How much cash does Peyto really make, and what is a share of it worth?

The words on this page

Real cash (true cash)

What was left in the bank each year after every bill, every tax payment and every well drilled. Not profit, and not "cash flow" as companies usually quote it, which leaves the drilling out. The strictest number there is.

Required return

The yearly return you insist on for taking the risk. A dollar promised in ten years is worth less than a dollar today; this rate says how much less. 9% is a common professional figure for a large Canadian producer; the reserve engineers use 10%.

Well life (reserve life)

How long the wells keep producing. After the life you choose, nothing is counted. Year-end 2025 proved reserves of 926 million Boe last about 19 years at 2025 production and proved plus probable of 1,450 million about 30; Peyto's own reserve life figures are 18 and 28 years.

What a share is worth

Every future year's cash, shrunk back to today's dollars at your required return, added up, less the debt, less the cost of cleaning up the wells, divided by the number of shares. Pay less than this and you earn more than your required return; pay more and you earn less.

Where the default growth comes from

The 4% default reflects the 2026 program of $450 to $500 million, which Peyto expects to add 43,000 to 48,000 Boe/d of new production, modestly more than offsetting a 26% to 28% base decline.

The arithmetic, step by step

1. Count the real cash each past year: cash generated by operations as reported, plus interest paid put back, minus rent on leases, minus every dollar spent on wells and plants. Buying and selling assets is shown separately.
2. Project it. The starting cash you choose (an average of the history, or the latest year) grows at your growth dial for ten years, then at the long-run rate for as long as the wells keep producing. Nothing is counted after the well life ends.
3. Bring it back to today. Each year's cash is shrunk by your required return, counted at mid-year because cash arrives through the year rather than on 31 December.
4. Turn it into a share value. Add up the shrunk cash; take off net debt of C$1,002M; take off the C$313M cost of cleaning up the wells if that switch is on; divide by 205.7M shares.
5. Work it backwards. "The growth today's price assumes" is the ten-year growth rate at which this start is worth exactly the share price.

Where the numbers come from

• The aggregator's free statements carry only the 2020 to 2025 fiscal years, short of the model's preferred ten, so the starting cash selector defaults to the five-year average.
• The 2023 acquisition line is the roughly $700 million purchase of Repsol Canada's assets, which lifted production by about a fifth; the dividend also stepped up sharply from 2022.
• Peyto hedges most of its gas production years in advance, so each year's cash flow reflects hedge prices as much as market prices; 2022's windfall and 2023's dip are both muted versions of what spot prices did.
• Peyto repurchased no shares in this period and has grown partly by issuing stock, so the share count rises through the history while the model holds it fixed.
• Lease payments are the audited principal repayment of lease line in the financing section, about $1.4 million a year for the Calgary head office lease including a small interest portion of $0.2 to $0.5 million; the lease obligation was $7.6 million at year-end 2025, so the effect is negligible.
• Interest paid for 2023 to 2025 adds the interest and financing charges paid line in the audited financing sections ($3.2 million, $2.3 million and $0.1 million) to the disclosed cash interest paid of $61.4, $77.1 and $70.0 million, so the full cash cost of debt is counted; earlier years had no such line.
• Net debt is total debt plus lease obligations minus cash and excludes working capital; Peyto's own net debt measure was $1,178 million at year-end 2025 against the $1,131 million shown here.
• The current net debt figure and share count are as at 30 June 2026, checked against Peyto's unaudited second quarter 2026 interim statements.
• Analyst targets: average C$27.75 across 10 analysts (stockanalysis.com, 30 August 2026).

For the technically minded

The method is the one used to evaluate capital projects, from Ted Lawrence, The Business Guide to Economic Evaluations: Projects, Leases, Tariffs and Acquisitions (2017). "Real cash" is the book's project cash flow (chapter 3) with depreciation, debt servicing and debt-like leases restructured out (chapters 4, 5 and 19); short operating leases stay in as a cost of producing, a chapter 19 judgment. The value per share follows the share-purchase evaluation of chapter 20: present value of the company's cash flows at the cost of capital (chapter 10), mid-year discounting (chapter 12), plus non-required assets, less net debt and the decommissioning liability. "What you gain or lose" is the bid-curve NPV of chapter 20; "when you get your money back" is the discounted payout of chapter 13; the bars follow the project profile of chapter 6. The reverse solve on growth is a plain reverse DCF.

Discount-rate anchors: 9% is a common cost-of-equity figure for a large Canadian producer and 10% is the reserve-report convention (PV10). The long-run rate defaults to 0% here: a depleting resource should not be assumed to grow forever, so anything above zero is a judgment you make with the dial.