Peyto Exploration and Development Corp. - Proxy Solicitation & Information Statement 2022

PEYTO EXPLORATION & DEVELOPMENT CORP.

Notice of Annual and Special Meeting of Shareholders to be held on May 12, 2022

The annual and special meeting of the shareholders of Peyto Exploration & Development Corp. (the " Corporation ") will be held at the offices of the Corporation, located at +15 Level, 600 – 3[rd] Avenue S.W., Calgary, Alberta T2G 0G5, on Thursday, May 12, 2022 at 3:00 p.m. (Calgary time) to:

receive and consider the Corporation's financial statements for the year ended December 31, 2021, together with the auditors' report thereon;
fix the number of directors of the Corporation to be elected at the meeting at seven (7);
elect seven (7) directors of the Corporation;
appoint the auditors and authorize the directors to fix their remuneration as such;
consider and, if thought appropriate, to approve a non-binding advisory resolution to accept the Corporation's approach to executive compensation;
consider and, if deemed advisable, to pass an ordinary resolution ratifying and approving amendments to the Corporation's share option plan to provide for a "rolling" share option plan, as more particularly described under " Matters to be Acted Upon at the Meeting – Amendments to the Share Option Plan " in the information circular – proxy statement accompanying this notice dated March 23, 2022 (the " Information Circular "); and
transact such other business as may properly be brought before the meeting or any adjournment thereof.

The specific details of the matters proposed to be put before the meeting are set forth in the accompanying Information Circular.

The Corporation currently intends to hold the meeting in person. However, in light of the ongoing concerns regarding COVID-19 pandemic, the Corporation asks that, in considering whether to attend the meeting in person, shareholders consider the advice and instructions of the Public Health Agency of Canada (PHAC) (www.canada.ca/en/public-health.html) and Alberta Health Services (www.albertahealthservices.ca). As always, the Corporation encourages shareholders to vote their common shares prior to the meeting following the instructions set out in the form of proxy or voting instruction form received by such shareholders.

The Corporation may take additional precautionary measures in relation to the meeting in response to further developments with the COVID-19 pandemic. In the event it is not possible or advisable to hold the meeting in person, the Corporation will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting entirely by electronic means, telephone or other communication facilities. Please monitor our website at www.peyto.com for updated information.

The Corporation requests that you date and sign the enclosed form of proxy and mail it to or deposit it with Computershare, (i) by mail using the enclosed return envelope or (ii) by hand delivery to Computershare, 8[th] Floor, 100 University Avenue, Toronto, Ontario M5J 2Y1. Alternatively, a shareholder may vote by telephone at 1-866-732-VOTE (8683) (toll free within North America) or 1-312-588-4290 (outside North America), by facsimile to 1-866-249-7775 or 1-416-263-9524 (if outside North America) or by internet using the 15 digit control number located at the bottom of your proxy at www.investorvote.com. All instructions are listed in the enclosed form of proxy. Your proxy or voting instructions must be received no later than 3:00 p.m. (Calgary time) on May 10, 2022 or, if the meeting is adjourned, 48 hours (excluding Saturdays, Sundays and holidays) before the beginning of any adjournment of the meeting.

Only shareholders of record at the close of business on March 23, 2022 will be entitled to vote at the meeting, unless a shareholder has transferred any common shares subsequent to that date and the transferee shareholder, not later than 10

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days before the meeting, establishes ownership of the common shares and demands that the transferee's name be included on the list of shareholders.

DATED at Calgary, Alberta this 23[rd] day of March, 2022.

By order of the Board of Directors of Peyto Exploration & Development Corp.

(signed) " Darren Gee " Chief Executive Officer

PEYTO EXPLORATION & DEVELOPMENT CORP.

Information Circular – Proxy Statement for the Annual and Special Meeting to be held on May 12, 2022

PROXIES

Solicitation of Proxies

This information circular – proxy statement is furnished in connection with the solicitation of proxies for use at the annual and special meeting of the shareholders of Peyto Exploration & Development Corp. (" Peyto " or the " Corporation ") to be held on Thursday, May 12, 2022 at 3:00 p.m. (Calgary time) at the offices of the Corporation, located at 300, 600 – 3[rd] Avenue S.W., Calgary, Alberta T2G 0G5, and at any adjournment thereof. The Corporation requests that a shareholder date and sign the enclosed form of proxy and mail it to or deposit it with Computershare, (i) by mail using the enclosed return envelope or (ii) by hand delivery to Computershare, 8[th] Floor, 100 University Avenue, Toronto, Ontario M5J 2Y1. Alternatively, a shareholder may vote by telephone at 1-866-732-VOTE (8683) (toll free within North America) or 1- 312-588-4290 (outside North America), by facsimile to 1-866-249-7775 or 1-416-263-9524 (if outside North America) or by internet using the 15 digit control number located at the bottom of the shareholder's proxy at www.investorvote.com. All instructions are listed in the enclosed form of proxy. A shareholder's proxy or voting instructions must be received no later than 3:00 p.m. (Calgary time) on May 10, 2022 or, if the meeting is adjourned, 48 hours (excluding Saturdays, Sundays and holidays) before the beginning of any adjournment of the meeting. Only shareholders of record at the close of business on March 23, 2022 will be entitled to vote at the meeting, unless a shareholder has transferred any common shares subsequent to that date and the transferee shareholder, not later than 10 days before the meeting, establishes ownership of the common shares and demands that the transferee's name be included on the list of shareholders.

The instrument appointing a proxy must be in writing and must be executed by you or your attorney authorized in writing or, if you are a corporation, under your corporate seal or by a duly authorized officer or attorney of the corporation.

The persons named in the enclosed form of proxy are officers of the Corporation. As a shareholder, you have the right to appoint a person, who need not be a shareholder, to represent you at the meeting. To exercise this right, you should insert the name of the desired representative in the blank space provided on the form of proxy and strike out the other names of the nominees of management.

Attendance at Meeting Discouraged in light of COVID-19 Pandemic

Following the meeting, the Corporation is planning to provide a brief presentation by management, the particulars of which will be set forth in a press release of the Corporation and outlined on the Corporation's website prior to the meeting.

Advice to Beneficial Holders of Common Shares

The information set forth in this section is of significant importance to you if you do not hold your common shares in your own name. Only proxies deposited by shareholders whose names appear on the Corporation's records as the registered holders of common shares can be recognized and acted upon at the meeting. If common shares are listed in an

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account statement provided by your broker, then in almost all cases those common shares will not be registered in your name on the Corporation's records. Such common shares will likely be registered under the name of your broker or an agent of that broker. In Canada, the vast majority of such common shares are registered under the name of CDS & Co., the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms. Common shares held by your broker or their nominee can only be voted upon your instructions. Without specific instructions, your broker or their nominee is prohibited from voting your common shares.

Applicable regulatory policy requires your broker to seek voting instructions from you in advance of the meeting. Every broker has its own mailing procedures and provides its own return instructions, which you should carefully follow in order to ensure that your common shares are voted at the meeting. Often, the form of proxy supplied by your broker is identical to the form of proxy provided to registered shareholders. However, its purpose is limited to instructing the registered shareholder how to vote on your behalf. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. (" Broadridge "). Broadridge mails a scannable voting instruction form in lieu of the form of proxy. You are asked to complete and return the voting instruction form to them by mail or facsimile. Alternatively, you can call their toll-free telephone number or visit their internet site to vote your common shares. They then tabulate the results of all instructions received and provide appropriate instructions respecting the voting of common shares to be represented at the meeting. If you receive a voting instruction form from Broadridge it cannot be used as a proxy to vote common shares directly at the meeting as the proxy must be returned to Broadridge well in advance of the meeting in order to have the common shares voted.

Notice-And-Access

Peyto has elected to use the "notice-and-access" provisions (the " Notice-and-Access Provisions ") under National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer (" NI 54-101 ") for the meeting in respect of the mailing of the Corporation's meeting materials, annual financial statements and management's discussion and analysis to the beneficial holders of common shares (i.e., a shareholder who holds their shares in the name of a broker or an agent) but not in respect of mailings to registered holders of the common shares (i.e., a shareholder whose name appears on the Corporation's records as a holder of common shares). The Notice-and-Access Provisions are a set of rules developed by the Canadian Securities Administrators that reduce the volume of materials that must be physically mailed to shareholders by allowing a reporting issuer to post its information circular in respect of a meeting of its shareholders and related materials online.

Peyto has also elected to use procedures known as "stratification" in relation to the Corporation's use of the Notice-andAccess Provisions. Stratification occurs when a reporting issuer using the Notice-and-Access Provisions provides a paper copy of an information circular and, if applicable, a paper copy of financial statements and related management's discussion and analysis (" Financial Information "), to some shareholders together with a notice of a meeting of its shareholders. In relation to the meeting, registered holders of the common shares will receive a paper copy of the notice of the meeting, this information circular – proxy statement and a form of proxy and the Corporation's financial statements and related management's discussion and analysis whereas all beneficial holders of common shares will receive a notice containing information prescribed by the Notice-and-Access Provisions and a voting instruction form. Peyto intends to pay for intermediaries to deliver proxy-related materials to objecting beneficial owners of common shares. Furthermore, a paper copy of the Financial Information in respect of the Corporation's most recently completed financial year was mailed to those registered and beneficial holders of common shares who previously requested to receive such information.

