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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Orecap Invest Corp | TSXV:OCI | TSX Venture | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.06 | 0.055 | 0.06 | 0.06 | 0.06 | 0.06 | 119,000 | 17:36:43 |
Hot Features
Premium
Peyto Exploration & Development Corp. (TSX:PEY) ("Peyto") is pleased to present
its operating and financial results for the second quarter of the 2013 fiscal
year. Peyto's production per share grew for the fifteenth consecutive quarter
with second quarter operating margins of 76%(1) and profit margins of 26%(2).
Second quarter 2013 highlights included:
-- Production per share up 31%. Production increased 41% (31% per share)
from 248 MMcfe/d (41,343 boe/d) in Q2 2012 to 349 MMcfe/d (58,145 boe/d)
in Q2 2013, setting a new company record. Current production is
approximately 60,000 boe/d.
-- Funds from operations per share up 57%. Funds from Operations ("FFO")
grew 70% (57% per share) from $65 million in Q2 2012 to $110 million in
Q2 2013 due to increases in both production and natural gas price, also
a new company record.
-- Operating costs of $2/boe. Industry leading operating costs of
$0.35/mcfe ($2.10/boe) for Q2 2013 were up slightly from $0.29/mcfe for
Q2 2012 mostly due to an increase in power prices. Total cash costs,
including royalties, operating costs, transportation, G&A and interest
were $1.09/mcfe ($6.54/boe), resulting in a $3.47/mcfe ($20.82/boe) cash
netback or 76% operating margin. Peyto has maintained this industry
leading operating margin, in excess of 75%, for the past three years.
-- Capital investment of $74 million. A total of 13 wells were drilled in
the second quarter. During the quarter Peyto drilled its 245th
horizontal well in the Deep Basin marking 1.0 million meters using the
new horizontal multi-stage frac technology.
-- Earnings of $0.25/share, dividends of $0.22/share. Earnings of $38
million were generated in the quarter while dividends of $33 million
were paid to shareholders, representing a before tax payout ratio of 30%
of FFO. The monthly dividend was increased in May 2013 from $0.06/share
to $0.08/share.
Second Quarter 2013 in Review
The second quarter of 2013 was a period of reduced operational activity for
Peyto due to a prolonged spring break-up and higher than normal rainfall.
Southwestern Alberta experienced twice the normal rainfall in June causing wet
surface conditions and flooding in many areas. As a result, much of Peyto's June
drilling and completion operations were delayed to late July. Consequently,
company record production levels of 60,000 boe/d, which were achieved in April,
declined throughout the quarter as no new wells were connected. Peyto was able
to advance three facility projects in the quarter, however, which together will
increase total company processing capacity from 440 MMcf/d to 520 MMcf/d by Q4
2013. Realized natural gas prices improved from the previous quarter to almost
double that of the previous year and when combined with increased average
production drove company funds from operations to record levels. Peyto improved
its financial flexibility in the quarter with an expanded credit facility and an
increase in total borrowing capacity to $1.15 billion. At quarter end, 65% of
this capacity was utilized resulting in a net debt to annualized FFO ratio of
1.7 times, down from 2.0 times in Q2 2012, and leaving over $400 million
undrawn. The strong financial and operating performance delivered in the quarter
resulted in an annualized 12% Return on Equity (ROE) and 10% Return on Capital
Employed (ROCE).
(1) Operating Margin is defined as funds from operations divided by revenue
before royalties but including realized hedging gains/losses.
(2) Profit Margin is defined as net earnings for the quarter divided by
revenue before royalties but including realized hedging gains/losses.
Natural gas volumes recorded in thousand cubic feet (mcf) are converted
to barrels of oil equivalent (boe) using the ratio of six (6) thousand
cubic feet to one (1) barrel of oil (bbl). Natural gas liquids and oil
volumes in barrel of oil (bbl) are converted to thousand cubic feet
equivalent (Mcfe) using a ratio of one (1) barrel of oil to six (6)
thousand cubic feet. This could be misleading, particularly if used in
isolation as it is based on an energy equivalency conversion method
primarily applied at the burner tip and does not represent a value
equivalency at the wellhead.
----------------------------------------------------------------------------
Three Months ended June 30 %
2013 2012 Change
----------------------------------------------------------------------------
Operations
Production
Natural gas (mcf/d) 310,621 221,176 40%
Oil & NGLs (bbl/d) 6,374 4,480 42%
Thousand cubic feet
equivalent (mcfe/d @ 1:6) 348,868 248,058 41%
Barrels of oil equivalent
(boe/d @ 6:1) 58,145 41,343 41%
Product prices
Natural gas ($/mcf) 3.72 2.86 30%
Oil & NGLs ($/bbl) 67.82 71.27 (5)%
Operating expenses ($/mcfe) 0.35 0.29 21%
Transportation ($/mcfe) 0.12 0.12 -
Field netback ($/mcfe) 3.77 3.16 19%
General & administrative
expenses ($/mcfe) 0.05 0.07 (29)%
Interest expense ($/mcfe) 0.25 0.23 9%
Financial ($000 except per
share)
Revenue 144,614 86,553 67%
Royalties 9,849 6,082 62%
Funds from operations 109,987 64,732 70%
Funds from operations per
share 0.74 0.47 57%
Total dividends 32,727 24,927 31%
Total dividends per share 0.22 0.18 31%
Payout ratio 30 39 (23)%
Earnings 37,773 18,201 108%
Earnings per diluted share 0.25 0.13 92%
Capital expenditures 73,809 45,924 61%
Weighted average common
shares outstanding 148,758,923 138,485,956 7%
As at June 30
Net debt (before future compensation expense and unrealized hedging gains)
Shareholders' equity
Total assets
----------------------------------------------------------------------------
Six Months ended June 30 %
2013 2012 Change
----------------------------------------------------------------------------
Operations
Production
Natural gas (mcf/d) 303,943 220,994 38%
Oil & NGLs (bbl/d) 6,109 4,291 42%
Thousand cubic feet
equivalent (mcfe/d @ 1:6) 340,595 246,737 38%
Barrels of oil equivalent
(boe/d @ 6:1) 56,766 41,123 38%
Product prices
Natural gas ($/mcf) 3.61 3.19 13%
Oil & NGLs ($/bbl) 71.65 77.75 (8)%
Operating expenses ($/mcfe) 0.33 0.31 6%
Transportation ($/mcfe) 0.12 0.12 -
Field netback ($/mcfe) 3.72 3.45 8%
General & administrative
expenses ($/mcfe) 0.04 0.06 (33)%
Interest expense ($/mcfe) 0.23 0.22 5%
Financial ($000 except per
share)
Revenue 277,816 189,049 47%
Royalties 20,440 14,917 37%
Funds from operations 212,844 142,377 49%
Funds from operations per
