Peyto Exploration & Development Corp. press release

Peyto Reports Fourth Quarter and 2025 Annual Results

2026-03-10

TSX - Toronto Stock Exchange · Natural Gas · Natural Gas Liquids · Oil · Canada · Corporate Finance

Peyto Reports Fourth Quarter and 2025 Annual Results

CALGARY, Alberta, March 10, 2026 (GLOBE NEWSWIRE) -- Peyto Exploration & Development Corp. ("Peyto" or the "Company") (TSX: PEY) is pleased to report operating and financial results for the fourth quarter and 2025 fiscal year.

Full Year and Q4 2025 Highlights:

Delivered $245.0 million in funds from operations1,2 ("FFO"), or $1.19/diluted share, and $102.0 million of free funds flow3 in the quarter. Annual FFO totaled $860.5 million or $4.24/diluted share, and annual free funds flow totaled $375.2 million.

Peyto generated earnings of $125.9 million, or $0.61/diluted share, in the quarter and $418.6 million, or $2.06/diluted share, in 2025. The Company returned $264.9 million ($1.32/share) of dividends to shareholders and reduced net debt4 by $171.0 million in 2025. Since inception, Peyto has returned $3.4 billion of dividends and distributions to shareholders or a cumulative $23.95/share.

Annual capital expenditures5 of $475.2 million, along with strong well results in the year, resulted in record production of 145 Mboe/d (763 MMcf/d gas, 18,270 bbl/d NGLs) in December, yielding a trailing 12-month capital efficiency6 of $9,900 per boe/d. Peyto delivered a 72% annual operating margin7 and a 31% annual profit margin8, resulting in a 16% return on capital employed9 ("ROCE") and a 15% return on equity9 ("ROE"), on a trailing 12-month basis.

The Company's disciplined hedging and diversification program in 2025 protected revenues from continued low natural gas prices at the AECO hub. The 2025 average price for the AECO 7A monthly index was $1.76/GJ, yet Peyto realized an average price of approximately $3.32/GJ ($3.82/Mcf). The Company continues to have a strong hedge position, protecting approximately 490 MMcf/d and 248 MMcf/d of natural gas production for 2026 and 2027, at $4.14/Mcf and $3.53/Mcf, respectively.

As previously announced, Peyto developed 504 BCFe of Proved Developed Producing ("PDP") reserves and increased reserves by 7%, 6%, and 6% in the PDP, Total Proved ("TP"), and Total Proved plus Probable ("P+P") reserves categories, respectively. PDP Finding, Development and Acquisition10 ("FD&A") costs of $0.94/Mcfe were the lowest in the Canadian oil and gas industry this year. The Company generated a 3.8 times recycle ratio11 using average field netback of $3.61/Mcfe in 2025 (3.1 times on an after-tax cash netback12 basis), the Company's highest PDP recycle ratio since 2003. Refer to more details in the February 19, 2026 press release.

Fourth quarter production volumes averaged a record 140,794 boe/d (740.1 MMcf/d of natural gas, 17,439 bbls/d of NGLs), a 6% (3% per share) increase year over year. Annual production averaged 134,055 boe/d (708.0 MMcf/d of natural gas, 16,048 bbls/d of NGLs), a 7% (4% per share) increase from 2024.

Quarterly cash costs13 totaled $1.23/Mcfe, 10% lower than Q4 2024, and included royalties of $0.18/Mcfe, operating expense of $0.49/Mcfe, transportation of $0.30/Mcfe, G&A of $0.05/Mcfe and interest expense of $0.21/Mcfe.

Capital expenditures totaled $142.1 million in the quarter. Peyto drilled 24 wells (22.5 net), completed 28 wells (26.5 net), and brought 26 wells (24.5 net) on production.

In the fourth quarter, Peyto amended and extended its credit facilities, which increased the revolving credit facility to $1.05 billion from $1.0 billion and extended the maturity to October 2029 from October 2027. Additionally, Peyto repaid and terminated its term loan facility.

