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November 2019 Corporate Presentation – Peyto Exploration & Development Corp

Peyto Exploration & Development Corp · Nov 12, 2019 · 56 slides

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Slides

  1. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 1
  2. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 2
    PEY.TO 20th 1998-2018 Who We Are N Pure Play Alberta Deep Basin 400 mmcf/d Gas, 11,000 boe/d NGLs N Returns Focused Strategy Avg ROCE 16%, ROE 29% over last 20 yrs, among highest in industry R10 R5W6 R27 N Long Reserve…
  3. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 3
    PEY.TO 20th 1998-2018 Growth Per Share Production/share Reserves/share FFO/share 2P NPV5/debt adj. (MMcfe/d/mm sh) (2P Bcfe/mm sh) (/sh) share (/sh) 1363 29.2 4.33 1289 1222 40 40 26.3 38 1179 36 38 38 37 1087 24.2 3.59 35…
  4. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 4
    PEY.TO 20th 1998-2018 Total Shareholder Return Model Future Prospects Past Profits 5 BOE factor - 6 mcf = 1 bbl of oil equivalent 11/11/2019
  5. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 5
    The Big Picture 20th 1998-2018 They Want More Energy We Wont Change That 6 Source: BP Energy Outlook 2019 11/11/2019
  6. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 6
    The Big Picture 20th 1998-2018 The World Needs More Canadian Energy Environmental Regulations Worker Safety Russia Saudi Iran Iraq Human Rights Ethical Standards Gender Equality Indigenous Consultation…
  7. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 7
    The Big Picture 20th 1998-2018 Peyto Does It Better Emission Intensity by Source Type for Canadian Oil and Gas (1990, 2005, 2016) 140 140 Emission Intensity per Barrel (kg CO2eq/bbl) 121.4 120 105.4 120 100 88.4 90.1…
  8. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 8
    The Big Picture 20th 1998-2018 Continuously Improving Environmental Performance Peyto GHG Emissions Intensity tCO2eq/boe (direct and indirect) 0.029 0.026 0.025 0.024 0.022 0.021 in GHG Emissions Intensity 2013 2014 2015…
  9. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 9
    The Big Picture 20th 1998-2018 So What Does All This Mean Canada has energy abundance. Canada has a moral obligation to provide the rest of the world with our clean, responsibly developed energy to improve lives and preserve…
  10. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 10
    The Peyto Strategy PEYTO Exploration & Development Corp. 11 11/11/2019
  11. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 11
    Peytos Strategy 20th 1998-2018 What We Continue To Believe N Natures gas is the fuel for the future. N Our gas and NGLs have some of the lowest emissions of any hydrocarbons produced in Canada. N Our business focus is to…
  12. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 12
    Peytos Strategy 20th 1998-2018 Changing Gas Market Requires Changing Strategy US Natural Gas (EIA) Canadian Natural Gas (EIA) 80 110 83.4 70 100 90 60 82.1 80 50 70 40 60 In 2018, the US grew consumption 30 faster than…
  13. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 13
    Peytos Strategy 20th 1998-2018 Integrate the Entire Oil & Gas Value Chain 14 11/11/2019
  14. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 14
    Peytos Strategy Fast Becoming an Integrated Energy Business PEYTO Exploration & Development Corp. Exploration and Development Production and Processing Storage and Marketing Midstream and Power Generation 647 Lands Purchased (YE…
  15. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 15
    Peytos Strategy 20th 1998-2018 Alberta Egress Challenge Do we revert back to a 0.20 difference off New Alberta NYMEX government has made solving AECO market disconnection a priority New Ministry of Natural Gas was created to…
  16. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 16
    Peytos Strategy 20th 1998-2018 Canadian Gas Egress Is Expanding Dry Natural Gas Production - Canada 25 (EIA) 9 LNG Export 8 2.0 Bcf/d 21 7 LNG Canada 20 6 NGTL Expansion 5+40% BCF/D 19 4 15 3 2 1 3.2 Bcf/d…
  17. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 17
    The Peyto Strategy Invest For Profit Not Growth PEYTO Exploration & Development Corp. 800 700 600 500 Peyto Earnings 400 CTD Q3/19 300 200 100 - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011…
  18. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 18
    The Peyto Strategy Dividend Sustainability PEYTO Exploration & Development Corp. 3,000 2,500 2,000 Peyto Ctd. Earnings (MM) 1,500 Q3/19 1,000 500 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009…
  19. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 19
    Peytos Profitable Business PEYTO Exploration & Development Corp. 20 11/11/2019
  20. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 20
    Peytos Profitable Business Build it for less than we sell it PEYTO Exploration & Development Corp. 2018 PEY 2014 PEY 2015 PEY 2016 PEY 2017 PEY 2018 Land/Acq/Disp Seismic Drilling PDP FD&A /mcfe (2.25) (1.64) (1.44) (1.36)…
  21. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 21
    Peytos Profitable Business The Price Bar Is Now Very Low, We Must Go Lower PEYTO Exploration & Development Corp. AECO 10 Monthly /GJ Peyto Realized Gas Price (/mcfe) 8 36% Avg. 6 Profit CTD Bonus 4 PDP FD&A 35% 2…
  22. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 22
    Peytos Profitable Business Competitive In The North American Marketplace PEYTO Exploration & Development Corp. 100% Montney 60% DB/40% Mont. 100% Deep 100% Montney 10% DB/90% Mont. VII 2018* TOU 2018* Basin PEY 2018 AAV 2018* ARX…
  23. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 23
    Peytos Profitable Business Results in a Low Cost Advantage PEYTO Exploration & Development Corp. 2.92 5.02 (0.25) 1.40 BOE factor - 6 mcf = 1 bbl of oil equivalent 24 Data from Peters & Co. 11/11/2019 Gas producers…
  24. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 24
    Peytos Unique Assets PEYTO Exploration & Development Corp.
