Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Shareholder Meeting (May 2021)
41 slides from Peyto Exploration & Development's shareholder meeting presentation, May 2021
Slide 1: May 2021
May 2021
Slide 2: Agenda
Agenda 2021 AGM – Fireside Chat PEYTO Exploration & Development Corp. 2. The 1. New to Energy Peyto? Transition 3. Peyto’s 2020 4. Delivered Performance Returns 5. Our Future 6.Other Stuff 2 5/31/2021
Slide 3: Plain Language Advisory Regarding Forward-Looking Statements
Plain Language Advisory Regarding Forward-Looking Statements PEYTO Exploration & Development Corp. “We are going to tell you about our vision of Peyto’s future today. We will also tell you where we think commodity prices are going to go. These are called forward looking statements. We are being trut
Slide 4: New To Peyto? Who We Are
New To Peyto? Who We Are PEYTO Exploration & Development Corp. N 5th Largest Canadian Gas Producer > 540 MMcfe/d N 11th Largest Canadian Gas Processor 875 MMcf/d capacity N Pure Play Alberta Deep Basin – Multizone stacked resource, 5 TCFe 2P reserves N Long Reserve Life Asset - 9yr PDP, 27yr 2P, swe
Slide 5: #1 Horizontal Deep Basin Driller
PEY.TO #1 Horizontal Deep Basin Driller PEYTO Exploration & Development Corp. Alberta Deep Basin Hz Spuds 1,200 Peyto spud it’s 1,000 th Hz w ell on Sept. 25, 2020 1,000 800 600 400 200 Peyto Deep Basin 0 Horizontal Wells (2009-Sept 2020) 5 5/31/2021
Slide 6: Alberta's Gas Developer
PEY.TO Alberta’s Gas Developer PEYTO Exploration & Development Corp. 8,000 7,000 6,000 1,787 5,000 27% 15% CAGR 1,572 4,000 CAGR 7,041 3,000 1,647 2,000 1,000 2,034 TCFe of Discovered Reserves 0 Cum Production BCFE Proved Developed Producing Proved Undeveloped Probable Additional 6 http://www.peyto.
Slide 7: Environmental Leader
PEY.TO Environmental Leader PEYTO Exploration & Development Corp. Notes: Intensities are based on total subsector emissions and relevant production amounts. They represent overall averages, not facility intensities. *Calculated on a barrel of oil equivalent (boe) basis by converting production volum
Slide 8: Canada Leads in Reducing Natural Gas Flaring
PEY.TO Canada Leads in Reducing Natural Gas Flaring PEYTO Exploration & Development Corp. “Over the last 5 years, Canada has been one of the leaders in the reduction of gas flaring. That’s the Canadian energy industry hard at work to do it better!” 8 https://energyminute.ca/single/infographics/1105/
Slide 9: We Heat Your Homes
PEY.TO We Heat Your Homes PEYTO Exploration & Development Corp. “Alberta Energy states that typical Alberta households use approximately 120 GJ of natural gas per year. As the 5th largest Canadian gas producer, Peyto provided enough natural gas to keep millions of homes warm last year.” Natural Gas
Slide 10: The Energy Transition
The Energy Transition PEYTO Exploration & Development Corp. 10 5/31/2021
Slide 11: Solving The Impossible Challenge
The Energy Transition Solving The Impossible Challenge PEYTO Exploration & Development Corp. Q. How do we increase the amount of energy available for the growing human population… …while reducing the environmental impact? 11 5/31/2021
Slide 12: End Energy Poverty
The Energy Transition End Energy Poverty PEYTO Exploration & Development Corp. “40% of the world do not have access to clean fuels for cooking” “13% of the world do not have access to electricity” 12 https://ourworldindata.org/energy-access#low-income-households-lack-access-to-electricity-and-clean-
Slide 13: Improve Energy Quality?