share 1.43 1.03 39%
Total dividends 59,493 49,839 19%
Total dividends per share 0.40 0.36 11%
Payout ratio 28 35 (20)%
Earnings 74,179 45,069 65%
Earnings per diluted share 0.50 0.33 52%
Capital expenditures 242,908 144,551 68%
Weighted average common
shares outstanding 148,716,032 138,399,017 7%
As at June 30
Net debt (before future
compensation expense and
unrealized hedging gains) 746,094 519,328 44%
Shareholders' equity 1,227,842 999,057 23%
Total assets 2,328,117 1,789,210 30%
----------------------------------------------------------------------------
Three Months ended Six Months ended
June 30 June 30
($000) 2013 2012 2013 2012
----------------------------------------------------------------------------
Cash flows from operating
activities 96,700 74,551 189,243 133,934
Change in non-cash working capital 6,728 (10,934) 14,504 5,433
Change in provision for performance
based compensation 6,559 1,115 9,097 3,010
----------------------------------------------------------------------------
Funds from operations 109,987 64,732 212,844 142,377
----------------------------------------------------------------------------
Funds from operations per share 0.74 0.47 1.43 1.03
----------------------------------------------------------------------------
(1) Funds from operations - Management uses funds from operations to analyze
the operating performance of its energy assets. In order to facilitate
comparative analysis, funds from operations is defined throughout this
report as earnings before performance based compensation, non-cash and
non-recurring expenses. Management believes that funds from operations
is an important parameter to measure the value of an asset when combined
with reserve life. Funds from operations is not a measure recognized by
International Financial Reporting Standards ("IFRS") and does not have a
standardized meaning prescribed by IFRS. Therefore, funds from
operations, as defined by Peyto, may not be comparable to similar
measures presented by other issuers, and investors are cautioned that
funds from operations should not be construed as an alternative to net
earnings, cash flow from operating activities or other measures of
financial performance calculated in accordance with IFRS. Funds from
operations cannot be assured and future dividends may vary.
Exploration & Development
Second quarter drilling activity focused on the Greater Sundance core area and
the many liquids rich, sweet gas resource plays currently under development. A
total of 13 wells were drilled across this land base, targeting the prospective
zones shown in the following table:
Q2 2013 Field
Total
Kisku/ New Wells
Zone Sundance Nosehill Wildhay Ansell Berland Kakwa Area Drilled
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cardium 2 2
Notikewin 2 1 1
Falher 2 1 3
Wilrich 1 1 3 5
Bluesky 2 2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total 7 3 4 1 13
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Both the Bluesky and Falher formations continue to prove up significant
additional inventory with each successful well drilled. To date Peyto has
drilled and brought onto production ten Bluesky horizontal wells, which
combined, currently contribute 5,000 boe/d to company total production. An
additional 5 Bluesky wells are planned for the remainder of the year. As well,
both Upper and Middle Falher horizontal wells, of which 26 have been brought on
production in the last year, are contributing 8,000 boe/d currently, up from
3,000 boe/d a year ago. Peyto has plans to drill 10-15 Falher wells to the end
of the year.
Over the past year and a half, Peyto has assembled a significant land base in a
new core area in Brazeau River. In total, 98.5 sections (91.6 net) of contiguous
land was purchased with previously identified prospectivity in the Spirit River
section including the Notikewin, Falher and Wilrich formations. Average land
cost to date has been less than $300/net acre of mineral rights. Thus far, Peyto
has drilled three Wilrich wells with initial results that are comparable to
those achieved in the Greater Sundance area. As well, Peyto has begun
construction on a new 20 MMcf/d gas facility in the area, which should be
operational by early November 2013. Peyto is encouraged by the initial results
to date and the significant drilling inventory currently identified on these
lands. Management believes capital invested in this area will meet or exceed
Peyto's high return objectives. For the balance of the year, one drilling rig
will be active in the Brazeau area.
Capital Expenditures
During the second quarter of 2013, Peyto spent $32.3 million to drill 13 gross
(12.3 net) horizontal wells and $10.1 million completing 9 gross (8.0 net)
wells. Wellsite equipment and tie-ins accounted for $7.3 million, to bring on
production 11 gross (10.0 net) wells. Two major pipeline projects were completed
early in the quarter in the Ansell and Berland areas, accounting for $4.1
million, which allowed Peyto to redirect existing production to owned facilities
and lower cost processing alternatives. Ongoing progress on the three new gas
plants that Peyto is constructing in 2013, at Oldman North, Swanson and Brazeau,
accounted for remainder of the $18.5 million in pipeline and facilities capital.
Peyto invested $5.0 million into new lands in the quarter, primarily in the
Brazeau, Berland and Sundance areas, as well as $0.6 million in new seismic,
adding a significant number of new drilling locations to Peyto's vast, liquids
rich, deep basin inventory.
Financial Results
Alberta daily natural gas prices averaged $3.35/GJ in Q2 2013, up 86% from Q2
2012, resulting in a Peyto unhedged realized price of $3.85/mcf before hedging
losses of $0.13/mcf. Meanwhile, Edmonton light oil prices averaged $92.62/bbl
from which Peyto realized $68.08/bbl, before hedging losses of $0.26/bbl, for
its natural gas liquids blend of condensate, pentane, butane and propane.
Combined, Peyto's unhedged revenues totaled $4.68/mcfe ($4.56/mcfe including
hedging losses), or 138% of the dry gas price, illustrating the benefit of high
heat content, liquids rich natural gas production.
Royalties of $0.32/mcfe, operating costs of $0.35/mcfe, transportation costs of
$0.12/mcfe, G&A of $0.05/mcfe and interest costs of $0.25/mcfe, combined for
total cash costs of $1.09/mcfe. These industry leading total cash costs resulted
in a cash netback of $3.47/mcfe or a 76% operating margin.
Depletion, depreciation and amortization charges of $1.68/mcfe, along with a
provision for future tax and market based bonus payments reduced the cash
netback to earnings of $1.19/mcfe, or a 26% profit margin.
