Peyto Reports Q1 2014 Results and Another Dividend Increase
CALGARY, ALBERTA--(Marketwired - May 14, 2014) - Peyto
Exploration & Development Corp. (TSX:PEY) ("Peyto" or the
"Company") is pleased to present its operating and financial
results for the first quarter of the 2014 fiscal year. Production
per share growth of 28%, combined with earnings per share growth of
64%, support a 25% dividend increase. First quarter 2014
highlights, including a 77% operating margin(1) and a 30% profit
margin(2), were as follows:
- Production per share up 28%. First quarter 2014 production
increased 30% (28% per share) from 332 MMcfe/d (55,372 boe/d) in Q1
2013 to 433 MMcfe/d (72,209 boe/d) in Q1 2014.
- Funds from operations per share up 54%. Generated a Company
record $161 million in Funds from Operations ("FFO") in Q1 2014 up
56% (54% per share) from $103 million in Q1 2013 due to increased
production volumes and improved commodity prices.
- Cash costs of $1.25/Mcfe. Total cash costs, including
royalties, operating costs, transportation, G&A and interest,
were up from $1.02/Mcfe in Q1 2013 but still remain industry
leading. This increase was primarily due to higher royalties,
driven by higher commodity prices, and higher operating costs, due
to front-end loaded chemical and maintenance costs. Higher
revenues, combined with these cash costs, resulted in a cash
netback of $4.12/Mcfe ($24.74/boe) or a 77% operating margin.
- Capital investment of $179 million. A capital program of $179
million was executed in the quarter resulting in production
additions of 11,500 boe/d at quarter end. The annualized cost
(trailing twelve months) to build this new production was
$17,140/boe/d. A total of 31 gross wells were drilled during the
first quarter.
- Earnings of $0.41/share, dividends of $0.24/share. Earnings of
$62 million were generated in the quarter while dividends of $37
million were paid to shareholders, representing a before tax payout
ratio of 23% of FFO.
- Dividend increase to $0.10/share. The Board of Directors has
approved a monthly dividend increase of $0.02/share, starting in
May 2014, to be paid on June 13, 2014 to shareholders of record as
of May 31, 2014.
First Quarter 2014 in Review
The first quarter of 2014 was another active period for the
Company with 9 drilling rigs developing the many Deep Basin
resource plays within Peyto's portfolio. Natural gas prices during
the quarter were extremely volatile as cold winter weather reduced
storage volumes to multi-year lows causing gas prices to increase
dramatically. Peyto increased its pace of activity and accelerated
2014 spending plans in response to the increase in natural gas
prices with an urgency to deploy more capital earlier in the year,
before potential cost inflation could occur. Drilling through
spring break-up became part of that plan, as did stockpiling
chemicals and accelerating facility maintenance during unscheduled
transportation outages. These efforts, combined with increased
government and regulatory fees, resulted in higher per unit
operating costs for the first quarter. At just over $3/boe, Peyto's
operating costs, inclusive of transportation, continue to lead the
industry by a wide margin. Average first quarter production of
72,209 boe/d was up 7% sequentially from the fourth quarter 2013,
while average realized prices were up 25%. These contributed to a
record $161 million in FFO, despite a $30 million hedging loss.
Progress on facility expansions continued in the quarter in
anticipation of ongoing production growth later in 2014. The strong
financial and operating performance delivered in the quarter
resulted in an annualized 20% Return on Equity (ROE) and 15% Return
on Capital Employed (ROCE).
- Operating Margin is defined as funds from operations
divided by revenue before royalties but including realized hedging
gains/losses.
- Profit Margin is defined as net earnings for the quarter
divided by revenue before royalties but including realized hedging
gains/losses. Natural gas volumes recorded in thousand
cubic feet (mcf) are converted to barrels of oil equivalent (boe)
using the ratio of six (6) thousand cubic feet to one (1) barrel of
oil (bbl). Natural gas liquids and oil volumes in barrel of oil
(bbl) are converted to thousand cubic feet equivalent (Mcfe) using
a ratio of one (1) barrel of oil to six (6) thousand cubic feet.
This could be misleading, particularly if used in isolation as it
is based on an energy equivalency conversion method primarily
applied at the burner tip and does not represent a value
equivalency at the wellhead.
