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Peyto Exploration & Dev (TSE:PEY)
:PEY
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Peyto Exploration & Dev (PEY) AI Stock Analysis

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TSE:PEY

Peyto Exploration & Dev

(TSX:PEY)

Rating:70Outperform
Price Target:
C$21.50
▲(11.11%Upside)
Peyto Exploration & Dev's overall score reflects its solid financial performance, efficient operational strategies, and attractive valuation. The company's effective gas hedging and high dividend yield enhance investor appeal, despite challenges with revenue consistency and economic uncertainties.
Positive Factors
Earnings
Peyto Exploration & Development Corp reported strong Q1 results, with realized pricing significantly exceeding industry benchmarks.
Operational Efficiency
Peyto's production and financial metrics met or exceeded expectations, demonstrating operational efficiency and effective cost management.
Negative Factors
Hedging Limitations
The extensive hedge book has constrained its upside to any potential improvements in natural gas prices relative to its peers.
Valuation Concerns
The analyst has reduced the stock rating to HOLD from Buy due to relative valuation concerns after a strong performance period.

Peyto Exploration & Dev (PEY) vs. iShares MSCI Canada ETF (EWC)

Peyto Exploration & Dev Business Overview & Revenue Model

Company DescriptionPeyto 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.
How the Company Makes MoneyPeyto Exploration & Development Corp generates revenue primarily through the production and sale of natural gas and natural gas liquids (NGLs). The company's revenue model is based on extracting hydrocarbons from its reserves and selling them in the open market. Key revenue streams include the sale of natural gas, NGLs, and crude oil, with natural gas being the predominant product. Peyto's earnings are influenced by factors such as production volumes, commodity prices, and operational efficiency. The company also benefits from its strategic partnerships and agreements with midstream service providers, enabling it to transport and process its products effectively. Additionally, Peyto focuses on maintaining a low-cost structure, which helps enhance its profitability even in fluctuating commodity price environments.

Peyto Exploration & Dev Earnings Call Summary

Earnings Call Date:May 13, 2025
(Q1-2025)
|
% Change Since: -0.26%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Positive
Peyto exhibited strong financial performance, effective gas hedging strategies, and innovative drilling practices. However, they face challenges with economic uncertainty and low Alberta gas pool prices, emphasizing the need for continued diversification.
Q1-2025 Updates
Positive Updates
Strong Financial Performance
Peyto generated funds from operations of $225 million in Q1 2025, thanks to gas hedging gains and a strong gas diversification portfolio. The operating margin was 71%.
Gas Hedging and Diversification Success
The gas hedging program and diversification to U.S. price markets resulted in a realized price of $4.17 per Mcf, 89% higher than the monthly AECO price.
Debt Reduction and Dividend Payout
Peyto paid out $66 million in dividends and retired approximately $66 million in net debt.
Innovative Drilling Techniques
Successful test of a new drilling technique in the Cardium formation resulted in 40% lower drill costs per horizontal meter.
Negative Updates
Uncertain Economic Environment
The uncertainty of the world economy continues to affect Peyto's business environment, although tariffs have a minimal impact.
Alberta Gas Pool Price Challenges
Alberta gas pool prices averaged only $40 a megawatt, similar to AECO prices, affecting direct supply deals and highlighting the need for market diversification.
Company Guidance
During Peyto's First Quarter 2025 Financial Results Conference Call, the company provided detailed guidance on its financial and operational performance. Peyto reported generating $225 million in funds from operations, with a significant contribution from gas hedging gains of $0.83 per Mcf and a gas diversification portfolio that added $1.13 per Mcf in value, resulting in a total revenue of $4.17 per Mcf, 89% higher than the AECO price. The company maintained low cash costs of $1.42 per Mcfe, down from $1.51 per Mcfe in the previous year, and achieved a robust 71% operating margin. Capital expenditures for the quarter amounted to $102 million, enabling Peyto to pay $66 million in dividends and retire $66 million in net debt. The company drilled 19 wells, completed 13, and tied in 14 during the quarter, with a focus on the prolific flare channel and new drilling techniques in the Cardium formation. Looking ahead, Peyto plans to spend between $450 million and $500 million for 2025, with a target capital efficiency rate of $10,000 to $11,000 per flowing BOE, sufficient to offset a 27% annual corporate decline rate.

Peyto Exploration & Dev Financial Statement Overview

Summary
Peyto Exploration & Dev exhibits strong profitability and operational efficiency with robust margins and debt management. However, revenue consistency and cash flow volatility pose potential risks. Attention is needed for revenue growth strategies and cash flow stabilization.
Income Statement
65
Positive
Peyto Exploration & Dev has shown a mixed performance in its income statement. The TTM gross profit margin is approximately 49.4%, indicating healthy cost management. The net profit margin is around 31.7%, suggesting strong profitability in the current period. However, the revenue growth has been inconsistent, with a significant decline in 2022 but a slight recovery in the most recent period. The EBIT and EBITDA margins are also robust, at 25.0% and 92.4% respectively, reflecting operational efficiency.
Balance Sheet
70
Positive
The company's balance sheet exhibits a stable financial structure. The debt-to-equity ratio stands at 0.52, indicating a moderate level of leverage. The return on equity is about 11.4%, showing a reasonable return for shareholders. The equity ratio is approximately 48.4%, suggesting a balanced capital structure. Overall, Peyto maintains a healthy balance between debt and equity, though the slight decline in equity year-on-year warrants attention.
Cash Flow
68
Positive
Cash flow analysis reveals a solid performance with an operating cash flow to net income ratio of 2.36, indicating efficient cash generation relative to earnings. The free cash flow to net income ratio is 0.86, reflecting decent cash availability after capital expenditures. However, the free cash flow growth rate has been volatile, highlighting potential cash flow management challenges.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue908.25M945.51M1.63B911.98M399.99M
Gross Profit421.22M424.58M1.07B575.60M124.26M
EBITDA849.88M778.10M872.94M517.66M261.29M
Net Income280.57M292.63M390.66M152.25M-35.55M
Balance Sheet
Total Assets5.51B5.51B4.01B3.78B3.60B
Cash, Cash Equivalents and Short-Term Investments13.63M37.18M11.90M5.72M9.31M
Total Debt1.36B1.40B864.52M1.07B1.18B
Total Liabilities2.81B2.79B1.95B2.02B1.92B
Stockholders Equity2.70B2.71B2.06B1.77B1.68B
Cash Flow
Free Cash Flow215.49M233.84M304.92M92.82M-32.65M
Operating Cash Flow672.36M644.87M811.78M457.87M203.05M
Investing Cash Flow-432.24M-1.15B-516.91M-351.43M-232.58M
Financing Cash Flow-263.66M527.27M-288.68M-110.03M32.66M

