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CALGARY, ALBERTA -- (Marketwire) -- 03/06/13 -- Peyto Exploration & Development Corp. ("Peyto" or the "Company") (TSX: PEY) is pleased to report operating and financial results for the fourth quarter and the 2012 fiscal year. Peyto grew production and reserves per share to record levels in 2012 while delivering a 76% operating margin1 and a 23% profit margin2. An 8% return on capital and an 8% return on equity were achieved despite historically low natural gas prices. Highlights for 2012 include:
-- Production per share up 17%. Annual production increased 26% or 17% per share to 267 MMCFe/d (44,527 boe/d) in 2012 from 213 MMCFe/d (35,465 boe/d) in 2011. Q4 2012 production was also up 26% to 49,754 boe/d.-- Reserves per share up 15%. Proved Producing ("PP"), Total Proved ("TP") and Proved plus Probable Additional ("P+P") reserves increased 24%, 23%, and 22% (15%, 14%, and 13% per share) to 0.9, 1.7, and 2.4 TCFe, respectively.-- Reduced cash costs 22%. Royalties, operating costs, transportation, G&A and interest expense totaled $1.05/MCFe ($6.30/boe) in 2012 down from $1.35/MCFe ($8.10/boe) in 2011. Industry leading operating costs were just $0.32/MCFe ($1.92/boe) in 2012.-- Funds from Operations per share of $2.22. Generated $313 million in Funds from Operations ("FFO") in 2012, down 6% from $2.36/share in 2011 despite a 27% drop in realized commodity prices.-- Capital investments up 63%. Invested a record $452 million to build 25,700 boe/d at a cost of $17,600/boe/d and invested $166 million to acquire Open Range Energy Corp. ("Open Range"), which produced 4,300 boe/d at year end, for a cost of $38,600/boe/d. Average cost to add new production was $20,600/boe/d.-- P+P FD&A half the field netback. All in FD&A cost for PP, TP and P+P reserves was $2.22/MCFe, $2.04/MCFe and $1.68/MCFe ($10.07/boe), respectively including changes in Future Development Capital ("FDC"), while the average field netback was $3.46/MCFe ($20.75/boe).-- NAV per share of $34. Net Asset Value or the Net Present Value per share, debt adjusted (discounted at 5%) of the P+P reserves was $20/share of developed reserves and $14/share of undeveloped reserves.-- Earnings of $0.67/share and dividends of $0.72/share. A total of $94 million in earnings were generated and $102 million in dividends were paid to shareholders. Cumulative dividend/distribution payments made by Peyto to date total $1.3 Billion ($12.31/share).2012 in Review
The year 2012 was an historic year for Peyto. With the largest capital program in the Company's history, coupled with its first major corporate acquisition, Peyto added a record 30,000 boe/d of new production. Peyto again led the industry as the lowest cost producer and with this advantage was able to generate a 23% profit margin despite natural gas prices that dropped to their lowest level in Company history. In addition to growing production and reserves per share, Peyto increased its ownership and control of processing infrastructure by 100 mmcf/d or 30%, ensuring this low cost advantage can continue in the future. Peyto's land position in the Alberta Deep Basin also grew by more than 30% resulting in the addition of 1.6 new booked horizontal drilling locations for every well drilled in 2012. Production revenues were maximized with the installation of Peyto's enhanced NGL extraction facilities at the Company's Oldman gas plant. Peyto's profitable, returns driven strategy once again delivered an attractive total return on shareholder's capital in 2012.