Revocability of Proxy

You may revoke your proxy at any time prior to a vote. If you or the person you give your proxy to attends personally at the meeting you or such person may revoke the proxy and vote in person. In addition to revocation in any other manner permitted by law, a proxy may be revoked by an instrument in writing executed by you or your attorney authorized in writing or, if you are a corporation, under your corporate seal or by a duly authorized officer or attorney of the corporation. To be effective the instrument in writing must be deposited either at the Corporation's head office at any time up to and

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including the last business day before the day of the meeting, or any adjournment thereof, at which the proxy is to be used, or with the chairman of the meeting on the day of the meeting, or any adjournment thereof.

Persons Making the Solicitation

This solicitation is made on behalf of the management of the Corporation. Pursuant to NI 54-101, arrangements have been made with clearing agencies, brokerage houses and other financial intermediaries to forward proxy-related materials to the beneficial owners of the common shares. The Corporation will bear the costs incurred in the preparation and mailing of the form of proxy, notice of annual and special meeting and this information circular – proxy statement. In addition to mailing forms of proxy, proxies may be solicited by personal interviews, or by other means of communication, by the Corporation's directors, officers and employees who will not be remunerated therefor.

Exercise of Discretion by Proxy

The common shares represented by the form of proxy in favour of management nominees will be voted on any poll at the meeting. Where you specify a choice with respect to any matter to be acted upon, the common shares will be voted on any poll in accordance with the specification so made. If no direction is given, your common shares will be voted in favour of the matters to be acted upon as set out herein. The persons appointed under the form of proxy which we have furnished are conferred with discretionary authority with respect to amendments or variations of those matters specified in the form of proxy and notice of annual and special meeting and with respect to any other matters which may properly be brought before the meeting or any adjournment thereof. At the time of printing this information circular – proxy statement, we know of no such amendment, variation or other matter.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The Corporation is authorized to issue an unlimited number of common shares. As at March 15, 2022, there were 169,003,120 common shares issued and outstanding. As a holder of common shares, you are entitled to one vote for each common share you own.

To the knowledge of the Corporation's directors and officers, as at March 15, 2022, no person or company beneficially owned or controlled or directed, directly or indirectly, more than 10% of the common shares which may be cast at the meeting.

As at March 15, 2022, the Corporation's directors and officers, as a group, beneficially owned or controlled or directed, directly or indirectly, approximately 5.3 million common shares or approximately 3% of the issued and outstanding common shares.

QUORUM FOR MEETING

A quorum for the meeting is two or more persons either present in person or represented by proxy and representing in the aggregate not less than 25% of the Corporation's outstanding common shares. If a quorum is not present at the meeting within one-half hour after the time fixed for the holding of the meeting, the meeting will be adjourned to such day being not less than 21 days later and to such place and time as may be determined by the chairman of the meeting. At such meeting, the shareholders present either personally or by proxy shall form a quorum.

APPROVAL REQUIREMENT

All of the matters to be considered at the meeting are ordinary resolutions requiring approval by more than 50% of the votes cast in respect of the resolution by or on behalf of shareholders present in person or represented by proxy at the meeting. The vote on our approach to executive compensation is advisory and the results will not be binding on the board of directors (the " Board ") of the Corporation.

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MATTERS TO BE ACTED UPON AT THE MEETING

Election of Directors

At the meeting, the shareholders will be asked to fix the number of directors of the Corporation to be elected at the meeting at seven (7) and to elect seven (7) directors.

Management is soliciting proxies, in the accompanying form of proxy, for an ordinary resolution in favour of fixing the Board at seven (7) members, and in favour of the election as directors, until the next annual meeting of shareholders of the Corporation, of the seven (7) nominees set forth below:

Donald Gray Michael MacBean Brian Davis Darren Gee Gregory Fletcher Kathy Turgeon John W. Rossall

In the event that a vacancy among such nominees occurs because of death or for any reason prior to the meeting, the proxy shall not be voted with respect to such vacancy. At the 2021 annual meeting of shareholders of the Corporation, the resolution fixing the number of directors to be elected at the meeting was passed with 69,675,532 common shares voted in favour (96.18% of the common shares voted at the meeting).

The form of proxy provided by management of the Corporation accompanying this information circular – proxy statement provides for individual voting on directors rather than slate voting.

As described below under " Majority Voting for Directors ", the election of each individual director of the Corporation will be effected by an ordinary resolution requiring the approval of more than 50% of the votes cast in respect of the resolution by or on behalf of shareholders present in person or represented by proxy at the meeting. It is the intention of the persons named in the enclosed form of proxy, if named as proxy and not expressly directed to the contrary in the form of proxy, to vote those proxies FOR the election of each of the persons specified above.

Directors' Biographies

The following information relating to the director nominees is based partly on the Corporation's records and partly on information received by the Corporation from the nominees and sets forth the names, ages and cities of residence of the proposed nominees, their committee memberships, the date on which each became a director of the Corporation (as applicable), the present occupations and brief biographies of such persons and the number of common shares owned, controlled or directed by each as at March 23, 2022.

Nominee for Election as

Director Donald Gray Scottsdale, Arizona Chairman of the Board Independent	Age Director Since(1) Common Shares Owned, Controlled or Directed(2) 56 October 1998 948,136 Mr. Gray is currently a private investor. Mr. Gray was the former President and Chief Executive Officer of Peyto from 1998 until his retirement in 2006. From May 2007 to September 2017, Mr. Gray was primarily engaged as President of EIQ Capital Corp., a private capital management company. Since September 2017, Mr. Gray has been a private investor. Mr. Gray has also been the Chairman of Gear Energy Ltd., an oil and gas company listed on the Toronto Stock Exchange (the "TSX"), since January 2010 and the Chairman of Petrus Resources Ltd., an oil and gas company listed on the TSX, since December 2010. Mr. Gray holds a BSc in petroleum engineering from Texas A&M University and has over 30 years experience in the Canadian oil and gas business in various capacities.	Common Shares Owned, Controlled or Directed(2)

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Board and Committee Membership	Board and Committee Membership	Membership	Membership	MeetingAttendance
		Board Total		(5/8) 62.5% (5/8) 62.5%
Current Board Directorships		Public Boards
		Gear Energy Ltd. Petrus Resources Ltd.
Voting Results of 2021 AGM Votes For Votes Withheld		Number of Votes		% of Votes
		69,066,801 3,337,046		95.4% 4.6%
Nominee for Election as Director Michael MacBean	Age	Director Since(1) June 2003	Common Shares Owned, Controlled or Directed(2)
	54		108,510

Michael MacBean 54 June 2003 108,510 Calgary, Alberta Lead Director of the Board Mr. MacBean is the Senior Managing Director of TriWest Capital Partners, a private equity firm Independent since April 2010.

Mr. MacBean is the Chairman of the Audit Committee of Peyto and the independent Lead Director of the Board. Mr. MacBean is primarily engaged as the Senior Managing Director of TriWest Capital Partners, a private equity firm. From October 1998 to April 2010, Mr. MacBean was the Chief Executive Officer of Diamond Energy Services LP, a partnership engaged in the energy services sector. From 1995 through 1998, Mr. MacBean served as Controller and subsequently Senior Investment Analyst for ARC Financial Corporation. During this time Mr. MacBean also served as Vice-President, Finance for ARC Energy Trust. Mr. MacBean holds a Bachelor of Commerce Degree from the University of Saskatchewan, holds his CPA, CA designation and is a member of the Chartered Professional Accountants of Alberta. In February 2007, Mr. MacBean received his Chartered Directors (C.Dir) designation from McMaster University.

Board and Committee Membership	Board and Committee Membership	Membership	Membership	Membership	MeetingAttendance
		Board Audit Committee (Chair) Reserves, Health, Safety and Environment Committee Compensation and Nominating Committee Environmental, Social and Governance Committee Total			(8/8) 100% (4/4) 100% (3/3) 100% (1/1) 100% (1/1) 100% (16/16) 100%
Current Board Directorships			Public Boards
			TerraVest Industries Inc.
Voting Results of 2021 AGM Votes For Votes Withheld			Number of Votes		% of Votes
			67,215,860 5,227,987		92.8% 7.2%
Nominee for Election as Director Brian Davis Houston, Texas	Age		Director Since(1) August 2006	Common Shares Owned, Controlled or Directed(2)
	56			167,240

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Director Independent

Mr. Davis is the Managing Partner of Oil and Gas Evaluations and Consulting, an independent oil and gas engineering consultancy firm based in Houston, Texas, since July 1994.

