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August 2017 Corporate Presentation – Peyto Exploration & Development Corp

Peyto Exploration & Development Corp · Aug 28, 2017 · 56 slides

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Slides

  1. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 1
  2. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 2
    Peyto Profile PEYTO Exploration & Development Corp. N TSX Listing: PEY N Shares Outstanding: 164.9 million, 3% insiders (as of Jul 4/17) N Monthly Dividend: 0.11/share N Current Production: 0.65 BCFe/d (110,000 boe/d) N YE 2016…
  3. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 3
    Peyto History Total Shareholder Return PEYTO Exploration & Development Corp. 60 120,000 50 100,000 40 80,000 30 60,000 20 40,000 10 20,000 - 0 CTD Dividend (/share) Month End Closing Price (/share) Peyto…
  4. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 4
    The Big Picture World Consumption of Hydrocarbons Isnt Slowing PEYTO Exploration & Development Corp. Consumption (MMBOE/day) Population (billions) 5 Source: ARC Financial, BP Energy Outlook 8/25/2017
  5. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 5
    The Big Picture Substitution Unlikely PEYTO Exploration & Development Corp. 6 8/25/2017
  6. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 6
    The Big Picture Gas Demand Is Growing PEYTO Exploration & Development Corp. 7 Source: BP Energy Outlook 8/25/2017
  7. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 7
    The Big Picture Peytos Natural Gas Is Cleanest PEYTO Exploration & Development Corp. Environment Canada Emission EIA CO2 Emissions for Emission Intensity (kg CO2-eq/boe) Intensity by Source Type - 2014 various fuels 100…
  8. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 8
    The Big Picture North American Demand Is Growing PEYTO Exploration & Development Corp. Demand Growth since 1998 9 8/25/2017
  9. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 9
    The Big Picture U.S. Is Now Self Sufficient In Gas PEYTO Exploration & Development Corp. 10 Source: EIA 8/25/2017
  10. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 10
    The Big Picture Canada Supply Demand Compressing PEYTO Exploration & Development Corp. Take-away capacity from Montney/Deep Basin 11 Source: NEB, Canadas Energy Future 2016 January 2016 8/25/2017
  11. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 11
    The Big Picture US Can Export Our Excess PEYTO Exploration & Development Corp. EIA U.S. Natural Gas Net Imports (MMcf/d) 15,000 10,000 5,000 0 (5,000) (10,000) Imports (mostly CND) Exports Net 12…
  12. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 12
    The Peyto Strategy What We Believe PEYTO Exploration & Development Corp. We believe that: N Natures gas is the fuel for the future. N Our focus should be on maximizing the return on invested capital your capital. N By selectively…
  13. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 13
    The Peyto Strategy Results in a Low Cost Advantage PEYTO Exploration & Development Corp. Operating Costs Transportation Costs 20 4.00 15 3.00 /boe 10 2.00 1.18 5 1.00 8.38 - - Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4…
  14. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 14
    The Peyto Strategy Counter Cyclical Growth Per Share PEYTO Exploration & Development Corp. 1400 2017 YE Target 70 115-120,000 boe/d 1200 60 1000 50 800 40 600 30 400 20 200 10 Growth rate in prod/dda 0 0 share (last…
  15. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 15
    The Peyto Strategy Consistent History of Earnings PEYTO Exploration & Development Corp. 800 600 Peyto Cum. Earnings 400 Q4/16 200 - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014…
  16. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 16
    The Peyto Strategy More Profit Per Dollar Of Capital PEYTO Exploration & Development Corp. Earnings/Capital 2001-2016 50% 40% 30% 20% 10% 0% CTD Earnings/Capital -10% 2001-2016 -20% -30% PEY ARX CNQ BNE VET ERF COG…
  17. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 17
    Q2/17 Q2/17 Dividend Sustainability Peyto Ctd. Dist/Div. Peyto Ctd. Earnings The Peyto Strategy 1,000 1,500 2,000 2,500 3,000 0 500 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1…
  18. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 18
    Compound Annual Total Return (%) 0 5 10 15 20 25 30 35 40 45 Peyto Exploration & Development Computer Modelling Group Stella-Jones Inc. Smart REIT First Quantum Minerals ALIMENTATION COUCHE TARD Parkland Fuel Corp.…
  19. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 19
    Peytos Profitable Business PEYTO Exploration & Development Corp. 20 8/25/2017
