Peyto Exploration & Development Corp. press release
Peyto Reports Third Quarter Results and Preliminary 2026 Capital Program
TSX - Toronto Stock Exchange · Natural Gas · Natural Gas Liquids · Oil · Canada
CALGARY, Alberta, Nov. 13, 2025 (GLOBE NEWSWIRE) -- Peyto Exploration & Development Corp. ("Peyto" or the "Company") is pleased to report operating and financial results for the third quarter of 2025 and a preliminary capital budget for 2026.
Highlights:
Peyto reported $198.9 million in funds from operations 1 , 2 ("FFO"), or $0.98/diluted share, and generated $69.1 million of free funds flow 3 in the quarter. Strong FFO was driven by the Company’s industry-leading low cash costs 4 and realized natural gas price after hedging and diversification of $3.57/Mcf, or 3.3 times the AECO 7A monthly benchmark. Earnings for the quarter totaled $90.7 million, or $0.45/diluted share, and Peyto returned $66.4 million as dividends to shareholders. Third quarter production volumes averaged 129,762 boe/d (684.9 MMcf/d of natural gas, 15,611 bbls/d of NGLs), an 8% increase year over year (5% on a per share basis), driven by the Company's successful capital program. Peyto recorded $89.2 million in realized hedging gains and exited the quarter with a hedge position protecting approximately 450 MMcf/d and 429 MMcf/d of natural gas production for Q4 2025 and 2026, respectively, at over $4/Mcf. Peyto’s natural gas and liquid hedging has secured over $715 million of revenue for 2026. Cash costs totaled $1.21/Mcfe for the quarter, including royalties of $0.08/Mcfe, operating expense of $0.51/Mcfe, transportation of $0.30/Mcfe, G&A of $0.06/Mcfe and interest expense of $0.26/Mcfe. This represents the lowest quarterly cash costs (with or without royalties) since the acquisition of Repsol Canada Energy Partnership in Q4 2023 as the Company strives to reduce costs to pre-Repsol levels. Regardless, Peyto remains an industry leader in low cash costs amongst Canadian producers in the oil and natural gas industry. Total capital expenditures 5 of $126.3 million were recorded in the quarter. Peyto drilled 20 wells (20.0 net), completed 16 wells (16.0 net), and brought 18 wells (18.0 net) on production. The Company also commissioned a new field compressor station in the Sundance area in the quarter. Net debt 6 was reduced by $20.5 million in the quarter and by $126.1 million from December 31, 2024 to $1.22 billion at the end of the quarter. Peyto delivered a historically strong operating margin _7 _of 72% and profit margin 8 of 29%, resulting in an 11% return on capital employed 9 ("ROCE") and a 13% return on equity 9 ("ROE"), on a trailing 12-month basis. The Company has preliminary plans to invest $450 to $500 million in capital for 2026 and expects to add between 43,000 to 48,000 Boe/d of new production from the development program to offset base production decline estimated between 26-28%.
Third Quarter 2025 in Review
Production averaged 129.8 Mboe/d, up 8% year over year, but 1.5% lower than Q2 2025 as Peyto navigated wet weather in July, turnarounds at two operated Peyto plants and low natural gas prices. The Company prudently shut in some dry gas production volumes at times during September when AECO/Empress natural gas prices fell below zero. Although Peyto did not have exposure to these prices, the Company elected to save reserves and fulfill downstream physical contracts with gas purchased at negative prices. The AECO 7A monthly index fell 52% from Q2 2025, averaging $0.94/GJ for the quarter due to seasonally high storage levels and ongoing pipeline maintenance. The U.S. benchmarks continued to fare better than AECO, with the NYMEX Henry Hub (last day) index averaging US$3.07/MMBtu in the quarter, down only 11% from Q2 2025. Peyto’s diversified market exposure to Ventura, Chicago, Dawn/Parkway and the Cascade Power Plant, coupled with approximately 74% of gas volumes hedged at fixed prices for the quarter, resulted in an all-in realized natural gas price of $3.57/Mcf ($3.10/GJ), or 3.3 times the AECO 7A index. Peyto’s disciplined risk management strategy, combined with its low-cost structure, generated FFO of $198.9 million, which funded $126.3 million of capital expenditures and $66.4 million of shareholder dividends. Despite the higher capital activity levels, the Company's net debt was reduced by $20.5 million in the quarter.
