Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — TD Calgary Energy Conference 2012
32 slides from Peyto Exploration & Development's conference presentation, Jul 11, 2012
Slide 1: TD Calgary Energy Conference July 2012
2011 ‐ 2003 ‐ 2010 1998 ‐ 2003 www.Peyto.com TD Calgary Energy Conference July 2012 Stampede 2012
Slide 2: Advisory Regarding Forward-Looking Statements
Advisory Regarding 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", "ongoing", "may", "will", "pr
Slide 3: The Peyto Strategy: Superior Shareholder Return
The Peyto Strategy Superior Shareholder Return $40 $35 $30 $25 $20 Shareholder IRR $15 $10 $5 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Share Price w/Div Share Price 3 Historical Per Unit and Units Outstanding numbers have been adjusted to reflect the May 27,
Slide 4: High Returns on Capital and Equity
The Peyto Strategy High Returns on Capital and Equity 60% $10 50% $8 40% $6 30% 12 yr Average ROE $4 20% 10% $2 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $0 Return On Capital Employed (%) Return On Equity (%) Earnings/share Realized Gas Price ($/mcfe) 12 yr Average ROCE Ret
Slide 5: Strong Operating and Profit Margins
The Peyto Strategy Strong Operating and Profit Margins $140 Revenue $120 $100 $80 $ millions $60 Funds from $40 Ops Profit Margin $20 Earnings (last 12 yrs) $0 5 Funds from Operations is defined as earnings before performance based compensation, non-cash and non-recurring expenses. Profit Margin is
Slide 6: Controlling Costs
The Peyto Strategy Controlling Costs Land $25MM PEY 2011 Seismic $3MM Drilling $175MM PDP FD&A Compl. $104MM $/mcfe ($2.12) Wellsite Facilities $32MM $40MM $379MM ∆PDP Reserves (before Prod.) 30 mmboes PDP FD&A $12.72/boe $2.12/mcfe Cash Costs $/mcfe ($1.35) Royalties Opex Transport ($0.53) ($0.35)
Slide 7: Build it for less than you sell it
The Peyto Strategy “Build it for less than you sell it” $8 2011 PP FD&A $6 $/mcfe AECO $4 $10 Monthly $10 $/GJ $2 Peyto Unhedged Realized Price ($/mcfe) Peyto Realized Gas Price ($/mcfe) $8 39% $8 $- Average PRQ* PEYTO ARX PGF BNP ERF NGL CLT FEL* BIR TET BTE PMT ONR NAE CPG PWT VET TOU "Profit" $6
Slide 8: Cost Control Challenges for the Canadian Industry
The Peyto Strategy Cost Control Challenges for the Canadian Industry CND 2011* CND 2010* CND 2009** PDP FD&A $/mcfe ($4.20) ($4.74) ($4.31) Cash Costs $/mcfe ($3.91) ($3.64) ($3.63) Sales Price $/mcfe $7.89 $7.60 $7.27 ($0.68) ($0.78) Loss ($0.22) 8 *Includes: AAV,ARX,BIR,BNP,BTE,CLT,CPG,CR,ERF,FEL,
Slide 9: Peyto's Profitable Business
Peyto’s Profitable Business
Slide 10: Returns Driven 2011
Peyto’s Business Returns Driven 250 200 2011 150 Net Capital to PV5 100 50 0 Production/share growth 250 2011 Capital Program 62 Net Wells 200 21,700 boe/d 150 2P Reserves/share growth 100 50 0 IRR 10 Note: liquids are converted to molar equivalent gas volume for this analysis (1 bbl approximately e
Slide 11: Growth per Share
