Peyto Exploration & Development Corp. (“Peyto” or the
“Company”) is pleased to present its operating and financial
results for the first quarter of the 2022 fiscal year. A 71%
Operating Margin1,2 and a 34% Profit Margin3 in the quarter
delivered an 9% Return on Capital4 and a 13% Return on Equity5, on
a trailing twelve-month basis. Highlights for the quarter included:
- Funds from
operations6 per share up
69%. Funds from Operations (“FFO”) were a Company record
$203 million after hedging losses of $53 million in the quarter.
Per diluted share FFO were $1.17, up 65% from $0.71 in Q1 2021. FFO
in the quarter exceeded capital expenditures and acquisitions,
leaving $38 million for dividends and debt reduction.
- Production per share up
13%. First quarter 2022 production of 101,549 boe/d,
comprised of 536 MMcf/d of natural gas, 7,253 bbl/d of Condensate
and Pentanes, and 5,020 bbl/d of Butane and Propane, was up 15%
(10% per diluted share) from 88,070 boe/d in Q1 2021. Total liquid
yields of 23 bbl/MMcf, or 12% of total production, was down from 27
bbl/MMcf in Q1 2021 due to an increased focus on leaner Spirit
River plays and acquired production (as discussed below).
- Total cash costs of
$1.53/Mcfe (or $0.93/Mcfe ($5.57/boe) excluding
royalties). Industry leading low total cash costs included
$0.60/Mcfe royalties, $0.41/Mcfe operating costs, $0.28/Mcfe
transportation, $0.03/Mcfe G&A and $0.21/Mcfe interest, which
combined with a realized price of $5.25/Mcfe to result in a
$3.72/Mcfe ($22.31/boe) cash netback, up 51% from $2.46/Mcfe
($14.81/boe) in Q1 2021. Total cash costs excluding royalties were
2% lower than Q1 2021.
- Capital investment of $143
million in organic activity. A total of 29 gross wells
(78% Working Interest, “WI”) were drilled in the first quarter, 30
gross wells (82% WI) were completed, and 27 gross wells (83% WI)
were brought on production. In addition, a small private Company in
the Brazeau area was acquired for $22 million and a new 50 MMcf/d
gas plant was constructed in the Chambers area. Capital efficiency
over the last 12 months was $10,000/boe/d.
- Earnings of $0.58/share,
Dividends of $0.15/share. Earnings of $98 million were
generated in the quarter while dividends of $25 million were paid
to shareholders.
First Quarter 2022 in Review
Peyto increased its pace of capital investment
in Q1 2022, drilling and connecting more gas wells and constructing
a 50 MMcf/d novel, low emissions gas plant in the Chambers area. In
addition, Peyto closed a strategic corporate acquisition in the
Greater Brazeau area which added a 100% owned, operated and
underutilized 45 MMcf/d sweet natural gas plant, 73 net sections of
undeveloped lands (each section offering up to 5 target formations,
therefore equivalent to over 350 net sections of deep basin
rights), 880 boe/d of production from 20 net wells, along with many
other operational and financial synergies. Also in the quarter,
Peyto successfully drilled its longest Extended Reach Horizontal
(“ERH”) well at over 6,000 m MD (Measured Depth). Production for
the quarter, which was up 15% from the previous year, held
relatively constant throughout the quarter as much of the drilling
and new plant increases came on in April 2022. The combination of
low total cash costs, higher production and higher realized
commodity prices resulted in an industry leading operating margin
and record funds from operations, despite the hedge losses. As
previously placed hedges roll off, Peyto will begin enjoying the
full effect of the higher commodity prices. A return to historic
profit margins drove near record quarterly earnings of $98
million.
_______________________________________
1 This press release contains certain non-GAAP and other
financial measures to analyze financial performance, financial
position, and cash flow including, but not limited to "operating
margin", "profit margin", "return on capital", "return on equity",
"netback", "funds from operations", and "net debt". These non-GAAP
and other financial measures do not have any standardized meaning
prescribed under IFRS and therefore may not be comparable to
similar measures presented by other entities. The non-GAAP and
other financial measures should not be considered to be more
meaningful than GAAP measures which are determined in accordance
with IFRS, such as earnings (loss), cash flow from operating
activities, and cash flow used in investing activities, as
indicators of Peyto’s performance. See "Non-GAAP and Other
Financial Measures" included at the end of this press release and
in Peyto's most recently filed MD&A for an explanation of these
financial measures and reconciliation to the most directly
comparable financial measure under IFRS.
