Peyto Exploration & Development Corp. · TSX:PEY

Peyto Exploration & Development — Investor Presentation (January 2023)

50 slides from Peyto Exploration & Development's investor presentation, Jan 13, 2023

  1. Slide 1: January 13, 2023

    January 13, 2023

  2. Slide 2: New To Peyto? Who We Are

    New To Peyto? Who We Are PEYTO Exploration & Development Corp.  5th Largest Canadian Natural Gas Producer  636 MMcfe/d (12% liquids)  Pure Play Alberta Deep Basin Multizone stacked resource, 5.4 TCFe 2P reserves  Long Reserve Life Asset 9yr PDP*, 25yr 2P, sweet gas, no mobile water risk  Return

  3. Slide 3: 21 Year Growth Per Share

    PEY.TO 21 Year Growth Per Share PEYTO Exploration & Development Corp. YoY +12% +6% +117% +52% 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

  4. Slide 4: Total Shareholder Return Model

    PEY.TO Total Shareholder Return Model PEYTO Exploration & Development Corp. Future Prospects Past Profits (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 “Advisories” section of this presentation

  5. Slide 5: Return Profits to Shareholders with Dividends

    PEY.TO Return Profits to Shareholders with Dividends PEYTO Exploration & Development Corp. Peyto Ctd. Earnings Q3/22 Peyto applies hedge accounting, meaning, earnings are not skewed by large unrealized gains or losses during a quarter Peyto Ctd. Dist/Div. Q3/22 * 2022 and beyond provided for illustr

  6. Slide 6: Natural Gas: Supplying Energy for Life

    PEY.TO Natural Gas: Supplying Energy for Life PEYTO Exploration & Development Corp. When it gets really cold, Source: https://www.theweathernetwork.com/ca/monthly/alberta/edmonton natural gas heats our homes but also plays a greater role in supplying electricity ! Natural Gas  Safe X  Reliable  A

  7. Slide 7: Global Natural Gas Markets

    Global Natural Gas Markets 385 BCF/d Global Marketplace in 2019* (pre-Covid) PEYTO Exploration & Development Corp. 28% of Half of all world gas Russia (CIS) exports market 83 BCF/d Europe 56 BCF/d North America 23 BCF/d 27 BCF/d Export 109 BCF/d Supply 54 BCF/d 102 BCF/d Demand 31 BCF/d 7 BCF/d Expo

  8. Slide 8: North American Natural Gas

    North American Natural Gas Domestic and Export Markets PEYTO Exploration & Development Corp. LNG Canada 2 BCF/d (2025) 17 BCF/d Supply 11 BCF/d Demand Peyto 6 BCF/d Export (US) 95 BCF/d Supply 6 BCF/d Import (CND) 83 BCF/d Demand Europe needs 18 BCF/d Export 31 BCF/d of imports (27 BCF/d coming from

  9. Slide 9: Emissions Leader

    PEY.TO Emissions 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 75.1 80.3 62.8 56.0 48.6 50.4 45.6 42.4 40.8 19.4 19.0 18.8 18.6 18.1 1990 2005 2020 1990 2005 202

  10. Slide 10: Continuously Improving Emissions

    PEY.TO Continuously Improving Emissions PEYTO Exploration & Development Corp. Peyto GHG 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 Methane Emissions Intensity 8.34 8.19 8.07 7.0

  11. Slide 11: 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

  12. Slide 12: Natural Gas Is The Solution

    Natural Gas Is The Solution USA Has Made the Biggest CO2 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 co

  13. Slide 13: Profitable Business

    Peyto’s Profitable Business PEYTO Exploration & Development Corp. 13

  14. Slide 14: 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 $365

  15. Slide 15: 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“ Cumulative To Date Lowest realized price ever, but also lowest total supply $6 cost ever Bonus $4 PDP FD&A $2 Continuous improvement in 44%

  16. Slide 16: Peyto's Moat is a Low-Cost Advantage

    Peyto’s Profitable Business Peyto’s “Moat” is a Low-Cost Advantage PEYTO Exploration & Development Corp. Total Cash Costs (excl Royalties) $25 $25 Large/Integrated Producers Intermediate Producers Junior Producers Gas Producers Peyto Peyto Advantage $20 The Peyto Advantage represents around $8/boe (

  17. Slide 17: 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 0% $0.00 Last 21 Years Avg. FFO/Revenue Intermediate Producer Avg FFO/Rev (Peter's &Co.) AECO Dail

