Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Shareholder Meeting (June 2013)
45 slides from Peyto Exploration & Development's shareholder meeting presentation, June 2013
Slide 1: AGM June 2013
Slide 2: Advisory
Advisory I am going to tell you about my vision of Peyto’s future today. I will also tell you where I think commodity prices are going to go. These are called forward looking statements. I am being truthful and using everything I know about Peyto and the industry to predict the future but I will lik
Slide 3: Then and Now
" Peytes las vndergone SOME arrazin q growth o tle lagk & yenee, Se a comparison of low we eouduct ouy besinegs foday YS a decade aac wight be interesting, : PEYTC Exploration & Devétop Then and Now dis . Exploration & Development Corp. 3 6/10/2013
Slide 4: The Peyto Strategy: Same As Always
The Peyto Strategy Same As Always Strategic Intent Strategic Intent Find, develop & produce natural gas in Alberta’s Central Deep Basin. Focus on projects that are predictable and repeatable with long term value & immediate cash- flow. Control destiny by having a high working interest in the prod
Slide 5: Still Most Active Deep Basin Driller
The Peyto Strategy Still Most Active Deep Basin Driller 6 August 2002 5 6/10/2013
Slide 6: Lands Are More Of The Same
The Peyto Strategy Lands Are More Of The Same 6 6/10/2013
Slide 7: Grow Our Assets
The Peyto Strategy Grow Our Assets Production 2P Reserves Funds from 2P NPV5 DA (Bcfe/mm sh) (MMcfe/d/mm sh) Operations ($/sh) ($/sh) $38 656 $36 16.6 $36 $35 $34 561 14.5 $2.92 $31 $3.02 $31 476 12.9 $2.71 $29 476 443 $2.65 428 $2.36 413 10.8 $2.19 391 $2.29 352 9.3 9.4 9.4 9.4 $1.95 $19 331 8.5 $1
Slide 8: Control Our Costs
The Peyto Strategy Control Our Costs PDP FD&A Operating Interest Cost G&A ($/Mcfe) Costs ($/Mcfe) ($/Mcfe) $2.95 $2.88 w/transportation $0.51 $0.50 ($/Mcfe) $0.41 $2.39 $2.22 $2.26 $2.12 $0.39 $0.36 $2.11 $2.10 $0.54 $0.31 $0.52 $0.53 $0.28 $1.60 $0.48 $0.26 $0.46 $0.49 $1.32 $0.42 $0.44 $0.20 $0.37
Slide 9: Then and Now - Operationally
Then and Now - Operationally
Slide 10: The Old Way
The Old Way Vertical Wellbore With Dual Completion • 2700m MD • 28 days Spud – RR • Drill $1.2MM • Complete $1.2MM (~$200k/Frac) • 80t sand in Notikewin • 70t sand in Cardium 10 6/10/2013
Slide 11: The Old Way: Dual Cardium/Notikewin Completion
The Old Way Vertical Wellbore With Dual Cardium/Notikewin Completion 10,000 ($MM) Notikewin Cardium Total Drill $1.2 Comp. $1.2 E/T $0.2 L/S/F $0.5 Total $3.1 1,000 EUR 1.5 BCFe 1.0 BCFe 2.5 BCFe F&D $1.24/mcfe Mcfe/d 100 10 Years 00/08-33-055-21W5/2 Cardium 00/08-33-055-21W5/0 Notikewin 11 Capital
Slide 12: Vertical To Multi-Stage Frac Horizontal Well Designs
Then and Now - Operationally Vertical To Multi-Stage Frac Horizontal Well Designs 12 6/10/2013
Slide 13: The New Way: Notikewin Horizontal Wells
The New Way Horizontal Wells With Multi-Stage Fracs (one zone at a time) - Notikewin • 4270m MD • 1500m Hz lateral (8 stg) • 20 days Spud – RR (8 days faster than vertical!) • Drill $2.9MM • Complete $1.5MM ($1.0MM for Fracs) • 480t sand (60t/stage) 13 6/10/2013
Slide 14: The New Way: Cardium Horizontal Wells
The New Way Horizontal Wells With Multi-Stage Fracs (one zone at a time) - Cardium • 3100m MD • 870m Hz lateral (6 stg) • 28 days Spud – RR Drill $2.2MM • Complete $1.9MM ($1.0MM for Fracs) • 360t sand (60t/stage) 14 6/10/2013
Slide 15: The New Way: Two Horizontal Wells With MSF
The New Way Two Horizontal Wells With MSF 10000 ($MM) Notikewin Cardium Total Drill $2.9 $2.2 $5.1 Comp. $1.5 $1.9 $3.4 E/T $0.4 $0.4 $0.8 L/S/F $1.0 $1.0 $2.0 Total $5.8 $5.5 $11.3 1000 EUR 4.3 BCFe 3.1 BCFe 7.4 BCFe Mcfe/d F&D $1.35/mcfe $1.77/mcfe $1.53/mcfe 100 10 Years 00/16-32-055-21W5/0 Cardi