2 Operating Margin is a non-GAAP financial ratio defined as
funds from operations divided by revenue before royalties but
including realized hedging gains/losses.
3 Profit Margin is a non-GAAP financial ratio defined as net
earnings for the quarter divided by revenue before royalties but
including realized hedging gains/losses.
4 Return on capital is a non-GAAP financial ratio. See "non-GAAP
and Other Financial Measures" in this news release and in the Q1
2022 MD&A.
5 Return on equity capital is a non-GAAP financial ratio. See
"non-GAAP and Other Financial Measures" in this news release and in
the Q1 2022 MD&A
6 Funds from operations is a non-GAAP financial
measure. See "non-GAAP and Other Financial Measures" in this news
release and in the Q1 2022 MD&A.
|
Three Months Ended Mar 31 |
% |
|
2022 |
2021 |
Change |
Operations |
|
|
|
Production |
|
|
|
Natural gas (mcf/d) |
535,660 |
455,593 |
18% |
NGLs (bbl/d) |
12,273 |
12,138 |
1% |
Thousand cubic feet equivalent (mcfe/d @ 1:6) |
609,295 |
528,419 |
15% |
Barrels of oil equivalent (boe/d @ 6:1) |
101,549 |
88,070 |
15% |
Production per million common
shares (boe/d) |
601 |
534 |
13% |
Product prices |
|
|
|
Natural gas ($/mcf) |
4.08 |
3.06 |
33% |
NGLs ($/bbl) |
81.66 |
45.63 |
79% |
Operating expenses
($/mcfe) |
0.41 |
0.36 |
14% |
Transportation ($/mcfe) |
0.28 |
0.17 |
65% |
Field netback ($/mcfe)(2) |
3.96 |
2.87 |
38% |
General & administrative
expenses ($/mcfe) |
0.03 |
0.04 |
-25% |
Interest expense ($/mcfe) |
0.21 |
0.38 |
-45% |
Financial ($000,
except per share*) |
|
|
|
Revenue and realized hedging
gains (losses)(1) |
286,894 |
175,327 |
64% |
Royalties |
32,903 |
14,069 |
134% |
Funds from operations(2) |
203,492 |
116,709 |
74% |
Funds from operations per
share – basic(2) |
1.20 |
0.71 |
69% |
Funds from operations per
share - diluted(2) |
1.17 |
0.71 |
65% |
Total dividends |
25,358 |
1,651 |
1436% |
Total dividends per
share(2) |
0.15 |
0.01 |
1400% |
Total payout ratio(2) |
83% |
95% |
-13% |
Earnings |
97,816 |
38,500 |
154% |
Earnings per share- basic |
0.58 |
0.23 |
152% |
Earnings per share -
diluted |
0.56 |
0.23 |
143% |
Capital expenditures |
143,331 |
108,851 |
32% |
Corporate acquisition |
22,220 |
- |
|
Weighted average common shares
outstanding (basic) |
169,058,178 |
165,069,227 |
2% |
Weighted average common shares
outstanding (diluted) |
173,320,559 |
165,069,227 |
5% |
|
|
|
|
Net debt(2) |
1,064,086 |
1,169,414 |
-9% |
Shareholders' equity |
1,633,557 |
1,699,771 |
-4% |
Total assets |
3,852,410 |
3,661,029 |
5% |
|
|
|
|
(1) excludes revenue from sale of natural gas
volumes from third-parties(2) This is a Non-GAAP financial measure
or ratio. See "non-GAAP and Other Financial Measures" in this news
release and in the Q1 2022 MD&A.
Exploration & Development
Most of the drilling activity in the quarter was
focused in the Brazeau area in support of the new Chambers gas
plant and on the Cardium formation to take advantage of higher
condensate prices driven by higher oil prices. Drilling activity
detail by area and formation is shown in the following table:
|
Field |
Total WellsDrilled |
Zone |
Sundance |
Nosehill |
Wildhay |
Ansell |
Cecilia |
Kisku/Kakwa |
Brazeau |
Belly River |
|
|
|
|
|
|
|
|
Cardium |
|
|
6 |
|
|
|
9 |
15 |
Notikewin |
|
2 |
|
4 |
|
|
2 |
8 |
Falher |
1 |
|
|
1 |
|
|
|
2 |
Wilrich |
|
1 |
|
2 |
|
|
1 |
4 |
Bluesky |
|
|
|
|
|
|
|
|
Total |
1 |
3 |
6 |
7 |
|
|
12 |
29 |
Peyto drilled 3 ERH wells in the quarter,
drilling its longest ever at 6,070 m MD with a horizontal lateral
of 3,136 m. The Company has now drilled 19 ERH wells into the
Cardium, Notikewin, Falher and Wilrich formations that all have
greater than 2,500 m horizontal laterals. These wells will continue
to be evaluated to determine how much economic benefit, in addition
to the environmental benefit, this enhanced well design can deliver
in Peyto’s various Deep Basin resource plays.