|
3 Months Ended Mar. 31 |
% |
|
2014 |
2013 |
Change |
| Operations |
|
|
|
| Production |
|
|
|
|
Natural gas (mcf/d) |
389,002 |
297,191 |
31% |
|
Oil
& NGLs (bbl/d) |
7,375 |
5,840 |
26% |
|
Thousand cubic feet equivalent (mcfe/d @ 1:6) |
433,252 |
332,230 |
30% |
|
Barrels of oil equivalent (boe/d @ 6:1) |
72,209 |
55,372 |
30% |
| Production per million common shares (boe/d)* |
476 |
372 |
28% |
|
|
|
|
| Product prices |
|
|
|
|
Natural gas ($/mcf) |
4.45 |
3.49 |
28% |
|
Oil
& NGLs ($/bbl) |
80.49 |
75.88 |
6% |
|
Operating expenses ($/mcfe) |
0.39 |
0.31 |
26% |
|
Transportation ($/mcfe) |
0.13 |
0.12 |
8% |
|
Field
netback ($/mcfe) |
4.39 |
3.67 |
20% |
|
General & administrative expenses ($/mcfe) |
0.04 |
0.02 |
100% |
|
Interest expense ($/mcfe) |
0.23 |
0.21 |
10% |
| Financial ($000, except per share*) |
|
|
|
| Revenue |
209,318 |
133,203 |
57% |
| Royalties |
17,861 |
10,591 |
69% |
| Funds from operations |
160,785 |
102,856 |
56% |
| Funds from operations per share |
1.06 |
0.69 |
54% |
| Total dividends |
36,505 |
26,766 |
36% |
| Total dividends per share |
0.24 |
0.18 |
33% |
|
Payout ratio |
23 |
26 |
(12)% |
| Earnings |
62,129 |
36,405 |
71% |
| Earnings per diluted share |
0.41 |
0.25 |
64% |
| Capital expenditures |
179,378 |
169,099 |
6% |
| Weighted average common shares outstanding |
151,826,431 |
148,672,664 |
2% |
| As at March 31 |
|
|
|
| End of period shares outstanding |
153,690,808 |
148,758,923 |
3% |
| Net debt |
838,495 |
749,546 |
12% |
| Shareholders' equity |
1,344,704 |
1,197,254 |
12% |
| Total assets |
2,686,661 |
2,281,287 |
18% |
| *all per share amounts using weighted average
common shares outstanding |
|
|
|
|
|
|
|
|
|
Three Months ended Mar. 31 |
|
($000) |
2014 |
2013 |
| Cash
flows from operating activities |
146,452 |
92,543 |
|
Change in non-cash working capital |
7,964 |
8,784 |
|
Change in provision for performance based compensation |
6,369 |
1,529 |
|
Funds from operations |
160,785 |
102,856 |
|
Funds from operations per share* |
1.06 |
0.69 |
(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 Canadian generally accepted accounting principles
("GAAP") and does not have a standardized meaning prescribed by
GAAP. 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 GAAP. Funds from operations cannot be
assured and future distributions may vary.
Exploration & Development
Peyto's first quarter 2014 activity continued to be diversified
across the many stacked resource plays in the Alberta Deep Basin,
with all zones yielding liquids rich, sweet natural gas. A total of
31 wells were drilled across the land base, targeting the many
prospective zones, as shown in the following table:
|
|
Field |
|
|
Zone |
Sundance |
Nosehill |
Wildhay |
Ansell |
Berland |
Kisku/ Kakwa |
Brazeau |
Total Wells Drilled |
|
Cardium |
1 |
1 |
1 |
1 |
|
|
|
4 |
|
Notikewin |
|
|
3 |
|
|
|
|
3 |
|
Falher |
2 |
4 |
|
|
|
|
1 |
7 |
|
Wilrich |
2 |
1 |
1 |
6 |
1 |
|
|
11 |
|
Bluesky |
2 |
3 |
|
1 |
|
|
|
6 |
|
Total |
7 |
9 |
5 |
8 |
1 |
|
1 |
31 |
The majority of the activity in the quarter focused on the
deeper Falher, Wilrich and Bluesky formations. These formations are
yielding greater economic returns due to a combination of higher
natural gas prices, greater deep gas drilling royalty incentives
combined with higher productivity and reserve recoveries.
Both the average depth and lateral length of Peyto's horizontal
wells continued to increase in Q1 2014, as the Company attempts to
develop more resource with each wellbore. At the same time, the
drilling cost per meter and time required to drill, complete, and
bring a new well on production continues to fall as Peyto's
infrastructure (roads, wellsites, pipelines, etc.) expands and
drilling practices are refined. The following table illustrates the
ongoing efficiency gains which should contribute to lower
development costs and greater returns:
|
|
2011 |
2012 |
2013 |
2014 Q1 |
|
Gross Spuds |
|
70 |
|
86 |
|
99 |
|
31 |
|
Measured Depth (m) |
|
3,903 |
|
4,017 |
|
4,179 |
|
4,236 |
|
HZ Length (m) |
|
1,303 |
|
1,358 |
|
1,409 |
|
1,468 |
|
|
|
|
|
|
|
|
|
|
|
Average Drilling ($MM) |
$ |
2.823 |
$ |
2.789 |
$ |
2.720 |
$ |
2,767 |
|
$ per MD meter |
$ |
723 |
$ |
694 |
$ |
651 |
$ |
653 |
|
|
|
|
|
|
|
|
|
|
|
Spud-Onstream (days) |
|
59 |
|
50 |
|
59 |
|
41 |
Capital Expenditures
During the first quarter of 2014, Peyto spent $80.2 million to
drill 31 gross (28.4 net) horizontal wells and $36.1 million
completing 22 gross (21.5 net) wells. Wellsite equipment and
tie-ins accounted for $15.7 million, while a total of $40.4 million
was invested in pipelines and facilities. A 27 km, 8" pipeline was
installed which connected a new growth area called Pedley to
Peyto's Wildhay gas plant. This new pipeline corridor provides the
necessary infrastructure for future wells and the ultimate
expansion of the Wildhay gas plant later in the year. Additional
compression was installed at Swanson and Oldman North gas plants,
as well as two compressors and a refrigeration unit at the Brazeau
River gas plant. New lands in Brazeau and Sundance were acquired
for $2.9 million, or $246/acre, while new 3D seismic was acquired
in Brazeau, Ansell and Sundance accounted for $3.9 million.