  20. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 20
    Peytos Profitable Business Build it for less than we sell it PEYTO Exploration & Development Corp. PEY 2014 PEY 2015 PEY 2016 34 Land/Acq/Disp 8 Seismic PDP FD&A 220 Drilling /mcfe (2.25) (1.64) (1.44) 105 Compl. 41 Wellsite…
  21. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 21
    Peytos Profitable Business Profitable Even Through The Lows PEYTO Exploration & Development Corp. AECO Peyto Realized Gas Price (/mcfe) Monthly 10 /GJ 36% Avg. Profit 8 Cum To Date 6 Bonus 4 Cash Costs 2…
  22. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 22
    Peytos Profitable Business Competitive In The North American Marketplace PEYTO Exploration & Development Corp. 100% Montney 65% DB/35% Mont. 100% Deep Basin VII 2016 TOU 2016 PEY 2016 PDP FD&A /mcfe (3.75) (2.45) (1.44) Cash…
  23. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 23
    Peytos Unique Assets PEYTO Exploration & Development Corp. 24 8/25/2017
  24. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 24
    Peytos Assets Geographically Focused Core Areas PEYTO Exploration & Development Corp. 450,000 net acres R10 R5W6 R27 R22 R17 R12 R7W5 9 operated gas plants Cutbank ---(835 mmcf/d net capacity) 1600+ km pipelines 1200+ producing…
  25. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 25
    Peytos Assets Deep Basin Permeability Segregation PEYTO Exploration & Development Corp. FOOTHILLS STRUCTURES GAS AS ING INCRE BILITY EA PERM WATER TRANSITION ZONE WATER GAS SE INCREAH AREA OF GAS DEPT…
  26. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 26
    Peytos Assets Multi Zone Stacked Sandstone Reservoirs PEYTO Exploration & Development Corp. Detailed Petrophysical work on the Spirit River sands revealed 30% more reserves per section Up to per section* 27…
  27. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 27
    Peytos Assets Deep Basin Lands Go A Long Way PEYTO Exploration & Development Corp. 800 Peyto Lands 700 600 Net Sections 500 400 Net Peyto Sections 300 200 100 - Net Sections of Cardium, Dunvegan, Notikewin,…
  28. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 28
    Peytos Assets Adding To Our Drilling Islands PEYTO Exploration & Development Corp. Greater Sundance Area Added 40 Net Sections Weve added 72 Net Sections of Land net sections with over 100 Added in 2016* locations…
  29. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 29
    Peytos Assets Large Hz MSF Inventory PEYTO Exploration & Development Corp. Done1 To Do Total Total Total Total Hz(Vt) Hz Locations Vertical Hz Locations Unbooked Wells Wells Booked* (3) 1 11 (6) 434 72 176(14) 409 5 1 5…
  30. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 30
    Peytos Assets Constantly Growing Inventory PEYTO Exploration & Development Corp. PEYTO INVENTORY PEYTO LOCATION GENERATION RATE INVENTORY Ratio of Locations Added/Total Wells Drilled Cumulative Wells Drilled Booked Locations…
  31. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 31
    Peytos Assets Greater Sundance Area PEYTO Exploration & Development Corp. Peyto Oldman & Oldman North Peyto Wildhay Sweet Gas Sweet Gas Plant Plants 90 mmcf/d Peyto Nosehill 250 mmcf/d Sweet Gas Plant 125 mmcf/d Peyto…
  32. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 32
    Peytos Assets The Greater Brazeau River Area PEYTO Exploration & Development Corp. Peyto Brazeau Sweet Gas Plant (2013) 140 mmcf/d Peyto Brazeau River 40,000 140 mmcf/d Sweet Gas Plant 35,000 30,000 Boe/d…
  33. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 33
    Peytos Assets Facility Ownership And Control PEYTO Exploration & Development Corp. Cutbank Kakwa Oldman & Oldman North Nosehill Wildhay Galloway Swanson Peyto Nosehill Gas Plant: 125 MMCF/d throughput Peyto Gas…
  34. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 34
    Peytos Assets Predictable and Repeatable PEYTO Exploration & Development Corp. 35 8/25/2017
  35. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 35
    Peytos Assets Annual Production Additions PEYTO Exploration & Development Corp. 60,000 11,000/boe/d 2011 - 379MM Capital Efficiency 2012 - 618MM 50,000 2013 - 578MM 2014 - 690MM 2015 - 594MM 40,000 2016 - 469MM BOE/D 2017…
  36. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 36
    Peytos Assets Drilling Cost Performance PEYTO Exploration & Development Corp. Hz Spirit River 5,000 40 4,500 34.5 4,268 4,299 4,310 4,260 4,152 4,155 4,222 35 Drill & Case Cost / Depth 4,066 3,999 4,000 29.3 30 3,500…
  37. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 37
    Peytos Assets Completion Cost Performance PEYTO Exploration & Development Corp. Monthly Average Completion Costs 2,000,000 300,000 1,800,000 250,000 1,600,000 -35% 1,400,000 200,000 Cost Per Stage 1,200,000 Total…
