% Falher 9% 40% Wilrich Bluesky Bullhead 20% 19% 17% 0% Notikewin Dunvegan Wilrich Fa
Slide 19: Future | 2024 Focus
PEYTO’S FUTURE | 2024 FOCUS ✓ Drill ~70 – 80 Net Hz Wells Focused on newly acquired lands and legacy Peyto properties Adds of 40,000 – 45,000 boe/d (~$11,000/boed) to offset 25% base production $450M- ✓ Optimize Infrastructure Realize synergies and debottlenecking opportunities with newly acquired i
Slide 20: Past | Peyto's Plan
PEYTO’S PAST | PEYTO’S PLAN 180,000 $8.00 Timing production growth to meet future 160,000 LNG capacity expansion, generates free $7.00 cash flow to fund capital program, pay 140,000 dividends and reduce debt. $6.00 120,000 $5.00 Price ($/GJ) WI BOE/D 100,000 $4.00 80,000 $3.00 60,000 $2.00 40,000 20
Slide 21: Future | Cash Costs
PEYTO’S FUTURE | CASH COSTS Still a Leader in the Industry Total Cash Costs(1) (excluding Royalties and Taxes) $2.50 Operating costs at our newly acquired facilities are high, but Peyto expects to lower unit operating costs with higher utilization and operational synergies. $2.00 Peyto Forecast Cash
Slide 22: Marketing
PEYTO’S MARKETING Gas Hedging and Diversification Strategy Moderates Volatility Gas Price(1) ($/mcf) AECO $10.00 0% $9.00 $8.00 Kineticor Edmonton $7.00 Empress Emerson $6.00 Power Calgary 28% $5.00 16% 9% Dawn $4.00 18% $3.00 $2.00 $1.00 Ventura Chicago $- 2012 2004 2005 2006 2007 2008 2009 2010 20
Slide 23: Gas Marketing
GAS MARKETING Future Market Diversification and Gas Price Protection Peyto has used financial basis deals between 459 MMcf/d fixed at AECO and other hubs to gain market $3.93/Mcf in 2024 and 435 MMcf/d fixed at diversification and allow us to hedge at $4.08/Mcf in 2025 various markets. This reduces
Slide 24: Gas Marketing: Fixed Price Gas Contracts
GAS MARKETING Peyto uses a dollar cost averaging approach to Fixed Price Gas Contracts smooth out the volatility in future prices by forward selling smaller blocks of production. Fixed price swaps give price certainty. Prices do not include a deducts for Fuel (~2%). USD contracts converted at 1.35 C
Slide 25: Gas Marketing: Floating Price Gas Contracts
GAS MARKETING Peyto has exposure to natural gas price upside with its diversification to premium markets in Floating Price Gas Contracts California, Ontario and the US mid-west and its Cascade Power contract. • Emerson 2 volumes are priced on the Emerson 2 index less transport and fuel of ~4%. • Hen
Slide 26: NGL Marketing
NGL MARKETING Peyto uses swaps and costless collars to secure Fixed Price Gas Contracts liquids revenue as well. 26
Slide 27: Diversification | Power
DIVERSIFICATION| POWER Cascade Gas Supply Agreement Peyto gas market diversification includes exposure to Alberta power pool prices • 15-year Gas Supply Agreement for ~52 MMcf/d to Kineticor’s Cascade Power Project, a 900MW combined cycle power generating facility • Expected onstream in Q2 2024 (onc
Slide 28: Gas Diversification | LNG Opportunity
GAS DIVERSIFICATION| LNG OPPORTUNITY Peyto is proud to participate in the Rockies LNG Consortium Our Partners whose goal is to support the construction of another LNG Rockies LNG is a partnership of Canadian natural gas producers working together to project off the Westcoast of BC to supply the Worl
Slide 29: Debt
PEYTO’S DEBT Peyto plans to reduce debt over the next 3 years targeting leverage under 1.0 Debt/EBITDA(2). Net Debt(1) of $1.36 billion as at Date Issued Rate Maturity Date Senior Secured Notes December 31, 2023: $65 million (CAD) May 1, 2015 4.26% May 1, 2025 $100 million (CAD) January 3, 2012 4.39
Slide 30: Tax Pools