  25. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 25
    Peytos Assets Geographically Focused Core Areas PEYTO Exploration & Development Corp. 480,000 net acres 9 operated gas plants Cutbank ---(835 mmcf/d net capacity) 1600+ km pipelines 1200+ producing zones Kakwa 100,000 boe/d…
  26. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 26
    Peytos Assets Deep Basin Permeability Segregation PEYTO Exploration & Development Corp. FOOTHILLS STRUCTURES GAS AS ING INCRE BILITY EA PERM WATER TRANSITION ZONE WATER GAS ASE INCRE AREA OF GAS DEPTH…
  27. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 27
    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* 28 *NGL…
  28. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 28
    Peytos Assets 20th1998-2018 Large Hz MSF Inventory Done1 To Do Total Total Total Total Hz(Vt) Hz Locations Vertical Hz Locations Unbooked Wells Wells Booked* (2) 2 440 113 363(12) 384 5 1 5 7 1 2(2) 18 90 176 165(2)…
  29. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 29
    Peytos Assets Type Well Economics Work Well at 2/GJ PEYTO Exploration & Development Corp. Type Well Economics (CND 2.00/GJ AECO, CND 70/bbl WTI) D/C/E/T IP 3mo EUR Capital BT IRR% mcfe/d Bcfe MM Cardium Type Curves Wild River 3,500…
  30. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 30
    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 - R10 R5W6 R27 R22 R17 R12 R7 T65 Net…
  31. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 31
    Peytos Assets 20th 1998-2018 The New Cardium Play Abundant Opportunities Oldman & Oldman North Nosehill Wildhay Swanson Galloway 32 11/11/2019
  32. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 32
    Peytos Assets 20th 1998-2018 Facility Ownership And Control Cutbank Kakwa Oldman (with Deep Cut) & Oldman North Nosehill Wildhay Galloway Swanson Peyto Gas Plants YE 2014 YE 2015 YE 2016 YE 2017 YE 2018 WI…
  33. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 33
    Peytos Assets 20th 1998-2018 Big Sunny Natural Gas Storage Scheme R.25 R.24 R.23 R.22 R.21 R.20 R.19 R.18 Nosehill Creek North Meter Station 139 mmcfd Capacity T.56 T.56 Obed North Oldman Meter Station 227 mmcfd Capacity…
  34. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 34
    Peytos Assets Unique Infrastructure Location PEYTO Exploration & Development Corp. Alliance Oldman & Oldman North Nosehill Wildhay Galloway Swanson 240 kV Power Lines Highway 16 Greater Sundance Area Bickerdike…
  35. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 35
    Peytos Assets 20th 1998-2018 The New Cardium Play Proving the Type Curve 36 11/11/2019
  36. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 36
    Peytos Assets 20th1998-2018 The New Cardium Play Improving Execution 2018 2019 37 11/11/2019
  37. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 37
    Peytos Assets 20th 1998-2018 H1 2019 Postmortem Returns Analysis Peyto H1 2019 Cardium Program IRR CN 2.00/GJ + US 55/bbl 180% 160% 140% 120% 100% BT IRR % 80% 60% 40% 80% is less than 1 year payout 20% 0% -20%…
  38. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 38
    Peytos Assets 20th 1998-2018 New Montney Play and Potential Expiries Potential Montney Intermediate Term Expiries 2019-2020 39 11/11/2019
  39. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 39
    Peytos Assets 20th 1998-2018 What Shareholders Currently Own Tangible Infrastructure (Replacement Value as at Dec 31, 2018) 80 Compressors (3.25MM each) 259 MM 17 Inlets (1.8MM each) 31 MM 20 Refrigeration plants (5.4MM each)…
  40. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 40
    Peytos Incredible Returns PEYTO Exploration & Development Corp. 41 11/11/2019
  41. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 41
    Peytos Assets 20th 1998-2018 2018 Postmortem Returns Analysis Cardium completion attempts with cased hole and cemented systems 42 Full cycle IRR is determined using actual capital spent on each well, including a 365k provision…
  42. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 42
    Peytos Returns High Returns On Your Capital And Equity PEYTO Exploration & Development Corp. 60% 12 50% 10 40% 8 20 yr Avg ROE to 2018 30% 6 20% 4 10% 2 0% 0 Return On Capital Employed (%) Return On Equity…
  43. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 43
    Peytos Future PEYTO Exploration & Development Corp.
