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1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp

Peyto Exploration & Development Corp · May 5, 2020 · 57 slides

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Slides

  1. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 1
  2. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 2
    PEY.TO Who We Are PEYTO Exploration & Development Corp. Quarterly Dividend: 0.01/share (CTD YE19 19.25/share) Shares O/S: 164.9 million (3% insider ownership) Q4/19 Net Debt: 415 million (senior unsecured notes, 3.7-4.9%CND)…
  3. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 3
    PEY.TO COVID19 Preparedness PEYTO Exploration & Development Corp. 1. Office Preparations All staff set up with remote desktop working capabilities (multiple communication tools: email, text, phone, conference, Webex, etc) Small,…
  4. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 4
    PEY.TO Growth Per Share PEYTO Exploration & Development Corp. Production/share Reserves/share FFO/share 2P NPV5/debt adj. share (MMcfe/d/mm sh) (2P Bcfe/mm sh) (/sh) (/sh) 1363 29.229.6 4.33 1289 1222 38 40 40 26.3 1179…
  5. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 5
    PEY.TO Total Shareholder Return Model PEYTO Exploration & Development Corp. Future Prospects Past Profits 6 BOE factor - 6 mcf = 1 bbl of oil equivalent 5/5/2020
  6. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 6
    The Big Picture They Want More Energy We Wont Change That PEYTO Exploration & Development Corp. 7 Source: BP Energy Outlook 2019 5/5/2020
  7. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 7
    The Big Picture The World Needs More Canadian Energy PEYTO Exploration & Development Corp. Environmental Regulations Worker Safety Russia Saudi Iran Iraq Human Rights Ethical Standards Gender Equality Indigenous…
  8. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 8
    The Big Picture Peyto Does It Better PEYTO Exploration & Development Corp. Emission Intensity by Source Type for Canadian Oil and Gas (1990, 2005, 2016) 140 140 121.4 Emmission Intensity per Barrel (kg 120 105.4 120 100…
  9. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 9
    The Big Picture Continuously Improving Environmental Performance PEYTO Exploration & Development Corp. Peyto GHG Emissions Intensity 29.0 KgCO2eq/boe (direct and 26.0 24.7 23.9 22.3 21.1 20.9 indirect) in GHG Emissions…
  10. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 10
    The Big Picture So What Does All This Mean PEYTO Exploration & Development Corp. Canada has energy abundance. Canada has a moral obligation to provide the rest of the world with our clean, responsibly developed energy to…
  11. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 11
    The Peyto Strategy PEYTO Exploration & Development Corp. 12 5/5/2020
  12. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 12
    Peytos Strategy What We Continue To Believe PEYTO Exploration & Development Corp. 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…
  13. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 13
    Peytos Strategy Changing Gas Market Requires Changing Strategy PEYTO Exploration & Development Corp. US Natural Gas (EIA) Canadian Natural Gas (EIA) 92.1 80 110 70 100 90 60 84.5 80 50 That growth is 70 potentially…
  14. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 14
    Peytos Strategy Integrate the Entire Oil & Gas Value Chain PEYTO Exploration & Development Corp. 15 5/5/2020
  15. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 15
    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…
  16. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 16
    Peytos Strategy Alberta Egress Challenge PEYTO Exploration & Development Corp. 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…
  17. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 17
    Peytos Strategy Canadian Gas Egress Is Expanding PEYTO Exploration & Development Corp. 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…
  18. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 18
    The Peyto Strategy Fund Growth From Cashflow PEYTO Exploration & Development Corp. 7,000 6,258 120,000 6,000 100,000 5,000 6,165 80,000 Peyto FFO 4,000 60,000 CTD Q4/19 3,000 40,000 2,000 1,000 20,000 0 1999 - 2000…
  19. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 19
    The Peyto Strategy Invest For Profit Not Growth PEYTO Exploration & Development Corp. 800 700 600 500 Peyto Capital 400 CTD Q4/19 300 200 100 - 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 CAPEX (MM) Earnings…
  20. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 20
    The Peyto Strategy Dividend Sustainability PEYTO Exploration & Development Corp. 3,000 2,500 2,000 Peyto Ctd. Earnings (MM) 1,500 Q4/19 1,000 500 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009…
  21. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 21
    Peytos Profitable Business PEYTO Exploration & Development Corp. 22 5/5/2020
  22. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 22
    Peytos Profitable Business Build it for less than we sell it PEYTO Exploration & Development Corp. 2019 PEY 2014 PEY 2015 PEY 2016 PEY 2017 PEY 2018 PEY 2019 Land/Acq/Disp Seismic Drilling PDP FD&A /mcfe (2.25) (1.64) (1.44)…
  23. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 23
    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 35% Avg. 6 Profit CTD Bonus 4 PDP FD&A 10% 2…
  24. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 24
    Peytos Profitable Business Results in a Low-Cost Advantage PEYTO Exploration & Development Corp. 2.60 4.61 (0.16) 1.00 25 BOE factor - 6 mcf = 1 bbl of oil equivalent Data from Peters & Co. 5/5/2020 Gas producers…
  25. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 25
    Peytos Unique Assets PEYTO Exploration & Development Corp.
