CALGARY, ALBERTA — (Marketwire) — 11/07/12 — Peyto Exploration & Development Corp. (“Peyto” or “the Company”) (TSX: PEY) is pleased to present its operating and financial results for the third quarter of the 2012 fiscal year. With a third quarter 2012 operating margin of 75%(1) and profit margin of 23%(2), Peyto grew production per share for the twelfth consecutive quarter. Highlights of the 2012 third quarter include:
Third quarter 2012 in Review
The third quarter of 2012 was an historic time for Peyto. The acquisition of Open Range represented the first major corporate acquisition in the Company–s fourteen year history. The properties that were acquired were a natural fit with Peyto–s Greater Sundance core area and included strategic facility and pipeline infrastructure that can be expanded and integrated into Peyto–s existing system. In addition, 99 net sections of land were included containing over 100 future drilling locations of similar quality to Peyto–s existing inventory of future locations. The Peyto team quickly and efficiently integrated Open Range into its business without disrupting a very active quarter that saw 6 to 8 drilling rigs running throughout. Inclusive of the acquired properties, Peyto maintained its industry leading low cost advantage with total cash costs of $1.00/Mcfe ($6.02/boe). Peyto–s total borrowing capacity was expanded to $880 million, reflecting the value of the additional properties, including the issue of $50 million of additional senior secured 10 year notes. The company maintained its financial flexibility with quarter ending net debt of $684 million or 2.2 times annualized Funds from Operations. Despite low natural gas prices, earnings of $0.16/share were generated, delivering 9% Return on Equity (ROE) and 7% Return on Capital Employed (ROCE).
Exploration & Development
While drilling at the start of the third quarter focused on the development of the more liquids-rich formations in Peyto–s inventory, like the Cardium and Falher, more recent activity has shifted back to the less liquids-rich, deeper formations like the Notikewin, Wilrich and Bluesky. This is due to improving natural gas prices which result in improved economics for the deeper, drier gas zones that enjoy greater royalty incentives.
At currently forecast natural gas prices, effectively all of the formations that Peyto develops within its core areas can yield similar full cycle, before tax, internal rates of return. Peyto has been nimble with its capital allocation and has quickly redirected its drilling efforts to diversify development activity amongst all of the potential targets.
During the quarter Peyto acquired 17 sections of new land at crown land sales, bringing total 2012 land acquisitions to 41.3 net sections. This is in addition to the 104.2 net sections of land added through property and corporate acquisitions. All 145.5 net sections are adjacent to or within Peyto–s existing core areas. In total, net of expiries, Peyto–s Deep Basin land position has grown by 28% in 2012, or 134 net sections (85,600 net acres).
Capital Expenditures
In addition to the $187 million acquisition of Open Range, Peyto had an active quarter of drilling activity. In total, Peyto invested $130 million in the building of new assets with $59 million spent drilling 30 gross (25.8 net) wells, $35 million spent completing 24 gross (20.2 net) wells, and $11 million spent on wellsite equipment and pipelines to bring on 24 gross (20.2 net) producing wells. A further $6 million was invested to expand current facilities, while the balance or $19 million was invested in the acquisition and evaluation of new undeveloped lands.
Overall, drilling times continued to shorten as rig crews became more practiced with Peyto–s drilling design. In 2012, the average horizontal well has taken just 20 days to drill, down more than 30% from 30 days in 2010. At the same time, the average horizontal well length in 2012 is 109 m longer. These efficiency gains not only translate into reduced capital cost but they allow Peyto to drill more wells with fewer rigs and less technical staff.
Financial Results
Alberta (AECO Monthly) natural gas prices averaged $2.08/GJ in the third quarter 2012, resulting in a Peyto unhedged realized price of $2.38/mcf before hedging gains of $0.68/mcf. Meanwhile, Edmonton light oil prices averaged $82.71/bbl from which Peyto realized $68.62/bbl (or 83%) for its oil and natural gas liquids blend of Condensate, Pentane, Butane and Propane. Combined Peyto–s unhedged revenues totaled $3.41/mcfe ($4.01/mcfe including hedging gains), or 164% of the dry gas price.