Peyto Exploration & Dev Technical Analysis

Technical Analysis Sentiment
Positive
Last Price19.35
Price Trends
50DMA
19.25
Positive
100DMA
18.14
Positive
200DMA
16.77
Positive
Market Momentum
MACD
-0.02
Negative
RSI
52.94
Neutral
STOCH
72.21
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PEY, the sentiment is Positive. The current price of 19.35 is above the 20-day moving average (MA) of 19.09, above the 50-day MA of 19.25, and above the 200-day MA of 16.77, indicating a bullish trend. The MACD of -0.02 indicates Negative momentum. The RSI at 52.94 is Neutral, neither overbought nor oversold. The STOCH value of 72.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:PEY.

Peyto Exploration & Dev Peers Comparison

Overall Rating
UnderperformOutperform
Sector (52)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
70
Outperform
C$3.90B13.0311.17%6.82%2.80%-7.94%
52
Neutral
C$2.96B-1.54-3.48%6.52%3.05%-49.39%
$2.14B6.3330.45%
$9.70B7.4911.56%6.77%
$2.25B2.0948.97%6.28%
$2.05B7.7616.78%
67
Neutral
C$2.65B24.568.83%-7.83%-45.69%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:PEY
Peyto Exploration & Dev
19.35
5.91
43.97%
ATHOF
Athabasca Oil
4.22
0.23
5.76%
WCPRF
Whitecap Resources
7.72
0.72
10.29%
PRMRF
Paramount Resources
15.50
4.87
45.81%
NUVSF
NuVista Energy
10.37
0.96
10.20%
TSE:IPCO
International Petroleum Corporation
23.25
3.91
20.22%

Peyto Exploration & Dev Corporate Events

Dividends
Peyto Confirms August Dividend Payment
Positive
Jul 15, 2025

Peyto Exploration & Development Corp. has announced a monthly dividend of $0.11 per common share for July 2025, payable on August 15, 2025. This announcement reflects the company’s commitment to providing returns to its shareholders and may influence its market positioning and stakeholder relations.

The most recent analyst rating on (TSE:PEY) stock is a Hold with a C$17.00 price target. To see the full list of analyst forecasts on Peyto Exploration & Dev stock, see the TSE:PEY Stock Forecast page.

Executive/Board ChangesDividends
Peyto Announces Director Retirement and Confirms July Dividend
Positive
Jun 13, 2025

Peyto Exploration & Development Corp. announced the retirement of Michael MacBean from its board of directors, acknowledging his significant contributions over 20 years, including roles as lead independent director and chair of various committees. Additionally, Peyto confirmed a monthly dividend of $0.11 per common share for June 2025, to be paid on July 15, 2025, highlighting its ongoing commitment to shareholder returns.

The most recent analyst rating on (TSE:PEY) stock is a Hold with a C$17.00 price target. To see the full list of analyst forecasts on Peyto Exploration & Dev stock, see the TSE:PEY Stock Forecast page.

Shareholder MeetingsBusiness Operations and Strategy
Peyto Exploration & Development Corp. Announces Shareholder Meeting Results
Positive
May 23, 2025

Peyto Exploration & Development Corp. announced the results of its annual and special meeting of shareholders, where all nominated directors were elected. Additionally, Deloitte LLP was appointed as auditors, and resolutions concerning executive compensation and the total shareholder return rights plan were approved. These decisions reflect shareholder support for the company’s strategic direction and governance, potentially impacting its operational and financial strategies moving forward.

The most recent analyst rating on (TSE:PEY) stock is a Hold with a C$17.00 price target. To see the full list of analyst forecasts on Peyto Exploration & Dev stock, see the TSE:PEY Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Peyto Reports Strong Q1 2025 Results with Increased Production and Revenue
Positive
May 13, 2025

Peyto Exploration & Development Corp. reported strong financial results for the first quarter of 2025, with $225.2 million in funds from operations and $114.1 million in earnings. The company’s success was driven by a significant increase in realized natural gas prices and industry-leading low cash costs. Peyto’s strategic hedging secured substantial revenue for the coming years, and the company reduced its net debt by $65.7 million, while also increasing production volumes by 7% year-over-year. These results underscore Peyto’s robust operational efficiency and its ability to capitalize on favorable market conditions, benefiting stakeholders and reinforcing its competitive position in the industry.

The most recent analyst rating on (TSE:PEY) stock is a Hold with a C$17.00 price target. To see the full list of analyst forecasts on Peyto Exploration & Dev stock, see the TSE:PEY Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 25, 2025