  26. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 26
    Peytos Assets Geographically Focused Core Areas PEYTO Exploration & Development Corp. 563,500 net acres 9 operated gas plants Cutbank ---(835 mmcf/d net capacity) 2,000+ km pipelines 1,250+ producing zones Kakwa 80,000 boe/d…
  27. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 27
    Peytos Assets PEYTO Deep Basin Permeability Segregation Exploration & Development Corp. FOOTHILLS STRUCTURES GAS AS ING INCRE BILITY EA PERM WATER TRANSITION ZONE WATER GAS ASE INCRE AREA OF GAS DEPTH…
  28. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 28
    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* 29 *NGL…
  29. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 29
    Peytos Assets PEYTO Large Hz MSF Inventory Exploration & Development Corp. Done1 To Do Total Total Total Total Hz(Vt) Hz Locations Vertical Hz Locations Unbooked3 Wells Wells Booked2 (2) 2 440 163 430(12) 419 5 1 2 4 1…
  30. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 30
    Peytos Assets Deep Basin Lands Go A Long Way PEYTO Exploration & Development Corp. 1,000 Peyto Lands 900 800 700 Net Sections 600 Net Peyto Sections 500 400 300 200 100 - Net Sections of Cardium, Dunvegan,…
  31. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 31
    Peytos Assets Facility Ownership And Control PEYTO Exploration & Development Corp. Cutbank Kakwa Oldman (with Deep Cut) & Oldman North Nosehill Wildhay Galloway Swanson Peyto Gas Plants YE 2014 YE 2015 YE 2016 YE…
  32. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 32
    Peytos Assets Big Sunny Natural Gas Storage Scheme PEYTO Exploration & Development Corp. 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…
  33. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 33
    Peytos Assets Unique Infrastructure Location PEYTO Exploration & Development Corp. Alliance Oldman & Oldman North Nosehill Wildhay Big Sunny Galloway Swanson 240 kV Power Lines Highway 16 Cascade Power Project…
  34. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 34
    Peytos Assets The New Cardium Play Abundant Opportunities PEYTO Exploration & Development Corp. Oldman & Oldman North Nosehill Wildhay Swanson Galloway 35 5/5/2020
  35. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 35
    Peytos Assets The New Cardium Play Improving Execution PEYTO Exploration & Development Corp. Peyto Cardium D/C/E/T Capital Costs 4,500,000 2018 2019 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000…
  36. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 36
    Peytos Assets The New Cardium Play Liquids Rich Revenue PEYTO Exploration & Development Corp. Wildhay Cardium NOI by Component 4,000,000…
  37. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 37
    Peytos Assets First 2 Cardium Hzs Have Reached Terminal Decline PEYTO Exploration & Development Corp. 6 Years There is nothing sexy about a 200 mcf/d gas well, except when it doesnt decline. Then it becomes an incredible…
  38. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 38
    Peytos Assets New Montney Play and Potential Expiries PEYTO Exploration & Development Corp. Potential Montney Intermediate Term Expiries 2019-2020 39 5/5/2020
  39. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 39
    Peytos Assets What Shareholders Currently Own PEYTO Exploration & Development Corp. Tangible Infrastructure (Replacement Value as at Dec 31, 2019) 80 Compressors (3.25MM each) 259 MM 17 Inlets (1.8MM each) 31 MM 20 Refrigeration…
  40. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 40
    Peytos Incredible Returns PEYTO Exploration & Development Corp. 41 5/5/2020
  41. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 41
    Peytos Returns Template Economics At Strip PEYTO Exploration & Development Corp. Area Formation IP3 (boe/d) EUR (mboe) % Liquids DCET (M) IRR (%) Brazeau Notikewin 900 940 15% 4,660 44% Sundance Tier 1 Cardium 550 627 25% 2,850…
  42. 1Q 2020 Earnings 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 21 yr Avg ROE to 2019 30% 6 20% 4 10% 2 0% 0 Return On Capital Employed (%) Return On Equity…
  43. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 43
    Peytos Future PEYTO Exploration & Development Corp.
