Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Investor Presentation (August 2022)
59 slides from Peyto Exploration & Development's investor presentation, August 2022
Slide 1: Slide 1
Slide 2: New To Peyto? Who We Are
New To Peyto? Who We Are PEYTO Exploration & Development Corp. N 5th Largest Canadian Gas Producer ∼ 635 MMcfe/d N 10th Largest Canadian Gas Processor 970 MMcf/d capacity N Pure Play Alberta Deep Basin Multizone stacked resource, 5.4 TCFe 2P reserves N Long Reserve Life Asset 9yr PDP, 25yr 2P, sweet
Slide 3: 21 Year Growth Per Share
PEY.TO 21 Year Growth Per Share PEYTO Exploration & Development Corp. YoY +12% +5% +119% +53% Historical Per Share (or unit) and Shares (units) Outstanding numbers (end of period) have been adjusted to reflect the May 27, 2005 2:1 stock split (1) FFO is a non-GAAP financial measure or ratio. Refer t
Slide 4: Total Shareholder Return Model
PEY.TO Total Shareholder Return Model PEYTO Exploration & Development Corp. Organic growth for LNG exports? Future Prospects Past Profits 4 (1) Net debt/share is a non-GAAP financial measure or ratio. Refer to the heading entitled "Non-GAAP and Other Financial Measures" contained within the “Advisor
Slide 5: Invest Shareholder Capital For Profit Not Growth
PEY.TO Invest Shareholder Capital For Profit Not Growth PEYTO Exploration & Development Corp. $800 $700 $600 $500 Peyto Capital $400 CTD Q2/22 $300 $200 $100 Covid $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 $(100) CAPEX ($MM) Earn
Slide 6: Return Profits to Shareholders with Dividends
PEY.TO Return Profits to Shareholders with Dividends PEYTO Exploration & Development Corp. $5,000 $4,500 $4,000 The current environment $3,500 and strip would cause an inflection in earnings power Peyto Ctd. Earnings $3,000 (MM$) $2,500 Q2/22 $2,000 $1,500 $1,000 $500 $0 Q4 2022F Q4 2023F Q4 2024F Q
Slide 7: We Heat Your Homes
PEY.TO We Heat Your Homes PEYTO Exploration & Development Corp. Natural Gas X X Safe Reliable Affordable 7 https://www.efficiencyalberta.ca 8/12/2022 http://www12.Statcan.gc.ca
Slide 8: Environmental Leader
PEY.TO Environmental Leader PEYTO Exploration & Development Corp. Notes: Intensities are based on total subsector emissions and relevant production amounts. They represent overall averages, not facility intensities. *Calculated on a barrel of oil equivalent (boe) basis by converting production volum
Slide 9: Continuously Improving Emissions
PEY.TO Continuously Improving Emissions PEYTO Exploration & Development Corp. Peyto GHG Emissions Intensity 29.0 26.0 24.7 23.9 22.3 21.1 19.8 19.6 19.3 2013 2014 2015 2016 2017 2018 2019 2020 2021E in GHG Emissions Intensity* KgCO2e/BOE (Scope 1,2,3) Peyto Flaring and Venting of Methane 9.3 8.3 8.2
Slide 10: The Peyto Strategy
The Peyto Strategy PEYTO Exploration & Development Corp. 10 8/12/2022
Slide 11: Global Natural Gas Markets
Global Natural Gas Markets 385 BCF/d Global Marketplace in 2019* (pre-Covid) PEYTO Exploration & Development Corp. Half of all 28% of Russia (CIS) world exports market 83 BCF/d 56 BCF/d Europe North America 27 BCF/d Export 23 BCF/d 109 BCF/d Supply 54 BCF/d 102 BCF/d Demand 31 BCF/d 7 BCF/d Export M
Slide 12: North American Natural Gas
North American Natural Gas Domestic and Export Markets PEYTO Exploration & Development Corp. LNG Canada 2 BCF/d 17 BCF/d Supply (2025) 11 BCF/d Demand Peyto 6 BCF/d Export (US) 95 BCF/d Supply 6 BCF/d Import (CND) 83 BCF/d Demand 18 BCF/d Export Europe needs 31 BCF/d of imports (27 BCF/d coming from
Slide 13: WCSB Natural Gas Market
WCSB Natural Gas Market Current Export Pathways PEYTO Exploration & Development Corp. AECO Gas Market 17 BCF/d Supply 9 BCF/d Demand 8 BCF/d Export (US) 1.5 1.0 Empress Emerson 2 2.0 1.0 2.5 Dawn Ventura Henry Hub 13 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and th
Slide 14: Bolster Alberta's Shrinking Gas Reserves
The Peyto Strategy Bolster Alberta’s Shrinking Gas Reserves PEYTO Exploration & Development Corp. https://www.aer.ca/providing-information/data-and-reports/statistical-reports/st98/statistics-and-data 14 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may n
Slide 15: Natural Gas Is The Solution
Natural Gas Is The Solution USA Has Made the Biggest Reduction PEYTO Exploration & Development Corp. Absolute Change in CO2 Emissions from 2009-2019 (million tonnes of CO2) China India Indonesia Vietnam Saudi Arabia Iran Russian Federation And help Turkey these guys South Korea Canada get off coal!