Three Months Ended Dec 31%Year Ended Dec 31%

2025

2024

Change2025

2024

Change

Operations

Production

Natural gas (Mcf/d)740,132708,1055%708,046659,2097%

NGLs (bbl/d)17,43915,40913%16,04815,3345%

Thousand cubic feet equivalent (Mcfe/d @ 1:6)844,765800,5586%804,332751,2127%

Barrels of oil equivalent (boe/d @ 6:1)140,794133,4266%134,055125,2027%

Production per million common shares (boe/d)6946763%6686404%

Product prices

Realized natural gas price – after hedging and diversification ($/Mcf)4.013.4317%3.823.3215%

Realized NGL price – after hedging ($/bbl)53.5864.78-17%

58.1665.77-12%

Net sales price ($/Mcfe)4.624.288%4.534.266%

Royalties ($/Mcfe)0.180.21-14%

0.160.22-27%

Operating ($/Mcfe)0.490.50-2%

0.520.53-2%

Transportation ($/Mcfe)0.300.2711%0.300.300%

Field netback(1)($/Mcfe)3.743.3512%3.613.2611%

General & administrative expenses ($/Mcfe)0.050.050%0.060.0520%

Interest expense ($/Mcfe)0.210.33-36%

0.250.36-31%

Financial ($000, except per share)

Natural gas and NGL sales including realized hedging gains (losses)(2)359,076315,09814%1,329,1751,172,07913%

Funds from operations(1)244,968199,07923%860,485713,13621%

Funds from operations per share - basic(1)1.211.0120%4.293.6418%

Funds from operations per share - diluted(1)1.191.0019%4.243.6217%

Total dividends66,92165,1403%264,941258,3693%

Total dividends per share0.330.330%1.321.320%

Earnings125,90178,22861%418,586280,57049%

Earnings per share – basic0.620.4055%2.091.4346%

Earnings per share – diluted0.610.3956%2.061.4245%

Total capital expenditures(1)142,093117,52521%475,171457,6074%

Decommissioning expenditures8491,836-54%

10,1158,44620%

Total payout ratio(1)86%93%-8%

87%102%-15%

Weighted average common shares outstanding - basic202,789,992197,388,0493%200,720,890195,737,3743%

Weighted average common shares outstanding - diluted205,511,803198,746,6313%203,130,517197,084,9733%

Net debt(1) 1,177,5771,348,574-13%

Shareholders' equity 2,851,7342,696,3296%

Total assets 5,459,3925,505,890-1%

(1) This is a Non-GAAP financial measure or ratio. See "non-GAAP and Other Financial Measures" in this news release and in the Q4 2025 MD&A

(2) Excludes marketing revenue

2025 in Review

Peyto completed another successful year of operations in 2025, achieving strong well results and meaningful reserve additions while remaining within the range of capital guidance. Despite a challenging gas price environment where monthly AECO prices averaged $1.76/GJ for the year, the Company’s disciplined hedging strategy and market diversification, coupled with industry leading cash costs, delivered a field netback of $3.61/Mcfe. The efficiency of the capital program generated PDP FD&A costs of $0.94/Mcfe and a field-level PDP recycle ratio of 3.8 times, meaning Peyto generated 3.8 times more cash flow, at the field operating level, than the cost required to find and develop new reserves. On an after-tax cash netback basis, inclusive of G&A, interest, and current taxes, the recycle ratio was 3.1 times. Highlights of the drilling program include continued success in high-deliverability Notikewin channels and follow-up wells along a prolific Falher trend that was discovered and defined over the past several years. Additional achievements include successful Viking formation follow-up wells, further derisking future inventory in this play, testing an enhanced drilling and completion design in the Cardium that improved play economics, and a return to the Bluesky where the results were highly profitable. Optimization initiatives also continued across Peyto’s operated gas plants and gathering systems to improve well productivity, increase facility utilization, and lower costs. The Company’s extensive owned-and-operated infrastructure, capable of processing up to 1.5 Bcf/d and currently 63% utilized, provides flexibility to redirect volumes within core areas, supports future growth, and enables further reductions in unit operating costs. During 2025, Peyto generated FFO of $860.5 million and earnings of $418.6 million. The Company returned $264.9 million in dividends to shareholders while reducing net debt by $171.0 million from year end 2024. Production grew to a record 145 Mboe/d in December 2025 (763 MMcf/d of gas, 18,270 bbl/d of NGLs), up from 136 Mboe/d (721 MMcf/d gas, 15,708 bbl/d NGLs) in December 2024, representing an exit capital efficiency of $9,900 per boe/d after accounting for 28% annual production decline. Annual operating and profit margins were 72% and 31%, respectively.