During the second quarter, Peyto's $730 million credit facility was reviewed and
the annual secured revolver was replaced by a $1.0 billion, two year, covenant
based unsecured revolver. Including the $150 million of senior unsecured notes,
Peyto's total borrowing capacity increased to $1.15 billion.
Marketing
AECO daily natural gas price was much improved in the second quarter of 2013.
This was due to a more typical storage balance entering the spring "shoulder
season" than the previous year's excess. Both AECO and NYMEX futures prices for
natural gas, however, are forecast to rise by less than 7% per year for the next
five years on the expectation that ample supplies of natural gas are available
for growing demand.
Approximately 57% of Peyto's (after royalty) natural gas production had been
pre-sold for Q2 2013, at an average fixed price of $3.19/GJ. This was the result
of an active hedging program which layers in future sales in the form of fixed
price swaps in order to smooth out the volatility in natural gas price.
Going forward, Peyto has committed to the future sale of 75,045,000 GJ of
natural gas at an average price of $3.34/GJ. As at August 12, 2013, the
remaining hedged volumes and prices for the upcoming years are summarized in the
following table.
----------------------------------------------------------------------------
Future Sales Average Price (CAD)
----------------------------------------------------------------------------
GJ Mcf $/GJ $/Mcf
----------------------------------------------------------------------------
2013 27,435,000 23,856,522 3.25 3.74
2014 44,010,000 38,269,565 3.37 3.88
2015 3,600,000 3,130,435 3.60 4.14
----------------------------------------------------------------------------
Total 75,045,000 65,256,522 3.34 3.84
----------------------------------------------------------------------------
As illustrated in the following table, Peyto's hedged realized natural gas
liquids prices (1) were down 4% year over year and 10% from the previous
quarter.
----------------------------------------------------------------------------
Three Months ended
June 30 Q1
2013 2012 2013
----------------------------------------------------------------------------
Condensate ($/bbl) 92.44 94.49 96.63
Propane ($/bbl) 23.70 19.50 26.75
Butane ($/bbl) 48.12 64.05 61.40
Pentane ($/bbl) 100.37 97.95 107.13
----------------------------------------------------------------------------
Total Oil and NGLs ($/bbl) 68.08 71.27 75.72
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Liquids prices are Peyto realized prices in Canadian dollars adjusted
for fractionation and transportation.
Peyto's hedging practice with respect to propane also continued in the quarter
and as of August 13, 2013, Peyto had committed to the future sale of 236,544
bbls of propane at an average price of $35.69USD/bbl. As at August 12, 2013, the
remaining hedged volumes and prices for the upcoming years are summarized in the
following table.
----------------------------------------------------------------------------
Propane
----------------------------------------------------------------------------
Average Price
Future Sales (bbls) ($USD/bbl)
----------------------------------------------------------------------------
2013 104,544 34.26
2014 132,000 36.94
----------------------------------------------------------------------------
Total 236,544 35.76
----------------------------------------------------------------------------
Activity Update
Since exiting the second quarter of 2013, Peyto has completed an additional 18
wells, 16 that have been brought on production, which has increased production
from July's 53,500 boe/d average to approximately 60,000 boe/d currently. The
remaining wells will be tied in and producing by the end of August. In addition,
10 wells are currently drilled and waiting on completion, while ten drilling
rigs are actively working in Peyto's core Deep Basin areas drilling
approximately 14 wells per month. There is also 2,500 boe/d of productive
capability waiting on the new Brazeau processing facility, expected in Q4 2013.
On July 7, 2013, Peyto rig released its 245th horizontal well, marking the point
at which Peyto had drilled over 1.0 million meters using horizontal well
technology. Since the summer of 2009 when Peyto spud its first horizontal well
in the Deep Basin, the combination of horizontal wells with multi-stage fracture
stimulation technology has helped Peyto become one of the fastest growing E&P
companies in Canada, effectively tripling corporate production over that time.
The experience and knowledge gained from this activity makes Peyto one of the
most proficient drillers in the Deep Basin.
Outlook
Near term Alberta natural gas prices have recently come under pressure due to
high transportation tariffs and competition from North Eastern US supplies,
however, the long term importance of natural gas in North America continues to
increase. Alberta natural gas prices are currently forecast to recover to above
$3/GJ by this coming winter season.
Based on continued profitability at these levels and at the current pace of
activity, management believes that year end 2013 production will exceed the
previous 67,000 boe/d exit guidance, once again achieving capital efficiencies
of less than $18,000/boe/d.
Peyto's high level of ownership and control, combined with a lean team, allows
the company to be nimble with the ability to slow down or increase activity as
market conditions dictate, taking advantage of opportunities to maximize
shareholder returns. The low cost structure and high operating margins combined
with a strong hedge book mean Peyto is also financially well positioned to
withstand continued volatility in natural gas prices. As always, Peyto will
maintain a strong balance sheet while only pursuing capital investments if its
high return objectives can be met.
Conference Call and Webcast
A conference call will be held with the senior management of Peyto to answer
questions with respect to the 2013 second quarter on Wednesday, August 14th,
2013, at 9:00 a.m. Mountain Daylight Time (MDT), or 11:00 a.m. Eastern Daylight
Time (EDT). To participate, please call 1-416-340-8018 (Toronto area) or
1-866-223-7781 for all other participants. The conference call will also be
available on replay by calling 1-905-694-9451 (Toronto area) or 1-800-408-3053
for all other parties, using passcode 9039358. The replay will be available at
11:00 a.m. MDT, 1:00 p.m. EDT Wednesday, August 14th, 2013 until midnight EDT on
Thursday, August 21st, 2013. The conference call can also be accessed through
the internet at http://www.gowebcasting.com/4414. After this time the conference
call will be archived on the Peyto Exploration & Development website at
www.peyto.com.
Management's Discussion and Analysis
Management's Discussion and Analysis of this second quarter report is available
on the Peyto website at http://www.peyto.com/news/Q22013MDandA.pdf. A complete
copy of the second quarter report to shareholders, including the Management's
Discussion and Analysis, and Financial Statements is also available at
www.peyto.com and will be filed at SEDAR, www.sedar.com, at a later date.
