Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Shareholder Meeting (May 2024)
33 slides from Peyto Exploration & Development's shareholder meeting presentation, May 22, 2024
Slide 1: Annual General Meeting
www.peyto.com Annual General Meeting May 22, 2024
Slide 2: 2024 AGM Agenda
2024 AGM| AGENDA Peyto 101 Natural Gas – The “Destination” Fuel Peyto and the Deep Basin Returns and Acquisition Update Past Profits Going Forward – 2024 and Beyond ? Questions and (hopefully) Answers 2
Slide 3: Simple Disclaimer
SIMPLE DISCLAIMER “Today we will discuss Peyto’s past and future. These are truthful statements, but the future is based on some assumptions (Forward-Looking Statements). Oil and gas exploration and production is a risky business. Do your homework before making any investment. Don’t blame us if it d
Slide 4: Who is Peyto | 101
WHO IS PEYTO | 101 25-year publicly traded company focused Focused Assets exclusively in the Alberta Deep Basin ALBERTA 5th Largest 124,000 boe/d (~12% liquids) April 2024 Canadian Gas Long reserve life assets (10yr PDP RLI , 30yr Producer 2P RLI @ 2023YE) Deep Basin 1.1 million net acres Operate an
Slide 5: Peyto's History | Per Share Growth
PEYTO’S HISTORY| PER SHARE GROWTH Over time, the Peyto model is designed to deliver a superior total return with per share growth in value, income and assets. Production/share Reserves/share 1 FFO/share 2 2P NPV5/debt adj. share 3 (MMcfe/y/mm sh) (2P Bcfe/mm sh) ($/sh) ($/sh) $4.85 $75.88 $71.20 136
Slide 6: Who is Peyto | Focused Core Areas
WHO IS PEYTO | FOCUSED CORE AREAS ✓ 1.1MM net acres of Alberta Deep Cutbank Basin Lands ✓ Own and operate 17 gas processing facilities with over 1.5 bcf/d of gross production capacity Kakwa ✓ Proximal to major pipeline egress (NGTL, Alliance) ✓ Drilled over 1,300 horizontals to date across 13 discre
Slide 7: Who is Peyto | Shareholder Returns
WHO IS PEYTO| SHAREHOLDER RETURNS $70.00 180,000 Peyto has a 25-year history of 160,000 $60.00 growing value, income and assets while delivering strong returns to 140,000 $50.00 shareholders May-19-2023 $15.92/sh 120,000 $40.00 Future Prospects 100,000 $/share boe/d $30.00 80,000 Enterprise Value 60
Slide 8: Why We Do It | Natural Gas
WHY WE DO IT | NATURAL GAS Demand for Natural Gas Continues World Energy Consumption by Source (1965-2022) 650 Fossil fuels represent 80% of the 550 world’s energy consumption. Natural gas can play a significant role to displace coal in the future and 450 reduce emissions while doing so. Exajoules 3
Slide 9: Why We Do It | Natural Gas Is the Solution
WHY WE DO IT | NAT GAS IS THE SOLUTION Global Carbon Emissions (2021) Absolute Change in CO2 Emissions from Fossil Fuels Rest of World (2011-2021, million tonnes of CO2) China Rest India China Vietnam 21.7% 30.9% Saudi Arabia Asia Iran Indonesia Turkey Russia Pakistan There is a great opportunity fo
Slide 10: Why We Do It | Growing LNG Capacity
WHY WE DO IT | GROWING LNG CAPACITY Rio Grande Costa Azul LNG Canada Plaquemines Corpus Christi III Golden Pass FAST LNG LNG growth in North America in 2024 - 2027 ✓ Fast LNG 0.6 bcf/d ✓ Golden Pass 2.4 bcf/d ✓ Corpus Christi 1.5 bcf/d 12 bcf/d of ✓ Plaquemines 3.2 bcf/d ✓ LNG Canada 1.8 bcf/d new c
Slide 11: North American Demand for Natural Gas Continues to Grow
WHY WE DO IT | NATURAL GAS North American Demand for Natural Gas Continues to Grow USA Electricity Generation from Gas Further coal to gas switching could add ~5 3500 Coal to gas switching in the bcf/d of gas demand by 2030 or as much 70 USA has added 10 – 15 bcf/d as 16 bcf/d if all coal plants are