By the end of the quarter, the 22 gross (21.6 net) wells that
were brought onstream were contributing 11,500 boe/d to the quarter
end exit rate of 72,000 boe/d.
Financial Results
Alberta (AECO) daily natural gas prices averaged $5.36/GJ in Q1
2014, while AECO monthly prices averaged $4.52/GJ. Typically, the
monthly price exceeds the daily price but this was not the case in
the first quarter. As Peyto had committed 88% of its production to
the monthly price, Peyto realized a volume weighted average natural
gas price of $4.57/GJ or $5.23/mcf, prior to a $0.78/mcf hedging
loss.
Peyto realized a blended oil and natural gas liquids price of
$84.64/bbl in Q1 2014, prior to a $4.15/bbl hedging loss, for its
blend of condensate, pentane, butane and propane, which represented
85% of the $99.81/bbl average Edmonton light oil price.
Combining realized natural gas and liquids prices, Peyto's
unhedged revenues totaled $6.14/mcfe ($5.37/mcfe including hedging
losses), or 134% of the dry gas price, illustrating the benefit of
high heat content, liquids rich natural gas production.
Royalties of $0.46/mcfe, operating costs of $0.39/mcfe,
transportation costs of $0.13/mcfe, G&A of $0.04/mcfe and
interest costs of $0.23/mcfe, combined for total cash costs of
$1.25/mcfe ($7.47/boe). These industry leading total cash costs
resulted in a cash netback of $4.12/mcfe or a 77% operating
margin.
Depletion, depreciation and amortization charges of $1.77/mcfe,
along with a provision for future tax and market based bonus
payments reduced the cash netback to earnings of $1.59/mcfe, or a
30% profit margin, which funded dividends of $0.94/mcfe.
Subsequent to the end of the first quarter, Peyto's $1.0 billion
covenant based unsecured credit facility was renewed and extended
for an additional two years. This new revolver has more attractive
pricing and the same covenants as the previous revolver (see the
Management's Discussion & Analysis for a description of the
covenants). Including the $270 million of senior unsecured notes,
Peyto's total borrowing capacity is $1.27 billion, leaving over
$430 million of available capacity as at March 31, 2014.
Marketing
Significantly colder than normal winter weather across much of
North America during the first quarter caused natural gas storage
inventories to be drawn down to multi-year lows. This led to higher
natural gas prices, especially in Alberta where AECO daily natural
gas prices fluctuated from lows of $3.66/GJ to highs of $24.82/GJ.
The average daily price over the 90 day period of $5.36/GJ was 19%
higher than the average monthly price at $4.52/GJ.
For the quarter, approximately 57% of Peyto's natural gas
production received a fixed price of $3.38/GJ from hedges that were
put in place over the previous 24 months, while the balance
received the blended daily and monthly price of $4.57/GJ, resulting
in an after-hedge price of $3.89/GJ or $4.45/mcf.
Peyto's practice of layering in future sales in the form of
fixed price swaps, and thus smoothing out the volatility in gas
prices, continued throughout the quarter. As at March 31, 2014
Peyto had committed to the future sale of 100,285,000 GJ of natural
gas at an average price of $3.58/GJ or $4.12/mcf based on Peyto's
historical heat content. The following table summarizes the
remaining hedged volumes and prices for the upcoming years as of
May 14, 2014.
|
|
Future Sales |
Average Price (CAD) |
|
|
GJ |
Mcf |
$/GJ |
$/Mcf |
|
2014 |
65,095,000 |
56,604,348 |
3.58 |
4.12 |
|
2015 |
34,480,000 |
29,982,609 |
3.73 |
4.29 |
|
2016 |
1,820,000 |
1,582,609 |
3.97 |
4.57 |
|
Total |
101,395,000 |
88,169,566 |
3.64 |
4.19 |
*prices and volumes in mcf use Peyto's historic heat content
premium of 1.15.
As illustrated in the following table, Peyto's realized natural
gas liquids prices (1) were up 6% year over year with all but
Butane receiving greater prices.
|
|
Three Months ended March 31 |
|
|
2014 |
2013 |
|
Condensate ($/bbl) |
100.68 |
92.18 |
|
Propane ($/bbl) (includes hedging) |
36.65 |
25.52 |
|
Butane ($/bbl) |
55.98 |
58.57 |
|
Pentane ($/bbl) |
105.37 |
102.19 |
|
Total oil and natural gas liquids ($/bbl) |
80.49 |
75.88 |
|
Edmonton par crude postings ($/bbl) |
99.81 |
86.28 |
(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 at March 31, 2014, Peyto had committed to the
future sale of 204,000 bbls of propane at an average price of
$45.82 CAD/bbl or $41.45USD/bbl.
Activity Update
Peyto has successfully maintained a high level of activity
through April and into the beginning of May while most of the
industry has shut down for spring break-up. Activity will continue
provided that weather and surface access conditions remain
acceptable. Peyto currently has 7 of its 9 rigs drilling and 3
completion spreads running. Since the end of the first quarter, an
additional 11 gross (9.7 net) wells have been, or are in the
process of being drilled and 12 more wells (11.2 net) have been
completed and brought on production. New wells for 2014 are
contributing 15,000 boe/d to the current total production of 73,000
boe/d.
Most recently, Peyto has drilled and completed the longest
horizontal well so far in the Company's history. This Sundance
horizontal Wilrich well was drilled with a 2,888 m horizontal
lateral and completed with a 21 stage slickwater fracture
stimulation. The Company expects that longer horizontal laterals
will not be applicable to all zones, nor in all areas, and while it
is still too early to determine with certainty, Peyto expects this
well will achieve above average rates of return.
