Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Haywood San Francisco Conference 2011
51 slides from Peyto Exploration & Development's conference presentation, February 2011
Slide 1: Peyto Exploration & Development Corp. - February 2011
2011 ‐ 2003 ‐ 2010 1998 ‐ 2003 TSX: PEY February 2011 132.8 million shares outstanding www.Peyto.com Monthly Dividend $0.06/share
Slide 2: The Peyto Strategy: 12 Year Track Record
The Peyto Strategy 12 Y Year T Track kRRecord d PEYTO Exploration & Development Corp. Prospect Generation Reserves Growth NAV Growth Profit Sharing (BCFe) (NPV5 Debt Adj/Unit) 1999 2000 2001 1999 2002 2000 2003 2001 2004 2002 2005 1999 2003 2006 2000 2004 2001 2007 2005 2008 2002 2006 2009 2003 2007
Slide 3: Compound Annual Total Return
L Coompound Annuaal Total Return 0 10 20 30 40 50 60 70 80 Calfrac Well Servicees Largest Jan‐99 Osisko Mining Peyto Energy Trust First Quuantum Minerals Pacific Ruubiales Energy Jan‐00 Transglobe Ennergy Corp. Calloway RREIT First Majestic Siilver Eldorado Gold Corpporation Jan‐01 Trican Well Servv
Slide 4: We Invest In Ourselves
We Invest In Ourselves 2010 Production P d ti growth th per Unit/Share U it/Sh PEYTO Exploration & Development Corp. $40 00 $40.00 /d per million) m distribution) 300 Record Production/unit Aug/05 of 241 boe/d/mm Converted to $35.00 a Dividend 250 Corp. ~40% $30.00 prod/share Production per Unitt or
Slide 5: Improved Capital Efficiency
Improved Capital Efficiency R Record dAAnnuall P Production d ti W Wedge d $60,000 2011 2010 ‐ $17,300/boe/d 2009 ‐ $ $17,300/boe/d , / / 2008 ‐ $33,100/boe/d 2007 ‐ $26,500/boe/d 2006 ‐ $50,300/boe/d 2005 ‐ $42,100/boe/d 2004 ‐ $22,200/boe/d 2003 ‐ $25,300/boe/d $25 300/boe/d $40,000 $ , 2002 ‐ $22
Slide 6: Improving Margins
Improving Margins Hi h Profit High P fit and dOOperating ti M Margins i PEYTO Exploration & Development Corp. 100% 90% 80% enue 70% Margin as % of Reve 69% Ave 60% Operating Margin 50% 40% 30% 37% Ave Profit Margin 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010F Earnings Cashflow
Slide 7: Why Own Peyto Today?
Why Own Peyto Today? All the same reasons as before PEYTO Exploration & Development Corp. • Predictable,, Repeatable p Results Low risk exploration and development Geographic focus, large inventory of opportunities Production 98% Peyto operated, operated 98% Peyto processed • Proven Lowest Cos
Slide 8: Predictable, Repeatable Results: Geographically Focused Core Areas
Predictable, Repeatable Results G hi ll F Geographically dC Focused Core A Areas PEYTO Exploration & Development Corp. • 267,000 net acres R10 R8 R6 R4 R2W6 R27 R25 • 5 R23 operated R21 gas R19 plants R17 R15 R13W5 T64 ---(250 mmcf/d capacity) T64 • 900 km pipelines C G F F CF F C F F F F GG Cutbank
Slide 9: Predictable, Repeatable Results: Tight Gas Resource Plays
Predictable, Repeatable Results Ti ht Gas Tight G Resource R Pl Plays PEYTO Exploration & Development Corp. Sundance Area Reservoirs 10 12 9 2/16/2011
Slide 10: Large Hz MSF Inventory
Predictable, Repeatable Results L Large H Hz MSF Inventory I t PEYTO Exploration & Development Corp. Horizontal Locations 126 locations 19 locations 70 locations 72 locations 165 locations 6 locations 458 locations! 10 2/16/2011 *Over 300 of these locations are recognized in the IPC (formerly PLA) i
Slide 11: Unique Land Strategy
Predictable, Repeatable Results U i Unique L Land d St Strategy t PEYTO Exploration & Development Corp. 2009 Year End Undeveloped Reserves/Undeveloped Land 1,000 1.8 900 1.6 Undeveloped Reserves/Land (booe/ac) Undevelopedd Lands (milllion accres) 800 1.4 700 1.2 600 1.0 500 0.8 400 0.6 300 200 0.4 1
Slide 12: Horizontal Wells on Production, Last 12 Months
Predictable, Repeatable Results HZ wells ll on Production P d ti L Lastt 12 months th PEYTO Exploration & Development Corp. Alberta's Central Deep Basin Activity AF AFF A FAA AA A EE A EF E Horizontal gas wells last 12 mo. A F F A AFAA F F AA FF F A F FA A A F A F AFA A A F F F F F A F Wells, On Pro
Slide 13: Why Own Peyto Today?