Peyto maintained its industry leading low cash costs in the quarter, despite the integration of the higher cost Open Range production, with average royalties of $0.26/Mcfe ($1.57/boe), operating costs of $0.35/Mcfe ($2.09/boe), transportation of $0.11/Mcfe ($0.68/boe), G&A of $0.03/Mcfe ($0.18/boe) and interest of $0.25/Mcfe ($1.50/boe). These cash costs totaled $1.00/Mcfe ($6.02/boe) and were deducted from revenues to yield a cash netback of $3.01/Mcfe ($18.08/boe), or a 75% operating margin. This industry leading operating margin has now been achieved for sixteen consecutive quarters and highlights Peyto–s commitment to be the lowest cost producer in the Canadian industry.
Depletion, depreciation and amortization charges of $1.72/Mcfe, along with a provision for future tax and market based bonus payments, reduced the cash netback to earnings of $0.91/Mcfe or a 23% profit margin.
During the quarter Peyto–s syndicate of lenders increased Peyto–s borrowing base to $880 million, reflecting the addition of the ONR assets. As well, on September 6, 2012, Peyto issued $50 million of senior secured notes pursuant to a note purchase and private shelf agreement with Prudential Investment Management Inc. The notes have a coupon rate of 4.88% and mature on September 6, 2022. Including this latest issue, Peyto now has $150 million of senior secured notes outstanding which rank equally with Peyto–s revolving bank facility of $730 million. With quarter end net debt of $684 million, Peyto has $196 million of available borrowing capacity ensuring future financial flexibility.
Marketing
Approximately 49% of Peyto–s natural gas production in the quarter had been pre-sold in forward sales done over the previous year at an average price of $3.23/GJ. The remaining balance of production was subject to AECO monthly spot prices that averaged $2.08/GJ. On a blended basis, Peyto–s realized gas price was $2.64/GJ or $3.06/mcf, reflective of Peyto–s high heat content natural gas production.
The company–s hedging practice of layering in future sales in the form of fixed price swaps, in order to smooth out the volatility in natural gas price, continued throughout the quarter. By the end of the third quarter Peyto had committed to the future sale of 59,695,000 gigajoules (GJ) of natural gas at an average price of $3.15/GJ or $3.68/mcf, based on Peyto–s historical heat content. The following table summarizes the remaining hedged volumes and prices for the upcoming years, effective September 30, 2012:
As illustrated in the following table, Peyto–s realized natural gas liquids prices(1) were down 12% year over year and 4% from the previous quarter.
Peyto–s hedging practice with respect to Propane and Butane also continued in the quarter and by the end of the third quarter Peyto had committed to the future sale of 186,000 bbls of Propane and Butane at an average price of $51.12USD/bbl. The following table summarizes the hedged volumes and prices for the upcoming years.
As at September 30, 2012, Peyto had committed to the future sale of 204,400 barrels of oil and natural gas liquids at an average price of $54.62 USD per barrel and 59,695,000 gigajoules (GJ) of natural gas at an average price of $3.15 per GJ. Had these contracts been closed on September 30, 2012, Peyto would have realized a gain in the amount of $2.9 million.
ONR Acquisition Update
On August 14, 2012 Peyto closed the acquisition of Open Range Energy Corp. for an effective total capital cost of $187.2 million. The acquisition was conducted pursuant to a plan of arrangement with Peyto exchanging 0.0723 Peyto shares for each Open Range share (5.4 million shares total) and assuming the $75 million in net debt (inclusive of transaction costs).
Integration of the Open Range asset base was concluded shortly after closing and drilling activity commenced on former ONR lands on September 17, 2012. So far, 5 wells have been drilled and 1 gross (0.6 net) well brought on production which has maintained production from the acquired lands at 5,100 boe/d. For the quarter, the ONR acquisition contributed production for 47 days or approximately 2,600 boe/d of average production.
Activity Update
Peyto currently has 8 drilling rigs running, which will increase to 9 by mid-November, out of approximately 90 natural gas directed rigs in the Western Canadian Sedimentary Basin (WCSB) making Peyto one of the busiest natural gas drillers in Canada. This counter cyclical strategy to invest in natural gas when most of the industry is not, allows Peyto improved purchasing power for services, materials and labor which lowers absolute development costs and improves shareholder returns. This strategy has resulted in Peyto building over 18,000 boe/d of new production since the start of 2012 at industry leading capital efficiencies of less than $18,000/boe/d. The new volume additions combined with acquired volumes of 4,700 boe/d and base production of 28,300 boe/d equates to current production of 51,000 boe/d.