| | Three Months Ended Sep 30 | % | Nine Months Ended Sep 30 | % | | | | | 2025 | 2024 | Change | 2025 | 2024 | Change | | Operations | | | | | | | | Production | | | | | | | | Natural gas (Mcf/d) | 684,903 | 638,433 | 7 % | 697,234 | 642,791 | 8 % | | NGLs (bbl/d) | 15,611 | 13,626 | 15 % | 15,579 | 15,309 | 2 % | | Thousand cubic feet equivalent (Mcfe/d @ 1:6) | 778,571 | 720,186 | 8 % | 790,707 | 734,643 | 8 % | | Barrels of oil equivalent (boe/d @ 6:1) | 129,762 | 120,031 | 8 % | 131,784 | 122,441 | 8 % | | Production per million common shares (boe/d) | 645 | 612 | 5 % | 659 | 627 | 5 % | | Product prices | | | | | | | | Realized natural gas price – after hedging and diversification ($/Mcf) | 3.57 | 2.95 | 21 % | 3.76 | 3.29 | 14 % | | Realized NGL price – after hedging ($/bbl) | 58.33 | 69.61 | -16 | 59.89 | 66.12 | -9 % | | Net sales price (2) ($/Mcfe) | 4.31 | 3.93 | 10 % | 4.49 | 4.25 | 6 % | | Royalties ($/Mcfe) | 0.08 | 0.18 | -56 | 0.15 | 0.23 | -35 | | Operating ($/Mcfe) | 0.51 | 0.54 | -6 | 0.53 | 0.54 | -2 % | | Transportation ($/Mcfe) | 0.30 | 0.31 | -3 | 0.30 | 0.30 | 0 % | | Field netback (1) ($/Mcfe) | 3.45 | 2.96 | 17 % | 3.56 | 3.22 | 11 % | | General & administrative expenses ($/Mcfe) | 0.06 | 0.03 | 100 % | 0.06 | 0.05 | 20 % | | Interest expense ($/Mcfe) | 0.26 | 0.38 | -32 | 0.27 | 0.37 | -27 % | | Financial ($000, except per share) | | | | | | | | Natural gas and NGL sales including realized hedging gains (2) | 308,832 | 260,608 | 19 % | 970,099 | 856,982 | 13 % | | Funds from operations (1) | 198,901 | 154,534 | 29 % | 615,517 | 514,057 | 20 % | | Funds from operations per share - basic (1) | 0.99 | 0.79 | 25 % | 3.15 | 2.63 | 20 % | | Funds from operations per share - diluted (1) | 0.98 | 0.78 | 26 % | 3.13 | 2.62 | 19 % | | Total dividends | 66,387 | 64,707 | 3 % | 198,020 | 193,229 | 2 % | | Total dividends per share | 0.33 | 0.33 | 0 % | 0.99 | 0.99 | 0 % | | Earnings | 90,736 | 51,029 | 78 % | 292,685 | 202,341 | 45 % | | Earnings per share – basic | 0.45 | 0.26 | 73 % | 1.46 | 1.04 | 40 % | | Earnings per share – diluted | 0.45 | 0.26 | 73 % | 1.45 | 1.03 | 41 % | | Total capital expenditures (1) | 126,302 | 125,869 | 0 % | 333,078 | 340,082 | -2 % | | Decommissioning expenditures | 3,450 | 2,013 | 71 % | 9,266 | 6,610 | 40 % | | Total payout ratio (1) | 99 % | 125% | -21 % | 88 % | 105% | -16 % | | Weighted average common shares outstanding - basic | 201,160,946 | 196,077,193 | 3 % | 200,023,611 | 195,183,132 | 2 % | | Weighted average common shares outstanding - diluted | 203,366,724 | 197,051,764 | 3 % | 202,125,719 | 196,395,465 | 3 % | | | | | | | | | | Net debt (1) | | | | 1,222,449 | 1,362,947 | -10 % | | Shareholders' equity | | | | 2,767,560 | 2,735,586 | 1 % | | Total assets | | | | 5,430,376 | 5,589,573 | -3 % | | | | | | | | |
(1) This is a Non-GAAP financial measure or ratio. See "non-GAAP and Other Financial Measures" in this news release and in the Q3 2025 MD&A (2) Excludes marketing revenue and other income
Capital Expenditures
Peyto contracted a fifth rig in September to catch up on lower-than-expected summer drilling activity. Peyto drilled 20 gross (20.0 net) horizontal wells in the third quarter including 10 Notikewin, 3 Wilrich, 3 Falher, 2 Viking, and 2 Bluesky wells in the core Sundance and Brazeau areas. The Company also completed 16 gross (16.0 net) wells and brought 18 gross (18.0 net) wells on production in the quarter, resulting in total well-related capital expenditures of $92.6 million. The capital program focused on drilling prolific zones in the Notikewin, Falher, and Bluesky, where initial results came in better than expected, and will contribute to a new production wedge being brought on in the fourth quarter for the winter season. Additionally, Peyto invested $33.3 million in gathering and processing facilities in the third quarter that included construction of a new field compressor station in Sundance, turnarounds at the Oldman plants, and pipeline de-bottlenecking in the Nosehill and Swanson areas of Sundance. The Sundance field compressor, which came in under budget, re-directs low pressure, liquids-rich gas wells to the Edson gas plant to make room in the gathering system for future drilling activity. Drilling and completion costs per meter were slightly higher in the quarter due to shorter laterals related to the composition of the well species. Peyto’s historical drilling and completion costs are summarized in the following table.
| | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2024 Q1 | 2024 Q2 | 2024 Q3 | 2024 Q4 | 2025 Q1 | 2025 Q2 | 2025 Q3 ( 1 ) | | Gross Hz Spuds | 70 | 61 | 64 | 95 | 95 | 72 | 75 | 18 | 20 | 21 | 16 | 19 | 19 | 20 | | Measured Depth (m) | 4,020 | 3,848 | 4,247 | 4,453 | 4,611 | 4,891 | 5,092 | 5,220 | 5,364 | 4,804 | 4,987 | 4,976 | 5,021 | 4,921 | | | | | | | | | | | | | | | | | | Drilling ($MM/well) | $1.71 | $1.62 | $1.68 | $1.89 | $2.56 | $2.85 | $2.90 | $3.05 | $2.89 | $2.81 | $2.85 | $3.01 | $2.94 | $ 2.97 | | $ per meter | $425 | $420 | $396 | $424 | $555 | $582 | $569 | $585 | $539 | $585 | $572 | $605 | $585 | $ 603 | | | | | | | | | | | | | | | | | | Completion ($MM/well) | $1.13 | $1.01 | $0.94 | $1.00 | $1.35 | $1.54 | $1.70 | $1.80 | $1.75 | $1.56 | $1.66 | $1.56 | $1.71 | $ 1.63 | | Hz Length (m) | 1,348 | 1,484 | 1,682 | 1,612 | 1,661 | 1,969 | 2,184 | 2,223 | 2,350 | 2,224 | 1,989 | 1,961 | 2,311 | 2,185 | | $ per Hz Length (m) | $751 | $679 | $560 | $620 | $813 | $781 | $776 | $809 | $744 | $703 | $834 | $793 | $740 | $ 747 | | $ ‘000 per Stage | $51 | $38 | $36 | $37 | $47 | $52 | $52 | $55 | $49 | $48 | $56 | $56 | $47 | $ 47 | | | | | | | | | | | | | | | | |
(1) Based on field estimates and may be subject to minor adjustments going forward.
Peyto also spent $0.4 million during the quarter on acquiring mineral rights and divested a minor property for $0.5 million.
Commodity Prices and Realizations
In the third quarter, Peyto realized a natural gas price after hedging and diversification of $3.57/Mcf, or $3.10/GJ, 3.3 times the average AECO 7A monthly benchmark of $0.94/GJ, driven by realized hedging gains and the Company's market diversification to non-AECO hubs. Peyto’s natural gas hedging activity resulted in a realized gain of $1.38/Mcf ($87.0 million) while Peyto’s diversification activities, including its gas supply agreement with the Cascade Power Plant, contributed $1.11/Mcf (net of diversification costs) in the quarter.
Condensate and pentanes averaged $83.24/bbl for the quarter, down 18% year over year, due to falling benchmark oil prices over the same period. Other NGL volumes were sold at an average price of $27.04/bbl, or 30% of Canadian dollar WTI. Peyto's combined realized NGL price was $56.75/bbl before hedging, and $58.33/bbl including a realized hedging gain of $1.58/bbl ($2.3 million) in the third quarter.