Peyto’s Business Growth per Share 400 $10 $50 Production per Unit or Share (boe/d per million) $9 350 $8 300 $7 Gas Price ($/GJ) 250 $6 PEY+Div 200 $5 $25 $4 150 $3 100 $2 50 $1 YoY production 0 $- $- growth/share liq prod/share gas prod/share AECO ($/GJ) Share price w/div 11 Historical Per Unit (sh
Slide 12: Focus on Returns Drives Capital Discipline
Peyto’s Business Focus on Returns Drives Capital Discipline 2011 ‐ $17,500/boe/d 2010 ‐ $17,300/boe/d 2009 ‐ $17,300/boe/d $50,000 2008 ‐ $33,100/boe/d Annual Production Wedge 2007 ‐ $26,500/boe/d 2006 ‐ $50,300/boe/d 2005 ‐ $42,100/boe/d 2004 ‐ $22,200/boe/d $40,000 2003 ‐ $25,300/boe/d Capital Eff
Slide 13: Peyto's Unique Assets
Peyto’s Unique Assets
Slide 14: Geographically Focused Core Areas
Peyto’s Assets Geographically Focused Core Areas • 313,800 net acres (825,000 net acres for all zones) • 5 operated gas plants ---(340 mmcf/d capacity) Cutbank • 900+ km pipelines • 750+ producing zones Kakwa • 42,000 boe/d Processed by Peyto Chicken Leland 150 miles Pine Creek Greater Sundance Oper
Slide 15: Applying Hz Technology to Tight Deep Basin Sands
Peyto’s Assets Applying Hz Technology to Tight Deep Basin Sands Up to per section 15 *NGL recoveries can increase by up to 15 bbl/mmcf with deeper cutting processing facilities 7/4/2012
Slide 16: Deep Basin Lands Go A Long Way
Peyto’s Assets Deep Basin Lands Go A Long Way Net Peyto Sections Net Sections of Cardium, Dunvegan, Notikewin, Falher, Wilrich, Bluesky, & Cadomin Net Sections for 2.2 TCFe of 2P EUR 16 TCFe – Trillion Cubic Feet equivalent Lands at December 31, 2011 7/4/2012 Based on InSite Petroleum Consultants (f
Slide 17: PEY/ONR Strategic Fit
PEY/ONR Strategic Fit Infrastructure Access for Peyto Step-out Areas Pedley Edson Ansell 17 Subject to Mid August 2012 closing. See press release dated July 3, 2012 7/4/2012
Slide 18: Large Hz MSF Inventory
Peyto’s Assets Large Hz MSF Inventory Done To Do Total Total Total Total Total Vertical Hz Hz Hz Locations ONR Hz Wells Wells Locations Unbooked Locations Booked* Unbooked** 432 40 206 103 9 5 1 6 10 1 2 12 90 29 44 25 35 7 11 34 148 7 14 53 83 99 30 4 2 14 6 19 12 87 1 21 124 652 137 410 527 100 Ov
Slide 19: Peyto's Future
oO a =) —_ =) LL n O —_— > oO OW
Slide 20: Maintain a Strong Balance Sheet
The Peyto Strategy Maintain a Strong Balance Sheet Q1 2012 Net Debt/FFO 3.0 2.5 2.0 Peyto Q1/12 D/FFO 1.5 1.0 0.5 0.0 BTE POU NGL PWT AAV ARX PGF PRQ PMT CPG ERF PBN ZAR BNP CR ONR BIR TOU PEYTO CQE VET TET CLT FEL Industry Ave. Q1/12 D/FFO 20 7/4/2012
Slide 21: Levering the Low Cost Advantage
The Peyto Strategy Levering the Low Cost Advantage $4.00 AECO Monthly Gas Price Actual & Forecast ($/GJ) $3.50 www.gasalberta.com $3.00 $2.50 $2.00 June 22, 2012 Strip $1.50 April 11, 2012 Strip $1.00 Jan‐11 Jan‐12 Jan‐13 Jan‐14 21 7/4/2012
Slide 22: Organic Growth Potential
Peyto’s Future? Organic Growth Potential 70,000 60,000 50,000 BOED First forecast NA 40,000 LNG exports. 30,000 20,000 10,000 0 22 7/4/2012
Slide 23: Appendix
Appendix • Corporate Fact Sheet • Quarterly Track Record • Tax Pools • Payout Ratio • Gas Marketing • Liquids Marketing • Hedging Strategy • Reserves data – volumes, values, RLI 23 7/4/2012
