Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Investor Presentation (March 2025)
42 slides from Peyto Exploration & Development's investor presentation, March 2025
Slide 1: Corporate Presentation March 2025
www.peyto.com Corporate Presentation March 2025
Slide 2: Who is Peyto | Corporate Overview
WHO IS PEYTO | CORPORATE OVERVIEW 26-year publicly traded company focused Focused Assets exclusively on the Alberta Deep Basin ALBERTA 6th Largest 134,000 boe/d (~12% liquids) February 2025 Canadian Gas Long reserve life assets (10yr PDP RLI , 28yr Producer 2P RLI @ 2024YE) Deep Basin 1.1 million ne
Slide 3: Who is Peyto | Resilient Strategy
WHO IS PEYTO| RESILIENT STRATEGY 1 2024 YE - Operating, Processing, Compression Sharpe Ratio - LTM ROE Last 10 Years, Quarterly and Transportations Costs 1.4 Stable returns comparable 1.2 $25.00 1 to Large Cap NA E&Ps 0.8 $20.00 Resilient to changing 0.6 market conditions 0.4 $15.00 0.2 US$/BOE 0 $1
Slide 4: Who is Peyto | Focused Core Areas
WHO IS PEYTO | FOCUSED CORE AREAS ✓ 1.1MM net acres of Alberta Deep Cutbank Basin Lands ✓ Own and operate 17 gas processing facilities with over 1.5 bcf/d of gross production capacity Kakwa ✓ Proximal to major pipeline egress (NGTL, Alliance) ✓ Drilled over 1,370 horizontals to date across 14 discre
Slide 5: Why We Do It | Natural Gas
WHY WE DO IT | NATURAL GAS Demand for Natural Gas Continues World Energy Consumption by Source (1965-2023) 700 Fossil fuels represent over 80% of 600 the world’s energy consumption. 500 Exajoules 400 300 200 100 0 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Oil Natural Gas Coal Nucle
Slide 6: Why We Do It | Growing LNG Capacity
WHY WE DO IT | GROWING LNG CAPACITY LNG growth in North America in 2024 - 2028 ✓ Mexico 0.6 bcf/d ✓ Plaquemines 3.2 bcf/d ✓ Corpus Christi 1.5 bcf/d 12 bcf/d of ✓ LNG Canada 1.8 bcf/d ✓ Golden Pass 2.4 bcf/d new capacity! ✓ Rio Grande 2.3 bcf/d • Current North American LNG export capacity is ~14 bcf
Slide 7: North American Demand for Natural Gas Continues to Grow
WHY WE DO IT | NATURAL GAS North American Demand for Natural Gas Continues to Grow USA Electricity Generation from Gas Further coal to gas switching could add ~5 3500 Coal to gas switching in the bcf/d of gas demand by 2030 or as much 70 USA has added 10 – 15 bcf/d as 16 bcf/d if all coal plants are
Slide 8: How We Do It | Profitable Growth
HOW WE DO IT | PROFITABLE GROWTH 2023 PEY acquires Repsol 180,000 Assets $8,000 Peyto returns profits to shareholders through dividends. 2022 160,000 Over time, Peyto expects to match PEY acquires assets in $7,000 Cumulative Earnings/Dividends (MM$) dividends to earnings but in the short the GBA and
Slide 9: How We Do It | Deep Basin Advantage
HOW WE DO IT | DEEP BASIN ADVANTAGE (1) (3) 2024 YE PDP FD&A ($/mcfe) Average Injected Water per Well by Formation, 2023 $5.00 500,000 Fit-for-purpose, nimble rigs (telescopic Better reservoir quality than doubles) decrease cycle time and lower other plays such as Montney Water per Well(bbl/Well) $4
Slide 10: How We Do It | Low Costs Drive Margins
HOW WE DO IT | LOW COSTS DRIVE MARGINS At Peyto we focus on costs since they are “sticky”, and they drive superior margins. Peyto’s margins were even stronger than liquids-weighted producers in 2023. 1 2024 Cash Costs ($/mcfe) 2024 YE Results $7.00 65% PEY $6.00 60% 55% 2 After-tax Margin $5.00 50%
