Q3 2026 MD & A

This Management's Discussion and Analysis ("MD&A") of Peyto Exploration & Development Corp. ("Peyto" or the "Company") is Management's analysis of the financial performance and significant trends and external factors that may affect future performance. This MD&A was prepared using information that is current as of November 9, 2026 and should be read in conjunction with the unaudited condensed consolidated financial statements (the "financial statements") as at and for the three and nine months ended September 30, 2026 and the MD&A and audited consolidated financial statements as at and for the year ended December 31, 2025, as well as Peyto's Annual Information Form, each of which is available at https://www.sedarplus.ca and on Peyto's website at https://www.Peyto.com.

All references are to Canadian dollars unless otherwise indicated.

Throughout this MD&A and in other materials disclosed by the Company, Peyto adheres to IFRS® Accounting Standards (the "Accounting Standards" or "GAAP") as issued by the International Accounting Standards Board; however, the Company also employs certain non-GAAP and other financial measures to analyze financial performance, financial position, and cash flow including, but not limited to "funds from operations", "free funds flow", "total capital expenditures", "adjusted earnings" and "net debt". These non-GAAP and other financial measures do not have any standardized meaning prescribed under the Accounting Standards 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 the Accounting Standards, such as earnings (loss), 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 MD&A for an explanation of these financial measures and reconciliation to the most directly comparable financial measure under the Accounting Standards.

Readers are cautioned that this MD&A contains certain forward-looking information and should be read in conjunction with Peyto's "Forward-Looking Statements" section included at the end of this MD&A.

Peyto is a Canadian energy company involved in the development and production of natural gas, oil and natural gas liquids in Alberta's deep basin. At December 31, 2025, the Company's total Proved plus Probable reserves were 8.7 trillion cubic feet equivalent (1.45 billion barrels of oil equivalent) as evaluated by its independent petroleum engineers. Production is currently weighted approximately 87% to natural gas and 13% to natural gas liquids.

The Peyto model is designed to deliver a superior total return with growth in value, assets, production and income, all on a debt adjusted per share basis. The model is built around three key strategies:

• Use technical expertise to achieve the best return on capital employed through the development of internally generated drilling projects.

• Build an asset base which is made up of high-quality natural gas reserves.

• Over time, balance dividends paid to shareholders with earnings and cash flow, and balance funding for the capital program with cash flow, equity and available credit lines.

Operating results over the last 28 years indicate that these strategies have been successfully implemented.

2026

2025

2024

1. Excludes marketing revenue and other income.

2. This is a non-GAAP financial measure or ratio. Refer to the section entitled "Non-GAAP and Other Financial Measures" contained within this MD&A for further information.

Three Months Ended September 30 Nine Months Ended September 30 2026 2025 % Change 2026 2025 % Change

Peyto's total production for the third quarter of 2026 increased 10% to 142,952 boe/d, compared to 129,762 boe/d for the third quarter of 2025. For the nine months ended September 30, 2026, total production increased to 145,245 boe/d, compared to 131,784 boe/d for the same period of 2025. The increases in the three and nine months ended September 30, 2026, were driven by new wells brought on production from the Company's capital program over the past year.

150,000

130,000

140,794

147,513

145,320

142,952

133,426

133,883 131,754

129,762

800

700

Production per million shares

110,000 600

90,000 500

boe/d

70,000 400

50,000 300

30,000 200

10,000 100

-10,000 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 0

Natural gas liquids (bbl/d) Natural gas (boe/d) Production (boe/d) per million shares

Three Months Ended September 30 Nine Months Ended September 30 2026 2025 % Change 2026 2025 % Change

The liquid-to-gas ratio was 25.1 bbls/MMcf for the third quarter of 2026 compared to 22.8 bbls/MMcf for the third quarter of 2025. Year to date, the liquid-to-gas ratio increased to 24.4 bbls/MMcf from 22.3 bbls/MMcf for the same period of 2025. The increased liquid-to-gas ratio in both periods is primarily due to Peyto's capital allocation to richer formations, as well as increased NGL recoveries, to maximize overall returns with changing commodity prices.

Three Months Ended September 30 Nine Months Ended September 30

($000) 2026 2025 % Change 2026 2025 % Change

(1) Excludes marketing revenue and other income.

For the third quarter of 2026, natural gas and NGL sales including realized hedging gains increased 12% to $344.7 million from $308.8 million for the third quarter of 2025. For the nine months ended September 30, 2026, natural gas and NGL sales including realized hedging gains rose 16% to $1,122.1 million from $970.1 million for the same period of 2025. The increased sales in the three and nine months ended September 30, 2026, was driven by higher production volumes and increased realized natural gas and NGL prices, partially offset by lower realized hedging gains.

Peyto's natural gas and NGL sales including realized hedging gains over the past eight quarters, are summarized below.

$500

$450

$400

$350

($ million)

$300

$250

$200

$150

$100

$50

$0

429.6

354.3

359.1

347.8

344.7

315.1

307.0

308.8

101.3

87.7

86.0

91.8 83.2

83.8

112.1

104.4

328.3

223.3

266.6

223.8

225.1

273.1

235.7

240.3

Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026

Natural gas sales including realized hedging gains (losses) NGL sales including realized hedging gains (losses)

According to its commodity hedging policy, Peyto enters into risk management contracts with well-established counterparties for the purpose of protecting a portion of its future revenues from the volatility of oil and natural gas prices. In periods of increasing commodity prices, Peyto expects to realize hedging losses and in periods of falling commodity prices, Peyto expects to realize hedging gains. Peyto's hedging program, since inception in 2003, has generated cumulative realized gains of $848 million.

Realized hedging gains over the past eight quarters are summarized below.

$100

$80

($ millions)

$60

$40

$20

$0

$(20)

$(40)

89.2

76.6

50.8

52.6

56.1

40.6

36.7

20.2

Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026

Natural gas NGLs

The change in revenue from natural gas and NGL sales including realized hedging gains (losses) in the three and nine months ended September 30, 2026, from the same periods of 2025, are detailed in the following charts:

20.0

14.0

6.7

344.7

308.8

(4.8)

400

350

300

250

($ million)

200

150

100

50

0

42.5

20.7

1,122.1

66.0

22.8

970.1

1,200

1,000

800

($ million)

600

400

200

0

Three Months Ended September 30 Nine Months Ended September 30 2026 2025 % Change 2026 2025 % Change

Three Months Ended September 30 Nine Months Ended September 30

2026 2025 % Change 2026 2025 % Change

1. Condensate, pentanes plus and other liquids prices are Peyto realized prices in Canadian dollars adjusted for fractionation and transportation. Excludes marketing revenue

2. Excludes marketing revenue but includes fixed price physical contracts

   Peyto actively markets all components of its production stream including natural gas, condensate, pentane, butane and propane. Natural Gas Prices

   Peyto's realized natural gas price, before hedging, rose 22% to $2.68/Mcf for the third quarter of 2026 from $2.19/Mcf in the third quarter of 2025, mainly due to increased AECO benchmark prices. However, Peyto was fully hedged at the AECO hub and the higher AECO prices resulted in lower realized hedging gains, totaling $0.82/Mcf for the third quarter of 2026, down from $1.38/Mcf in the third quarter of 2025. The Company's realized natural gas price, after hedging and diversification, totaled $3.50/Mcf (or $3.04/GJ) for the quarter, 2% lower than the third quarter of 2025, but 108% higher than the AECO 7A benchmark price of $1.46/GJ for the same period.

   For the nine months ended September 30, 2026, Peyto's realized natural gas price, after hedging and diversification, increased 3% to $3.87/Mcf from $3.76/Mcf in the same period of 2025, driven by higher benchmark prices at all hubs, partially offset by lower realized hedging gains.

