Peyto Exploration & Development (PEY) Q3 2024 earnings summary

Executive summary

• Funds from operations reached CAD 154.3 million, with earnings of CAD 51.0 million and CAD 64.7 million in dividends returned to shareholders.

• Successfully executed a major turnaround at the Edson Gas Plant, maintaining safety and efficiency despite challenging conditions.

• Production averaged 120,031 BOE/d, up 23% year-over-year, driven by the Repsol acquisition.

• Disciplined hedging and market diversification protected revenues amid weak AECO gas prices, with realized gas prices nearly 4x the AECO benchmark.

• Achieved industry-leading cost structure and operating margins, supported by disciplined execution and strong team performance.

Financial highlights

• Delivered CAD 154.3 million in funds from operations, flat quarter-over-quarter and up 4% year-over-year, despite AECO prices averaging CAD 0.65/GJ.

• Natural gas and NGL sales including hedging gains totaled CAD 260.6 million, up 12% year-over-year.

• Cash costs were CAD 1.44/MCFE, down from Q2, with field netback at CAD 2.96/MCFE and cash netback at CAD 2.55/MCFE.

• Operating margin reached 64%, among the highest in the sector, with profit margin at 19%.

• Issued CAD 75 million in private notes at 5.64% for 10 years, refinancing maturing debt.

Outlook and guidance

• Preliminary 2025 capital budget set at CAD 450–500 million, targeting 70–80 wells and 43,000–48,000 BOE/d of new production to offset a 26–28% base decline.

• On track to meet or exceed exit production target of 135,000 BOE/d, aligning with the low end of CAD 450 million capital guidance.

• Hedged close to CAD 800 million of fixed revenue for 2025, providing insulation from price volatility.

• Net debt reduction expected by year-end 2024 with improved prices and higher production.

• Production expected to remain flat in H1 2025, ramping up in H2 to align with LNG market developments.