Peyto Exploration & Development Corp. (“Peyto” or the
“Company”) is pleased to release its 2022 ESG Report which details
the Company’s environmental, social, and governance (“ESG”)
activities for the year ended December 31, 2021. The complete ESG
report (the “Report”) can be found at www.peyto.com.
Peyto believes good environmental, social, and
governance performance is essential to managing a long-term
sustainable business. The Company has reported on environmental and
safety performance over the last 7 years through its annual
sustainability reports and 2022 marks the second year of the
Company’s comprehensive ESG Report. The Company’s core values of
efficiency, cost control, and operational excellence naturally lead
to less environmental impact, strong social conscience and
effective corporate governance. Longstanding relationships with
suppliers, regulators, and local communities has allowed Peyto to
conduct business safely and responsibly for over 23 years.
Highlights of the 2022 Report
include:
Reduced Greenhouse Gas Emissions (“GHG”)
Intensity
- Peyto’s Scope 1 and 2 GHG emissions
intensities* were determined at 18.1 kgCO2e per boe of production
in 2021, representing a 28% reduction from 2013 levels and a 3%
reduction from the prior year (Page 21 of the Report).
- The Company’s emissions intensity,
per barrel of production, was less than half that of the average in
the Canadian Oil and Gas sector according to Government of Canada
data (Page 22 of the Report).
- Peyto controlled and operated 99%
of its production in 2021 which was processed through one of 10
wholly owned gas processing plants. All Scope 1 and 2 emissions
from wellhead to sales through these facilities were included in
its emissions intensity.
*Peyto cautions that when comparing the
Company’s emissions intensity with other operators in the industry
care should be taken to ensure that all emissions, including those
generated at third party processing facilities, are included in the
totals. Peyto has adjusted and compared GHG emissions intensity in
its 2022 Report to normalize for this discrepancy. Refer to Page 21
in the Report.
Methane Emissions Reduction
- The Company specifically targets
the methane component of GHG emissions as it provides the best
opportunity to make meaningful reductions while minimizing the loss
of sales gas.
- The 2021 flared and vented methane
emissions intensity was down 59% from 2016, exceeding its 5-year
target of reducing intensity to 50% of 2016 levels (Page 22 of the
Report).
- A new target has been set to
further reduce this intensity another 50% by 2023 (or 75% lower
than 2016 levels).
- Peyto’s ongoing methane emissions
reduction projects include the installation of zero emissions
measurement skids on all new wells and retrofitting older sites
with zero emission solar powered pumps, ultra-low-bleed
controllers, and methane collection bottles to use as heater
fuel.
Carbon Capture and Storage
- During 2021, Peyto conducted an
evaluation of deep storage reservoirs in proximity to the Company’s
gas processing facilities in the Greater Sundance area and
investigated commercially available carbon capture
technologies.
- It was determined that Peyto’s land
base contains several deep saline aquifers that have the capacity
to store all carbon generated by Company’s activities for decades
to come.
- Peyto will continue to evaluate
these opportunities before committing shareholder capital to ensure
any viable disposal scheme is commercial.
Land and Water Use
Minimization
- Peyto continued to optimize its
well pads and modular facility designs to ensure they are
“right‐sized” and expandable for resource development and
production growth.
- This ensures minimal land use per
unit of energy produced while simultaneously minimizing capital
requirements.
- Since 2012, Peyto has utilized
multi-well pad drilling to reduce overall land use and wellsite
footprints.
- By the end of 2021, the cumulative
land used for all of Peyto’s roads and well sites has been reduced
to 1.4 ha/well, down 30% from 2013 (Page 27 of the Report).
- Peyto’s high quality Deep Basin
Cretaceous reservoirs require less water for fracturing and smaller
leases for fracture operations than the Montney or Duvernay
plays.
- The Company’s water use intensity
is one of the lowest at 0.4 bbls of water per boe produced in the
first 6 months as compared by AER data (Page 25 of the
Report).
