2011 2003 2010 1998 2003 www.Peyto.com EnerComs The Oil & Gas Conference 16 August 16, 2011
Peyto Profile PEYTO Exploration & Development Corp. N TSX Listing: PEY N Monthly Dividend: 0.06/share N Shares Outstanding: g 133 million ((6% insider ownership) p) N Current Production: 215 MMCFe/d (36,000 boe/d) N…
The Peyto Strategy Deploy p y Superior p Business Acumen N Deep basin technical expertise N Continuous focus on returns N Internally generated drilling ideas (over 1,000 locations to date) Develop Superior Assets N Operated and…
The Peyto Strategy Growth per Share 250 45 boe/d/mm d per million) 300 shares Record 40 Production per share 250 35 30 Share (boe/d 200 Share price 25 150 20 15 oduction per S 100 10 50 YoY…
The Peyto Strategy Real Returns 180 160 140 2010 120 100 80 Net Capital to PV10 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Production/share g growth 2010 Capital Program 45 Net Wells 15,100…
Peytos Peyto s Profitable Business
Peytos Business Build it for less than you sell it AECO AECO Monthly 10 /GJ Peyto Unhedged Realizeed Price (/mcffe) 40% 8 Price (/mcfe) Average Profit 6 Realized Gas P PDP FD&A 4 Bonus G&A Interest G&A,…
Peytos Business Whos Profitable Peyto Ave Profit 2002-2010 = 2.80/mcfe Ultra Pet. Ave Profit 2002-2010 = 1.96/mcfe 10 10 10 10 Price (/mcfe) e (/mcfe) Price (/mcf) 8 40% 8 8 8 ce (/GJ) Average /mcfe)…
Peytos Business Focus on Returns Drives Capital Discipline * Capital Efficiency is the cost to add new production measured at Dec 31 each year. Example: In 2010 , Peyto invested 11 261MM to build 15,100 boe/d for a capital…
Peytos Business Unique Land Strategy 3,000 1,000 s) 00s acres 900 2,500 800 ped Reserrves/ cre 700 2,000 Land (00 eloped ac 600 1,500 500 400 veloped L ndevelop Undeve 1,000 300 200 500 Un…
Peytos Business Deep Basin Lands Go A Long Way Net Peyto y Sections Net Sections of Cardium, Notikewin, Falher and Wilrich N tS Net Sections ti ffor 2 TCFe TCF off 2P EUR 13 TCFe Trillion Cubic Feet equivalent Lands…
Peytos Assets Geographically Focused Core Areas 267,000 net acres 5 operated gas plants ---((285 mmcf/d capacity) 900+ km pipelines 700+ producing zones Cutbank 35,000 boe/d Kakwa y Peyto Processed by y Chicken Leland 150…
Peytos Assets Deep Basin Permeability Segregation FOOTHILLS STRUCTURES GAS AS ING INCRE BILITY EA PERM WATER TRANSITION ZONE WATER GAS ASE INCRE AREA OF GAS DEPTH MATURATION 17 8/8/2011
Peytos Assets Applying Hz Technology to Tight Deep Basin Sands Up to per section 18 8/8/2011
Peytos Assets Longest Reserve Life 2010 PP Reserve Life 15 10 Peyto PP RLI (yrs) 5 0 Industry PP RLI (yrs) 20 2010 Year End Proved Producing Reserve Life (using Q4 2010 production rate). 8/8/2011 Source: Company…
Peytos Assets Lowest O Operating C Costs 2010 Operating Costs 20 15 Peyto Op Costs (/boe) 10 5 - Industry Op Costs (/boe) Operating Costs include Transportation costs. (/boe) 21 BOE factor - 6 mcf = 1 bbl of oil…
Peytos Assets Lowest Operating Costs Gas Producers 18 PEYTO D li h Daylight 16 Trilogy 14 Fairborne Operating Costs (/bboe) Advantage 12 12 Perpetual 10 Progress Tourmaline 8 Celtic Ce tc Average 12 %/yr…