Slide 24: Corporate Fact Sheet
PEY.TO Corporate Fact Sheet PEYTO Exploration & Development Corp. N Long Reserve Life Asset ‐ 9 yrs PDP, 22 yrs P+P N Lowest Cost Producer ‐ $1.11/mcfe ($6.67/boe) cash costs Q1/12 N Superior Returns ‐ Ave ROCE 21%, Ave ROE 40% N All Organic ‐ 42,000 boe/d built by Peyto N Own and Control ‐ Operate
Slide 25: Quarterly Track Record
Quarterly Track Record 2012 2011 2010 2009 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Operations Production Oil & NGLs (bbl/d) 4,101 3,856 3,947 3,918 3,811 3,746 3,389 3,439 3,322 3,465 3,330 3,028 Natural gas (mcf/d) 220,811 189,653 212,715 194,832 183,790 166,710 122,031 148,551 122,717 112,422
Slide 26: Peyto's Tax Pools
Organic Business Model Peyto’s Tax Pools $1,200 $1,000 $800 Millions $600 $400 $200 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CEC UCC (25%) CEE (100%) CDE (30%) COGPE (10%) CAPEX 26 7/4/2012
Slide 27: Payout Ratio History
Payout Ratio History Maximum Historical Payout Ratio 91% 100% Minimum Converted 42% 80% to a Trust at 57% 60% 40% 20% 0% Cash Payout Ratio Total Payout Ratio Converted to a Corp. at 32% Historical Per Unit and Units Outstanding numbers have been adjusted to reflect the May 27, 2005 2:1 stock split T
Slide 28: Gas Marketing
Gas Marketing Future Sales Financial Hedges - Gas Pricing 2011 2012 2013 2014 Term GJ/d ($/GJ) A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O From To 1-Apr-10 31-Mar-12 5000 $5.670 ● ● ● ● ● ● ● ● ● ● ● ● 1-Apr-11 31-Mar-12 5000 $6.200 ● ● ● ● ● ● ● ● ● ● ● ● 1
Slide 29: Liquids Marketing
Liquids Marketing Future Sales Financial Hedges - Propane 2012 2013 2014 Term bbl/d Pricing ($/bbl) A M J J A S O N D J F M A M J J A S O N D J F M From To 1-Sep-12 31-Mar-13 66 $49.56 ● ● ● ● ● ● ● 1-Sep-12 31-Mar-13 66 $44.10 ● ● ● ● ● ● ● Avg (propane) Avg bbl/d 38 132 0 0 Avg $ per bbl $46.83 $4
Slide 30: Successful Hedging Strategy
Successful Hedging Strategy Peyto Realized Price History $16.00 2003 2004 2005 2006 2007 2008 2009 2010 2010 Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto $7.51/mcf $7.38/mcf $8.78/mcf $8.46/mcf $8.42/mcf $8.64/mcf $6.44/mcf $5.36/mcf $4.47/mcf AECO Mo AECO Mo AECO Mo $14.00 AECO Mo AECO Mo
Slide 31: Peyto's 2011 Reserves
Peyto’s 2011 Reserves Volumes Natural Gas Sales Gas Liquids & Oil Category (BCF) (Mstb) BOE's(Mstb) Proven Producing 668 16,125 127,457 Proven Non-Producing 14 356 2,745 Proven Undeveloped 422 24,834 95,102 Total Proven 1,104 41,314 225,304 Probable Additional 496 14,525 79,977 Proved + Probable 1,6
Slide 32: Peyto's 2011 Reserves: Before Tax NPV
Peyto’s 2011 Reserves Before Tax Net Present Value Variable Price Economics NPV (millions of CDN dollars) Category 0% 5% 8% 10% Proven Producing $ 4,809 $ 2,624 $ 2,049 $ 1,792 Proven Non-Producing $ 97 $ 43 $ 29 $ 23 Proven Undeveloped $ 2,796 $ 1,306 $ 878 $ 681 Total Proven $ 7,702 $ 3,972 $ 2,95
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