Section1: Company Overview and Fundamental Insights

1.1 Company Overview:

Peyto Exploration & Development Corp (TSX: PEY) is a Canadian energy company involved in the development and production of natural gas in Alberta's deep basin. Substantial revenue is generated from Natural gas and natural gas liquid sales.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 5 Shareholders:

The top 5 shareholders together form ~20.73% of the total shareholding. Letko, Brosseau & Associates Inc.  and Fidelity Management & Research Company LLC, holds a maximum stake in the company at ~­­­8.62% and ~6.25%, respectively.

1.4 Key Metrics:

The company has reported higher average daily production and has realized higher price on the sequential basis which led to shining financials numbers, is a key positive. However, in Q2 2022 the top line and bottom-line number were slight below compared to Q1 2022.Additionaly, the group is posting sequential growth in its cash flows and industry leading operating margins, demonstrating its strength and adaptability.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of its recent activities, such as announcement regarding dividend distribution, an update on its drilling and de leveraging balance sheet:

2.2 Insights of Q2 2022 Financial Performance:

Section 3: Key Risks, Company Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 1, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined:

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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