Slide 11: How We Do It | Own and Control
HOW WE DO IT | OWN AND CONTROL Peyto controls 1.5 bcf/d of gross Gross Gross Raw Net Capacity Gas Plants Capacity Throughput processing capacity with total (MMcf/d) (MMcf/d) (MMcf/d)* utilization of 58%. This leaves plenty of room for growth in the future 1 Edson (WI: 83%) 275 228 126 without substa
Slide 12: How We Do It | Continuous Improvement
HOW WE DO IT | CONTINUOUS IMPROVEMENT Average Well Production by Spud Year Unit Drill and Complete Costs 9,000 $900 By Year By Quarter 8,000 In 2024, Peyto realized a >25% uplift $800 in productivity relative to previous $700 7,000 years. Peyto continues to optimize $600 6,000 well designs, increasi
Slide 13: How We Do It | Repsol Update
HOW WE DO IT | REPSOL UPDATE Successful Development of Acquisition Lands 14,000 12,000 Outperforming our recent Develop and Optimize New Lands programs by ~40% 10,000 ✓ Started drilling immediately and have ~2 rigs MCF/D 8,000 running on acquired lands 6,000 ✓ Drills include locations across the acq
Slide 14: How We Do It | Field Optimization
HOW WE DO IT | FIELD OPTIMIZATION Cecilia Booster to Continuing to optimize our Central Foothills Gas Gathering move gas to Wild infrastructure for cost River and Edson System (CFGGS) Gas Plants savings, increased reliability, and revenue generation. Line looping to debottleneck Added 3rd party volu
Slide 15: How We Do It | Growing Opportunities
HOW WE DO IT| GROWING OPPORTUNITIES Kakwa Initial Falher Results 25,000 20,000 15,000 MCF/D Kakwa GP 10,000 5,000 0 0 50 100 150 200 Days New Falher Drills PEY Spirit River Land Peyto Well 1 Peyto Well 2 Offset Average Spirit River Horizontals • Through a series of Crown land sales and swaps, Peyto
Slide 16: Returns | Robust Results
PEYTO’S RETURNS| ROBUST RESULTS Wells On Stream to end-Dec: 2024 Drilling Program Year to Date IRR on Acquired Lands (33 wells): 64% 66 gross / 64.3 net Price Deck: Flat, CA$3.00/GJ, US$70/bbl WTI IRR on Legacy Lands (33 wells): 50% Full Cycle Economics - $1,215,000/well Entire 2024 Program Forecast
Slide 17: Returns | Return on Equity
PEYTO’S RETURNS | RETURN ON EQUITY Investors rarely get to participate in the wells themselves, making 60% type well economics somewhat $12 meaningless. ROE and ROCE are 24% the returns investors get, after 50% deducting corporate costs. $10 40% $8 26 yr Avg ROE to 2024 30% $6 20% $4 14% 10% 0% $2 $
Slide 18: Future | 2025 Focus
PEYTO’S FUTURE | 2025 FOCUS ✓ Drill ~70 – 80 Net Hz Wells Focused on acquired lands and legacy Peyto properties Add 43,000 – 48,000 boe/d (~$10,500/boed) to offset ~27% base production decline $450M- ✓ Optimize Infrastructure Gathering and Plant Debottlenecking Projects Sundance Field Compression pr
Slide 19: Future | Undrilled Inventory
PEYTO’S FUTURE | UNDRILLED INVENTORY(1) Booked Inventory (Volume weighted) Average IRR by Species (3-year plan) $3.00/GJ and US$70/bbl WTI 6% 25% 120% 109% 105% Cardium 100% 24% Dunvegan 83% 80% Notikewin 60% 60% 52% Falher 9% 40% Wilrich Bluesky Bullhead 20% 19% 0% 17% Notikewin Dunvegan Wilrich Fa
Slide 20: Future | Supply Cost Goals
