Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Shareholder Meeting (May 2014)
31 slides from Peyto Exploration & Development's shareholder meeting presentation, May 2014
Slide 1: Annual General Meeting May 2014
www.Peyto.com Annual General Meeting May 2014
Slide 2: The Peyto Story: 15 Years of Success
The Peyto Story 15 Years of Success th 1998‐2013
Slide 3: Historical Milestones
The Peyto Story 15th 1998‐2013 Historical Milestones 80,000 $20 Peyto Production (boe/d) July 2009: Peyto drills first Hz Mar 31, 2006: AECO Monthly Gas Price ($/GJ) Peyto cuts well 13-25-55-20W5 70,000 Capex to "live June 2009: The Great within means" Recession July 1, due to high ends 2003: costs.
Slide 4: Trading History and Shareholder Return
The Peyto Story 15th 1998‐2013 15 Year Trading History $700,000 $50 $14 45% Total $12 $40 Return last yr. Shareholder IRR $10 $30 $8 $20 $6 $10 $4 $1,000 $0 $2 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Share Price w/Div Share Price Gas Price
Slide 5: Long Overdue Recognition
The Peyto Story 15th 1998‐2013 Long Overdue Recognition 5 4/20/2015
Slide 6: The Peyto Strategy: How We Do It
The Peyto Strategy 15th 1998‐2013 How We Do It N Invest in our own ideas N Build it ourselves N Operate it ourselves N Focus on maximum returns N Stay concentrated, lean & efficient 6 4/20/2015
Slide 7: What We Believe
The Peyto Strategy 15th 1998‐2013 What We Believe N “We believe nature’s gas is the fuel for the future.” N “We believe we can make a real profit by being the lowest cost, most efficient producer in the industry.” N “We believe in partnering with shareholders to make that profit, not by trying to ma
Slide 8: Profitable Business: Build it for less than we sell it
Peyto’s Profitable Business 15th 1998‐2013 “Build it for less than we sell it” PEY 2013 Land/Acq Seismic $9MM $3MM Drilling $254MM PDP FD&A ($2.35) Compl. $152MM Wellsite $48MM $/mcfe Facilities $112MM $578MM ∆PDP Reserves (before Prod.) 41.0 mmboes PDP FD&A $14.09/boe Cash Costs $/mcfe ($1.06) $2.3
Slide 9: Profitable Even Through The Lows
Peyto’s Profitable Business 15th 1998‐2013 Profitable Even Through The Lows AECO Monthly $10 Peyto Realized Gas Price ($/mcfe) $/GJ 37% Avg. "Profit“ Cum To Date $8 $6 Bonus $1.02 $4 Cash Costs ($1.06) $2 PDP FD&A ($2.35) $- Forecast with 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2
Slide 10: Profitability Challenges For The Canadian Gas Industry
Peyto’s Profitable Business 15th 1998‐2013 Profitability Challenges For The Canadian Gas Industry 2013 2012 2011 20101 PDP FD&A $/mcfe ($2.93) ($3.43) ($3.68) ($3.11) Cash Costs $/mcfe ($3.13) ($2.98) ($3.31) ($3.19) Sales Price $/mcfe $6.56 $5.91 $6.95 $6.56 ($0.05) $0.27 Profit/(Loss) $0.50 ($0.50
Slide 11: Competitive In The North American Marketplace
Peyto’s Profitable Business 15th 1998‐2013 Competitive In The North American Marketplace
Slide 12: Profitability By Basin – 5 yr. Average