Peytos Assets Deep Gas Drilling Royalty Incentives 3,500-4,000 m MD Trigger depth for Natural Gas Deep Drilling Program 2,200 m reduced from TVD 2,500m TVD to 2,000m TVD 3,700-4,000 m MD 2,650-2,850 m TVD 4 200 m…
Peytos Assets Lowest FD&A Cost 2010 PP FD&A Costs 40 35 30 25 20 Peyto PP FD&A (/boe) 15 10 5 0 Industry PP FD&A (/boe) 24 Proved Producing FD&A Cost Inclusive of Acquisition, Finding and Development Capital…
Peytos Assets Low FD&A Costs, High Recycle Ratio PP FD&A 50 TP FD&A P+P FD&A 40 Field Netback Field Netback 30 20 Peyto PP Recycle Ratio 10 (10 yr) Recycle Ratio is the Netback divided by FD&A *FD&A costs…
Peytos Assets Lowest Total Costs 2010 Total Costs Total 140% al Costs as % T 120% Revenue 100% 80% Peyto Margin 60% 40% Tota 20% 0% Op Costs Royalties PP FD&A Interest G&A Industry Margin 26…
Peytos Assets High Margins Total Peyto Revenue 85.7% 85 7% Gas (Peyto 2010) 14.3% Liquids 4/GJ 4.68/mcf (ave 17% lift for heat) 40% 28.00/boe / ((6:1)) More 90/bbl Edm than 76/bbl (2010 84% Peyto realized) High Heat Content…
Peytos Peyto s Incredible Returns
Peytos Returns High Returns on Capital and Equity 60% 10 9 50% 8 40% 7 6 30% 5 4 20% Average ROE 3 10% 2 1 0% 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Return On Capital Employed (%) Return On…
Peytos Returns Shareholder Returns = NAV Growth + Income 50 Cum Dist/Div. PA 40 PU ebt adjusted/share PDP 30 20 PV5 de 10 Compound Annual - Growth Rate 30 PV5 DA/share is Before Tax Net Present Value,…
2011 Outlook More Of 2010 Drill (90% Hz Wells) Expand Gas Gathering & Processing Capacity Increase Undeveloped Land Base Shoot Seismic 2011 Capital Program Acquire Additional Opportunities and Partner Interests 31…
2011 Outlook It Just Gets Easier to Grow 2011 Decline Assumes 15,000 18%* 15,000 50%* 34% base decline* 2012 Decline Assumes 20,000 16%* 18,000 50% 32% base decline 32 *Forecast decline rate based on Insite Petroleum…
Appendix Tight g Gas Resource Plays y Cardium Notikewin Wilrich Falher Quarterly Track Record Tax Pools Distribution History Payout Ratio Gas Marketing Hedging Strategy Reserves data volumes, values, RLI 33 8/8/2011
Tight Gas Resource Plays Horizontal MSF Projects 34 8/8/2011
Cardium Resource Play Horizontal MSF Project C di Cardium Gas G Fairway F i Sundance Cardium 4,000 sq miles up to 65 TCF Gas in Place1 2-3 TCF developed to date E Peyto Cardium Rights 400 sq miles (gross) 1.0 TCF…
Cardium Resource Play Cardium Type Log and Reserves Volumetric Reserves AREA(Ha)= 256 (1 section) 23m Gross thickness H(m)= 15 15m Net Pay (using POROSITY(%)= 9 6% porosity cutoff) SW(%)= 18 TEMP.(Deg.C)= 80 PRES.(kPa)=…
Cardium Resource Play Horizontal MSF S Project R11 R9 R7 R5 R3 R1W6 R26 R24 R22 R20 R18 R16 T66 GF F CFFACF FF FAG F AAF CACF AF AF F F F FCAG G A F AF CF FCACF FEF FC GCFF G ACCF CF AG F FG L CG CJ K G ALCG K C EEG KG G ECG…
Cardium Resource Play Economic Comparison Vertical vs. Horizontal 9,000 Ave Cardium Vertical last 5 yrs (00/132005522W5/0) Well 1 Well 2 Well 3 8 000 8,000 Well 4 Well 5 Well 6 7,000 Well 7 Well 8 High Hz Well 9 Ave…