Q1 2022 drilling and completion cost on a per
meter drilled and per stage completed basis were up over 2021
mostly due to the high percentage of Cardium wells in the first
quarter. As the drilling program progresses to more ERH wells over
the balance of the year, drilling and completion metrics are
expected to improve, despite continued inflationary pressures.
|
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
2022Q1 |
Gross Hz Spuds |
86 |
99 |
123 |
140 |
126 |
135 |
70 |
61 |
64 |
95 |
29 |
Measured Depth (m) |
4,017 |
4,179 |
4,251 |
4,309 |
4,197 |
4,229 |
4,020 |
3,848 |
4,247 |
4,453 |
4,291 |
|
|
|
|
|
|
|
|
|
|
|
|
Drilling ($MM/well) |
$2.79 |
$2.72 |
$2.66 |
$2.16 |
$1.82 |
$1.90 |
$1.71 |
$1.62 |
$1.68 |
$1.89 |
$2.13 |
$ per meter |
$694 |
$651 |
$626 |
$501 |
$433 |
$450 |
$425 |
$420 |
$396 |
$424 |
$496 |
|
|
|
|
|
|
|
|
|
|
|
|
Completion ($MM/well) |
$1.67 |
$1.63 |
$1.70 |
$1.21 |
$0.86 |
$1.00 |
$1.13 |
$1.01* |
$0.94 |
$1.00 |
$1.22 |
Hz Length (m) |
1,358 |
1,409 |
1,460 |
1,531 |
1,460 |
1,241 |
1,348 |
1,484 |
1,682 |
1,612 |
1,529 |
$ per Hz Length (m) |
$1,231 |
$1,153 |
$1,166 |
$792 |
$587 |
$803 |
$835 |
$679 |
$560 |
$620 |
$801 |
$ ‘000 per Stage |
$257 |
$188 |
$168 |
$115 |
$79 |
$81 |
$51 |
$38 |
$36 |
$37 |
$44 |
*excluding Peyto’s Wildhay Montney well.
Capital Expenditures
During the first quarter of 2022, Peyto invested
$52 million on drilling, $33 million on completions, $10 million on
wellsite equipment and tie-ins, $47 million on facilities and major
pipeline projects, $1 million on seismic and $22 million on the
corporate acquisition of a private junior producer. Of the $47
million on facilities, the new Chambers plant accounted for $32
million, including $17 million transferred from capital inventory.
Other major pipeline projects included $8 million in Greater
Brazeau pipeline infrastructure, $3 million in additional Swanson
pipeline and gathering infrastructure, and $2 million in
optimization and methane reduction initiatives.
Marketing
Peyto actively markets all components of its
production stream including natural gas, condensate, pentane,
butane and propane. Natural gas was sold in Q1 2022 at various hubs
including Emerson (35%), AECO (30%), Henry Hub (20%), Malin (7%),
Empress (5%), and Ventura (3%) using both physical transportation
and basis transactions (diversification activities) to access those
hubs. Natural gas prices were left to float on daily or monthly
pricing or locked in using fixed price swaps at those hubs and
Peyto’s realized price is benchmarked against those local prices,
then adjusted for transportation (either physical or synthetic) to
those markets. Net of diversification activities of $1.17/Mcf,
Peyto realized a before hedge price of $4.23/GJ prior to NGTL fuel
deductions. This compares to an AECO Daily (5A) average price of
$4.49/GJ.
Peyto also employs a methodical commodity risk
management program that is designed to smooth out the short-term
fluctuations in the price of natural gas and natural gas liquids
through future sales. This smoothing gives greater predictability
of cashflows for the purposes of capital planning and dividend
payments. The future sales are meant to be orderly and consistent
to avoid speculation, much like “dollar cost averaging” the future
prices. In general, this approach will show hedging losses when
short term prices climb and hedging gains when short term prices
fall. For the first quarter of 2022, approximately 69% of Peyto’s
gas was locked in at a fixed price of $3.82/Mcf. Most of those
contracts were established several quarters prior at then market
prices that were lower than the first quarter spot prices. Since
Peyto began this hedging practice in 2003, the Company has
accumulated $404 million in total hedging gain utilizing this
program.
