Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Investor Presentation (July 2023)
43 slides from Peyto Exploration & Development's investor presentation, July 2023
Slide 1: Peyto Corporate Presentation July 2023
www.Peyto.com July 2023
Slide 2: Who We Are?
Who We Are? PEYTO Exploration & Development Corp. One of Canada’s largest Natural Gas Producers 610,000 Mcfe/d (12% 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: 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 $1.36 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 liq
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 Q1/23 Peyto applies hedge accounting. As such, earnings are not skewed by large unrealized gains or losses during a quarter Peyto Ctd. Dist/Div. Q1/23 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 Operated by
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 Large Hz MSF Inventory PEYTO 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. 9,000 8,000 7,000 2,033 6,000 26% 1,570 (BCFe) 5,000 CAGR 4,000 8,035 1,971 3,000 2,000 TCFe of 1,000 2,461 Discovered Reserves 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 201
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: 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 7000 18/22 Paid Out 11/27 Paid Out Gross Recombined Gas Rate (mcf/d) Gross Recombined Gas Rate (mcf/d) 6000 4,000 5000 +60 b
Slide 26: Extended Reach Horizontals
Peyto’s Returns Extended Reach Horizontals PEYTO Exploration & Development Corp. Year Over Year Performance - All Wilrich 7000 Peyto’s Extended Reach Horizontals 6000 (ERH) have increased reserves per well by 86% and costs to develop have been 5000 reduced by 31%. Application to the Gas Rate (mcf/d)
Slide 27: Peyto Returns
Peyto Returns 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. 27
Slide 28: Updated Template Economics At Recent Strip
Peyto’s Returns Updated Template Economics At Recent Strip PEYTO Exploration & Development Corp. Greater Brazeau Greater Sundance Cardium Notikewin Wilrich ERH Notikewin Falher ERH Cardium Dunvegan Wilrich ERH Type Curve Economics Gas [MMcf] 2,566 3,587 3,835 4,699 4,289 1,280 4,705 3,780 NGLs [Mbbl
Slide 29: 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 30: Future
Peyto’s Future PEYTO Exploration & Development Corp. Ensign Rig #401 has been drilling for Peyto for over 12 years. 30
Slide 31: 2023 Focus
Peyto’s Future 2023 Focus PEYTO Exploration & Development Corp. Drill ~70 Net Hz Wells • Focused in Sundance and Brazeau core areas • 4 to 5 rigs (flexible, back-end loaded) Expand Infrastructure • Construct Gas Pipeline for Cascade Power Supply • Optimize Existing Core Areas Increase Opportuni
Slide 32: 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 $3.60/mcf Realized gas $1.50/mcfe hedge loss $5.36/mcfe Targets after diversification and hedges on May 31 Strip $5.04 $3.60 $4.60 Revenue $/mcfe $5.36 Royalties ($0.74)
Slide 33: 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 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 Prices Peyto yields $3.20 $3.76 $4.56 $3.75 $3.73 $3.87 $3.95 $3.69 $3.68 $3.79 $3.76 $3.71 $3.70 $3.67 (US$3.50/MMBtu Henry Hub, CAD$3.00/GJ AECO, $120/MWh AB Power,
Slide 35: Successful Hedging Strategy Smoothes Volatility
Gas Marketing Successful Hedging Strategy Smoothes Volatility PEYTO Exploration & Development Corp. Gas Price ($/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. $7.00 $7.00 $6.00 $6.0
Slide 36: Cascade Gas Supply Agreement
Gas Marketing Cascade Gas Supply Agreement PEYTO Exploration & Development Corp. Sundance Provincial Park 15 year, Gas Supply Agreement for 52 mmcfd directly Swanson Gas Plant connected through a new large diameter pipeline from 23km new Peyto 10” / 8” Swanson Plant to pipeline now built Cascade 900
Slide 37: 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 37
Slide 38: Rockies LNG Partnership
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 3 billion cubic feet per day of
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. Debt at Mar 31, 2023 $44 At Mar 31, 2023, Peyto’s Net $415 $419 Debt1 was $878 million with roughly half fixed at attractive interest rates of ~4% with Debt/EBITDA = 0.95 Term Debt Drawn Bank Debt Adj Working C
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: FD&A Costs and Reserves
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
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