Why Own Peyto Today? All the same reasons as before PEYTO Exploration & Development Corp. • Predictable,, Repeatable p Results Low risk exploration and development Geographic focus, large inventory of opportunities Production 98% operated, operated 98% processed • Proven Lowest Cost Producer
Slide 14: Low FD&A Costs, High Recycle Ratio
Low Cost Producer Low FD&A Costs, Costs High Recycle Ratio PEYTO Exploration & Development Corp. $8 $7 $6 $5.02 $5 $/Mcfe $4 $3 $2 0 $2.10 $2 $1 $‐ 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 PDP TP P+P Field Netback 14 *FD&A costs include all capital expenditures and changes in Future De
Slide 15: Industry Leading Operating Costs
Low Cost Producer I d t Leading Industry L di O Op C Costs t PEYTO Exploration & Development Corp. $18 PEYTO $16 Daylight Trilogy $14 Fairborne Operatinng Costs ($/bboe) Advantage $12 P Perpetual t l 10 %/yr Progress $10 Tourmaline Celtic $8 Average $6 $4 1 %/yr $2 $‐ 15 BOE factor - 6 mcf = 1 bbl o
Slide 16: Deep Gas Drilling Royalty Incentives
Low Cost Producer D Deep G Gas Drilling D illi R Royalty lt IIncentives ti PEYTO Exploration & Development Corp. 3,500-4,000 m MD Trigger depth for Natural Gas Deep Drilling Program 2,200 m TVD reduced from 2,500m TVD to 2,000m TVD 3,700-4,000 m MD 2,650-2,850 m TVD 4,200 m MD 2,750-2,900 m TVD *3,7
Slide 17: Peyto's Full-Cycle Gas Supply Cost
Low Cost Producer P t ’ Full-Cycle Peyto’s F ll C l G Gas S Supply l CCostt PEYTO Exploration & Development Corp. $10 $10 hedged Realiized Price ($//mcfe) cfe) $8 40% $8 as Price ($/GJ J) s Price ($/mc Average Profit $6 $6 $/mcf Bonus Cnd$ Realized Gas O Monthly Ga $4 $4 PDP FD&A G&A, Interest $2 $2
Slide 18: Who's Profitable
Low Cost Producer Wh ’ Profitable Who’s P fit bl PEYTO Exploration & Development Corp. Peyto Ave Profit 2002-2009 = $2.92/mcfe Ultra Pet. Ave Profit 2002-2009 = $2.79/mcfe $10 $10 $10 $10 Price ($/mcfe) Price ($/mcf) e ($/mcfe) $8 40% $8 $8 $8 ce ($/GJ) Average $/mcfe) Profit o Realized Gas Price Ul
Slide 19: The New Margins
Low Cost Producer Th New The N M Margins i PEYTO Exploration & Development Corp. Total Peyto Revenue 84.8% Gas 15 2% Liquids 15.2% New Drilling Peyto 9mo 2010 Unhedged Cardium Hztl Wilrich/Notikewin Hztl $3.92/GJ (Ave AECO daily) $4/GJ $4.57/mcf $ / ((16.5% up p Peyto y realized)) $4.68/mcf $ / ((av
Slide 20: Why Own Peyto Today?
Why Own Peyto Today? All the same reasons as before PEYTO Exploration & Development Corp. • Predictable,, Repeatable p Results Low risk exploration and development Geographic focus, large inventory of opportunities Production 98% operated, operated 98% processed • Proven Lowest Cost Producer
Slide 21: 2010 Capital Program
Greatest Total Return 2010 C Capital it l P Program PEYTO Exploration & Development Corp. 180 160 140 2010 Net Capex $201 Million 120 2010 Drills 100 (All in $261MM less $60MM in Op Income from 2010 wells) 80 60 45 net wells ll 40 20 15,100 boe/d new production 91 MMCFe/d / 0 2000 2001 2002 2003 200
Slide 22: High Returns on Capital and Equity
Greatest Total Return Hi hR High t Returns on C it l and Capital dE it Equity PEYTO Exploration & Development Corp. 60% $10 $9 50% $8 $7 40% $6 30% $5 $4 20% $3 $2 10% $1 0% $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E Return On Capital Employed (%) Return On Equity (%) Earnings/s
Slide 23: Shareholder Returns = Growth + Income
Greatest Total Return Sh h ld Returns Shareholder R t = Growth G th + IIncome PEYTO Exploration & Development Corp. $50 $40 are PV5 debt adjusted/sha $30 $20 $10 $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 PDP PU PA Cum Distribution/Div. 23 PV5 DA/share is Before Tax Net Present Value,
Slide 24: 2011 Outlook: More Of 2010
2011 Outlook More Of 2010 PEYTO Exploration & Development Corp. • Capital Expenditures ($300-$325 million before DRC) • Drill and Re-enter New Gas Locations ((90% Hz)) • Expand Gas Gathering & Processing Capacity • Expand Undeveloped Land Base • Expand Seismic Database • Acquire Additional Opportuni
Slide 25: 2010 All Over Again?
