Peyto Exploration & Development (PEY) Q3 2025 earnings summary

Executive summary

• Funds from operations reached $198.9 million ($0.98/diluted share), up 29% year-over-year, with free funds flow of $69.1 million, driven by low cash costs and realized gas prices of $3.57/Mcf, 3.3x AECO, supported by hedging and diversification.

• Production averaged 129,762 BOE/day, up 8% year-over-year, with per-share production up 5% and flat sequentially.

• Cash costs were $1.21/MCFE, the lowest since the Repsol Canada acquisition.

• Paid CAD 0.33 per share in dividends, totaling $66.4 million, and repaid $20.5 million in net debt during the quarter.

• Realized hedging gains of $89.2 million, with significant hedge positions securing over $715 million of 2026 revenue.

Financial highlights

• Natural gas and NGL sales including realized hedging gains reached $308.8 million, up 19% year-over-year.

• Operating margin was 72% and profit margin 29% for the quarter.

• Capital expenditures totaled $126.3 million, mainly for drilling, completions, the Sundance compressor, a fifth rig, and plant turnarounds.

• FFO per share (diluted) increased 26% to $0.98; earnings per share (diluted) rose 73% to $0.45.

• Total payout ratio was just under 100%.

Outlook and guidance

• Preliminary 2026 capital budget set at $450–$500 million to drill 70–80 net wells, expected to add 43,000–48,000 BOE/day by next December.

• Targeting a new production record in November and aiming for a 140,000–145,000 BOE/day exit rate in December, at the midpoint of capital guidance.

• Production growth expected to be 5–10% in the coming year, with sufficient cash flow to fund capital, pay dividends, and reduce debt.

• 2026 cash costs targeted to decrease by around 10% year-over-year, excluding royalties.

• Royalty rates expected to rise to 4–4.5% in Q4 and 5–6% in 2026, reflecting higher price strips.