Financial Data and Key Metrics Changes - In 2025, the company generated over $750 million in adjusted EBITDAX and reported a net loss of $41.4 million due to a non-cash impairment charge of $67.2 million from the sale of Canadian assets [5][25][26] - The company reported production of 16,556 net revenue interest barrels of oil equivalent per day, exceeding guidance [25] - SEC proved reserves decreased by 5% year-over-year to 43 million barrels of oil equivalent, but the SEC proved reserve PV-10 increased by 8% to $410 million due to positive revisions [20][21] Business Line Data and Key Metrics Changes - The company divested all Canadian assets and expanded its Côte d'Ivoire position by becoming the operator with a 60% working interest in the Kossipo field [5][6] - In Gabon, the company began a phase three drilling program and successfully completed a full field maintenance shutdown [12][15] - The FPSO refurbishment in Côte d'Ivoire was completed ahead of schedule, with production expected to restart in Q2 2026 [8][9] Market Data and Key Metrics Changes - The company reported a favorable oil price adjustment in Gabon, contributing to an income tax benefit of $4.6 million in Q4 2025 [28] - The average SEC pricing was around $70 per barrel, impacting the company's financial results [21] Company Strategy and Development Direction - The company aims to achieve a production target of 50,000 barrels of oil equivalent per day and continues to focus on operational excellence and organic growth initiatives [5][6] - The company is exploring new development opportunities in Equatorial Guinea and evaluating alternative technical solutions for enhanced economic value [19][41] - The strategy includes maximizing asset value, rationalizing the portfolio, and pursuing accretive opportunities [40][42] Management's Comments on Operating Environment and Future Outlook - Management indicated that 2025 was a transitional year, with significant production uplifts expected from ongoing projects in 2026 and 2027 [7][25] - The company expressed confidence in its diversified portfolio and the potential for substantial increases in sales and adjusted EBITDAX in the future [38][39] Other Important Information - The company returned $26.5 million to shareholders through dividends in 2025 and has a strong cash position with unrestricted cash increasing to $58.9 million [7][30] - The company has a capital expenditure forecast for 2026 between $290 million and $360 million, focusing on drilling campaigns and FPSO refurbishment [37] Q&A Session All Questions and Answers Question: Can you provide more granularity on CapEx in Côte d'Ivoire? - The majority of Q1 CapEx is linked to the Gabon drilling program and FPSO finalization, with around $10 million for Kossipo preparation [46][48] Question: What is the expected residual CapEx for drilling in Côte d'Ivoire in 2027? - The CapEx for Q4 2026 drilling is projected to be between $30 million and $45 million [50] Question: Can you discuss the base Brent price forecast embedded in the NRI volume assumptions? - The underlying Brent assumption for 2026 is $65, with profit oil split benefiting from price rises [65][66] Question: Will VAALCO maintain its current working interest in Kossipo and CI-705? - The company is comfortable with its 60% working interest in Kossipo and is currently not planning to farm down its position [68] Question: What is the breakdown of the roughly $150 million CapEx in Côte d'Ivoire? - Approximately $50 million is allocated for the FPSO hookup and recommissioning, with the balance for drilling [74][78] Question: How will the company utilize any excess free cash flow generated? - Excess free cash flow will primarily be used to reduce debt rather than enhance shareholder returns due to high capital commitments [79]

Core Insights - Peyto Exploration & Development Corp. has released its independent reserves report effective December 31, 2025, marking 27 years of successful reserves development [1] - The company reported significant growth in reserves and production, with a capital budget of $450–$500 million approved for 2026 to offset a projected decline in base production [3][4] 2025 Highlights - In 2025, Peyto added 504 BCFe (84 MMboe) of new Proved Developed Producing (PDP) reserves at a Finding, Development and Acquisition (FD&A) cost of $0.94/Mcfe, the lowest in 23 years [4] - The company achieved record production in December 2025 of 145 Mboe/d, generating a capital efficiency of $9,900/boe/d [4] - The average field netback was $3.61/Mcfe ($21.66/boe), resulting in a recycle ratio of 3.8 times, the highest in 22 years [4] 2026 Capital Budget - The approved capital budget for 2026 is projected to add between 43,000 and 48,000 boe/d of new production, which will more than offset an estimated 26% to 28% decline in base production [3] - The capital program will utilize four to five drilling rigs to drill 70–80 net horizontal wells, with the remaining budget allocated for optimization and maintenance projects [3] Reserves and Valuation - Peyto's PDP reserves increased by 7% to 509 MMboe, Total Proved (TP) reserves increased by 6% to 926 MMboe, and Total Proved plus Probable (P+P) reserves also increased by 6% to 1,450 MMboe [4] - The before-tax, 10% discounted net present value (BT NPV10) of the company's reserves is $5.0 billion on a PDP basis, $6.9 billion on a TP basis, and $9.4 billion on a P+P basis [4] - The debt-adjusted BT NPV10 of the company's P+P reserves was assessed at $40 per share, with $25 per share attributable to developed reserves and $15 per share to undeveloped reserves [11] Production and Decline Rates - The company estimates a total base decline rate of approximately 26-28% for 2026, based on December 2025 production levels [22] - The Reserve Life Index (RLI) for PDP reserves remains at 10 years, while TP and P+P reserves have RLIs of 18 and 28 years, respectively [4][40] Market Diversification and Hedging - Peyto's active hedging program has secured prices for approximately 475 MMcf/d of natural gas for 2026 at an average price over $4.00/Mcf, providing significant revenue certainty [4][5] - The company's market diversification strategy to non-AECO hubs is expected to enhance revenue stability, particularly during periods of price volatility [6][7] Historical Performance - Over the past 27 years, Peyto has invested a total of $9.4 billion in the Canadian economy, developing 7.2 TCFe of total developed natural gas and associated liquids at an average cost of $1.31/Mcfe [10] - The company has consistently delivered a compound annual growth rate (CAGR) of 20% in PDP reserves per share since inception [4]