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Peters & Co Energy Conference – Peyto Exploration & Development Corp

Peyto Exploration & Development Corp · Sep 1, 2011 · 61 slides

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Slides

  1. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 1
    2011 2003 2010 1998 2003 www.Peyto.com Peters & Co. Energy Conference 2011 September 2011
  2. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 2
    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: 228 MMCFe/d (38,000 boe/d) N…
  3. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 3
    The Peyto Strategy Geographically Focused Core Areas 285,000 net acres 5 operated gas plants ---((285 mmcf/d capacity) 900+ km pipelines 750+ producing zones Cutbank 38,000 boe/d Kakwa y Peyto Processed by y Chicken Leland…
  4. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 4
    The Peyto Strategy Growth per Share 400 per million) 50 350 260 boe/d/mm shares 300 Record Production 40 per share Share (boe/d p Share price 250 30 200 150 20 S oduction per S 100 10 50 YoY…
  5. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 5
    The Peyto Strategy Applying Hz Technology to Tight Deep Basin Sands Up to per section 6 9/12/2011
  6. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 6
    The Peyto Strategy P fi i t Execution Proficient E ti off Ideas Id PEYTO Exploration & Development Corp. Alberta's Central Deep Basin Activity Horizontal gas wells last 24 mo. Gas Wells Spud Rank Company (Since Aug 2009) 1…
  7. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 7
    The Peyto Strategy Drilling Efficiency ff Gains G R) Drilling Daays (SpudRR Drilling days less (30% savings) Q3 2009 onwards - Horizontal Wells 8 9/12/2011
  8. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 8
    C Drilling Cost Improvements Reduction in per well cost The Peyto Strategy 7,000,000 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 13-25-55-20 8-22-55-21 13-6-55-21 3-16-55-22 14-36-54-22…
  9. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 9
    The Peyto Strategy Consistent Results 800 700 2010 Average Hz Well 600 500 2011 Average Hz Well E/D 400 BOE 300 200 100 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 10 BOE factor - 6 mcf = 1 bbl of oil…
  10. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 10
    The Peyto Strategy Large Hz MSF Inventory Horizontal Locations 126 locations 19 locations 87 locations 116 locations Identified Locations 154 locations 6 locations 500 locations 11 9/12/2011 *Over 300 of these…
  11. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 11
    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 12…
  12. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 12
    2012 Outlook Bigger, Stronger, S Faster Than Before f 400 14 /d per million) 350 12 300 10 0 or Share (boe/ 250 8 200 6 ction per Unit o 150 4 100 2 Produc 50 0 - 2001 2002 2003 2004 2005 2006…
  13. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 13
    Appendix The Peyto Strategy Peytos Profitable Business Peytos Unique Assets Peytos Incredible Returns Tight Gas Resource Plays Quarterly Track Record Tax Pools Distribution History Payout Ratio Gas Marketing Hedging Strategy…
  14. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 14
    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…
  15. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 15
    The Peytos Strategy Superior Shareholder Return 35 30 25 20 Shareholder IRR 15 10 5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Share price w/dist Share price w/dist Share price Share…
  16. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 16
    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…
  17. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 17
    Peytos Peyto s Profitable Business
  18. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 18
    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,…
  19. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 19
    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)…
  20. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 20
    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 21 261MM to build 15,100 boe/d for a capital…
  21. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 21
    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…
  22. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 22
    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 23 TCFe Trillion Cubic Feet equivalent Lands…
  23. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 23
    Peytos Peyto s Unique Assets
  24. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 24
    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 25 9/12/2011
  25. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 25
    Peytos Assets Longest Reserve Life 2010 PP Reserve Life 15 10 Peyto PP RLI (yrs) 5 0 Industry PP RLI (yrs) 26 2010 Year End Proved Producing Reserve Life (using Q4 2010 production rate). 9/12/2011 Source: Company…
  26. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 26
    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) 27 BOE factor - 6 mcf = 1 bbl of oil…
  27. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 27
    Peytos Assets Lowest Operating Costs Gas Producers 18 PEYTO 16 16 D li h Daylight Trilogy 14 Fairborne boe) 12 12 Perpetual ng Costs (/b Progress 10 Tourmaline 8 Operatin Celtic Average 6 4…
  28. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 28
    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…
  29. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 29
    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) 30 Proved Producing FD&A Cost Inclusive of Acquisition, Finding and Development Capital…
  30. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 30
    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…
  31. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 31
    Peytos Assets Lowest Total Costs 2010 Total Costs enue 140% s as % Total Reve 120% 100% 80% Peyto Margin 60% 40% Total Costs 20% 0% Op Costs Royalties PP FD&A Interest G&A Industry Margin 32 Total…