Slide 16: Superior Hz Well Economics
Then and Now - Operationally Superior Hz Well Economics Old Way New Way Dual Card/Not Total Card Hz Not Hz (i n 2003$) (i n 2013$) (i n 2013$) ($MM) Drill $ 1.2 $ 1.6 $ 5.1 $ 2.2 $ 2.9 Complete $ 1.2 $ 1.4 $ 3.4 $ 1.9 $ 1.5 Equip/Tie $ 0.2 $ 0.8 $ 0.8 $ 0.4 $ 0.4 Land/Seis/Facil $ 0.5 $ 0.6 $ 2.0 $
Slide 17: Large Hz MSF Inventory
The New Way Large Hz MSF Inventory To Do Done1 Total Total Hz Hz Locations Total Total Locations Unbooked Vertical Hz Booked* Wells Wells 56 432 52 191 29 5 1 5 1 14 Old Way New Way 90 39 79 61 7 14 14 54 13 35 222 14 93 97 165 4 6 46 36 12 2 87 2 21 205 652 222 488 842 1. Drilling to Dec 31, 2012 *
Slide 18: Expertise Through Experience: 1 Million Meters
The New Way Expertise Through Experience 1 MILLION METERS of horizontal wellbore drilled since Aug 2009 18 6/10/2013
Slide 19: Oldman Cheap Cut NGL Extraction
The New Way Oldman “Cheap Cut” NGL Extraction New Oldman North Plantsite JT Chokes and (“Newman”) De‐Eth Tower Deep Cut Re‐compressors Dehy and Mole Sieve LPG storage and pump station Peyto Oldman Gas Plant: 125 MMCF/d throughput, 30 bbl/mmcf liquids extraction, (23,000-24,000 boe/d) 19 6/10/2013
Slide 20: Self Sufficient Energy Inputs
The New Way Self Sufficient Energy Inputs $5MM Estimated Savings/yr. 20 Diesel $1.00/litre Nat Gas $3.00/Mcf (~$0.10/litre) 6/10/2013
Slide 21: Then and Now – Economic Returns
Then and Now – Economic Returns
Slide 22: Building it for less than we sell it
Then and Now – Economic Returns “Building it for less than we sell it” PEY 2000 ‐ 2002 PEY 2010 ‐ 2012 PDP FD&A $/mcfe ($0.88) ($2.15) 144% Cash Costs $/mcfe ($1.92) ($1.34) (30%) Total Costs $/mcfe ($2.80) ($3.49) 25% Sales Price $/mcfe $5.68 $5.29 (7%) Profit BOE factor ‐ 6 mcfe = 1 bbl of oil equ
Slide 23: Fighting Oil Price Inflation
Then and Now – Economic Returns Fighting Oil Price Inflation Aeco Monthly Gas Price Edmonton Par Oil Price $18 $144 $15 $120 $12 $96 $/BBL $/GJ $9 $72 $6 $48 $3 $24 $- $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 23 6/10/2013
Slide 24: Service Rate Inflation
Then and Now – Economic Returns Service Rate Inflation Avg Peyto Drilling Dayrate (excluding TDS) $20,000 $15,000 $10,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 24 6/10/2013
Slide 25: Producing it for less than we sell it
Then and Now – Economic Returns “Producing it for less than we sell it” PEY 2000 ‐ 2002 PEY 2010 ‐ 2012 CAGR PDP FD&A $/mcfe ($0.88) ($2.15) 9% Cash Costs $/mcfe ($1.92) ($1.34) (1%) Total Costs $/mcfe ($2.80) ($3.49) 2% Sales Price $/mcfe $5.68 $5.29 (1%) Profit BOE factor ‐ 6 mcfe = 1 bbl of oil e
Slide 26: Cash Cost Inflation
Then and Now – Economic Returns Cash Cost Inflation (not including Royalties) $25.00 $20.00 $15.00 8%/yr $10.00 CAGR $5.00 $- Peyto Bonavista Baytex ARC Enerplus Pengrowth Crescent Point Trilogy Tourmaline 26 6/10/2013
Slide 27: Profitable Even In The Lows
The New Way Profitable Even In The Lows Land $11MM PEY 2012 Seismic Drilling $2MM $212MM Compl. $127MM PDP FD&A ($2.22) Wellsite $46MM Facilities $37MM $/mcfe Acq/Disp $183MM $618MM ∆PDP Reserves (before Prod.) 46.3 mmboes PDP FD&A $13.34/boe Cash Costs ($1.05) $2.22/mcfe $/mcfe Royalties ($0.31) Op
Slide 28: Profitable Throughout The Cycle
Then and Now – Economic Returns Profitable Throughout The Cycle AECO Monthly $10 $/GJ 37% Avg. Peyto Realized Gas Price ($/mcfe) "Profit“ Cum. To Date $8 $6 Bonus $4 Cash Costs $2 PDP FD&A $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Forecast with AECO Strip 28 Total
Slide 29: Then and Now - Corporately
Then and Now - Corporately
Slide 30: PDP Reserves Growth
Then and Now – Corporately PDP Reserves Growth 1,000 945 900 14% CAGR 800 765 700 664 583 595 600 591 600 527 (BCFe) 500 426 400 323 300 248 200 134 100 44 3 ‐ 30 6/10/2013