PEYTO’S FUTURE| SUPPLY COST GOALS 2025 $/mcfe 2021 2022 2023 2024 Goals Repeat great results (3) from 2024 program PDP FD&A (1) $0.97 $1.41 $1.21 $1.00 Royalties $0.22 $1.00 OPEX $0.53 Cash Costs(1) $1.25 $1.62 $1.42 $1.46 Transport $0.30 $1.43 G&A $0.05 Royalties up. Total Supply Cost $2.22 $3.03 $
Slide 21: Past | Peyto's Future
PEYTO’S PAST | PEYTO’S FUTURE 180,000 Modest production growth (5-10%) $8.00 increases value of our assets, generates 160,000 $7.00 free cash flow to fund the capital program, 140,000 pay 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,
Slide 22: Future | Cash Costs
PEYTO’S FUTURE | CASH COSTS Still a Leader in the Industry Despite being the lowest cost Total Cash Costs (excluding(1) Royalties and Taxes) producer, Peyto strives to reduce $2.50 controllable unit costs. Peyto expects to achieve this through higher plant utilization, operational improvements, and
Slide 23: Marketing
PEYTO’S MARKETING Gas Hedging and Diversification Strategy Moderates Volatility Gas Price(1) ($/mcf) AECO $10.00 7% $9.00 $8.00 Kineticor Edmonton Empress $7.00 Emerson Dawn/ $6.00 Power Calgary 18% 8% Parkway $5.00 21% $4.00 19% $3.00 $2.00 $1.00 Ventura Chicago $- 2010 2017 2024 2004 2005 2006 200
Slide 24: Gas Marketing
GAS MARKETING Future Market Diversification and Gas Price Protection Peyto has used financial basis and physical transportation agreements between AECO and other 480 MMcf/d fixed at $4.14/Mcf in 2025 hubs to gain market diversification and exposure to 366 MMcf/d fixed at $4.02/Mcf in 2026 demand reg
Slide 25: 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 deductions for Fuel (~2%). USD contracts converted at 1.43
Slide 26: 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. • Henry Hub, Malin, Dawn and Chicago volumes are sold using physical basis deals from AECO
Slide 27: NGL Marketing
NGL MARKETING Peyto uses swaps and costless collars to secure Fixed Price Contracts liquids revenue as well. USD contracts converted at 1.43CAD/USD 27
Slide 28: Diversification | Power
DIVERSIFICATION| POWER Cascade Gas Supply Agreement Peyto gas market diversification includes exposure to Alberta power pool prices Power Transmission Lines ✓ A 15-year Gas Supply Agreement, which came into effect on August 31st, 2024, to directly supply ~52 MMcf/d to Kineticor’s Cascade Power Proje
Slide 29: Gas Diversification | LNG Opportunity
GAS DIVERSIFICATION| LNG OPPORTUNITY Peyto is part of the Rockies LNG Consortium whose goal is to Our Partners support the construction of another LNG project off the Rockies LNG is a partnership of Canadian natural gas producers working together to Westcoast of BC to supply the World with another 1
Slide 30: Peyto's Debt
PEYTO’S DEBT In June 2024, Peyto extended its Revolving Credit Facility and Amortizing Term Loan to October 13, 2027, and October 13, 2026, respectively. Peyto plans to reduce debt over the next 2 years targeting leverage under 1.0 Debt/EBITDA(2). Net Debt(1) of $1.35 billion at December Date Issued
Slide 31: Tax Pools
PEYTO’S TAX POOLS $1.2B $1,800 $1,600 $1,400 $1,200 $1,000 Federal Tax Pools $800 Q4/24 Millions $600 $8.9B $400 $200 $- 2001 2024 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 CEC UCC (25%) CEE (100%) CDE (30%) COGPE (10%) Ta
Slide 32: Advisories
ADVISORIES Forward Looking Statements This presentation contains forward-looking information (forward-looking statements). Words such as "guidance", "may", "can", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "aim", "seek", "propose", "contemplate", "estimate", "focu