The Energy Transition Improve Energy Quality? PEYTO Exploration & Development Corp. “Natural gas consumption is growing fastest as it offers the most Affordable Scalable Reliable Cleanest ways to improve the energy mix.” 13 5/31/2021
Slide 14: How Can Peyto Help?
The Energy Transition How Can Peyto Help? PEYTO Exploration & Development Corp. Develop low cost, affordable natural gas Lower environmental impact of development Invest capital where we live Offer employment opportunities for Albertans Share our resources with the world 14 5/31/2021
Slide 15: Peyto's 2020 Performance: Year Growth Per Share
Peyto’s 2020 Performance 22 Year Growth Per Share PEYTO Exploration & Development Corp. YoY -1.5% +2.7% -34% +2.5% Production/share Reserves/share increased FFO/share dropped due to the NAV/share increased due to declined due to smaller due to increases in PDP lowest realized commodity increased res
Slide 16: Record Low Total Supply Cost
Peyto’s 2020 Performance Record Low Total Supply Cost PEYTO Exploration & Development Corp. 2014 2015 2016 2017 2018 2019 2020 2020 Land/Acq/Disp Seismic Drilling PDP FD&A $/mcfe ($2.25) ($1.64) ($1.44) ($1.36) ($1.18) ($1.55) ($1.06) Compl. Wellsite Facilities Cash Costs ($1.08) ($0.81) ($0.76) ($0
Slide 17: Lowering The Bar
Peyto’s 2020 Performance Lowering The Bar PEYTO Exploration & Development Corp. AECO $10 Monthly $/GJ Peyto Realized Gas Price ($/mcfe) 35% Avg. $8 "Profit“ CTD Lowest realized price ever, but also lowest total supply cost ever $6 Bonus $4 PDP FD&A Supply cost down 45% since 2010 7% $2 48% Cash Cost
Slide 18: Maintained Our Low-Cost Advantage
Peyto’s 2020 Performance Maintained Our Low-Cost Advantage PEYTO Exploration & Development Corp. $2.98 $4.54 ($0.14) $1.02 18 BOE factor - 6 mcf = 1 bbl of oil equivalent Data from Peter’s & Co. 5/31/2021 Gas producers include: AAV,ARX,BIR,CR,KEL,NVA,PIPE,PMT,PNE,POU,SDE,SRX,TOU,VII
Slide 19: High Operating Margins
Peyto’s 2020 Performance High Operating Margins PEYTO Exploration & Development Corp. 90% $9.00 80% $8.00 70% $7.00 60% $6.00 50% $5.00 40% $4.00 30% $3.00 20% $2.00 Peyto Operating Margin 10% $1.00 0% $0.00 Last 20 Year Avg. FFO/Revenue Intermediate Producer Avg FFO/Rev (Peter's &Co.) AECO Daily Ga
Slide 20: ERH Wells "A Game Changer"
Peyto’s 2020 Performance ERH Wells “A Game Changer” PEYTO Exploration & Development Corp. Greater Sundance Area Superior Thickness Wilrich 2009 – 2020 • Drilled in the sweet spots • 320 horizontals drilled to date • $1.1B invested to date • 0.9 TCF developed (PDP) with ∼45% recovered to date • Avg l
Slide 21: Longer Horizontal Wells Increase IRR
Peyto’s 2020 Performance Longer Horizontal Wells Increase IRR PEYTO Exploration & Development Corp. Wilrich New Design - Wilrich Old Type Well Economics ERH Design Gas MMcf 3,772 2,343 NGLs Mbbl 54 33 DCET (1/2 cycle) M$ 3,694 3,197 Average Lateral Length m 2,400 1,300 Frac Stages 34-35 10 F&D ($/Mc
Slide 22: 2020 Post-Mortem Returns Analysis
