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September 2017 Corporate Presentation – Peyto Exploration & Development Corp

Peyto Exploration & Development Corp · Sep 14, 2017 · 53 slides

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Slides

  1. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 1
  2. September 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. September 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. September 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 9/28/2017
  5. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 5
    The Big Picture Gas Demand Is Growing PEYTO Exploration & Development Corp. 6 Source: BP Energy Outlook 9/28/2017
  6. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 6
    The Big Picture North American Demand Is Growing PEYTO Exploration & Development Corp. 20+BCF/d annual decline Demand Growth since 1998 7 9/28/2017
  7. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 7
    The Big Picture Unlimited Cheap Gas or Rising Spot Price PEYTO Exploration & Development Corp. 8 Source: RBC 9/28/2017
  8. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 8
    The Big Picture Canada Supply Demand Compressing PEYTO Exploration & Development Corp. Take-away capacity from Montney/Deep Basin 9 Source: NEB, Canadas Energy Future 2016 January 2016 9/28/2017
  9. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 9
    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 10…
  10. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 10
    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…
  11. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 11
    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…
  12. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 12
    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…
  13. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 13
    The Peyto Strategy Invest For Profit Not Growth PEYTO Exploration & Development Corp. 800 600 Peyto Earnings 400 CTD Q4/16 200 - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014…
  14. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 14
    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…
  15. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 15
    Q2/17 Q2/17 Dividend Sustainability Peyto Ctd. Dist/Div. Peyto Ctd. Earnings The Peyto Strategy 1,000 1,500 2,000 2,500 0 500 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3…
  16. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 16
    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.…
  17. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 17
    Peytos Profitable Business PEYTO Exploration & Development Corp. 18 9/28/2017
  18. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 18
    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…
  19. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 19
    The Peyto Strategy Maximize Profits Throughout Commodity Cycle PEYTO Exploration & Development Corp. AECO 10 Monthly /GJ Peyto Realized Gas Price (/mcfe) 36% Avg. Profit 8 Cum To Date 6 Bonus 4 PDP FD&A 31% 2…
  20. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 20
    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…
  21. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 21
    Peytos Unique Assets PEYTO Exploration & Development Corp. 22 9/28/2017
  22. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 22
    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…
  23. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 23
    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…
  24. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 24
    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* 25…
  25. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 25
    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,…
  26. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 26
    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…
  27. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 27
    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…
  28. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 28
    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…
  29. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 29
    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…
  30. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 30
    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…
  31. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 31
    Peytos Assets Predictable and Repeatable PEYTO Exploration & Development Corp. 32 9/28/2017
  32. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 32
    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…
  33. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 33
    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 4,233 4,152 4,155 4,222 35 Drill & Case Cost / Depth 4,066 3,999 4,000 29.3 30 3,500…
  34. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 34
    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…
  35. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 35
    Peytos Incredible Returns PEYTO Exploration & Development Corp. 36 9/28/2017
  36. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 36
    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…
  37. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 37
    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…
  38. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 38
    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 (%)…
  39. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 39
    Peytos Future PEYTO Exploration & Development Corp. 40 9/28/2017
  40. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 40
    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…
  41. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 41
    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…
  42. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 42
    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…
  43. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 43
    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…
  44. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 44
    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…
  45. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 45
    Peytos Future Working Around The Takeaway Constraints PEYTO Exploration & Development Corp. The capacity has been oversold by as much as 60% 46 9/28/2017
  46. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 46
    Appendix PEYTO Exploration & Development Corp. N Quarterly Track Record N Tax Pools N Hedging Strategy N Gas Marketing N FAQ 47 9/28/2017
  47. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 47
    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…
  48. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 48
    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…
  49. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 49
    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…
  50. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 50
    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 544,438 2.59…
  51. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 51
    Gas Marketing Future Sales (2 of 4) PEYTO Exploration & Development Corp. 52 9/28/2017 Assuming an Average Heating Value of 1.15 GJ/mcf for Peytos gas
  52. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 52
    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…
  53. September 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 53
    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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