   Peyto's natural gas market diversification activity resulted in natural gas sales being priced off various hubs including AECO, Ventura, Emerson 2, Malin, Dawn, Parkway, Chicago and Henry Hub using both physical fixed price and temporary basis transactions to access those locations. Natural gas prices were left to float on daily pricing or locked in using fixed price swaps at those hubs and Peyto's realized price was benchmarked against those local prices, then adjusted for marketing arrangements (either physical or short-term synthetic) to those markets.

   Peyto's market diversification activity includes the 60,000 GJ/day gas supply agreement ("GSA") with the Cascade 900 MWh Combined-Cycle Power Plant. Peyto's realized price under the GSA is indexed to Cascade's realized power price.

   Commencing in 2029, Peyto will deliver 50,000 MMBtu/d to Centrica Energy over a 10-year period. Deliveries will be made at the NIT (AECO) hub operated by NGTL in Alberta. The natural gas will be priced against the Dutch Title Transfer Facility ("TTF") benchmark, less deductions.

   In the third quarter of 2026, Peyto was successful in securing over 80,000 GJ/d of additional transportation capacity on the TC Energy Mainline to North Bay Junction and Parkway, starting in November 2028, through the latest Existing Capacity and New Capacity Open Seasons. This will double Peyto's natural gas sales volumes to Ontario markets and reduce exposure to the local AECO market.

   The value of Peyto's natural gas market diversification and hedging activities over the past eight quarters, relative to the AECO 7A benchmark, is included in the following chart.

   5.00

   4.50

   4.00

   3.50

   ($/McF)

   3.00

   2.50

   2.00

   1.50

   1.00

   0.50

   -

   Natural Gas Price

   4.69

   4.17

   4.01

   3.43

   3.42

   3.50

   1.68

0.53

0.82

0.85

1.16

0.76

3.57

3.53

0.83

0.37

Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026

AECO 7A (1) Diversification value (2) Realized hedging gain/(loss) Realized natural gas price after hedging

NGL Prices

Peyto's realized NGL price, before hedging, rose 23% to $69.88/bbl for the third quarter of 2026, from $56.75/bbl for the third quarter in 2025, driven by the sharp increase in the WTI benchmark price. WTI CAD increased 34% for the third quarter of 2026, compared to the third quarter of 2025, driving a 32% increase in Peyto's realized condensate and pentanes plus price over the same period. Other NGLs increased 5% to $28.34/bbl, compared to $27.04/bbl for the third quarter of 2025, due to higher realized propane and butane prices. The increase in the realized NGL price was partially offset by a realized NGL hedging loss of $9.11/bbl in the quarter. Peyto's realized NGL price, after hedging, rose to $60.77/bbl, compared to $58.33/bbl for the third quarter of 2025.

For the nine months ended September 30, 2026, Peyto's NGL price, after hedging, increased 5% to $62.87/bbl from $59.89/bbl in the same period of 2025, primarily due to the increase in benchmark oil prices, partially offset from increased realized NGL hedging losses.

The Company's liquids were actively marketed with condensate being sold on a monthly index differential linked to WTI oil prices. Peyto's NGLs (a blend of pentanes plus, butane, and propane) are fractionated by a third party in Fort Saskatchewan, Alberta; however, Peyto markets each product separately. Pentanes plus were sold on a monthly index differential linked to WTI, with some volumes forward sold on fixed differentials to WTI. Butane was sold as a % of WTI or a fixed differential to the Mount Belvieu, Texas market. Propane was sold on a fixed differential to the Conway, Kansas market and the Mount Belvieu (LST), Texas market. While some products were sold pursuant to annual term contracts to ensure delivery paths remain open, others were marketed on the daily spot market.

Three Months Ended September 30 Nine Months Ended September 30

($000) 2026 2025 % Change 2026 2025 % Change

(1) This is a non-GAAP financial measure or ratio. Refer to the section entitled "Non-GAAP and Other Financial Measures" contained within this MD&A for further information.

Peyto has NGL marketing contracts whereby the Company purchases NGL mix from third parties, transports and fractionates the product, and sells the NGL components. The marketing revenue and marketing purchases are recorded gross on Peyto's income statement and are accounted for separately from Peyto's own production.

For the third quarter of 2026, Peyto recorded marketing revenue totaling $6.9 million, and marketing purchases of $5.9 million, compared to marketing revenue of $4.9 million, and marketing purchases of $4.3 million for the third quarter of 2025. Year to date, marketing revenue totaled $18.4 million, and marketing purchases totaled $16.2 million, compared to $18.6 million and $16.4 million, respectively, for the same period of 2025.

Three Months Ended September 30 Nine Months Ended September 30

($000) 2026 2025 % Change 2026 2025 % Change

Peyto's other income includes third-party gathering and processing income, sales of excess natural gas transportation service, and electricity sales generated by the Company's cogeneration facility at the Edson Gas Plant. For the third quarter of 2026, other income increased 149% to $5.4 million compared to $2.2 million for the third quarter of 2025. Year to date, other income increased to $20.0 million from $9.4 million for the same period of 2025. The increases in the three and nine months ended September 30, 2026, compared to the same periods of 2025, were due to increased sales of excess transportation service.

Royalties are paid to the owners of the mineral rights with whom leases are held, including the provincial government of Alberta. Alberta Crown royalties on natural gas and NGLs are invoiced on the Crown's share of production based on a monthly established reference price ("Reference Price"). The natural gas Reference Price is a monthly weighted average price of gas consumed in Alberta and gas exported from Alberta reduced for transportation and marketing allowances. Royalties also include Gas Cost Allowance ("GCA"), which reduces royalties payable to the Crown for capital and operating expenditures incurred by Peyto in gathering and processing the Crown's share of natural gas and NGL production. Additionally, all of Peyto's new wells qualify for the Alberta Crown Drilling and Completion Cost Allowance program, which has a 5% initial royalty rate under the Modernized Royalty Framework.

Three Months Ended September 30 Nine Months Ended September 30 2026 2025 % Change 2026 2025 % Change

For the three and nine months ended September 30, 2026, royalties increased to $21.4 million and $60.4 million, respectively, from $5.6 million and $33.1 million in the same periods of 2025. On a percentage of sales basis, royalties rose to 7.0% and 5.9% for the three and nine months ended September 30, 2026, respectively, from 2.6% and 4.3% for the comparative prior periods. The increased royalties in the three and nine months ended September 30, 2026, were primarily driven by decreased GCA credits associated with Peyto's 2026 gathering and processing facility additions, coupled higher NGL royalties from increased NGL sales relative to total sales and higher benchmark oil prices.

In its 28-year history, Peyto has invested $9.7 billion in capital projects and acquisitions, found, acquired and developed 7.2 TCFe of natural gas reserves and paid over $1.3 billion in royalties.

$30,000

$25,000

($000)

$20,000

$15,000

$10,000

$5,000

Royalties

15%

12%

9%

6%

3%

$0 0%

Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026

Royalties Royalties as a % of sales before hedging

Peyto's operating expenses include all costs with respect to day-to-day well and facility operations.

Three Months Ended September 30 Nine Months Ended September 30 2026 2025 % Change 2026 2025 % Change

1. Government cost include property taxes, carbon tax, Crown lease rentals, Alberta Energy Regulator administration fees and Orphan Well Association fees

For the three and nine months ended September 30, 2026, operating costs rose to $38.7 million and $119.9 million, respectively, compared to $36.8 million and $114.3 million for the same periods of 2025, driven by increased production volumes. On a unit-of-production basis, operating costs decreased 4% to $0.49/Mcfe in the third quarter of 2026 from $0.51/Mcfe in the same period of 2025. In the nine months ended September 30, 2026, operating costs decreased 6% to $0.50/Mcfe compared to

$0.53/Mcfe in the same period of 2025. The decreases on a unit-of-production basis are primarily due to cost efficiencies from incremental production volumes.