Cardium Resource Play Payout Analysis 4.0 3.5 Ave Cardium Hz Cost 5.7 million (D&C, E&T, Seismic, Land & Facilities) Well 1 Well 2 3.0 Well 3 Well 4 All in Costs (000s) Drill 2 800 2,800 Well 5 Well 6 Complete 2,000 Well…
Cardium Resource Play Conservative Horizontal Reserve Assignment P+P 280m Ave Drainage Area: PDP 90 ac (340m perimeter) Ave 80 T P+P 100 ac (360m perimeter) sand PDP N 340m P+P Ave Drainage Area: 360m PDP 135 ac (250m…
Notikewin Resource Play Horizontal MSF Project A N Peyto Not. vt A N Peyto P t Crdm Peyto Not. hhz N t hz Peyto Notikewin Mineral Rights 41 8/8/2011
Notikewin Resource Play Economic Comparison Vertical vs. Horizontal Average Vertical Notikewin 00/080305621W5/0 10,000 Well 1 Well 2 Hi h Hz High H W ll 4 Well 4 9,000 Well 3 Well 5 8,000 Well 6 Well 7 Well 8 Ave Vertical Ave…
Notikewin Resource Play Payout Analysis 4.5 Ave Notikewin Cost 5.2 million (D&C,E&T,Seismic, Land & Facilities) 4.0 Well 1 All in Costs (000s) Well 2 Drill 2,900 3.5 Well 3 Complete 1,500 Well 4 Equip/Tie in 250 Well Cost 4 650…
Wilrich Resource Play Horizontal MSF Project Nosehill Project Area A N Peyto Wil. vt A N Peyto P t Crdm Peyto Wil. hhz Wil hz P t Wilrich Peyto Wil i h Mineral Rights 45 8/8/2011
Wilrich Resource Play Economic Comparison Vertical vs. Horizontal Average Wilrich Vertical 00/022605520W5/0 Well 1 Well 2 Well 3 9,000 Well 4 Well 5 Well 6 Well 7 Well 8 Well 8 Well 9 Well 9 Well 10 Well 11 8,000 Well 12 Well…
Wilrich Resource Play Payout Analysis 4.5 Well 1 Well 2 Well 3 Well 4 Ave Wilrich Hs Cost 5.2 million (D&C,E&T,Seismic, Land & Facilities) Well 5 4.0 Well 6 Well 7 All in Costs (000s) Well 8 Drill 2,800 Well 9 3.5 Complete…
Falher Resource Play Type Log 2-8-55-21W5 Example Volumetric Reserves Notikewin AREA(Ha)= 256 (1 section) H(m)= H(m) 10 POROSITY(%)= 8 SW(%)= 35 TEMP.(Deg.C)= 98 Falher A PRES.(kPa)= 30000 Z= 0.92 Recovery Factor(%)= 85…
Falher Resource Play E Economic i CComparison i 9,000 Well 1 Well 2 8,000 Well 3 Well 4 7,000 Well 5 Ave Falher Hz Daily Gas Production (mcfe/d) 6,000 Target Hz Extrap 5,000 4,000 3,000 2,000 1,000 0…
Falher Resource Play Payout Analysis 4.5 Ave Falher Cost 5.2 million (D&C,E&T,Seismic, Land & Facilities) 4.0 Well 1 All in Costs (000s) Well 2 3.5 Drill 2,800 Well 3 Complete 1,600 Well 4 Equip/Tie q p in 250 Well 5 Well…
Quarterly Track Record 2011 2010 2009 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Operations Production Oil & NGLs (bbl/d) 3,811 3,746 3,389 3,439 3,322 3,465 3,330 3,028 3,222 2,916 2,950 Natural gas (mcf/d) 183,790 166,710 122,031…
Payout Ratio History Maximum 91% Minimum Converted 42% to a Trust at 57% Converted to a Corp. at 32% Historical Per Unit and Units Outstanding numbers have been adjusted to reflect the May 27, 2005 2:1 stock split…
Gas Marketing Future Sales Financial Hedges - Gas Pricing 2010 2011 2012 2013 Term GJ/d (/GJ) J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M From To 1-Apr-09 31-Mar-10 5000 7.650 1-Nov-09 31-Mar-10…
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