Q1 2026 Highlights:
Peyto delivered record first quarter production volumes of 147,513 boe/d (777.6 MMcf/d of natural gas, 17,919 bbls/d of NGLs), a 10% increase year over year (7% on a per share basis), driven by the Company's successful capital program.
Reported its highest quarterly funds from operations1,2 ("FFO") of $293.0 million ($1.41/diluted share), and generated $139.7 million of free funds flow3 in the quarter. Strong FFO was driven by the Company's industry-leading low cash costs4 and realized natural gas price after hedging of $4.69/Mcf, 73% higher than the AECO 7A monthly benchmark.
Earnings for the quarter totaled $171.1 million, or $0.82/diluted share, setting more new records for Peyto on an absolute and per share basis.
The Company returned $67.6 million of dividends to shareholders in the quarter and reduced net debt5 by $89.2 million from December 31, 2025. Peyto's Debt/EBITDA leverage ratio was reduced from 1.2 times at December 31, 2025 to 1.0 times at March 31, 2026.
Peyto recorded $20.2 million in realized hedging gains in the quarter and has a hedge position protecting approximately 514 MMcf/d of natural gas production for April–December 2026 and 348 MMcf/d for 2027, at $3.96/Mcf and $3.35/Mcf, respectively.
Generated a 77% operating margin6 and a 39% profit margin7 in the quarter, resulting in a 17% return on capital employed8 ("ROCE") and a 16% return on equity8 ("ROE"), on a trailing 12-month basis.
Quarterly cash costs9 totaled $1.28/Mcfe, 10% lower than Q1 2025, and included royalties of $0.21/Mcfe, operating expense of $0.52/Mcfe, transportation of $0.29/Mcfe, G&A of $0.06/Mcfe and interest expense of $0.20/Mcfe.
Capital expenditures totaled $150.5 million in the quarter. Peyto drilled 23 wells (23.0 net), completed 23 wells (23.0 net), and brought 21 wells (21.0 net) on production. Additionally, the Company purchased 41 gross (27.8 net) sections of undeveloped land through crown land sales and mineral land acquisitions.
First Quarter 2026 in Review
Peyto was active in the quarter with five drilling rigs in the Greater Sundance and Brazeau areas, as well as with pipeline and compression projects that expanded the existing gathering systems to accommodate incremental production volumes. First quarter production averaged 147,513 boe/d, up 10% year over year, setting a new record for the Company. Natural gas prices varied in the quarter with cold winter weather driving up demand, particularly in the US Midwest and Eastern markets where Peyto had exposure to daily market prices. The AECO 7A monthly gas price averaged $2.36/GJ while NYMEX Henry Hub (last day) averaged US$5.04/MMBtu. Peyto's diversification to premium winter markets helped to fetch a strong realized natural gas price, before hedging, of $4.32/Mcf ($3.76/GJ), 59% higher than AECO 7A. Additionally, the Company recorded $0.37/Mcf of realized hedging gains on its gas volumes in the quarter from its mechanistic risk management strategy. All in, Peyto's realized gas price after hedging totaled $4.69/Mcf or 73% higher than AECO 7A monthly price. The strong gas price, combined with Peyto's low-cost structure, boosted FFO to a record $293.0 million, up 20% from Q4 2025. This record FFO funded $150.5 million of capital expenditures, $67.6 million of shareholder dividends and allowed for a $89.2 million reduction in net debt in the quarter.