Mr. Davis is the Chairman of the Reserves, Health, Safety and Environment Committee of Peyto. Mr. Davis has been primarily engaged as the Managing Partner of Oil and Gas Evaluations and Consulting, an independent oil and gas engineering consultancy firm based in Houston, Texas, since July 1994. Through his experience at Oil and Gas Evaluations and Consulting, Mr. Davis has acquired significant experience and exposure to accounting and financial issues. Mr. Davis holds a BSc in petroleum engineering from Texas A&M University.

Board and Committee Membership	Board and Committee Membership	Membership	Membership	MeetingAttendance
		Board Audit Committee Reserves, Health Safety and Environment Committee (Chair)(4) Compensation and Nominating Committee Environmental, Social and Governance Committee(5) Total		(8/8) 100% (4/4) 100% (3/3) 100% (1/1) 100% (1/1) 100% (16/16) 100%
Current Board Directorships		Public Boards
		N/A
Voting Results of 2021 AGM Votes For Votes Withheld		Number of Votes		% of Votes
		67,251,905 5,191,942		92.8% 7.2%
Nominee for Election as Director Darren Gee Calgary, Alberta Director Non-Independent	Age		Common Shares Owned, Controlled or Directed(2)

Mr. Gee was previously the Vice-President, Engineering of Peyto, joining the organization in 2001. Mr. Gee has over 30 years experience in the Canadian oil and gas business. Mr. Gee has a BSc in mechanical engineering from the University of Alberta and is a member of APEGA.

Board and Committee Membership	Membership	MeetingAttendance(3)
	Board Total	(7/7) 100% (7/7) 100%
Current Board Directorships	Public Boards
	N/A
Voting Results of 2021 AGM Votes For Votes Withheld	Number of Votes	% of Votes
	63,582,275 8,861,572	87.8% 12.2%

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Nominee for Election as Director Gregory Fletcher	Age 73	Director Since(1) January 2007	Common Shares Owned, Controlled or Directed(2)
			19,000

Gregory Fletcher 73 January 2007 19,000 Calgary, Alberta Director Mr. Fletcher is the President of Sierra Energy Inc., a private oil and gas production company, since Independent 1997.

Mr. Fletcher is the Chairman of the Compensation and Nominating Committee of Peyto. Mr. Fletcher is primarily engaged as the President of Sierra Energy Inc., a private oil and gas production company that he founded in 1997. Mr. Fletcher is also a director of Calfrac Well Services Ltd., an oilfield services company listed on the TSX, and Whitecap Resources Inc., an oil and gas company listed on the TSX. Mr. Fletcher holds a BSc in geology from the University of Calgary. In January 2009, Mr. Fletcher graduated from the Directors' Education Program sponsored by the Institute of Corporate Directors and Haskayne School of Business at the University of Calgary.

Board and Committee Membership	Board and Committee Membership	Membership	Membership	Membership	MeetingAttendance
		Board Audit Committee Reserves, Health, Safety and Environment Committee Compensation and Nominating Committee (Chair) Environmental, Social and Governance Committee Total			(8/8) 100% (4/4) 100% (3/3) 100% (1/1) 100% (1/1) 100% (16/16) 100%
Current Board Directorships			Public Boards
			Calfrac Well Services Ltd. WhitecapResources Inc.
Voting Results of 2021 AGM Votes For Votes Withheld			Number of Votes		% of Votes
			66,174,081 6,269,766		91.3% 8.7%
Nominee for Election as Director Kathy Turgeon Calgary, Alberta Director Non-Independent	Age			Common Shares Owned, Controlled or Directed(2)

Ms. Turgeon was previously the Controller of Peyto from April 2004 to January 2006. Ms. Turgeon has a Bachelor of Commerce Degree from the University of Calgary, holds her CPACA designation and is a member of the Chartered Professional Accountants of Alberta.

Board and Committee Membership	Membership	MeetingAttendance(3)
	Board Total	(6/6) 100% (6/6) 100%
Current Board Directorships	Public Boards
	N/A
Voting Results of 2021 AGM Votes For Votes Withheld	Number of Votes	% of Votes
	63,985,700 8,458,147	88.3% 11.7%

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Nominee for Election as Director

Director Age Director Since[(1)] Common Shares Owned, Controlled or Directed[(2)] John W. Rossall 61 May 2019 107,000 Calgary, Alberta Director Mr. Rossall is currently a corporate director and is a board member of Pipestone Energy Corp., a Independent junior oil and gas company listed on the TSX, and is also a board member of the United Way of Calgary and Area.

Mr. Rossall was previously the Executive Director, North America of Repsol SA (formerly Talisman Energy Inc., an oil and gas company listed on the TSX), from May 2015 to July 2018, Senior Vice President, Canada from September 2012 to May 2015 and a strategic consulting advisor from November 2011 to September 2012. Prior thereto, Mr. Rossall was the President and Chief Executive Officer of ProspEx Resources Ltd., an oil and gas company listed on the TSX, and a member of its board of directors from August 2004 to May 2011. From December 2001 to July 2004, Mr. Rossall was Vice President, North Business Unit of Burlington Resources Canada Ltd. (formerly Canadian Hunter Exploration Ltd.), an oil and gas company listed on the TSX, and prior thereto, Manager, Deep Basin Business Team from November 2000 to December 2001. Mr. Rossall has also served on the board of directors of the Canadian Association of Petroleum Producers from January 2013 to April 2017.

Mr. Rossall earned a Bachelor of Applied Science (Chemical Engineering) degree from the University of Waterloo and also attended the Harvard Business School (Management Development). Mr. Rossall is a professional engineer and a member of APEGA.

Board and Committee Membership	Membership	MeetingAttendance
	Board Compensation and Nominating Committee Reserves, Health, Safety and Environment Committee Environmental, Social and Governance Committee (Chair) Total	(8/8) 100% (1/1) 100% (3/3) 100% (1/1) 100% (12/12) 100%
Current Board Directorships	Public Boards
	Pipestone EnergyCorp.
Voting Results of 2021 AGM Votes For Votes Withheld	Number of Votes	% of Votes
	67,849,125 4,594,722	93.7% 6.3%

Notes:

(1) The period of time served as a director or officer of the Corporation includes, where applicable, the period of time served as a director of the Corporation's predecessors, Peyto Exploration & Development Corp., a corporation amalgamated on January 1, 2011, Peyto Energy Administration Corp., former administrator of Peyto Energy Trust, and Peyto Exploration & Development Corp., a corporation amalgamated under the Business Corporations Act (Alberta) (the " ABCA "), prior thereto.
(2) The information as to common shares beneficially owned, directly or indirectly, is based upon information furnished to Peyto by the nominees. All of the directors meet or exceed the Corporation's minimum share ownership requirement for directors. See " Statement of Executive Compensation – Director and Officer Equity Ownership ".
(3) Mr. Gee and Ms. Turgeon each attended all Audit Committee, Reserves Committee and Compensation and Nominating Committee meetings during 2021. During the year, certain meetings of directors were held without management, and the above noted meeting attendance figures above for Mr. Gee and Ms. Turgeon do not include any meeting of directors to which they were not eligible to attend.

Experience and Background of Directors

The Board and the Compensation and Nominating Committee review the experience, qualifications and skills of the Corporation's directors to ensure that the composition of the Board and committees and the competencies and skills of the

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members are in line with those that the Compensation and Nominating Committee considers that the Board and its respective committees should possess.

The Board identifies and evaluates the competencies and skills of the members based on the individual experience and background of each director. This exercise is performed both on an ad-hoc basis and at least annually based on selfassessment by each director whereby each director is asked to rate their experience and background in a variety of key subject areas. This data is compiled into a matrix representing the broad Board skills for current directors. This matrix is maintained to identify areas for strengthening the Board, if any, and address them through the recruitment of new members. See " Corporate Governance Practices – Item 9 – Assessments ".

The following table outlines the experience and background of, but not necessarily the technical expertise of, the individual members of the Board as of December 31, 2021 based on information provided by such individuals.

		Gray	MacBean	Davis	Gee	Fletcher	Turgeon	Rossall	Total
Enterprise Management	Experience as a President or CEO leading an organization or major business line								6
Business Development	Management or executive experience with responsibility for identifying value creation opportunities								7
Financial Literacy	Ability to critically read and analyze financial statements								7
Corporate Governance	Understanding the requirements of good corporate governance usually gained through experience as a senior executive officer or a Board member of a public organization								7
Change Management	Experience leading a major organizational change or managinga significant merger								6
Operations	Management or executive experience with oil and gas operations								5
Financial Experience	Senior executive experience in financial accountingand reportingand corporate finance								6
Human Resources	Management or executive experience with responsibilityfor human resources								7
Reserves Evaluation	General experience with or executive responsibilityfor oil andgas reserves evaluation								7
Risk Evaluation	Management or executive experience in evaluating and managing the variety of risks faced by an organization								7
HS&E Management	Understanding of the regulatory environment surrounding workplace health, safety, environment and social responsibility for the oil and gas industry								7
Legal and Regulatory	Experience in legal and regulatory matters								4
Diversity	Contributes to the Board in a way that enhances perspectives through diversity in gender, ethnic background, geographic origin, experience (industry and public, private and non-profit sectors),etc.								7

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Advance Notice Provisions

The Corporation has adopted by-laws (the " By-laws ") which contain advance notice provisions regarding advance notice of nominations of directors of the Corporation (the " Advance Notice Provisions "). The Advance Notice Provisions provide that advance notice to the Corporation must be made in circumstances where nominations of persons for election to the Board are made by shareholders other than pursuant to: (a) a "proposal" made in accordance with the ABCA; or (b) a requisition of a meeting made pursuant to the ABCA.