Slide 16: Profitable Business
Peyto’s Profitable Business PEYTO Exploration & Development Corp. 16 8/12/2022
Slide 17: Profitable Business: Build it for less than we sell it
Peyto’s Profitable Business “Build it for less than we sell it” PEYTO Exploration & Development Corp. 2021 2014 2015 2016 2017 2018 2019 2020 2021 Land/Acq/Disp Seismic Drilling PDP FD&A $/mcfe ($2.25) ($1.64) ($1.44) ($1.36) ($1.18) ($1.55) ($1.06)($0.97) Compl. Wellsite Facilities Cash Costs $365M
Slide 18: Lowering The Bar
Peyto’s Profitable Business Lowering The Bar PEYTO Exploration & Development Corp. AECO $10 Monthly $/GJ Peyto Realized Gas Price ($/mcfe) 35% Avg. $8 "Profit“ CTD Lowest realized price ever, but $6 also lowest total supply cost ever Bonus $4 PDP FD&A Supply cost down 45% $2 since 2010 Cash Costs 43
Slide 19: Peyto's Moat is a Low-Cost Advantage
Peyto’s Profitable Business Peyto’s “Moat” is a Low-Cost Advantage PEYTO Exploration & Development Corp. $2.06 $4.81 ($0.24) $1.22 BOE factor - 6 mcf = 1 bbl of oil equivalent 19 Data from Peter’s & Co. Gas producers include: AAV,ARX,BIR,CR,KEL,NVA,PIPE,PMT,PNE,POU,SDE,TOU Non-GAAP measures and rati
Slide 20: High Operating Margins
Peyto’s Profitable Business High Operating Margins PEYTO Exploration & Development Corp. 90% $9.00 80% $8.00 70% $7.00 60% $6.00 50% $5.00 40% $4.00 30% $3.00 20% $2.00 Peyto Operating Margin 10% $1.00 Last 21 Year Avg. 0% 2000 $0.00 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 FFO/Revenue Inte
Slide 21: Unique Assets
Peyto’s Unique Assets PEYTO Exploration & Development Corp. New P eyto Cham bers Gas P lant 21 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and
Slide 22: Geographically Focused Core Areas
Peyto’s Assets Geographically Focused Core Areas PEYTO Exploration & Development Corp. • 608,580 net acres (Q421) • 12 operated gas plants - Cutbank --(970 mmcf/d net capacity) • 2,000+ km pipelines • ∼1,700+ producing zones Kakwa • ∼105,000 boe/d Leland Of Production: Greater Processed by Peyto Sun
Slide 23: Deep Basin Permeability Segregation
Peyto’s Assets PEYTO Deep Basin Permeability Segregation Exploration & Development Corp. FOOTHILLS STRUCTURES GAS AS ING INCRE BILITY EA PERM WATER TRANSITION ZONE WATER GAS ASE INCRE AREA OF GAS DEPTH MATURATION 23 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and the
Slide 24: Multi Zone Stacked Sandstone Reservoirs
Peyto’s Assets Multi Zone Stacked Sandstone Reservoirs PEYTO Exploration & Development Corp. *NGL recoveries can increase by 15+ bbl/mmcf with deeper cutting processing facilities Reserves are 2P recoverable in a section at 85% RF Up to per section* 24 Non-GAAP measures and ratios do not have any st
Slide 25: Cecilia Acquisitions
Peyto’s Assets Cecilia Acquisitions $35MM – Effective Jan 1/21 PEYTO Exploration & Development Corp. • YE21 Rates: • Base: 2,750 boe/d Cecilia Gas Plant 12-34-56-22W5 Ownership: 100% WI • New: 12,650 boe/d (20 new wells Original Throughput: ∼16mmcf/d sales and online, 3 reactivations) 10 bbl/mmcf •
Slide 26: Brazeau PrivateCo Addition and Area Growth