The Company’s liquids are also actively marketed
with condensate being sold on a monthly index differential linked
to West Texas Intermediate (“WTI”) oil prices. Peyto’s NGLs (a
blend of pentanes plus, butane and propane) are fractionated by a
third party in Fort Saskatchewan, Alberta and Peyto markets each
product separately. Pentanes Plus are sold on a monthly index
differential linked to WTI, with some volumes forward sold on fixed
differentials to WTI. Butane is sold as a percent of WTI or a fixed
differential to Mount Belvieu, Texas markets. Propane is sold on a
fixed differential to Conway, Kansas markets. While some products
like Butane and Propane require annual term contracts to ensure
delivery paths and markets are certain, others can be sold on the
daily spot market. Peyto’s realized product prices for Q1 2022,
relative to 2021 and benchmark prices, are shown in the following
table.
Benchmark Commodity Prices at Various
Markets
|
Three Months ended March 31 |
|
2022 |
2021 |
AECO 7A monthly ($/GJ) |
4.35 |
2.77 |
AECO 5A daily ($/GJ) |
4.49 |
2.99 |
NYMEX (US$/MMBTU) |
4.60 |
3.38 |
Emerson2 (US$/MMBTU) |
4.57 |
2.91 |
Malin NGI (US$/MMbtu) |
5.66 |
3.03 |
Ventura daily (US$/MMbtu) |
4.47 |
11.86 |
Canadian WTI ($/bbl) |
119.40 |
73.22 |
Conway C3 (US$/bbl) |
54.03 |
38.40 |
CND/USD Exchange rate |
1.266 |
1.266 |
Peyto Realized Natural Gas Price by Market (net of
diversification)
|
Three Months ended March 31 |
|
2022 |
2021 |
AECO 7A monthly (CND$/GJ) |
4.35 |
2.78 |
AECO 5A daily (CND$/GJ) |
4.48 |
2.91 |
NYMEX (US$/MMBTU) |
3.11 |
2.07 |
Emerson2 (US$/MMBTU) |
3.93 |
2.22 |
Malin (US$/MMBTU) |
3.48 |
2.42 |
Ventura (US$/MMBTU) |
3.38 |
10.77 |
|
|
|
Peyto Realized Commodity
Prices |
|
|
Natural gas (CND$/mcf) |
6.03 |
4.52 |
Gas marketing diversification activities (CND$/mcf) |
(1.17) |
(1.04) |
Gas hedging (CND$/mcf) |
(0.78) |
(0.42) |
|
|
|
Condensate and C5+ (CND$/bbl) |
125.81 |
68.57 |
Butane and propane (CND$/bbl) |
52.68 |
30.89 |
Liquid hedging (CND$/bbl) |
(14.24) |
(7.21) |
Peyto realized natural gas prices are at NIT,
prior to fuel. Peyto gas has an average heating value of approx.