Slide 33: Drilling Locations
Drilling Locations This presentation discloses drilling locations in three categories: (i) proved locations; (ii) probable locations; and (iii) unbooked locations. In respect of the Acquisition, proved locations and probable locations are derived from the GLJ Acquisition Report and account for drill
Slide 34: Oil and Gas Metrics
Oil and Gas Metrics Peyto has used a number of oil and gas metrics herein which do not have standardized meanings and therefore may be calculated differently from the metrics presented by other oil and gas companies. Such metrics include "DCET", "EUR", "payout", "Before tax IRR" and "NPV @ 10%". DCE
Slide 35: Non-GAAP Measures: Netback and Funds from Operations
Netback is a non-GAAP measure that represents the profit margin associated with the production and sale of petroleum and natural gas. Peyto computes "field netback per Mcfe" as commodity sales from production, plus third-party sales net of purchases, if any, plus other income, less royalties, operat
Slide 36: History
PEYTO’S HISTORY The Ensign #401 rig has been drilling for Peyto since November 2009. 36
Slide 37: History | Per Share Growth
PEYTO’S HISTORY| PER SHARE GROWTH Over time, the Peyto model is designed to deliver a superior total return with per share growth in value, income and assets. 2 3 Production/share Reserves/share1 FFO/share 2 2P NPV10/debt adj. share (MMcfe/y/mm sh) (2P Bcfe/mm sh) ($/sh) ($/sh) $57.74 $4.85 41.6 140
Slide 38: History | Shareholder Returns
PEYTO’S HISTORY| SHAREHOLDER RETURNS $70.00 180,000 160,000 $60.00 Peyto has a 26-year history of growing value, income and assets while delivering strong returns to 140,000 $50.00 shareholders Dec-31-2024 $17.14/sh 120,000 Future Prospects $40.00 100,000 $/share boe/d Enterprise $30.00 Value 80,000
Slide 39: History | Cost Control
PEYTO’S HISTORY| COST CONTROL Peyto has been successfully controlling supply costs to preserve margin 33% on average during last 10 years. $/mcfe 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 PDP FD&A(1) $1.64 $1.44 $1.36 $1.18 $1.55 $1.06 $0.97 $1.41 $1.21 $1.00(3) Cash Costs(1) $0.81 $0.76 $0.
Slide 40: History | Profitable Reserves Growth
PEYTO’S HISTORY| PROFITABLE RESERVES GROWTH Annual Reserves Per Share Reserves Life Index(1) (by Category) (Reserves/ Q4 Annualized Production) Reserves per Share (boe/sh) 8.00 35 6.91 28 Reserves Life Index 7.00 30 6.00 25 5.00 20 4.00 15 10 3.00 2.00 10 1.00 5 - - 2003 2001 2005 2007 2009 2011 201
Slide 41: History | Reserve Growth
PEYTO’S HISTORY| RESERVE GROWTH Over the past 26 years, Peyto has discovered 11.2 TCFe of natural gas reserves. 12,000 10,000 2,947 8.2 (BCFe) 8,000 6,000 25% CAGR 2,412 11,167 2,843 TCFe of 4,000 2P Reserves 2,000 2,965 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20
Slide 42: History | Land Growth
PEYTO’S HISTORY| LAND GROWTH Peyto continues to expand its Alberta Deep Basin footprint with additional drilling inventory. 1.1 Peyto Lands 2,000 1,800 1,600 Million Net Acres 1,400 1,725 1,200 Net Sections 1,000 800 Net Peyto Sections 600 400 200 - 1999 2004 2009 2014 2019 2024 Lands as of Dec 31,
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