The following is a summary of the Peyto Exploration & Development Corp. (PEYUF) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Peyto reported Q3 2024 funds from operations of $154 million, consistent with the previous quarter, despite low daily AECO gas prices averaging $0.65 GJ.

• Cash costs decreased to $1.44 per Mcfe driven by lower royalties and G&A expenses, though somewhat offset by higher interest, transportation, and operating costs.

• Peyto achieved net debt neutrality year-to-date, planning further debt reduction in Q4 with better hedged and unhedged prices and increased production.

• Operating margin maintained at 64%, showcasing strong profitability relative to industry peers.

Business Progress:

• Successfully managed a major turnaround at the Edson Gas Plant, despite operational challenges.

• Drilled and completed wells showing an average sustained production improvement of 25%, particularly notable on Repsol lands with a 40% productivity increase.

• Achieved production targets with a new monthly record of 130,000 BOEs per day in October.

• Preliminary budget for 2025 outlines a capital expenditure of $450 million to $500 million, aiming to drill 70 to 80 wells to add production and offset estimated declines.

Opportunities:

• Peyto's hedging strategy ensures stable revenues, allowing capital expenditure and dividend sustainability.

• Secured a 10-year transportation contract on the TC mainline to deliver to an important demand center in Toronto, enhancing market diversification.

Risks:

• Forecasted higher production decline rates next year, which may necessitate adjustments in operational strategies or capital deployment to maintain output and efficiency.

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