Peyto Exploration & Development Corp. Increases Reserves Per Share 19% and Production Per Share 33% in 2011

Friday, Feb 17, 2012

Peyto Exploration & Development Corp. (TSX:PEY) is pleased to present the results and analysis of the independent reserve report effective December 31, 2011. The evaluation encompassed 100% of Peyto's reserve assets and was conducted by InSite Petroleum Consultants.

Peyto successfully executed the largest capital program in its thirteen year history during 2011, resulting in substantial growth in production and reserves. All of the activity was focused on the company's multi-zone, liquids rich, natural gas resource plays located in the Alberta Deep Basin. Production(1) grew 38%, from 30,600 boe/d at year end 2010 to 42,100 boe/d at year end 2011, while reserves grew 24% from 260 mmboes to 322 mmboes (33% and 19%, respectively per share). This represents the 13th consecutive year that Peyto has grown its reserves per share.

BASE RESERVES

Peyto's existing Proved Producing reserves at the start of 2011 (base reserves) were evaluated and adjusted for 2011 production as well as any technical revisions resulting from the additional twelve months of data. As part of InSite's independent engineering analysis, all 710 producing entities were evaluated. These producing wells and zones represent a total gross Estimated Ultimate Recoverable (EUR) volume of 1.2 TCF plus associated liquids.

Included in this group of producing wells are 43 horizontal wells which were drilled and completed with multi-stage fracture stimulations prior to 2011. Original reserve assignments for these wells were conservative due to a lack of analog production performance data. Over time, these wells have outperformed expectations and have received an average Proven Producing reserve increase of 10% from 3.2 BCFe/well to 3.5 BCFe/well.

In aggregate, Peyto is pleased to report that its total base reserves continue to meet with expectation, which increases the confidence in the prediction of future recoveries.

Price Forecasts

InSite's Alberta spot natural gas price forecast for the next 15 years, which begins with $3.25 C$/MMBTU, is starting 18% lower today than a year ago. This is due to a reduction in forecasted Henry Hub natural gas price and an increase in the CND$/USD$ exchange rate.

The Insite forecast for Alberta Condensate price, which accounts for over 62% of Peyto's total natural gas liquid production, starts 12% higher, or $102.90/bbl. The debt adjusted NPV, discounted at 5%, of last year's Proved Producing reserves, decreased 10% due to this change in commodity price forecasts, as described in the following value reconciliation.

The InSite Petroleum Consultants price forecast used in the variable dollar economics is available on their website at www.insitepc.com.

Source: Marketwire

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