Darren Gee, President and CEO
August 13, 2013
Certain information set forth in this document and Management's Discussion and
Analysis, including management's assessment of Peyto's future plans and
operations, capital expenditures and capital efficiencies, contains
forward-looking statements. By their nature, forward-looking statements are
subject to numerous risks and uncertainties, some of which are beyond these
parties' control, including the impact of general economic conditions, industry
conditions, volatility of commodity prices, currency fluctuations, imprecision
of reserve estimates, environmental risks, competition from other industry
participants, the lack of availability of qualified personnel or management,
stock market volatility and ability to access sufficient capital from internal
and external sources. 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. In addition, Peyto is providing future oriented financial
information set out in this press release for the purposes of providing clarity
with respect to Peyto's strategic direction and readers are cautioned that this
information may not be appropriate for any other purpose. Other than is required
pursuant to applicable securities law, Peyto does not undertake to update
forward looking statements at any particular time.
Peyto Exploration & Development Corp.
Condensed Balance Sheet (unaudited)
(Amount in $ thousands)
June 30 December 31
2013 2012
----------------------------------------------------------------------------
Assets
Current assets
Cash 15,511 -
Accounts receivable 61,956 85,677
Due from private placement (Note 6) - 3,459
Financial derivative instruments
(Note 8) 7,139 10,254
Prepaid expenses 13,910 4,150
----------------------------------------------------------------------------
98,516 103,540
----------------------------------------------------------------------------
Long term portion of financial
derivative instruments (Note 8) 1,732 -
Prepaid capital - 3,714
Property, plant and equipment, net
(Note 3) 2,227,869 2,096,270
----------------------------------------------------------------------------
2,229,601 2,099,984
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2,328,117 2,203,524
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Current liabilities
Accounts payable and accrued
liabilities 75,571 164,946
Income taxes payable - 1,890
Dividends payable (Note 6) 11,901 8,911
Provision for future performance
based compensation (Note 7) 8,548 2,677
----------------------------------------------------------------------------
96,020 178,424
----------------------------------------------------------------------------
Long-term debt (Note 4) 750,000 580,000
Long-term derivative financial
instruments (Note 8) - 2,532
Provision for future performance
based compensation (Note 7) 3,285 59
Decommissioning provision (Note 5) 52,540 58,201
Deferred income taxes 198,430 174,241
----------------------------------------------------------------------------
1,004,255 815,033
----------------------------------------------------------------------------
Equity
Share capital (Note 6) 1,130,069 1,124,382
Shares to be issued (Note 6) - 3,459
Retained earnings 89,932 75,247
Accumulated other comprehensive
income (loss) (Note 6) 7,841 6,979
----------------------------------------------------------------------------
1,227,842 1,210,067
----------------------------------------------------------------------------
2,328,117 2,203,524
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Peyto Exploration & Development Corp.
Condensed Income Statement (unaudited)
(Amount in $ thousands)
Three months ended Six months ended
June 30 June 30
2013 2012 2013 2012
----------------------------------------------------------------------------
Revenue
Oil and gas sales 148,466 68,879 276,889 154,100
Realized gain (loss) on
hedges (Note 8) (3,852) 17,674 927 34,949
Royalties (9,849) (6,082) (20,440) (14,917)
----------------------------------------------------------------------------
Petroleum and natural gas
sales, net 134,765 80,471 257,376 174,132
----------------------------------------------------------------------------
Expenses
Operating 11,242 6,603 20,548 13,904
Transportation 3,796 2,645 7,455 5,251
General and
administrative 1,717 1,639 2,197 2,610
Future performance based
compensation (Note 7) 6,559 1,115 9,097 3,010
Interest 8,022 4,996 14,332 10,134
Accretion of
decommissioning
provision (Note 5) 369 232 737 489
Depletion and
depreciation (Note 3) 53,287 39,101 104,912 78,774
Gain on disposition of
assets - (144) - (144)
----------------------------------------------------------------------------
84,992 56,187 159,278 114,028
----------------------------------------------------------------------------
Earnings before taxes 49,773 24,284 98,098 60,104
----------------------------------------------------------------------------
Income tax
Deferred income tax
expense 12,000 6,083 23,919 15,035
----------------------------------------------------------------------------
Earnings for the period 37,773 18,201 74,179 45,069
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share (Note
6)
Basic and diluted $0.25 $ 0.13 $ 0.50 $ 0.33
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Weighted average number
of common shares
outstanding (Note 6)
Basic and diluted 148,758,923 138,485,956 148,716,032 138,399,017
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Peyto Exploration & Development Corp.
Condensed Statement of Comprehensive Income (unaudited)
(Amount in $ thousands)
Three months ended Six months ended
June 30 June 30
2013 2012 2013 2012
----------------------------------------------------------------------------
Earnings for the period 37,773 18,201 74,179 45,069
Other comprehensive income
Change in unrealized gain on cash
flow hedges 30,204 (10,923) 2,076 16,194
Deferred tax recovery (expense) (8,514) 7,149 (287) 4,689
Realized (gain) loss on cash flow
hedges 3,852 (17,674) (927) (34,949)
----------------------------------------------------------------------------
Comprehensive income 63,315 (3,247) 75,041 31,003
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Peyto Exploration & Development Corp.
Condensed Statement of Changes in Equity (unaudited)
(Amount in $ thousands)
Six months ended June 30
2013 2012
----------------------------------------------------------------------------
Share capital, beginning of period 1,124,382 889,115
----------------------------------------------------------------------------
Common shares issued by private placement 5,742 11,952
Common shares issuance costs (net of tax) (55) (26)
----------------------------------------------------------------------------
Share capital, end of period 1,130,069 901,041
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Common shares to be issued, beginning of
period 3,459 9,740
----------------------------------------------------------------------------
Common shares issued (3,459) (9,740)
----------------------------------------------------------------------------
Common shares to be issued, end of period - -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Retained earnings, beginning of period 75,247 82,889
----------------------------------------------------------------------------
Earnings for the period 74,179 45,069
Dividends (Note 6) (59,494) (49,839)
----------------------------------------------------------------------------
Retained earnings, end of period 89,932 78,119
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated other comprehensive income,
beginning of period 6,979 33,964
----------------------------------------------------------------------------
Other comprehensive income (loss) 862 (14,066)
----------------------------------------------------------------------------
Accumulated other comprehensive income
(loss), end of period 7,841 19,898
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total equity 1,227,842 999,058
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Peyto Exploration & Development Corp.