Peyto’s Assets Brazeau PrivateCo Addition and Area Growth PEYTO Exploration & Development Corp. PrivateCo Acquisition • $22 million, effective Jan 1, 2022 Chambers Development • 81.8 Gross (73.0 Net) 120,000 sections of land 100,000 New Plant Field Gas (mcf/d) (expands to 352 net 80,000 sections of
Slide 27: Whitehorse/Minehead ERHs
Peyto’s Assets Whitehorse/Minehead ERHs PEYTO Exploration & Development Corp. Sundance Whitehorse/ Minehead Whitehorse Brazeau Timeline: • 2017-2018: Drilled ten, 1-mile horizontals Minehead • 2021/2022: Successfully tested three extended reach horizontals to improve the economics of the play, bough
Slide 28: 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) 440 200 474(10) 480 5 1 5 16 1 2 31 90 197 200 90 7 75 58 32 117 148 121 2 40 15 409 301 176 4 44 54 41 12 2 8
Slide 29: Deep Basin Lands Go A Long Way
Peyto’s Assets Deep Basin Lands Go A Long Way PEYTO Exploration & Development Corp. 1,000 Peyto Lands 900 800 700 Net Sections 600 Net Peyto Sections 500 400 300 200 100 - Net Sections of Cardium, Dunvegan, Notikewin, Falher, Wilrich, Bluesky, Cadomin, Montney & Duvernay Net Sections – Developed Are
Slide 30: Deep Basin Lands Continue to Turn Over
Peyto’s Assets Deep Basin Lands Continue to Turn Over PEYTO Exploration & Development Corp. Spirit River Expiries Sections - Possible Spirit River land expiries (drilling validation dependent) from 2022 - 2025 P eyto lands in yellow Montney Expiries Sections - Possible Montney land expiries (drillin
Slide 31: Increased Facility Ownership And Control
Peyto’s Assets Increased Facility Ownership And Control PEYTO Exploration & Development Corp. Cutbank Kakwa Peyto Gas Plants Cecilia YE 2020 WI Oldman (with Deep Cut) W & Oldman North 1 Oldman 125 mmcf/d 100% Wildhay 2 Nosehill 125 mmcf/d 100% Nosehill 3 Wildhay 90 mmcf/d 100% 4 Galloway 60 mmcf/d 8
Slide 32: Unique Infrastructure Location
Peyto’s Assets Unique Infrastructure Location PEYTO Exploration & Development Corp. Cecilia Alliance Oldman & Oldman North Nosehill Big Sunny Wildhay Galloway Swanson Highway 16 Greater Sundance Area Cascade Power Project Location Advantages: ISD mid-2023 • 900 MW Combined-Cycle • Nova/Alliance Supp
Slide 33: Alberta's Gas Developer
Peyto’s Assets Alberta’s Gas Developer PEYTO Exploration & Development Corp. 9,000 8,000 7,000 6,000 1,993 26% (TCFe) 5,000 CAGR 1,571 4,000 7,655 15% 3,000 CAGR 1,823 2,000 TCFe of 1,000 2,234 Discovered Reserves 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 34: What Shareholders Currently Own
Peyto’s Assets What Shareholders Currently Own PEYTO Exploration & Development Corp. Tangible Infrastructure (Replacement Value as at Dec 31, 2021) 81 Compressors ($3.25MM each) $283 MM 18 Inlets ($1.9MM each) $35 MM 21 Refrigeration plants ($5.7MM each) $119 MM 12 Power Generation Sets ($1.6M each)
Slide 35: Incredible Returns
Peyto’s Incredible Returns PEYTO Exploration & Development Corp. 35 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and Other Financial Measures"
Slide 36: Production Performance by Vintage
Peyto’s Returns Production Performance by Vintage PEYTO Exploration & Development Corp. Year Over Year Performance - All Cardium Year Over Year Performance - All Wilrich 5,000 7,000 Gross Recombined Gas Rate (mcf/d) Gross Recombined Gas Rate (mcf/d) 6,000 4,000 +60 bbl/mmcf NGLs +14 bbl/mmcf NGLs 5,
