Peyto Exploration & Development (PEY) Q2 2026 earnings summary

Executive summary

• Maintained stable production despite wet weather, with Q2 2026 production averaging 145,320 boe/d, up 10% year-over-year, driven by a strong Q1 drilling program and enhanced NGL recoveries.

• Paid down additional debt, increased the dividend in May, and expanded undeveloped acreage.

• Funds from operations reached $227.7 million (CAD 228 million), up 19% from Q2 2025, supporting capital expenditures, dividends, and debt reduction.

• Signed a significant 10-year natural gas diversification deal with Centrica, linking future gas sales to the Dutch TTF benchmark starting in 2029.

Financial highlights

• Controllable cash costs were CAD 1.04 per Mcfe, returning to pre-acquisition levels, with cash costs at $1.32/Mcfe and pre-royalty costs at $1.04/Mcfe, 11% lower than Q2 2025.

• Realized gas price was CAD 3.42 per Mcf ($3.42/Mcf), double the AECO average and 108% above the AECO 7A benchmark, aided by diversification and hedges.

• Generated CAD 228 million in funds from operations (CAD 1.11/share) and adjusted earnings of CAD 150 million (CAD 0.50/share); Q2 2026 adjusted earnings were $105.0 million ($0.50/diluted share), up 19% year-over-year.

• Operating margin reached 71% and profit margin was 29% for the quarter.

• Dividends paid were $71.8 million, with net debt reduced by $72.4 million from March 31, 2026; monthly dividend increased by CAD 0.01/share (9%) in May.

Outlook and guidance

• Running four rigs for the remainder of the year, with a shift toward liquid-rich drilling targets.

• Over 500 MMcf/d of gas hedged above CAD 4/Mcf for 2026 and 400 MMcf/d secured for 2027 at CAD 3.30/Mcf.

• 2026 capital program reiterated at $450–$500 million, targeting 43,000–48,000 boe/d of new production by year-end and 78 net wells planned.

• Plans to manage production to limit exposure to weak markets for the remainder of summer.

• Confident in long-term strategy due to market diversification, cost control, and favorable industry tailwinds.