Condensed Statement of Cash Flows (unaudited)
(Amount in $ thousands)
Three months ended Six months ended
June 30 June 30
2013 2012 2013 2012
----------------------------------------------------------------------------
Cash provided by (used in)
operating activities
Earnings 37,773 18,201 74,179 45,069
Items not requiring cash:
Deferred income tax 12,000 6,083 23,919 15,035
Depletion and depreciation 53,287 39,101 104,912 78,774
Accretion of decommissioning
provision 369 232 737 489
Change in non-cash working capital
related to operating activities (6,729) 10,934 (14,504) (5,433)
----------------------------------------------------------------------------
96,700 74,551 189,243 133,934
----------------------------------------------------------------------------
Financing activities
Issuance of common shares - - 5,742 11,952
Issuance costs - - (73) (35)
Cash dividends paid (29,752) (24,297) (56,504) (49,808)
Increase (decrease) in bank debt 110,000 25,000 170,000 (75,000)
Issuance of long term notes - - - 100,000
----------------------------------------------------------------------------
80,248 73 119,165 (12,891)
----------------------------------------------------------------------------
Investing activities
Additions to property, plant and
equipment (161,437) (74,624) (292,897) (178,267)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net increase (decrease) in cash 15,511 - 15,511 (57,224)
Cash, beginning of period - - - 57,224
----------------------------------------------------------------------------
Cash, end of period 15,511 - 15,511 -
----------------------------------------------------------------------------
The following amounts are included in cash flows from operating activities:
----------------------------------------------------------------------------
Cash interest paid 6,646 4,122 14,514 8,435
Cash taxes paid - - 1,890 -
----------------------------------------------------------------------------
Peyto Exploration & Development Corp.
Notes to Condensed Financial Statements (unaudited)
As at June 30, 2013 and 2012
(Amount in $ thousands, except as otherwise noted)
1. Nature of operations
Peyto Exploration & Development Corp. ("Peyto" or the "Company") is a Calgary
based oil and natural gas company. Peyto conducts exploration, development and
production activities in Canada. Peyto is incorporated and domiciled in the
Province of Alberta, Canada. The address of its registered office is 1500, 250 -
2nd Street SW, Calgary, Alberta, Canada, T2P 0C1.
Effective December 31, 2012, Peyto completed an amalgamation with its
wholly-owned subsidiary Open Range Energy Corp. pursuant to section 184(1) of
the Business Corporations Act (Alberta). Following the amalgamation, Peyto does
not have any subsidiaries.
These financial statements were approved and authorized for issuance by the
Audit Committee of Peyto on August 12, 2013.
2. Basis of presentation
The condensed financial statements have been prepared by management and reported
in Canadian dollars in accordance with International Accounting Standard ("IAS")
34, "Interim Financial Reporting". These condensed financial statements do not
include all of the information required for full annual financial statements and
should be read in conjunction with the Company's consolidated financial
statements as at and for the years ended December 31, 2012 and 2011.
Significant Accounting Policies
(a) Significant Accounting Judgments, Estimates and Assumptions
The timely preparation of the condensed financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingencies, if any, as at the date of the
financial statements and the reported amounts of revenue and expenses during the
period. By their nature, estimates are subject to measurement uncertainty and
changes in such estimates in future years could require a material change in the
condensed financial statements.
Except as disclosed below, all accounting policies and methods of computation
followed in the preparation of these financial statements are the same as those
disclosed in Note 2 of Peyto's consolidated financial statements as at and for
the years ended December 31, 2012 and 2011.
(b) Recent Accounting Pronouncements
Certain new standards, interpretations, amendments and improvements to existing
standards were issued by the International Accounting Standards Board (IASB) or
International Financial Reporting Interpretations Committee (IFRIC) that are
mandatory for accounting periods beginning January 1, 2013 or later periods. The
affected standards are consistent with those disclosed in Peyto's consolidated
financial statements as at and for the years ended December 31, 2012 and 2011.
Peyto adopted the following standards on January 1, 2013:
IFRS 10 - Consolidated Financial Statements; supercedes IAS 27 "Consolidation
and Separate Financial Statements" and SIC-12 "Consolidation - Special Purpose
Entities". This standard provides a single model to be applied in control
analysis for all investees including special purpose entities. This standard
became applicable on January 1, 2013. Peyto adopted the standard on January 1,
2013, with no impact on Peyto's financial position or results of operations.
IFRS 11 - Joint Arrangements; requires a venturer to classify its interest in a
joint arrangement as a joint venture or joint operation. Joint ventures will be
accounted for using the equity method of accounting, whereas joint operations
will require the venturer to recognize its share of the assets, liabilities,
revenue and expenses. This standard became applicable on January 1, 2013. Peyto
adopted the standard on January 1, 2013, with no impact on Peyto's financial
position or results of operations.
IFRS 12 - Disclosure of Interests in Other Entities; establishes disclosure
requirements for interests in other entities, such as joint arrangements,
associates, special purpose vehicles and off-balance-sheet vehicles. The
standard carries forward existing disclosure and also introduces significant
additional disclosure requirements that address the nature of, and risks
associated with, an entity's interests in other entities. This standard became
effective for Peyto on January 1, 2013. Peyto adopted the standard on January 1,
2013, with no impact on Peyto's financial position or results of operations.
IFRS 13 - Fair Value Measurement; defines fair value, sets out a single IFRS
framework for measuring fair value and requires disclosure about fair value
measurements. IFRS 13 applies to accounting standards that require or permit
fair value measurements or disclosure about fair value measurements (and
measurements, such as fair value less costs to sell, based on fair value or
disclosure about those measurements), except in specified circumstances. IFRS 13
became applicable on January 1, 2013. Peyto adopted the standard on January 1,
2013, with no impact on Peyto's financial position or results of operations.
3. Property, plant and equipment, net
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Cost
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At December 31, 2012 2,483,007
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Additions 236,511
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At June 30, 2013 2,719,518
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Accumulated depreciation
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At December 31, 2012 (386,737)
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Depletion and depreciation (104,912)
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At June 30, 2013 (491,649)
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----------------------------------------------------------------------------
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Carrying amount at December 31, 2012 2,096,270
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----------------------------------------------------------------------------
Carrying amount at June 30, 2013 2,227,869
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During the three and six month periods ended June 30, 2013, Peyto capitalized
$1.5 million and $4.1 million (2012 - $0.8 million and $2.5 million) of general
and administrative expense directly attributable to production and development
activities.