Netbacks
The Company’s realized natural gas and NGL sales yielded a combined revenue stream of $3.07/Mcfe before hedging gains of $1.24/Mcfe, resulting in a quarterly net sales price of $4.31/Mcfe, 10% higher than the $3.93/Mcfe realized in Q3 2024. Cash costs totaled $1.21/Mcfe in the quarter, 16% lower than $1.44/Mcfe in Q3 2024 due to decreased royalties, operating and interest costs. Operating costs totaled $0.51/Mcfe, down from $0.54/Mcfe in Q3 2024. Operating costs were also down from Q2 2025 despite lower production volumes, reflecting the Company’s continuous pursuit of cost efficiency. The Company's cash netback (net sales price including other income, net marketing revenue, realized gain on foreign exchange, less total cash costs) was $3.14/Mcfe, resulting in a solid 72% operating margin. Historical cash costs and operating margins are shown in the following table:
| | 2022 | 2023 | 2024 | 2025 | | | | | | | | | | | | | ($/Mcfe) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 (2) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | | Revenue (1) | 5.25 | 5.48 | 5.01 | 5.74 | 5.10 | 4.07 | 4.32 | 4.83 | 4.92 | 3.97 | 3.99 | 4.34 | 4.95 | 4.34 | 4.35 | | Royalties | 0.60 | 0.95 | 0.70 | 0.72 | 0.53 | 0.18 | 0.29 | 0.30 | 0.24 | 0.26 | 0.18 | 0.21 | 0.25 | 0.14 | 0.08 | | | | | | | | | | | | | | | | | | | Op Costs | 0.41 | 0.39 | 0.38 | 0.41 | 0.50 | 0.47 | 0.44 | 0.55 | 0.55 | 0.52 | 0.54 | 0.50 | 0.53 | 0.54 | 0.51 | | Transportation | 0.28 | 0.27 | 0.26 | 0.22 | 0.24 | 0.29 | 0.29 | 0.26 | 0.30 | 0.30 | 0.31 | 0.27 | 0.29 | 0.31 | 0.30 | | G&A | 0.03 | 0.02 | 0.02 | 0.02 | 0.03 | 0.05 | 0.04 | 0.06 | 0.06 | 0.06 | 0.03 | 0.05 | 0.06 | 0.06 | 0.06 | | Interest | 0.21 | 0.20 | 0.21 | 0.21 | 0.22 | 0.22 | 0.28 | 0.40 | 0.36 | 0.36 | 0.38 | 0.33 | 0.29 | 0.26 | 0.26 | | Cash cost pre-royalty | 0.93 | 0.88 | 0.87 | 0.86 | 0.99 | 1.03 | 1.05 | 1.27 | 1.27 | 1.24 | 1.26 | 1.15 | 1.17 | 1.17 | 1.13 | | | | | | | | | | | | | | | | | | | Total Cash Costs 10 | 1.53 | 1.83 | 1.57 | 1.58 | 1.52 | 1.21 | 1.34 | 1.57 | 1.51 | 1.50 | 1.44 | 1.36 | 1.42 | 1.31 | 1.21 | | Cash Netback 11 | 3.72 | 3.65 | 3.44 | 4.16 | 3.58 | 2.86 | 2.98 | 3.26 | 3.41 | 2.47 | 2.55 | 2.98 | 3.53 | 3.03 | 3.14 | | Operating Margin | 71% | 67% | 69% | 72% | 71% | 70% | 69% | 67% | 69% | 62% | 64% | 69% | 71% | 70% | 72 % | | | | | | | | | | | | | | | | | |
(1) Revenue includes other income, net marketing revenue and realized gains (losses) on foreign exchange. (2) First quarter of Repsol assets included in Peyto's results
Depletion, depreciation, and amortization charges of $1.33/Mcfe, along with provisions for current tax, deferred tax, performance-based compensation and stock-based compensation resulted in earnings of $1.27/Mcfe, for a 29% profit margin. Dividends to shareholders totaled $0.93/Mcfe.
Hedging and Marketing
The Company has been active in hedging future production with financial and physical fixed price contracts to protect a portion of its future revenue from commodity prices and foreign exchange volatility. The following table summarizes Peyto's hedge position for the fourth quarter of 2025, calendar 2026, and calendar 2027.
| | Q4 2025 | 2026 | 2027 | | Natural Gas | | | | | Volume (MMcf/d) | 450 | 429 | 128 | | Average Fixed Price (1) ($/Mcf) | 4.36 | 4.04 | 3.73 | | WTI Swaps | | | | | Volume (bbls/d) | 4,900 | 2,693 | 398 | | Average Fixed Price ($/bbl) | 90.06 | 85.79 | 83.85 | | WTI Collars | | | | | Volume (bbls/d) | 500 | 248 | - | | Put–Call ($/bbl) | 90.00–100.50 | 87.50–100.25 | - | | Propane | | | | | Volume (bbls/d) | 500 | 123 | - | | Average Fixed Price (US$/bbl) | 33.60 | 33.60 | - | | USD FX Contracts | | | | | Amount sold (USD 000s) | 60,025 | 128,840 | 27,895 | | Rate (CAD/USD) | 1.354 | 1.361 | 1.365 | | | | | |
(1) At 1.40 CAD/USD FX rate for USD contracts
The Company's fixed price contracts combined with its diversification to multiple hubs in North America allow for revenue security and support Peyto's capital expenditure program, continued shareholder returns through dividends, and debt reduction. Details of Peyto’s ongoing marketing and diversification efforts are available on Peyto’s website at https://www.peyto.com/Marketing.aspx .
