Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Shareholder Meeting (May 2016)
39 slides from Peyto Exploration & Development's shareholder meeting presentation, May 2016
Slide 1: Annual General Meeting May 2016
www.Peyto.com Annual General Meeting May 2016
Slide 2: The Peyto Story: A President's Perspective
The Peyto Story A President’s Perspective PEYTO Exploration & Development Corp. 2 5/17/2016
Slide 3: 17 Years Of Unmatched Success
The Peyto Story 17 Years Of Unmatched Success PEYTO Exploration & Development Corp. th 1998‐2015 3 5/17/2016
Slide 4: 2015 Commodity Drop
The Peyto Story 2015 Commodity Drop PEYTO Exploration & Development Corp. $12 $120 $10 $100 $CDN/GJ $8 $80 $CDN/BBL $6 $60 (18%) $4 $40 (30%) $2 $20 $- $- Aeco Monthly Gas Price CDN Light Sweet Oil Price 4 5/17/2016
Slide 5: 2015 Stock Markets
The Peyto Story 2015 Stock Markets PEYTO Exploration & Development Corp. 50% 40% 2015 30% 20% 10% 0% -10% -20% -30% -40% -50% S&P/TSX Capped Energy Index TOU ARX PEY 5 Share performance includes dividends as applicable. 5/17/2016
Slide 6: 100,000 boe/d Milestone
The Peyto Story 100,000 boe/d Milestone PEYTO Exploration & Development Corp. 6 BOE factor - 6 mcf = 1 bbl of oil equivalent 5/17/2016
Slide 7: 100,000 boe/d
The Peyto Story 100,000 boe/d PEYTO Exploration & Development Corp. Nov/15: Peyto $15 July 2009: produces Peyto drills first Hz 100,000 well 13-25-55-20W5 100,000 July 1, 2003: boe/d! Peyto Energy Trust Nov 2012: begins trading Peyto Oct. 31, 2002: produces 50,000 boe/d $10 Peyto produces 10,000 boe
Slide 8: $2B Earnings Milestone
The Peyto Story $2B Earnings Milestone PEYTO Exploration & Development Corp. 8 BOE factor - 6 mcf = 1 bbl of oil equivalent 5/17/2016
Slide 9: $2B Earnings
The Peyto Story $2B Earnings PEYTO Exploration & Development Corp. $800 $700 $600 $500 Peyto Cum. Earnings $400 Q4/15 $300 $200 $100 $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAPEX ($MM) Earnings Peyto Cum. Capital Q4/15 9 5/17/2016
Slide 10: More Profit Per Dollar Of Capital
The Peyto Story More Profit Per Dollar Of Capital PEYTO Exploration & Development Corp. 50% 43% 40% 40% 32% 32% 30% 21% 19% 20% 9% 10% 7% CTD Earnings/Capital 4% 2000-2015 0% -10% -6% PEY ARX CNQ VET ERF COG TOU RRC BTE SWN First Energy 10 5/17/2016
Slide 11: Profitably Grow Our Assets Per Share
The Peyto Story Profitably Grow Our Assets Per Share D&DA PEYTO Exploration & Development Corp. Production Growth Reserves Growth PDP FD&A Operating Costs (boe/d/mm D&DA shares) (2P Bcfe/mm D&DA shares) ($/Mcfe) w/transportation ($/Mcfe) $2.95 $2.88 852875 36 36 $2.35 $0.54 $2.39 $2.22 31 $2.26 $2.1
Slide 12: What We Believe
The Peyto Strategy What We Believe PEYTO Exploration & Development Corp. N “We believe nature’s gas is the fuel for the future.” N “We believe we can in the industry.” N “We believe in partnering with shareholders to make that profit, not by trying to make your money our money.” 12 5/17/2016
Slide 13: Low Costs, High Margins
The Peyto Strategy Low Costs, High Margins PEYTO Exploration & Development Corp. Q1/16 Unhedged Operating Margin 100% 80% 60% 40% 20% 0% Unhedged FFO/Revenue AAV VET BTE VII CPG TET POU PEYTO RRX ARX SRX KEL ERF PPY BNP PGF TOU BIR CR BXE PMT WCP -20% Q1 2016 -40% -60% 13 Unhedged Operating Margin i