4. Long-term debt
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June 30, 2013 December 31, 2012
----------------------------------------------------------------------------
Bank credit facility 600,000 430,000
Senior unsecured notes 150,000 150,000
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Balance, end of the period 750,000 580,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------
As at June 30, 2013, the Company had a syndicated unsecured $1.0 billion
extendible revolving credit facility with a stated term date of April 26, 2015.
The bank facility is made up of a $30 million working capital sub-tranche and a
$970 million production line. The facilities are available on a revolving basis
for a two year period. Outstanding amounts on this facility will bear interest
at rates ranging from prime plus 0.8% to prime plus 2.25% determined by the
Company's debt to earnings before interest, taxes, depreciation, depletion and
amortization (EBITDA) ratios ranging from less than 1:1 to greater than 2.5:1.
On January 3, 2012, Peyto issued CDN $100 million of senior unsecured notes
pursuant to a note purchase and private shelf agreement. The notes were issued
by way of private placement and rank equally with Peyto's obligations under its
bank facility. The notes have a coupon rate of 4.39% and mature on January 3,
2019. Interest is paid semi-annually in arrears.
On September 6, 2012, Peyto issued CDN $50 million of senior unsecured notes
pursuant to a note purchase and private shelf agreement. The notes were issued
by way of private placement and rank equally with Peyto's obligations under its
bank facility. The notes have a coupon rate of 4.88% and mature on September 6,
2022. Interest is paid semi-annually in arrears.
Upon the issuance of the senior unsecured notes January 3, 2012, Peyto became
subject to the following financial covenants as defined in the credit facility
and note purchase and private shelf agreements:
-- Senior Debt to EBITDA Ratio will not exceed 3.0 to 1.0
-- Total Debt to EBITDA Ratio will not exceed 4.0 to 1.0
-- Interest Coverage Ratio will not be less than 3.0 to 1.0
-- Total Debt to Capitalization Ratio will not exceed 0.55:1.0
Peyto is in compliance with all financial covenants at June 30, 2013.
Total interest expense for the three and six month periods ended June 30, 2013
was $8.0 million and $14.3 million (2012 - $5.0 million and $10.1 million) and
the average borrowing rate for the period was 4.2% and 4.1% (2012 - 4.1% and
4.3%).
5. Decommissioning provision
Peyto makes provision for the future cost of decommissioning wells, pipelines
and facilities on a discounted basis based on the commissioning of these assets.
The decommissioning provision represents the present value of the
decommissioning costs related to the above infrastructure, which are expected to
be incurred over the economic life of the assets. The provisions have been based
on Peyto's internal estimates of the cost of decommissioning, the discount rate,
the inflation rate and the economic life of the infrastructure. Assumptions,
based on the current economic environment, have been made which management
believes are a reasonable basis upon which to estimate the future liability.
These estimates are reviewed regularly to take into account any material changes
to the assumptions. However, actual decommissioning costs will ultimately depend
upon the future market prices for the necessary decommissioning work required
which will reflect market conditions at the relevant time. Furthermore, the
timing of the decommissioning is likely to depend on when production activities
ceases to be economically viable. This in turn will depend and be directly
related to the current and future commodity prices, which are inherently
uncertain.
The following table reconciles the change in decommissioning provision:
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Balance, December 31, 2012 58,201
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New or increased provisions 4,012
Accretion of decommissioning provision 737
Change in discount rate and estimates (10,410)
----------------------------------------------------------------------------
Balance, June 30, 2013 52,540
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----------------------------------------------------------------------------
Current -
Non-current 52,540
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Peyto has estimated the net present value of its total decommissioning provision
to be $52.5 million as at June 30, 2013 ($58.2 million at December 31, 2012)
based on a total future undiscounted liability of $137.5 million ($127.9 million
at December 31, 2012). At June 30, 2013 management estimates that these payments
are expected to be made over the next 50 years with the majority of payments
being made in years 2041 to 2062. The Bank of Canada's long term bond rate of
2.89 per cent (2.36 per cent at December 31, 2012) and an inflation rate of two
per cent (two per cent at December 31, 2012) were used to calculate the present
value of the decommissioning provision.
6. Share capital
Authorized: Unlimited number of voting common shares
Issued and Outstanding
Number of Common Amount
Common Shares (no par value) Shares $
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Balance, December 31, 2011 137,960,301 889,115
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Common shares issued 4,628,750 115,024
Common shares issued for
acquisition 5,404,007 112,187
Common shares issued by private
placement 525,655 11,952
Common share issuance costs (net of
tax) - (3,896)
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Balance, December 31,2012 148,518,713 1,124,382
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Common shares issued by private
placement 240,210 5,742
Common share issuance costs (net of
tax) - (55)
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Balance, June 30, 2013 148,758,923 1,130,069
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On December 31, 2011 Peyto completed a private placement of 397,235 common
shares to employees and consultants for net proceeds of $9.7 million ($24.52 per
share). These common shares were issued on January 13, 2012.
On March 23, 2012, Peyto completed a private placement of 128,420 common shares
to employees and consultants for net proceeds of $2.2 million ($17.22 per
share).
On August 14, 2012, Peyto issued 5,404,007 common shares which were valued at
$112.2 million (net of issuance costs) ($20.76 per share) in relation to the
closing of a corporate acquisition.
On December 11, 2012, Peyto closed an offering of 4,628,750 common shares at a
price of $24.85 per common share, receiving proceeds of $110.0 million (net of
issuance costs).
On December 31, 2012, Peyto completed a private placement of 154,550 common
shares to employees and consultants for net proceeds of $3.5 million ($22.38 per
share). These common shares were issued January 7, 2013.
On March 19, 2013, Peyto completed a private placement of 85,660 common shares
to employees and consultants for net proceeds of $2.2 million ($26.65 per
share).
Per share amounts
Earnings per share or unit have been calculated based upon the weighted average
number of common shares outstanding for the three and six month periods ended
June 30, 2013 of 148,758,923 and 148,716,032 (2012 - 138,485,956 and
138,399,017). There are no dilutive instruments outstanding.
Dividends
During the three and six month periods ended June 30, 2013, Peyto declared and
paid dividends of $0.22 per common share ($0.06 per common share per month for
April and $0.08 per common share per month for May and June) and $0.40 per
common share, totaling $32.7 million and $59.5 million (2012 - $0.18 and $0.36
or $0.06 per share per month, $24.0 million and $49.9 million).