Facility and pipeline expansion work continues to progress in
anticipation of production growth in the second half of the year. A
twinning of the Wildhay sales pipeline is in the final stages of
completion, as are fabrication of a second refrigeration package
and compressor for the Oldman North plant expansion which is
scheduled for a September startup.
Recent investment success has prompted renewed focus on the
Wilrich and Falher formations in Ansell, the Bluesky play in North
Sundance, the Falher and Notikewin in Central Sundance, and the
Wilrich in Brazeau River.
Dividend Increase
In keeping with Peyto's total return model, profitable growth in
the Company's assets should ultimately yield growth in sustainable
dividends for shareholders. Over the last year, production per
share and Proved Developed Producing reserves per share have grown
28% and 12%, respectively, while earnings per share have increased
64%. Based on this profitable growth, and irrespective of the
recent strength in natural gas prices, the Board of Directors of
Peyto has approved a $0.02/share increase to the monthly dividend
starting in May 2014. This is the second dividend increase since
Peyto converted to a dividend-paying, growth corporation at the end
of 2010.
Outlook
Commodity prices for the balance of 2014 continue to look
robust, and while higher commodity prices will drive higher funds
from operations, Peyto will remain vigilant with respect to service
cost inflation. Peyto is executing more of its 2014 capital program
in the first half of the year in an attempt to mitigate this
potential cost inflation and fully expects to meet its rate of
return objectives. The Company remains committed to maximizing the
returns on shareholder's capital by continuing to be one of the
lowest cost, most efficient and most profitable energy companies in
the industry.
Conference Call and Webcast
A conference call will be held with the senior management of
Peyto to answer questions with respect to the 2014 first quarter
financial results on Thursday, May 15th, 2014, at 9:00 a.m.
Mountain Daylight Time (MDT), or 11:00 a.m. Eastern Daylight Time
(EDT). To participate, please call 1-416-340-9432 (Toronto area) or
1-800-769-8320 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 9633376.
The replay will be available at 11:00 a.m. MDT, 1:00 p.m. EDT
Thursday, May 15th, 2014 until midnight EDT on Thursday, May 22nd,
2014. The conference call can also be accessed through the internet
at http://www.gowebcasting.com/5336. After this time the conference
call will be archived on the Peyto Exploration & Development
website at www.peyto.com.
Shareholders are invited to attend Peyto's AGM at 3:00 p.m. on
Tuesday, May 27, 2014 at Livingston Place Conference Centre, +15
level, 222-3rd Avenue SW, Calgary, Alberta.
Management's Discussion and Analysis
Management's Discussion and Analysis of this first quarter
report is available on the Peyto website at
http://www.peyto.com/news/Q12014MDandA.pdf. A complete copy of the
first 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
May 14, 2014
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) |
|
|
|
|
March 31 2014 |
|
December 31 2013 |
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Accounts receivable |
108,164 |
|
83,714 |
|
| Due
from private placement (Note 6) |
- |
|
6,245 |
|
|
Prepaid expenses |
11,586 |
|
5,666 |
|
|
|
119,750 |
|
95,625 |
|
|
|
|
|
|
|
Property, plant and equipment, net (Note 3) |
2,566,911 |
|
2,459,531 |
|
|
|
2,566,911 |
|
2,459,531 |
|
|
|
2,686,661 |
|
2,555,156 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable and accrued liabilities |
185,950 |
|
155,265 |
|
|
Dividends payable (Note 6) |
12,295 |
|
11,901 |
|
|
Derivative financial instruments (Note 8) |
64,221 |
|
26,606 |
|
|
Provision for future performance based compensation (Note
7) |
11,470 |
|
5,100 |
|
|
|
273,936 |
|
198,872 |
|
|
|
|
|
|
|
Long-term debt (Note 4) |
760,000 |
|
875,000 |
|
|
Long-term derivative financial instruments (Note 8) |
17,735 |
|
5,180 |
|
|
Provision for future performance based compensation (Note
7) |
5,426 |
|
3,200 |
|
|
Decommissioning provision (Note 5) |
67,330 |
|
61,184 |
|
|
Deferred income taxes |
217,530 |
|
211,082 |
|
|
|
1,068,021 |
|
1,155,646 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
| Share
capital (Note 6) |
1,292,384 |
|
1,130,069 |
|
|
Shares to be issued (Note 6) |
- |
|
6,245 |
|
|
Retained earnings |
112,599 |
|
86,975 |
|
|
Accumulated other comprehensive loss (Note 6) |
(60,279 |
) |
(22,651 |
) |
|
|
1,344,704 |
|
1,200,638 |
|
|
|
2,686,661 |
|
2,555,156 |
|
See accompanying notes to the financial statements.
