Peyto Exploration & Development Corp. press release
Peyto Delivers Strong Reserves Additions in 2025
TSX - Toronto Stock Exchange · Natural Gas · Natural Gas Liquids · Oil · Canada
Peyto Delivers Strong Reserves Additions in 2025
CALGARY, Alberta, Feb. 19, 2026 (GLOBE NEWSWIRE) -- Peyto Exploration & Development Corp. ("Peyto" or the "Company") (TSX: PEY) is pleased to present the results and in-depth analysis of its independent reserves report effective December 31, 2025. The evaluation encompassed 100% of Peyto’s reserves and was conducted by GLJ Ltd. ("GLJ"). This marks the Company’s 27th year of successful reserves development. Certain financial and operating information included in this news release is based on estimated unaudited financial results for the year ended December 31, 2025. See "Unaudited Financial Information" in the Advisories section of this news release.
2025 HIGHLIGHTS
The Company added 504 BCFe1 (84 MMboe2) of new Proved Developed Producing ("PDP") reserves at a Finding, Development and Acquisition3 ("FD&A") cost of $0.94/Mcfe ($5.66/boe), Peyto’s lowest in 23 years. The Company’s continuous focus on adding reserves at low costs has generated a three-year average PDP FD&A of $1.05/Mcfe.
Peyto invested $475 million of capital4 in 2025, using 55% of funds from operations5 ("FFO"), while returning $265 million in dividends to shareholders and decreasing net debt6 by $170 million.
The Company achieved record production in December of 145 Mboe/d (763 MMcf/d gas, 18,270 bbl/d NGLs), generating an exit rate capital efficiency7 of $9,900/boe/d.
A systematic hedging program and market diversification strategy, paired with Peyto’s low operating cost structure, delivered an average field netback8 of $3.61/Mcfe ($21.66/boe). This netback, combined with a low PDP FD&A, resulted in a recycle ratio9 of 3.8 times (2.9 times excluding hedges), Peyto's highest in 22 years.
Peyto delivered reserves growth across all categories in 2025 through its successful drilling program. PDP reserves increased 7% to 509 MMboe, Total Proved ("TP") reserves increased 6% to 926 MMboe, and Total Proved plus Probable ("P+P") reserves increased 6% to 1,450 MMboe. On a per‑share basis, reserves grew 4%, 3%, and 3% for PDP, TP, and P+P, respectively. Since inception, the Company has generated a 20% compound annual growth rate10 ("CAGR") in PDP reserves per share.
Peyto’s capital investment replaced 172%, 203% and 270% of annual production with new PDP, TP, and P+P reserves, respectively.
The before‑tax, 10% discounted net present value ("BT NPV10") of the Company’s reserves is $5.0 billion on a PDP basis, $6.9 billion on a TP basis, and $9.4 billion on a P+P basis. Peyto’s 2025 capital program delivered a 2% increase in PDP reserve value and a 5% increase on a debt‑adjusted per‑share basis, compared to the prior year, despite lower forecasted pricing used by GLJ in this year’s evaluation.
Total Company BT NPV10 for PDP, TP, and P+P reserves on a debt‑adjusted basis implies values of $19 per share, $28 per share, and $40 per share, respectively, using the January 1, 2026, Three‑Consultant Average ("3CA") price forecast (GLJ, McDaniel, and Sproule).
The Reserve Life Index11 ("RLI") for PDP reserves remains unchanged at 10 years, while Peyto grew year-over-year fourth quarter production by 5.5%. TP and P+P reserves RLI also remain unchanged at 18 and 28 years, respectively, supported by the Company’s industry-leading cash costs. Peyto’s PDP reserve life is one of the longest in the industry.
Peyto consistently develops reserves at a lower cost than originally forecasted, providing confidence in valuing the Company’s over 1,600 undeveloped booked locations.
