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¹ This press release contains certain non-GAAP and other financial measures to analyze financial performance, financial position, and cash flow including, but not limited to "operating margin", "profit margin", "return on capital", "return on equity", "netback", "funds from operations", "free funds flow", "total cash costs", and "net debt". These non-GAAP and other financial measures do not have any standardized meaning prescribed under IFRS and therefore may not be comparable to similar measures presented by other entities. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as earnings, cash flow from operating activities, and cash flow used in investing activities, as indicators of Peyto’s performance. See "Non-GAAP and Other Financial Measures" included at the end of this press release and in Peyto's most recently filed MD&A for an explanation of these financial measures and reconciliation to the most directly comparable financial measure under IFRS.
² Funds from operations is a non-GAAP financial measure. See "non-GAAP and Other Financial Measures" in this news release and in the Q1 2025 MD&A.
³ Free funds flow is a non-GAAP financial measure. See "non-GAAP and Other Financial Measures" in this news release and in the Q1 2025 MD&A.
⁴ Cash costs is a non-GAAP financial measure. See "non-GAAP and Other Financial Measures" in this news release.
⁵ Net debt a non-GAAP financial measure. See "non-GAAP and Other Financial Measures" in this news release and in the Q1 2025 MD&A.
⁶ Total capital expenditures is a non-GAAP financial measure. See "non-GAAP and Other Financial Measures" in this news release and in the Q1 2025 MD&A.
⁷ Operating Margin is a non-GAAP financial ratio. See "non-GAAP and Other Financial Measures" in this news release.
⁸ Profit Margin is a non-GAAP financial ratio. See "non-GAAP and Other Financial Measures" in this news release.
⁹ Return on capital employed and return on equity are non-GAAP financial ratios. See "non-GAAP and Other Financial Measures" in this news release.

(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 2025 MD&A
(2) Excludes marketing revenue and other income

Capital Expenditures

Peyto drilled 19 gross (18.2 net) horizontal wells in the first quarter including 10 Wilrich, 1 Falher, 4 Notikewin, 3 Dunvegan, and 1 Cardium well in the core Brazeau and Sundance areas. The Company also completed 13 gross (13.0 net) wells and brought 14 gross (14.0 net) wells on production in the quarter resulting in total well-related capital expenditures of $85.6 million. Additionally, Peyto invested $15.5 million in gathering and processing facilities that included optimization projects and a pipeline to connect third-party volumes to Peyto's Brazeau plant for long-term fee income. First quarter average drilling costs were slightly higher than the prior quarter, which was attributed to both cold weather operations and the execution of a uniquely over-pressured three-well pad in the Edson area. This was offset by lower completion costs, which fell 6% on a per-well basis from Q4 2024.

(1) Based on field estimates and may be subject to minor adjustments going forward. 
(2) Peyto’s Montney well is excluded from drilling and completion cost comparison.

Peyto also spent $0.8 million during the quarter on acquiring mineral rights, seismic, and minor acquisitions.

Commodity Prices and Realizations

In the first quarter, Peyto realized a natural gas price after hedging and diversification of $4.17/Mcf, or $3.63/GJ, 89% higher than the average AECO 7A monthly benchmark of $1.92/GJ due to realized hedging gains and the Company's market diversification to non-AECO hubs. Peyto’s natural gas hedging activity resulted in a realized gain of $0.83/Mcf ($53.0 million) in the quarter.

Condensate and pentanes averaged $90.88/bbl for the quarter, down 1% year over year, while Canadian dollar WTI ("WTI CAD") decreased 1% to $102.49/bbl over the same period. Other NGL volumes were sold at an average price of $32.41/bbl, or 32% of WTI CAD, up 3% from $31.37/bbl in Q1 2024. Peyto's combined realized NGL price in the quarter was $64.56/bbl before hedging, and $62.97/bbl including a hedging loss of $1.59/bbl.