Transportation expenses rose to $22.9 million and $69.9 million for the three and nine months ended September 30, 2026, respectively, from $21.8 million and $65.1 million for the same periods of 2025, driven by toll increases and new Dawn service that commenced in the fourth quarter of 2025. On a unit-of-production basis, transportation expenses were $0.29/Mcfe and

$0.29/Mcfe for the three and nine months ended September 30, 2026, respectively, compared to $0.30/Mcfe and $0.30/Mcfe in the same periods of 2025.

$45,000

$40,000

$35,000

$30,000

($000)

$25,000

$20,000

$15,000

$10,000

$5,000

$0

Operating Expenses

Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026

Operating expenses Operating expenses per Mcfe

$1.00

$0.80

$0.60

$0.40

$0.20

$-

$27,000

$24,000

$21,000

($000)

$18,000

$15,000

$12,000

$9,000

$6,000

$3,000

$0

Transportation

Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026

Transportation Transportation per Mcfe

$0.70

$0.60

$0.50

$0.40

$0.30

$0.20

$0.10

$-

Three Months Ended September 30 Nine Months Ended September 30 2026 2025 % Change 2026 2025 % Change

For the third quarter of 2026, G&A expenses (before overhead recoveries) were $8.0 million, compared with $7.4 million for the third quarter of 2025. Year to date, gross G&A expenses increased to $23.8 million from $22.9 million in the same period of 2025, primarily due to increased employment, professional services and information technology, partially offset by lower rent expense.

Gross G&A expenses averaged $0.10/Mcfe before capitalized G&A and overhead recoveries of $0.04/Mcfe for G&A expenses of $0.06/Mcfe in the third quarter of 2026 ($0.10/Mcfe before capitalized G&A and overhead recoveries of $0.04/Mcfe for G&A expenses of $0.06/Mcfe in the third quarter of 2025).

Peyto capitalizes G&A expenses and performance-based compensation related to the execution of its capital program. For the three and nine months ended September 30, 2026, Peyto capitalized $3.1 million and $8.8 million, respectively, of expenses directly attributable to exploration and development activities compared to $3.1 million and $8.5 million for the same periods of 2025.

$5,000

G&A Expense

$0.50

$4,000 $0.40

($000)

$3,000 $0.30

$2,000 $0.20

$1,000 $0.10

$0 $-

Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026

G&A G&A per Mcfe

The Company awards performance and stock-based compensation to employees, key consultants and directors. Performance and stock-based compensation is comprised of rights, stock options, deferred share units, and reserve value-based bonus.

The reserve value-based component is 4% of the incremental increase in after-tax per share value, if any, as adjusted to reflect changes in debt, dividends, general and administrative expenses and interest expense, of proved producing reserves calculated using un-escalated, unhedged average realized prices of the current year and a discount rate of 8%. Peyto accrued $3.0 million and $9.0 million for performance-based compensation expense in the three and nine months ended September 30, 2026 (2025

- $2.5 million and $7.5 million). Stock-Based Compensation Total Shareholder Return Rights

In May 2025, the Company adopted, and shareholders approved the Total Shareholder Return Rights Plan ("TSRRP") to replace Peyto's stock option program as the Company's only security-based compensation arrangement for employees, executive officers and consultants. Under the TSRRP, participants are granted rights ("Rights") that vest ratably over three years. The future value of which is based on the difference between the market value of the common shares on the date of grant and the market value of the common shares on vesting date, plus the dividends paid to shareholders during such period. Plan participants who are executive officers of the Company are subject to performance conditioning metrics on 50% of the Rights granted to them (the "Performance Rights").

Employees and officers are expected to settle any in-the-money rights through the issuance of common shares, which are issued from treasury. Rights held by consultants are expected to be settled in cash. The TSRRP provides that the aggregate number of common shares issuable thereunder and under all other security-based compensation arrangements of the Company at any time may not exceed 6.5% of the total number of issued and outstanding common shares from time to time.

Stock Options

The Company has a stock option plan allowing for the granting of stock options to officers, employees and consultants of the Company. Stock options were granted periodically with a three-year vesting period. At the vesting, recipients have thirty days to exercise options after which any unexercised options expire. With the adoption and approval of the TSRRP, Peyto has ceased granting new awards under the stock option plan. Outstanding stock options will vest, exercise or expire according to original grant agreements, with the final tranche vesting in January 2028.

Deferred Share Units

Peyto has a deferred share unit ("DSU") plan, whereby DSUs may be issued to members of the Board of Directors. Each DSU is a notional unit equal in value to one Common Share, which entitles the holder to receive a common share upon redemption. DSUs vest immediately but can only be converted to a share upon the holder ceasing to be a Director of the Company. The expense associated with the DSU plan is determined based on the 5-day VWAP of Common Shares at the grant date. The expense is recognized in the income statement in the quarter in which the units are granted, with a corresponding charge to contributed surplus in the balance sheet.

Stock-Based Compensation Expense

Stock-based compensation is calculated on 4.5 million non-vested stock options (2.2% of the total number of common shares outstanding), 6.5 million Rights (3.2% of the total number of common shares outstanding) and 0.4 million vested DSUs (0.2% of the total number of common shares outstanding). Peyto records a non-cash provision for compensation expense over the life of the awards calculated using Black-Scholes and Monte Carlo simulation valuation models. Stock-based compensation expense for the three and nine months ended September 30, 2026, was $4.1 million and $12.1 million, respectively (2025 -

$3.7 million and $10.9 million).

Balance, September 30, 2026

Stock Option Plan

Deferred Share Units

Number of

DSUs

Balance, December 31, 2025 336,252

DSU's granted 37,379

Balance, September 30, 2026 373,631

Three Months Ended September 30 Nine Months Ended September 30 2026 2025 % Change 2026 2025 % Change

For the three and nine months ended September 30, 2026, interest and financing costs fell to $14.2 million and $45.0 million, respectively, compared to $18.3 million and $57.8 million for the same periods of 2025. The decrease in interest and financing costs is due to a lower average bank debt outstanding combined with lower interest rates on the Company's bank debt, compared to the same periods of 2025. Year to date, Peyto's average interest rate fell to 5.5% from 6.0% for the same period of 2025, primarily driven by decreases to the Bank of Canada's policy rate.

Accretion expense was $3.4 million and $9.4 million for the three and nine months ended September 30, 2026, respectively, compared to $3.4 million and $9.7 million for the same periods of 2025.

$50,000

$45,000

$40,000

$35,000

($000)

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0

Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026

Interest and financing Average interest rates

10.0%

9.0%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Three Months Ended September 30 Nine Months Ended September 30

($/Mcfe) 2026 2025 % Change 2026 2025 % Change

(1) This is a non-GAAP ratio. Refer to the section entitled "Non-GAAP and Other Financial Measures" contained within this MD&A for further information

Netbacks are a non-GAAP measure that represents the profit margin associated with the production and sale of petroleum and natural gas. Netbacks are per unit of production measures used to assess Peyto's performance and efficiency. The primary factors that produce Peyto's strong netbacks and high margins are a low-cost structure and its hedging and diversification program.

$8.00

$7.00

$6.00

($/Mcfe)

$5.00

$4.00

$3.00

Net Sales Price and Cash Costs

$4.90

$4.28

$4.27

$4.31

$4.62

$4.38

$4.37

$5.39

$2.00

$1.00

$-

$1.36 $1.42 $1.31 $1.21 $1.23 $1.28 $1.32 $1.29

Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026

Operating costs Transportation G&A

Interest on long-term debt Royalties Net Sale Price(1)

(1) Excludes marketing revenue and other income

Three Months Ended September 30 Nine Months Ended September 30 2026 2025 % Change 2026 2025 % Change

The Company's depletion and depreciation totaled $100.7 million ($1.28/Mcfe) in the third quarter of 2026 compared to $95.3 million ($1.33/Mcfe) in the third quarter of 2025. In the nine months of 2026, depletion and depreciation totaled $304.7 million ($1.28/Mcfe) compared to $287.7 million ($1.33/Mcfe) for the same period of 2025. The increases on an absolute basis are due to higher production volumes over the same periods in 2025. The decreases in depletion and depreciation on a per-unit basis reflect a lower depletion rate due to updated reserves and future development costs.