The Company’s TP and P+P FD&A costs, inclusive of changes to future development capital, were $0.96/Mcfe ($5.78/boe) and $0.83/Mcfe ($4.98/boe), respectively, with corresponding field netback recycle ratios of 3.7 and 4.3 times, including hedges.
2026 CAPITAL BUDGET
The Board of Directors of Peyto has approved a 2026 capital budget of $450–$500 million. The capital program is projected to add between 43,000 and 48,000 boe/d of new production by year end and more than offset the Company’s estimated 26% to 28% decline in base production. The Company expects to utilize four to five drilling rigs to drill 70–80 net horizontal wells, representing approximately 80% of the 2026 budget. The remaining capital is planned for optimization and maintenance projects for Peyto’s 13 operating gas plants and extensive gathering system infrastructure. An incremental $13 million is expected to be spent on abandonment and reclamation activities.
Peyto’s active hedging program has secured prices for approximately 475 MMcf/d of natural gas for 2026 at an average price over $4.00/Mcf, and when combined with the Company’s liquids hedges, provides revenue certainty of over $830 million, reflecting one of the highest levels of price protection in the industry. This fixed revenue more than covers the planned capital program and dividends to shareholders for the year and allows for continued debt repayment at current commodity price forecasts.
Additionally, the Company's market diversification to non-AECO hubs is positioned for another solid year. For the first quarter of 2026, all of Peyto's floating-price exposure to Chicago, Dawn, Parkway, Emerson 2 and Malin is contracted to daily benchmark indexes, which allowed the Company to capture high daily prices during the most recent cold weather-related volatility in the premium US Mid-West and Ontario markets.
As always, Peyto’s capital program will remain flexible to respond to changing commodity prices. However, the Company’s strong hedge book, market diversification and industry leading cash costs insulate the effects of short-term volatility and allow the efficient development of the Company’s high-quality assets.
HISTORICAL PERSPECTIVE
Over the past 27 years, Peyto has acquired, explored and discovered 12 TCFe of Alberta Deep Basin natural gas and associated liquids, of which 60% has now been developed12.
Peyto 27-year cumulative production*:3.26TCFe
Total Proved + Probable Developed reserves*:3.91TCFe
Total Developed natural gas and liquids*:7.17TCFe
Total Proved + Probable Undeveloped reserves*:4.79TCFe
Total acquired, explored for and discovered*:11.96TCFe
* As at December 31, 2025
Each year the Company invests in the discovery of new reserves and the efficient and profitable development of existing reserves into high netback natural gas and NGL production for the purpose of generating the maximum possible return on capital for its shareholders.
In those 27 years, a total of $9.4 billion was invested in the Canadian economy in the acquisition and development of 7.2 TCFe of total developed natural gas and associated liquids at an average cost of $1.31/Mcfe, while a weighted average field netback of $3.47/Mcfe delivered $10 billion in FFO, $3.4 billion in dividends and distributions to shareholders, and resulted in a cumulative recycle ratio of 2.6 times. Royalty payments made to Alberta during this time have totaled over $1.3 billion.
Based on the December 31, 2025, evaluation, net debt of $1.18 billion at December 31, 2025, and 203.3 million shares outstanding at December 31, 2025, the debt‑adjusted BT NPV10 of the Company’s P+P reserves was $40 per share. This value is comprised of $25 per share attributable to developed reserves and $15 per share attributable to undeveloped reserves. The assessment includes a full provision for abandonment and reclamation liabilities associated with all wells, well sites, and facilities for which Peyto has ownership and responsibility. The evaluation excludes financial hedges but includes market diversification contracts.
2025 RESERVES REPORT AND ANALYSIS
The following table summarizes Peyto’s reserves and the discounted Net Present Value of future cash flows, before income tax, using the 3CA price forecast. The 3CA price forecast is available on GLJ’s website at www.gljpc.com.