(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 year divided by Revenue before Royalties but including realized hedging gains (losses).Natural gas volumes recorded in thousand cubic feet (mcf) are converted tobarrels of oil equivalent (boe) using the ratio of six (6) thousand cubicfeet to one (1) barrel of oil (bbl). Natural gas liquids and oil volumes inbarrel 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. Thiscould be misleading if used in isolation as it is based on an energyequivalency conversion method primarily applied at the burner tip and doesnot represent a value equivalency at the wellhead.---------------------------------------------------------------------------- 3 Months Ended December 31 % 2012 2011 Change----------------------------------------------------------------------------OperationsProduction Natural gas (mcf/d) 266,808 212,715 25% Oil & NGLs (bbl/d) 5,286 3,947 34% Thousand cubic feet equivalent (mcfe/d @ 1:6) 298,522 236,394 26% Barrels of oil equivalent (boe/d @ 6:1) 49,754 39,399 26%Product prices Natural gas ($/mcf) 3.45 4.21 (18)% Oil & NGLs ($/bbl) 73.01 88.04 (17)% Operating expenses ($/mcfe) 0.31 0.35 (11)% Transportation ($/mcfe) 0.11 0.12 (8)% Field netback ($/mcfe) 3.62 4.32 (16)% General & administrative expenses ($/mcfe) 0.02 0.05 (60)% Interest expense ($/mcfe) 0.32 0.35 (9)%Financial ($000, except per share)Revenue 120,310 114,263 5%Royalties 9,205 9,870 (7)%Funds from operations 93,948 80,410 17%Funds from operations per share 0.65 0.60 8%Total dividends 26,178 24,245 8%Total dividends per share 0.18 0.18 -Payout ratio (%) 28 30 (7)%Earnings 25,823 26,036 (1)%Earnings per share 0.18 0.19 (5)%Capital expenditures 156,847 94,688 66%Weighted average shares outstanding 145,449,651 133,913,301 9%As at December 31Net debt (before future compensation expense and unrealized hedging gains)Shareholders' equityTotal assets------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 12 Months Ended December 31 % 2012 2011 Change----------------------------------------------------------------------------OperationsProduction Natural gas (mcf/d) 238,490 189,653 26% Oil & NGLs (bbl/d) 4,778 3,856 24% Thousand cubic feet equivalent (mcfe/d @ 1:6) 267,160 212,789 26% Barrels of oil equivalent (boe/d @ 6:1) 44,527 35,465 26%Product prices Natural gas ($/mcf) 3.23 4.47 (28)% Oil & NGLs ($/bbl) 73.92 81.67 (9)% Operating expenses ($/mcfe) 0.32 0.35 (9)% Transportation ($/mcfe) 0.12 0.13 (8)% Field netback ($/mcfe) 3.46 4.46 (22)% General & administrative expenses ($/mcfe) 0.04 0.06 (33)% Interest expense ($/mcfe) 0.13 0.28 (54)%Financial ($000, except per share)Revenue 411,400 424,560 (3)%Royalties 30,754 41,064 (25)%Funds from operations 313,243 314,622 -Funds from operations per share 2.22 2.36 (6)%Total dividends 101,593 96,068 6%Total dividends per share 0.72 0.72 -Payout ratio (%) 33 31 6%Earnings 93,951 128,183 (27)%Earnings per share 0.67 0.96 (30)%Capital expenditures 617,985 379,061 63%Weighted average shares outstanding 141,093,829 133,196,301 6%As at December 31Net debt (before future compensation expense and unrealized hedging gains) 662,461 465,391 42%Shareholders' equity 1,210,067 1,015,708 19%Total assets 2,203,524 1,800,252 22%------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 3 Months Ended 12 Months Ended December 31 December 31($000) 2012 2011 2012 2011---------------------------------------------------------------------------- Cash flows from operating activities 78,878 85,592 284,309 289,995Change in non-cash working capital 4,457 (19,139) 12,920 3,085Change in provision for performance based compensation (7,712) (8,739) (2,819) (1,154)Gain on disposition of assets 3,870 - 4,378 - Income tax paid on account of 2003 reassessment 1,868 - 1,868 - Performance based compensation 12,587 22,696 12,587 22,696---------------------------------------------------------------------------- Funds from operations 93,948 80,410 313,243 314,622---------------------------------------------------------------------------- Funds from operations per share 0.65 0.60 2.36 2.36----------------------------------------------------------------------------(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 dividends may vary.