  44. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 44
    Peytos Future 2020 Outlook PEYTO Exploration & Development Corp. Drill 65Hz Wells (Liquids Rich Natural Gas) vs 50 in 2019 Market 3rd Party Capacity Offer Excess Capacity to Other Operators Increase Opportunities Undeveloped…
  45. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 45
    Peytos Future Gas Price Stability Before Returning to Growth PEYTO Exploration & Development Corp. 14 bbl/mmcf 14 bbl/mmcf 17 bbl/mmcf 20 bbl/mmcf 27 bbl/mmcf 30 bbl/mmcf 5 4.19 4 100,000 12,000/boe/d 16,800/boe/d…
  46. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 46
    Peytos Future Lower Costs and Increase Liquids to Preserve Profit PEYTO Exploration & Development Corp. PEY 2017 PEY 2018 PEY 2019 PEY 2020 Goals 86% Gas 1.54/GJ*1.15 14% NGLs45/bbl=(60%of 75oil) 84% Gas 2.00/GJ*1.15 Revenue…
  47. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 47
    Gas Marketing Future Market Diversification and Gas Price Protection PEYTO Exploration & Development Corp. 48 *Average Heating Value of approximately 1.15 GJ/mcf for Peytos gas 5/5/2020
  48. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 48
    Gas Marketing Fixed Price Swaps For Gas and Liquids PEYTO Exploration & Development Corp. Peyto Marketing Summary AECO 7A Fixed Price Swaps (CAD/GJ) TOTAL TOTAL TOTAL TOTAL TOTAL Q4 2019 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2020 Q1…
  49. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 49
    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 12 of the 10.00 last 14 years using a 8.00 methodical…
  50. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 50
    Gas Marketing Balanced Revenue Stream PEYTO Exploration & Development Corp. 2019 ACTUALS Condy & C5+ Gas - AECO - Fixed Peyto Quarterly Revenue Breakdown (5a/7a) 11% 5% 300,000 60% 250,000 50% 200,000 40% Gas - AECO…
  51. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 51
    Gas Marketing LNG Consortium and Export Potential PEYTO Exploration & Development Corp. 52 5/5/2020
  52. 1Q 2020 Earnings 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 5/5/2020
  53. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 53
    Quarterly Track Record PEYTO Exploration & Development Corp. 2019 2018 2017 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Operations Production Oil & NGLs (bbl/d) 10,922 11,221 10,650 11,110 10,703 9,692 10,273 9,209 9,243…
  54. 1Q 2020 Earnings 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 1,000 800 Federal Tax Pools Millions 600 400 Q4/19 200 - 1999 2000 2001 2002 2003 2004 2005 2006 2007…
  55. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 55
    Peytos Debt Blend of fixed term and revolving debt PEYTO Exploration & Development Corp. 50 4.88% End of 1.3B Revolver Oct 22 65 4.26% 100 3.70% 100 3.95% 100 4.39% 56 Interest rates are in CND 5/5/2020
  56. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 56
    Peytos Assets Organic Reserves Growth PEYTO Exploration & Development Corp. 8,000 7,000 6,000 5,000 17% CAGR 4,000 3,000 1,600 2,000 1,000 1,859 TCFe of Discovered Reserves 0 Cum Production BCFE Proved Developed…
  57. 1Q 2020 Earnings Presentation – Peyto Exploration & Development Corp – slide 57
    Peytos Assets Long Reserve Life Asset PEYTO Exploration & Development Corp. RESERVE LIFE INDEX 30 YEARS AT Q4 PRODUCTION 25 28.8 20 15 18.7 10 Years PDP 5 9.4 0 2001 2002 2003 2004 2005 2006 2007 2008…

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