  44. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 44
    Peytos Future 20th 1998-2018 2019 Outlook Drill 50Hz Wells (Liquids Rich Natural Gas) vs 70 in 2018 Market 3rd Party Capacity Offer Excess Capacity to Other Operators Increase Opportunities Undeveloped Land Base Diversify…
  45. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 45
    Peytos Future Gas Price Stability Before Returning to Growth PEYTO Exploration & Development Corp. 5 14 bbl/mmcf 14 bbl/mmcf 17 bbl/mmcf 20 bbl/mmcf 27 bbl/mmcf 32 bbl/mmcf 36 bbl/mmcf, exit 18,000 bbl/d Lean gas 4.19…
  46. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 46
    Peytos Future Lower Costs and Increase Liquids to Preserve Profit PEYTO Exploration & Development Corp. 40-50 bbl/mmcf new adds in 2018/19 increases liq to 14% PEY 2017 PEY 2018 PEY 2019 Goals 91% Gas 2.30/GJ 89% Gas…
  47. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 47
    Gas Marketing 20th 1998-2018 Future Market Diversification and Gas Price Protection Q2 2019 Sales Gas 485,000 GJ/d* 48 *Average Heating Value of approximately 1.15 GJ/mcf for Peytos gas 11/11/2019
  48. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 48
    Gas Marketing Successful Hedging Strategy Smoothes Volatility PEYTO Exploration & Development Corp. Gas Price (/mcf) 12.00 12.00 Peyto has beat the AECO 10.00 monthly price in 11 of the 10.00 last 13 years using a 8.00 methodical…
  49. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 49
    Gas Marketing 20th 1998-2018 Minimized AECO Spot Market Exposure Gas - Gas - AECO Dawn/Vent Condy spot Fixed & C5+ - (monthly/ 2% daily) Gas - Henry Fixed 6% Hub spot 11% 9% Condy & C5+ - Gas - Floating HH 21% Fixed…
  50. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 50
    Gas Marketing Fixed Price Swaps For Gas and Liquids PEYTO Exploration & Development Corp. 51 Assumes an Average Heating Value of 1.15 GJ/mcf for Peytos gas 11/11/2019
  51. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 51
    Gas Marketing 20th 1998-2018 LNG Consortium and Export Potential 52 11/11/2019
  52. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 52
    Appendix PEYTO Exploration & Development Corp. N Quarterly Track Record N Tax Pools N Leverage N Reserves Growth 53 11/11/2019
  53. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 53
    Quarterly Track Record PEYTO Exploration & Development Corp. 2019 2018 2017 2016 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Operations Production Oil & NGLs (bbl/d) 10,650 11,110 10,703 9,692 10,273 9,209 9,243 10,043…
  54. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 54
    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 Q4/18 600 400 200 - 2006 1999 2000 2001 2002 2003 2004 2005 2007…
  55. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 55
    Peytos Debt Careful Use Of Debt For Leveraged Returns PEYTO Exploration & Development Corp. Peyto Net Debt/PDP NPV10 100% 80% Peyto becomes NAIC2 rated, gains access to 60% cheaper term debt 40% 20% Debt/PDP…
  56. November 2019 Corporate Presentation – Peyto Exploration & Development Corp – slide 56
    Peytos Assets 20th 1998-2018 Reserves Growth 7,000 6,000 5,000 17% CAGR 4,000 3,000 1644 2,000 1,000 TCFe of 1,682 Discovered Reserves 0 Probable Additional Proved Undeveloped Proved Developed Producing Cum…

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