Netbacks

The Company’s realized natural gas and NGL sales yielded a combined revenue stream of $4.20/Mcfe before hedging gains of $0.70/Mcfe, resulting in a quarterly net sales price of $4.90/Mcfe, consistent with $4.87/Mcfe realized in Q1 2024. Cash costs totaled $1.42/Mcfe in the quarter, 6% lower than $1.51/Mcfe in Q1 2024 due to lower operating, transportation and interest costs. Operating costs are typically highest in the colder, first quarter and Peyto expects per-unit operating costs to trend downward throughout 2025. Peyto's cash netback (net sales price including other income, net marketing revenue, realized gain on foreign exchange, less total cash costs) was $3.53/Mcfe, the highest since Q1 2023, driving a solid 71% operating margin. Historical cash costs and operating margins are shown in the following table:

(1) Revenue includes other income, net marketing revenue and realized gains on foreign exchange.
(2) First quarter of Repsol assets included in Peyto's results

Depletion, depreciation, and amortization charges of $1.34/Mcfe, along with provisions for current tax, deferred tax, performance-based compensation and stock-based compensation resulted in earnings of $1.58 /Mcfe, or a 32% profit margin. Dividends to shareholders totaled $0.91/Mcfe.

Hedging and Marketing

The Company has been active in hedging future production with financial and physical fixed price contracts to protect a portion of its future revenue from commodity price and foreign exchange volatility. The following table summarizes Peyto's hedge position for Q2–Q4 2025, calendar 2026, and calendar 2027.

(1) At 1.39 CAD/USD FX rate for USD contracts

The Company's fixed price contracts combined with its diversification to multiple hubs in North America allow for revenue security and support Peyto's capital expenditure program, continued shareholder returns through dividends, and debt reduction.  Details of Peyto’s ongoing marketing and diversification efforts are available on Peyto’s website at https://www.peyto.com/Marketing.aspx.

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¹⁰ Total Cash costs is a non-GAAP financial ratio. See "non-GAAP and Other Financial Measures" in this news release.
¹¹ Cash netback is a non-GAAP financial ratio. See "non-GAAP and Other Financial Measures" in this news release and in the Q1 2025 MD&A.

Activity Update

Since the start of the second quarter, Peyto has continued with an active drilling program across all core areas with 8 wells (6.7 net) drilled, 11 wells (9.4 net) completed, and 12 wells (12.0 net) brought on production. The Company intends to continue with a steady capital program through spring break-up and the rest of 2025.

Last month, Peyto completed a third Falher well in Sundance, as a follow-up to the two wells that discovered a new channel last year. The results to date from these wells have demonstrated top decile internal rate of returns and the team has identified at least 20 additional locations on Peyto lands.  The Company plans to drill three more wells in the channel before the end of the year, which will help further delineate the trend and prove up productivity.

Recently, the Company applied an alternate drilling technique and liner design on two low working-interest Cardium wells.  This technique, which targets drilling just below the Cardium sand, allowed Peyto to achieve significantly longer laterals while reducing per unit drill costs below historical levels in the area.  A cemented ball drop system allowed for the deployment of 60 stages in each well—a new record for Peyto.  Early results from these wells are encouraging and the Company plans to follow up with additional wells this year to further test the design.  With continued success, Peyto sees the opportunity to apply the new design to other Cardium inventory which comprises approximately 25% of the Company’s undrilled, booked reserves volumes.

Beginning in April, Peyto commissioned a new pipeline to accept approximately 8 MMcf/d of natural gas from a third party at its Brazeau gas plant, relating to a multi-year gas processing agreement which utilizes spare capacity at the facility. This new pipeline also provides a future opportunity to serve other third-party volumes. 
  
Outlook

While the recent weakness in oil prices has a minimal effect on Peyto’s cash flow, it could be constructive to natural gas prices if the fall in oil prices lowers oil activity and associated gas production in the US. The Company remains bullish on forward natural gas prices with the recent start-up of US LNG export facilities and the ramp up of LNG Canada throughout 2025, combined with continued natural gas demand for AI driven data centres in North America. Further, Peyto is well-positioned with its hedge book and market diversification to provide shareholders with both revenue security and exposure to commodity price upside.  Over the next several years, the Company has significant volumes exposed to premium demand markets in the US and Canada, which offer a superior price above the current AECO market.