1.15GJ/Mcf.Liquids prices are Peyto realized prices in Canadian
dollars adjusted for fractionation, transportation, and market
differentials.Details of Peyto’s ongoing marketing and
diversification efforts are available on Peyto’s website
at:http://www.peyto.com/Files/Operations/Marketing/hedges.pdf
Financial Results
The Company’s realized price for natural gas in
Q1 2022 was $6.03/Mcf, prior to $1.17/Mcf of market diversification
activities and a $0.78/Mcf hedging loss, while its realized liquids
price was $95.90/bbl, before a $14.24/bbl hedging loss, which
yielded a combined revenue stream of $5.25/Mcfe. This net sales
price was 42% higher than the $3.70/Mcfe realized in Q1 2021. Cash
costs of $1.53/Mcfe were 23% higher than the $1.24/Mcfe in Q1 2021
due to a $0.31/Mcfe increase in royalties to 11% of realized
revenue. Royalty payments to Alberta were higher in the quarter due
to improved commodity prices. Peyto expects that Company royalty
rates will continue to range between 10-15% even with the higher
forecasted commodity prices due to the large portion of mature, low
decline production that receives a lower royalty rate due to lower
productivity, combined with a large portion of production from new
wells that receive an initial royalty rate of 5%. When
the total cash costs of $1.53/Mcfe were deducted from realized
revenues of $5.25/Mcfe, it resulted in a cash netback of $3.72/Mcfe
or a 71% operating margin. Historical cash costs and operating
margins are shown in the following table:
|
2019 |
2020 |
2021 |
2022 |
($/Mcfe) |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Revenue |
3.20 |
2.60 |
2.50 |
2.76 |
2.30 |
1.73 |
2.15 |
2.71 |
3.70 |
2.92 |
3.33 |
4.42 |
5.25 |
Royalties |
0.14 |
0.01 |
0.03 |
0.12 |
0.12 |
0.06 |
0.14 |
0.18 |
0.29 |
0.26 |
0.36 |
0.53 |
0.60 |
Op Costs |
0.35 |
0.34 |
0.31 |
0.34 |
0.39 |
0.36 |
0.32 |
0.31 |
0.36 |
0.35 |
0.35 |
0.32 |
0.41 |
Transportation |
0.19 |
0.19 |
0.19 |
0.19 |
0.19 |
0.17 |
0.16 |
0.15 |
0.17 |
0.22 |
0.23 |
0.23 |
0.28 |
G&A |
0.06 |
0.05 |
0.05 |
0.02 |
0.04 |
0.04 |
0.04 |
0.04 |
0.04 |
0.05 |
0.02 |
0.02 |
0.03 |
Interest |
0.28 |
0.30 |
0.31 |
0.31 |
0.29 |
0.33 |
0.35 |
0.38 |
0.38 |
0.33 |
0.26 |
0.22 |
0.21 |
Total Cash Costs |
1.02 |
0.89 |
0.89 |
0.98 |
1.03 |
0.96 |
1.01 |
1.06 |
1.24 |
1.21 |
1.22 |
1.32 |
1.53 |
Cash Netback1 |
2.18 |
1.71 |
1.61 |
1.78 |
1.27 |
0.77 |
1.14 |
1.65 |
2.46 |
1.71 |
2.11 |
3.10 |
3.72 |
Operating Margin1 |
68% |
66% |
64% |
65% |
55% |
45% |
53% |
61% |
67% |
59% |
63% |
70% |
71% |
(1) This is a Non-GAAP measure or ratio. See
"non-GAAP and Other Financial Measures" in this news release and in
the Q1 2022 MD&A.Depletion, depreciation, and amortization
charges of $1.33/Mcfe, along with a provision for deferred tax and
stock-based compensation payments resulted in earnings of
$1.78/Mcfe, or a 34% profit margin. Dividends to shareholders
totaled $0.46/Mcfe.
Activity Update
Peyto has remained active since the end of the
quarter with 5 rigs running which has resulted in 11 wells drilled
(62% WI), 13 completed (73% WI) and 9 wells (75% WI) brought
onstream. In addition, 8 wells (75% WI) remain drilled but not yet
tied in. Typically, the Company operates a moderate program during
the wet spring breakup period but this year plans to continue
drilling with 4 rigs, weather permitting, to take advantage of
strong gas prices and greater service availability. This plan will
accelerate Peyto’s annual capital program into the first half of
the year allowing for an option to increase the annual capital
budget later in the year.
In early April, Peyto commissioned and started
up its Chambers Gas plant in the Greater Brazeau core area and
corporate production has averaged 106,000 boe/d since that time.
This low emissions facility, located adjacent to the NGTL
gathering system, has been outperforming capacity expectations and
is currently processing 65 MMcf/d of gas and 2,400 bbl/d of NGLs
from a successful Chambers development program of Cardium,
Notikewin, and Wilrich wells. Plans for expansion are already being
assessed as the Company has 2 rigs operating in the area. This is
the Company’s 12th gas processing plant and brings the total
processing capacity for the Greater Brazeau area up to 250 MMcf/d
and the total corporate processing capacity close to 1 BCF/d.
Outlook
Global geopolitical events have combined with
historically low natural gas inventory levels to create decade high
commodity prices for all the products Peyto develops and sells.
Despite the severe backwardation in future commodity prices, new
capital investments have some of the most attractive returns the
Company has ever experienced. These events, combined with Peyto’s
low cost, high margin production are expected to continue to
deliver record cashflows allowing the Company to reduce the closing
debt level this year to below the projected funds flow. This will
allow Peyto to focus on increasing returns to shareholders.