Slide 37: Extended Reach Horizontals
Peyto’s Returns Extended Reach Horizontals PEYTO Exploration & Development Corp. Peyto’s Extended Reach Horizontals (ERH) continue to be a large part of the Wilrich capital program with 10-15 more wells planned in 2022. 37 Non-GAAP measures and ratios do not have any standardized meaning under IFRS
Slide 38: 2021 Best Year Ever
Peyto Returns 2021 Best Year Ever PEYTO Exploration & Development Corp. 2021 Wells Sorted by Species Price Deck: 2021 Actuals + Feb 8, 2022 Strip 500% 450% 2021 Capital Program IRR = 121% Included $750k/well for FLS 400% 350% 300% Full Cycle BTAX IRR [%] 250% 200% 150% 100% 50% 0% -50% 38 Non-GAAP m
Slide 39: Updated Template Economics At Recent Strip
Peyto’s Returns Updated Template Economics At Recent Strip PEYTO Exploration & Development Corp. June 29 AECO WTI Strip $C/GJ $US/bbl Jul-Dec 2022 6.04 104.29 2023 4.91 91.45 2024 4.31 82.84 Brazeau / Chambers Greater Sundance 2025 4.35 76.78 2026 4.41 72.51 Cardium Notikewin Wilrich ERH Notikewin W
Slide 40: 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 23 yr Avg ROE to 2021 30% $6 20% $4 10% $2 0% $0 Return On Capital Employed (%) Return On Equity (%) 23 yr Avg ROCE to 2021 Earnings/share Realized Price ($/mcfe) Return on Equity (RO
Slide 41: Future
Peyto’s Future PEYTO Exploration & Development Corp. 41 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and Other Financial Measures" and "Non-GAA
Slide 42: 2022 Outlook
Peyto’s Future 2022 Outlook PEYTO Exploration & Development Corp. Drill ~90Hz Wells (Liquids Rich Natural Gas) vs 91 in 2021 Expand Infrastructure New Chambers Gas Plant (prepaid equipment) Increase Opportunities Expand Undeveloped Land Base Diversify Markets Continue to Evaluate New Pipe/Basis
Slide 43: Steady Production Growth With Less Than Cash Flow
Peyto’s Future Steady Production Growth With Less Than CF PEYTO Exploration & Development Corp. $9 $8 $4.19 $7 100,000 $17,500/boe/d $5.65 $20,600/boe/d $17,300/boe/d $16,800/boe/d $6 $15,100/boe/d $10,900/boe/d ∼$9,000/boe/d $12,000/boe/d $3.48 AECO 7A ($/GJ) $11,600/boe/d 2012 $5 WI BOED Capex $61
Slide 44: Lower Costs to Preserve Profit
Peyto’s Future Lower Costs to Preserve Profit PEYTO Exploration & Development Corp. PEY 2014 PEY 2019 PEY 2021 PEY Goals 87% Gas @$3.43/GJ*1.15 HC 13% NGLs@$53/bbl 88% Gas @$4.00/GJ*1.15 $5.04 $2.23 $3.61 ∼$5.45 12% NGLs@$70/bbl=(70%of Revenue $4.52/mcfe $0.91/mcfe hedge loss $100 CND WTI) $/mcfe $3
Slide 45: Balance Sheet Priority
Peyto’s Future Balance Sheet Priority PEYTO Exploration & Development Corp. $2,000 $250 $1,800 Q1 2022, $203 $1,600 $200 Q4 2014, $173 $1,400 Total Net Debt(1) ($MM) Quarterly FFO(1) ($MM) $1,200 $150 $1,000 $800 $100 $600 $400 $50 $200 $0 $0 Q4 1999 Q2 2000 Q4 2000 Q2 2001 Q4 2001 Q2 2002 Q4 2002 Q
Slide 46: Appendix
Appendix PEYTO Exploration & Development Corp. N Gas Marketing N Quarterly Track Record N Tax Pools N Leverage 46 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section ent
Slide 47: Rising Gas Prices?