Capital Expenditures

Peyto drilled 82 gross (78.4 net) horizontal wells in 2025 and brought 79 gross (75.4 net) wells on production. The Company invested $386.4 million, 81% of total capital expenditures, in drilling, completing, and bringing wells on production in 2025. Activity was distributed across the Company’s core areas, with 19 gross (16.4 net) wells drilled in the Brazeau area and 63 gross (62.0 net) wells drilled in the Sundance area. The program targeted multiple horizons including the Cardium, Dunvegan, Viking, Notikewin, Falher, Wilrich, and Bluesky formations. The 2025 program included 34 gross wells (41%) that were not recognized in the prior year’s reserve report, highlighting the depth and quality of new opportunities Peyto continues to unlock across its core land base. Average well productivity in 2025 was equivalent to the improved 2024 average well results while maintaining the same per-unit well costs. During 2025, the average horizontal length was 3% shorter than in 2024 while drilling and completion costs per meter were up 4% and 1%, respectively.

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Gross Hz Spuds1231401261357061649595727582

Measured Depth (m)4,2514,3094,1974,2294,0203,8484,2474,4534,6114,8915,0924,963

Drilling ($MM/well)$2.66$2.16$1.82$1.90$1.71$1.62$1.68$1.89$2.56$2.85$2.90$2.93

$ per meter$626$501$433$450$425$420$396$424$555$582$569$591

Completion ($MM/well)$1.70$1.21$0.86$1.00$1.13$1.01*$0.94$1.00$1.35$1.54$1.70$1.67

Hz Length (m)1,4601,5311,4601,2411,3481,4841,6821,6121,6611,9692,1842,123

$ per Hz Length (m)$1,166$792$587$803$751$679$560$620$813$781$776$787

$ ‘000 per Stage$168$115$79$81$51$38$36$37$47$52$52$51

*Peyto’s Montney well is excluded from drilling and completion cost comparison.

During 2025, Peyto invested a total of $86.2 million in facility upgrades and pipeline projects to optimize and expand the Company’s gathering and processing infrastructure. Specifically, Peyto invested $23.5 million in a 35 MMcf/d field compressor in the Sundance area to gather low pressure gas and redirect it to the Edson Gas Plant. This compressor station was installed to accommodate future development opportunities in the area and can be expanded to 60 MMcf/d. The Company also constructed a key pipeline in 2025 designed to connect 8 MMcf/d of third-party natural gas into the Brazeau gas plant. This project is supported by a multi-year processing agreement and is intended to utilize spare capacity at the Brazeau facility. The pipeline was also designed to accommodate additional third-party volumes, creating further opportunities to enhance facility throughput and revenue.

Peyto continued to be active in pursuing high quality opportunities at crown land sales as well as through swaps, purchases, and farm-ins. In total, the Company spent $2.1 million to acquire 15.8 net sections of land across the Company’s core areas.

Reserves

Peyto’s 2025 capital program delivered growth across all reserves categories. The value of the Company’s reserves per share decreased in the Total Proved and Proved plus Probable categories due to the reduction of commodity price forecasts used in the GLJ Ltd. ("GLJ") report. However, the strong 2025 capital program generated a 2% increase in PDP reserves value per share over last year. The following table illustrates the change in reserve volumes and Net Present Value ("NPV") of future cash flows, discounted at 10%, before income tax and using the 3-Consultant average forecast pricing.

As of December 31

% Change,

per share (basic outstanding)1

2025

2024

Reserves (BCFe)

Proved Developed Producing3,0532,8434%

Total Proved5,5595,2553%

Total Proved + Probable8,7028,2023%

Net Present Value2($millions) Discounted at 10%

Proved Developed Producing$4,970

$4,879

2%

Total Proved$6,870

$7,051

-3%

Total Proved + Probable$9,362

$9,569

-2%

1 Basic shares outstanding as at Dec 31, 2025 were 203,343,491 and Dec 31, 2024 were 197,829,480

2 It should not be assumed that the estimates of future net revenues presented in the tables above represent the fair market value of the reserves. See "Information Regarding Disclosure on Oil and Gas Reserves" in the advisory section of this news release.