In addition, Peyto has 7 gross (6.5 net) wells that are drilled but waiting on completion, and 5 gross (4.0 net) wells completed but waiting on tie in, which represents approximately 6,000 boe/d of behind pipe production. In the past, Peyto has not had this much productive capacity waiting on completion and tie in operations but recent pad drilling techniques, which significantly reduce rig move costs, have delayed wellsite access for completions and pipelining operations. The economic benefit of reduced drilling costs significantly outweighs the short term delay in production additions. The company remains on track to exit 2012 at approximately 57,000 boe/d.
The enhanced liquids recovery project at Peyto–s Oldman gas plant, which was originally scheduled to be completed by October 1, 2012, is now expected to be completed and operational by the end of November. An unexpected delay in the delivery of a major component and subsequent construction delays has set the project back eight weeks. Upon completion, it is expected that the Oldman liquid yield will increase from 25 bbl/mmcf to 40 bbl/mmcf, principally from improved Propane and Butane recoveries.
2013 Budget
The Board of Directors has approved a preliminary 2013 budget which includes a capital program expected to range between $450 and $500 million. This record level of investment anticipates that 8 drilling rigs will remain active throughout the year, developing several of the stacked formations within Peyto–s Deep Basin core areas. As with past years, it is forecast that over 80% of the capital will be directed to well-related activity including drilling, completions, wellsite equipment and pipelines. In addition, both facility expansion and additional liquids recovery (“deep cut”) projects will account for 15% of the total capital. The remaining capital will be directed to new land acquisitions and seismic evaluation.
A total of 100 gross, 85 net wells are forecast to be drilled in 2013 from over 1,000 locations in Peyto–s existing inventory. This is expected to result in the addition of between 25,000 to 29,000 boe/d of new production and assumes that similar capital efficiencies to the past four years of $17,500/boe/d can also be successfully achieved in 2013. A portion of this new production will offset an internally forecast 34% base decline, while a portion will grow overall 2013 production to a forecast exit level between 62,000 boe/d and 67,000 boe/d.
AECO natural gas prices in 2013 are currently forecast to average approximately $3.40/GJ, up almost 50% from average 2012 levels. This price, combined with oil prices forecast to average $90/bbl and Peyto–s industry leading low cash costs of $1/Mcfe ($6/boe), would result in strong cash netbacks and the ability to fund the dividend and the majority of the 2013 capital program. The balance of the capital program can be funded from available bank lines, working capital and equity, while still maintaining a strong balance sheet.
Outlook
The remainder of 2012 and full year 2013 is forecast to be one of the most active periods in Peyto–s history. It comes at a time when the rest of the Canadian industry is not focused on developing natural gas resources as most plays do not provide an economic return at current prices. The number of active, natural gas directed drilling rigs in Canada is clear evidence of that fact. Peyto–s unique low cost structure in combination with its focused, returns driven strategy allows the company to take a very counter cyclical approach which has delivered superior total returns to shareholders in the past. Fortunately, Peyto–s current inventory of profitable drilling opportunities has never been greater.
The company–s financial flexibility, quality asset base and strong balance sheet position Peyto to be opportunistic in this environment. As always, capital investments will only be pursued if return objectives can be met.
Conference Call and Webcast
A conference call will be held with the senior management of Peyto to answer questions with respect to the 2012 third quarter on Thursday, November 8th, 2012, at 9:00 a.m. Mountain Standard Time (MST), or 11:00 a.m. Eastern Standard Time (EST). To participate, please call 1-800-734-8592. The conference call will also be available on replay by calling 1-800-633-8284 (North American Toll Free) or 1-402-997-9140 (for those outside North America) using passcode 21608617. The replay will be available at 11:00 a.m. MST, 1:00 p.m. EST Thursday, November 8th, 2012 until 11:00 am MST on Thursday, November 15th, 2012. In addition to telephone access, the conference call can be accessed through the internet at . After this time the conference call will be archived on the Peyto Exploration & Development website at .