Approved by the Board of Directors
Michael MacBean, Director
Darren Gee, Director
| Peyto Exploration & Development Corp. |
|
| Condensed Income Statement (unaudited) |
|
| (Amount in $
thousands) |
|
|
|
|
|
Three months ended March 31 |
|
|
|
2014 |
|
2013 |
|
|
Revenue |
|
|
|
|
| Oil
and gas sales |
|
239,421 |
|
|
128,424 |
|
|
Realized (loss) gain on hedges (Note 8) |
|
(30,103 |
) |
|
4,779 |
|
|
Royalties |
|
(17,861 |
) |
|
(10,591 |
) |
|
Petroleum and natural gas sales, net |
|
191,457 |
|
|
122,612 |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
Operating |
|
15,230 |
|
|
9,306 |
|
|
Transportation |
|
5,145 |
|
|
3,659 |
|
|
General and administrative |
|
1,556 |
|
|
481 |
|
|
Future performance based compensation (Note 7) |
|
8,596 |
|
|
2,538 |
|
|
Interest |
|
8,741 |
|
|
6,310 |
|
|
Accretion of decommissioning provision (Note 5) |
|
498 |
|
|
368 |
|
|
Depletion and depreciation (Note 3) |
|
68,851 |
|
|
51,625 |
|
|
|
|
108,617 |
|
|
74,287 |
|
|
Earnings before taxes |
|
82,840 |
|
|
48,325 |
|
|
|
|
|
|
|
|
|
Income tax |
|
|
|
|
|
|
|
Deferred income tax expense |
|
20,711 |
|
|
11,920 |
|
|
Earnings for the period |
|
62,129 |
|
|
36,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (Note 6) |
|
|
|
|
|
|
|
Basic and diluted |
$ |
0.41 |
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding (Note
6) |
|
|
|
|
|
|
|
Basic and diluted |
|
151,826,431 |
|
|
148,672,664 |
|
|
|
|
|
| Peyto Exploration & Development Corp. |
|
| Condensed Statement of Comprehensive Income
(unaudited) |
|
| (Amount in $ thousands) |
|
|
|
|
|
Three months ended March 31 |
|
|
|
2014 |
|
2013 |
|
|
Earnings for the period |
62,129 |
|
36,405 |
|
| Other
comprehensive income |
|
|
|
|
|
Change in unrealized loss on cash flow hedges |
(80,273 |
) |
(28,128 |
) |
|
Deferred tax expense |
12,543 |
|
8,227 |
|
|
Realized (gain) loss on cash flow hedges |
30,103 |
|
(4,779 |
) |
|
Comprehensive income |
24,502 |
|
11,725 |
|
| Peyto Exploration & Development Corp. |
|
| Condensed Statement of Changes in Equity
(unaudited) |
|
| (Amount in $ thousands) |
|
|
|
|
|
Three months ended March 31 |
|
|
|
2014 |
|
2013 |
|
|
Share capital, beginning of period |
1,130,069 |
|
1,124,382 |
|
|
Common shares issued by private placement |
6,997 |
|
5,742 |
|
|
Equity offering |
160,480 |
|
- |
|
|
Common shares issuance costs (net of tax) |
(5,162 |
) |
(55 |
) |
|
Share capital, end of period |
1,292,384 |
|
1,130,069 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares to be issued, beginning of period |
6,245 |
|
3,459 |
|
|
Common shares issued |
(6,245 |
) |
(3,459 |
) |
|
Common shares to be issued, end of period |
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings, beginning of period |
86,975 |
|
75,247 |
|
|
Earnings for the period |
62,129 |
|
36,405 |
|
|
Dividends (Note 6) |
(36,505 |
) |
(26,766 |
) |
|
Retained earnings, end of period |
112,599 |
|
84,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive (loss) income, beginning of
period |
(22,651 |
) |
6,979 |
|
|
Other comprehensive loss |
(37,628 |
) |
(24,680 |
) |
|
Accumulated other comprehensive loss, end of period |
(60,279 |
) |
(17,701 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
1,344,704 |
|
1,197,254 |
|
| Peyto Exploration & Development Corp. |
|
| Condensed Statement of Cash Flows
(unaudited) |
|
| (Amount in $ thousands) |
|
|
|
| The following amounts are included in cash flows from
operating activities: |
|
|
|
|
Three months ended March 31 |
|
|
2014 |
|
2013 |
|
| Cash provided by (used in) operating activities |
|
|
|
|
| Earnings |
62,129 |
|
36,405 |
|
| Items not requiring cash: |
|
|
|
|
|
Deferred income tax |
20,711 |
|
11,920 |
|
|
Depletion and depreciation |
68,851 |
|
51,625 |
|
|
Accretion of decommissioning provision |
498 |
|
368 |
|
|
Long
term portion of future performance based compensation |
2,227 |
|
1,009 |
|
| Change in non-cash working capital related to operating
activities |
(7,964 |
) |
(8,784 |
) |
|
146,452 |
|
92,543 |
|
| Financing activities |
|
|
|
|
| Issuance of common shares |
167,477 |
|
5,742 |
|
| Issuance costs |
(6,883 |
) |
(73 |
) |
| Cash dividends paid |
(36,110 |
) |
(26,752 |
) |
| Increase (decrease) in bank debt |
(115,000 |
) |
60,000 |
|
|
9,484 |
|
38,917 |
|
| Investing activities |
|
|
|
|
| Additions to property, plant and equipment |
(179,378 |
) |
(169,099 |
) |
| Change in prepaid capital |
8,795 |
|
3,714 |
|
| Change in non-cash working capital relating to
investing activities |
14,647 |
|
33,925 |
|
|
(155,936 |
) |
(131,460 |
) |
| Net increase (decrease) in cash |
- |
|
- |
|
| Cash, Beginning of Period |
- |
|
- |
|
| Cash, End of Period |
- |
|
- |
|
|
|
|
|
|
| Cash interest paid |
8,330 |
|
7,867 |
|
| Cash taxes paid |
- |
|
1,890 |
|
|
|
|
Peyto Exploration & Development Corp. |
|
Notes to Condensed Financial Statements (unaudited) |
|
As at March 31, 2014 and 2013 |
|
(Amount in $ thousands, except as otherwise noted) |
|
- 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.