PEYTO’S TAX POOLS $1.1B $1,800 $1,600 $1,400 $1,200 $1,000 Federal Tax Pools $800 Q4/23 Millions $600 $7.7B $400 $200 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 CEC UCC (25%) CEE (100%) CDE (30%) COGPE (10%) Tax Los
Slide 31: Advisories
ADVISORIES Forward Looking Statements This presentation contains forward-looking information (forward-looking statements). Words such as "guidance", "may", "can", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "aim", "seek", "propose", "contemplate", "estimate", "focu
Slide 32: Development Plan
Development Plan The Company has presented herein a three-year illustrative development plan that provides for developing both the acquired assets and Peyto's current assets. The development plan is based on a number of assumptions including, without limitation: the required reinvestment rates to ma
Slide 33: Oil and Gas Metrics
Oil and Gas Metrics Peyto has used a number of oil and gas metrics herein which do not have standardized meanings and therefore may be calculated differently from the metrics presented by other oil and gas companies. Such metrics include "DCET", "EUR", "payout", "Before tax IRR" and "NPV @ 10%". DCE
Slide 34: Netback and non-GAAP measures
Netback is a non-GAAP measure that represents the profit margin associated with the production and sale of petroleum and natural gas. Peyto computes "field netback per Mcfe" as commodity sales from production, plus third-party sales net of purchases, if any, plus other income, less royalties, operat
Slide 35: Peyto's History
PEYTO’S HISTORY The Ensign #401 rig has been drilling for Peyto since November 2009. 35
Slide 36: History | Per Share Growth
PEYTO’S HISTORY| PER SHARE GROWTH Over time, the Peyto model is designed to deliver a superior total return with per share growth in value, income and assets. Production/share Reserves/share 1 FFO/share 2 2P NPV5/debt adj. share 3 (MMcfe/y/mm sh) (2P Bcfe/mm sh) ($/sh) ($/sh) 1363 $4.85 $75.88 1307
Slide 37: History | Reserve Growth
PEYTO’S HISTORY| RESERVE GROWTH Over the past 25 years, Peyto has discovered 10.5 TCFe of natural gas reserves. 12,000 10,000 2,837 10.5 (BCFe) 8,000 6,000 4,000 26% CAGR 2,322 2,661 10,511 TCFe of Discovered Reserves 2,000 2,691 0 1999 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201
Slide 38: History | Land Growth
PEYTO’S HISTORY| LAND GROWTH Peyto continues to expand its Alberta Deep Basin footprint with additional drilling inventory. Peyto Lands 1.5 2,000 1,800 1,600 Million Gross Acres 1,400 1,200 Net Sections 1,747 1,000 800 600 Net Peyto Sections 400 200 - 1999 2001 2003 2005 2007 2009 2011 2013 2015 201
Slide 39: History | Emissions Leader
PEYTO’S HISTORY| EMISSIONS LEADER Emission Intensity by Source Type for Canadian Oil and Gas (1990, 2005, 2021) 140 140 Emmission Intensity per Barrel (kg CO2eq/bbl) 124.6 120 Peyto provides energy for the world for far less 120 emissions intensity than the average of the 96.1 Canadian Gas Industry.
Slide 40: 2023 Sustainability Report
2023 SUSTAINABILITY REPORT Environmental Social Governance Water Injected per BOE2 by Operator, 2022 2022 Key Figures Water per 6-Month BOE (bbl/BOE) 2.50 2.00 1.50 Low water use intensity 60 Total Employees 1.00 0.50 0.00 52% Women in the workforce 9.32 Peyto Methane Emissions Intensity1 10 Years 8
Slide 41: History | Emissions
PEYTO’S HISTORY | EMISSIONS Continuous Improvement Peyto GHG Emissions Intensity1 24.9 22.1 21.1 20.9 -32% 19.4 19.0 18.8 18.6 18.1 17.0 kgCO2/BOE in GHG Emissions Intensity1 2013 2014 2015 2016 2017 Scope 1 2018 Scope 2 2019 2020 2021 2022 Since 2013 Peyto Methane Emissions Intensity1 9.32 8.34 -68
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