Slide 14: Counter Cyclical Growth Per Share
The Peyto Strategy Counter Cyclical Growth Per Share PEYTO Exploration & Development Corp. liq prod/share gas prod/share Production per Unit or Share (boe/d per million) 700 AECO Forecast ($/GJ) 2016 YE Target $15 $75 AECO ($/GJ) >110,000 boe/d Share price w/div 600 $12 $60 500 Gas Price ($/GJ) PEY+
Slide 15: Canadian Gas Rig Count vs Gas Price
The Peyto Strategy Canadian Gas Rig Count vs Gas Price PEYTO Exploration & Development Corp. Baker Hughes Canadian Gas Rig Count 600 $14 500 $12 AECO Monthly ($/GJ) $10 400 $8 300 $6 200 $4 100 $2 0 $- 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 15 5/17/2016
Slide 16: US Gas Rig Count vs Gas Price
The Peyto Strategy US Gas Rig Count vs Gas Price PEYTO Exploration & Development Corp. 2,500 $14 $12 Baker Hughes US Gas Rig Count 2,000 $10 NYMEX ($/MMBTU) 1,500 $8 1,000 $6 $4 500 $2 0 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 16 5/17/2016
Slide 17: Counter Cyclical Growth Per Share
The Peyto Strategy Counter Cyclical Growth Per Share PEYTO Exploration & Development Corp. Canadian Gas Rig Count vs Peyto % Overspend 500 500% 450 450% Baker Hughes Canadian Gas Rig Count 400 400% 350 350% CAPEX/(FFO-Div) 300 300% 250 250% 200 200% 150 150% 100 100% 50 50% 0 0% 2001 2002 2003 2004
Slide 18: High Returns On Your Capital And Equity
The Peyto Strategy High Returns On Your Capital And Equity PEYTO Exploration & Development Corp. 2015 ROACE 30% 25% 20% 15% 10% 5% 0% -5% ? -10% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F Peyto ROACE Canadian Industry ROACE* *Scotiabank 18 5/17/2016
Slide 19: Ideas: Where To Invest The Next $5B
Peyto’s Ideas Where To Invest The Next $5B PEYTO Exploration & Development Corp. 19 5/17/2016
Slide 20: The Next 100,000 boe/d?
Peyto’s Ideas The Next 100,000 boe/d? PEYTO Exploration & Development Corp. 20 5/17/2016
Slide 21: First 100,000 boe/d: Starting With Nothing
Peyto’s First 100,000 boe/d Starting With Nothing PEYTO Exploration & Development Corp. 21 5/17/2016
Slide 22: Sundance Core Area
Peyto’s First 100,000 boe/d Sundance Core Area PEYTO Exploration & Development Corp. By YE 2002 • 44,985 net acres of land (70 sections) • 101 net wells drilled • 120 net zones on production 22 5/17/2016
Slide 23: Sundance at ~10,000 boe/d
Peyto’s First 100,000 boe/d Sundance at ~10,000 boe/d PEYTO Exploration & Development Corp. 20,000 • $240 MM Capex $15 ($310 MM Infl. Adj.) • 101 net wells drilled • 100 mmcf/d Oldman 15,000 Gas Plant $10 10,000 $5 5,000 0 $- 1998 1999 2000 2001 2002 2003 2004 2005 Peyto Production (boe/d) 23 5/17/2
Slide 24: Early Field Trips
Peyto’s First 100,000 boe/d Early Field Trips PEYTO Exploration & Development Corp. 24 5/17/2016
Slide 25: The Oldman Gas Plant
Peyto’s First 100,000 boe/d The 100 mmcf/d Oldman Gas Plant PEYTO Exploration & Development Corp. 25 5/17/2016
Slide 26: Greater Sundance Area Today
Peyto’s First 100,000 boe/d Greater Sundance Area Today PEYTO Exploration & Development Corp. • 202,430 net F F F F F FF F AF F CF FF C F FFFF FF F FF F G G FA F A F FF FAF FAAF FG F C F A FF GF F F G CG L L I C G FF AF F FF A F FAF AF AAF FAF AF AAF CF AAFA F AFAF AF AF A F AFA F AF FA DFA F FAA F
Slide 27: Next 100,000 boe/d?
