Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Shareholder Meeting (May 2019)
50 slides from Peyto Exploration & Development's shareholder meeting presentation, May 9, 2019
Slide 1: May 9, 2019
May, 9, 2019)
Slide 2: Regarding Forward-Looking Statements
Advisory 20th 1998‐2018 Regarding Forward-Looking Statements “I am going to tell you about my vision of Peyto’s future today. I will also tell you where I think commodity prices are going to go. These are called forward looking statements. I am being truthful and using everything I know about Peyto
Slide 3: Another Milestone
PEY.TO Another Milestone PEYTO Exploration & Development Corp. th 1998‐2018 3 5/10/2019
Slide 4: 20 Years Later – Who's Left?
PEY.TO 20th 1998‐2018 20 Years Later – Who’s Left? TSE Oil & Gas Index Today: 6 Left 1998: 51 Companies S&P/TSX Capped Energy Index Imperial Oil Total Number of Constituents: 32 Imperial Oil Petro-Canada Data as of May 2019 Petro-Canada* Shell Canada A Shell Canada A Suncor Imperial Oil Limited Sunc
Slide 5: A Dynamic History of Growth (and a Solid Plan Forward)
PEY.TO 20th 1998‐2018 A Dynamic History of Growth (and a Solid Plan Forward) 5 Historical Per Unit (share) and Units (shares) Outstanding numbers have been adjusted to reflect the May 27, 2005 2:1 stock split Dividend adjusted assumes dividends used to buy back shares at quarter end share price. 5/1
Slide 6: Growth Per Share
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 $36 $3.48 $34 22.5 $34 $2.92 $3.17 $31 20.8 $3.02 $2.71 $2.94 $31
Slide 7: Total Shareholder Return Model
PEY.TO 20th 1998‐2018 Total Shareholder Return Model Future Prospects Past Profits 7 BOE factor - 6 mcf = 1 bbl of oil equivalent 5/10/2019
Slide 8: World Population is Increasing
The Big Picture 20th 1998‐2018 World Population is Increasing World Population Density Map You are here 8 5/10/2019
Slide 9: The Rest of the World Deserves Our Quality of Life
The Big Picture 20th 1998‐2018 The Rest of the World Deserves Our Quality of Life 9 Source: Modern Resources 5/10/2019
Slide 10: Quality of Life/Wealth Drives Energy Consumption
The Big Picture 20th 1998‐2018 Quality of Life/Wealth Drives Energy Consumption Lifestyle = Wealth = Energy Consumption “the easiest way to arrest and reverse energy consumption is to destroy wealth. And that’s what the Financial Crisis did.” – Peter Tertzakian 20 million 100 million 360 billion ton
Slide 11: More Energy Consumption = More Pollution
The Big Picture 20th 1998‐2018 More Energy Consumption = More Pollution 11 5/10/2019
Slide 12: A Collision is Coming
The Big Picture 20th 1998‐2018 A Collision is Coming Energy Abundance Energy Scarcity Who wins? Less Energy = Better Climate More Energy = Better Life 12 5/10/2019
Slide 13: More, Better Energy Required – For the World
The Big Picture 20th 1998‐2018 More, Better Energy Required – For the World Growing demand Who will be their supplier of choice? 13 https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/energy-outlook/bp-energy-outlook-2019.pdf 5/10/2019
Slide 14: Let's Get the Right Fuels to the Right People
The Big Picture 20th 1998‐2018 Let’s Get the Right Fuels to the Right People 14 5/10/2019
Slide 15: Natural Gas Production/Consumption Must Grow
The Big Picture 20th 1998‐2018 Natural Gas Production/Consumption Must Grow +75% Must Grow Not Easy We need Reduce Must Grow another 100 mmboe/d to raise the life expectancy of half the population Not Easy Not Easy 15 5/10/2019
Slide 16: Who Should Supply That Energy?
The Big Picture 20th 1998‐2018 Who Should Supply That Energy? Environmental Regulations Worker Safety Russia Saudi Iran Iraq Human Rights Ethical Standards Gender Equality Indigenous Consultation Russia Qatar China Iran CANADA 16 Source: Modern Resources 5/10/2019
Slide 17: Peyto Does It Better
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 Emmission Intensity per Barrel (kg CO2eq/bbl) 121.4 120 105.4 120 100 88.4 90.1 100 83.4 79.5 80 80 53.8 56.1 52.1 60 50.3 49.1 60 42.8 40 40 23.9 22.9 20 20 0 0
Slide 18: Continuously Improving Environmental Performance
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 2016 2017 2018 Peyto Flaring and Venting of Methane 0.61 0.77 0.74 0.65 0.58 0.