Peyto recorded current tax expense of $28.6 million and $94.6 million for the three months and nine months ended September 30, 2026, respectively, compared to $26.3 million and $82.1 million for the same period of 2025. These increases reflect higher taxable income compared to the corresponding periods in 2025, partially offset by reinstated accelerated investment and resources deductions that were enacted on March 26, 2026.

For the three and nine months ended September 30, 2026, deferred tax expense rose to $19.1 million and $38.6 million, respectively, compared to $2.1 million and $8.4 million for the same periods of 2025, largely driven by increased before-tax earnings.

The Company is a party to certain derivative financial instruments, including fixed price contracts. The Company enters into these forward contracts with well-established counterparties for the purpose of protecting a portion of its future revenues from the volatility of oil, natural gas prices, the foreign exchange rate and interest rates. To minimize counterparty risk, these marketing contracts are executed with financial institutions which are members of Peyto's banking syndicate.

Financial derivative instruments are valued on the consolidated balance sheet using quoted market prices at period end. Physical delivery contracts are not considered financial instruments and therefore, no asset or liability is recognized on the consolidated balance sheet.

During the three and nine months ended September 30, 2026, Peyto recorded realized hedging gains on commodity contracts of $42.0 million and $99.9 million, respectively, compared to $90.8 million and $201.0 million for the same periods of 2025. A summary of contracts outstanding in respect of the hedging activities are as follows:

Propane - Conway Period Hedged

Type Daily Volume (bbl)

Average Price (USD/bbl)

Q4 2026 Fixed Price 1,000 $34.23

Q1 2027 Fixed Price 1,000 $34.23

Had these contracts closed on September 30, 2026, Peyto would have realized a gain in the amount of $91.5 million.

For the three and nine months ended September 30, 2026, the Company recognized an unrealized gain on derivative financial instruments of $65.2 million and $67.6 million, respectively (2025: nil) related to covered call option contracts and an embedded derivative. The call option contracts are tabled above, and the embedded derivative is detailed below.

Embedded Derivative

Peyto has a long-term agreement to deliver 50,000 MMBtu/d of natural gas for a term of 10 years, which delivery is expected to commence in 2029. Under the terms of the agreement, the Company will deliver natural gas at Alberta's Nova Inventory Transfer point and receive a Dutch TTF index price less associated deductions. Peyto has identified an embedded derivative within this contract as a result of the pricing structure, and the host contract is a natural gas sales agreement with an underlying AECO price. The Company recognizes gains (losses) on risk management contracts related to the embedded derivative. For the three and nine months ended September 30, 2026, the Company recognized an unrealized gain on the embedded derivative of $70.8 million and $77.3 million, respectively (2025: nil). At September 30, 2026, the fair value of the embedded derivative was $77.3 million (December 31, 2025, nil). See note 11 in the Company's Q3 2026 financial statements for further details.

Subsequent to September 30, 2026, Peyto entered into the following commodity hedging contracts:

During the three and nine months ended September 30, 2026, Peyto recorded realized hedging losses of $1.4 million and $2.4 million, respectively, on foreign exchange forward contracts, compared to $1.6 million and $8.4 million for the same periods of 2025. Realized losses on foreign exchange forward contracts are aggregated with natural gas hedges. Peyto has the following foreign exchange forward contracts in place at September 30, 2026.

Had these contracts settled on September 30, 2026, Peyto would have realized a loss in the amount of $8.2 million. Subsequent to September 30, 2026, Peyto entered into the following hedging foreign exchange contracts:

During the three and nine months ended September 30, 2026, Peyto recorded realized hedging losses on interest rate swaps of

$47 thousand and $269 thousand, respectively, compared to $54 thousand and $91 thousand for the same periods of 2025. Realized losses on interest rate swaps are recorded to interest expense. Peyto has the following interest rate swap contracts in place at September 30, 2026.

Term Notional Amount Peyto pays fixed rate

Peyto receives floating rate

January 30, 2025 to January 30, 2028 $50 million 2.67% CORRA

Had these contracts settled on September 30, 2026, Peyto would have realized a gain in the amount of $257 thousand.

Peyto's earnings are largely determined by commodity prices for crude oil and natural gas including the US/Canadian dollar exchange rate. Volatility in these oil and gas prices can cause fluctuations in Peyto's earnings and cash flow. Low operating costs and a long reserve life reduce Peyto's sensitivity to changes in commodity prices.

The Company is exposed to fluctuations in the Canadian/US dollar exchange ratio since commodities are effectively priced in US dollars and converted to Canadian dollars. Peyto mitigates exchange rate risks using foreign exchange forward contracts and by hedging certain products with Canadian dollar contracts. Additionally, the $40 million USD in senior secured notes provides structural foreign exchange risk mitigation.

The Company is exposed to interest rate risk in relation to interest expense on its revolving credit facility and term loan. Peyto uses interest rate swaps on a portion of its floating rate debt to mitigate its interest rate exposure. At September 30, 2026, the increase or decrease in earnings for each 100 bps (1%) change in weighted average borrowing rate paid on the outstanding revolving credit facility amounts to approximately $1.3 million per quarter. The average debt outstanding for the quarter was

$1.02 billion (including $491 million fixed rate debt).

Three Months Ended September 30 Nine Months Ended September 30

($000 except per share amounts) 2026 2025 % Change 2026 2025 % Change

1. This is a non-GAAP measure or ratio. Refer to the section entitled "Non-GAAP and Other Financial Measures" contained within this MD&A for further information.

   Cash Flow from Operating Activities and Funds from Operations

   For the third quarter of 2026, cash flow from operating activities was $214.1 million compared to $225.1 million in the same quarter of 2025. Funds from operations ("FFO") increased 11% to $220.9 million for the third quarter of 2026, compared to

   $198.9 million in the third quarter of 2025. The increased FFO was primarily driven by:

   • higher production volumes, realized NGL prices, and other income, combined with lower interest and financing costs;

   • partially offset by lower realized hedging gains, and higher royalties, operating, transportation and current tax expenses.

     For the nine months ended September 30, 2026, cash flow from operating activities increased to $710.8 million from $618.8 million for the same period of 2025. FFO totaled $741.5 million for nine months of 2026, compared to $615.7 million for the same period of 2025. These increases were mainly due to:

   • higher production volumes, realized natural gas and NGL prices, other income, and a realized gain on foreign exchange, combined with lower interest and financing costs;

   • partially offset by lower realized hedging gains, and higher royalties, operating, transportation, and current tax expenses.

Funds from operations is a non-GAAP financial measure, refer to the section entitled "Non-GAAP and Other Financial Measures" for additional information contained within this MD&A.

84,551

(48,698)

4,055

3,687 220,877

198,901 (15,749) (1,876) (1,144) (565) (2,285)

300,000

250,000

200,000

($ 000)

150,000

100,000

50,000

0

247,126

(95,169)

12,812

11,741 741,530

(27,290)

(5,610) (4,753) (327)

(12,517)

615,517

1,000,000

900,000

800,000

700,000

($ 000)

600,000

500,000

400,000

300,000

200,000

100,000

0

1. "Other" includes other income, net marketing revenue, and realized gain/loss on foreign exchange

   Free Funds Flow

   Peyto uses free funds flow, defined as cash flow from operating activities before changes in non-cash operating working capital, provision for performance-based compensation, and transaction costs, less total capital expenditures, as an indicator of the funds available for capital allocation. For the three and nine months ended September 30, 2026, free funds flow was $92.8 million and $373.1 million, respectively, compared to $69.1 million and $273.2 million for the same periods of 2025. Free funds flow is a non-GAAP financial measure, refer to the section entitled "Non-GAAP and Other Financial Measures" for additional information contained within this MD&A.