Management–s Discussion and Analysis
Management–s Discussion and Analysis of this third quarter report is available on the Peyto website at . A complete copy of the third quarter report to shareholders, including the Management–s Discussion and Analysis, and Financial Statements is also available at and will be filed at SEDAR, , at a later date. Shareholders and interested investors are encouraged to visit the Peyto website where there is a wealth of information designed to educate and inform.
Darren Gee
President and CEO
November 7, 2012
Certain information set forth in this document and Management–s Discussion and Analysis, including 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, industry conditions, volatility of commodity 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. Any “financial outlook” or “future oriented financial information” in this press release, as defined by applicable securities legislation has been approved by management of Peyto. Such financial outlook or future oriented financial information is provided for the purpose of providing information about management–s current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Other than is required pursuant to applicable securities law, Peyto does not undertake to update forward looking statements at any particular time.
Peyto Exploration & Development Corp.
Notes to Condensed Consolidated Financial Statements (unaudited)
As at September 30, 2012 and 2011
(Amount in $ thousands, except as otherwise noted)
1. Nature of operations
Peyto Exploration & Development Corp. and its wholly subsidiary Open Range Energy Corp. (“Open Range”), (collectively “Peyto” or the “Company”) is a Calgary based oil and natural gas company. Peyto conducts exploration, development and production activities in Canada. Peyto is incorporated and domiciled in the Province of Alberta, Canada. The address of its registered office is 1500, 250 – 2nd Street SW, Calgary, Alberta, Canada, T2P 0C1.
These financial statements were approved and authorized for issuance by the Audit Committee of Peyto on November 6, 2012.
2. Basis of presentation
The condensed consolidated financial statements have been prepared by management and reported in Canadian dollars in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”. These condensed consolidated financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the Company–s Financial Statements for the year ended December 31, 2011.
The timely preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies, if any, as at the date of the financial statements and the reported amounts of revenue and expenses during the period. By their nature, estimates are subject to measurement uncertainty and changes in such estimates in future years could require a material change in the condensed consolidated financial statements.
All accounting policies and methods of computation followed in the preparation of these condensed consolidated financial statements are the same as those disclosed in Note 2 of Peyto–s audited Financial Statements as at and for the years ended December 31, 2011 and 2010. Any reference to “Peyto” or the “Company” throughout these financial statements refers to the Company and its subsidiary. All inter-entity transactions have been eliminated.
3. Corporate Acquisition
On August 14, 2012, Peyto completed the acquisition, by plan of arrangement, of all issued and outstanding common shares of Open Range. The total consideration of approximately $187.2 million paid for by the issuance of 5.4 million shares and the assumption of Open Range–s long-term debt and working capital deficiency ($193.6 million was allocated to Property, plant & equipment). Transaction costs of approximately $0.6 million are included in the financial statements.
The Open Range properties are a natural fit with Peyto–s Greater Sundance core area. Open Range–s plant and pipeline infrastructure complements Peyto–s existing core assets and accesses other proven Peyto lands adjacent to the main Sundance area. This will allow for the accelerated development of the Peyto step-out areas.
The above amounts are estimates, which were made by management at the time of the preparation of these condensed consolidated financial statements based on information then available. Amendments may be made as amounts subject to estimates are finalized.
If Peyto had acquired Open Range on January 1, 2012, the pro-forma results of the oil and gas sales, net income and comprehensive income for the period ended September 30, 2012 would have been as follows;
Proceeds received for assets disposed of during the three and nine month periods ended September 30, 2012 were $1.0 million and $1.2 million (2011 – $nil and $1.5 million).
During the three and nine month periods ended September 30 2012, Peyto capitalized $2.3 million and $4.8 million (2011 – $1.7 million and $4.4 million) of general and administrative expense directly attributable to production and development activities.