Slide 19: So What Does All This Mean?
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 the environment. Peyto can continue to be an industry leader by prov
Slide 20: The Peyto Strategy
20th 1998‐2018 The Peyto Strategy 20 5/10/2019
Slide 21: What We Continue To Believe
Peyto’s Strategy 20th 1998‐2018 What We Continue To Believe N “Nature’s gas is the fuel for the future.” N “Our gas and NGLs are made from all natural, decomposed, organic materials.” N “Our business focus is on maximizing the return on invested capital – your capital.” N “By maintaining low cash co
Slide 22: Canadian Gas Egress Is Expanding
Peyto’s Strategy 20th 1998‐2018 Canadian Gas Egress Is Expanding Dry Natural Gas Production - Canada 25 (EIA) $9 LNG Export 2.0 Bcf/d $8 21 $7 LNG Canada 20 $6 NGTL Expansion $5+30% BCF/D 19 $4 15 $3 $2 $1 10 $0 2000 2005 2010 2015 2020 2025 3.2 Bcf/d NGTL Expansion – 2019 to 2021 Canadian Gas Produ
Slide 23: 2019 NGTL Expansion Adds Capacity
Peyto’s Strategy 20th 1998‐2018 2019 NGTL Expansion Adds Capacity 23 Source: TCPL website, 2018 Investor Day 5/10/2019
Slide 24: Changing Market Requires Changing Strategy
Peyto’s Strategy 20th1998‐2018 Changing Market Requires Changing Strategy US Natural Gas (EIA) 100 Supply Demand Supply Driven Driven Driven 90 80 83.4 82.1 70 60 50 40 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 U.S. Natural Gas Total Consumption BCF/d U.S. Dry Natural Gas Prod
Slide 25: Integrate the Entire Oil & Gas Value Chain
Peyto’s Strategy 20th 1998‐2018 Integrate the Entire Oil & Gas Value Chain 25 5/10/2019
Slide 26: Exploration & Development
20th 1998‐2018 Exploration & Development 26 5/10/2019
Slide 27: Deep Basin Permeability Segregation
Peyto’s Assets 20th 1998‐2018 Deep Basin Permeability Segregation FOOTHILLS STRUCTURES GAS AS ING INCRE BILITY EA PERM WATER TRANSITION ZONE WATER GAS SE INCREAH AREA OF GAS DEPT MATURATION 27 5/10/2019
Slide 28: Large Hz MSF Inventory
Peyto’s Assets 20th 1998‐2018 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) 61 7 74 40 8 111 166 303 2 20 14 385 370 153 4 40 54 44 12 2 87 2 18 205 1 0 120 6
Slide 29: The "New" Cardium Play – High Grade Land Base
Peyto’s Assets 20th 1998‐2018 The “New” Cardium Play – High Grade Land Base 29 5/10/2019
Slide 30: The "New" Cardium Play – Abundant Opportunities
Peyto’s Assets 20th 1998‐2018 The “New” Cardium Play – Abundant Opportunities Oldman & Oldman North Nosehill Wildhay Swanson Galloway 30 5/10/2019
Slide 31: The "New" Cardium Play – Proving the Type Curve
Peyto’s Assets 20th 1998‐2018 The “New” Cardium Play – Proving the Type Curve 31 March 26, 2019 Strip Pricing: AECO 2019 - $1.45/GJ, WTI 2019 - US$63 5/10/2019
Slide 32: 2018 Post Mortem Returns Analysis
Peyto’s Assets 20th 1998‐2018 2018 Post Mortem Returns Analysis Cardium completion attempts with cased hole and cemented systems 32 Full cycle IRR is determined using actual capital spent on each well, including a $365k provision for land, seismic, and facilities. 5/10/2019 Economics are run using a
Slide 33: New Montney Play and Potential Expiries
Peyto’s Assets 20th 1998‐2018 New Montney Play and Potential Expiries Potential Montney Intermediate Term Expiries 2019-2020 33 5/10/2019
Slide 34: Fast Becoming an Integrated Energy Business
Peyto’s Strategy 20th 1998‐2018 Fast Becoming an Integrated Energy Business Exploration and Development Production and Processing Storage and Marketing Midstream and Power Generation • 647 Lands Purchased (YE ‘18) • 1,475 producing wells North American market 300+ mmcf/d midstream 3rd • 1,512 Wells
Slide 35: Facility Ownership And Control