With the globalization of natural gas from North
American LNG export expansion, Peyto will be well positioned to
participate in solving the world’s ongoing need for energy
security, affordability and reliability with responsibly developed
production from environmentally conscientious jurisdictions.
Conference Call and Webcast
A conference call will be held with the senior
management of Peyto to answer questions with respect to the
Company’s Q1 2022 results on Thursday, May 12, 2022, at 9:00 a.m.
Mountain Time (MT), or 11:00 a.m. Eastern Time (ET). To
participate, please call 1-844-492-6041 (North America) or
1-478-219-0837 (International). Shareholders and interested
investors are encouraged to ask questions about Peyto and its most
recent results. Questions can be submitted prior to the call at
info@peyto.com. The conference call can also be accessed through
the internet
https://edge.media-server.com/mmc/p/ndciz42i. The
conference call will be archived on the Peyto Exploration &
Development website at www.peyto.com.
Annual General Meeting
Peyto’s Annual General Meeting of Shareholders
is scheduled for 3:00 p.m. on Thursday, May 12, 2022, at the Eau
Claire Tower, +15 level, 600 – 3rd Avenue SW, Calgary, Alberta.
Shareholders who do not wish to attend are encouraged to visit the
Peyto website at www.peyto.com where there is a wealth of
information designed to inform and educate investors and where a
copy of the AGM presentation will be posted. A monthly President’s
Report can also be found on the website which follows the progress
of the capital program and the ensuing production growth, along
with video and audio commentary from Peyto’s senior management.
Management’s Discussion and
Analysis/Financial Statements
A copy of the first quarter report to shareholders, including
the MD&A, unaudited financial statements and related notes, is
available at
http://www.peyto.com/Files/Financials/2022/Q12022FS.pdf and at
http://www.peyto.com/Files/Financials/2022/Q12022MDA.pdf and will
be filed at SEDAR, www.sedar.com at a later date.
Darren
Gee |
Jean-Paul
Lachance |
Chief Executive Officer |
President and Chief Operating Officer |
May 11, 2022 |
|
Cautionary Statements
Forward-Looking Statements
This news release contains certain
forward-looking statements or information ("forward-looking
statements") as defined by applicable securities laws that involve
substantial known and unknown risks and uncertainties, many of
which are beyond Peyto's control. These statements relate to future
events or the Company's future performance. All statements other
than statements of historical fact may be forward-looking
statements. The use of any of the words "plan", "expect",
"prospective", "project", "intend", "believe", "should",
"anticipate", "estimate", or other similar words or statements that
certain events "may" or "will" occur are intended to identify
forward-looking statements. The projections, estimates and beliefs
contained in such forward-looking statements are based on
management's estimates, opinions, and assumptions at the time the
statements were made, including assumptions relating to:
macro-economic conditions, including public health concerns
(including the impact of the COVID-19 pandemic) and other
geopolitical risks, the condition of the global economy and,
specifically, the condition of the crude oil and natural gas
industry, and the ongoing significant volatility in world markets;
other industry conditions; changes in laws and regulations
including, without limitation, the adoption of new environmental
laws and regulations and changes in how they are interpreted and
enforced; increased competition; the availability of qualified
operating or management personnel; fluctuations in other commodity
prices, foreign exchange or interest rates; stock market volatility
and fluctuations in market valuations of companies with respect to
announced transactions and the final valuations thereof; results of
exploration and testing activities; and the ability to obtain
required approvals and extensions from regulatory authorities.
Management of the Company believes the expectations reflected in
those forward-looking statements are reasonable, but no assurances
can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of
them do so, what benefits that Peyto will derive from them. As
such, undue reliance should not be placed on forward-looking
statements. Forward-looking statements contained herein include,
but are not limited to, statements regarding: the forecast costs of
future abandonment and reclamation liability; expectations
regarding future drilling inventory; the future outlook for
commodity prices being better in 2022; expectations regarding the
Company's margin of profit; the expectation that Peyto's new
landholdings will yield twice the number of locations as were
drilled in 2021; the Company's drilling and completion program for
2022, including the timing of the drilling program and the
Company's expectation that it will fill the capacity in the Cecilia
gas plant and the timing of the same; the Company's intention to
install zero emissions instrumentation on all new well sites and
the timing of installation; the anticipated effects of installing
zero emissions instrumentation on all new well sites; the
expectation for growing production and increased funds flow beyond
the budgeted capital program for 2022; the Company's intention to
reduce indebtedness and increase dividends; anticipated improvement
of costs and profitability; the timing of Peyto's annual general
meeting; and the Company's overall strategy and focus.