Summary of Crude Oil, Natural Gas and Natural Gas Liquids
Reserves and Before Tax Net Present Values as of Dec 31, 2025
Company GrossBefore Tax Net Present Value ($millions)
Discounted at
Reserve Category(*)Conventional Natural Gas
(BCF)Natural Gas Liquids(**)(Mbbl)BCFe
(6:1)MMboe
(6:1)0%5%8%10%
Proved Developed Producing2,58578,0153,053509$11,025$6,925$5,599$4,970
Proved Non-producing531,1146010$190$113$88$76
Proved Undeveloped2,09258,9662,445408$6,255$3,174$2,252$1,824
Total Proved4,730138,0965,559926$17,470$10,213$7,939$6,870
Probable2,70872,5193,143524$11,731$4,763$3,156$2,492
Total Proved + Probable7,438210,6158,7021,450$29,201$14,976$11,095$9,362
Notes: * Based on the GLJ report effective December 31, 2025. Tables may not add due to rounding.
** Natural gas liquids include immaterial amounts of light & medium crude oil.
The following table presents a reconciliation of the Company’s gross reserves compared to the prior year’s reserves evaluation. The increase in Peyto’s reserves is primarily attributable to development activity completed during the year, as well as positive technical revisions, largely related to wells drilled in 2024.
Reconciliation of Company Gross Reserves
Reserves Reconciliation
Company Gross(*)(**)Conventional Natural Gas (MMcf) Natural Gas Liquids(***)
(Mbbl) Oil Equivalent (Mboe)
Proved Developed Producing
2025 Opening balance2,435,197 67,968 473,834
Extensions and improved recovery400,198 10,397 77,096
Technical revisions12,520 5,594 7,680
Economic factors(4,282)(86)(800)
Production(258,437)(5,857)(48,930)
2025 Closing balance2,585,197 78,015 508,881
Total Proved
2025 Opening balance4,513,457 123,611 875,853
Extensions and improved recovery404,395 11,112 78,511
Technical revisions93,961 9,789 25,449
Dispositions(14,645)(399)(2,840)
Economic factors(8,553)(159)(1,584)
Production(258,437)(5,857)(48,930)
2025 Closing balance4,730,177 138,096 926,459
Total Proved + Probable
2025 Opening balance7,065,157 189,437 1,366,963
Extensions and improved recovery563,809 15,104 109,072
Technical revisions109,692 12,904 31,186
Dispositions(29,379)(801)(5,698)
Economic factors(12,539)(171)(2,261)
Production(258,437)(5,857)(48,930)
2025 Closing balance7,438,303 210,615 1,450,332
* Amounts may not add due to rounding.
** Factors with no values have been removed from the reconciliation.
*** Natural gas liquids include immaterial amounts of light & medium crude oil.
The following table provides a historical summary of technical and economic revisions to the Company’s reserves. Over the past ten years, changes to Peyto’s reserves attributable to technical revisions and economic factors have been on average, slightly positive. This consistency provides confidence in the accuracy and reliability of the Company’s annual reserves evaluation.
Historical Percent Change in Reserves from Technical Revisions and Economic Factors
Reserve Category2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
10 Yr. Simple Avg.
Proved Developed Producing-0.8%0.8%1.0%0.7%-0.1%-2.9%1.5%3.1%0.2%1.4%0.5%
Total
Proved0.2%1.8%4.0%0.3%-1.4%-1.4%1.2%3.1%3.3%2.6%1.4%
Total Proved + Probable-0.3%1.2%2.3%-1.5%-1.2%-1.3%-1.0%1.9%2.8%2.0%0.5%
ANALYSIS FOR PEYTO SHAREHOLDERS
One of the guiding principles at Peyto is "to tell you the business facts that we would want to know if our positions were reversed". Therefore, each year Peyto provides an extensive analysis of the independent reserve evaluation that goes far beyond industry norms to answer the most important questions for shareholders:
Base Reserves – How did the "base reserves" that were on production at the time of the last reserve report perform during the year, and how did any change in commodity price forecast affect their value?