- During 2021, Peyto also recycled
84% of the flowback water used in hydraulic fracturing activities,
exceeding the 80% target set in 2020, further reducing freshwater
use (Page 26 of the Report).
Liability Management
- Peyto’s organic development
strategy has resulted in 98% of the Company’s asset base being
developed by Peyto over the last 23 years resulting in minimal
liabilities.
- At the end of 2021, over 90% of the
wells drilled over those 23 years were still producing representing
one of the highest ratios of producing to non-producing wells in
the industry.
- During the year, the Company
proactively spent $2.1 million towards retirement and abandonment
activities, exceeding the target set in 2020 of $1 million per year
over the next 3 years (Page 30 of the Report).
- At year end, Peyto estimated the
cost of future abandonment and reclamation liability (all wells,
sites, & facilities) at approximately $62 million (discounted
at 5%) which represents a mere 1.2% of Peyto’s total $5.0 billion
of forecast future value from the developed reserves (at the same
discount rate).
Health and Safety
- At Peyto, everyone is a worker
first, and each employee, and every contractor, is charged with the
responsibility of carrying out Peyto’s business without compromise
to the safety of themselves, their co-workers, and the equipment
they use.
- The Company is proud to continue to
report zero total recordable incidents over the last 5 years for
its employees.
- The contractor total recordable
incident frequency rate of 0.84 for 2021 was less than the 2020
target of below 1.0 (Page 18 of the Report).
- Peyto affirmed its commitment to
safety by renewing the Company’s Certification of Recognition
(COR), resulting in a third-party audit score of 95% (Page 19 of
the Report).
Our People
- The Peyto Board and leadership
team’s commitment to its employees was evidenced by the Company’s
low voluntary turnover rate, which has averaged only 2% over the
last 5 years, and by the average tenure of employees (10 years)
(Page 31 of the Report).
- The dedicated Peyto team was again
one of the most efficient in the industry, managing over 11 MMcfe/d
of production per employee in 2021.
- Gender diversity was evidenced by a
40% female workforce.
Our Community
- Peyto understands that strong
relationships in the communities where the Company operates has
been a critical part of the success of over 23 years of operation
in Alberta, Canada.
- Over this time, Peyto has invested
over $8.2 billion in goods and services to provide jobs to
Albertans and Canadians, paid over $1.1 billion in property taxes
and royalties to fund public social programs and facilities, while
also returning $2.5 billion to shareholders (Page 32 of the
Report).
- Peyto is also proud to be a
long-term supporter of the Shock Trauma Air Rescue Service (STARS)
having contributed over $700,000 to keep this vital emergency
service provider in the air for Albertans since 2004.
Peyto is committed to continual ESG performance
improvement and has set the following specific goals and targets in
areas that are aligned with the Company’s core values contained in
the Report:
Goals and Targets
- A 75% reduction of vented and
flared Methane emissions intensity from 2016 levels by 2023 (Page
22 of the Report).
- Maintain a contractor TRIF below
1.0 and continue to reduce the 3-year trailing average TRIF each
year (Page 18 of the Report).
- Recycle greater than 80% of
flowback water during fracturing operations and reduce overall
fresh make-up water (Page 26 of the Report).
- Exceed the annual AER closure spend
requirements relating to abandonment and reclamation activities
(Page 30 of the Report).
