Peyto Announces Reduced Capital Program, Reduced Dividend and COVID-19 Preparedness

CALGARY, Alberta, April 15, 2020 (GLOBE NEWSWIRE) -- 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.