Page 1

NEWS RELEASE MAY 12 , 2021 PEYTO POSTS STRONG Q1 2021 PROFITS SYMBOL : PEY - TSX CALGARY , ALBERTA - Peyto Exploration & Development Corp. ( " Peyto ” or the “ Company ” ) is pleased to present its operating and financial results for the first quarter of the 2021 fiscal year . A 67 % Operating Margin ( ¹ ) and a 22 % Profit Margin ( 2 ) in the quarter delivered a 4 % Return on Capital and a 4 % Return on Equity , on a trailing twelve - month basis . Highlights for the quarter included : • • • • Production per share up 12 % . First quarter 2021 production of 88,070 boe / d , comprised of 456 MMcf / d of natural gas , 7,018 bbl / d of Condensate and Pentanes , and 5,120 bbl / d of Butane and Propane , was up from 78,514 boe / d in Q1 2020. Total liquid yields of 27 bbl / MMcf , or 13.8 % of total production , was down from 29 bbl / MMcf in Q1 2020 due to an increased focus on leaner gas Spirit River plays and the acquired Cecilia production ( effective January 1 , 2021 ) . Funds from operations per share up 115 % . Generated $ 117 million in Funds from Operations ( " FFO ” ) in Q1 2021 ( $ 0.71 / share ) , up from $ 55 million in Q1 2020 ( $ 0.33 / share ) due to higher commodity price realizations combined with higher production . FFO in the quarter exceeded the combination of capital expenditures ( $ 73 million ) , acquisitions ( $ 36 million ) , and dividends ( $ 1.6 million ) , by $ 6 million resulting in a total payout ratio of 95 % . Total cash costs of $ 1.24 / Mcfe ( or $ 0.95 / Mcfe ( $ 5.67 / boe ) excluding royalties ) . Industry leading low total cash costs included $ 0.29 / Mcfe royalties , $ 0.36 / Mcfe operating costs , $ 0.17 / Mcfe transportation , $ 0.04 / Mcfe G & A and $ 0.38 / Mcfe interest , which combined with a realized price of $ 3.70 / Mcfe and resulted in a $ 2.46 / Mcfe ( $ 14.81 / boe ) cash netback , up 94 % from $ 1.27 / Mcfe ( $ 7.63 / boe ) in Q1 2020. Operating costs per unit for Q1 2021 were down 8 % from Q1 2020 largely due to increased volumes and higher facility utilizations , while royalties were up due to higher commodity prices . Interest charges were also up 31 % because of higher stamping fees negotiated as part of the temporary covenant provisions . Capital investment of $ 73 million in organic activity . A total of 27 gross ( 22.5 net working interest ) wells were drilled in the first quarter , 21 gross ( 17 net ) wells were completed , and 20 gross ( 16.7 net ) wells were brought on production . In addition , two acquisitions totaling $ 35.6 million ( effective January 1 , 2021 ) were closed in the quarter . Over the last 12 months new production additions , inclusive of acquisitions , accounted for approximately 34,000 boe / d at the end of the quarter , which , when combined with a trailing twelve - month capital investment of $ 276 million , equates to an annualized capital efficiency of $ 8,100 / boe / d . Earnings of $ 0.23 / share , Dividends of $ 0.01 / share . Earnings of $ 38.5 million were generated in the quarter while dividends of $ 1.6 million were paid to shareholders . During the quarter , Peyto earned $ 0.35 for every dollar of capital invested . Over the Company's 22 ½ year history , a cumulative $ 2.6 billion has been earned for a total of $ 6.5 billion of capital invested , or $ 0.40 for every dollar invested . First Quarter 2021 in Review Peyto enjoyed an active first quarter despite the continued impacts and constraints of the global COVID - 19 pandemic . The Company maintained its vigilant focus on safety and successfully conducted a full winter drilling and completions program while also fully integrating two property acquisitions , including taking over operations of its 10th owned and operated natural gas processing plant . Total Company owned and operated plant processing capacity now stands at approximately 875 MMcf / d making Peyto the 11th largest Canadian gas processing company . Despite the severe cold weather experienced in February , Peyto was able to grow production 6 % from 86,000 boe / d at the start of the year to 91,000 boe / d by the end of the first quarter using 93 % of funds from operations . This growth improved facility utilization and helped lower per unit fixed costs . The much - improved commodity prices contributed to a more than doubling of funds from operations over Q1 2020 , despite the temporary higher market diversification costs which resulted in an 11 % discount to AECO daily natural gas prices . As market diversification costs continue to fall moving forward , Peyto's realized natural gas prices are expected to once again match or beat AECO spot prices further improving funds from operations . Excess free cashflow in the quarter was used to reduce indebtedness which , combined with higher cashflow , allowed Peyto to achieve its debt to EBITDA target earlier than originally forecast . Strong operational execution combined with industry leading low costs resulted in a 22 % profit margin . 1. Operating Margin is defined as funds from operations divided by revenue before royalties but including realized hedging gains / losses . 2. Profit Margin is defined as net earnings for the quarter divided by revenue before royalties but including realized hedging gains / losses . 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 value equivalency at the wellhead .