Peyto’s Next 100,000 boe/d? PEYTO Exploration & Development Corp. 27 5/17/2016
Slide 28: Brazeau Core Area
Peyto’s Next 100,000 boe/d Brazeau Core Area PEYTO Exploration & Development Corp. By YE 2015 • 75,772 net Peyto Brazeau Sweet Gas Plant acres of land 100 mmcf/d N (118 sections) • 39 net hz wells N drilled N N N • 37 net wells on N production 28 5/17/2016
Slide 29: Brazeau At ~10,000 boe/d
Peyto’s Next 100,000 boe/d Brazeau At ~10,000 boe/d PEYTO Exploration & Development Corp. 20,000 $15 Sundance Production (boe/d) • $280 MM Capex Brazeau Production (boe/d) AECO Monthly ($/GJ) • 39 net wells drilled • 100 mmcf/d Brazeau 15,000 Gas Plant $10 10,000 $5 5,000 - $0 2012 2013 2014 2015 20
Slide 30: The Brazeau Gas Plant
Peyto’s Next 100,000 boe/d The 100 mmcf/d Brazeau Gas Plant PEYTO Exploration & Development Corp. 30 5/17/2016
Slide 31: How Long?
Peyto’s Next 100,000 boe/d How Long? PEYTO Exploration & Development Corp. Peyto Production (boe/d) $15 Greater Brazeau Area (boe/d) 100,000 AECO Monthly Gas Price ($/GJ) $10 50,000 $5 0 $- 31 BOE factor - 6 mcfe = 1 bbl of oil equivalent 5/17/2016
Slide 32: 2016 Outlook
Peyto’s Next 100,000 boe/d 2016 Outlook PEYTO Exploration & Development Corp. 2016 Goals* • 10% service cost reduction • Drilling off season PDP FD&A ~($1.50) • Longer laterals, more stages $/mcfe • Continuous operations • Natural gas heated water Slow down facility pre‐builds ~($0.70) • Cash Costs
Slide 33: A Simple Strategy
Peyto’s Next 100,000 boe/d A Simple Strategy PEYTO Exploration & Development Corp. • Invest in our own ideas • Build it ourselves • Operate it ourselves • Focus on maximum return • Stay concentrated, lean & efficient 33 5/17/2016
Slide 34: Focus On Returns
2016 Outlook Focus On Returns PEYTO Exploration & Development Corp. Species IP NGLs EUR D/C/E/T IRR @ IRR @ IRR @ IRR @ IRR @ Number of mmcfd bbl/mmcf BCFE /L/S/F Feb Feb Apr Apr 1/16 2.50/GJ 2016 $MM 22/16 22/16 1/16 Strip Flat Locations Strip Strip Strip (delay (10% prod. to less Nov Better strip
Slide 35: Summer Production Strategy
2016 Outlook Summer Production Strategy PEYTO Exploration & Development Corp. 120,000 102,200 boe/d exit 120,000 100,000 85,700 boe/d exit 100,000 Defer new production for 75,200 boe/d exit better gas 80,000 80,000 price? It’s a better IRR! 57,000 boe/d exit BOED 60,000 42,100 boe/d exit 51,000 adde
Slide 36: Complimentary Winter Hedging Strategy
2016 Outlook Complimentary Winter Hedging Strategy PEYTO Exploration & Development Corp. $12 100% 90% $10 80% 70% $8 % Hedged Price ($/mcf) 60% $6 50% 40% $4 30% CTD gain 20% $2 $351MM 10% Q1/16 $0 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 % Hedged Hedges to Come AECO ($/mcf) Pe
Slide 37: The Next Step
2016 Outlook The Next Step PEYTO Exploration & Development Corp. 37 5/17/2016
Slide 38: Questions?
Questions? PEYTO Exploration & Development Corp. 38 5/17/2016
Slide 39: 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
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