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Peyto Exploration & Dev (TSE:PEY)
TSX:PEY
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Peyto Exploration & Dev
(TSX:PEY)
73Outperform
Positive Factors
Asset Acquisition
The company's acquisition of the Repsol Deep Basin assets has been very successful, and allowed it to deliver a ~25% improvement in overall well productivity.
Dividend Yield
Peyto shares currently imply a compelling dividend yield of roughly 8%, supported by its hedging program and peer-leading cost structure.
Hedging Strategy
Peyto's extensive hedging program has allowed it to fund its capital program, reduce debt, and maintain its healthy dividend despite ongoing weakness in western Canada natural gas prices.
Negative Factors
Hedging Restrictions
The extensive hedge book has constrained its upside to any potential improvements in natural gas prices relative to its peers.
Price Exposure
The company has no exposure to floating AECO prices, which will remove any upside associated with LNG Canada.
Price Improvement Benefits
Due to a large portion of its volumes being hedged, Peyto will not be a primary beneficiary of the upside if natural gas prices improve.
Peyto Exploration & Dev (PEY) vs. S&P 500 (SPY)
Market Cap
C$3.18B
Dividend Yield8.25%
Average Volume (3M)1.18M
Price to Earnings (P/E)11.2
Beta (1Y)0.97
Revenue Growth-9.52%
EPS Growth-11.68%
CountryCA
Employees53
SectorEnergy
Sector Strength45
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)1.43
Shares Outstanding199,030,350
10 Day Avg. Volume1,355,767
30 Day Avg. Volume1,175,999
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.79
Price to Cash Flow (P/CF)4.60
P/FCF Ratio9.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$19.17Price Target Upside14.31% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
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 sale of natural gas, natural gas liquids (NGLs), and crude oil. The company's revenue model is centered around exploring and developing its extensive portfolio of natural gas and oil reserves, optimizing production capabilities, and selling the extracted resources in the market. Key revenue streams include long-term contracts and spot market sales of its natural gas and oil products. Significant factors contributing to its earnings include its strategic operational efficiency, cost management practices, and advantageous market positioning within the prolific Deep Basin region. Additionally, Peyto's focus on maintaining low operating costs and leveraging advanced extraction technologies plays a critical role in enhancing its profitability.
Peyto Exploration & Dev Financial Statement Overview
Summary
Peyto Exploration & Dev exhibits strengths in operational efficiency and a stable equity structure, despite recent revenue declines. Profitability margins are under pressure, and cash flow constraints may pose challenges if not addressed. The company must focus on stabilizing revenue and managing debt to maintain financial health.Income Statement
The company has shown mixed revenue performance with a decline in recent years. The gross profit margin for 2024 is at 46.37%, indicating effective cost management. However, the net profit margin has decreased to 30.89%, demonstrating a reduction in profitability. EBITDA margin remains strong at 92.13%, reflecting robust operational efficiency. EBIT margin is notably absent, raising concerns about interest and tax impacts on earnings.65
Positive
Balance Sheet
Peyto Exploration & Dev maintains a solid equity base with an equity ratio of 48.95%, suggesting a balanced capital structure. The debt-to-equity ratio is 0.50, indicating moderate leverage. ROE is healthy at 10.40%, showing efficient use of equity to generate profits. The increasing total liabilities highlight potential financial risks if revenue does not stabilize.70
Positive
Cash Flow
Operating cash flow to net income ratio of 2.40 showcases strong cash generation relative to net income. Free cash flow has decreased, with a reduction in free cash flow to net income ratio at 0.77. Free cash flow growth rate is negative, reflecting challenges in maintaining positive cash flow after capital expenditures.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 908.25M | 945.51M | 1.63B | 911.98M | 399.99M | Gross Profit |
| 421.22M | 424.58M | 1.07B | 575.60M | 124.26M | EBIT |
| 0.00 | 385.84M | 907.92M | 442.82M | 18.70M | EBITDA |
| 836.96M | 778.10M | 872.94M | 517.66M | 261.29M | Net Income Common Stockholders |
| 280.57M | 292.63M | 390.66M | 152.25M | -35.55M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 13.63M | 37.18M | 11.90M | 5.72M | 9.31M | Total Assets |
| 5.51B | 5.51B | 4.01B | 3.78B | 3.60B | Total Debt |
| 1.36B | 1.40B | 864.52M | 1.07B | 1.18B | Net Debt |
| 1.35B | 1.37B | 852.61M | 1.07B | 1.17B | Total Liabilities |
| 2.81B | 2.79B | 1.95B | 2.02B | 1.92B | Stockholders Equity |
| 2.70B | 2.71B | 2.06B | 1.77B | 1.68B |
| Cash Flow | Free Cash Flow | |||
| 215.49M | 233.84M | 304.92M | 92.82M | -32.65M | Operating Cash Flow |
| 672.36M | 644.87M | 811.78M | 457.87M | 203.05M | Investing Cash Flow |
| -432.24M | -1.15B | -516.91M | -351.43M | -232.58M | Financing Cash Flow |
| -263.66M | 527.27M | -288.68M | -110.03M | 32.66M |
Peyto Exploration & Dev Technical Analysis
Positive
16.77
Price Trends
16.35
Positive
16.23
Positive
15.19
Positive
Market Momentum
0.65
Negative
75.95
Negative
78.75
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 16.77 is below the 20-day moving average (MA) of 17.26, above the 50-day MA of 16.35, and above the 200-day MA of 15.19, indicating a neutral trend. The MACD of 0.65 indicates Negative momentum. The RSI at 75.95 is Negative, neither overbought nor oversold. The STOCH value of 78.75 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 (57)
Financial Indicators
Performance Comparison
TSE:PEY
Peyto Exploration & Dev
16.77
2.90
20.91%
BIREF
Birchcliff Energy
4.06
0.39
10.63%
KELTF
Kelt Exploration
3.86
-0.64
-14.22%
TSE:TOU
Tourmaline Oil
59.47
-1.88
-3.06%
AETUF
ARC Resources
18.11
0.35
1.97%
Peyto Exploration & Dev Earnings Call Summary
Earnings Call Date: Mar 11, 2025 | % Change Since: 7.92% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant achievements in production, financial performance, and strategic asset integration. Despite some operational challenges and market uncertainties, the company's effective hedging strategy and robust operating margins suggest a strong overall performance. The sentiment is positive with substantial highlights outweighing the lowlights.Highlights
Successful Integration of Repsol Assets
Drilled 41 gross wells on the former Repsol lands, accounting for 55% of total wells drilled, resulting in a sustained 40% production improvement over legacy programs.