Peyto’s 2020 Performance 2020 Post-Mortem Returns Analysis PEYTO Exploration & Development Corp. ERH Wells 22 Full cycle IRR is determined using actual capital spent on each well, including a $825k provision for land, seismic, and facilities in order to total to the $236MM 2020 total capital expendi
Slide 23: Production Performance by Vintage
Peyto’s 2020 Performance Production Performance by Vintage PEYTO Exploration & Development Corp. + 60 bbls/mmcf NGLs + 12 bbls/mmcf NGLs Drill & Complete 2020 2018-19 Costs (MM) Cardium $2.25 $2.56 (30 wells) (97 wells) Notikewin $2.93 $3.04 (12 wells) (8 wells) 23 5/31/2021
Slide 24: Year End Cecilia Acquisitions
Peyto’s 2020 Performance Year End Cecilia Acquisitions (Jan 1/21 effective) PEYTO Exploration & Development Corp. Cecilia Gas Plant 12-34-56-22W5 Ownership: 100% WI NGTL Nosehill Ck North Meter Current Throughput: ∼15mmcf/d sales @ Station $35MM Cecilia Acquisitions 5.6bbl/mmcf 1-1-57-22W5 Capacity:
Slide 25: Cecilia Acquisitions – Ultra-low Decline
Peyto’s 2020 Performance Cecilia Acquisitions – Ultra-low Decline PEYTO Exploration & Development Corp. 114 gross producers CTD 165 BCF 25 5/31/2021
Slide 26: Increased Facility Ownership And Control
Peyto’s 2020 Performance Increased Facility Ownership And Control PEYTO Exploration & Development Corp. Cutbank Kakwa Oldman (with Deep Cut) & Oldman North Cecilia W Peyto Gas Plants Wildhay Nosehill Swanson YE 2020 WI 1 Oldman 125 mmcf/d 100% Galloway 2 Nosehill 125 mmcf/d 100% 3 Wildhay 90 mmcf/d
Slide 27: Successful Reserves Conversion, Again
Peyto’s 2020 Performance Successful Reserves Conversion, Again PEYTO Exploration & Development Corp. Actual/ Booked Forecast Actual Reserve Total Booked/ Forecast Locations Forecast Outcome Cost per Actual Outcome Cost per Year Drills Total Cost per Converted Unit Unit Unit gross Capex* Capex* gross
Slide 28: Long Producing Reserve Life Maintained
Peyto’s 2020 Performance Long Producing Reserve Life Maintained PEYTO Exploration & Development Corp. Peyto Reserve Life Index 35 27 Years at Q4 Production 30 25 20 18 15 10 9 5 Peyto PDP RLI 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 PDP TP P+PA 2020 PDP
Slide 29: Long Cashflow Generating Asset
Peyto’s 2020 Performance Long Cashflow Generating Asset PEYTO Exploration & Development Corp. PDP Reserves NPV and RLI $10 10.0 $9 9.0 $8 8.0 $7 7.0 $6 6.0 $5 5.0 $4 4.0 $3 3.0 $2 2.0 PDP $1 1.0 NPV0 versus NPV10 $0 0.0 PDP NPV0 ($B) PDP NPV10 PDP RLI (yrs) 29 PDP RLI is calculated by dividing PDP r
Slide 30: Reserves Option Value – Montney Comparison
Peyto’s 2020 Performance Reserves Option Value – Montney Comparison PEYTO Exploration & Development Corp. PDP Reserves • Peyto has the same PDP 170,000 reserves as Montney player at 180,000 YE 2020. 160,000 Montney example • Peyto’s PDP reserves are PDP 267,995 MMBOE 140,000 PDP RLI 4.3 yrs ultimate
Slide 31: Continuously Improving Emissions
Peyto’s 2020 Performance Continuously Improving Emissions PEYTO Exploration & Development Corp. Peyto GHG Emissions Intensity 29.0 26.0 24.7 23.9 22.3 21.1 19.8 19.6 2013 2014 2015 2016 2017 2018 2019 2020 in GHG Emissions Intensity* KgCO2e/BOE (Scope 1,2,3) Peyto Flaring and Venting of Methane 9.3