Despite the political volatility and global economic uncertainty, Peyto remains committed to its 2025 capital guidance of $450 to $500 million. The program is designed with flexibility in the back half of the year to adjust to changing commodity prices and the business environment. Peyto will manage production to minimize exposure to weaker priced markets, when necessary, while the Company’s systematic hedging and market diversification programs secure revenues to support future dividends and further strengthen the balance sheet.

Conference Call and Webcast

A conference call will be held with senior management of Peyto to answer questions with respect to the Company’s Q1 2025 results on Wednesday, May 14, 2025, at 9:00 a.m. Mountain Time (MT), or 11:00 a.m. Eastern Time (ET).

Access to the webcast can be found at: https://edge.media-server.com/mmc/p/svumnnnm.  To participate in the call, please register for the event at: Participant Call Link.  Participants will be issued a dial in number and PIN to join the conference call and ask questions. Alternatively, questions can be submitted prior to the call at info@peyto.com. The conference call will be available on the Peyto Exploration & Development website at www.peyto.com.

Annual and Special Meeting

Peyto’s Annual and Special Meeting of Shareholders is scheduled for 3:00 p.m. on Thursday, May 22, 2025, at the Eau Claire Tower, +15 level, 600 – 3rd Avenue SW, Calgary, Alberta. Shareholders are encouraged to read the Information Circular and vote in advance of the proxy voting deadline of Tuesday, May 20 at 3:00 p.m. (Calgary time) and attend this in-person meeting. Leading independent proxy advisory firms have recommended Peyto shareholders ("Shareholders") vote "FOR" all the proposed resolutions.  Shareholders who have questions or need assistance with voting their shares should contact Peyto’s strategic advisor and proxy solicitation agent, Laurel Hill Advisory Group, by telephone at 1-877-452-7184 or by email at assistance@laurelhill.com. Shareholders who do not wish to attend are encouraged to visit the Peyto website at www.peyto.com where there is a wealth of information designed to inform and educate investors and where a copy of the AGM presentation will be posted. A monthly report from the President can also be found on the website which follows the progress of the capital program and the ensuing production growth.

Management’s Discussion and Analysis

A copy of the first quarter report to shareholders, including the MD&A, unaudited consolidated financial statements and related notes, is available at http://www.peyto.com/Files/Financials/2025/Q12025FS.pdf and at http://www.peyto.com/Files/Financials/2025/Q12025MDA.pdf and will be filed at SEDAR+, www.sedarplus.com at a later date.

Jean-Paul Lachance                                                                                                                                           
President & Chief Executive Officer                                                                                                                              
May 13, 2025

Phone:  (403) 261-6081
Fax:      (403) 451-4100
info@peyto.com

Cautionary Statements

Forward-Looking Statements

This news release contains certain forward-looking statements or information ("forward-looking statements") as defined by applicable securities laws that involve substantial known and unknown risks and uncertainties, many of which are beyond Peyto's control. These statements relate to future events or the Company's future performance. All statements other than statements of historical fact may be forward-looking statements. The use of any of the words "plan", "expect", "prospective", "project", "intend", "believe", "should", "anticipate", "estimate", or other similar words or statements that certain events "may" or "will" occur are intended to identify forward-looking statements. The projections, estimates and beliefs contained in such forward-looking statements are based on management's estimates, opinions, and assumptions at the time the statements were made, including assumptions relating to: macro-economic conditions, including public health concerns and other geopolitical risks, the condition of the global economy and, specifically, the condition of the crude oil and natural gas industry, and the ongoing significant volatility in world markets; other industry conditions; changes in laws and regulations including, without limitation, the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; increased competition; the availability of qualified operating or management personnel; fluctuations in other commodity prices, foreign exchange or interest rates; stock market volatility and fluctuations in market valuations of companies with respect to announced transactions and the final valuations thereof; results of exploration and testing activities; and the ability to obtain required approvals and extensions from regulatory authorities. Management of the Company believes the expectations reflected in those forward-looking statements are reasonable, but no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Peyto will derive from them. As such, undue reliance should not be placed on forward-looking statements. Forward-looking statements contained herein include, but are not limited to, statements regarding: management's assessment of Peyto's future plans and operations, including the 2025 capital expenditure program, drilling plans relating to the Falher discovery at Sundance and the additional wells planned using the alternate drilling technique in the Cardium; the expectation that per-unit operating costs will trend lower in 2025; the expectation that recent weakness in oil prices will have minimal effect on Peyto and could be constructive if lower oil activity decreases associated gas; LNG and AI data centres increasing natural gas demand and setting up a bullish price environment; the sustainability of the Company's dividend; the effectiveness of the Company's hedging program at securing revenue; the timing of Peyto's annual general meeting; and the Company's overall strategy and focus.