Comprehensive income
Comprehensive income consists of earnings and other comprehensive income
("OCI"). OCI comprises the change in the fair value of the effective portion of
the derivatives used as hedging items in a cash flow hedge. "Accumulated other
comprehensive income" is an equity category comprised of the cumulative amounts
of OCI.
Accumulated hedging gains
Gains and losses from cash flow hedges are accumulated until settled. These
outstanding hedging contracts are recognized in earnings on settlement with
gains and losses being recognized as a component of net revenue. Further
information on these contracts is set out in Note 8.
7. Future performance based compensation
Peyto awards performance based compensation to employees annually. The
performance based compensation is comprised of reserve and market value based
components.
Reserve based component
The reserves value based component is 4% of the incremental increase in value,
if any, as adjusted to reflect changes in debt, equity, dividends, general and
administrative costs and interest, of proved producing reserves calculated using
a constant price at December 31 of the current year and a discount rate of 8%.
Market based component
Under the market based component, rights with a three year vesting period are
allocated to employees. The number of rights outstanding at any time is not to
exceed 6% of the total number of common shares outstanding. At December 31 of
each year, all vested rights are automatically cancelled and, if applicable,
paid out in cash. Compensation is calculated as the number of vested rights
multiplied by the total of the market appreciation (over the price at the date
of grant) and associated dividends of a common share for that period.
The fair values were calculated using a Black-Scholes valuation model. The
principal inputs to the option valuation model were:
June 30, 2013 June 30, 2012
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Share price $22.58 - $30.40 $18.83 - $24.75
Exercise price $19.30 - $22.68 $12.06 - $24.55
Expected volatility 0% - 26% 0% - 36%
Option life 0.50 years 0.50 years
Dividend yield 0% 0%
Risk-free interest rate 1.25% 1.04%
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8. Financial instruments
Financial instrument classification and measurement
Financial instruments of the Company carried on the condensed balance sheet are
carried at amortized cost with the exception of cash and financial derivative
instruments, specifically fixed price contracts, which are carried at fair
value. There are no significant differences between the carrying amount of
financial instruments and their estimated fair values as at June 30, 2013.
The Company's areas of financial risk management and risks related to financial
instruments remained unchanged from December 31, 2012.
The fair value of the Company's cash and financial derivative instruments are
quoted in active markets. The Company classifies the fair value of these
transactions according to the following hierarchy.
-- Level 1 - quoted prices in active markets for identical financial
instruments.
-- Level 2 - quoted prices for similar instruments in active markets;
quoted prices for identical or similar instruments in markets that are
not active; and model-derived valuations in which all significant inputs
and value drivers are observable in active markets.
-- Level 3 - valuations derived from valuation techniques in which one or
more significant inputs or value drivers are unobservable.
The Company's cash and financial derivative instruments have been assessed on
the fair value hierarchy described above and classified as Level 1.
Fair values of financial assets and liabilities
The Company's financial instruments include cash, accounts receivable, financial
derivative instruments, due from private placement, current liabilities,
provision for future performance based compensation and long term debt. At June
30, 2013, cash and financial derivative instruments are carried at fair value.
Accounts receivable, due from private placement, current liabilities and
provision for future performance based compensation approximate their fair value
due to their short term nature. The carrying value of the long term debt
approximates its fair value due to the floating rate of interest charged under
the credit facility.
Commodity price risk management
Peyto uses derivative instruments to reduce its exposure to fluctuations in
commodity prices. Peyto considers all of these transactions to be effective
economic hedges for accounting purposes.
Following is a summary of all risk management contracts in place as at June 30,
2013:
----------------------------------------------------------------------------
Propane Monthly Price
Period Hedged Type Volume (USD)
----------------------------------------------------------------------------
April 1, 2013 to December 31, 2013 Fixed Price 4,000 bbl $ 30.66/bbl
April 1, 2013 to December 31, 2013 Fixed Price 4,000 bbl $ 32.34/bbl
April 1, 2013 to December 31, 2013 Fixed Price 4,000 bbl $ 34.885/bbl
April 1, 2013 to December 31, 2013 Fixed Price 4,000 bbl $ 35.39/bbl
April 1, 2013 to December 31, 2013 Fixed Price 4,000 bbl $ 34.44/bbl
January 1, 2014 to March 31, 2014 Fixed Price 4,000 bbl $ 37.80/bbl
January 1, 2014 to December 31, 2014 Fixed Price 4,000 bbl $ 35.70/bbl
January 1, 2014 to December 31, 2014 Fixed Price 4,000 bbl $ 35.485/bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural Gas Price
Period Hedged TypeDaily Volume (CAD)
----------------------------------------------------------------------------
April 1, 2012 to October 31, 2013 Fixed Price 5,000 GJ $ 4.00/GJ
April 1, 2012 to October 31, 2013 Fixed Price 5,000 GJ $ 4.00/GJ
April 1, 2012 to October 31, 2013 Fixed Price 5,000 GJ $ 4.00/GJ
April 1, 2012 to October 31, 2013 Fixed Price 5,000 GJ $ 4.00/GJ
April 1, 2012 to October 31, 2013 Fixed Price 5,000 GJ $ 2.52/GJ
April 1, 2012 to March 31, 2014 Fixed Price 5,000 GJ $ 3.00/GJ
May 1, 2012 to October 31, 2013 Fixed Price 5,000 GJ $ 2.30/GJ
August 1, 2012 to March 31, 2014 Fixed Price 5,000 GJ $ 3.00/GJ
August 1, 2012 to October 31, 2014 Fixed Price 5,000 GJ $ 3.10/GJ
November 1, 2012 to October 31, 2013 Fixed Price 5,000 GJ $ 2.60/GJ
