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

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TSE:PEY

Peyto Exploration & Dev

(TSX:PEY)

Rating:82Outperform
Price Target:
C$22.00
▲(18.22% Upside)
Peyto Exploration & Dev's strong financial performance and positive earnings call are the most significant factors driving the high score. The company's attractive valuation further supports the stock's potential, despite some technical indicators suggesting short-term caution.
Positive Factors
Hedging Strategy
The company's hedges continue to generate strong cash flow, safeguarding the dividend and capital program while aiding in further debt reduction.
Market Diversification
Peyto's realized gas price was $3.53/mcf versus AECO 7A benchmark of $2.25/mcf, demonstrating the effectiveness of its market diversification strategy.
Negative Factors
Hedging Constraints
Although the extensive hedge book has protected its high-yielding base dividend at lower natural gas prices, it has also constrained its upside to any potential improvements in natural gas prices relative to its peers.
Stock Rating
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:Aug 12, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 13, 2025
Earnings Call Sentiment Positive
The earnings call for Peyto's second quarter of 2025 highlighted substantial production growth, successful cost management, and effective hedging strategies, leading to increased funds from operations and significant debt reduction. Although there were some operational interruptions due to external factors like fires and an increase in property taxes, the positive aspects far outweighed these challenges.
Q2-2025 Updates
Positive Updates
Increased Production and Reduced Costs
Quarter production was just under 132,000 BOEs a day, up 8% since the second quarter of 2024. Cash costs were down 13% over the same period to $1.31 per Mcfe.
Hedging and Diversification Success
Strong hedge book added $53 million in total gains, contributing $0.75 per Mcf to realized gas revenue. Market diversification added $0.53 per Mcf net of transportation costs over AECO pricing.
Significant Increase in Funds from Operations
Funds from operations increased by 24% year-over-year, generating $191 million in the quarter, or $0.95 per diluted share, up 20% from Q2 last year.
Debt Reduction
Paid down $40 million of net debt in the quarter and $105 million year-to-date.
Successful Drilling Program
Drilled 19 wells, completed 19, and tied in 21 in the quarter, with a notable 37% reduction in drilling and completion costs per meter for Cardium wells.
Promising New Discoveries
Completed a well in the Falher channel trend that produced over 1 Bcf of gas, the best outcome in this trend so far.
Negative Updates
Operational Interruptions Due to Fires
Fires near Fort Mac caused oil sands shut-ins, affecting natural gas demand in the province.
Higher Operating Costs Due to Property Taxes
Operating costs were slightly higher due to an unanticipated increase in the 2025 property tax bill.
Company Guidance
During Peyto's Second Quarter 2025 Financial Results Conference Call, the company provided several key metrics and guidance for the rest of the year. Production increased by 8% year-over-year, reaching just under 132,000 BOEs per day, while cash costs decreased by 13% to $1.31 per Mcfe. The company's strong hedge book contributed $53 million in total gains, enhancing realized gas revenue by $0.75 per Mcf. Market diversification added another $0.53 per Mcf net of transportation costs. These factors helped boost funds from operations by 24%, totaling $191 million or $0.95 per diluted share, up 20% from the previous year. Peyto plans to spend between $450 million to $500 million in 2025, aiming to achieve a capital efficiency rate of $10,000 to $11,000 per BOE per day by year-end. The company expects royalty rates to remain around 5% for the remainder of the year, with interest costs decreasing due to lower interest rates and reduced bank debt, which was cut by $40 million in the quarter and $105 million year-to-date. Looking forward, Peyto plans to continue its drilling activities, including developing new wells in the Falher channel trend, and anticipates ramping up production in Q4 to coincide with better winter pricing.