Peyto has a syndicated $730 million extendible revolving credit facility with a stated term date of April 28, 2013. The bank facility is made up of a $30 million working capital sub-tranche and a $700 million production line. The facilities are available on a revolving basis for a period of at least 364 days and upon the term out date may be extended for a further 364 day period at the request of Peyto, subject to approval by the lenders. In the event that the revolving period is not extended, the facility is available on a non-revolving basis for a further one year term, at the end of which time the facility would be due and payable. Outstanding amounts on this facility will bear interest at rates ranging from prime plus 1.25% to prime plus 2.75% determined by Peyto–s debt to earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) ratios ranging from less than 1:1 to greater than 2.5:1. A General Security Agreement with a floating charge on land registered in Alberta is held as collateral by the bank.
On January 3, 2012, Peyto issued CDN $100 million of senior secured notes pursuant to a note purchase and private shelf agreement. The notes were issued by way of private placement and rank equally with Peyto–s obligations under its bank facility. The notes have a coupon rate of 4.39% and mature on January 3, 2019. Interest will be paid semi-annually in arrears.
On September 6, 2012, Peyto issued CDN $50 million of senior secured notes pursuant to a note purchase and private shelf agreement. The notes were issued by way of private placement and rank equally with Peyto–s obligations under its bank facility. The notes have a coupon rate of 4.88% and mature on September 6, 2022. Interest will be paid semi-annually in arrears.
Upon the issuance of the senior secured notes January 3, 2012, Peyto became subject to the following financial covenants as defined in the credit facility and note purchase and private shelf agreements:
Peyto is in compliance with all financial covenants at September 30, 2012.
Peyto–s total borrowing capacity is $880 million and Peyto–s net credit facility is $730 million.
Total interest expense for the three and nine month periods ended September 30, 2012 was $6.4 million and $16.5 million (2011 – $5.2 million and $14.3 million) and the average borrowing rate for the three and nine month periods was 4.6% and 4.4% (2011 – 4.4% and 4.4%).
Peyto makes provision for the future cost of decommissioning wells, pipelines and facilities on a discounted basis based on the commissioning of these assets.
The decommissioning provision represents the present value of the decommissioning costs related to the above infrastructure, which are expected to be incurred over the economic life of the assets. The provisions have been based on Peyto–s internal estimates of the cost of decommissioning, the discount rate, the inflation rate and the economic life of the infrastructure. Assumptions, based on the current economic environment, have been made which management believes are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual decommissioning costs will ultimately depend upon the future market prices for the necessary decommissioning work required which will reflect market conditions at the relevant time. Furthermore, the timing of the decommissioning is likely to depend on when production activities cease to be economically viable. This in turn will depend and be directly related to the current and future commodity prices, which are inherently uncertain.
The following table reconciles the change in decommissioning provision:
Peyto has estimated the net present value of its total decommissioning provision to be $63.8 million as at September 30, 2012 ($38.0 million at December 31, 2011) based on a total future undiscounted liability of $131.6 million ($101.2 million at December 31, 2011). At September 30, 2012 management estimates that these payments are expected to be made over the next 50 years with the majority of payments being made in years 2040 to 2061. The Bank of Canada–s long term bond rate of 2.32 per cent (2.49 per cent at December 31, 2011) and an inflation rate of two per cent (two per cent at December 31, 2011) were used to calculate the present value of the decommissioning provision.
7. Shareholders– capital
Authorized: Unlimited number of voting common shares
Peyto reinstated its amended distribution reinvestment and optional trust unit purchase plan (the “Amended DRIP Plan”) effective with the January 2010 distribution whereby eligible unitholders could elect to reinvest their monthly cash distributions in additional trust units at a 5 percent discount to market price. The DRIP plan incorporated an Optional Trust Unit Purchase Plan (“OTUPP”) which provided unitholders enrolled in the DRIP with the opportunity to purchase additional trust units from treasury using the same pricing as the DRIP. The DRIP and the OTUPP plans were cancelled December 31, 2010.
On December 31, 2010, Peyto completed a private placement of 655,581 common shares to employees and consultants for net proceeds of $12.4 million ($18.95 per share). These common shares were issued on January 6, 2011.
On January 14, 2011, 279,723 common shares (113,527 pursuant to the DRIP and 166,196 pursuant to the OTUPP) were issued for net proceeds of $4.9 million.
On March 25, 2011, Peyto completed a private placement of 250,615 common shares to employees and consultants for net proceeds of $4.7 million ($18.86 per share).