  18. Slide 18: Unique Assets

    Peyto’s Unique Assets PEYTO Exploration & Development Corp. Peyto Chambers Gas Plant 18

  19. Slide 19: Geographically Focused Core Areas

    Peyto’s Assets Geographically Focused Core Areas PEYTO Exploration & Development Corp. • 672,000 net acres (Q322) • 12 operated gas plants -- Cutbank - (970 mmcf/d net capacity) Kakwa • 2,000+ km pipelines • 1,700+ producing zones Leland • 107,000 boe/d Greater Of Production: Sundance Processed by

  20. Slide 20: Multi Zone Stacked Sandstone Reservoirs

    Peyto’s Assets Multi Zone Stacked Sandstone Reservoirs PEYTO Exploration & Development Corp. Up to per section* *NGL recoveries can increase by 15+ bbl/mmcf with deeper cutting processing facilities Reserves are 2P recoverable in a section at 85% RF 20

  21. Slide 21: Deep Basin Lands Go A Long Way

    Peyto’s Assets Deep Basin Lands Go A Long Way PEYTO Exploration & Development Corp. 1,200 Peyto Lands 1,000 Net Peyto Sections 800 Net Sections 600 400 Net Sections of Cardium, Dunvegan, Notikewin, Falher, Wilrich, Bluesky, Cadomin, Montney & Duvernay 200 28 - 1999 2000 2001 2002 2003 2004 2005 2006

  22. Slide 22: 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 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

  23. Slide 23: 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

  24. Slide 24: Whitehorse/Minehead ERHs

    Peyto’s Assets Whitehorse/Minehead ERHs PEYTO Exploration & Development Corp. Sundance Whitehorse/ Minehead Farm-in Whitehorse Brazeau History and Future Plans : • 2017/18: Acquired farm-in position and crown land and drilled ten, 1-mile horizontals • 2021/22: Successfully tested three extended reac

  25. Slide 25: Increased Facility Ownership And Control

    Peyto’s Assets Increased Facility Ownership And Control PEYTO Exploration & Development Corp. Cutbank Kakwa Peyto Gas Plants Cecilia YE 2022 W Oldman (with Deep Cut) & 1 Oldman 125 mmcf/d Oldman North 2 Nosehill 125 mmcf/d Wildhay Nosehill 3 Wildhay 75 mmcf/d 4 Galloway 60 mmcf/d Shut in Swanson 5 O

  26. Slide 26: 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 ISD (Q4 2023) Location Advantages: • 900 MW Combined-Cycle • Nova/Alliance Sup

  27. Slide 27: 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% (BCFe) 5,000 CAGR 1,571 4,000 15% 7,655 CAGR 3,000 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

  28. Slide 28: What Shareholders Currently Own

    Peyto’s Assets What Shareholders Currently Own PEYTO Exploration & Development Corp. Peyto’s Infrastructure Value (Replacement costs @ 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

  29. Slide 29: Incredible Returns

    Peyto’s Incredible Returns PEYTO Exploration & Development Corp. 29

  30. Slide 30: 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 NGLs 5000 +18 bbl/mmcf NGLs

  31. Slide 31: Extended Reach Horizontals

    Peyto’s Returns Extended Reach Horizontals PEYTO Exploration & Development Corp. Year Over Year Performance - All Wilrich Peyto’s Extended Reach Horizontals (ERH) continue to 7000 be a large part of the Wilrich 6000 capital programs over last 2 Gas Rate (mcf/d) 5000 years. Application to the Falher

  32. Slide 32: Peyto Returns

    Peyto Returns PEYTO Exploration & Development Corp. 14 wells have paid out full cycle capital already with 33 paying out their half cycle costs. 45% of spuds projected to payout full cycle capital in less than 1-year. Chambers Cardium Non-Op results vastly poorer than Peyto drilled wells. 32

  33. Slide 33: Updated Template Economics At Recent Strip

    Peyto’s Returns Updated Template Economics At Recent Strip PEYTO Exploration & Development Corp. Brazeau / Chambers Greater Sundance Whitehorse Type Curve Economics Cardium Notikewin Wilrich ERH Notikewin Falher ERH Cardium Dunvegan Wilrich ERH Wilrich ERH Gas [MMcf] 2,566 3,488 4,133 4,811 4,293 1,

  34. Slide 34: 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 2022F 2023F 2024F 2025F 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

