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November 2017 Corporate Presentation – Peyto Exploration & Development Corp

Peyto Exploration & Development Corp · Nov 28, 2017 · 50 slides

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Slides

  1. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 1
  2. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 2
    PEY.TO Who We Are PEYTO Exploration & Development Corp. N 5th Largest Natural Gas Producer in Canada N Pure Play Alberta Deep Basin 115,000 boe/d Gas & NGLs N Returns Focused Strategy ROCE 17%, ROE 31% over last 18 yrs N Long…
  3. November 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 Future 60,000 Prospects 20 40,000 10 Past 20,000 Profits - 0 CTD Dividend (/share) Month End…
  4. November 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 11/28/2017
  5. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 5
    The Big Picture North American Demand Is Growing PEYTO Exploration & Development Corp. Demand Growth since 1998 6 11/28/2017
  6. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 6
    The Big Picture US Keeping Up But Replacing Decline Is A Big Job PEYTO Exploration & Development Corp. The US needs to build over 20 BCF/d every year just to hold flat. Thats a new Marcellus play every year And the…
  7. November 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 11/28/2017
  8. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 8
    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…
  9. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 9
    The Peyto Strategy Results in a Low Cost Advantage PEYTO Exploration & Development Corp. Operating Costs Transporation Costs 20 5 4 15 3 /boe 10 2 5 7.56 1.07 1 - - Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2…
  10. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 10
    The Peyto Strategy Counter Cyclical Growth Per Share PEYTO Exploration & Development Corp. 2500 2017 YE Target 80 115-120,000 boe/d 70 2000 60 1500 50 40 1000 30 20 500 10 Growth rate in prod/dda 0 0 share (last 8…
  11. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 11
    The Peyto Strategy Invest For Profit Not Growth PEYTO Exploration & Development Corp. 800 600 Peyto Earnings 400 CTD Q3/17 200 - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014…
  12. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 12
    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…
  13. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 13
    Q3/17 Q3/17 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…
  14. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 14
    Peytos Profitable Business PEYTO Exploration & Development Corp. 15 11/28/2017
  15. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 15
    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…
  16. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 16
    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…
  17. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 17
    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…
  18. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 18
    Peytos Unique Assets PEYTO Exploration & Development Corp. 19 11/28/2017
  19. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 19
    Peytos Assets Geographically Focused Core Areas PEYTO Exploration & Development Corp. 470,000 net acres R10 R5W6 R27 R22 R17 R12 R7W5 9 operated gas plants Cutbank ---(835 mmcf/d net capacity) 1600+ km pipelines 1200+ producing…
  20. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 20
    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…
  21. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 21
    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* 22…
  22. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 22
    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,…
  23. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 23
    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…
  24. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 24
    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…
  25. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 25
    Peytos Assets Spirit River Group Potential Land Expiries PEYTO Exploration & Development Corp. AB Land Sales 5 yr Term 6,000,000 1,000 900 5,000,000 800 700 4,000,000 600 3,000,000 500 400 2,000,000 300 200 1,000,000 100…
  26. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 26
    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…
  27. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 27
    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…
  28. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 28
    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…
  29. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 29
    Peytos Future Annual Production Additions PEYTO Exploration & Development Corp. 2011 - 379MM - 17,500/boe/d 10,500/boe/d 60,000 2012 - 618MM - 17,600/boe/d Capital Efficiency 2013 - 578MM - 15,100/boe/d 2014 - 690MM - 16,800/boe/d…
  30. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 30
    Peytos Incredible Returns PEYTO Exploration & Development Corp. 31 11/28/2017
  31. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 31
    Peytos Returns Focus On Returns Drives Capital Discipline PEYTO Exploration & Development Corp. 2017 10,500/boe/d 120,000 2016 - 10,800/boe/d 900 2015 - 11,600/boe/d 2017 Forecast Exit 115,000-120,000 boe/d 2014 - 16,800/boe/d…
  32. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 32
    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 (%)…
  33. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 33
    Peytos Returns 2017 Full Cycle Real Returns (YTD) PEYTO Exploration & Development Corp. 2017 Wells YTD (111G /106 N) Sorted by Formation Actual 2017 Pricing with InSite Sep 30, 2017 Forecast 200 Includes 700k/well as a provision…
  34. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 34
    Peytos Assets Template Economics At Strip PEYTO Exploration & Development Corp. Species IP NGLs EUR D/C/E/T/L IRR Oct IRR Number of /S/F 5/2017 Strip 2.50/GJ 2018 mmcfd bbl/mmcf BCFE MM Flat Locations Sundance Wilrich 5.3 10 2.6…
  35. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 35
    Peytos Future PEYTO Exploration & Development Corp. 36 11/28/2017
  36. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 36
    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…
  37. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 37
    Peytos Future 15th 19982013 Build it for less than we sell it PEY 2017Q3 PEY 2018 Goals 91% Gas 1.93/GJ AECO*115% 9% NGLs 46/bbl (75% oil) 91% Gas 2.35/GJ Revenue /mcfe 3.24 2.69/mcfe 0.55/mcfe hedging gain 3.24/mcfe Peyto…
  38. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 38
    Peytos Future 2018 Outlook PEYTO Exploration & Development Corp. Drill 90-120Hz Wells (Liquids Rich Natural Gas) vs 146 in 2017 Expand & Extract Increase Processing Capacity & NGL Yield Increase Undeveloped Land Base Shoot…
  39. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 39
    Peytos Future Where To From Here PEYTO Exploration & Development Corp. H1 150MM H2 300MM 115,000 - 45 wells 75 wells 120,000 boe/d exit 10,800/boe/d 11,600/boe/d 100,000 9,000/boe/d 16,800/boe/d 10,500/boe/d…
  40. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 40
    Peytos Future Limited Exposure to AECO Daily (5A) PEYTO Exploration & Development Corp. Peyto AECO Gas Marketing Portfolio 100% 0% 8% 9% 12% 15% 90% 85% target 80% 37% 38% 70% 58% 60% 94% 50% 84% 80% 83% 75% 40% 2.65/GJ…
  41. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 41
    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…
  42. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 42
    Peytos Future Canada Has Role To Play But Transport Costs Key PEYTO Exploration & Development Corp. 2018 Transport Transport Market Cost Net Price Costs as % Market Price (Firm+Fuel) Received of Price To AECO 1.73 0.19 1.54…
  43. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 43
    Appendix PEYTO Exploration & Development Corp. N Quarterly Track Record N Tax Pools N Hedging Strategy N Gas Marketing N FAQ 44 11/28/2017
  44. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 44
    Quarterly Track Record PEYTO Exploration & Development Corp. 2017 2016 2015 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Operations Production Oil & NGLs (bbl/d) 8,958 8,319 9,586 7,457 8,938 7,247 6,621 7,008 6,643 6,943 5,352…
  45. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 45
    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…
  46. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 46
    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…
  47. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 47
    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 554,904 2.58…
  48. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 48
    Gas Marketing Future Sales (2 of 4) PEYTO Exploration & Development Corp. 49 11/28/2017 Assuming an Average Heating Value of 1.15 GJ/mcf for Peytos gas
  49. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 49
    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…
  50. November 2017 Corporate Presentation – Peyto Exploration & Development Corp – slide 50
    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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