The forward-looking statements contained herein
are subject to numerous known and unknown risks and uncertainties
that may cause Peyto's actual financial results, performance or
achievement in future periods to differ materially from those
expressed in, or implied by, these forward-looking statements,
including but not limited to, risks associated with: continued
changes and volatility in general global economic conditions
including, without limitations, the economic conditions in North
America and public health concerns (including the impact of the
COVID-19 pandemic); continued fluctuations and volatility in
commodity prices, foreign exchange or interest rates; continued
stock market volatility; imprecision of reserves estimates;
competition from other industry participants; failure to secure
required equipment; increased competition; the lack of availability
of qualified operating or management personnel; environmental
risks; changes in laws and regulations including, without
limitation, the adoption of new environmental and tax laws and
regulations and changes in how they are interpreted and enforced;
the results of exploration and development drilling and related
activities; and the ability to access sufficient capital from
internal and external sources. In addition, to the extent that any
forward-looking statements presented herein constitutes
future-oriented financial information or financial outlook, as
defined by applicable securities legislation, such information has
been approved by management of Peyto and has been presented to
provide management's expectations used for budgeting and planning
purposes and for providing clarity with respect to Peyto's
strategic direction based on the assumptions presented herein and
readers are cautioned that this information may not be appropriate
for any other purpose. Readers are encouraged to review the
material risks discussed in Peyto's annual information form for the
year ended December 31, 2021 under the heading "Risk Factors" and
in Peyto's annual management's discussion and analysis under the
heading "Risk Management".
The Company cautions that the foregoing list of
assumptions, risks and uncertainties is not exhaustive. Readers are
cautioned that the assumptions used in the preparation of such
information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. Peyto's actual
results, performance or achievement could differ materially from
those expressed in, or implied by, these forward-looking statements
and, accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what benefits Peyto will derive
there from. The forward-looking statements, including any
future-oriented financial information or financial outlook,
contained in this news release speak only as of the date hereof and
Peyto does not assume any obligation to publicly update or revise
them to reflect new information, future events or circumstances or
otherwise, except as may be required pursuant to applicable
securities laws.
Barrels of Oil Equivalent
To provide a single unit of production for
analytical purposes, natural gas production and reserves volumes
are converted mathematically to equivalent barrels of oil (BOE).
Peyto uses the industry-accepted standard conversion of six
thousand cubic feet of natural gas to one barrel of oil (6 Mcf = 1
bbl). The 6:1 BOE ratio is based on an energy equivalency
conversion method primarily applicable at the burner tip. It does
not represent a value equivalency at the wellhead and is not based
on current prices. While the BOE ratio is useful for comparative
measures and observing trends, it does not accurately reflect
individual product values and might be misleading, particularly if
used in isolation. As well, given that the value ratio, based on
the current price of crude oil to natural gas, is significantly
different from the 6:1 energy equivalency ratio, using a 6:1
conversion ratio may be misleading as an indication of value.
NON-GAAP AND OTHER FINANCIAL
MEASURES
Throughout this press release, Peyto employs
certain measures to analyze financial performance, financial
position, and cash flow. These non-GAAP and other financial
measures do not have any standardized meaning prescribed under IFRS
and therefore may not be comparable to similar measures presented
by other entities. The non-GAAP and other financial measures should
not be considered to be more meaningful than GAAP measures which
are determined in accordance with IFRS, such as net income (loss),
cash flow from operating activities, and cash flow used in
investing activities, as indicators of Peyto’s performance.
Non-GAAP Financial Measures
Funds from Operations"Funds
from operations" is a non-GAAP measure which represents cash flows
from operating activities before changes in non-cash operating
working capital and provision for future performance-based
compensation. Management considers funds from operations and per
share calculations of funds from operations to be key measures as
they demonstrate the Company’s ability to generate the cash
necessary to pay dividends, repay debt and make capital
investments. Management believes that by excluding the temporary
impact of changes in non-cash operating working capital, funds from
operations provides a useful measure of Peyto’s ability to generate
cash that is not subject to short-term movements in operating
working capital. The most directly comparable GAAP measure is cash
flows from operating activities.
|
Three Months ended March 31 |
($000) |
2022 |
2021 |
|
Cash flows from operating activities |
185,790 |
119,752 |
|
Change in non-cash working capital |
17,702 |
(3,043 |
) |
Performance based compensation |
- |
- |
|
Funds from operations |
203,492 |
116,709 |
|
Net Debt "Net debt" is a
non-GAAP financial measure that is the sum of long-term debt and
working capital excluding the current financial derivative
instruments and current portion of lease obligations. It is used by
management to analyze the financial position and leverage of the
Company. Net debt is reconciled to long-term debt which is the most
directly comparable GAAP measure.