Peyto Exploration & Dev Financial Statement Overview

Summary
Peyto Exploration & Dev demonstrates strong profitability and operational efficiency, with robust EBIT and EBITDA margins. However, inconsistent revenue growth and cash flow volatility present potential risks. The balance sheet is stable, with moderate leverage and a reasonable return on equity.
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.00B908.25M945.51M1.63B911.98M399.99M
Gross Profit538.30M421.22M424.58M1.07B575.60M124.26M
EBITDA908.40M849.88M778.10M872.94M517.66M261.29M
Net Income331.21M280.57M292.63M390.66M152.25M-35.55M
Balance Sheet
Total Assets5.42B5.51B5.51B4.01B3.78B3.60B
Cash, Cash Equivalents and Short-Term Investments31.68M13.63M37.18M11.90M5.72M9.31M
Total Debt1.29B1.36B1.40B864.52M1.07B1.18B
Total Liabilities2.69B2.81B2.79B1.95B2.02B1.92B
Stockholders Equity2.73B2.70B2.71B2.06B1.77B1.68B
Cash Flow
Free Cash Flow276.19M215.49M233.84M304.92M92.82M-32.65M
Operating Cash Flow727.15M672.36M644.87M811.78M457.87M203.05M
Investing Cash Flow-465.70M-432.24M-1.15B-516.91M-351.43M-232.58M
Financing Cash Flow-252.22M-263.66M527.27M-288.68M-110.03M32.66M

Peyto Exploration & Dev Technical Analysis

Technical Analysis Sentiment
Negative
Last Price18.61
Price Trends
50DMA
18.88
Negative
100DMA
18.65
Negative
200DMA
17.21
Positive
Market Momentum
MACD
-0.14
Positive
RSI
40.52
Neutral
STOCH
21.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PEY, the sentiment is Negative. The current price of 18.61 is below the 20-day moving average (MA) of 18.73, below the 50-day MA of 18.88, and above the 200-day MA of 17.21, indicating a neutral trend. The MACD of -0.14 indicates Positive momentum. The RSI at 40.52 is Neutral, neither overbought nor oversold. The STOCH value of 21.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:PEY.

Peyto Exploration & Dev Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
C$3.74B10.9712.21%7.20%7.02%7.16%
65
Neutral
$15.28B7.483.22%5.33%4.10%-60.58%
$2.21B7.0427.01%
$9.15B7.0011.56%6.97%
$2.16B2.1144.56%5.17%
$2.09B8.4814.64%
67
Neutral
C$2.77B39.555.46%-17.88%-67.55%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:PEY
Peyto Exploration & Dev
18.33
5.45
42.31%
ATHOF
Athabasca Oil
4.32
0.71
19.67%
WCPRF
Whitecap Resources
7.26
0.66
10.00%
PRMRF
Paramount Resources
14.62
4.92
50.72%
NUVSF
NuVista Energy
10.47
1.82
21.04%
TSE:IPCO
International Petroleum Corporation
24.52
7.23
41.82%

Peyto Exploration & Dev Corporate Events

Dividends
Peyto Exploration & Development Corp. Confirms August Dividend
Positive
Aug 15, 2025

Peyto Exploration & Development Corp. has announced a monthly dividend of $0.11 per common share for August 2025, payable on September 15, 2025, to shareholders of record by August 31, 2025. This dividend declaration underscores Peyto’s ongoing commitment to delivering shareholder value and highlights its stable financial performance amidst the dynamic energy market.

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.

DividendsBusiness Operations and StrategyFinancial Disclosures
Peyto Reports Strong Q2 2025 Results with Increased Production and Debt Reduction
Positive
Aug 12, 2025

Peyto Exploration & Development Corp. reported strong financial results for the second quarter of 2025, with $191.3 million in funds from operations and a significant reduction in net debt. The company achieved an 8% increase in production volumes year over year, driven by its capital program, and maintained industry-leading low cash costs. Peyto’s strategic hedging and market diversification allowed it to realize a natural gas price significantly higher than the AECO benchmark, securing substantial revenue for future periods. The company’s disciplined risk management and operational efficiency resulted in a solid operating margin and profit margin, supporting shareholder dividends and further debt reduction.

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.

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.

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: Aug 27, 2025