Activity Update
Since the start of the fourth quarter, Peyto has continued with a five-rig drilling program spread across the Sundance and Brazeau core areas with 12 wells (10.8 net) drilled, 15 wells (14.5 net) completed, and 12 wells (12 net) brought on production. The recent drilling program has delivered strong initial production results in the fourth quarter as Peyto continues to focus on high-rate Notikewin and Falher targets which are expected to ramp up production into improving winter prices. Peyto has been pleased with the performance of the additional rig and intends to continue with five rigs for the remainder of the 2025 program and through Q1 2026, assuming spot natural gas prices remain supportive.
This past October marks Peyto’s 27th anniversary of successful operations exclusively in Alberta’s Deep Basin. After all these years, the Company continues to find new prospects, apply new technologies, and harvest opportunities in Peyto’s existing core areas, achieving great results and returning profits to shareholders.
Credit Facility Amendment and Extension
On October 23, 2025, the Company entered into an agreement with its syndicate of lenders to amend and extend its credit facilities, which increased the revolving credit facility to $1.05 billion from $1.0 billion and extended the maturity date to October 23, 2029, from October 13, 2027. There was no change in Peyto's borrowing costs or the financial covenants in the amended agreement. Additionally, effective October 23, 2025, Peyto repaid the $50 million outstanding balance under its term loan facility using proceeds from the increased revolving credit facility and terminated the term loan facility.
The credit facility extension, along with Peyto’s long-term notes, provides the Company with a strong liquidity position to execute its business plan over the next four years.
2026 Preliminary Budget and Plans
Peyto’s preliminary capital budget for 2026, set at $450–$500 million, includes a low-risk development program targeting multiple formations across all core areas with a larger portion expected in the Greater Sundance area, leveraging successful drilling results from 2025. The Company expects to continue with five drilling rigs at the start of the year for this capital program and will modify investments, as necessary, depending on market conditions. The program is expected to drill between 70–80 horizontal wells, with well-related costs representing approximately 80% of the 2026 budget.
Facility spending planned for 2026 includes a major pipeline looping project in the Sundance area to accommodate future well development. Other facility projects include minor turnarounds at plants in the Sundance area, multiple pipeline optimization and debottlenecking initiatives, and plant optimization projects. These projects will increase reliability and lower long-term operating costs, leveraging Peyto’s operated 1.4 Bcf/d of net gas processing capacity. Additionally, the Company plans to spend approximately $13 million on closure related activities to reduce abandonment retirement obligations.
While specific details of the budget will be finalized in early 2026, the capital program is estimated to add approximately 43,000 to 48,000 boe/d of new production by the end of the year and more than offset annual forecasted decline of between 26–28%. The program will be designed to add production throughout 2026 and will remain flexible, as always, to allow Peyto to react to changes in commodity prices, service costs and the global economic environment.
Outlook
The Company remains on track to execute the 2025 capital program within the $450–$500 million capital guidance and exit the year with production volumes at approximately 145,000 boe/d for December.
Peyto remains bullish on the outlook for natural gas going forward as local natural gas demand continues to grow to support increasing electrification, growing oil sands production and economic development in the province. LNG Canada continues to ramp up production at their new facility and should reach full capacity in 2026. In the US, demand for natural gas is steadily growing with increasing power demand and LNG exports. The US has added over 3 Bcf/d of LNG export capacity in 2025, recently setting new daily records over 17 Bcf/d, and is expected to add another 12 Bcf/d of capacity by the end of the decade. Peyto is well positioned to take advantage of the constructive outlook for natural gas demand while the Company’s disciplined hedging program and diversification to multiple demand markets helps to protect revenues for the short term. Additionally, Peyto’s resilient strategy focuses on maintaining low cash and finding costs with its long-life reserves, which supports the capital program, future dividends and continued strengthening of the balance sheet for shareholders.