2011 Outlook 2010 All O Over A Again? i ? PEYTO Exploration & Development Corp. $60,000 2011F ‐ $17,300/boe/d 2010 ‐ $17,300/boe/d 2009 ‐ $17,300/boe/d 2008 ‐ $33,100/boe/d boe/d) 2007 ‐ $26,500/boe/d 2006 ‐ $50,300/boe/d Annual Produciton Wedge (b 2005 ‐ $42,100/boe/d 2004 ‐ $22,200/boe/d 2003 ‐ $2
Slide 26: Appendix
Appendix PEYTO Exploration & Development Corp. • 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 26 2/16/2011
Slide 27: Tight Gas Resource Plays
Tight Gas Resource Plays H i t l MSF P Horizontal j t Projects PEYTO Exploration & Development Corp. 27 2/16/2011
Slide 28: Cardium Resource Play
Cardium Resource Play H i Horizontal t l MSF P Project j t PEYTO Exploration & Development Corp. 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 developed to date (ve
Slide 29: Cardium Type Log and Reserves
Cardium Resource Play C di Cardium T Type L Log and dRReserves PEYTO Exploration & Development Corp. 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)= 19000 Z= 0.8 Recovery Factor(%)
Slide 30: Cardium Horizontal MSF Project
Cardium Resource Play Horizontal MSF Project PEYTO Exploration & Development Corp. 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 GG G G IJ EEEEEEF EEEF GC L GK F ECECGG
Slide 31: Cardium Economic Comparison: Vertical vs. Horizontal
Cardium Resource Play E Economic i CComparison i – Vertical V ti l vs. H Horizontal i t l PEYTO Exploration & Development Corp. 7,000 Ave Cardium Vertical ‐ last 5 yrs (00/13‐20‐055‐22W5/0) Well 1 Well 2 Well 3 W ll 4 Well 6,000 Well 5 Well 6 Well 7 Well 8 High Hz Well 9 Well 10 Ave Vertical Ave Tar
Slide 32: Cardium Payout Analysis
Cardium Resource Play P Payout t Analysis A l i PEYTO Exploration & Development Corp. 4.0 3.5 Ave Cardium Hz Cost $5.7 million (D&C, E&T, Seismic, Land & Facilities) 3.0 Well 1 Well 2 All in Costs (000’s) Well 3 Well 4 Drill $2 800 $2,800 Complete $2,000 Well 5 Well 6 Equip/Tie in $250 2.5 Well 7 We
Slide 33: Conservative Horizontal Reserve Assignment
Cardium Resource Play C Conservative ti H Horizontal i t lRReserve A Assignment i t PEYTO Exploration & Development Corp. P+P 200m 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 (185m perimeter) P+P 150 ac (20
Slide 34: Notikewin Resource Play
Notikewin Resource Play H i Horizontal t l MSF P Project j t PEYTO Exploration & Development Corp. A N Peyto Not. vt A N Peyto P t Crdm Peyto Not. hhz N t hz Peyto Notikewin Mineral Rights 34 2/16/2011
Slide 35: Notikewin Type Log
Notikewin Resource Play T Type L 1 Log 1-20-54-22W5 20 54 22W5 PEYTO Exploration & Development Corp. 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 Surface Loss(%)= 4.5 OGIP(B
Slide 36: Notikewin Economic Comparison: Vertical vs. Horizontal
Notikewin Resource Play E Economic i CComparison i – Vertical V ti l vs. H Horizontal i t l PEYTO Exploration & Development Corp. Average Vertical Notikewin 00/08‐03‐056‐21W5/0 Well 2 10,000 Well 1 Hi h Hz High H W ll 4 Well 9,000 Well 3 Well 5 8,000 Well 6 Ave Vertical Ave Target on (mcfe/d) Well 7
Slide 37: Notikewin Payout Analysis
Notikewin Resource Play P Payout t Analysis A l i PEYTO Exploration & Development Corp. 4.5 Ave Notikewin Cost $5.2 million (D&C,E&T,Seismic, Land & Facilities) 4.0 Well 1 All in Costs (000’s) Well 2 Drill $2,900 3.5 Well 3 Complete $1,500 Well 4 Equip/Tie in $250 Well Cost $4 650 $4,650 Well 5 3.0
Slide 38: Wilrich Resource Play
Wilrich Resource Play H i Horizontal t l MSF P Project j t PEYTO Exploration & Development Corp. 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 38 2/16/2011
Slide 39: Wilrich Type Log