  38. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 38
    Peytos Incredible Returns PEYTO Exploration & Development Corp. 39 8/25/2017
  39. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 39
    BTAX IRR (%) -50 0 50 100 150 200 250 300 02/13-11-043-12W5/0 02/08-08-055-21W5/0 00/08-18-055-21W5/0 00/08-28-054-21W5/0 00/14-15-043-12W5/0 00/13-11-043-12W5/0 02/16-33-054-22W5/0…
  40. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 40
    Peytos Returns Focus On Returns Drives Capital Discipline PEYTO Exploration & Development Corp. 2017 11,000/boe/d 120,000 2016 - 10,800/boe/d 900 2015 - 11,600/boe/d 2017 Forecast Exit 120,000 boe/d 2014 - 16,800/boe/d Annual…
  41. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 41
    Peytos Returns High Returns On Your Capital And Equity PEYTO Exploration & Development Corp. 60% 12 50% 10 40% 8 30% 6 18 yr Avg ROE to 2016 20% 4 10% 2 0% 0 Return On Capital Employed (%) Return On Equity (%)…
  42. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 42
    Peytos Future PEYTO Exploration & Development Corp. 43 8/25/2017
  43. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 43
    Peytos Future Industry Cost Inflation PEYTO Exploration & Development Corp. Active Canadian Drilling Rigs 800 100/bbl oil, 3.50/GJ gas 600 400 50/bbl oil, 2.30/GJ gas 200 0 JUL-13 JUL-14 JUL-15 JUL-16 JUL-17 GAS RIGS…
  44. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 44
    Peytos Future 15th 19982013 Build it for less than we sell it PEY 2016 92% Gas 2.00/GJ AECO PEY 2017 Goals 8% NGLs 40/bbl (75% oil) 91% Gas 2.40/GJ 2.63/mcfe 9% NGLs 47/bbl Revenue /mcfe 3.18 0.56/mcfe hedging gain 3.18/mcfe…
  45. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 45
    Peytos Future 2017 Outlook PEYTO Exploration & Development Corp. Drill 145-160Hz Wells (Liquids Rich Natural Gas) vs 129 in 2016 Expand & Extract Increase Processing Capacity & NGL Yield 120 mmcf/d With Brazeau East GP…
  46. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 46
    Peytos Future Where To From Here PEYTO Exploration & Development Corp. August 10, 2017 (source: CIBC) 150,000 120,000+ boe/d exit 10,800/boe/d 11,600/boe/d 10,000 /boe/d 100,000 16,800/boe/d 10,000 /boe/d BOED…
  47. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 47
    Peytos Future Careful Use Of Debt For Leveraged Returns PEYTO Exploration & Development Corp. 2016 Net Debt/PDP NPV10 100% 80% 60% 40% 20% 0% BXE NVA AAV PWT VET TOU BNP TET ARX ERF WBE…
  48. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 48
    Peytos Future Working Around The Takeaway Constraints PEYTO Exploration & Development Corp. The capacity has been oversold by as much as 60% 49 8/25/2017
  49. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 49
    Appendix PEYTO Exploration & Development Corp. N Quarterly Track Record N Tax Pools N Hedging Strategy N Gas Marketing N FAQ 50 8/25/2017
  50. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 50
    Quarterly Track Record PEYTO Exploration & Development Corp. 2017 2016 2015 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Operations Production Oil & NGLs (bbl/d) 8,319 9,586 7,457 8,938 7,247 6,621 7,008 6,643 6,943 5,352…
  51. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 51
    Organic Business Model Peytos Tax Pools PEYTO Exploration & Development Corp. 1,800 1,600 1,400 1,200 Federal Tax Pools Millions 1,000 800 Q4/16 600 400 200 - 1999 2001 2003 2005 2007 2009 2011 2013 2015 CEC UCC…
  52. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 52
    Peytos Future Successful Hedging Strategy Smoothes Volatility PEYTO Exploration & Development Corp. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto…
  53. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 53
    Gas Marketing Future Sales (1 of 4) PEYTO Exploration & Development Corp. Hedges by year (averaged) Year Vol. GJ/d Price/GJ Vol. mcf/d Price/mcf 2015 344,644 3.48 299,690 4.00 2016 460,656 2.77 400,915 3.18 2017 531,452 2.59…
  54. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 54
    Gas Marketing Future Sales (2 of 4) PEYTO Exploration & Development Corp. 55 8/25/2017 Assuming an Average Heating Value of 1.15 GJ/mcf for Peytos gas
  55. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 55
    Gas Marketing Future Sales (3 of 4) PEYTO Exploration & Development Corp. Aug-16 Aug-17 Aug-18 Aug-19 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19 Nov-19 Feb-16…
  56. August 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 56
    Gas Marketing Future Sales (4 of 4) PEYTO Exploration & Development Corp. Aug-16 Aug-17 Aug-18 Aug-19 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19 Nov-19 Feb-16…

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