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1. Company Snapshot

1.a. Company Description

Peyto Exploration & Development Corp.engages in the exploration, development, and production of oil and natural gas, and natural gas liquids in Deep Basin of Alberta.As of December 31, 2021, it had a total proved plus probable reserves of 904 million barrels of oil equivalent.


The company was formerly known as Peyto Energy Trust and changed its name to Peyto Exploration & Development Corp.in January 2011.Peyto Exploration & Development Corp.


was founded in 1998 and is headquartered in Calgary, Canada.

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1.b. Last Insights on PEY

Peyto Exploration & Development Corp.'s recent performance was driven by robust Q2 2025 earnings, with revenue and net income surging to CAD 307.46 million and CAD 87.83 million, respectively. Natural gas production increased to 696,619 Mcf/d, showcasing operational efficiency. The company's monthly dividend payments, including $0.11 per common share for September, October, and November, provide a stable income stream. With a strong earnings beat and growing production, Peyto's prospects appear promising, positioning it as an attractive option for investors seeking dividend stocks with growth potential.

1.c. Company Highlights

2. Peyto's Q3 2025 Earnings: A Strong Performance

Peyto Exploration & Development Corp.'s third-quarter 2025 financial performance was robust, with funds from operations reaching nearly $200 million, or $0.98 per diluted share, marking a 29% increase from Q3 2024. The company's actual EPS came out at $0.45, below estimates of $0.68. Despite this, Peyto achieved a 72% operating margin and 29% profit margin, showcasing its operational efficiency. The company's cash costs were $1.21 per Mcfe, the lowest since the Repsol Canada assets acquisition, highlighting its cost management capabilities.

Publication Date: Nov -17

📋 Highlights
  • Production Growth:: Q3 2025 output reached 130,000 BOEs/day, a 5% increase from Q3 2024.
  • Cost Efficiency:: Cash costs fell to $1.21/Mcfe, the lowest since the Repsol Canada acquisition.
  • Operational Profitability:: Funds from operations hit $200M ($0.98/share), up 29% YoY, with 72% operating margin.
  • Capital Allocation:: $126M spent on infrastructure upgrades, including a field compressor and plant turnarounds, while reducing net debt by $20.5M.

Operational Highlights

Peyto's production stood at approximately 130,000 BOEs per day, a 5% increase from Q3 2024. The company's capital expenditure was $126 million, primarily allocated to a new field compressor in Sundance, a fifth rig, and Oldman plant turnarounds. Peyto's payout ratio was under 100%, and it paid down $20.5 million in net debt, demonstrating its commitment to financial discipline.

Outlook and Guidance

Peyto has extended its credit facility for four years, with a $1.05 billion revolving credit facility, and plans to invest $450-500 million in 2026, drilling 70-80 net wells. This program is expected to add 43,000-48,000 BOEs per day by December 2026. The company targets a 5-10% growth rate and anticipates a 10% reduction in cash costs for 2026, driven by optimization projects at Sundance.

Valuation and Metrics

With a P/E Ratio of 13.1, P/B Ratio of 1.59, and Dividend Yield of 6.08%, Peyto's valuation appears reasonable. Analysts estimate next year's revenue growth at 13.1%. Peyto's ROIC is 3.58%, and ROE is 12.32%, indicating a decent return on equity. The Net Debt / EBITDA ratio stands at 1.39, suggesting a manageable debt position. As JP Lachance mentioned, the company's disciplined risk management program and proactive approach to hedging will help manage volatility.

Royalty Rates and LNG Exports

Peyto expects royalty rates to be around 4%-4.5% in Q4 and 5%-6% next year based on the current pricing strip. The company believes that while an oversupply of LNG could negatively impact North American pricing, U.S. producers have shown discipline in reacting to market conditions with supply cuts. Peyto is working towards increasing export capabilities to improve the local market.