($000) |
As atMarch 31, 2022 |
As atDecember 31, 2021 |
As atMarch 31, 2021 |
Long-term debt |
1,039,984 |
|
1,065,712 |
|
1,150,000 |
|
Current assets |
(172,058 |
) |
(144,370 |
) |
(91,679 |
) |
Current liabilities |
492,187 |
|
239,620 |
|
129,667 |
|
Financial derivative instruments |
(294,794 |
) |
(61,091 |
) |
(17,438 |
) |
Current portion of lease obligation |
(1,233 |
) |
(1,123 |
) |
(1,136 |
) |
Net debt |
1,064,086 |
|
1,098,748 |
|
1,169,414 |
|
Non-GAAP Financial Ratios
Funds from Operations per
SharePeyto presents funds from operations per share by
dividing funds from operations by the Company's diluted or basic
weighted average common shares outstanding. "Funds from operations"
is a non-GAAP financial measure. Management believes that funds
from operations per share provides investors an indicator of funds
generated from the business that could be allocated to each
shareholder's equity position.
Netback per MCFE and
BOE"Netback" is a non-GAAP measure that represents the
profit margin associated with the production and sale of petroleum
and natural gas. Peyto computes "field netback per Mcfe" as
commodity sales from production less royalties, operating, and
transportation expense divided by production and "cash netback" as
"field netback" less interest and general and administration
expense divided by production. Netbacks are per unit of production
measures used to assess Peyto’s performance and efficiency. The
primary factors that produce Peyto’s strong netbacks and high
margins are a low-cost structure and the high heat content of its
natural gas that results in higher commodity prices.
|
Three Months ended March 31 |
($/Mcfe) |
2022 |
2021 |
Gross Sale Price |
6.22 |
4.23 |
Realized hedging gain (loss) |
(0.97) |
(0.53) |
Net Sale Price |
5.25 |
3.70 |
Less: Royalties |
0.60 |
0.29 |
Operating costs |
0.41 |
0.36 |
Transportation |
0.28 |
0.17 |
Field netback |
3.96 |
2.88 |
General and administrative |
0.03 |
0.04 |
Interest on long-term debt |
0.21 |
0.38 |
Cash netback ($/Mcfe) |
3.72 |
2.46 |
Cash netback ($/boe) |
22.31 |
14.81 |
Return on EquityPeyto
calculates ROE, expressed as a percentage, as Earnings divided by
the Equity. Peyto uses ROE as a measure of long-term financial
performance, to measure how effectively Management utilizes the
capital it has been provided by shareholders and to demonstrate to
shareholders the returns generated over the long term.
Return on Capital EmployedPeyto
calculates ROCE, expressed as a percentage, as EBIT divided by
Total Assets less Current Liabilities per the Financial Statements.
Peyto uses ROCE as a measure of long-term financial performance, to
measure how effectively Management utilizes the capital (debt and
equity) it has been provided and to demonstrate to shareholders the
returns generated over the long term.
Total Payout Ratio"Total payout
ratio" is a non-GAAP measure which is calculated as the sum of
dividends declared plus additions to property, plant and equipment,
divided by funds from operations. This ratio represents the
percentage of the capital expenditures and dividends that is funded
by cashflow. Management uses this measure, among others, to assess
the sustainability of Peyto’s dividend and capital program.
|
Three Months ended March 31 |
|
2022 |
2021 |
Total dividends declared ($000) |
25,358 |
1,651 |
Additions to property, plant and equipment ($000) |
143,331 |
108,851 |
Total payout ($000) |
168,689 |
110,502 |
Funds from operations ($000) |
203,492 |
116,709 |
Total payout ratio (%) |
83% |
95% |
Operating MarginOperating
Margin is a non-GAAP financial ratio defined as funds from
operations divided by revenue before royalties but including
realized hedging gains/losses.
Profit MarginProfit Margin is a
non-GAAP financial ratio defined as net earnings for the quarter
divided by revenue before royalties but including realized hedging
gains/losses.
Peyto Exploration and De... (TSX:PEY)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024
Peyto Exploration and De... (TSX:PEY)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024