The forward-looking statements contained herein are subject to numerous known and unknown risks and uncertainties that may cause Peyto's actual financial results, performance or achievement in future periods to differ materially from those expressed in, or implied by, these forward-looking statements, including but not limited to, risks associated with: continued changes and volatility in general global economic conditions including, without limitations, the economic conditions in North America and public health concerns; continued fluctuations and volatility in commodity prices, foreign exchange or interest rates; continued stock market volatility; imprecision of reserves estimates; competition from other industry participants; failure to secure required equipment; increased competition; the lack of availability of qualified operating or management personnel; environmental risks; changes in laws and regulations including, without limitation, the adoption of new environmental and tax laws, tariffs, and regulations and changes in how they are interpreted and enforced; the results of exploration and development drilling and related activities; and the ability to access sufficient capital from internal and external sources.  In addition, to the extent that any forward-looking statements presented herein constitutes future-oriented financial information or financial outlook, as defined by applicable securities legislation, such information has been approved by management of Peyto and has been presented to provide management's expectations used for budgeting and planning purposes and for providing clarity with respect to Peyto's strategic direction based on the assumptions presented herein and readers are cautioned that this information may not be appropriate for any other purpose.  Readers are encouraged to review the material risks discussed in Peyto's latest annual information form under the heading "Risk Factors" and in Peyto's annual management's discussion and analysis under the heading "Risk Factors".

The Company cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Peyto's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits Peyto will derive there from.  The forward-looking statements, including any future-oriented financial information or financial outlook, contained in this news release speak only as of the date hereof and Peyto does not assume any obligation to publicly update or revise them to reflect new information, future events or circumstances or otherwise, except as may be required pursuant to applicable securities laws.

Barrels of Oil Equivalent

To provide a single unit of production for analytical purposes, natural gas production and reserves volumes are converted mathematically to equivalent barrels of oil (BOE). Peyto uses the industry-accepted standard conversion of six thousand cubic feet of natural gas to one barrel of oil (6 Mcf = 1 bbl). The 6:1 BOE ratio is based on an energy equivalency conversion method primarily applicable at the burner tip. It does not represent a value equivalency at the wellhead and is not based on current prices. While the BOE ratio is useful for comparative measures and observing trends, it does not accurately reflect individual product values and might be misleading, particularly if used in isolation. As well, given that the value ratio, based on the current price of crude oil to natural gas, is significantly different from the 6:1 energy equivalency ratio, using a 6:1 conversion ratio may be misleading as an indication of value.

Thousand Cubic Feet Equivalent (Mcfe)

Natural gas volumes recorded in thousand cubic feet (mcf) are converted to barrels of oil equivalent (boe) using the ratio of six (6) thousand cubic feet to one (1) barrel of oil (bbl).  Natural gas liquids and oil volumes in barrel of oil (bbl) are converted to thousand cubic feet equivalent (Mcfe) using a ratio of one (1) barrel of oil to six (6) thousand cubic feet.  This could be misleading, particularly if used in isolation as it is based on an energy equivalency conversion method primarily applied at the burner tip and does not represent a value equivalency at the wellhead.

Non-GAAP and Other Financial Measures

Throughout this press release, Peyto employs certain measures to analyze financial performance, financial position, and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed under IFRS and therefore may not be comparable to similar measures presented by other entities. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income (loss), cash flow from operating activities, and cash flow used in investing activities, as indicators of Peyto’s performance.