   Earnings

   The Company's earnings in the three and nine months ended September 30, 2026, rose to $155.7 million and $433.0 million, respectively, from $90.7 million and $292.7 million for the same periods of 2025. These increases were primarily driven by:

   • higher sales revenue, an unrealized gain on derivative financial instruments, along with lower financing costs;

   • partially offset by lower realized hedging gains, and higher royalties, operating, transportation, performance-based compensation, depletion and depreciation, and income taxes.

     Adjusted Earnings

     Peyto uses adjusted earnings for its own performance measure and to provide investors with a measurement of the Company's earnings prior to the after-tax, non-cash effects of unrealized gains and losses on financial instruments and unrealized gains and losses on foreign exchange. The Company's adjusted earnings in the three and nine months ended September 30, 2026, rose to $105.4 million and $382.7 million, respectively, from $91.7 million and $291.0 million for the same periods of 2025. These increases were primarily driven by:

   • higher sales revenue, increased other income and lower financing costs;

   • partially offset by lower realized hedging gains, and higher royalties, operating, transportation, performance-based compensation, depletion and depreciation, and income taxes.

Adjusted earnings is a non-GAAP financial measure, refer to the section entitled "Non-GAAP and Other Financial Measures" for additional information contained within this MD&A.

Peyto invested $124 million in capital expenditures for the third quarter of 2026. The Company drilled 22 wells (22.0 net), completed 19 wells (19.0 net) and brought 20 wells (20.0 net) on production for drilling, completions, equipping and tie-in capital of $99.6 million. Facilities and pipeline projects totaled $23.5 million in the quarter, which included pipeline optimization projects, compressor upgrades, and a turnaround at the Swanson gas plant. Additionally, Peyto invested $0.9 million in Crown land sales in the quarter.

The following table summarizes capital expenditures for the three and nine months ended September 30, 2026 and 2025:

Three Months Ended September 30 Nine Months Ended September 30

($000) 2026 2025 % Change 2026 2025 % Change

(1) This is a non-GAAP measure or ratio. Refer to the section entitled "Non-GAAP and Other Financial Measures" contained within this MD&A for further information.

Net debt is a non-GAAP financial measure used by the Company in monitoring and assessing its capital structure. Net debt as at September 30, 2026, December 31, 2025, and September 30, 2025 are summarized as follows:

(1) T his is non-GAAP financial measure. Refer to the section entitles "Non-GAAP and Other Financial Measures" contained within this MD&A for further information

Peyto's net debt of $1.0 billion as at September 30, 2026, decreased by $185.5 million from December 31, 2025.

The Company remains on track to execute the 2026 capital program within the $450 to $500 million capital guidance. Peyto's preliminary capital budget for 2027 has been set at $475 to $525 million. Based on current commodity prices, Peyto's cash flow from operating activities is expected to fully fund the 2027 capital program and dividend payment, with the balance being allocated to debt repayment.

The total amount of capital invested in 2027 will be driven by the number and quality of projects generated. Capital will only be invested if it meets the long-term return objectives of the Company. The majority of the capital program will involve drilling, completion and tie-in of lower risk development gas wells. Peyto's rapidly scalable business model has the flexibility to match planned capital expenditures to actual cash flow.

On October 23, 2025, the Company entered into an agreement with its syndicate of lenders to amend and extend its credit facilities, which increased the revolving operating facility (the "Revolving Credit Facility") to $1.05 billion. The maturity date of the Revolving Credit Facility was extended to October 23, 2029, and consisted of a $40 million working capital tranche and a $1.01 billion production line, available on a revolving basis. Effective June 12, 2026, the Company reallocated the commitments under the Revolving Credit Facility, with no change to the total committed amount of $1.05 billion or the maturity date. Following this amendment, the Revolving Credit Facility consists of a $155 million working capital tranche and an $895 million production line.

Borrowings under the Revolving Credit Facility bears interest at Canadian bank prime or US base rate, or, at Peyto's option, Canadian dollar CORRA advances or US dollar SOFR loan rates, plus adjustments and applicable margin.

The Company had $136.3 million letters of credit outstanding at September 30, 2026 ($9.1 million at December 31, 2025).

Peyto is subject to financial covenants as defined in the credit facility and note purchase agreements. The Company's financial covenants include financial measures defined within its revolving credit facility agreement that are not defined under the Accounting Standards. These financial measures are defined in the amended credit facility agreement as follows:

• Total Debt: includes long-term debt and subordinated debt plus bank overdraft and letters of credit.

• Senior Debt: includes long-term debt plus bank overdraft and letters of credit.

• EBITDA: trailing twelve-month net income before non-cash items, interest, and income taxes.

Peyto is in compliance with all financial covenants at September 30, 2026. Outstanding secured senior notes as at September 30, 2026 are as follows:

Authorized: Unlimited number of voting common shares Issued and Outstanding

Common Shares (no par value)

Number of Common

Shares

Amount

$'000

"Total payout ratio" is a non-GAAP measure which is calculated as the sum of dividends declared plus total capital expenditures and decommissioning expenditures, divided by funds from operations. This ratio represents the percentage of total capital expenditures, decommissioning expenditures and dividends that are funded by cashflow. Management uses this measure, among others, to assess the sustainability of Peyto's dividend and capital program. Refer to the section entitled "Non-GAAP and Other Financial Measures" in this MD&A for further information.

Three Months Ended September 30 Nine Months Ended September 30

($000, except total payout ratio) 2026 2025 % Change 2026 2025 % Change

(1) This is a non-GAAP financial measure. Refer to the section entitled "Non-GAAP and Other Financial Measures" contained within this MD&A for further information.

In addition to those recorded on the Company's balance sheet, the following is a summary of Peyto's contractual obligations and commitments at September 30, 2026:

Certain directors of Peyto are considered to have significant influence over other reporting entities that Peyto engages in commercial transactions with. Such services are provided in the normal course of business and at market rates. These directors are not involved in the day-to-day operational decision making of the Company. The dollar value of the transactions between Peyto and each of the related reporting entities is summarized below:

Expense (Income) ($000) Accounts Payable (Account Receivable) ($000)

Three Months ended September 30 Nine months ended September 30 As at September 30

Investors who purchase common shares are participating in the total returns from a portfolio of western Canadian natural gas producing properties. As such, the total returns earned by investors and the value of the shares are subject to numerous risks inherent in the oil and natural gas industry.

Expected returns depend largely on the volume of petroleum and natural gas production and the price received for such production, along with the associated costs. The price received for oil depends on a number of factors, including West Texas Intermediate oil prices, Canadian/US currency exchange rates, quality differentials and Edmonton par oil prices. The price received for natural gas production is dependent on current Alberta, Henry Hub, Malin, Dawn, Chicago, Ventura, and Emerson market prices and Canadian/US currency exchange rates. Peyto's marketing strategy is designed to smooth out short-term fluctuations in the price of natural gas through future sales. It is meant to be methodical and consistent and to avoid speculation.

Access to markets may be restricted at times by pipeline or processing capacity. These risks are minimized by controlling as much of the processing and transportation activities as possible and ensuring transportation and processing contracts are in place with reliable cost-efficient counterparties.

Inherent in development of the existing oil and gas reserves are the risks, among others, of drilling dry holes, encountering production or drilling difficulties or experiencing high decline rates in producing wells. To minimize these risks, Peyto employs experienced staff to evaluate and operate wells and utilize appropriate technology in operations. In addition, prudent work practices and procedures, safety programs and risk management principles, including insurance coverage protect Peyto against certain potential losses.