November 1, 2012 to October 31, 2013 Fixed Price 5,000 GJ $ 3.005/GJ
November 1, 2012 to October 31, 2013 Fixed Price 5,000 GJ $ 3.00/GJ
November 1, 2012 to March 31, 2014 Fixed Price 5,000 GJ $ 2.81/GJ
November 1, 2012 to March 31, 2014 Fixed Price 5,000 GJ $ 3.00/GJ
November 1, 2012 to March 31, 2014 Fixed Price 5,000 GJ $ 3.05/GJ
November 1, 2012 to March 31, 2014 Fixed Price 5,000 GJ $ 3.02/GJ
November 1, 2012 to October 31, 2014 Fixed Price 5,000 GJ $ 3.0575/GJ
January 1, 2013 to October 31, 2013 Fixed Price 5,000 GJ $ 3.42/GJ
January 1, 2013 to December 31, 2013 Fixed Price 5,000 GJ $ 3.105/GJ
January 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.00/GJ
January 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.02/GJ
April 1, 2013 to October 31, 2013 Fixed Price 5,000 GJ $ 3.205/GJ
April 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.105/GJ
April 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.53/GJ
April 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.45/GJ
April 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.50/GJ
April 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.08/GJ
April 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.17GJ
April 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.10/GJ
April 1, 2013 to October 31, 2014 Fixed Price 5,000 GJ $ 3.25/GJ
April 1, 2013 to October 31, 2014 Fixed Price 5,000 GJ $ 3.30/GJ
April 1, 2013 to October 31, 2014 Fixed Price 5,000 GJ $ 3.33/GJ
April 1, 2013 to October 31, 2014 Fixed Price 7,500 GJ $ 3.20/GJ
April 1, 2013 to October 31, 2014 Fixed Price 5,000 GJ $ 3.22/GJ
April 1, 2013 to October 31, 2014 Fixed Price 5,000 GJ $ 3.20/GJ
April 1, 2013 to October 31, 2014 Fixed Price 5,000 GJ $ 3.1925/GJ
April 1, 2013 to October 31, 2014 Fixed Price 5,000 GJ $ 3.25/GJ
April 1, 2013 to October 31, 2014 Fixed Price 5,000 GJ $ 3.30/GJ
July 1, 2013 to October 31, 2013 Fixed Price 5,000 GJ $ 3.34/GJ
August 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.55/GJ
November 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.71/GJ
November 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.76/GJ
November 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.86/GJ
November 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 4.00/GJ
November 1, 2013 to March 31, 2014 Fixed Price 5,000 GJ $ 3.52/GJ
November 1, 2013 to October 31, 2014 Fixed Price 5,000 GJ $ 3.50/GJ
November 1, 2013 to October 31, 2014 Fixed Price 5,000 GJ $ 3.53/GJ
November 1, 2013 to March 31, 2015 Fixed Price 5,000 GJ $ 3.6025/GJ
April 1, 2014 to October 31, 2014 Fixed Price 5,000 GJ $ 3.505/GJ
April 1, 2014 to October 31, 2014 Fixed Price 5,000 GJ $ 3.555/GJ
April 1, 2014 to October 31, 2014 Fixed Price 5,000 GJ $ 3.48/GJ
April 1, 2014 to March 31, 2015 Fixed Price 5,000 GJ $ 3.82/GJ
April 1, 2014 to March 31, 2015 Fixed Price 5,000 GJ $ 3.44/GJ
April 1, 2014 to March 31, 2015 Fixed Price 5,000 GJ $ 3.52/GJ
November 1, 2014 to March 31, 2015 Fixed Price 5,000 GJ $ 3.81/GJ
November 1, 2014 to March 31, 2015 Fixed Price 5,000 GJ $ 3.90/GJ
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As at June 30, 2013, Peyto had committed to the future sale of 228,000 barrels
of propane at an average price of $35.05 per barrel and 78,325,000 gigajoules
(GJ) of natural gas at an average price of $3.31 per GJ. Had these contracts
been closed on June 30, 2013, Peyto would have realized a gain in the amount of
$8.9 million.
Subsequent to June 30, 2013 Peyto entered into the following contracts:
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Propane Monthly Price
Period Hedged Type Volume (USD)
----------------------------------------------------------------------------
October 1, 2013 to December 31, 2013 Fixed Price 4,000 bbl $ 39.774/bbl
January 1, 2014 to March 31, 2014 Fixed Price 4,000 bbl $ 36.54/bbl
January 1, 2014 to March 31, 2014 Fixed Price 4,000 bbl $ 39.354/bbl
----------------------------------------------------------------------------
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Natural Gas Price
Period Hedged TypeDaily Volume (CAD)
----------------------------------------------------------------------------
April 1, 2014 to March 31, 2015 Fixed Price 5,000 GJ $ 3.4725/GJ
April 1, 2014 to March 31, 2015 Fixed Price 5,000 GJ $ 3.525/GJ
April 1, 2014 to March 31, 2015 Fixed Price 5,000 GJ $ 3.60/GJ
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9. Commitments
Following is a summary of Peyto's contractual obligations and commitments as at
June 30, 2013.
2013 2014 2015 2016 2017 Thereafter
----------------------------------------------------------------------------
Note repayment(1) - - - - - 150,000
Interest payments(2) 3,415 6,830 6,830 6,830 6,830 18,785
Transportation
commitments 6,993 13,338 10,059 5,177 1,685 1,235
Operating leases 1,126 2,392 1,228 712 360 -
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Total 11,534 22,560 18,117 12,719 8,875 170,020
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(1) Long-term debt repayment on senior unsecured notes
(2) Fixed interest payments on senior unsecured notes
Officers
Darren Gee Tim Louie
President and Chief Executive Officer Vice President, Land
Scott Robinson David Thomas
Executive Vice President and Chief Vice President, Exploration
Operating Officer
Kathy Turgeon Jean-Paul Lachance
Vice President, Finance and Chief Vice President, Exploitation
Financial Officer
Stephen Chetner
Corporate Secretary
Directors
Don Gray, Chairman
Stephen Chetner
Brian Davis
Michael MacBean, Lead Independent Director
Darren Gee
Gregory Fletcher
Scott Robinson
Auditors
Deloitte LLP
Solicitors
Burnet, Duckworth & Palmer LLP
Bankers
Bank of Montreal
Union Bank, Canada Branch
Royal Bank of Canada
Canadian Imperial Bank of Commerce
The Toronto-Dominion Bank
Bank of Nova Scotia
HSBC Bank Canada
Alberta Treasury Branches
Canadian Western Bank
Transfer Agent
Valiant Trust Company
Head Office
1500, 250 - 2nd Street SW
Calgary, AB
T2P 0C1
Phone: 403.261.6081
Fax: 403.451.4100
Web: www.peyto.com
Stock Listing Symbol: PEY.TO
Toronto Stock Exchange
FOR FURTHER INFORMATION PLEASE CONTACT:
Peyto Exploration & Development Corp.
1500, 250 - 2nd Street SW
Calgary, AB T2P 0C1
403.261.6081
403.451.4100 (FAX)
www.peyto.com
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