Peyto’s Profitable Business 15th 1998‐2013 Profitability By Basin – 5 yr. Average* 100% Deep Basin ‐ PEY 80% Marcellus – Cabot* 75% Rockies – Ultra* 70% Haynesville – Exco** PD FD&A $/mcfe ($2.21) ($3.08) ($3.47) ($2.89) $/mcfe ($1.37) ($2.05) ($1.50) ($2.40) Cash Costs $/mcfe $5.40 Sales Price $5.6
Slide 13: Deep Basin Permeability Segregation
Peyto’s Assets 15th1998‐2013 Deep Basin Permeability Segregation Ante Ck FOOTHILLS STRUCTURES Elmworth GAS AS ING INCRE BILITY EA PERM WATER Kaybob TRANSITION ZONE WATER Kakwa GAS Gas INCREAH DEPT SE AREA OF GAS Window MATURATION Wild River Sundance Edson Bighorn Deep Basin Trap Brazeau Hoadley 13 4
Slide 14: Multi Zone Stacked Sandstone Reservoirs
Peyto’s Assets 15th 1998‐2013 Multi Zone Stacked Sandstone Reservoirs Detailed Petrophysical work on the Spirit River sands revealed >30% more reserves per section Up to per section* 14 *NGL recoveries can increase by 15+ bbl/mmcf with deeper cutting processing facilities 4/20/2015 Reserves are 2P r
Slide 15: Geographically Focused Core Areas
Peyto’s Assets 15th 1998‐2013 Geographically Focused Core Areas • 425,000 net acres R10 R5W6 R27 R22 R17 R12 R7W5 • 9 operated gas plants Cutbank ---(525 mmcf/d net capacity) • 1000+ km pipelines • 900+ producing zones T60 Kakwa • 75,000 boe/d T60 Chicken Leland Processed by Peyto Pine T55 Creek T55
Slide 16: Facility Ownership And Control
Peyto’s Assets 15th 1998‐2013 Facility Ownership And Control R9 R4W6 R26 R21 R16 R11 R6W5 Cutbank Waskahigan W Chicken T60 W Smoky/Kakwa Cutpick Leland/Berland Oldman North T55 Wildhay W W W Nosehill W Sundance Galloway WW Swanson Ansell P/L Peyto Gas Plants 50km, 10", $10MM YE 2013 YE 2014 WI Peyto
Slide 17: Lowest Operating Costs – Gas Producers
Peyto’s Assets 15th 1998‐2013 Lowest Operating Costs – Gas Producers How? • We operate • Full facilities • No water • No sour • Chemical recycle • Nat gas fuel • Continuous innovation CAGR 0.5 %/yr 17 BOE factor - 6 mcf = 1 bbl of oil equivalent 4/20/2015 Operating costs include transportation. (Adv
Slide 18: Peyto's Unique Assets
15th 1998‐2013 Peyto’s Unique Assets
Slide 19: Self Sufficient Energy Inputs
Peyto’s Assets 15th 1998‐2013 Self Sufficient Energy Inputs $5MM Estimated Savings/yr. 19 Diesel $1.00/litre Nat Gas $3.00/Mcf (~$0.10/litre) 4/20/2015
Slide 20: Focus On Returns Drives Capital Discipline
Peyto’s Business 15th 1998‐2013 Focus On Returns Drives Capital Discipline 2013 - $15,100/boe/d 2012 - $17,600/boe/d ONR Acq - $38,600/boe/d $60,000 Annual Production Wedge (boe/d) 2011 - $17,500/boe/d 80,000 2010 - $17,300/boe/d 2009 - $17,300/boe/d 2013YE Exit 75,200 boe/d Capital Efficiency ($/bo
Slide 21: Hypothetical Returns
Peyto’s Returns 15th 1998‐2013 Hypothetical Returns Upper Middle Brazeau Brazeau Species Cardium Notikewin Falher Falher Wilrich Bluesky Falher Wilrich Well Costs D&C ($M) ($M) $3,500 $4,300 $4,100 $4,200 $4,300 $4,200 $4,600 $4,800 Reserves BCFe 2.2 3.0 3.4 2.9 3.3 3.2 3.5 3.3 IP30 Mcf/d 1,500 4,00