Although Peyto's focus is on internally generated drilling programs, any acquisition of oil and natural gas assets depends on an assessment of value at the time of acquisition. Incorrect assessments of value can adversely affect dividends to shareholders and the value of the common shares. Peyto employs experienced staff and performs appropriate levels of due diligence on the analysis of acquisition targets, including a detailed examination of reserve reports; if appropriate, reengineering of reserves for a large portion of the properties to ensure the results are consistent; site examinations of facilities for environmental liabilities; detailed examination of balance sheet accounts; review of contracts; review of prior year tax returns and modeling of the acquisition to attempt to ensure accretive results to the shareholders.

Peyto's operating costs could escalate and become uncompetitive due to supply chain disruptions, inflationary cost pressures, equipment limitations, escalating supply costs, commodity prices, and additional government intervention through stimulus spending or additional regulations. Peyto's inability to manage costs may impact project returns and future development decisions, which could have a material adverse effect on its financial performance and cash flows.

The cost or availability of oilfield services may adversely affect Peyto's ability to undertake exploration, development and construction projects. The crude oil and natural gas industry is cyclical in nature and is prone to shortages of supply of equipment and services including drilling rigs, geological and geophysical services, engineering and construction services, major equipment items for infrastructure projects, and construction materials generally. These materials and services may not be available when required at reasonable prices. A failure to secure the services and equipment necessary to Peyto's operations for the expected price, on the expected timeline, or at all, may have an adverse effect on Peyto's financial performance and cash flows.

Peyto is subject to financial market risk. Peyto routinely monitors its financial forecasts, capital spending, balance sheet and dividend policy and has the ability to make operational and financial changes to help ensure Peyto remains compliant with all financial covenants. If necessary, Peyto can request temporary relief from financial covenants from lenders.

In the event Peyto does not comply with it's financial covenants and lenders do not grant covenant relief, Peyto's access to capital could be restricted or repayment required. In order to maintain substantial rates of growth, Peyto must continue reinvesting in, drilling for or acquiring petroleum and natural gas. The capital expenditure program is funded primarily through funds from operations, debt and, if appropriate, equity.

The value of Peyto's common shares is based on, among other things, the underlying value of the oil and natural gas reserves. Geological and operational risks can affect the quantity and quality of reserves and the cost of ultimately recovering those reserves. Lower oil and gas prices increase the risk of write-downs on oil and gas property investments. In order to mitigate this risk, proven and probable oil and gas reserves are evaluated each year by a firm of independent reservoir engineers. Both the reserves committee and the Board of Directors reviews and approves the reserve report.

The petroleum and natural gas industry is subject to extensive controls, regulatory policies and income and resource taxes imposed by various levels of government. These regulations, controls and taxation policies are amended from time to time.

Peyto has no control over the level of government intervention or taxation in the petroleum and natural gas industry. Peyto operates in such a manner to ensure, to the best of its knowledge that it is in compliance with all applicable regulations and are able to respond to changes as they occur.

Amendments to the Competition Act that came into force in June 2024 expressly target greenwashing by imposing substantiation requirements for certain environmental claims and increasing exposure for misleading environmental representations. The new requirements are complex and uncertain, and in some cases led companies to pause, withdraw, or revise voluntary environmental disclosures. Expanded private access to the Competition Tribunal for deceptive marketing matters came into force in June 2025, although subsequent amendments in Budget Implementation Act, 2025, No. 1 narrowed access for private proceedings and adjusted the substantiation framework for claims about the environmental benefits of a business or business activity. Despite these improvements, the regulatory landscape continues to evolve and penalties for corporations can reach $10 million for a first order, $15 million for subsequent orders, and may be higher depending on the benefit from the conduct, including in some cases up to 3% of annual worldwide gross revenues.

Companies making voluntary environmental disclosures face ongoing risk of liability and reputational harm. Uncertainty surrounding the interpretation and enforcement of this legislation may expose the Company to increased litigation and financial penalties, the outcome and impacts of which can be difficult to assess or quantify and may have a material adverse effect on the Company's business, reputation, financial condition, and results.

The petroleum and natural gas industry is subject to both environmental regulations and an increased environmental awareness. Peyto has reviewed its environmental risks and is, to the best of its knowledge, in compliance with the appropriate environmental legislation and have determined that there is no current material impact on operations. Peyto employs environmentally responsible business operations and looks to both Alberta provincial authorities and Canada's federal authorities for direction and regulation regarding environmental and climate change legislation.

A number of factors, including the effects of the use of hydrocarbons on climate change, the impact of crude oil and natural gas operations on the environment, environmental damage relating to spills of crude oil products during production and transportation, and Indigenous rights, have affected certain investors' sentiments towards investing in the crude oil and natural gas industry. As a result of these concerns, some institutional, retail and governmental investors have announced that they are no longer funding or investing in crude oil and natural gas assets or companies or are reducing the amount thereof over time. In addition, certain institutional investors are requesting that issuers develop and implement more robust ESG policies and practices. Developing and implementing such policies and practices can involve significant costs and require a significant time commitment from the Board, Management and employees of Peyto.

Failing to implement the policies and practices, as requested by institutional investors, may result in such investors reducing their investment in Peyto, or not investing in Peyto at all. Any reduction in the investor base interested or willing to invest in the crude oil and natural gas industry and more specifically, Peyto, may result in limiting Peyto's access to capital, increasing the cost of capital, and decreasing the price and liquidity of Peyto's securities even if Peyto's operating results, underlying asset values, or cash flows have not changed.

Changes to the demand for oil and natural gas products and the rise of petroleum alternatives may negatively affect Peyto's financial condition, results of operations and cash flows. Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas and technological advances in fuel economy and renewable energy generation systems could reduce the demand for oil, natural gas and liquid hydrocarbons. Recently, certain jurisdictions have implemented policies or incentives to decrease the use of hydrocarbons and encourage the use of renewable fuel alternatives, which may lessen the demand for petroleum products and put downward pressure on commodity prices. Advancements in energy efficient products have a similar effect on the demand for oil and natural gas products.

Peyto cannot predict the impact of changing demand for oil and natural gas products, and any major changes may have a material adverse effect on Peyto's business, financial condition, results of operations and cash flow by decreasing Peyto's profitability, increasing its costs, limiting its access to capital and decreasing the value of its assets.

Peyto has become increasingly dependent upon the availability, capacity, reliability, and security of our information technology infrastructure and our ability to expand and continually update this infrastructure to conduct daily operations. Peyto depends on various information technology systems to estimate reserve quantities, process and record financial data, manage Peyto's land base, manage financial resources, analyze seismic information, administer contracts with operators and lessees, and communicate with employees and third-party partners.

Cyber-security breaches, as well as the loss of or unauthorized access to electronic data may adversely impact Peyto's operations and financial position. Further, Peyto is subject to a variety of information technology and system risks as a part of its normal course operations, including potential breakdown, invasion, virus, cyber-attack, cyber-fraud, security breach, and destruction or interruption of Peyto's information technology systems by third parties or insiders. Unauthorized access to these systems by employees or third parties could lead to corruption or exposure of confidential, fiduciary or proprietary information, interruption to communications or operations or disruption to business activities, or Peyto's competitive position. Disruption of critical information technology services, or breaches of information security, could have a negative effect on Peyto's performance and earnings, as well as its reputation, and any damages sustained may not be adequately covered by Peyto's current insurance coverage, or at all.

Peyto provides employees with social media guidelines that align with its Code of Business Conduct and Ethics Policy. Despite these efforts, as social media continues to grow in influence and access to social media platforms becomes increasingly prevalent, there are significant risks that Peyto may not be able to properly regulate social media use and preserve adequate records of business activities.

In addition, cyber-phishing attempts, in which a malicious party attempts to obtain sensitive information such as usernames, passwords, credit card and banking details, or approval of wire transfer requests by disguising as a trustworthy entity in an electronic communication, have become more widespread and sophisticated in recent years.