These financial statements were approved and authorized for
issuance by the Audit Committee of Peyto on May 13, 2014.
- 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 financial
statements as at and for the years ended December 31, 2013 and
2012.
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
financial statements as at and for the years ended December 31,
2013 and 2012.
(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, 2014 or later periods. The
affected standards are consistent with those disclosed in Peyto's
financial statements as at and for the years ended December 31,
2013 and 2012.
Peyto adopted the following standards on January 1, 2014:
IAS 36 "Impairment of Assets" has been amended to reduce the
circumstances in which the recoverable amount of cash generating
units "CGUs" are required to be disclosed and clarify the
disclosures required when an impairment loss has been recognized or
reversed in the period. The retrospective adoption of these
amendments will only impact Peyto's disclosures in the notes to the
financial statements in periods when an impairment loss or
impairment reversal is recognized.
IFRIC 21 "Levies" was developed by the IFRS Interpretations
Committee ("IFRIC") and is applicable to all levies imposed by
governments under legislation, other than outflows that are within
the scope of other standards (e.g., IAS 12 "Income Taxes") and
fines or other penalties for breaches of legislation. The
interpretation clarifies that an entity recognizes a liability for
a levy when the activity that triggers payment, as identified by
the relevant legislation, occurs. It also clarifies that a levy
liability is accrued progressively only if the activity that
triggers payment occurs over a period of time, in accordance with
the relevant legislation. Lastly, the interpretation clarifies that
a liability should not be recognized before the specified minimum
threshold to trigger that levy is reached. The retrospective
adoption of this interpretation does not have any impact on Peyto's
financial statements.
Standards issued but not yet effective
IFRS 9, as issued, reflects part of the IASB's work on the
replacement of IAS 39 "Financial Instruments: Recognition and
Measurement" and applies to classification and measurement of
financial assets and financial liabilities as defined in IAS 39 and
hedging transactions. The standard has no effective date. In
subsequent phases, the IASB will address impairment of financial
assets. The adoption of IFRS 9 may have an effect on the
classification and measurement of the company's financial assets
and financial liabilities. The Company will quantify the effect in
conjunction with the other phases, when the final standard
including all phases is issued with an effective date.
- Property, plant and equipment, net
| Cost |
|
|
| At December 31, 2013 |
3,071,245 |
|
|
Additions |
179,378 |
|
|
Decommissioning provision additions |
5,648 |
|
|
Prepaid capital |
(8,795 |
) |
| At March 31, 2014 |
3,247,476 |
|
| Accumulated depletion and depreciation |
|
|
| At December 31, 2013 |
(611,714 |
) |
|
Depletion and depreciation |
(68,851 |
) |
| At March 31, 2014 |
(680,565 |
) |
|
|
|
| Carrying amount at December 31, 2013 |
2,459,531 |
|
| Carrying amount at March 31, 2014 |
2,566,911 |
|
During the period ended March 31, 2014, Peyto capitalized $2.8
million (2013 - $2.6 million) of general and administrative expense
directly attributable to production and development activities.
- Long-term debt
|
|
March 31, 2014 |
December 31, 2013 |
| Bank
credit facility |
490,000 |
605,000 |
|
Senior secured notes |
270,000 |
270,000 |
|
Balance, end of the year |
760,000 |
875,000 |
As at March 31, 2014, the Company had a syndicated $1 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. Borrowings under the facility bear interest at Canadian
bank prime (3% at both December 31, 2013 and 2012) or US base rate,
or, at Peyto's option, Canadian dollar bankers' acceptances or US
dollar LIBOR loan rates, plus applicable margin and stamping fees.
The total stamping fees range between 80 basis points and 225 basis
points on Canadian bank prime and US base rate borrowings and
between 180 basis points and 325 basis points on Canadian dollar
bankers' acceptance and US dollar LIBOR borrowings. The undrawn
portion of the facility is subject to a standby fee in the range of
40.5 to 73.13 basis points.
On December 4, 2013, Peyto issued $120 million of senior
unsecured notes pursuant to a note purchase 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 4.50% and mature on December 4, 2020. Interest will
be paid semi-annually in arrears.
Peyto is subject to the following financial covenants as defined
in the credit facility and note purchase agreements:
- Long-term debt plus the average working capital deficiency
(surplus) at the end of the two most recently completed fiscal
quarters adjusted for non-cash items not to exceed 3.0 times
trailing twelve month net income before non-cash items, interest
and income taxes;
- Long-term debt and subordinated debt plus the average working
capital deficiency (surplus) at the end of the two most recently
completed fiscal quarters adjusted for non-cash items not to exceed
4.0 times trailing twelve month net income before non-cash items,
interest and income taxes;
- Trailing twelve months net income before non-cash items,
interest and income taxes to exceed 3.0 times trailing twelve
months interest expense;
- Long-term debt and subordinated debt plus the average working
capital deficiency (surplus) at the end of the two most recently
completed fiscal quarters adjusted for non-cash items not to exceed
55 per cent of the book value of shareholders' equity and long-term
debt and subordinated debt.
