Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Investor Presentation (August 2023)
43 slides from Peyto Exploration & Development's investor presentation, August 2023
Slide 1: Corporate Presentation August 2023
Slide 2: Who We Are?
Who We Are? PEYTO Exploration & Development Corp. One of Canada’s largest Natural Gas Producers 600,000 Mcfe/d (11% liquids) Pure Play Alberta Deep Basin Multizone stacked resource, 5.6 TCFe 2P reserves (2022 YE) Long Reserve Life Asset 9yr PDP*, 24yr 2P, sweet gas, no mobile water risk (202
Slide 3: 22 Year Growth Per Share
PEY.TO 22 Year Growth Per Share PEYTO Exploration & Development Corp. 1 2 3 YoY +10% +0.3% +70% +32% (1) Total Proved + Probable reserves (2) Funds from operations (“FFO”) is a non-GAAP financial measure or ratio. Refer to the heading entitled "Non-GAAP and Other Financial Measures" contained within
Slide 4: Why We Do It: Natural Gas Supplying Energy for Life
Why We Do It Natural Gas: Supplying Energy for Life PEYTO Exploration & Development Corp. World Energy Consumption by Source (1965-2021) 650 550 450 Exajoules 350 250 Natural gas can play a significant role to 150 displace coal in the future and reduce emissions. 50 1965 1975 1985 1995 2005 2015 Oil
Slide 5: Natural Gas: A Global Market
Natural Gas: A Global Market LNG Carriers Map – Mar 2023 PEYTO Exploration & Development Corp. ?? ?? Note the traffic Source: marinetraffic.com, March 2023 across the Atlantic 5
Slide 6: Natural Gas: US LNG Export Ramp-Up
Why We Do It Natural Gas: US LNG Export Ramp-Up PEYTO Exploration & Development Corp. >20 BCF/d by 2025 6
Slide 7: 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
Slide 8: 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
Slide 9: 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
Slide 10: Profitable Business
Peyto’s Profitable Business PEYTO Exploration & Development Corp. 10
Slide 11: Peyto's Moat is a Low-Cost Advantage
Peyto’s Profitable Business Peyto’s “Moat” is a Low-Cost Advantage PEYTO Exploration & Development Corp. The Peyto Advantage represents around $1.34 mcfe lower costs during the last 5 years as compared to other Gas Producers. Data from Peter’s & Co. Gas Producers include: AAV,ARX,BIR,CR,KEL,NVA,PIPE
Slide 12: Low Cash and Finding Cost Leads to Better Margins
Peyto’s Profitable Business Low Cash and Finding Cost Leads to Better Margins PEYTO Exploration & Development Corp. Peyto’s industry leading cash costs, combined with low finding and developing costs, translates to an overall cost advantage that leads to superior margins even as compared to higher l
Slide 13: Build it for less than we sell it
Peyto’s Profitable Business “Build it for less than we sell it” PEYTO Exploration & Development Corp. $371MM DCET (82 net wells) $/mcfe 2014 2015 2016 2017 2018 2019 2020 2021 2022 $100MM Facilities and Pipelines $55MM Land & Acquisitions PDP FD&A $2.25 $1.64 $1.44 $1.36 $1.18 $1.55 $1.06 $0.97 $1.4
Slide 14: Return Profits to Shareholders with Dividends
Peyto’s Profitable Business Return Profits to Shareholders with Dividends PEYTO Exploration & Development Corp. Peyto Ctd. Earnings Q2/23 Peyto applies hedge accounting. As such, earnings are not skewed by large unrealized gains or losses during a quarter Peyto Ctd. Dist/Div. Q2/23 14
Slide 15: Unique Assets
Peyto’s Unique Assets PEYTO Exploration & Development Corp. Peyto Chambers Gas Plant 15
Slide 16: 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 “GSA” Operat