The Advance Notice Provisions fix a deadline by which shareholders must submit director nominations to the Chief Financial Officer of the Corporation prior to any annual or special meeting of shareholders and outlines the specific information that a nominating shareholder must include in the written notice to the Chief Financial Officer of the Corporation for an effective nomination to occur. No person nominated by a shareholder will be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of the Advance Notice Provisions.

In the case of an annual meeting of shareholders, notice to the Chief Financial Officer of the Corporation must be made not less than 30 days prior to the date of the annual meeting; provided, however, that in the event that the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the 10[th] day following such public announcement. In the case of a special meeting of shareholders (which is not also an annual meeting), notice to the Corporation must be made not later than the close of business on the 15[th] day following the day on which the first public announcement of the date of the special meeting was made.

If Notice-and-Access Provisions are used for delivery of proxy related materials in respect of a meeting described above and the notice date in respect of the meeting is not less than 50 days before the date of the applicable meeting, the notice must be received not later than the close of business on the 40[th] day before the date of the applicable meeting.

In the event of an adjournment or postponement of an annual meeting or special meeting of shareholders or any announcement thereof, a new time period shall commence for the giving of timely notice.

The Board may, in its sole discretion, waive any requirement of the Advance Notice Provisions of the By-laws.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Other than as disclosed below, no proposed director is, as at the date hereof, or has been, within the 10 years before the date hereof, a director, chief executive officer or chief financial officer of any company that: (i) while such person was acting in that capacity, was the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation for a period of more than 30 consecutive days; (ii) was subject to an event that resulted, after the director, chief executive officer or chief financial officer ceased to be a director, chief executive officer or chief financial officer, in the company being the subject of a cease trade or similar order or an order that denied the relevant company any exemption under securities legislation, for a period of more than 30 consecutive days; or (iii) while such person was acting in that capacity, or within a year of such person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

Mr. Darren Gee, a director and Chief Executive Officer of Peyto, was a director of Endurance Energy Ltd. (" Endurance "), a private corporation engaged in the exploration and production of natural gas. Mr. Gee resigned as a director of Endurance on September 1, 2015. Nine months after Mr. Gee's resignation, Endurance filed for creditor protection under the Companies Creditors' Arrangement Act on May 30, 2016.

No proposed director (or any personal holding company of such person), has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in making an investment decision.

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Personal Bankruptcies

No proposed director (or any personal holding company of such person), has, within the 10 years preceding the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.

Majority Voting for Directors

The Board has adopted a policy stipulating that if the number of common shares voted in favour of the election of a particular director nominee at a shareholders' meeting is less than the number of common shares voted and withheld from voting for that nominee, the nominee will submit his resignation to the Board within five days of the meeting, with the resignation to take effect upon acceptance by the Board. The Compensation and Nominating Committee will consider the director nominee's offer to resign and will make a recommendation to the Board as to whether or not to accept the resignation. The Compensation and Nominating Committee will be expected to accept the resignation except in special circumstances requiring the applicable director to continue to serve on the Board. In considering whether or not to accept the resignation, the Compensation and Nominating Committee will consider all factors that it deems relevant including, without limitation, the stated reasons why shareholders "withheld" votes from the election of that nominee, the existing Board composition, the length of service and the qualifications of the director whose resignation has been tendered, the director's contributions to the Corporation and attendance at previous meetings, the Corporation's compensation and nominating policies and such other skills and qualities as the Compensation and Nominating Committee deems to be relevant.

The Board will consider the Compensation and Nominating Committee's recommendation and make a decision as to whether to accept the director's offer to resign within 90 days of the date of the meeting, which it will announce by way of a press release, including, if the Board elects, the reasons for rejecting the resignation offer. In considering whether to accept the director's offer of resignation, the Board will consider the factors considered by the Compensation and Nominating Committee and such additional factors it considers to be relevant. No director who is required to tender his resignation shall participate in the deliberations or recommendations of the Compensation and Nominating Committee or the Board. The Board shall accept the resignation absent any exceptional circumstances.

If a director's offer of resignation is accepted, subject to any corporate law restrictions, the Board may leave the resultant vacancy unfilled until the next annual general meeting. Alternatively, at the Board's discretion, it may fill the vacancy through the appointment of a new director whom the Board considers appropriate or it may call a special meeting of shareholders at which there will be presented nominees supported by the Board to fill the vacant position or positions. The foregoing policy does not apply in circumstances involving contested director elections.

Risk Oversight by the Board

The Board must have a good understanding of the principal risks the Corporation faces in its business in order to provide proper oversight and guidance to management. Management must be diligent about identifying all of the Corporation's principal risks, establishing appropriate risk management practices and implementing an appropriate system to manage risks effectively to support our long-term viability.

The Board reviews and assesses the following as part of its risk oversight duties:

the material risks that affect the Corporation's strategic plan;
how Peyto's compensation structure affects risk-taking behaviour;
the Corporation's risk appetite and tolerance; and
talent management and succession planning.

The Board also oversees management's system of controls either directly or through its committees:

the integrity of the Corporation's internal controls over financial reporting, disclosure controls and management information systems;
compliance with significant policies and procedures for the Corporation's operations;

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compliance with the laws and regulations that apply to Peyto;
the health of the Corporation's corporate documents and records in terms of them being properly prepared, approved and maintained; and
the structure and integrity of Peyto's health, safety and environmental programs to achieve expectations.

Appointment of Auditors

Management is soliciting proxies, in the accompanying form of proxy, in favour of the appointment of the firm of Deloitte LLP, Chartered Professional Accountants, as the Corporation's auditors, to hold office until the next annual meeting of the shareholders and to authorize the directors to fix their remuneration as such. Deloitte LLP was first appointed auditors of the Corporation's predecessor, Peyto Energy Trust, on June 3, 2004. At the 2021 annual meeting of shareholders of the Corporation, this resolution was passed with 74,747,536 common shares voted in favour (96.94% of the common shares voted at the meeting).

It is the intention of the persons named in the enclosed form of proxy, if named as proxy and not expressly directed to the contrary in the form of proxy, to vote those proxies FOR the appointment of auditors.

Advisory Vote on Executive Compensation

The underlying principle for executive compensation at the Corporation is "pay-for-performance". Management of the Corporation believes that this philosophy achieves the goal of attracting and retaining excellent employees and executive officers, while rewarding the demonstrated behaviors that reinforce our values and help us to deliver on our corporate objectives. For a detailed discussion of our executive compensation program, see " Statement of Executive Compensation ".

After monitoring developments and emerging trends in the practice of holding advisory votes on executive compensation (commonly referred to as "Say-on-Pay"), the Board, as a part of our commitment to corporate governance, has determined to provide shareholders with a "Say-on-Pay" advisory vote at the meeting. The Board believes that it is essential for the shareholders to be well informed of the Corporation's approach to executive compensation and considers this advisory vote to be an integral component of the ongoing process of engagement between the shareholders and the Board.

At the meeting, shareholders will have an opportunity to vote on our approach to executive compensation through consideration of the following advisory resolution:

"BE IT RESOLVED, on an advisory basis and not to diminish the role and responsibilities of the board of directors of Peyto Exploration & Development Corp. (" Peyto "), that the shareholders accept Peyto's approach to executive compensation as more particularly disclosed in the information circular – proxy statement of Peyto dated March 23, 2022."

As this is an advisory vote, the results will not be binding upon the Board. However, the Compensation and Nominating Committee and the Board will consider the outcome of the vote as part of its ongoing review of the Corporation's approach to executive compensation. We will disclose the results of the shareholder advisory vote as part of our report of voting results to be filed on SEDAR following the meeting.

In the event that the advisory resolution is not approved by a majority of the votes cast at the meeting, the Board will take measures to understand the concerns of shareholders and will review the Corporation's approach to compensation going forward within the context of those concerns.

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Amendments to the Share Option Plan

Background

On May 9, 2019, shareholders approved the adoption of a fixed number share option plan for the Corporation (the " Option Plan ") under which 16,487,418 common shares have been authorized for issuance (including common shares issuable under the Corporation's other security based compensation plans). The Option Plan authorizes the Board to grant options to acquire common shares to officers, employees of and consultants to, the Corporation and its subsidiaries or persons providing services on an ongoing basis thereto in the growth and development of the Corporation and its subsidiaries by providing them with the opportunity through options to acquire an increased proprietary interest in the Corporation. Nonemployee directors are not entitled to participate under the Option Plan.

