Peyto Exploration & Development (PEY) Q2 2025 earnings summary

Executive summary

• Quarterly production averaged 131,754–132,000 BOE/d, up 8% year-over-year, driven by strong operational execution and cost discipline.

• Funds from operations rose 24% year-over-year to CAD 191.3 million (CAD 0.95 per diluted share), with free funds flow of CAD 83.7 million.

• Earnings totaled CAD 87.8 million (CAD 0.43 per diluted share), and CAD 66.0 million was returned to shareholders as dividends.

• Maintained active drilling with 19 wells drilled, 19 completed, and 21 tied in, focusing on cost reductions and operational efficiency.

• Realized hedging gains of CAD 52.6–53 million, securing revenue into 2026 and supporting premium gas prices.

Financial highlights

• Cash costs decreased 13% year-over-year to CAD 1.31 per MCFE, maintaining an industry-leading cost structure.

• Realized natural gas price after hedging was CAD 3.53/Mcf, up 23% year-over-year; net sales price was CAD 4.27/Mcfe, up 8%.

• Field netback improved 16% to CAD 3.36/Mcfe; cash netback was CAD 3.03/Mcfe, up from CAD 2.47/Mcfe year-over-year.

• Paid down CAD 39.9–40 million of net debt in the quarter and CAD 105–105.6 million year-to-date.

• Royalties and interest costs were lower due to weak AECO prices and reduced bank debt.

Outlook and guidance

• 2025 capital spending guidance remains at CAD 450–500 million, targeting production additions at CAD 10,000–11,000 per BOE/d.

• Annual corporate decline rate estimated at 27%, with new well locations expected to offset declines.

• Production ramp-up anticipated in Q4 to align with improved winter pricing and LNG Canada ramp-up.

• Hedge book and market diversification provide revenue security and upside exposure.

• Royalty rates expected to remain around 5% for the rest of the year.