3. NewsRoom

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Peyto Exploration & Development Corp. Confirms Monthly Dividend for November 14, 2025

Oct -15

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Top 3 TSX Dividend Stocks To Enhance Your Portfolio

Sep -23

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Peyto Exploration & Development Corp. Confirms Monthly Dividend for October 15, 2025

Sep -15

Source:

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Top TSX Dividend Stocks For August 2025

Aug -25

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Peyto Exploration & Development Second Quarter 2025 Earnings: Misses Expectations

Aug -16

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Peyto Exploration & Development Corp. Confirms Monthly Dividend for September 15, 2025

Aug -15

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Rising Earnings and Production Could Be a Game Changer for Peyto Exploration & Development (TSX:PEY)

Aug -15

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Peyto Reports Second Quarter 2025 Results

Aug -12

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.00%)

6. Segments

Natural Gas and Natural Gas Liquids

Expected Growth: 12%

Peyto Exploration & Development Corp.'s 12% growth in Natural Gas and Natural Gas Liquids is driven by increased drilling activities, improved well productivity, and strategic acquisitions. Additionally, favorable commodity prices, efficient operations, and a strong balance sheet have contributed to the company's growth momentum.

Royalties

Expected Growth: 12%

Peyto Exploration & Development Corp.'s 12% royalty growth is driven by increased natural gas production, favorable commodity prices, and efficient operations. The company's focus on low-cost, high-return drilling programs and strategic asset acquisitions have also contributed to the growth. Additionally, Peyto's strong balance sheet and disciplined capital allocation have enabled the company to capitalize on opportunities and drive long-term value creation.

Natural Gas Sales to Third Parties

Expected Growth: 12%

Peyto Exploration & Development Corp.'s 12% growth in Natural Gas Sales to Third Parties is driven by increased production volumes, higher realized prices, and strategic hedging activities. Additionally, the company's focus on low-cost operations, efficient drilling and completion techniques, and access to premium pricing markets have contributed to this growth.

7. Detailed Products

Natural Gas

Peyto Exploration & Development Corp. is a leading producer of natural gas in Canada, with a focus on exploring, developing, and producing natural gas reserves in the Western Canadian Sedimentary Basin.

Crude Oil

Peyto Exploration & Development Corp. also produces crude oil, which is extracted from its oil-rich assets in the Western Canadian Sedimentary Basin.

Natural Gas Liquids (NGLs)

Peyto Exploration & Development Corp. produces NGLs, which are a byproduct of natural gas processing, and are used as a feedstock for petrochemical plants.

8. Peyto Exploration & Development Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Peyto Exploration & Development Corp. is medium due to the availability of alternative energy sources such as wind and solar power.

Bargaining Power Of Customers

The bargaining power of customers for Peyto Exploration & Development Corp. is low due to the company's strong market position and limited customer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Peyto Exploration & Development Corp. is medium due to the company's dependence on a few key suppliers for drilling and extraction services.

Threat Of New Entrants

The threat of new entrants for Peyto Exploration & Development Corp. is high due to the relatively low barriers to entry in the oil and gas industry.

Intensity Of Rivalry

The intensity of rivalry for Peyto Exploration & Development Corp. is high due to the highly competitive nature of the oil and gas industry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 34.02%
Debt Cost 6.15%
Equity Weight 65.98%
Equity Cost 13.18%
WACC 10.79%
Leverage 51.57%

11. Quality Control: Peyto Exploration & Development Corp. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Peyto Exploration

A-Score: 7.0/10

Value: 5.7

Growth: 4.7

Quality: 6.6

Yield: 9.0

Momentum: 7.5

Volatility: 8.3

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Chord Energy

A-Score: 6.5/10

Value: 8.1

Growth: 8.1

Quality: 5.1

Yield: 10.0

Momentum: 1.5

Volatility: 6.0

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Black Stone Minerals

A-Score: 6.4/10

Value: 5.0

Growth: 3.7

Quality: 9.0

Yield: 10.0

Momentum: 1.5

Volatility: 9.3

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Whitecap Resources

A-Score: 6.4/10

Value: 5.7

Growth: 6.0

Quality: 6.9

Yield: 8.0

Momentum: 4.0

Volatility: 7.7

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Tourmaline Oil

A-Score: 6.3/10

Value: 4.5

Growth: 5.0

Quality: 7.4

Yield: 9.0

Momentum: 3.5

Volatility: 8.3

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Civitas Resources

A-Score: 6.0/10

Value: 9.3

Growth: 6.2

Quality: 6.2

Yield: 10.0

Momentum: 1.0

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

23.3$

Current Price

23.3$

Potential

-0.00%

Expected Cash-Flows