Note: based on the GLJ Ltd Petroleum Consultants ("GLJ") report effective December 31, 2025. The GLJ 3-consultant price forecast is available at www.GLJPC.com.

For more information on Peyto’s reserves, refer to the Press Release dated February 19, 2026, announcing the Year End Reserve Report which is available on the website at www.peyto.com. The complete statement of reserves data and required reporting in compliance with NI 51-101 will be included in Peyto's Annual Information Form to be released by March 31, 2026.

Fourth Quarter 2025

Peyto continued its drilling activity throughout the fourth quarter of 2025 with five rigs running across the Company’s core areas. Drilling and completions capital of $110.1 million was invested to drill 24 gross (22.5 net) wells and complete 28 gross (26.5 net) wells. In addition, $11.9 million was invested to tie-in 26 gross (24.5 net) wells, while $18.9 million was invested in facility and major pipeline infrastructure including the completion and commissioning of a new field compressor station in the Swanson area, compressor upgrades at several gas plants, and pipeline de-bottlenecking in the Nosehill and Swanson areas of Sundance.

Drilling targets in the fourth quarter included a larger percentage of high-rate Notikewin and Falher targets resulting in increased well performance in the quarter and lifted quarterly production volumes to 140,794 boe/d (740.1 MMcf/d of natural gas and 17,439 bbl/d of NGLs), up 9% from Q3 2025. The production ramp-up was intentionally timed to coincide with stronger winter pricing across the Company’s diversified natural gas sales markets.

Peyto’s realized price for natural gas for the quarter was $4.01/Mcf including hedging gains, while its realized liquids price was $53.58/bbl including hedging gains, which yielded an average net sale price of $4.62/Mcfe. The net sale price for the quarter was up 8% from $4.28/Mcfe in Q4 2024, despite realized NGL prices declining 17%. Total cash costs for the quarter of $1.23/Mcfe decreased 10% from $1.36/Mcfe for Q4 2024, reflecting lower royalties, operating costs, and interest and financing expenses, partially offset by higher transportation costs. The total Q4 2025 cash costs included royalties of $0.18/Mcfe, operating costs of $0.49/Mcfe, transportation costs of $0.30/Mcfe, interest and financing costs of $0.21/Mcfe, and G&A costs of $0.05/Mcfe. The Company’s cash netback (before performance-based compensation and current tax expense) was $3.47/Mcfe, up 16% from Q4 2024, and yielded a 74% operating margin in the quarter.

Peyto generated $245.0 million of FFO for the quarter, up 23% from $199.1 million in Q4 2024. On a per-share basis, FFO rose 19% year-over-year to $1.19 per diluted share in the fourth quarter. The year-over-year increase was primarily driven by higher production volumes, stronger realized natural gas prices after hedging and diversification, and lower interest and financing costs. The Company's profit margin in the quarter was 34%, up from 24% in Q4 2024, and the highest since Q4 2022.

Marketing

Commodity Prices

In the fourth quarter, Peyto realized a natural gas price after hedging and diversification of $4.01/Mcf, or $3.49/GJ, 57% higher than the average AECO 7A monthly benchmark of $2.22/GJ, driven by realized hedging gains and price exposure to non-AECO hubs, including Dawn, Parkway, Chicago and Henry Hub. Peyto’s natural gas hedging activity resulted in a realized gain of $0.76/Mcf ($51.8 million) while the Company’s diversification activities contributed $0.70/Mcf (net of diversification costs) in the quarter. The value of Peyto's natural gas market diversification and hedging activities over the past eight quarters, relative to the AECO 7A benchmark, is detailed in the following table.

($/Mcf)Q1

2024Q2

2024Q3

2024Q4

2024Q1

2025Q2

2025Q3

2025Q4

2025

AECO 7A12.231.560.891.592.212.251.082.55

Diversification value20.230.090.750.681.130.531.110.70

Realized hedging gain1.591.221.311.160.830.751.380.76

Realized natural gas price after hedging and diversification4.052.872.953.434.173.533.574.01

% premium to AECO 7A81%84%233%116%89%57%229%57%

AECO 7A monthly benchmark has been converted to $/Mcf at Peyto's average heat content of 1.15 GJ/Mcf.

