Peyto Reports Second Quarter 2025 Results

Executive Summary

• Peyto Exploration & Development Corp. reported strong Q2 2025 financial results, with Funds from Operations (FFO) reaching $191.3 million ($0.95/diluted share) and earnings of $87.8 million ($0.43/diluted share), driven by industry-leading low cash costs and a realized natural gas price 57% higher than the AECO benchmark.
• The company returned $66.0 million to shareholders via dividends and reduced net debt by $39.9 million during the quarter, bringing total net debt to $1.24 billion.
• Production averaged 131,754 boe/d, an 8% year-over-year increase, supported by active drilling in the Brazeau and Sundance areas, including successful cost-reduction initiatives in the Cardium formation.

Key Details

• Financial Performance (Q2 2025):
  • Funds from Operations (FFO): $191.3 million ($0.95 diluted share).
  • Free Funds Flow: $83.7 million.
  • Net Earnings: $87.8 million ($0.43 diluted share).
  • Net Sales Price: $4.27/Mcfe (up 8% YoY).
  • Cash Costs: $1.31/Mcfe (including royalties of $0.14/Mcfe).
  • Operating Margin: 70%; Profit Margin: 28%.
  • Return on Capital Employed (ROCE): 10%; Return on Equity (ROE): 12% (trailing 12-month).
• Production Volumes:
  • Average Production: 131,754 boe/d (up 8% YoY, 5% per share).
  • Natural Gas: 696,619 Mcf/d.
  • NGLs: 15,650 bbl/d.
• Capital Expenditures & Drilling:
  • Total CapEx: $104.6 million.
  • Drilled: 19 gross (17.7 net) horizontal wells.
  • Completed: 19 gross (16.9 net) wells.
  • Brought on Production: 21 gross (18.9 net) wells.
  • Well Costs: Cardium wells saw a 37% reduction in drilling and completion cost per horizontal meter due to revised wellbore design and aggressive stimulation.
  • Facilities: $18.5 million invested in gathering/processing, including a new field compressor station in Sundance.
• Hedging & Marketing:
  • Realized Natural Gas Price: $3.53/Mcf (57% above AECO 7A benchmark).
  • Hedging Gains: $52.6 million recorded in Q2.
  • Hedge Position: Protects ~479 MMcf/d for H2 2025 and ~410 MMcf/d for 2026 at approx. $4/Mcf.
  • Secured Revenue: ~$655 million for 2026.
• Balance Sheet:
  • Net Debt: Reduced by $39.9 million in Q2 to $1.24 billion (down $105.6 million from Dec 31, 2024).
  • Shareholders' Equity: $2.73 billion.
• Outlook & Guidance:
  • 2025 Capital Guidance: Unchanged at $450–$500 million.
  • Q3 Activity: 7 wells drilled, 8 completed, 5 on production since start of quarter.
  • Planned Turnarounds: Oldman and Oldman North gas plants in September.
  • Future Drilling: Increase in Notikewin locations, follow-ups to Falher channel, and ~6 wells in Viking/Bluesky formations by year-end.

Notable Quotes

• Jean-Paul Lachance, President & CEO: "Peyto delivered a solid operating margin of 70% and profit margin of 28%... Peyto continues to have the lowest cash costs of all Canadian producers in the oil and natural gas industry."