On December 16, 2011, Peyto closed an offering of 4,899,000 common shares at a price of $23.50 per common share, receiving proceeds of $110.1 million (net of issuance costs).
On December 31, 2011 Peyto completed a private placement of 397,235 common shares to employees and consultants for net proceeds of $9.7 million ($24.52 per share). These common shares were issued on January 13, 2012.
On March 23, 2012 Peyto completed a private placement of 128,420 common shares to employees and consultants for net proceeds of $2.2 million ($17.22 per share).
On August 14, 2012 Peyto issued 5,404,007 common shares which were valued at $112.0 million (net of issuance costs) ($20.76 per share) in relation to the closing of a corporate acquisition (Note 3).
Per share amounts
Earnings per share have been calculated based upon the weighted average number of common shares outstanding for the three and nine month periods ended September 30, 2012 were 142,069,048 and 139,631,290 (2011 – 133,061,301 and 132,954,410). There are no dilutive instruments outstanding.
Dividends
During the three and nine month periods ended September 30, 2012, Peyto declared and paid dividends of $0.18 and $0.54 per common share or $0.06 per common share per month, totaling $25.6 million and $75.4 million (2011 – $0.18 and $0.54 per share or $0.06 per share per month, $24.0 million and $71.8 million).
Comprehensive income
Comprehensive income consists of earnings and other comprehensive income (“OCI”). OCI comprises the change in the fair value of the effective portion of the derivatives used as hedging items in a cash flow hedge. “Accumulated other comprehensive income” is an equity category comprised of the cumulative amounts of OCI.
Accumulated hedging gains
Gains and losses from cash flow hedges are accumulated until settled. These outstanding hedging contracts are recognized in earnings on settlement with gains and losses being recognized as a component of net revenue. Further information on these contracts is set out in Note 9.
8. Future performance based compensation
Peyto awards performance based compensation to employees annually. The performance based compensation is comprised of reserve and market value based components.
Reserve based component
The reserves value based component is 4% of the incremental increase in value, if any, as adjusted to reflect changes in debt, equity, dividends, general and administrative costs and interest, of proved producing reserves calculated using a constant price at December 31 of the current year and a discount rate of 8%.
Market based component
Under the market based component, rights with a three year vesting period are allocated to employees. The number of rights outstanding at any time is not to exceed 6% of the total number of common shares outstanding. At December 31 of each year, all vested rights are automatically cancelled and, if applicable, paid out in cash over the three year vesting period. Compensation is calculated as the number of vested rights multiplied by the total of the market appreciation (over the price at the date of grant) and associated dividends of a common share for that period.
The fair values were calculated using a Black-Scholes valuation model. The principal inputs to the valuation model were:
9. Risk management contracts
Peyto uses derivative instruments to reduce its exposure to fluctuations in commodity prices. Peyto considers all of these transactions to be effective economic hedges for accounting purposes.
Following is a summary of all risk management contracts in place as at September 30, 2012:
As at September 30, 2012, Peyto had committed to the future sale of 204,400 barrels of oil and natural gas liquids at an average price of $54.62 USD per barrel and 59,695,000 gigajoules (GJ) of natural gas at an average price of $3.15 per GJ or $3.68 per mcf. Had these contracts been closed on September 30, 2012, Peyto would have realized a gain in the amount of $2.9 million. If the AECO gas price on September 30, 2012 were to increase by $1/GJ, the unrealized gain would decrease by approximately $59.7 million. An opposite change in commodity prices rates would result in an opposite impact on other comprehensive income.
Subsequent to September 30, 2012 Peyto entered into the following contracts:
10. Commitments and contingencies
Peyto has contractual obligations and commitments as follows:
Contingent liability
From time to time, Peyto is the subject of litigation arising out of its day-to-day operations. Damages claimed pursuant to such litigation may be material or may be indeterminate and the outcome of such litigation may materially impact Peyto–s financial position or results of operations in the period of settlement. While Peyto assesses the merits of each lawsuit and defends itself accordingly, Peyto may be required to incur significant expenses or devote significant resources to defending itself against such litigation. These claims are not currently expected to have a material impact on Peyto–s financial position or results of operations.
Officers
Contacts:
Peyto Energy Trust
Darren Gee
President and CEO
403.261.6081
403.451.4100 (FAX)