PEY Peyto Exploration and Development Corp

Peyto Exploration & Development Corp. ("Peyto" or the "Company") is pleased to announce that due to strong demand, it has increased the size of the previously announced public offering of subscription receipts ("Subscription Receipts") to 14,710,000 Subscription Receipts at a price of $11.90 per Subscription Receipt (the “Offering Price”) for gross proceeds of approximately $175 million (the “Equity Offering”). The Company previously entered into an agreement with a syndicate of underwriters (the "Underwriters") led by BMO Capital Markets, CIBC Capital Markets and National Bank Financial. Peyto has also granted the Underwriters an option, exercisable, in whole or in part, at any time up to the earlier of 30 days following the closing of the Equity Offering and the occurrence of certain termination events with respect to the Subscription Receipts, to purchase up to an additional 15% of the number of Subscription Receipts purchased by the Underwriters under the Equity Offering at the Offering Price to cover over-allotments, if any, and for market stabilization purposes (the "Over-Allotment Option"). The gross proceeds from the Equity Offering, less the portion of the underwriters’ fee that is payable on the closing of the Equity Offering, will be held in escrow and are intended to be used by Peyto to fund a portion of the purchase price for the acquisition of Repsol Canada Energy partnership, which holds the Canadian upstream oil and gas business of Repsol Exploración, S.A.U., including all related midstream facilities and infrastructure located predominantly in the Deep Basin, for cash consideration of US$468 million (CDN$636 million) (the “Acquisition") subject to closing adjustments.

Each Subscription Receipt will entitle the holder to receive, without payment of additional consideration and without further action, one common share of Peyto (a "Common Share") upon the closing of the Acquisition.

Holders of the Subscription Receipts will be entitled to receive payments per Subscription Receipt equal to the cash dividends paid on Peyto's Common Shares (the "Dividend Equivalent Payments"), if any, actually paid or payable to holders of such Common Shares in respect of all record dates for such dividends occurring from the closing date of the Equity Offering to, but excluding, the last day on which the Subscription Receipts remain outstanding, to be paid to holders of Subscription Receipts concurrently with the payment date of each such dividend. The Dividend Equivalent Payments will be made regardless of whether the Acquisition is completed or not. If the Acquisition is not completed on or before March 31, 2024, or in certain other events, then the subscription price for the Subscription Receipts will be returned to holders of Subscription Receipts, together with any unpaid Dividend Equivalent Payments and any pro-rata interest on such funds, if any.

The Subscription Receipts issued pursuant to the Equity Offering have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from registration under the Securities Act. The Subscription Receipts issued pursuant to the Equity Offering will be distributed by way of a short form prospectus in all provinces of Canada (excluding Québec) and may also be placed privately in the United States to Qualified Institutional Buyers (as defined under Rule 144A under the U.S. Securities Act) pursuant to the exemption provided by Rule 144A thereunder, and may be distributed outside Canada and the United States on a basis which does not require the qualification or registration of any of the Company's securities under domestic or foreign securities laws. This news release is neither an offer to sell nor the solicitation of an offer to buy any securities and shall not constitute an offer to sell or solicitation of an offer to buy, or a sale of, any securities in any jurisdiction in which such offer, solicitation or sale is unlawful.

The Equity Offering is expected to close on or about September 26, 2023 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange.

Jean-Paul LachancePresident and Chief Executive OfficerPhone: (403) 261-6081

Advisory:

This news release contains forward-looking information (forward-looking statements). Words such as "guidance", "may", "can", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "aim", "seek", "propose", "contemplate", "estimate", "focus", "strive", "forecast", "expect", "project", "target", "potential", "objective", "continue", "outlook", "vision", "opportunity" and similar expressions suggesting future events or future performance, as they relate to the Company or any affiliate of the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, timing for closing of the Equity Offering, the terms of the Subscription Receipts and the use of equity proceeds to support the purchase price for the Acquisition Such statements reflect Peyto's current expectations, estimates and projections based on certain material factors and assumptions at the time the statement was made. Material assumptions include: closing of the Acquisition on the terms presently contemplated, timing and receipt of regulatory approvals and timing of closing of the Equity Offering. Peyto's forward-looking statements are subject to certain risks and uncertainties which could cause results or events to differ from current expectations, including, without limitation: risks related to the closing of the Acquisition and Equity Offering, and the other factors discussed under the heading "Risk Factors" in the Company's Annual Information Form for the year ended December 31, 2022 and set out in Peyto's other continuous disclosure documents. Many factors could cause Peyto's or any particular business segment's actual results, performance or achievements to vary from those described in this press release, including, without limitation, those listed above and the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release as intended, planned, anticipated, believed, sought, proposed, estimated, forecasted, expected, projected or targeted and such forward-looking statements included in this news release, should not be unduly relied upon. The impact of any one assumption, risk, uncertainty, or other factor on a particular forward-looking statement cannot be determined with certainty because they are inter-dependent and Peyto's future decisions and actions will depend on management’s assessment of all information at the relevant time. Such statements speak only as of the date of this news release. Peyto does not intend, and does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking statements contained in this news release are expressly qualified by these cautionary statements.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities in any jurisdiction. The securities of Peyto will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States, or to a U.S. person, absent registration or applicable exemption therefrom.