For more information on Peyto’s ESG initiatives
please review the Report at
https://www.peyto.com/Files/Corporate%20Responsibility/ESG%20Committee/Peyto2022ESGReport.pdf
Darren
Gee |
Jean-Paul
Lachance |
Chief Executive Officer |
President and Chief Operating Officer |
Phone: (403) 261-6081 |
Phone: (403) 261-6081 |
September 8, 2022
This news release contains certain
forward-looking statements or information ("forward-looking
statements") as defined by applicable securities laws that involve
substantial known and unknown risks and uncertainties, many of
which are beyond Peyto's control. These statements relate to future
events or the Company's future performance. All statements other
than statements of historical fact may be forward-looking
statements. The use of any of the words "plan", "expect",
"prospective", "project", "intend", "believe", "should",
"anticipate", "estimate", or other similar words or statements that
certain events "may" or "will" occur are intended to identify
forward-looking statements. Forward-looking information in this
news release includes statements regarding the anticipated effects
of Peyto's environmental, social, and governance performance on the
long term sustainability of its business, Peyto's target to further
reduce flared and vented methane emissions intensity, Peyto's
ongoing methane reductions projects, Peyto's consideration of
future carbon capture and storage projects, Peyto's estimates of
abandonment and reclamation liabilities and the matters set forth
under "Goals and Targets". The projections, estimates and beliefs
contained in such forward-looking statements are based on
management's estimates, opinions, and assumptions at the time the
statements were made, including assumptions relating to:
macro-economic conditions commodity prices, inflation rates and
costs of goods and services, changes in laws and regulations
including, without limitation, the adoption of new environmental
laws and regulations and changes in how they are interpreted and
enforced; increased competition; the availability of qualified
operating or management personnel; fluctuations in other commodity
prices, foreign exchange or interest rates; stock market volatility
and fluctuations in market valuations of companies with respect to
announced transactions and the final valuations thereof; results of
exploration and testing activities; and the ability to obtain
required approvals and extensions from regulatory authorities.
Management of the Company believes the expectations reflected in
those forward-looking statements are reasonable, but no assurances
can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of
them do so, what benefits that Peyto will derive from them. As
such, undue reliance should not be placed on forward-looking
statements.
The forward-looking statements contained herein
are subject to numerous known and unknown risks and uncertainties
that may cause Peyto's actual financial results, performance or
achievement in future periods to differ materially from those
expressed in, or implied by, these forward-looking statements,
including but not limited to, risks associated with: continued
changes and volatility in general global economic conditions
including, without limitations, changes to budgets and capital
allocations, changes in economic conditions in North America and
public health concerns (including the impact of the COVID-19
pandemic); imprecise estimates, continued fluctuations and
volatility in commodity prices, foreign exchange or interest rates;
stock market volatility; imprecision of reserves estimates;
competition from other industry participants; failure to secure
required equipment; increased competition; the lack of availability
of qualified operating or management personnel; environmental
risks; changes in laws and regulations including, without
limitation, the adoption of new environmental and tax laws and
regulations and changes in how they are interpreted and enforced;
the results of exploration and development drilling and related
activities; and the ability to access sufficient capital from
internal and external sources.
The Company cautions that the foregoing list of
assumptions, risks and uncertainties is not exhaustive. Readers are
cautioned that the assumptions used in the preparation of such
information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. Peyto's actual
results, performance or achievement could differ materially from
those expressed in, or implied by, these forward-looking statements
and, accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what benefits Peyto will derive
there from. The forward-looking statements, including any
future-oriented financial information or financial outlook,
contained in this news release speak only as of the date hereof and
Peyto does not assume any obligation to publicly update or revise
them to reflect new information, future events or circumstances or
otherwise, except as may be required pursuant to applicable
securities laws.
Certain market, independent third-party and
industry data contained in this news release is based upon
information from government or other independent industry
publications and reports or based on estimates derived from such
publications and reports. Government and industry publications and
reports generally indicate that they have obtained their
information from sources believed to be reliable, but the Company
has not conducted its own independent verification of such
information. This Presentation also includes certain data derived
from public filings made by independent third parties. While the
Company believes this data to be reliable, market and industry data
is subject to variations and cannot be verified with complete
certainty due to limits on the availability and reliability of raw
data, the voluntary nature of the data gathering process and other
limitations and uncertainties inherent in any statistical survey.
The Company has not independently verified any of the data from
independent third-party sources referred to in this news release or
ascertained the underlying assumptions relied upon by such
sources.
Barrels of Oil EquivalentTo 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.
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