Given the Option Plan is a "fixed plan", the maximum number of common shares that may be issued under all security based compensation arrangements of the Corporation, including the Option Plan, the 2019 Market Based Bonus Plan and the DSU Plan, is 16,487,418 common shares, which represented 10% of the number of issued and outstanding common shares on the date the Option Plan was adopted by the Board. Currently, there are 9,898,857 options to acquire common shares outstanding and 188,615 DSUs outstanding. As the Option Plan is a "fixed plan", the exercise of any options granted under the Option Plan, or other security based compensation plans, will not create unallocated grants available for re-issuance under the Option Plan. As such, based on the aggregate number of options, Rights and DSUs that are outstanding and have been previously exercised or settled, the maximum number of options that may be issued in the future is limited to 2,271,000 options.

After a comprehensive review by the Board of a forecast of future equity incentive requirements of the Corporation, taking into account, among other things, the Corporation's strategic operational plan and execution thereof, it was determined that the Option Plan of the Corporation should be amended so as to convert it from a "fixed plan" to a "rolling plan", whereby the maximum number of common shares which may be reserved and set aside for issuance under such plan, and all other security based compensation plans, would be changed from the fixed maximum of 16,487,418 common shares to a maximum aggregate number of common shares equal to 10% of common shares issued and outstanding from time to time, on a non-diluted basis. The Board believes that the Corporation will require the additional flexibility provided by a "rolling plan" in the future to grant options to eligible participants for retention and recruitment purposes, as options are a critical element on the Corporation's compensation philosophies and practices, and provide meaningful alignment between the holders thereof and the Corporation's other shareholders, especially as compared to other alternative compensation arrangements that may be used in the absence of being able to grant sufficient options, such as cash-based incentive plans. Accordingly, on March 23, 2022, the Board approved, subject to shareholder approval, certain amendments to the Option Plan. The Option Plan, as amended, will provide that any increase in the outstanding common shares (whether as a result of the exercise of options or otherwise) will result in an increase in the number of common shares that may be issued on exercise of options outstanding at any time and any decrease in the number of options granted, due to the exercise of options, will make new grants available under the Option Plan.

The full text of the Option Plan, as amended, is set forth in Schedule "A" hereto. The amendments to the Option Plan include (i) changing the maximum number of common shares available for issuance under the Option Plan and any other previously established or proposed securities based compensation arrangement of the Corporation from a "fixed" number (16,487,418 common shares) to an amount equal to 10% of the issued and outstanding common shares from time to time; (ii) clarifying that any increase in the outstanding common shares (whether as a result of the exercise of options or otherwise) will result in an increase in the number of common shares that may be issued on exercise of options outstanding at any time and any decrease in the number of options granted, due to the exercise of options, will make new grants available under the Option Plan; and (iii) providing a new defined term of "Outstanding Common Shares" that provides the manner of determining the number of common shares outstanding from time to time for the purposes of determining the maximum number of common shares that may be issued pursuant to the exercise of options. Other than in respect of the foregoing, no other term, condition or provision of the Option Plan have been amended or modified. See " Statement of Executive Compensation – Option Plan - Description of the Option Plan " for a description of the Option Plan, prior to the foregoing amendments. See also Schedule "A" hereto, for the full text of the Option Plan, as amended.

In the event the Stock Option Plan Resolution (as defined below) is approved at the Meeting, the maximum number of common shares that may be reserved and set aside for issuance under the Option Plan, and all other security based compensation plans, will increase from a maximum of 16,487,418 common shares to a maximum of 16,900,312 common shares (being equal to 10% of common shares currently issued and outstanding), and based on the number of options and

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DSUs currently outstanding, and the other changes to the Option Plan as described above, would leave 6,812,840 options (or other security based compensation entitlement) available for future issuance.

At the meeting, shareholders will be asked to consider and, if deemed advisable, to pass the following ordinary resolution (the " Stock Option Plan Resolution "):

"BE IT RESOLVED as an ordinary resolution of the shareholders of Peyto Exploration & Development Corp. (" Peyto ") that:

the amendments to Peyto's share option plan, substantially as described under the heading " Matters to be Acted Upon at the Meeting – Amendments to the Share Option Plan " in the information circular – proxy statement of Peyto dated March 23, 2022 is hereby ratified, approved and confirmed;
the Board of Directors of Peyto or a duly authorized committee thereof, as referred to in the share option plan, are hereby authorized to issue options to acquire common shares of Peyto pursuant to the share option plan to those eligible to receive such options thereunder until May 12, 2025, which is the date that is three years from the date of the meeting of shareholder at which approval is being sought;
the issuance of all unallocated options under the share option plan is hereby authorized and approved;
notwithstanding that this resolution has been passed by the holders of common shares of Peyto, the Board of Directors of Peyto is hereby authorized and empowered to revoke these resolutions, without any further approval of the shareholders of Peyto, at any time if such revocation is considered necessary or desirable by the Board of Directors of Peyto; and
any director or officer of Peyto is hereby authorized and directed, for and on behalf of Peyto, to execute (whether under the corporate seal of Peyto or otherwise) and deliver, or cause to be executed and delivered, and to sign and/or file, or cause to be signed and/or filed, as the case may be, all applications, declarations, instruments and other documents, and to do or cause to be done all such other acts and things, as such director or officer may determine necessary or advisable to give effect to the foregoing resolutions including, without limitation, the execution, signing or filing of any such document or the doing of any such act or thing being conclusive evidence of such determination."

Pursuant to the requirements of the TSX, the Stock Option Plan Resolution must be approved by a simple majority of the votes cast by the shareholders present in person or represented by proxy at the meeting. The rules of the TSX require that, if a listed issuer has security based compensation plans that do not have a fixed maximum number of shares issuable thereunder, the directors and shareholders of the issuer approve and reaffirm the unallocated options, rights or entitlements under such plans every three years. Accordingly, if the Stock Option Plan Resolution is approved, the Corporation will be required to obtain shareholder approval of all unallocated options under the Stock Option Plan every three years. If the Stock Option Plan Resolution is not approved at the Meeting, the amendments will not become effective and the maximum number of common shares available for issuance under the Option Plan, and all other security based compensation plans, will remain at 16,487,418 common shares. In such case, the Corporation may consider alternative compensation plans or programs in the event it does not have sufficient room under the Option Plan, including cash-based programs, to ensure it has the appropriate and necessary compensation programs necessary to attract and retain qualified personnel.

It is the intention of the persons named in the enclosed form of proxy, if named as proxy and not expressly directed to the contrary in the form of proxy, to vote those proxies FOR the Stock Option Plan Resolution.

STATEMENT OF EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Role of Compensation and Nominating Committee

The Compensation and Nominating Committee is comprised of Messrs. Fletcher, MacBean, Rossall and Davis. These directors are considered independent from Peyto for the purposes of National Instrument 58-201 – Corporate Governance Guidelines . See " Matters to be Acted Upon at the Meeting – Election of Directors – Directors' Biographies " for the

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relevant education and experience of each member of the Compensation and Nominating Committee that enables each member to make decisions on the suitability of Peyto's compensation policies and practices.

The purpose of the Compensation and Nominating Committee is to assist the Board in fulfilling its responsibilities relating to compensation matters, particularly those relating to compensation of the Corporation's executive officers as well as matters dealing with the nomination of Board members and the overall functioning of the Board. The role of the Compensation and Nominating Committee includes human resources matters in the sense of the establishment and maintenance of an overall compensation plan to attract, reward and keep talented people and in the sense of ensuring that the Board is comprised of appropriate individuals to serve the Corporation's needs. In addition, the Compensation and Nominating Committee attempts to design the Corporation's compensation in a manner that will foster longer-term value creation. In carrying out its mandate in respect of compensation matters, the Compensation and Nominating Committee is expected to:

A. Advise the Board on executive compensation matters.
B. Review and recommend a compensation philosophy, guidelines and plans for the Corporation's executives and employees.
C. Review and approve corporate goals and objectives relevant to Chief Executive Officer (" CEO ") compensation.
D. Evaluate the CEO's performance in light of those goals, and make recommendations to the Board with regard to the CEO's compensation based on this evaluation.
E. In consultation with the CEO, review and approve non-CEO compensation, incentive-compensation plans and equity-based plans.
F. Review and approve all discretionary compensation granted.
G. Review and approve fees to be paid to members of the Board.
H. Review executive compensation disclosure before it is publicly disclosed.

The Compensation and Nominating Committee meets from time to time each year for the purpose of, among other things, reviewing the overall compensation policy of Peyto. The Compensation and Nominating Committee makes recommendations to the Board on salaries of executive officers, bonus allocations and directors' compensation. The Board reviews all recommendations of the Compensation and Nominating Committee relating to compensation matters before final approval.