Slide 22: Peyto's Returns
ROR, % 0 20 40 60 80 100 120 140 160 100/01‐29‐54‐21W5/0 HZ 100/11‐32‐54‐21W5/0 HZ 102/04‐33‐54‐21W5/0 HZ 100/16‐16‐56‐21W5/0 HZ 102/16‐29‐54‐21W5/0 HZ 102/13‐32‐54‐21W5/0 HZ 103/05‐04‐55‐21W5/0 HZ 100/01‐05‐51‐19W5/0 HZ 102/15‐18‐056‐21W5/0 100/13‐18‐56‐21W5/0 HZ 100/16‐18‐56‐21W5/0 HZ 100/04‐07‐56
Slide 23: High Returns On Your Capital And Equity
Peyto’s Returns 15th 1998‐2013 High Returns On Your Capital And Equity 60% $10 50% $8 40% $6 30% 15 yr Average ROE $4 20% 12% 10% 10% $2 0% $0 Return On Capital Employed (%) Return On Equity (%) Earnings/share Realized Gas Price ($/mcfe) 15 yr Average ROCE Return on Equity (ROE) is earnings for the
Slide 24: Peyto's Future
15th 1998‐2013 Peyto’s Future
Slide 25: 2014 Outlook: Continuously Improve Profitability
2014 Outlook 15th1998‐2013 Continuously Improve Profitability 2014 Goals* • Pad drilling • CNG powered rigs PDP FD&A $/mcfe <($2.00) • • • Longer laterals, more stages Continuous operations Natural gas heated water Summer drilling <($1.20) • Cash Costs $/mcfe • Chemical optimization • Improving runt
Slide 26: 2014 Outlook: Biggest Year Ever (again!)
2014 Outlook 15th 1998‐2013 Biggest Year Ever (again!) Drill 110-122 Hz Wells (100% Hz-MSF, Liquids Rich Natural Gas) Expand & Extract Increase Processing Capacity & NGL Yield Increase Undeveloped Land Base Shoot Seismic 2014 Capital Program Acquire Additional Opportunities and Partner Interest
Slide 27: Large Resource + Low Cost = Profitable Growth
2014 Outlook Large Resource + Low Cost = Profitable Growth 2014 Budget $575MM‐$625MM 100,000 110 – 122G (101‐112N) Wells, 9‐10 rigs 100,000 Add 32k to 35k boe/d for $18,000/boe/d 78,500 to 81,500 boe/d exit 90,000 90,000 75,200 boe/d exit 80,000 80,000 57,000 boe/d exit 70,000 70,000 60,000 60,000 4
Slide 28: Road To 100,000 boe/d
Peyto’s Future 15th 1998‐2013 Road To 100,000 boe/d 120,000 >100,000 boed 25% CAGR 110,000 >90,000 boed 100,000 >80,000 boed 90,000 72,600 boed $17,500/boe/d 80,000 $17,500/boe/d 70,000 BOED $17,500/boe/d 60,000 61,600 50,000 53,500 40,000 45,600 30,000 2014 Budget 2015 Budget 2016 Budget 2017 Budge
Slide 29: Growing Production = Growing Earnings
Peyto’s Future 15th 1998‐2013 Growing Production=Growing Earnings 30% $6 25% $5 20% $4 15% $3 12% 10% 10% $2 5% $1 0% $0 Return On Capital Employed (%) Return On Equity (%) Earnings/share ($/sh) Realized Gas Price ($/mcfe) Return on Equity (ROE) is earnings for the period divided by average sharehol
Slide 30: Peyto Profile
Peyto Profile 15th 1998‐2013 N TSX Listing: PEY N Shares Outstanding: 153.7 million, 4.4% insiders (as of Feb. 5/14) N Monthly Dividend: $0.10/share (incr. from $0.08 effective May/14) N Current Production: ~450 MMCFe/d (75,000 boe/d) N YE 2013 2P Reserves: 2.8 TCFe (468 mmboes) N Net Debt: $100 mil
Slide 31: R U Ready To Saddle Up!
Peyto’s Future 15th 1998‐2013 R U Ready To Saddle Up!
Peyto Exploration & Development — Shareholder Meeting (May 2014) on 6ix