  35. Slide 35: Peyto's Future

    Peyto’s Future PEYTO Exploration & Development Corp. Ensign Rig #401 has been drilling for Peyto for over 12 years. 35

  36. Slide 36: 2023 Focus

    Peyto’s Future 2023 Focus PEYTO Exploration & Development Corp.  Drill ~85 Net Hz Wells • 4 to 5 rigs (back-end loaded)  Expand Infrastructure • New Whitehorse Gas Plant (relocate Galloway) • Construct Gas Pipeline for Cascade Power Supply Increase Opportunities • Farm-in Minehead Area, Other Tuc

  37. Slide 37: 2023 Capital Plans

    Peyto’s Future 2023 Capital Plans PEYTO Exploration & Development Corp. 2023 Capital Program GSA • Spend $425MM - $475MM Cascade Power Plant Connection • Drill 75-85 net locations (4 rigs in Winter, 5 rigs in back half) • Focused across 3 areas (Sundance, Brazeau, Whitehorse) Whitehorse • Drill init

  38. Slide 38: Steady Production Growth with Less Than CF

    Peyto’s Future Steady Production Growth with Less Than CF PEYTO Exploration & Development Corp. $9 $8 $12,500/boe/d dropping to $10,000/boe/d if price drops 100,000 $17,500/boe/d $7 $20,600/boe/d $17,300/boe/d $16,800/boe/d $6 $10,900/boe/d $9,000/boe/d $15,100/boe/d $12,000/boe/d AECO 7A ($/GJ) $1

  39. Slide 39: Peyto's Gas Markets

    Gas Marketing Peyto’s Gas Markets PEYTO Exploration & Development Corp. AECO/ NGTL Empress Emerson 2 Malin Ventura Dawn Henry Hub 39

  40. Slide 40: Future Market Diversification and Gas Price Protection

    Gas Marketing Future Market Diversification and Gas Price Protection PEYTO Exploration & Development Corp. Realized Prices $C/GJ @ $5 Henry $3.74 $4.19 $3.93 $3.92 $4.80 $5.40 $4.90 $4.91 $4.91 $4.93 $4.87 $4.87 $4.88 $4.88 $4.88 $4.88 $4.84 Hub, $4 AECO, $120/MWh, 1.35 FX Peyto has over 55% gas hed

  41. Slide 41: Appendix

    Appendix PEYTO Exploration & Development Corp.  Gas Marketing  Quarterly Track Record  Tax Pools  Leverage 41

  42. Slide 42: Fixed & Floating Price Gas Contracts

    Gas Marketing Fixed & Floating Price Gas Contracts PEYTO Exploration & Development Corp. Fixed Price Contracts Floating Price Contracts (MMBtu/d) 1.15 Heating value GJ/mcf; 1.350 CAD/USD *Peyto forecasts gas deliveries to Cascade to commence in Q4 2023, but actual commencement may differ from antici

  43. Slide 43: 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 monthly price in 12 of the $8.00 $8.00 last 16 years using a $7.00 methodical hedging strategy. $7.00 $6.00 $6.00 $5.00 $5.00 $4.00

  44. Slide 44: Rockies LNG Partnership – West Coast LNG Option

    Gas Marketing Rockies LNG Partnership – West Coast LNG Option PEYTO Exploration & Development Corp. 44

  45. Slide 45: Quarterly Track Record

    Quarterly Track Record PEYTO Exploration & Development Corp. 2022 2021 2020 2019 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Operations Production Oil & NGLs (bbl/d) 13,263 13,411 12,273 11,653 11,038 11,164 12,289 12,138 11,308 11,256 11,263 11,126 11,585 10,922 Natural gas (mcf/d) 544,843 5

  46. Slide 46: 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 $- 2021* 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 CEC UCC (

  47. Slide 47: Peyto's Debt

    Peyto’s Debt Blend of fixed term and revolving debt PEYTO Exploration & Development Corp. End of $0.8B Revolver Oct ‘25 $65 4.26% $100 3.70% MM$ $100 3.95% $100 4.39% $40USD 3.98% Debt in CND$ unless otherwise indicated 47

  48. Slide 48: 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",

  49. Slide 49: 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

  50. Slide 50: Finding, Development and Acquisition Costs

    Advisories PEYTO Exploration & Development Corp. Finding, Development and Acquisition Costs This presentation contains disclosure regarding finding, development and acquisition costs ("FD&A"). The aggregate of the exploration and development costs incurred in the most recent financial year and the c

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