Slide 17: 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
Slide 18: Large Hz MSF Inventory
Peyto’s Assets PEYTO Large Hz MSF Inventory Exploration & Development Corp. Done1 To Do Total Total Total Total Hz (Vt) Hz Locations Vertical Hz Locations Unbooked3 Wells Wells Booked2 2 (2) 440 222 463(10) 419 5 5 6 9 1 2 31 90 229 214 87 7 78 59 32 124 157 147 2 40 15 436 308 167 4 44 54 62 12 2 8
Slide 19: Alberta's Gas Developer
Peyto’s Assets Alberta’s Gas Developer PEYTO Exploration & Development Corp. 6,000 5,000 2,033 4,000 26% CAGR (BCFe) 3,000 8,035 1,570 2,000 TCFe of 1,000 1,971 Discovered Reserves 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20
Slide 20: Cecilia Acquisition - 2021
Peyto’s Assets Cecilia Acquisition - 2021 PEYTO Exploration & Development Corp. PEY Cecilia Gas Plant W Cecilia Asset Base and Growth Production 15,000 boe/d 18,000 PEY Gathering System 16,000 W 14,000 W W Oldman/ 12,000 OMN PEY Nosehill 10,000 plants PEY Oldman & Gas Plant 8,000 Oldman North Base G
Slide 21: 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
Slide 22: Brazeau PrivateCo and Area Growth
Peyto’s Assets Brazeau PrivateCo and Area Growth PEYTO Exploration & Development Corp. New Property Acquisition (Acquired late Q2 2022) 35 mmcfd 6,000 boe/d Peyto Aurora Plant (Acquired Q1 2022) 45 mmcfd capacity New Asset Pipelines (red) Deal Closed 3 mmcfd 500 boe/d Peyto GGS (black) 2023 Remainin
Slide 23: Increased Facility Ownership And Control
Peyto’s Assets Increased Facility Ownership And Control PEYTO Exploration & Development Corp. Cutbank Kakwa Peyto Gas Plants Cecilia W Oldman (with Deep Cut) & YE 2022 Oldman North 1 Oldman 125 mmcf/d Wildhay Nosehill 2 Nosehill 125 mmcf/d 3 Wildhay 75 mmcf/d 4 Galloway 60 mmcf/d Shut in Swanson Gal
Slide 24: Incredible Returns
Peyto’s Incredible Returns PEYTO Exploration & Development Corp. 24
Slide 25: Peyto Returns - 2022
Peyto Returns - 2022 PEYTO Exploration & Development Corp. 29 wells have paid out full cycle capital already with 53 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. 25
Slide 26: Production Performance by Vintage
Peyto’s Returns Production Performance by Vintage PEYTO Exploration & Development Corp. Average Well Production by Spud Year 7,000 Unit Drill and Complete Costs 6,000 $1,000 5,000 $900 $800 4,000 $700 MCF/D $600 3,000 $500 $400 2,000 $300 $200 1,000 $100 $0 0 Year Year Year Year Q1 Q2 Q3 Q4 Q1 Q2 0
Slide 27: Updated Template Economics At Recent Strip
Peyto’s Returns Updated Template Economics At Recent Strip PEYTO Exploration & Development Corp. Brazeau / Chambers Greater Sundance Type Curve Cardium Notikewin Wilrich ERH Notikewin Falher ERH Cardium Dunvegan Wilrich ERH Economics Gas [MMcf] 2,552 3,581 3,826 4,697 4,156 1,280 4,703 3,779 NGLs [M
Slide 28: 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 30% $6 24 yr Avg ROE to 2022 20% $4 10% $2 0% $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Return On Capi
Slide 29: Future
Peyto’s Future PEYTO Exploration & Development Corp. Ensign Rig #401 has been drilling for Peyto for over 12 years. 29
Slide 30: 2023 Focus
Peyto’s Future 2023 Focus PEYTO Exploration & Development Corp. Drill ~65-70 Net Hz Wells • Focused on Sundance and Brazeau core areas • 3 to 4 rigs (flexible, back-end loaded) • Targeting low end of guidance pending prices Expand Infrastructure • Construct Gas Pipeline for Cascade Power Supply
Slide 31: Lower Costs to Preserve Profit