Slide 12: How We Do It | Peyto & the Deep Basin
HOW WE DO IT | PEYTO & THE DEEP BASIN $6.00 2023 YE PDP FD&A ($/mcfe) (1) Average Injected Water per Well by (3) Formation, 2022 $5.00 500,000 Fit-for-purpose, nimble rigs (telescopic Better reservoir quality than other Water per Well(bbl/Well) $4.00 doubles) decrease cycle time and lowers 400,000 p
Slide 13: How We Do It | Low Costs Drive Margins
HOW WE DO IT | LOW COSTS DRIVE MARGINS At Peyto we focus on costs since they are “sticky”, and they drive superior margins. Peyto’s margins are even stronger than liquids-weighted producers. 2023 Cash Costs ($/mcfe) 2023 YE Results $4.50 70% PEY $4.00 65% $3.50 60% Pre-Hedge Margin $3.00 55% $2.50 5
Slide 14: How We Do It | Profitable Reserves Growth
HOW WE DO IT | PROFITABLE RESERVES GROWTH Annual Reserves Per Share Reserve Life Index (1) (by Category) (Reserves/ Q4 Annualized Production) Reserves per Share (boe/sh) 8.00 7.00 6.73 30 35 Reserve Life Index 6.00 30 5.00 25 4.00 20 3.00 15 10 2.00 10 1.00 5 0 - 2001 2003 2005 2007 2009 2011 2013 2
Slide 15: Acquisition | Early Successes
ACQUISITION| EARLY SUCCESSES Early Success on 2023 Acquisition Lands 15 down, 785+ to go! 14,000 Internally, Peyto estimates over 12,000 800 locations on the lands from 10,000 Wells drilled on acquisition lands are, on average, the Repsol acquisition. outperforming our top programs by 30% 8,000 MCF/
Slide 16: Acquisition | Field Integration
ACQUISITION| FIELD INTEGRATION Reactivate pipeline to Pipeline header modification to integrate Cecilia and Wild send Dunvegan gas to Wild River River and allow gas to flow for better liquid recoveries and between the two facilities lower line pressure Compressor tied-in to move gas from CFGGS Cecil
Slide 17: How We Do It | Dunvegan Hz
HOW WE DO IT | DUNVEGAN HZ Dunvegan Type Well The recent acquisition expands an emerging 6,000 Dunvegan play. Peyto has approximately 10-12 5,000 wells planned for 2024. 101 DNVG 4,000 Booked(1) Locations MCF/D 3,000 2,000 20-30 bbls/mmcf 1,000 6 PEY Drills 0 to Date 0 12 24 36 48 60 Months on Produ
Slide 18: Peyto's Returns | Robust Results
PEYTO’S RETURNS| ROBUST RESULTS 2023 Drilling Program Individual Well Results 200% Wells On Stream to end-Dec: Price Deck: 2023 Realized Unhedged + 2024+ 72 gross / 67.8 net Realized Hedged (Feb-07-2024 strip) 2023 Capital Program IRR YTD = 34% Includes ~$1,180k/well full cycle costs 150% DNVG IRR =
Slide 19: Peyto's Returns | Dividends
PEYTO’S RETURNS | DIVIDENDS Earnings are profits and Peyto returns those profits to shareholders through $4,000 dividends. Peyto applies hedge accounting, so earnings are not skewed by large $3,500 unrealized gains or losses during a quarter. $3.5B $3,000 $2,500 Over time, Peyto expects to match div
Slide 20: Peyto's Future | 2024 Focus
PEYTO’S FUTURE | 2024 FOCUS ✓ Drill ~70 – 80 Net Hz Wells Focused on newly acquired lands and legacy Peyto properties Adds of 40,000 – 45,000 boe/d (~$11,000/boed) to offset 25% base production $450M- ✓ Optimize Infrastructure Realize synergies and debottlenecking opportunities with newly acquired i
Slide 21: 2024 Plans | Supply Cost Goals
2024 PLANS| SUPPLY COST GOALS 2024 $/mcfe 2020 2021 2022 2023 Goals Early results from (1) acquisition means FD&A PDP FD&A $1.06 $0.97 $1.41 $1.21(3) Royalties $0.32 $1.10 should come down for OPEX $0.49 2024 Cash Costs(1) $1.01 $1.25 $1.62 $1.42 $1.45 Transport $0.27 G&A $0.05 Royalties down. Total
Slide 22: Peyto's Future | Undrilled Inventory