Increasingly, social media is used as a vehicle to carry out cyber-phishing attacks. Information posted on social media sites, for business or personal purposes, may be used by attackers to penetrate Peyto's systems and obtain confidential information. Peyto's employees are often the targets of such cyber-phishing attacks, as they are and will continue to be targeted by parties using fraudulent "spoof" emails to misappropriate information or to introduce viruses or other malware through "Trojan horse" programs to Peyto's computers. These emails appear to be legitimate emails, but direct recipients to fake websites operated by the sender of the email or request recipients to send a password or other confidential information through email or to download malware. If Peyto becomes a victim to a cyber-phishing attack it could result in a loss or theft of Peyto's financial resources or critical data and information or could result in a loss of control of Peyto's technological infrastructure or financial resources. The significance of any such event is difficult to quantify but may in certain circumstances be material and could have a material adverse effect on Peyto's business, financial condition, and results of operations.

Despite these threats and the residual risk that remains, Peyto applies technical and process controls in line with industry-accepted standards to protect its information, assets and systems, including a written incident response plan for responding to a cybersecurity incident. However, these controls may not adequately prevent cyber-security breaches. Peyto maintains policies and procedures that address and implement employee protocols with respect to electronic communications and electronic devices and conducts regular cyber-security risk assessments and training and education programs for its employees. Peyto also employs encryption protection of its confidential information on all computers and other electronic devices. Despite Peyto's efforts to mitigate such cyber-phishing attacks through education and training, cyber-phishing activities remain a serious problem that may damage its information technology infrastructure

There is a risk that (i) the tariffs that are currently in effect on goods exported from or imported into Canada continue in effect for an extended period of time, the tariffs that have been threatened are implemented, that tariffs that are currently suspended are reactivated, the rate or scope of tariffs are increased, or new tariffs are imposed, including on oil and natural gas, (ii) the

U.S. and/or Canada imposes any other form of tax, restriction or prohibition on the import or export of products from one country to the other, including on oil and natural gas, and (iii) the tariffs imposed or threatened to be imposed by the U.S. on other countries and retaliatory tariffs imposed or threatened to be imposed by other countries on the U.S., will trigger a broader global trade war which could have a material adverse effect on the Canadian, U.S. and global economies, and by extension the Canadian oil and natural gas industry and the Company, including by decreasing demand for (and the price of) oil and natural gas, disrupting supply chains, increasing costs, causing volatility in global financial markets, and limiting access to financing.

For a detailed discussion of the risks, uncertainties and industry conditions associated with Peyto's business, refer to the Company's Annual Information Form, which is available under Peyto's SEDAR+ profile at https://www.sedarplus.ca and at https://www.peyto.com.

The Company's Chief Executive Officer and Chief Financial Officer have designed, or caused to be designed under their supervision, disclosure controls and procedures to provide reasonable assurance that: (i) material information relating to the Company is made known to the Company's Chief Executive Officer and Chief Financial Officer by others, particularly during the period in which the annual and interim filings are being prepared; and (ii) information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time period specified in securities legislation.

The Company's Chief Executive Officer and Chief Financial Officer have designed, or caused to be designed under their supervision, internal control over financial reporting to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Such officers have evaluated, or caused to be evaluated under their supervision, the effectiveness of the Company's internal control over financial reporting at the financial period end of the Company and concluded that the Company's internal control over financial reporting is effective, at the financial period end of the Company, for the foregoing purpose.

Peyto is required to disclose herein any change in Peyto's internal control over financial reporting that occurred during the period ended September 30, 2026, that has materially affected, or is reasonably likely to materially affect, Peyto's internal control over financial reporting. No material changes in Peyto's internal control over financial reporting were identified during such period that has materially affected, or are reasonably likely to materially affect, Peyto's internal control over financial reporting.

It should be noted that a control system, including the Company's disclosure and internal controls and procedures, no matter how well conceived, can provide only reasonable, but not absolute, assurance that the objectives of the control system will be met and it should not be expected that the disclosure and internal controls and procedures will prevent all errors or fraud.

Peyto does not have any guarantees or off-balance sheet arrangements that have been excluded from the balance sheets other than commitments disclosed in the "Contractual Obligations" section of this MD&A.

Estimates of oil and natural gas reserves, by necessity, are projections based on geologic and engineering data, and there are uncertainties inherent to the interpretation of such data as well as the projection of future rates of production and the timing of development expenditures. Reserve engineering is an analytical process of estimating underground accumulations of oil and natural gas that can be difficult to measure. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgment. Estimates of economically recoverable oil and natural gas reserves and future net cash flows necessarily depend upon a number of variable factors and assumptions, such as historical production from the area compared with production from other producing areas, the assumed effects of regulations by governmental agencies and assumptions governing future oil and natural gas prices, future royalties and operating costs, development costs and workover and remedial costs, all of which may in fact vary considerably from actual results. For these reasons, estimates of the economically recoverable quantities of oil and natural gas attributable to any particular group of properties, classifications of such reserves based on risk recovery, and estimates of the future net cash flows expected there from may vary substantially. Any significant variance in the assumptions could materially affect the estimated quantity and value of the reserves, which could affect the carrying value of Peyto's oil and natural gas properties and the rate of depletion of the oil and natural gas properties as well as the calculation of the reserve value based compensation. Actual production, revenues and expenditures with respect to Peyto's reserves will likely vary from estimates, and such variances may be material.

Peyto's estimated quantities of proved and probable reserves at December 31, 2025 were evaluated by independent petroleum engineers GLJ Ltd.

All costs of exploring for and developing petroleum and natural gas reserves, together with the costs of production equipment, are capitalized and then depleted and depreciated on the unit-of-production method based on proved plus probable reserves. Petroleum and natural gas reserves and production are converted into equivalent units based upon estimated relative energy content (6 mcf to 1 barrel of oil). Costs for gas plants and other facilities are capitalized and depreciated on a declining balance basis.

Impairment is indicated if the carrying value of the long-lived asset or oil and gas cash generating unit exceeds its recoverable amount under the Accounting Standards. If impairment is indicated, the amount by which the carrying value exceeds the estimated fair value of the long-lived asset is charged to earnings. The determination of the recoverable amount for impairment purposes under the Accounting Standards involves the use of numerous assumptions and judgments including future net cash flows from oil and gas reserves, future third-party pricing, inflation factors, discount rates and other uncertainties. Future revisions to these assumptions impact the recoverable amount.

The decommissioning provision is estimated based on existing laws, contracts or other policies. The fair value of the obligation is based on estimated future costs for abandonment and reclamation discounted at a risk-free interest rate. The liability is adjusted each reporting period to reflect the passage of time and for revisions to the estimated future cash flows, with the accretion charged to earnings. By their nature, these estimates are subject to measurement uncertainty and the impact on the financial statements could be material.

The reserve value-based compensation is calculated using the year end independent reserves evaluation which was completed in February 2026. A quarterly provision for the reserve value-based compensation is calculated using estimated proved producing reserve additions adjusted for changes in debt, equity and dividends. Actual proved producing reserves additions and forecasted commodity prices could vary significantly from those estimated and may have a material effect on the calculation.

The determination of the Company's income and other tax liabilities requires interpretation of complex laws and regulations often involving multiple jurisdictions. All tax filings are subject to audit and potential reassessment after the lapse of considerable time. Accordingly, the actual income tax liability may differ significantly from that estimated and recorded.

Voluntary changes in accounting policy are made only if they result in financial statements which provide more reliable and relevant information. Accounting policy changes are applied retrospectively unless it is impractical to determine the period or cumulative impact of the change. Corrections of prior period errors are applied retrospectively and changes in accounting estimates are applied prospectively by including these changes in earnings. When the Company has not applied a new primary source of GAAP that has been issued, but is not effective, the Company will disclose the fact along with information relevant to assessing the possible impact that application of the new primary source of GAAP will have on the financial statements in the period of initial application.

Additional information relating to Peyto Exploration & Development Corp. can be found on SEDAR+ at https://www.sedarplus.ca and https://www.Peyto.com.

Throughout this MD&A and in other materials disclosed by the Company, 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.

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, if any. 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.