Value Creation – How much value did the 2025 capital investments create, both in current producing reserves and in undeveloped potential? Has the Peyto team earned the right to continue investing shareholders’ capital?
Growth and Income – Are the projected cash flows capable of funding the growing number of undeveloped opportunities and a sustainable dividend stream to shareholders, without sacrificing Peyto’s financial flexibility or allowing for the timely repayment of any debt used?
Risk Assessment – What are the risks associated with the assessment of Peyto’s reserves and the risk of recovering future cashflows from the forecasted production streams?
1. Base Reserves
Peyto’s existing PDP reserves at the start of 2025 (the base reserves) were evaluated and adjusted for 2025 production as well as any technical or economic revisions resulting from the additional twelve months of production and commodity price data. As part of GLJ’s independent engineering analysis, all base 3,192 producing reserve entities (zones/wells) were evaluated. These base producing wells and zones represent a total gross Estimated Ultimate Recoverable ("EUR") volume of 9.6 TCFe (remaining PDP + Probable Additional ("PA") reserves plus all cumulative production to date), which is up 0.1% from the prior year estimate. As a result, Peyto is pleased to report that its total base reserves continue to meet expectations, which provides confidence in the prediction of future recoveries.
For 2026, Peyto estimates a total base decline rate of approximately 26-28% from the monthly average production in December 2025 of 145 Mboe/d. The historical base decline rates and capital programs are shown in the following table:
Historical Proved Developed Producing Reserves Annual Decline Rates
20162017201820192020202120222023202420252026F
Base Decline
(%/yr)*40%37%35%29%23%27%30%29%27%28%26-28%
Capital Expenditures ($MM)$469$521$232$206$236$365$529$413$458$475$450-500
*The base decline represents the aggregate annual decline of all wells on production at the end of the previous year.
2. Value Creation/Reconciliation
During 2025, Peyto invested $475 million in organic activity to evaluate exploration lands, expand its gathering and infrastructure network, and drill, complete, and tie in 82 gross (78.4 net) wells. In alignment with Peyto’s strategy of maximizing shareholder returns, evaluating the economic outcomes of these investments is essential to determining the optimal deployment of shareholder capital going forward. This look‑back analysis not only provides shareholders with a detailed "report card" on the capital deployed but also highlights the potential returns available from similar undeveloped opportunities in the future.
Exploration, Development, and Acquisition Activity
Of the total capital invested in exploration and development activities (excluding acquisitions) in 2025, approximately 1% was allocated to land and seismic acquisition, 18% to pipeline and facility projects, and the remaining 81% to drilling, completing, and tying in both existing and new wells. This capital program delivered approximately 48,000 boe/d of incremental production in December 2025, after adjustments for base production backout, resulting in a capital efficiency of $9,900 boe/d.
Of the 82 gross wells drilled during the year, 53 wells (65%) were previously identified undeveloped locations. Peyto successfully converted the reserves assigned to these locations into developed status through the drilling of 48 wells with longer horizontal well designs, which enabled more efficient development of previously identified locations.
The remaining 34 wells were new locations developed during the year, on both existing and newly acquired lands, and were not included in last year’s booked undeveloped inventory.
The 2024 year-end P+P Undeveloped reserves originally assigned to the 53 locations referenced above totaled 273 BCFe, or 5.1 BCFe per location, and included a forecasted capital investment of $232 million ($0.85/Mcfe). Ultimately, 366 BCFe were developed in 2025 through the conversion of these locations, an average of 6.9 BCFe per conversion, for a total capital investment of $236 million. This translated to a conversion cost of $0.65/Mcfe, representing a 24% improvement relative to the 2024 year-end forecast.
Peyto’s dedication to driving down costs through continuous optimization and efficient operations is illustrated in the Company’s ability to consistently develop reserves at a lower cost than originally forecasted, providing confidence in valuing future undeveloped locations. The following table details Peyto’s historical success in converting forecasted future undeveloped locations into producing wells.