In carrying out its mandate, the risks associated with the Corporation's compensation policies and practices were discussed both by the Compensation and Nominating Committee and the Board, including the risk of executive officers taking inappropriate or excessive risks and the risk of inappropriate focus on short-term goals at the expense of long-term return to shareholders. While no program can fully mitigate these risks, the Compensation and Nominating Committee does not believe the Corporation's compensation programs encourage its executive officers to take inappropriate or excessive risks. This assessment is based on a number of considerations including, without limitation: (i) the Corporation's compensation policies and practices are uniform throughout the organization and there are no significant differences in compensation structure among the executive officers; (ii) the overall compensation program is both market and performance based and aligned with the Corporation's business plan and long-term strategies. The compensation package for executive officers consists of fixed (base salary, which is payable in cash) and variable elements (options under the fixed number share option plan for the Corporation (the " Option Plan ") which are exercised for common shares and reserves/value based bonus (the " Value Component "), which is payable in cash), which are designed to balance long-term goals and the shortterm interests of the Corporation and are aimed at creating sustainable value for shareholders. The performance elements are linked to achievement of the Corporation's business goals and are reviewed annually by the Compensation and Nominating Committee; (iii) in exercising its discretion under the Option Plan and Value Component, the Compensation and Nominating Committee reviews individual and corporate performance taking into account the long-term interests of the Corporation; (iv) the compensation expense to executive officers is not a significant percentage of the Corporation's revenue; and (v) results of annual performance assessments of executive officers goals, objectives and performance are

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reviewed and considered in awarding compensation and such discretionary judgement is applied in awarding options under the Option Plan, discretionary bonuses under the Value Component and future compensation.

In adopting the Option Plan in 2019, the Board considered the compensation arrangements of its peer group relative to the Corporation's compensation practices. The Board made the decision to adopt the Option Plan, as opposed to continuing to utilize a cash based market based bonus (referred to herein as the " Market Component "), to bring Peyto more in line with its peer group, to ensure that the Corporation's compensation practices are aligned with the Corporation's current asset base, head count and operations, to eliminate the complexity of the Market Component, to shift towards long term securities based incentive awards and to focus the organization on shareholder return and per share performance metrics.

Prior to the adoption of the Option Plan, the Board had approved the grant of rights (" Rights ") on January 1, 2019 pursuant to the Market Component. At the same time that the Option Plan was adopted and as part of the transition to long term securities based incentive awards in the form of options, the Board adopted the a market based bonus plan (the " 2019 Market Based Bonus Plan ") which provides for the issuance of common shares on settlement of the Rights granted on January 1, 2019, which was subsequently approved by the TSX and shareholders. The 2019 Market Based Bonus Plan was in effect only for the one-time grant of Rights, which were granted on January 1, 2019. No further Rights will be granted under the 2019 Market Based Bonus Plan. The 2,475,000 Rights granted effective January 1, 2019 pursuant to the 2019 Market Based Bonus Plan are substantially the same as the Rights previously granted by the Corporation pursuant to the Market Component except that the Board has the discretion to settle the Rights under the 2019 Market Based Bonus Plan in common shares (either acquired by the Corporation on the TSX or by issuance from treasury) or in cash.

In addition, in adopting the directors' deferred share unit plan (the " DSU Plan "), the Board considered the director compensation arrangements of its peer group relative to the Corporation's director compensation practices. The Board made the decision to adopt the DSU Plan, as opposed to continuing to utilize the cash based Multiplier (as described and defined under " Statement of Executive Compensation – Directors' Compensation – DSU Plan " below) with respect to the payment of the variable portion of 50% of each non-executive director's annual retainer, to preserve cash, bring Peyto's director compensation structure more in line with its peer group, to ensure that the Corporation's compensation practices are aligned with the Corporation's current asset base, head count and operations, to eliminate the complexity of the Multiplier, to shift towards long term securities based incentive awards and to focus the organization on shareholder return and per share performance metrics.

See " Statement of Executive Compensation – Compensation Discussion and Analysis – Option Plan ", " Statement of Executive Compensation – Compensation Discussion and Analysis – Reserves/Value Based Bonus ", " Statement of Executive Compensation – Compensation Discussion and Analysis – Market Based Bonus ", " Statement of Executive Compensation – Compensation Discussion and Analysis – 2019 Market Based Bonus Plan ", " Statement of Executive Compensation – Directors' Compensation " and " Statement of Executive Compensation – Directors' Compensation – DSU Plan" .

Executive and Employee Compensation Principles and Strategy

The Corporation's compensation policies are founded on the principle that executive and employee compensation should be consistent with shareholders' interests and, therefore, the compensation strategy employed is weighted towards variable or performance based compensation. The objectives of the policies are to attract and retain a high quality management and employee team and to motivate performance by tying a significant portion of compensation to performance measures. The current elements of the Corporation's executive and employee compensation policies are consistent with the Corporation's business strategy of creating shareholder value by efficiently developing and producing oil and gas reserves, while distributing a portion of the Corporation's cash to shareholders through dividends. The Compensation and Nominating Committee evaluates these objectives on an ongoing basis. The Corporation's current compensation plan consists of the following items:

base salary
Option Plan
Value Component

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The Option Plan was approved by shareholders at the Corporation's annual and special meeting of shareholders held on May 9, 2019 and, following such approval, the Corporation has discontinued with the grant of Rights under the Market Component and has not granted any further Rights under the 2019 Market Based Bonus Plan.

In keeping with the objectives stated above, the Corporation generally pays base salaries at the median of entities of similar size. The variable or performance based compensation consists of grants under the Option Plan and Value Component which are described in detail below. Grants under the Option Plan reward participants for the performance of the Corporation and encourage commitment to the Corporation, while the Value Component rewards participants for annual accretive growth in oil and natural gas reserve value. The Compensation and Nominating Committee reviews all three components in assessing the compensation of individual executive officers and of Peyto employees as a whole. The Corporation does not have a pension plan or other form of formal retirement compensation.

When determining executive compensation, including the assessment of the competitiveness of the Corporation's executive compensation practices, the CEO and the Compensation and Nominating Committee utilize compensation survey information provided by various companies including Mercer Human Resource Consulting Ltd. (" Mercer "), an independent human resource consulting firm, in addition to other compensation information obtained by the CEO and the Compensation and Nominating Committee from public disclosure documents of comparable issuers. The Corporation accesses Mercer's survey results every two years. Information provided by Mercer is based on Mercer's annual survey of compensation practices within the Canadian oil and gas industry, which reflects the prior fiscal year's compensation determinations. In addition, the Compensation and Nominating Committee reviews compensation information available in the public domain with respect to companies considered to be in the Corporation's peer group. In selecting a benchmarking group for comparison purposes, the CEO and the Compensation and Nominating Committee consider the entities with which the Corporation competes for talent and, from that group, selects benchmarking group members based on a comparison of broad corporate measures such as annual production, annual revenue and number of employees.

Currently, the entities included in the Corporation's benchmarking peer group are: Advantage Energy Ltd., Baytex Energy Corp., Birchcliff Energy Ltd., Kelt Exploration Ltd., Nuvista Energy Ltd., Paramount Resources Ltd., Spartan Delta Corp. and Whitecap Resources Inc.

The CEO is responsible for making recommendations to the Compensation and Nominating Committee with respect to compensation levels for all executive officers, other than the CEO. In making such recommendations, the CEO analyzes a number of factors including the performance of the individual executive officer, level of responsibility, experience, expertise and the leadership role undertaken. The CEO's compensation is determined by the Board upon recommendation by the Compensation and Nominating Committee. A description of each element of the Corporation's compensation, as well as a detailed description of the CEO's compensation is set forth below.

Base Salaries

The base salary component is intended to provide a fixed level of competitive pay that reflects each executive officer's or employee's primary duties and responsibilities. The Corporation's policy is that salaries for its executive officers and other employees are competitive within its industry and generally set at the median salary level among entities its size. The rationale, as set forth above, is to focus compensation on variable or performance based compensation.

Option Plan

In adopting the Option Plan, the Board considered the compensation arrangements of its peer group relative to the Corporation's compensation practices. The Board made the decision to adopt the Option Plan, as opposed to continuing to utilize the cash based Market Component, to bring Peyto more in line with its peer group, to ensure that the Corporation's compensation practices are aligned with the Corporation's current asset base, head count and operations, to eliminate the complexity of the Market Component, to shift towards long term securities based incentive awards and to focus the organization on shareholder return and per share performance metrics.

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As the Option Plan is a fixed number share option plan, the vesting of any Rights granted under the 2019 Market Based Bonus Plan or the exercise of any options granted under the Option Plan will not create unallocated grants available for re-issuance under the Option Plan.