  32. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 32
    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…
  33. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 33
    Peytos Assets It Just Gets Easier to Grow 2011 Decline Assumes 15,000 18%* 15,000 50%* 34% base decline* 2012 Decline Assumes 20,000 16%* 21,700 50% 33.7% base decline 34 *Forecast decline rate based on Insite Petroleum…
  34. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 34
    Peytos Peyto s Incredible Returns
  35. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 35
    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…
  36. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 36
    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 37 PV5 DA/share is Before Tax Net Present Value,…
  37. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 37
    Tight Gas Resource Plays Horizontal MSF Projects 38 9/12/2011
  38. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 38
    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…
  39. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 39
    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)=…
  40. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 40
    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…
  41. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 41
    Cardium Resource Play Economic Comparison Vertical vs. Horizontal Ave Cardium Vertical last 5 yrs (00/132005522W5/0) Well 1 Well 2 8,000 Well 3 Well 4 Well 5 Well 6 7,000 Well 7 Well 8 Well 9 Well 10 Well 11 6,000 High Hz…
  42. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 42
    Cardium Resource Play Payout Analysis Well 1 4.0 Well 2 Well 3 Well 4 Well 5 Well 5 Well 6 3.5 Well 7 Ave Cardium Hz Cost 5.7 million (D&C, E&T, Seismic, Land & Facilities) Well 8 Well 9 Well 10 Well 11 3.0 All in Costs…
  43. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 43
    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…
  44. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 44
    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 45 9/12/2011
  45. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 45
    Notikewin Resource Play Type Log 1-20-54-22W5 28m Gross Pay 19m Net Pay Volumetric Reserves AREA(Ha)= 256 (1 section) H(m)= 19 POROSITY(%)= 8 SW(%)= 35 TEMP.(Deg.C)= 96 PRES.(kPa)= 32000 Z= 1.02 Recovery Factor(%)= 85…
  46. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 46
    Notikewin Resource Play Economic Comparison Vertical vs. Horizontal Average Vertical Notikewin 00/080305621W5/0 Well 1 Well 2 9,000 Well 4 Well 3 Well 5 Hi h Hz High H W ll 6 Well 6 Well 7 8,000 Well 8 Well 9 Well 10 Well…
  47. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 47
    Notikewin Resource Play Payout Analysis 4.5 Well 1 Well 2 Ave Notikewin Cost 5.2 million (D&C,E&T,Seismic, Land & Facilities) Well 3 Well 3 Well 4 4.0 Well 5 All in Costs (000s) Well 6 Drill 2,900 Well 7 Complete 1,500 Well 8…
  48. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 48
    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 49 9/12/2011
  49. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 49
    Wilrich Resource Play Type Log 7-5-56-20W5 23m Gross Pay 16m Net Pay Volumetric Reserves AREA(Ha)= 256 (1 section) JET H(m)= H(m) 16 2825 FRAC (-1578.4) POROSITY(%)= 8 SW(%)= 35 TEMP.(Deg.C)= 98 PRES.(kPa)= 24000 Z=…
  50. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 50
    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…
  51. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 51
    Wilrich Resource Play Payout Analysis Well 1 4.5 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 All in Costs (000s) Well 7 Drill 2,800 Well 8 Well 9 3.5 Complete 1,600…
  52. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 52
    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 S…
  53. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 53
    Falher Resource Play E Economic i CComparison i 9,000 Well 1 Well 2 8,000 Well 3 Well 4 7,000 e/d) Well 5 Well 6 Well 6 oduction (mcfe 6,000 Ave Falher Hz Target Hz Extrap 5,000 4 000 4,000 Daily Gas Pro…
  54. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 54
    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 Drill 2,800 3.5 Well 3 Complete 1,600 Well 4 Equip/Tie q p in 250 Well 5 Well Cost…
  55. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 55
    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…
  56. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 56
    Organic Business Model Peytos Tax Pools 1,000 900 800 700 600 ons 500 Millio 400 300 200 100 - 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 UCC (25%) CEE (100%) CDE (30%) COGPE (10%)…
  57. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 57
    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…
  58. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 58
    Gas Marketing F t Future Sales S l 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 A M J J A S O From To 1-Apr-09 31-Mar-10 5000…
  59. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 59
    Successful Hedging Strategy Peyto Realized Price History 2003 2004 2005 2006 2007 2008 2009 2010 16.00 Peyto 7.51/mcf Peyto 7.38/mcf Peyto 8.78/mcf Peyto 8.46/mcf Peyto 8.42/mcf Peyto 8.64/mcf Peyto 6.44/mcf Peyto…
  60. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 60
    Peytos 2010 Reserves Volumes Natural Gas Sales Gas Liquids & Oil Category (BCF) (Mstb) BOE's(Mstb) Proven Producing 568 15,959 110,620 Proven Non-Producing 12 305 2,236 Proven Undeveloped 350 8,595 66,846 Total Proven 929…
  61. Peters & Co Energy Conference – Peyto Exploration & Development Corp – slide 61
    Peytos 2010 Reserves Before Tax Net Present Value Variable Price Economics NPV (millions of CDN dollars) Category 0% 5% 8% 10% Proven Producing 4,503 4 503 2,363 2 363 1,821 1 821 1,582 1 582 Proven Non-Producing 92 37 24…

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