Peyto is in compliance with all financial covenants at March 31,
2014.
Total interest expense for the period ended March 31, 2014 was
$8.7 million (2013 - $6.3 million) and the average borrowing rate
for the period was 4.4% (2013 - 4.0%).
Subsequent to March 31, 2014, Peyto's banking syndicate agreed
to extend the stated term date of the credit facility to April 26,
2017. Borrowings under the amended facility bear interest at
Canadian bank prime or US base rate, or, at Peyto's option,
Canadian dollar bankers' acceptances or US dollar LIBOR loan rates,
plus applicable margin and stamping fees. The total stamping fees
range between 50 basis points and 215 basis points on Canadian bank
prime and US base rate borrowings and between 150 basis points and
315 basis points on Canadian dollar bankers' acceptance and US
dollar LIBOR borrowings. The undrawn portion of the facility is
subject to a standby fee in the range of 30 to 63 basis points.
- 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:
|
Balance, December 31, 2013 |
61,184 |
| New
or increased provisions |
2,630 |
|
Accretion of decommissioning provision |
498 |
|
Change in discount rate and estimates |
3,018 |
|
Balance, March 31, 2014 |
67,330 |
|
Current |
- |
|
Non-current |
67,330 |
Peyto has estimated the net present value of its total
decommissioning provision to be $67.3 million as at March 31, 2014
($61.2 million at December 31, 2013) based on a total future
undiscounted liability of $178.5 million ($177.8 million at
December 31, 2013). At March 31, 2014 management estimates that
these payments are expected to be made over the next 50 years with
the majority of payments being made in years 2040 to 2063. The Bank
of Canada's long term bond rate of 2.96 per cent (3.24 per cent at
December 31, 2013) and an inflation rate of two per cent (two per
cent at December 31, 2013) were used to calculate the present value
of the decommissioning provision.
- Share capital
Authorized: Unlimited number of voting common shares
Issued and Outstanding
|
Common Shares (no par value) |
Number of Common Shares |
Amount $ |
|
|
Balance, December 31, 2012 |
148,518,713 |
1,124,382 |
|
|
Common shares issued by private placement |
240,210 |
5,742 |
|
|
Common share issuance costs (net of tax) |
- |
(55 |
) |
|
Balance, December 31,2013 |
148,758,923 |
1,130,069 |
|
|
Common shares issued by private placement |
211,885 |
6,997 |
|
|
Equity offering |
4,720,000 |
160,480 |
|
|
Common share issuance costs, (net of tax) |
- |
(5,162 |
) |
|
Balance, March 31, 2014 |
153,690,808 |
1,292,384 |
|
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).
On December 31, 2013, Peyto completed a private placement of
190,525 common shares to employees and consultants for net proceeds
of $6.2 million ($32.78 per share). These common shares were issued
January 8, 2014.
On February 5, 2014, Peyto closed an offering for 4,720,000
common shares at a price of $34.00 per common share, receiving net
proceeds of $153.6 million.
On March 17, 2014, Peyto completed a private placement of 21,360
common shares to employees and consultants for net proceeds of $
0.8 million ($35.20 per common share).
Per share amounts
Earnings per share or unit have been calculated based upon the
weighted average number of common shares outstanding for the period
ended March 31, 2014 of 151,826,431 (2013 - 148,672,664). There are
no dilutive instruments outstanding.
Dividends
During the period ended March 31, 2014, Peyto declared and paid
dividends of $0.24 per common share or $0.08 per common share per
month, totaling $36.5 million (2013 - $0.18 or $0.06 per common
share per month, $26.8 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 and losses
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.
- 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:
|
|
March 31, 2014 |
|
March 31, 2013 |
|
| Share
price |
$22.58 - $37.72 |
|
$22.58 - $26.94 |
|
|
Exercise price |
$19.91 - $32.03 |
|
$19.30 - $22.58 |
|
|
Expected volatility |
24 |
% |
25 |
% |
|
Option life |
1
year |
|
1
year |
|
|
Dividend yield |
0 |
% |
0 |
% |
|
Risk-free interest rate |
1.07 |
% |
1.02 |
% |
- Financial instruments and Capital management
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 March 31,
2014.
The Company's areas of financial risk management and risks
related to financial instruments remained unchanged from December
31, 2013.
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 significant value drivers are observable
in active markets.
