They are not putting molecules on a ship. They are selling a basis
Peyto (TSX: PEY) reported second-quarter 2026 results on August 11. Production averaged 145,320 boe/d, 758.2 MMcf/d of gas and 18,959 barrels a day of NGLs, up 10 percent from a year earlier. Funds from operations were $227.7 million, or $1.09 a diluted share. Free funds flow was $140.6 million. AECO 7A averaged $1.43 per GJ in the quarter. Peyto's realized gas price after hedging and diversification was $3.42 per Mcf, or $2.97 per GJ. That is more than double the local index. Cash costs before royalties were $1.04 per Mcfe. Net debt fell $72.4 million from March 31 to about $1.02 billion.
The new line is the Centrica Energy deal. Peyto will deliver 50,000 MMBtu a day for 10 years starting in 2029. Delivery is at the NIT hub on NGTL. The price is Dutch TTF minus deductions. Peyto says that takes non-AECO exposure over 400 MMcf/d from 2028 on, next to Dawn, Chicago, Henry Hub, Empress, Emerson 2, and Alberta power. Hedges cover about 505 MMcf/d in the second half of 2026 at $4.02 per Mcf and 404 MMcf/d in 2027 at $3.31.
TTF at NIT is a swap with a counterparty, not LNG Canada
Centrica is buying Alberta gas priced off Europe. The molecules stay on NGTL unless Centrica moves them. Peyto does not become an exporter because the invoice cites TTF. If European prices collapse, the deduction still applies and the floor is whatever the contract says. The company did not put the deduction in the release. Do not invent it.
Capital in the quarter was $84.9 million. Ten wells were drilled, 14 completed, 15 brought on. After quarter-end Peyto was running four rigs in Sundance and Brazeau. It also started sending about 85 MMcf/d to a third-party plant and says that added 1,500 barrels a day of NGLs.
Neutral read
PEY is on the listed producer list. Banks were skipped. The $3.42 realized price is the current print. The TTF deal is a 2029 start. Write it as a basis contract, not as a cargo. Watch whether 2028 non-AECO volumes actually clear 400 MMcf/d, and whether four rigs stay up if AECO stays cheap.