The maximum number of common shares that may be issued under all security based compensation arrangements of the Corporation, being the Option Plan, the 2019 Market Based Bonus Plan and the DSU Plan, is 16,487,418 common shares representing 10% of the number of issued and outstanding common shares on the date such plans (other than the DSU Plan) were adopted by the Board. Currently, there are 9,898,857 options to acquire common shares outstanding and 188,615 deferred share units (" DSUs ") outstanding. Up to 2,271,000 common shares are available for future grants under the Option Plan, the DSU Plan and all other security based compensation arrangements (no further Rights will be granted under the 2019 Market Based Bonus Plan), based on the number of outstanding awards under each of the Option Plan, the 2019 Market Based Bonus Plan and the DSU Plan as at March 23, 2022.

Description of the Option Plan

The full text of the Option Plan, prior to the amendments described herein and to be considered at the meeting, is attached to the Corporation's information circular – proxy statement dated March 29, 2019 as Schedule "A". The following is a summary of certain key provisions of the Option Plan. This summary is subject to, and qualified by, the specific provisions of the Option Plan. Capitalized terms used in the summary below and defined in the Option Plan have the meanings given to them in the Option Plan. The foregoing is a description of the Option Plan prior to the proposed amendments described above under " Amendments to the Share Option Plan ".

The Option Plan permits the granting of options to officers, employees of and consultants to, the Corporation and its subsidiaries, and other persons who provide ongoing management and consulting services to the Corporation and its subsidiaries. The Option Plan limits the number of common shares that may be subject to options granted and outstanding under the Option Plan and any other security based compensation arrangements established by the Corporation at 10% of the outstanding common shares at the date of the Board's adoption of the Option Plan, being 16,487,418 common shares.

Options granted pursuant to the Option Plan have a term as determined by the Board and vest in such manner as determined by the Board. Options which expire during a blackout period (as defined in the Option Plan) or within nine business days following the expiration of a blackout period, shall be extended for a period of ten business days after the end of such blackout period. Options granted under the Option Plan are non-transferable and non-assignable. The Option Plan does not provide for or contemplate the provision of financial assistance to facilitate the exercise of options and the issuance of common shares. The exercise price of options granted is determined by the Board at the time of grant provided that if at such time the common shares are listed on a stock exchange, the exercise price shall not be less than the volume weighted average trading price per common share on the stock exchange, for the last five (5) consecutive trading days immediately prior to the date of grant or such other minimum price that may be prescribed by such exchange.

The number of common shares that may be issued under the Option Plan are subject to the following additional limitations: (i) the number of common shares reserved for issuance at any time, pursuant to the Option Plan and all other established or proposed security based compensation arrangements of the Corporation, to Insiders (as defined in the Option Plan) of the Corporation shall not exceed 10% of the outstanding common shares; (ii) the number of common shares reserved for issuance to Insiders within any one year, period pursuant to the Option Plan and all other established or proposed security based compensation arrangements of the Corporation, shall not exceed 10% of the outstanding common shares; and (iii) the number of common shares issued within one year, pursuant to the Option Plan and all other established or proposed security based compensation arrangements of the Corporation, to any one Insider and such Insider's associates shall not exceed 10% of the outstanding common shares.

In case of death of an optionee, options terminate on the date determined by the Board which may not be more than 12 months from the date of death and, if the optionee ceases to be an officer or employee of, or to provide ongoing management or consulting services to, the Corporation, options terminate on the expiry of a period not in excess of six months as determined by the Board at the time of grant. In each case, the optionee is entitled to exercise those options that the optionee was entitled to exercise on the date of death or the date the optionee ceased to be an officer, or employee of, or to provide ongoing management or consulting services to, the Corporation, as the case may be. An optionee may make an offer (" Surrender Offer ") to the Corporation, at any time, for the disposition and surrender by the optionee to the Corporation of any options granted for an amount in cash or in common shares equal to the difference between closing price of the Common Shares on the TSX on the date the Options are surrendered to the Corporation (provided that if the

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Common Shares are not then listed and posted for trading on stock exchange, then the Surrender Price shall be determined by the Board in its sole discretion acting reasonably and in good faith) and the exercise price of such options and the Corporation may, but is not obligated to, accept the Surrender Offer.

If approved by the Board, options may provide that, whenever the shareholders receive a take-over proposal (a " Takeover Proposal "), such option may be exercised as to all or any of the common shares in respect of which such option has not previously been exercised (including in respect of common shares not otherwise vested at such time) by the optionee, but any such option not otherwise vested and deemed only to have vested in accordance with the foregoing may only be exercised for the purposes of tendering to such Take-over Proposal.

In the event of a change of control (as defined in the Option Plan) prior to the expiry date of any outstanding option: (i) an optionee is terminated without cause in connection with such change of control or within the six (6) months following a change of control, all options held by the optionee shall vest and the optionee shall, if such termination occurs prior to, or at, the effective time of such change of control, be entitled to exercise all options held by the optionee until immediately prior to the effective time of such change of control (or such other time as may be designated by the Board) and, if such termination period occurs following such change of control, the optionee shall be entitled to exercise all options held by such optionee until the date that is 90 days after the optionee's termination date, all options which have not been exercised prior to the required dates as set forth in the Option Plan shall become null and void and all rights to receive common shares thereunder shall be forfeited by the optionee; or (ii) within six (6) months following a change of control, the optionee voluntarily resigns for an event or events which constitute good reason (as defined in the Option Plan), all options held by the optionee shall vest and the optionee shall be entitled to exercise all options held by such optionee until the date that is 90 days after the optionee's termination date and after such date all options which have not been exercised shall become null and void and all rights to receive common shares thereunder shall be forfeited by the optionee.

The Option Plan contains standard adjustment and anti-dilution provisions for changes in the capital structure of the Corporation.

Additionally, the Option Plan contains a "cashless exercise" feature, which provides that, unless the Board determines otherwise at any time, an option holder may elect to exercise an option by surrendering such option in exchange for the issuance of common shares equal to the number determined by dividing (i) the difference between the market price on the date of exercise and the exercise price of such option by (ii) the market price of the common shares at the date of exercise. If a holder utilizes this "cashless exercise" feature, the full number of common shares underlying the options exercised will be deducted from the number of common shares reserved for issuance under the Option Plan.

The Board may make certain amendments to the Option Plan or discontinue the Option Plan at any time without the consent of the participants as permitted by the provisions of the Option Plan and, if required, subject to the approval by any exchange on which the common shares are listed. However, the Board may not amend the Option Plan without shareholder approval with respect to: (i) increasing the number of common shares reserved for issuance under the Option Plan and all other established or proposed security based compensation arrangements of the Corporation; (ii) increasing the number of common shares reserved for issuance to Insiders or issuable to Insiders in any one year period as set forth in the Option Plan; (iii) reduce the Exercise Price of any option granted pursuant to the Option Plan; (iv) extend the expiry date of any outstanding options other than as permitted in the Option Plan; (v) make any amendment that would reduce the Exercise Price of an outstanding option (including a cancellation and reissue of an option that constitutes a reduction in Exercise Price; (vi) permit a holder of options to transfer or assign options to a new beneficial holder, other than for estate settlement purposes; or (vii) any amendments to the amendments section of the Option Plan. Other than as listed above, the Corporation may make such amendments to the Option Plan and any options granted thereunder without the approval of shareholders in accordance with the provisions of the Option Plan.

Reserves/Value Based Bonus

The principal purpose of the Value Component is to advance the interests of Peyto by providing for bonuses for key employees and directors of Peyto who are designated as participants thereunder. The overriding philosophy of the Value Component is to reward participants annually for accretive oil and natural gas reserve value growth, which is a result of Peyto's exploration and development program. The Value Component is designed to recognize individual performance that has played a role in creating incremental value per common share but not to reward for increases in commodity prices. Peyto believes that the change in value of the Corporation's proven producing reserves is the best measure of performance of an oil and gas company.

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The Value Component is administered by the CEO, who selects the participants, other than the CEO, among key employees of Peyto and allocates participation points to each such participant. The amount of participation in the Value Component is not set in relation to any formula or specific criteria but is the result of a subjective determination by the CEO and is approved by the Compensation and Nominating Committee and the Board, with the use of the Corporation's independent engineering firm's calculation of the incremental value of the Corporation's proven producing reserves using the same constant price forecast for the opening and closing valuation and an 8% discount factor. This incremental value is adjusted for dividends, debt, equity, interest and general and administrative expenses in order to isolate the net incremental value added on a per share basis and assists the CEO in making his recommendation. Recommendations regarding the allocations made by the CEO are reviewed by the Compensation and Nominating Committee. Allocations and payments made to the CEO are determined by the Board on the advice of the Compensation and Nominating Committee. Given the small number of employees at Peyto, this manner of allocation remains optimal.

Under the Value Component, the bonus pool is comprised of 4% of the annual incremental increase in value, if any, as adjusted to reflect changes in debt, equity, dividends, general and administrative expenses and interest expense, of the Corporation's proven producing reserves calculated using a discount rate of 8%. The change in the Corporation's proven producing reserves is calculated on a calendar year basis. The Corporation's proven producing reserves are calculated by an independent oil and gas reservoir engineer, at the end of a fiscal year, using the previous year's unhedged realized commodity prices held constant for all calculations. The bonuses, if any, under the Value Component are paid in cash. Compensation expense with respect to the Value Component totalled $7.7 million in 2021 (2020 – $Nil).

