Peyto Reports Second Quarter 2025 Results

Core Insights - Peyto Exploration & Development Corp. reported strong operating and financial results for Q2 2025, with production averaging 131.8 Mboe/d, an 8% increase year over year, and a significant rise in funds from operations (FFO) to $191.3 million, or $0.95 per diluted share [3][5][11]. Production and Operations - Production volumes for Q2 2025 averaged 131,754 boe/d, consisting of 696,619 Mcf/d of natural gas and 15,650 bbl/d of NGLs, reflecting an 8% increase year over year [4][5]. - The company operated four drilling rigs in the Greater Sundance and Brazeau areas, with minor operational delays due to wet spring conditions [3][5]. - Peyto drilled 19 gross (17.7 net) wells and completed 19 gross (16.9 net) wells during the quarter, with total capital expenditures of $104.6 million [7][8]. Financial Performance - Funds from operations (FFO) increased by 24% year over year to $191.3 million, driven by low cash costs and a realized natural gas price after hedging of $3.53/Mcf, which is 57% higher than the AECO 7A benchmark [5][11]. - Earnings for the quarter totaled $87.8 million, a 71% increase compared to the previous year, with dividends to shareholders amounting to $66.0 million [5][6]. - Net debt was reduced by $39.9 million during the quarter, totaling $1.24 billion at the end of Q2 2025 [5][6]. Commodity Prices and Realizations - The realized natural gas price after hedging was $3.53/Mcf, significantly higher than the AECO 7A average of $1.96/GJ, due to effective hedging and market diversification [11][12]. - The average realized NGL price was $58.43/bbl, which included a realized hedging gain of $3.68/bbl [12][13]. Cost Management - Total cash costs for the quarter were $1.31/Mcfe, a 13% decrease from the previous year, attributed to lower royalties and interest costs [13][14]. - Operating costs increased slightly to $0.54/Mcfe, primarily due to higher property taxes and government expenses [13][14]. Capital Expenditures and Future Plans - Peyto's capital guidance for 2025 remains unchanged at $450 to $500 million, with plans to ramp up production in Q4 2025 in anticipation of higher winter natural gas prices [24][23]. - The company is actively pursuing drilling in profitable locations, including Notikewin and Falher formations, and has commenced construction of a new compressor station to enhance operational efficiency [20][21]. Market Outlook - The company maintains a bullish outlook on long-term natural gas prices, supported by the start-up of LNG Canada and increasing demand from AI-driven data centers [23][24]. - Peyto's diversified market exposure and hedging strategies are expected to provide revenue security and mitigate price risks [18][23].