Non-GAAP Financial Measures

Funds from Operations
"Funds from operations" is a non-GAAP measure which represents cash flows from operating activities before changes in non-cash operating working capital, decommissioning expenditure, provision for performance-based compensation and transaction costs.  Management considers funds from operations and per share calculations of funds from operations to be key measures as they demonstrate the Company’s ability to generate the cash necessary to pay dividends, repay debt and make capital investments.  Management believes that by excluding the temporary impact of changes in non-cash operating working capital, funds from operations provides a useful measure of Peyto’s ability to generate cash that is not subject to short-term movements in operating working capital.  The most directly comparable GAAP measure is cash flows from operating activities.

Free Funds Flow
Peyto uses "free funds flow" as an indicator of the efficiency and liquidity of Peyto’s business, measuring its funds after capital investment available to manage debt levels, pay dividends, and return capital to shareholders through activities such as share repurchases. Peyto calculates free funds flow as cash flows from operating activities before changes in non-cash operating working capital, provision for performance-based compensation, and transaction costs, less total capital expenditures, allowing Management to monitor its free funds flow to inform its capital allocation decisions.  The most directly comparable GAAP measure to free funds flow is cash from operating activities. The following table details the calculation of free funds flow and the reconciliation from cash flow from operating activities to free funds flow.

Total Capital Expenditures
Peyto uses the term "total capital expenditures" as a measure of capital investment in exploration and production activity, as well as property acquisitions and divestitures, and such spending is compared to the Company's annual budgeted capital expenditures. The most directly comparable GAAP measure for total capital expenditures is cash flow used in investing activities. The following table details the calculation of cash flow used in investing activities to total capital expenditures.

Net Debt
"Net debt" is a non-GAAP financial measure that is the sum of long-term debt and working capital excluding the current financial derivative instruments, current portion of lease obligations and current portion of decommissioning provision.  It is used by management to analyze the financial position and leverage of the Company. Net debt is reconciled to long-term debt which is the most directly comparable GAAP measure.

Net marketing revenue
Peyto uses the term "net marketing revenue" to evaluate the profitability of products purchased from third parties that are resold. Net marketing revenue is calculated as marketing revenue less marketing purchases. 

Non-GAAP Financial Ratios

Funds from Operations per Share
Peyto presents funds from operations per share by dividing funds from operations by the Company's diluted or basic weighted average common shares outstanding. "Funds from operations" is a non-GAAP financial measure. Management believes that funds from operations per share provides investors an indicator of funds generated from the business that could be allocated to each shareholder's equity position.

Netback per MCFE and BOE
"Netback" is a non-GAAP measure that represents the profit margin associated with the production and sale of petroleum and natural gas.  Peyto computes "field netback per Mcfe" as commodity sales from production, plus net marketing revenue, if any, plus other income, less royalties, operating, and transportation expenses, divided by production.  "Cash netback" is calculated as "field netback" less interest, less general and administration expense and plus or minus realized gain on foreign exchange, divided by production.  "After-tax cash netback" is calculated as "cash netback" less current tax, divided by production. Netbacks are per-unit-of-production measures used to assess Peyto’s performance and efficiency. 

Net marketing revenue per Mcfe
"Net marketing revenue per Mcfe" is comprised of marketing revenue less marketing purchases, as determined in accordance with IFRS, divided by the Company's total production.

Total Payout Ratio
"Total payout ratio" is a non-GAAP measure which is calculated as the sum of dividends declared plus total capital expenditures plus decommissioning expenditures, divided by funds from operations.  This ratio represents the percentage of the capital expenditures and dividends that is funded by cashflow.  Management uses this measure, among others, to assess the sustainability of Peyto’s dividend and capital program.

Operating Margin
Operating Margin is a non-GAAP financial ratio defined as funds from operations, before current tax, divided by revenue before royalties but including realized hedging gains/losses other income and third-party sales net of purchases.

Profit Margin
Profit Margin is a non-GAAP financial ratio defined as net earnings divided by revenue before royalties but including realized hedging gains/losses, other income and third-party sales net of purchases.

Cash Costs
Cash costs is a non-GAAP financial ratio defined as the sum of royalties, operating expenses, transportation expenses, G&A and interest, on a per Mcfe basis.  Peyto uses total cash costs to assess operating margin and profit margin.