Peyto’s Assets 20th 1998‐2018 Facility Ownership And Control Cutbank Kakwa Oldman (with Deep Cut) & Oldman North Nosehill Wildhay Galloway Swanson Peyto Gas Plants YE 2014 YE 2015 YE 2016 YE 2017 YE 2018 WI Whitehorse (on hold) 1 Oldman 125 mmcf/d 125 mmcf/d 125 mmcf/d 125 mmcf/d 125 mmcf/d 100% 2 N
Slide 36: Potential For Additional Liquids Extraction
Peyto’s Assets Potential For Additional Liquids Extraction PEYTO Exploration & Development Corp. Oldman and Nosehill Oldman North Wildhay Propane Gas Phase Value Far Less Than C3 Value ($/bbl of liq eq.) Liquid Value Condensate $20 Swanson via Pembina $15 $10 Galloway $5 $0 $1.00 $2.00 $3.00 $4.00 G
Slide 37: Fast Becoming an Integrated Energy Business
Peyto’s Strategy 20th 1998‐2018 Fast Becoming an Integrated Energy Business Exploration and Development Production and Processing Storage and Marketing Midstream and Power Generation • 647 Lands Purchased (YE ‘18) • 1,475 producing wells North American market 300+ mmcf/d midstream 3rd • 1,512 Wells
Slide 38: "Big Sunny" Natural Gas Storage Scheme
Peyto’s 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 North Nosehill Edson Viking D Gas Storage Unit Mayberne • TCPL Owned and Ope
Slide 39: "Big Sunny" Proprietary Natural Gas Storage Scheme
Peyto’s Assets 20th 1998‐2018 ”Big Sunny” Proprietary Natural Gas Storage Scheme • Preliminary engineering underway Nosehill Plant 120 MMcfd • Phased facility and Oldman/Oldman injector/producer well North Plants 240 MMcfd development approach • Anticipated 3 to 6 month injection, 100 to 200 MMcfd i
Slide 40: Future Market Diversification and Gas Price Protection
Gas Marketing 20th 1998‐2018 Future Market Diversification and Gas Price Protection 88% Hedged 72% Hedged 18% Hedged 2% Hedged Markets Markets Markets Markets 99% AECO 63% AECO 40% AECO 45% AECO 1% Dawn 12% Dawn/Vent 13% Dawn/Vent 14% Dawn/Vent 0% Henry Hub 25% Henry Hub 47% Henry Hub 41% Henry Hub
Slide 41: LNG Consortium and Export Potential
Gas Marketing 20th 1998‐2018 LNG Consortium and Export Potential 41 5/10/2019
Slide 42: Minimized AECO Spot Market Exposure
Gas Marketing 20th 1998‐2018 Minimized AECO Spot Market Exposure 31% Liquids 38% Revenue Liquids Revenue 42 * 2019 and beyond provided for illustration only. Budgets and forecasts beyond 2019 have not been finalized and are subject to change due to a variety of factors including but not limited to p
Slide 43: Fast Becoming an Integrated Energy Business
Peyto’s Strategy 20th 1998‐2018 Fast Becoming an Integrated Energy Business Exploration and Development Production and Processing Storage and Marketing Midstream and Power Generation • 647 Lands Purchased (YE ‘18) • 1,475 producing wells North American market 300+ mmcf/d midstream 3rd • 1,512 Wells
Slide 44: Midstream & Power Generation
20th 1998‐2018 Midstream & Power Generation 44 5/10/2019
Slide 45: Peyto's Future
20th 1998‐2018 Peyto’s Future
Slide 46: 2019 Outlook
Peyto’s 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 Markets Evaluate New Pipe Options 2019 Capital Program Improve Balance
Slide 47: Peyto's Profitable Business
Peyto’s 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) ($1.18) Compl. Wellsite Facilities $232MM Cash Costs $/mcfe ($1.08) (
Slide 48: Gas Price Stability Before Returning to Growth
Peyto’s 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 Temporary liquids rejection, low $4.19 C3/C4 price + high gas price = less prod. but more CF
Slide 49: Who We Are
PEY.TO Who We Are PEYTO Exploration & Development Corp. N 6th Largest Natural Gas Producer in Canada N Pure Play Alberta Deep Basin – ~85,000‐90,000 boe/d Gas & NGLs N Returns Focused Strategy – Avg ROCE 16%, ROE 29% over last 20 yrs, among highest in industry N Long Reserve Life Asset ‐ 9 yrs PDP,
Slide 50: Questions?
Questions? PEYTO Exploration & Development Corp. 50 5/10/2019
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