Diversification value represents the difference between Peyto's realized natural gas price (after diversification cost but before realized hedging gain/loss) and the AECO 7A monthly benchmark price.

Condensate and pentanes averaged $74.00/bbl for the quarter, down 19% year over year due to falling benchmark oil prices over the same period. Other NGL volumes were sold at an average price of $22.85/bbl, or 28% of Canadian dollar WTI. Peyto's combined realized NGL price was $50.89/bbl before hedging, and $53.58/bbl including a realized hedging gain of $2.69/bbl ($4.3 million) in the fourth quarter.

Hedging

The Company has been actively hedging future production with financial and physical fixed price contracts to protect a portion of its future revenue from commodity price and foreign exchange volatility. The following table summarizes Peyto's hedge position for calendar 2026, and calendar 2027. Peyto’s natural gas and liquid hedging program has secured over $880 million and $355 million of revenue for 2026 and 2027, respectively.

20262027

Natural Gas

Volume (MMcf/d)490248

Average Fixed Price ($/Mcf)4.143.53

WTI Swaps

Volume (bbls/d)4,545898

Average Fixed Price ($/bbl)86.0781.71

WTI Collars

Volume (bbls/d)500500

Put–Call ($/bbl)81.25–94.7075.00–87.25

Propane

Volume (bbls/d)123-

Average Fixed Price (US$/bbl)33.60-

USD FX Contracts

Amount sold (USD 000s)154,29052,895

Rate (CAD/USD)1.3651.360

The Company's fixed price contracts combined with its diversification to the Cascade power plant and other premium market 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 The Company’s ongoing marketing and diversification efforts are available on Peyto’s website at https://www.peyto.com/Marketing.aspx.

The Peyto Strategy

The Peyto strategy has been one of the most consistent strategies in the Canadian Energy industry over the last two and a half decades and is centered on maximizing the returns on shareholders’ capital by investing that capital in the profitable development of long life, low cost, and low risk natural gas resource plays. Peyto’s strategy of maximizing returns doesn’t just focus on the efficient execution of exploration and production operations in the field but continues in the head office where the management of corporate costs, including the cost of capital, is carefully controlled to ensure true returns are ultimately realized. The alignment of goals between what is good for the Company, its shareholders, its employees and what is good for the environment and all stakeholders is critical to ensure the greatest returns are achieved. Evidence of Peyto’s success deploying this strategy through the years is illustrated in the following table.

($/Mcfe)2015201620172018201920202021202220232024202527 Year

Wt. Avg.

Sales Price1$3.83$3.18$3.39$3.27$2.78$2.23$3.61$5.36$4.59$4.32$4.58$4.43

All cash costs but royalties2($0.67)

($0.63)

($0.68)

($0.79)

($0.87)

($0.88)

($0.88)

($0.88)

($1.10)

($1.24)

($1.13)

($0.88)

Capital costs3($1.64)

($1.44)

($1.36)

($1.18)

($1.55)

($1.06)

($0.97)

($1.41)

($1.21)

($1.00)

($0.94)

($1.48)

Financial Benefit4$1.52$1.12$1.35$1.30$0.35$0.29$1.75$3.07$2.28$2.07$2.51$2.07

40%35%40%40%13%13%49%57%50%48%55%47%

Royalty Owners$0.14$0.13$0.15$0.13$0.08$0.13$0.37$0.74$0.32$0.22$0.16$0.40

Current Taxes-------$0.09$0.26$0.27$0.36$0.08

Left for Shareholders$1.38$0.99$1.19$1.17$0.27$0.16$1.38$2.24$1.70$1.59$1.99$1.59

Div./Dist. paid$1.11$1.01$0.97$0.59$0.22$0.08$0.11$0.45$1.04$0.94$0.90$1.03

Sales price includes per-unit natural gas and NGL revenue, realized hedging gains (losses), realized gain (loss) on foreign exchange, other income and marketing revenue net of marketing purchases.