Slide 32: Less Impact on Land and Water
Peyto’s 2020 Performance Less Impact on Land and Water PEYTO Exploration & Development Corp. Peyto Land Use Reduction 2.1 2.0 1.9 1.8 1.7 1.7 1.6 1.5 2013 2014 2015 2016 2017 2018 2019 2020 in Surface Land Use ha per well (cumulative… Freshwater Use and Flowback Recycling 100 0.08 74 0.07 0.07 80 bb
Slide 33: Updated Template Economics At Strip
Peyto’s Returns Updated Template Economics At Strip PEYTO Exploration & Development Corp. Brazeau / Chambers Greater Sundance Notikewin Notikewin Cardium Notikewin Wilrich Tier 1 Tier 2 Wilrich ERH Falher ERH Cardium Gas [MMcf] 2,605 4,348 4,921 4,753 2,242 3,774 4,502 1,567 NGLs [Mbbl] 149 122 76 5
Slide 34: Total Shareholder Return Model
PEY.TO Total Shareholder Return Model PEYTO Exploration & Development Corp. Organic growth for LNG exports? Future Prospects Past Profits 34 BOE factor - 6 mcf = 1 bbl of oil equivalent 5/31/2021
Slide 35: High Returns On Your Capital And Equity
Peyto’s Returns High Returns On Your Capital And Equity PEYTO Exploration & Development Corp. 60% $12 50% $10 40% $8 22 yr Avg ROE to 2020 30% $6 20% $4 10% $2 0% $0 Return On Capital Employed (%) Return On Equity (%) 22 yr Avg ROCE to 2020 Earnings/share Realized Price ($/mcfe) Return on Equity (RO
Slide 36: 2021 Outlook
Peyto’s Future 2021 Outlook PEYTO Exploration & Development Corp. Drill ~80Hz Wells (Liquids Rich Natural Gas) vs 65 in 2020 Market 3rd Party Capacity Offer Excess Capacity to Other Operators Increase Opportunities Undeveloped Land Base Diversify Markets Evaluate New Pipe Options 2021 Capital Pr
Slide 37: Gas Price Stability Before Returning to Growth
Peyto’s Future Gas Price Stability Before Returning to Growth PEYTO Exploration & Development Corp. 14 bbl/mmcf 14 bbl/mmcf 17 bbl/mmcf 20 bbl/mmcf 26 bbl/mmcf 28 bbl/mmcf 26 bbl/mmcf 25 bbl/mmcf 24 bbl/mmcf $5 Possible Growth scenario $4.19 Uses ∼90% of Plant Capacity $17,500/boe/d $4 100,000 $17,6
Slide 38: Lower Costs to Preserve Profit
Peyto’s Future Lower Costs to Preserve Profit PEYTO Exploration & Development Corp. PEY 2018 PEY 2019 PEY 2020 2021 PEY Goals 86% Gas @$2.11/GJ*1.15 87% Gas @$2.80/GJ*1.15 14% NGLs@$31/bbl=(60%of $52oil) $3.27 $2.78 $2.23 $3.30 13% NGLs@$47/bbl=(60%of $78 Revenue $2.81/mcfe -$0.58/mcfe diversifitcat
Slide 39: Future Market Diversification and Gas Price Protection
Gas Marketing Future Market Diversification and Gas Price Protection PEYTO Exploration & Development Corp. We have virtually no exposure to AECO until 2023 Approx. 70% of 2021 is fixed price 39 *Average Heating Value of approximately 1.15 GJ/mcf for Peyto’s gas 5/31/2021
Slide 40: LNG Consortium and Export Potential
Gas Marketing LNG Consortium and Export Potential PEYTO Exploration & Development Corp. 40 5/31/2021
Slide 41: 2021 ESG Report is Coming!
ESG 2021 ESG Report is Coming! PEYTO Exploration & Development Corp. 41 5/31/2021
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