Historical Undeveloped Reserves Conversion Performance
Reserve YearTotal
DrillsBooked Locations ConvertedBooked/
TotalForecast OutcomeForecast Cost per UnitActual OutcomeActual Cost per UnitActual/
Forecast Cost per Unit
Gross
WellsGross
Wells BCFeCapex* $MM$/McfeBCFeCapex* $MM$/Mcfe
20161288264%254$297$1.17254$246$0.97-17%
20171429768%298$295$0.99321$305$0.95-4%
2018703753%104$115$1.10120$118$0.98-11%
2019613964%129$111$0.86123$109$0.88+2%
2020645281%172$158$0.92165$135$0.82-11%
2021956164%221$193$0.87227$192$0.84-3%
2022957983%331$268$0.81333$320$0.96+19%
2023724461%171$159$0.93236$196$0.83-11%
2024775875%305$270$0.89441$289$0.66-26%
2025825365%273$232$0.85366$236$0.65-24%
10-Yr Total88660268%2,258$2,098$0.932,586$2,146$0.83-11%
*Capex represents only well-related capital for drilling, completion, equipping and tie-in
Value Reconciliation
To accurately assess the Peyto team’s contribution to year-over-year value creation, the Company re-runs the prior year’s reserves evaluation using the current year’s price forecast. This approach isolates the impact of changes in commodity price forecast from the factors that are within the team’s control. It allows Peyto to distinguish the value generated from capital invested, operational improvements, and value created through the Company’s marketing diversification efforts throughout the year.
The 3CA price forecast used by GLJ in this year’s evaluation is lower than last year for both natural gas and natural gas liquids, which has had the effect of decreasing the net present value of all reserve categories. Specifically, 2024’s PDP reserves decreased $459 million (9% of the 2024 BT NPV10) due to this price adjustment.
After isolating the price forecast impact, the Peyto team delivered meaningful value creation through its 2025 capital program, strong operational performance, and marketing diversification efforts, resulting in an increase of $550 million of PDP BT NPV10 using only 55% of FFO.
The following table summarizes the reconciliation of value from last year’s evaluation.
Year over Year Value Reconciliation
BT NPV10($millions)
PDPTPP+P
2025 Opening Balance$4,879$7,051$9,569
Value Change due to Price$(459)$(853)$(1,088)
Value Change due to Company Activity$550$672$881
2025 Closing Balance$4,970$6,870$9,362
In addition, the Company distributed $265 million of dividends and reduced net debt by $170 million.
3. Growth and Income
Over the past 23 years, Peyto has returned a total of $3.4 Billion ($23.95 per share) to shareholders through distributions and dividends. As a dividend‑paying, growth‑oriented corporation, Peyto’s objective is to profitably grow the resource base that supports sustainable shareholder income. For dividends to be sustainable and grow over time, Peyto must continue to profitably find and develop new reserves. Merely increasing production from the existing reserve base does not enhance the long‑term durability of that income. The RLI, the ratio of reserves to production rate, provides a useful measure of this long‑term sustainability. Management believes the most meaningful way to evaluate current reserve life is to divide PDP reserves by actual, annualized fourth‑quarter production.
During 2025, the Company’s capital program successfully replaced 172% of annual production with new PDP reserves, resulting in 7% year‑over‑year growth (4% per share). Fourth‑quarter production increased 6%, rising from 133 Mboe/d (708 MMcf/d of gas and 15,409 bbl/d of NGLs) to 141 Mboe/d (740 MMcf/d of gas and 17,439 bbl/d of NGLs). The combined impact of higher PDP reserves and increased fourth‑quarter production maintained the PDP RLI at 10 years. For comparison, the TP and P+P RLIs were 18 and 28 years, respectively.
The following table highlights the Company’s historical RLI.
Historical Reserve Life Index
2016201720182019202020212022202320242025