Peyto Announces 1,000th Horizontal Well and Q3 2020 Financial Results
CALGARY, Alberta, Nov. 11, 2020 (GLOBE NEWSWIRE) — Peyto Exploration & Development Corp. (“Peyto” or the “Company”) is pleased to present its operating and financial results for the third quarter of the 2020 fiscal year. While the COVID-19 pandemic continued to grip the world and global energy markets, Peyto was able to safely continue conducting drilling operations, achieving a significant operational milestone in the Company’s 22 year history with the completion of its 1,000th horizontal well. Results for the quarter included:
Funds from operations of $0.30/share. Generated $49 million in Funds From Operations (“FFO”) in Q3 2020, down from $68 million in Q3 2019 due to 14% lower realized commodity prices offset by 2% higher production levels.
Liquids production up 6%. Natural gas production increased 1% from 396 MMcf/d in Q3 2019 to 402 MMcf/d in Q3 2020 while Condensate and NGL production increased 6% from a year ago to 11,263 bbl/d. Liquid yields were 28 bbl/MMcf, up from 27 bbl/MMcf in Q3 2019, primarily due to new Cardium drilling. Total liquids production was comprised of 6,493 bbls/d of Condensate and Pentanes+, and 4,770 bbls/d of Propane and Butane. Total Q3 2020 production of 78,210 boe/d was up 2% from Q3 2019.
Total cash costs of $1.01/Mcfe ($0.87/Mcfe or $5.25/boe excluding royalties). Industry leading total cash costs, included $0.14/Mcfe royalties, $0.32/Mcfe operating costs, $0.16/Mcfe transportation, $0.04/Mcfe G&A and $0.35/Mcfe interest, and combined with a realized price of $2.15/Mcfe, resulting in a $1.14/Mcfe ($6.83/boe) cash netback, down 29% from $1.61/Mcfe ($9.65/boe) in Q3 2019. Operating costs per unit for Q3 2020 were up 3% from Q3 2019, largely due to increased power and chemical costs.
Capital investment of $62 million. A total of 18 gross wells (16.5 net) were drilled in the third quarter, 21 gross wells (19.5 net) were completed, and 21 gross wells (19.5 net) were brought on production. Over the last 12 months the 74 gross (67.35 net) wells brought on production accounted for approximately 24,000 boe/d at the end of the quarter, which, when combined with a trailing twelve month capital investment of $241 million, equates to an annualized capital efficiency of $10,000/boe/d. Peyto anticipates the 2020 full year capital efficiency will be approximately $9,000/boe/d based on continued drilling and completion cost improvements.
Dividends of $0.01/share, Loss of $0.07/share. Dividends of $1.6 million were paid to shareholders during the quarter while a loss of $11.3 million was recorded.Third Quarter 2020 in Review
Peyto increased drilling activity in the third quarter, following spring break up, with four drilling rigs active across the Company’s Deep Basin core areas. On September 23, 2020 drilling commenced on the Company’s 1,000th Deep Basin horizontal well at 14-01-054-19W5. The well was drilled to 4,250m measured depth with a 1,832m horizontal lateral in the Notikewin formation. Drilling was conducted by the Ensign #401 rig which has been drilling for Peyto for over 10 years without a single lost-time incident. The 14-01 well also set a new drilling pace record at Peyto, taking only 6.5 days from spud to total depth. The well is currently being completed as part of a multi-well pad site and will commence production shortly. Peyto has now drilled more horizontal wells in the Alberta Deep Basin than any other operator and continues to lead the industry in innovation, efficiency and safety while responsibly developing Alberta’s natural gas resources. Production grew from 76,000 boe/d at the start of the quarter to exit at 83,000 boe/d. Commodity prices also rebounded from Q2 2020 lows with NYMEX gas and WTI oil up 18% and 47%, respectively. Although Funds from Operations for the quarter were lower than Q3 2019, the higher commodity prices lifted FFO 49% from the previous quarter. Peyto maintained its industry leading low cash costs at $1.01/Mcfe which delivered a 53% Operating Margin1. The Company anticipates that the recent improvement in natural gas prices and continued growth in production will significantly improve financial performance in the quarters ahead. 1. Operating Margin is defined as funds from operations 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.