Wilrich Resource Play T Type L 7 Log 7-5-56-20W5 5 56 20W5 PEYTO Exploration & Development Corp. 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= 0.92 Recovery Factor(%)= 85 S
Slide 40: Wilrich Economic Comparison: Vertical vs. Horizontal
Wilrich Resource Play E Economic i CComparison i – Vertical V ti l vs. H Horizontal i t l PEYTO Exploration & Development Corp. Average Wilrich Vertical 00/02‐26‐055‐20W5/0 Well 1 9,000 Well 2 Well 3 Well 4 Well 5 8,000 Well 6 High Hz Well 7 Well 8 Ave Target Well 9 7,000 Well 10 Ave Vertical Horizo
Slide 41: Wilrich Payout Analysis
Wilrich Resource Play P Payout t Analysis A l i PEYTO Exploration & Development Corp. 4.5 Ave Wilrich Hs Cost $5.2 million (D&C,E&T,Seismic, Land & Facilities) 4.0 Well 1 Well 2 All in Costs (000’s) Well 3 Well 4 Drill $2,800 3.5 Well 5 Complete $1,600 Well 6 Equip/Tie q p in $$250 Well 7 Well 8 Wel
Slide 42: Falher Type Log
Falher Resource Play T Type L 2 Log 2-8-55-21W5 8 55 21W5 PEYTO Exploration & Development Corp. Example Volumetric Reserves Notikewin AREA(Ha)= 256 (1 section) H(m)= H(m) 10 POROSITY(%)= 8 SW(%)= 35 TEMP.(Deg.C)= 98 Falher A PRES.(kPa)= 30000 Z= 0.92 Recovery Factor(%)= 85 S f Surface Loss(%)= L (%)
Slide 43: Falher Payout Analysis
Falher Resource Play P Payout t Analysis A l i PEYTO Exploration & Development Corp. 4.5 Ave Falher Cost $5.2 million (D&C,E&T,Seismic, Land & Facilities) 4.0 Well 1 All in Costs (000’s) Well 2 Drill $2,800 3.5 Complete $1,600 Equip/Tie q p in $$250 Well Cost $4,650 3.0 Land/Seismic $50 Facilities $
Slide 44: Quarterly Track Record
Quarterly Track Record PEYTO Exploration & Development Corp. 2010 2009 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Operations Production Oil & NGLs (bbl/d) 3,322 3,465 3,330 3,028 3,222 2,916 2,950 3,022 3,265 3,207 Natural gas (mcf/d) 122,717 112,422 103,934 92,718 95,467 89,259 90,191 95,998 100,384 101,9
Slide 45: Peyto's Tax Pools
Organic Business Model P t ’ T Peyto’s Tax Pools P l PEYTO Exploration & Development Corp. $900 $800 $700 $600 ons $500 Millio $400 $300 $200 $100 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010F UCC (25%) CEE (100%) CDE (30%) COGPE (10%) CAPEX 45 2/16/2011
Slide 46: Payout Ratio History
Payout Ratio History PEYTO Exploration & Development Corp. Maximum 91% Historical Payout Ratio 100% Minimum Converted 42% % to a Trust 80% at 57% 60% 40% 20% 0% Quarter Cash Payout Ratio Total Payout Ratio Historical Per Unit and Units Outstanding numbers have been adjusted to reflect the May 27, 20
Slide 47: Gas Marketing: Future Sales
Gas Marketing F t Future Sales S l Financial Hedges - Gas Pricing 2009 2010 2011 2012 0-Jan-00 GJ/d ($/GJ) 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-Oct-09 5000 $7.850 ● ● ● ● ● ● ● 1-Nov-08 1 Nov 08 31-Mar-09 31 Mar 09 5000 $9 700 $9.7
Slide 48: Successful Hedging Strategy
Successful Hedging Strategy Peyto Realized Price History PEYTO Exploration & Development Corp. 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 $5.36/mcf AECO Mo AECO Mo AECO Mo AECO M
Slide 49: Peyto's Reserves: Volumes
Peyto’s Reserves V l Volumes PEYTO Exploration & Development Corp. 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 24,859 179,701 Probable Additional 424 9
Slide 50: Peyto's Reserves: Before Tax Net Present Value
Peyto’s Reserves B f Before Tax T Net N t Present P t Value V l PEYTO Exploration & Development Corp. 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 $ 18 Proven U
Slide 51: Advisory Regarding Forward-Looking Statements
Advisory R Regarding di F Forward-Looking d L ki St Statements t t PEYTO Exploration & Development Corp. This presentation contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "contin
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