Slide 31: Long Life Producing Reserve Base
Then and Now – Corporately Long Life Producing Reserve Base 1 TRILLION CUBIC FT (TCFe) of Proved Producing Reserves 31 TCFe – Trillion cubic feet equivalent 6/10/2013
Slide 32: Production Growth (Boe/d)
Then and Now – Corporately Production Growth (Boe/d) 60,000 50,000 40,000 16% CAGR 30,000 39% CAGR 20,000 10,000 ‐ 32 6/10/2013
Slide 33: Net Debt ($MM)
Then and Now – Corporately Net Debt ($MM) $800 $600 $400 $200 $0 Peyto Net Debt ($MM) 33 6/10/2013
Slide 34: Increased Access To Capital
Then and Now – Corporately Increased Access To Capital 1 BILLION DOLLARS of revolving, unsecured bank facility 34 6/10/2013
Slide 35: Consistent Leverage
Then and Now – Corporately Consistent Leverage $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 PP NPV8 ($B) Net Debt ($B) 35 6/10/2013
Slide 36: Improving Balance Sheet
Then and Now – Corporately Improving Balance Sheet 2.5 $30,000 Net Debt/Production ($/boe/d) Net Debt/Annualized FFO ($/$) 2.0 $25,000 $20,000 1.5 $15,000 1.0 $10,000 0.5 $5,000 ‐ $0 Debt/FFO Debt/flowing boe 36 6/10/2013
Slide 37: Now and To Come
Now and To Come = PEYTO%. Exploration & Development Corp.
Slide 38: 2013 Outlook: Biggest Year Ever
2013 Outlook Biggest Year Ever Drill 100+ (100% Hz Wells, Liquids Rich Natural Gas) Expand & Extract Increase Processing Capacity & NGL Yield Increase Undeveloped Land Base 2013 Capital Program Shoot Seismic Acquire Additional Opportunities and Partner Interests 38 6/10/2013
Slide 39: 2013 Outlook: Same Stuff
2013 Outlook Same Stuff 100+ wells Cardium Hz 20% Notikewin Hz U. Falher Hz M. Falher Hz 70% Wilrich Hz Bluesky Hz 7% Cadomin Hz 3% 100% $500MM Peyto Gas Plants Drill/Comp 72% WI ETA Oldman 125 mmcf/d 100% Equip/Tie‐in 8% Nosehill 120 mmcf/d 100% Wildhay 70 mmcf/d 100% Facilities 17% Galloway 60 mmc
Slide 40: Large Resource + Low Cost = Profitable Growth
2013 Outlook Large Resource + Low Cost = Profitable Growth Budget vs Actual Production 62,000-67,000 boed 70,000 ~56,000 boed 60,000 Deep Cut Plant Outage 42,100 boed 50,000 >40% CAGR BOED 40,000 30,600 boed (35%/share) 30,000 Base Decline 35% 20,000 Base Decline 35% 10,000 Base Decline 33% Base Dec
Slide 41: It Just Gets Easier to Grow
2013 Outlook It Just Gets Easier to Grow 35% 35%* 33% 32% 31% 30% $618MM Annual Production Wedge (boe/d) 29% $379MM $113MM 26% $139MM 27% Base $358MM 26% Decline $312MM Triple production in 3 years!! $79MM $231MM 23% $139MM 22% Capex $122MM 20% $261MM $73MM 41 BOE factor - 6 mcf = 1 bbl of oil equiv
Slide 42: Continuously Improve Profitability
2013 Outlook Continuously Improve Profitability 2013 Goals* • Pad drilling • CNG powered rigs PDP FD&A $/mcfe <($2.00) • • • Well design improvements Water optimization Natural gas heated water • Summer drilling Cash Costs $/mcfe <($1.00) • • Natural gas fired power CNG trucks • Facility utilization
Slide 43: Future Outlook: Organic Growth Potential
Future Outlook Organic Growth Potential 100,000 90,000 80,000 70,000 60,000 First forecast NA BOED 50,000 LNG exports. 40,000 30,000 20,000 10,000 0 Future production numbers are not a forecast, simply for illustrative purposes only 43 BOE factor - 6 mcf = 1 bbl of oil equivalent 6/10/2013
Slide 44: Future Outlook: Organic Growth Potential
Future Outlook Organic Growth Potential $18 $90 700 Production per Unit or Share (boe/d per million) $16 600 $14 500 PEY+ Cumulative Div./Dist. $12 Gas Price ($/GJ) 400 $10 $45 $8 300 $6 200 $4 100 $2 0 $- $- liq prod/share gas prod/share AECO Forecast ($/GJ) AECO ($/GJ) Share price w/div Historical
Slide 45: Thank You For Joining Us Today
Thank You For Joining Us Today Pray For Sunshine
Peyto Exploration & Development — Shareholder Meeting (June 2013) on 6ix