Peyto’s Future Lower Costs to Preserve Profit PEYTO Exploration & Development Corp. PEY 2023 PEY 2014 PEY 2021 PEY 2022 $6.86/mcfe $3.70/mcf Realized gas $1.50/mcfe hedge loss $5.36/mcfe Targets after diversification and current hedges on Aug 8 $5.04 $3.60 $4.63 Revenue $/mcfe $5.36 Royalties ($0.74
Slide 32: Steady Production Growth with Less Than CF
Peyto’s Future Steady Production Growth with Less Than CF PEYTO Exploration & Development Corp. $9 $8 $13,600/boe/d 100,000 $7 $17,500/boe/d $12,500/boe/d $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 $11,600/boe/d $5 Gas Prices 2012 WI BOED Cap
Slide 33: Peyto's Gas Markets
Gas Marketing Peyto’s Gas Markets PEYTO Exploration & Development Corp. AECO / NIT Peyto Lands Enbridge Pipeline System Empress Emerson 2 Malin Ventura Dawn Chicago Henry Hub 33
Slide 34: Future Market Diversification and Gas Price Protection
Gas Marketing Future Market Diversification and Gas Price Protection PEYTO Exploration & Development Corp. $C/GJ At these indicative $3.88 $4.76 $3.78 $3.75 $3.94 $4.03 $3.76 $3.75 $3.86 $3.87 $3.73 $3.72 $3.69 Prices Peyto yields (US$3.50/MMBtu Henry Hub, CAD$3.00/GJ AECO, $120/MWh AB Power, 1.35 F
Slide 35: Fixed & Floating Price Gas Contracts
Gas Marketing Fixed & Floating Price Gas Contracts PEYTO Exploration & Development Corp. Fixed Price Contracts Floating Price Contracts (MMBtu/d) 1.15 Heating value GJ/mcf; 1.350 CAD/USD *Peyto forecasts gas deliveries to Cascade to commence in Q1 2024, but actual commencement may differ from antici
Slide 36: Successful Hedging Strategy Smoothes Volatility
Gas Marketing Successful Hedging Strategy Smoothes Volatility PEYTO Exploration & Development Corp. Gas Price ($/mcf) $10.00 $10.00 $9.00 $9.00 Peyto has beat the AECO monthly price in 12 of $8.00 the last 17 years using a methodical hedging $8.00 and diversification strategy. Hedging gains are $7.0
Slide 37: Cascade Gas Supply Agreement
Gas Marketing Cascade Gas Supply Agreement PEYTO Exploration & Development Corp. • 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 late 2023 or early 2024 • Contract price scales with Alberta mo
Slide 38: Rockies LNG Partnership - West Coast LNG Option
Gas Marketing Rockies LNG Partnership – West Coast LNG Option PEYTO Exploration & Development Corp. Our Partners Rockies LNG is a partnership of Canadian natural gas producers working together to advance West Coast LNG opportunities. Together we produce approximately 5.6 billion cubic feet per day o
Slide 39: 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 Q4/22 $200 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 CEC 2022 UCC (2
Slide 40: Blend of fixed term and revolving debt
Peyto’s Debt Blend of fixed term and revolving debt PEYTO Exploration & Development Corp. • At June 30, 2023, Peyto’s Net Debt1 was Date Issued Rate Maturity Date $870 million: Senior Secured Notes $100 million (CAD) October 24, 2016 3.70% October 24, 2023* $65 million (CAD) May 1, 2015 4.26% May 1,
Slide 41: Advisories: 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",
Slide 42: Advisories: Net Debt
Advisories PEYTO Exploration & Development Corp. Net Debt "Net debt" is a non-GAAP measure that is the sum of long-term debt and working capital excluding the current financial derivative instruments, current portion of lease obligations and current portion of decommissioning provision. It is used b
Slide 43: Advisories: 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
Peyto Exploration & Development — Investor Presentation (August 2023) on 6ix