Peyto Announces Reduced Capital Program, Reduced Dividend and COVID-19 Preparedness
April 15 2020 - 5:30PM
Peyto Exploration & Development Corp. ("Peyto” or the
“Company") (TSX: PEY) announces today its board of directors
(the “Board”) has approved a reduction to the Company’s capital
program and dividend in response to the extreme impacts of the
COVID-19 pandemic on near term hydrocarbon demand and commodity
prices.
The 2020 capital program, which was expected to
range between $250-$300 million, has been reduced to between
$200-$250 million. Peyto will ensure it stays nimble with the
ability to adjust the capital program either up or down in response
to commodity prices and the global economic environment while
attempting to match the capital program to funds from operations.
To that end, the Company continues to maintain a strong line-up of
drill-ready locations. First half 2020 capital investment is
expected to range between $110-$120 million. Additionally,
considering the erosion in forecast commodity prices and the
resultant impact on 2020 earnings projections, Peyto is reducing
the dividend from $0.02/month to $0.01/quarter. Following the March
2020 dividend, paid on April 15, 2020, the Company will commence
paying dividends on a quarterly basis with the first quarterly
dividend of $0.01 per common share being paid to shareholders of
record as at June 30, 2020, with payment on July 15, 2020. These
changes to Peyto’s 2020 plans are necessary to preserve Peyto’s
balance sheet during this period of reduced liquidity for the
industry.
Peyto ‘s business model remains robust with long
life, low cost natural gas assets that deliver high profit and
operating margins. At year-end 2019, the Company had an operating
margin of 65% and a producing reserve life of over 9 years, which
are some of the highest measures in the industry. Additionally,
Peyto owns and controls an enviable midstream asset base that is
uniquely located at the intersection of highways, railways,
transmission pipelines, high voltage powerlines and natural gas
storage reservoirs.
Peyto has been fully prepared for the potential
impact of the COVID-19 pandemic to its workforce and the extended
service industry with its business continuity plans. The Company’s
small but experienced head office workforce is fully functional
when working remotely using existing technologies which had been
previously developed during the Calgary 2013 floods. Meanwhile,
field employees and contractors already operate under Peyto’s
Working Alone policy with well-established emergency response plans
that include remote control and well monitoring capability and
automation systems. Peyto has long been part of the Energy Mutual
Aid Co-op within its areas of operation and is an active member of
the local oilfield community. The Company is prepared for extended
disruption to supply chains with equipment and materials already
stockpiled for an extended spring breakup period. As well Peyto’s
drilling and completion design requires fewer service industry
workers to be on location to conduct specific operations which
reduces the potential for person to person transmission.
Peyto has made provisions for this year’s annual
and special meeting of shareholders to account for the COVID-19
pandemic and in accordance with advice from the Public Health
Agency of Canada and Alberta Health Services. While current plans
are subject to change, the Company is encouraging registered
shareholders and duly appointed proxyholders to NOT attend the
meeting in person, particularly if they are experiencing any of the
described COVID-19 symptoms. As always, the Corporation encourages
shareholders to vote their common shares prior to the meeting
following the instructions set out in the form of proxy or voting
instruction form received by such shareholders. The Corporation may
take additional precautionary measures in relation to the meeting
in response to further developments with the COVID-19 pandemic. In
the event it is not possible or advisable to hold the meeting in
person, the Corporation will announce alternative arrangements for
the meeting as promptly as practicable, which may include holding
the meeting entirely by electronic means, telephone or other
communication facilities. Peyto is planning an electronic
presentation for investors by management shortly after the annual
and special meeting, the particulars of which will be press
released prior to.
Please monitor Peyto’s website at www.peyto.com
for updated information on the meeting and presentation
details.
Darren GeePresident and CEOApril 15,
2019Phone: (403) 261-6081Fax:
(403) 451-4100
Certain information set forth in this document,
including information relating to Peyto’s revised 2020 capital
program and its upcoming annual and special meeting of
shareholders, as well as 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, the impact of
the COVID- 19 pandemic, industry conditions, volatility of
commodity prices including the ongoing depressed oil 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. To provide a single unit of
production for analytical purposes, natural gas production and
reserves volumes are converted mathematically to equivalent barrels
of oil (BOE). Peyto uses the industry-accepted standard conversion
of six thousand cubic feet of natural gas to one barrel of oil (6
Mcf = 1 bbl). The 6:1 BOE ratio is based on an energy equivalency
conversion method primarily applicable at the burner tip. It does
not represent a value equivalency at the wellhead and is not based
on current prices. While the BOE ratio is useful for comparative
measures and observing trends, it does not accurately reflect
individual product values and might be misleading, particularly if
used in isolation. As well, given that the value ratio, based on
the current price of crude oil to natural gas, is significantly
different from the 6:1 energy equivalency ratio, using a 6:1
conversion ratio may be misleading as an indication of value.
Peyto Exploration and De... (TSX:PEY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Peyto Exploration and De... (TSX:PEY)
Historical Stock Chart
From Jul 2023 to Jul 2024