Gas Marketing Rising Gas Prices? PEYTO Exploration & Development Corp. Demand Driven Demand Driven Supply Driven Market Market Market ? 47 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities.
Slide 48: The Future of Gas Prices
Gas Marketing The Future of Gas Prices PEYTO Exploration & Development Corp. 48 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and Other Financia
Slide 49: Future Market Diversification and Gas Price Protection
Gas Marketing Future Market Diversification and Gas Price Protection PEYTO Exploration & Development Corp. 3-5 yr diversification program Our plan is to fill this up with Midwest US /Eastern CND exposure and more direct connect industrial *Average Heating Value of approximately 1.15 GJ/mcf for Peyto
Slide 50: Fixed Price Swaps For Gas and Liquids
Gas Marketing Fixed Price Swaps For Gas and Liquids PEYTO Exploration & Development Corp. Peyto Marketing Summary 1.15 Heating Value GJ/mcf AECO 7A Fixed Price Swaps (CAD$/GJ) 1.255 cad/usd TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL Q4 2019 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2020 Q1 2021 Q2 2021 Q3 2021
Slide 51: Rising Realized Gas Prices
Gas Marketing Rising Realized Gas Prices PEYTO Exploration & Development Corp. $9.00 Avg Peyto Realized 3.492 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 Avg AECO 5a 3.489 $- Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q
Slide 52: Successful Hedging Strategy Smoothes Volatility
Gas Marketing Successful Hedging Strategy Smoothes Volatility PEYTO Exploration & Development Corp. Gas Price ($/mcf) $10.00 $10.00 $9.00 Peyto has beat the AECO $9.00 $8.00 monthly price in 12 of the $8.00 last 16 years using a $7.00 methodical hedging strategy. $7.00 $6.00 $6.00 $5.00 $5.00 $4.00
Slide 53: Rockies LNG Partnership – West Coast LNG Option
Gas Marketing Rockies LNG Partnership – West Coast LNG Option PEYTO Exploration & Development Corp. 53 Non-GAAP measures and ratios do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-
Slide 54: Quarterly Track Record
Quarterly Track Record PEYTO Exploration & Development Corp. 2022 2021 2020 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Operations Production Oil & NGLs (bbl/d) 13,411 12,273 11,653 11,038 11,164 12,289 12,138 11,308 11,256 11,263 11,126 11,585 Natural gas (mcf/d) 541,030 535,660 476,387 517,606 473,0
Slide 55: 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 Q4/21 $200 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021* CEC UCC (
Slide 56: Blend of fixed term and revolving debt
Peyto’s Debt Blend of fixed term and revolving debt PEYTO Exploration & Development Corp. $65 4.26% End of $0.95B Revolver Oct ‘23 $100 3.70% MM$ $100 3.95% $100 4.39% $40USD 3.98% Debt in CND$ unless otherwise indicated 56 Non-GAAP measures and ratios do not have any standardized meaning under IFRS
Slide 57: 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 58: Advisories: Funds from Operations
Advisories PEYTO Exploration & Development Corp. Funds from Operations "Funds from operations" ("FFO") is a non-GAAP measure which represents cash flows from operating activities before changes in non-cash operating working capital and provision for future performance-based compensation. Management
Slide 59: Advisories: Oil and Gas Metrics
Advisories PEYTO Exploration & Development Corp. Oil and Gas Metrics This presentation contains a number of oil and gas and finance metrics, including "FD&A cost", "cash costs", "supply cost", "full cycle netback", "reserve life", "payout", "IP12 rates", "internal rate of return (IRR)", "corporate d
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