- Level 3 - valuations derived from valuation techniques in which
one or more significant inputs or significant 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 March 31, 2014, 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 March 31, 2014:
|
Propane Period Hedged |
Type |
Monthly Volume |
Price (USD) |
|
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 |
$ |
37.485/bbl |
| April
1, 2014 to September 30, 2014 |
Fixed
Price |
4,000 bbl |
$ |
41.79/bbl |
| April
1, 2014 to September 30, 2014 |
Fixed
Price |
4,000 bbl |
$ |
42.63/bbl |
| April
1, 2014 to September 30, 2014 |
Fixed
Price |
4,000 bbl |
$ |
44.31/bbl |
| April
1, 2014 to September 30, 2014 |
Fixed
Price |
4,000 bbl |
$ |
46.20/bbl |
|
October 1, 2014 to December 31, 2014 |
Fixed Price |
4,000 bbl |
$ |
42.84/bbl |
|
Natural Gas Period Hedged |
Type |
Daily Volume |
Price (CAD) |
|
November 1, 2012 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
3.0575/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 |
|
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 October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
3.335/GJ |
| April
1, 2014 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
3.10/GJ |
| April
1, 2014 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
3.80/GJ |
| April
1, 2014 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
3.825/GJ |
| April
1, 2014 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
3.95/GJ |
| April
1, 2014 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
3.98/GJ |
| April
1, 2014 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
4.07/GJ |
| April
1, 2014 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
4.32/GJ |
| April
1, 2014 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
4.35/GJ |
| April
1, 2014 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
4.55/GJ |
| April
1, 2014 to October 31, 2014 |
Fixed
Price |
5,000 GJ |
$ |
4.42/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 |
| 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 |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.27/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.41/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.5575/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.465/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.43/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.54/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.50/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.25/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.25/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.23/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.23/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.23/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.31/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.3525/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.40/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.49/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.54/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.61/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.70/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.75/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.81/GJ |
| April
1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.83/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 |
$ |
3.95/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.05/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.12/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.20/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.44/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.585/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.78/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.60/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.58/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.68/GJ |
| April
1, 2015 to October 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.285/GJ |
| April
1, 2015 to October 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.30/GJ |
| April
1, 2015 to October 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.35/GJ |
| April
1, 2015 to October 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.40/GJ |
| April
1, 2015 to October 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.47/GJ |
| April
1, 2015 to October 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.48/GJ |
| April
1, 2015 to October 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.52/GJ |
| April
1, 2015 to October 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
3.70/GJ |
|
April 1, 2015 to October 31, 2015 |
Fixed Price |
5,000 GJ |
$ |
3.75/GJ |
As at March 31, 2014, Peyto had committed to the future sale of
204,000 barrels of propane at an average price of $45.82 CAD
($41.45 USD) per barrel and 100,285,000 gigajoules (GJ) of natural
gas at an average price of $3.58 per GJ or $4.12 per mcf. Had these
contracts been closed on March 31, 2014, Peyto would have realized
a loss in the amount of $82.0 million. If the AECO gas price on
March 31, 2014 were to increase by $1/GJ, the unrealized loss would
increase by approximately $100.3 million. An opposite change in
commodity prices rates would result in an opposite impact on other
comprehensive income.
Subsequent to March 31, 2014 Peyto entered into the following
contracts:
|
Natural Gas Period Hedged |
Type |
Daily Volume |
Price (CAD) |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.68/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.80/GJ |
|
November 1, 2014 to March 31, 2015 |
Fixed
Price |
5,000 GJ |
$ |
4.87/GJ |
| April
1, 2015 to March 31, 2016 |
Fixed
Price |
5,000 GJ |
$ |
3.9175/GJ |
| April
1, 2015 to March 31, 2016 |
Fixed
Price |
5,000 GJ |
$ |
3.93/GJ |
| April
1, 2015 to March 31, 2016 |
Fixed
Price |
5,000 GJ |
$ |
4.00/GJ |
|
April 1, 2015 to March 31, 2016 |
Fixed Price |
5,000 GJ |
$ |
4.05/GJ |
- Commitments
Following is a summary of Peyto's contractual obligations and
commitments as at March 31, 2014.
|
|
2014 |
2015 |
2016 |
2017 |
2018 |
Thereafter |
| Note
repayment(1) |
- |
- |
- |
- |
- |
270,000 |
|
Interest payments(2) |
8,815 |
12,230 |
12,230 |
12,230 |
12,230 |
22,755 |
|
Transportation commitments |
13,580 |
19,531 |
18,796 |
14,975 |
11,261 |
13,356 |
|
Operating leases |
2,126 |
2,380 |
1,863 |
1,654 |
1,295 |
10,356 |
|
Total |
24,521 |
34,141 |
32,889 |
28,859 |
24,786 |
316,467 |
| (1) Long-term debt repayment on senior secured notes |
| (2) Fixed interest payments on senior secured notes |
- Contingencies
On October 31, 2013, Peyto was named as a party to a statement
of claim received with respect to transactions between Poseidon
Concepts Corp. and Open Range Energy Corp. The allegations
contained in the claim are based on factual matters that
pre-existed Peyto's involvement with New Open Range which makes
them difficult to assess at this time. However, Peyto intends to
aggressively protect its interests and the interests of its
shareholders and will seek all available legal remedies in
defending the action. Management continues to assess the nature of
this claim, in conjunction with their legal advisors.
Officers
|
Darren Gee, President and Chief Executive Officer |
|
Tim Louie, Vice President, Land |
|
|
|
|
|
Scott Robinson, Executive Vice President and Chief Operating
Officer |
|
David Thomas, Vice President, Exploration |
|
|
|
|
|
Kathy Turgeon, Vice President, Finance and Chief Financial
Officer |
|
Jean-Paul Lachance, Vice President, Exploitation |
|
|
|
|
|
Stephen Chetner, Corporate Secretary |
|
|
| Directors |
|
Don Gray, Chairman |
|
Stephen Chetner |
|
Brian Davis |
|
Michael MacBean, Lead Independent
Director |
|
Darren Gee |
|
Gregory Fletcher |
|
Scott Robinson |
| 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:
http://www.peyto.com/ |
| Stock
Listing Symbol: PEY.TO |
|
|
Toronto Stock
Exchange |
Peyto Energy TrustDarren GeePresident and
CEO403.261.6081403.451.4100www.peyto.com
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