Three Months Ended Mar 31
%
2026
2025
Change
Operations
Production
Natural gas (Mcf/d)
777,567
710,459
9
%
NGLs (bbl/d)
17,919
15,473
16
%
Thousand cubic feet equivalent (Mcfe/d @ 1:6)
885,079
803,299
10
%
Barrels of oil equivalent (boe/d @ 6:1)
147,513
133,883
10
%
Production per million common shares (boe/d)
720
673
7
%
Product prices
Realized natural gas price, after hedging ($/Mcf)
4.69
4.17
12
%
Realized NGL price, after hedging ($/bbl)
62.84
62.97
0
%
Net sales price ($/Mcfe)
5.39
4.90
10
%
Royalties ($/Mcfe)
0.21
0.25
-16
%
Operating ($/Mcfe)
0.52
0.53
-2
%
Transportation ($/Mcfe)
0.29
0.29
0
%
Field netback(1)($/Mcfe)
4.49
3.88
16
%
General & administrative expenses ($/Mcfe)
0.06
0.06
0
%
Interest expense ($/Mcfe)
0.20
0.29
-31
%
Financial ($000, except per share)
Natural gas and NGL sales including realized hedging gains (losses)(2)
429,601
354,268
21
%
Funds from operations(1)
292,998
225,335
30
%
Funds from operations per share - basic(1)
1.43
1.13
27
%
Funds from operations per share - diluted(1)
1.41
1.12
26
%
Total dividends
67,576
65,676
3
%
Total dividends per share
0.33
0.33
0
%
Earnings
171,089
114,117
50
%
Earnings per share, basic
0.84
0.57
47
%
Earnings per share, diluted
0.82
0.57
44
%
Total capital expenditures(1)
150,449
102,129
47
%
Decommissioning expenditures
2,865
2,872
0
%
Total payout ratio(1)
75%
76%
-1
%
Weighted average common shares outstanding - basic
204,779,537
199,017,749
3
%
Weighted average common shares outstanding - diluted
208,181,438
200,359,842
4
%
Net debt(1)
1,088,363
1,282,891
-15
%
Shareholders' equity
2,985,070
2,593,128
15
%
Total assets
5,517,949
5,356,226
3
%
(1) This is a Non-GAAP financial measure or ratio. See "non-GAAP and Other Financial Measures" in this news release and in the Q1 2026 MD&A(2) Excludes marketing revenue and other income
Capital Expenditures
Peyto continued with a five-rig program in the first quarter and spud 23 gross (23.0 net) horizontal wells, including 2 Cardium, 2 Viking, 6 Notikewin, 6 Falher, 6 Wilrich, and 1 Bluesky well in the core Sundance and Brazeau areas. The Company also completed 23 gross (23.0 net) wells and brought 21 gross (21.0 net) wells on production in the quarter, resulting in total well-related capital expenditures of $120.6 million. As part of the program, Peyto followed up with two Cardium wells in a new area of Brazeau using the same drilling and completion design that produced strong results in 2025. The wells were recently brought onstream and are exceeding expectations both from a productivity and liquid yield perspective. Additionally, Peyto invested $26.1 million in gathering and processing facilities that included upgrades to plant compression and LPG storage along with field pipeline projects to accommodate new development in the greater Sundance area. Drilling costs per meter were down 8% as compared to Q4 2025, as Peyto drilled some of the longest wells in the Company's history. Completion costs per meter were up slightly from Q4 2025 as higher stage density completions were deployed in several wells in Q1 2026. Peyto's historical drilling and completion costs are summarized in the following table.
2018
2019
2020
2021
2022
2023
2024
2025
2025Q1
2025Q2
2025Q3
2025Q4
2026Q1(1)
Gross Hz Spuds
70
61
64
95
95
72
75
82
19
19
20
24
23
Measured Depth (m)
4,020
3,848
4,247
4,453
4,611
4,891
5,092
4,963
4,976
5,021
4,921
4,834
5,206
Drilling ($MM/well)
$1.71
$1.62
$1.68
$1.89
$2.56
$2.85
$2.90
$2.93
$3.01
$2.94
$2.97
$2.84
$2.83
$ per meter
$425
$420
$396
$424
$555
$582
$569
$591
$605
$585
$603
$587
$543
Completion ($MM/well)
$1.13
$1.01
$0.94
$1.00
$1.35
$1.54
$1.70
$1.67
$1.56
$1.71
$1.63
$1.70
$1.70
Hz Length (m)
1,348
1,484
1,682
1,612
1,661
1,969
2,184
2,123
1,961
2,311
2,185
2,036
2,011
$ per Hz Length (m)
$751
$679
$560
$620
$813
$781
$776
$787
$793
$740
$747
$837
$843
$ ‘000 per Stage
$51
$38
$36
$37
$47
$52
$52
$51
$56
$47
$47
$55
$57
(1) Based on field estimates and may be subject to minor adjustments going forward.
Peyto was also successful acquiring a total of 41 gross (27.8 net) sections of undeveloped land in the Company's core areas through crown land sales and mineral land acquisitions totaling $3.6 million ($201/acre) to bolster drilling inventory.
Marketing
Commodity PricesIn the first quarter, Peyto realized a natural gas price after hedging of $4.69/Mcf, or $4.08/GJ, 73% higher than the average AECO 7A monthly benchmark of $2.36/GJ, driven by strong realized prices at the Company's non-AECO hubs, including Dawn, Parkway, Ventura, Chicago and Henry Hub, as well as realized hedging gains. Peyto's diversification activities contributed $1.61/Mcf (net of diversification costs) in the quarter, while the Company's natural gas hedging activity resulted in a realized gain of $0.37/Mcf ($25.6 million). The value of Peyto's natural gas market diversification and hedging activities over the past eight quarters, relative to the AECO 7A benchmark, is detailed in the following table.
($/Mcf)
Q22024
Q32024
Q42024
Q12025
Q22025
Q32025
Q42025
Q12026
AECO 7A1
1.56
0.89
1.59
2.21