PEYTO’S FUTURE | UNDRILLED INVENTORY(1) Booked Inventory (Volume weighted) Average IRR by Species (3-year plan) $3.00/GJ and US$70/bbl WTI 6% 25% 120% 109% 105% Cardium 100% 24% Dunvegan 83% 80% Notikewin 60% 60% 52% Falher 9% 40% Wilrich Bluesky Bullhead 20% 19% 0% 17% Notikewin Dunvegan Wilrich Fa
Slide 23: Peyto's Past | Peyto's Future
PEYTO’S PAST | PEYTO’S FUTURE 180,000 Timing production growth to meet future $8.00 160,000 LNG capacity expansion, generates free $7.00 cash flow to fund the capital program, pay 140,000 dividends and reduce debt. $6.00 120,000 $5.00 Price ($/GJ) WI BOE/D 100,000 $4.00 80,000 $3.00 60,000 $2.00 40,
Slide 24: Peyto's Past | Peyto's Future
PEYTO’S PAST | PEYTO’S FUTURE $3,000 $375 $2,400 $300 Quarterly FFO (MM$) Net Debt (MM$) $1,800 $225 $1,200 $150 $600 $75 $0 $0 1999-Q4 2000-Q4 2001-Q4 2002-Q4 2003-Q4 2004-Q4 2005-Q4 2006-Q4 2007-Q4 2008-Q4 2009-Q4 2010-Q4 2011-Q4 2012-Q4 2013-Q4 2014-Q4 2015-Q4 2016-Q4 2017-Q4 2018-Q4 2019-Q4 2020
Slide 25: Peyto's Marketing
PEYTO’S MARKETING Gas Hedging and Diversification Strategy Moderates Volatility Gas Price(1) ($/mcf) AECO $10.00 0% $9.00 $8.00 Kineticor Edmonton Empress $7.00 Power Calgary Emerson $6.00 33% $5.00 10% 9% Dawn $4.00 18% $3.00 $2.00 $1.00 Ventura Chicago $- 2004 2005 2006 2007 2008 2009 2010 2011 20
Slide 26: Gas Marketing
GAS MARKETING Future Market Diversification and Gas Price Protection Peyto has used financial basis deals between AECO and other hubs to gain market diversification and allow us to 459 MMcf/d fixed at $3.93/Mcf in 2024 hedge at various markets. This reduces market risk and 450 MMcf/d fixed at $4.09/
Slide 27: Diversification | Power
DIVERSIFICATION| POWER Peyto gas market diversification includes Cascade Gas Supply Agreement exposure to Alberta power pool prices • 15-year Gas Supply Agreement for ~52 MMcf/d to Kineticor’s Cascade Power Project, a 900MW combined cycle power generating facility • Expected onstream in Q3 2024 (onc
Slide 28: Gas Diversification | LNG Opportunity
GAS DIVERSIFICATION| LNG OPPORTUNITY Peyto is proud to participate in the Rockies LNG Consortium Our Partners whose goal is to support the construction of another LNG Rockies LNG is a partnership of Canadian natural gas producers working together to project off the Westcoast of BC to supply the Worl
Slide 29: Questions
QUESTIONS ih PEY TO Jet 29
Slide 30: Advisories
ADVISORIES Forward Looking Statements This presentation contains forward-looking information (forward-looking statements). Words such as "guidance", "may", "can", "would", "could", "s hould", "will", "intend", "plan", "anticipate", "belie ve", "aim", "seek", "propose", "contemplate", "estimate", "fo
Slide 31: Development Plan
Development Plan The Company has presented here in a three-year illustrative development plan that provides for de veloping both the acquired assets and Peyto's current assets. The deve lopment plan is based on a number of assumptions including, without limitation: the required re investment rates t
Slide 32: Oil and Gas Metrics
Oil and Gas Metrics Peyto has used a number of oil and gas metrics here in which do not have standardized meanings and therefore may be calculated diffe rently from the metrics presented by other oil and gas companies. Such metrics include "DCET", "E UR", " payout", "Before tax IRR" and "NPV @ 10%".
Slide 33: Netback and Non-GAAP Measures
Netback is a non-GAAP measure that represents the profit m argin associated with the production and sale of pe troleum and natural gas. Peyto computes "field netback per Mcfe" as commodity sales from production, plus third-party sales net of purchases, if any, plus other income, less royalties, oper
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