Three Months Ended September 30 Nine Months Ended September 30

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.

Three Months Ended September 30 Nine Months Ended September 30

Peyto uses "adjusted earnings" for its own performance measure and to provide investors with a measurement of the Company's earnings prior to the after-tax, non-cash effects of unrealized gains and losses on financial instruments and unrealized gains and losses on foreign exchange. The most directly comparable GAAP measure for adjusted earnings is earnings. The following table details the calculation of earnings to adjusted earnings.

Three Months Ended September 30 Nine Months Ended September 30

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.

Three Months Ended September 30 Nine Months Ended September 30

"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.

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. In reporting for prior periods, marketing revenue and marketing purchases were reported as "sales of natural gas and natural gas liquids from third parties" and "natural gas and natural gas liquids purchased from third parties."

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 provide investors an indicator of funds generated from the business that could be allocated to each shareholder's equity position.

Peyto presents adjusted earnings per share by dividing adjusted earnings by the Company's diluted or basic weighted average common shares outstanding. "Adjusted earnings" is a non-GAAP financial measure. Management uses adjusted earnings as a

performance measure and to provide investors with a measurement of the Company's earnings prior to the non-cash effects of unrealized gains and losses on financial instruments and unrealized gains and losses on foreign exchange.

"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.

Three Months Ended September 30 Nine Months Ended September 30

"Total payout ratio" is a non-GAAP measure which is calculated as the sum of dividends declared plus total capital expenditures and decommissioning expenditures, divided by funds from operations. This ratio represents the percentage of the capital expenditures, decommissioning 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.

Three Months Ended September 30 Nine Months Ended September 30

"DD&A expense per Mcfe and boe" is comprised of DD&A expense, as determined in accordance with IFRS, divided by the Company's total production.

"Gross sale price" is comprised of natural gas and natural gas liquids sales, as determined in accordance with IFRS, divided by the Company's total production.

"G&A expense per Mcfe and boe" is comprised of G&A expense, as determined in accordance with IFRS, divided by the Company's total production.

"Interest and financing expense per Mcfe and boe" is comprised of interest and financing expense, as determined in accordance with IFRS, divided by the Company's total production.

"Liquids production to sales gas ratio" is comprised of NGLs production, divided by the Company's natural gas production.

"Net sale price" is comprised of natural gas and natural gas liquids sales including hedging gains or losses, as determined in accordance with IFRS, divided by the Company's total production.

"Operating expense per Mcfe and boe" is comprised of operating expense, as determined in accordance with IFRS, divided by the Company's total production.

"Other income per Mcfe" is comprised of other income, as determined in accordance with IFRS, divided by the Company's total production.

"Production per million common shares" is comprised of the Company's total production divided by the weighted average number of shares outstanding at the end of the period.

"Realized condensate and pentanes plus price" is comprised of condensate and pentanes commodity sales from production, as determined in accordance with IFRS, divided by the Company's condensate and pentanes production.

"Realized gain on foreign exchange per Mcfe" is comprised of realized gain on foreign exchange, as determined in accordance with IFRS, divided by the Company's total production.

"Realized natural gas price" is comprised of natural gas commodity sales from production, as determined in accordance with IFRS, divided by the Company's natural gas production.

"Realized NGLs price" is comprised of NGLs commodity sales from production, as determined in accordance with IFRS, divided by the Company's NGLs production.

Realized gain on foreign exchange and other income

"Royalties as a percentage of sales" is comprised of royalties, as determined in accordance with IFRS, divided by commodity sales from production as determined in accordance with IFRS.

"Royalties per Mcfe and boe" is comprised of royalties, as determined in accordance with IFRS, divided by the Company's total production.

"Sale price" is comprised of total commodity sales from production including hedging gains or losses, as determined in accordance with IFRS, divided by the Company's total production.

"Total dividends per common share" is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.

"Total realized hedging gain (loss) per Mcfe and boe" is comprised of realized gain (loss) on derivative financial instruments, as determined in accordance with IFRS, divided by the Company's total production.

"Transportation per Mcfe and boe" is comprised of transportation expense, as determined in accordance with IFRS, divided by the Company's total production

Certain statements contained in this MD&A constitute forward-looking statements or forward-looking information (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws. These forward-looking statements relate to future events or Peyto's future performance. All statements other than statements of historical fact are

forward-looking statements. The use of any of the words "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "should", "believe" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These statements speak only as of the date of this MD&A.

Forward-looking statements are based on a number of factors and assumptions which have been used to develop such forward-looking statements but which may prove to be incorrect. Although Peyto believes that the expectations reflected in such forward-looking statements are reasonable, undue reliance should not be placed on forward-looking statements because Peyto can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this MD&A, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which Peyto operates; the timely receipt of any required regulatory approvals; the ability of Peyto to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which Peyto has an interest in to operate the field in a safe, efficient and effective manner; the ability of Peyto to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisitions, development and exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of Peyto to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes, environmental and climate change matters in the jurisdictions in which Peyto operates; and the ability of Peyto to successfully market its oil and natural gas products.

In particular, this MD&A contains forward-looking statements pertaining to the following:

• Peyto's 2026 capital expenditure program of $450 to $500 million;

• Peyto's preliminary 2027 capital budget of $475 to $525 million;

• Peyto's belief that funds from operations based on current strip pricing, together with available borrowings under the credit facility will be sufficient to maintain dividends, finance current operations, and fund the planned capital expenditure program;

• the existence, operation and strategy of Peyto's commodity price risk management program; and

• the approximate and maximum amount of forward sales and hedging to be employed by Peyto.

  The actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this MD&A:

• public health risks;

• volatility in market prices for oil and natural gas;

• fluctuations in foreign exchange or interest rates and stock market volatility;

• loss of markets;

• changes to the Company's capital budget;

• liabilities inherent in oil and natural gas operations;

• uncertainties associated with estimating oil and natural gas reserves;

• risks and uncertainties associated with Peyto's oil and natural gas exploration and development program;

• competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;

• incorrect assessments of the value of acquisitions and exploration and development programs;

• geological, technical, drilling and processing problems;

• restrictions and/or limitations on transportation, including pipeline systems;

• uncertainties associated with changes in legislation, including, but not limited to, changes in income tax laws, tariffs, threat of tariffs, oil and natural gas royalty and regulatory frameworks and climate change laws and frameworks; and

• the other factors discussed under "Risk Factors" in Peyto's latest Annual Information Form.

Statements relating to reserves are deemed to be forward-looking statements as they involve the implied assessment, based on current estimates and assumptions, that the reserves described can be profitably produced in the future. The foregoing lists of factors are not exhaustive. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement. Peyto does not undertake any obligation to publicly update or revise any forward-looking statements, except as required by applicable securities law.

Natural gas liquids volumes are recorded in barrels of oil (bbl) and are converted to a thousand cubic feet equivalent (Mcfe) using a ratio of six (6) thousand cubic feet to one (1) barrel of oil (bbl). 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). Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 bbl is based in an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared with natural gas is significantly different from the energy equivalent of six to one, utilizing a boe conversion ratio of 6 Mcf:1 bbl may be misleading as an indication of value.

The following is a list of abbreviations that may be used in this MD&A:

Measurement bbl barrel

bbl/d barrels per day Mbbl thousand barrels MMbbl million barrels

boe (1) barrels of oil equivalent

boe/d (1) barrels of oil equivalent per day Mboe (1) thousands of barrels of oil equivalent MMboe (1) millions of barrels of oil equivalent Mcf thousand cubic feet

Mcf/d thousand cubic feet per day MMcf million cubic feet

MMcf/d million cubic feet per day Bcf billion cubic feet

MMBtu million British thermal units GJ gigajoule

1. Excludes marketing revenue and other income

2. This is a non-GAAP financial measure or ratio. Refer to the section entitled "Non-GAAP and Other Financial M easures" contained within this MD&A for further information