Record Production Levels
Achieved a record production level of 133,000 BOEs per day in Q4 and reached a target exit production of 136,000 BOEs per day in December 2024.
Strong Financial Performance
Generated roughly $200 million in funds from operations or $1 per share in the quarter, with a strong net sales price of $4.28 per Mcfe despite low AECO prices.
Robust Operating Margin
Delivered a 64% operating margin despite low average annual prices at AECO.
Effective Hedging Strategy
Secured $850 million of revenue for 2025 through hedging, with 480 million cubic feet per day hedged for this year at prices over $4 per Mcf.
Record Dividends
Paid a record amount of $258 million in dividends to shareholders for 2024.
Capital Efficiency
Achieved a trailing 12-month capital efficiency of approximately $9,700 per flowing BOE, one of the strongest in the company's history.
Lowlights
Loss of Base Production
Lost about 3,500 barrels a day of base production due to operational changes.
Market Uncertainty
Uncertainty due to potential tariffs affecting market sentiment, though the company is largely insulated by hedges and contracts.
High Methanol Costs
Currently facing the highest methanol costs ever seen, impacting operating expenses.
Company Guidance
During Peyto's Fourth Quarter 2024 Financial Results Conference Call, President and CEO Jean-Paul Lachance highlighted the company's successful operational and financial performance. Peyto drilled 41 gross wells on the acquired Repsol lands, accounting for 55% of their total 75 wells. This contributed to a sustained 40% production increase over legacy programs. The company reported outstanding Proved Developed Producing (PDP) Finding, Development, and Acquisition (FD&A) costs for 2024 at $1 per Mcfe. They achieved a record production of 133,000 BOEs per day in Q4, reaching a target exit production of 136,000 BOEs per day in December after deploying $457 million of capital, which was near the low end of their guidance. Their capital efficiency stood at approximately $9,700 per flowing BOE, one of the strongest in their history. Financially, they reported about $200 million in funds from operations or $1 per share in Q4, with cash costs of $1.36 per Mcfe, delivering a 64% operating margin. Looking forward, Peyto has hedged 480 million cubic feet per day for 2025 and plans to drill 70 to 80 net wells, aiming for an exit production of around 145,000 BOEs a day in December 2025. The company is also exploring options for further market diversification, including exposure to Japan Korea Marker (JKM) pricing and potential liquid-rich M&A opportunities.Peyto Exploration & Dev Corporate Events
Dividends
Peyto Confirms April 2025 Dividend Payment
Positive
Mar 14, 2025
Peyto Exploration & Development Corp. has announced a confirmed monthly dividend of $0.11 per common share for March 2025, payable on April 15, 2025. This decision reflects the company’s ongoing commitment to providing shareholder returns and maintaining its position as a significant player in the North American energy sector.
DividendsBusiness Operations and StrategyFinancial Disclosures
Peyto Reports Strong 2024 Results Amid Strategic Hedging Success
Positive
Mar 11, 2025
Peyto Exploration & Development Corp. reported strong financial and operational results for the fourth quarter and full year 2024, with significant increases in production and reserves. The company’s strategic hedging and diversification efforts have successfully shielded it from declining natural gas prices, allowing it to maintain a robust financial position and return substantial dividends to shareholders.
M&A TransactionsDividendsBusiness Operations and StrategyFinancial Disclosures
Peyto Reports Record Reserves and Strong Financial Performance in 2024
Positive
Feb 21, 2025
Peyto Exploration & Development Corp. reported a record performance in 2024, driven by its comprehensive drilling program and strategic acquisition from Repsol Canada Limited Partnership. The company achieved notable reserves growth across all categories, with a significant increase in production and reserves value. Despite low natural gas prices, Peyto’s efficient operations and hedging strategy resulted in strong financial performance, including a high recycle ratio and substantial dividends to shareholders. The company’s forward-looking capital program for 2025 underscores its commitment to maintaining its growth trajectory.
Dividends
Peyto Confirms February 2025 Dividend Payment
Positive
Feb 14, 2025
Peyto Exploration & Development Corp. has announced the confirmation of its monthly dividend for February 2025, set at $0.11 per common share, payable on March 14, 2025. This decision reflects Peyto’s commitment to delivering value to its shareholders and maintaining its financial stability within the competitive energy sector.
Peyto Announces January 2025 Dividend Payment
Jan 15, 2025
Peyto Exploration & Development Corp. has announced a monthly dividend of $0.11 per common share for January 2025, to be paid on February 14, 2025. This decision reflects the company’s commitment to returning value to its shareholders and may influence its market positioning by reinforcing investor confidence.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.