Market Component

Since approval of the Option Plan by shareholders at the Corporation's annual and special shareholder meeting held May 9, 2019, the Option Plan has replaced the Market Component described below and the Corporation will not make any further grants under the Market Component. The following description of the Market Component is included in this information circular – proxy statement as there remain nil Rights outstanding under the Market Component.

Prior to the adoption of the Option Plan, at the beginning of each calendar year, the Board used its discretion to determine whether to award new Rights, the number of Rights to be awarded, if any, the vesting schedule of such Rights and the allocations. Such new Rights were granted effective January 1 and were issued at the Grant Price (as defined below). In certain circumstances, a new Service Provider may be granted Rights at the time they commenced providing services to Peyto, with the Grant Price of such Rights being the market price of the common shares at such time. All Rights that vested expire at the end of the year regardless of whether they are in the money or not.

The grant price (the " Grant Price ") per Right is equal to the weighted average of the per common share closing price of common shares traded through the facilities of the TSX on the ten (10) consecutive trading days immediately preceding the date of grant of the Rights.

All Rights granted are valued at December 31 of the year of grant using the formula set forth below, but vest and are paid out equally over three (3) years. Each Right is valued at an amount equal to the sum of: (i) the weighted average of the per common share closing price of common shares traded through the facilities of the TSX on the ten (10) consecutive trading days immediately preceding the end of the calendar year less the Grant Price for such Right; and (ii) the amount of dividends declared by Peyto per common share from the grant date to the date of valuation. If the Grant Price of such Rights exceeds the value of the Rights on the vesting date, the Market Component is not paid to such holder of Rights for that period. All previously issued Rights under the Market Component have been cancelled as a result of the applicable Grant Price exceeding the value of such Rights on the applicable vesting date.

2019 Market Based Bonus Plan

As a result of the transition to securities based incentive awards and the adoption of the Option Plan, the Board approved the issuance of common shares on settlement of the Rights granted on January 1, 2019, all pursuant to the terms of the 2019 Market Based Bonus Plan. In order to set the terms of the issuance of common shares pursuant to the Rights and to comply with the rules of the TSX regarding securities based compensation plans, the Board adopted the 2019 Market Based Bonus Plan.

To date, 2,475,000 Rights granted on January 1, 2019, which are subject to the 2019 Market Based Bonus Plan and may be settled in common shares at the option of the Board have been issued. 923,133 Rights were cancelled and forfeited on

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or before December 31, 2019, including 825,000 Rights which vested on December 31, 2019, but were out-of-the-money on vesting and, as such, have been cancelled and forfeited. 825,667 Rights were cancelled and forfeited on or before December 31, 2020, including 749,400 Rights which vested on December 31, 2020, but were out-of-the-money on vesting and, as such, have been cancelled and forfeited. 705,967 Rights vested on December 31, 2021 and were settled by issuance of 179,021 common shares.

The 2019 Market Based Bonus Plan is in effect only for the one-time grant of Rights, which were granted on January 1, 2019. No further Rights will be granted under the 2019 Market Based Bonus Plan.

The maximum number of common shares that may be issued under all security based compensation arrangements of the Corporation, being the Option Plan, the 2019 Market Based Bonus Plan and the DSU Plan, is 16,487,418 common shares representing 10% of the number of issued and outstanding common shares on the date such plans (other than the DSU Plan) were adopted by the Board. Currently, there are 9,898,857 options to acquire common shares outstanding and 188,615 DSUs outstanding. Up to 2,271,000 common shares are available for future grants under the Option Plan, the DSU Plan and all other security based compensation arrangements based on the number of outstanding awards under each of the Option Plan, the 2019 Market Based Bonus Plan (no further Rights will be granted under the 2019 Market Based Bonus Plan) and the DSU Plan as at March 23, 2022.

Description of the 2019 Market Based Bonus Plan

The full text of the 2019 Market Based Bonus Plan is attached to the Corporation's information circular – proxy statement dated March 29, 2019 as Schedule "B". The following is a summary of certain key provisions of the 2019 Market Based Bonus Plan. This summary is subject to, and qualified by, the specific provisions of the 2019 Market Based Bonus Plan. Capitalized terms used in the summary below and defined in the 2019 Market Based Bonus Plan have the meanings given to them in the 2019 Market Based Bonus Plan.

The purpose of the 2019 Market Based Bonus Plan is to provide officers, consultants, employees and other service providers, as applicable (all of which are hereinafter called " Service Providers "), of Peyto with an opportunity to be issued Rights, as designated from time to time by the Board, the future value of which is based on the market value of the common shares and the dividends paid to shareholders. The 2019 Market Based Bonus Plan provides an increased incentive for these Service Providers to contribute to the future success of Peyto, thus enhancing the value of the common shares for the benefit of all the shareholders.

2,475,000 Rights were granted by the Board on January 1, 2019 to Service Providers at the 2019 Plan Grant Price (as defined below), being $7.23, which amounted to Rights representing an aggregate value of $17,894,250 on January 1, 2019 and of which 1,093,400 Rights were granted to insiders of the Corporation. The 2019 Market Based Bonus Plan will only apply to the one-time grant of Rights on January 1, 2019. The allocation of Rights were granted by the Board based on the recommendations of the Compensation and Nominating Committee after consultation with the CEO. No further Rights will be granted pursuant to the 2019 Market Based Bonus Plan.

The 2019 Market Based Bonus Plan provides that the number of common shares issuable under the 2019 Market Based Bonus Plan and all other security based compensation arrangements of the Corporation may not exceed 10% of the total number of issued and outstanding common shares from time to time. The number of common shares that may be issued under the 2019 Market Based Bonus Plan are subject to the following additional limitations: (i) the number of common shares reserved for issuance at any time, pursuant to the 2019 Market Based Bonus Plan and all other established or proposed security based compensation arrangements of the Corporation, to Insiders (as defined in the 2019 Market Based Bonus Plan) of the Corporation shall not exceed 10% of the outstanding common shares; (ii) the number of common shares issued to Insiders within any one year period, pursuant to the 2019 Market Based Bonus Plan and all other established or proposed security based compensation arrangements of the Corporation, shall not exceed 10% of the outstanding common shares; and (iii) the number of common shares issued within any one year period, pursuant to the 2019 Market Based Bonus Plan and all other established or proposed security based compensation arrangements of the Corporation, to any one Insider and such Insider's associates shall not exceed 10% of the outstanding common shares.

Rights granted under the 2019 Market Based Bonus Plan are non-transferable and non-assignable.

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The grant price (the " 2019 Plan Grant Price ") per Right is equal to the volume weighted average of the per common share closing price of common shares traded through the facilities of the TSX on the ten (10) consecutive trading days immediately preceding January 1, 2019, which was $7.23.

The Rights granted under the 2019 Market Based Bonus Plan vest as to one-third (1/3) of the total number of Rights granted to a Grantee pursuant to the 2019 Market Based Bonus Plan on each of December 31, 2019, 2020 and 2021 (each, a " Vesting Date ").

Each vested right shall be valued on the Vesting Date (subject to any black-out period extension as set forth in the 2019 Market Based Bonus Plan) at an amount (the " Vesting Value ") equal to the sum of: (i) the volume weighted average trading price per common share on the TSX for the ten (10) consecutive trading days immediately preceding the Vesting Date (the " Valuation Price ") less the 2019 Plan Grant Price for such Right; and (ii) the amount of dividends declared by the Corporation per common share from January 1, 2019 to the Vesting Date.

If, on the applicable Vesting Date, the Valuation Price is less than the 2019 Plan Grant Price, no amount shall be payable to the Grantees and the vested Rights shall expire on such date.

If, on the applicable Vesting Date, the Valuation Price is greater than the 2019 Plan Grant Price, the vested Rights shall become subject to payment by the Corporation (subject to any black-out period extension as set forth in the 2019 Market Based Bonus Plan), in its sole and absolute discretion, by any of the following methods, or by a combination of such methods: (i) payment in cash; (ii) payment in common shares acquired by the Corporation on the TSX; or (iii) if approved by the Board, payment in common shares issued from treasury of the Corporation. With respect to any Rights, the Corporation shall not determine whether the payment method shall take the form of cash or common shares, or a combination thereof, until the Vesting Date, or some reasonable time prior thereto. A Grantee shall not have any right to demand to be paid in, or receive, common shares in respect of the Vesting Value underlying a Right, at any time. Notwithstanding any election by the Corporation to settle any Vesting Value, or portion thereof, in common shares, the Corporation reserves the right to change its election in respect thereof at any time up until payment is actually made, and the Grantee shall not have the right, at any time, to enforce settlement in the form of common shares. Where the Corporation elects to pay any amounts pursuant to a Right by acquiring common shares on the TSX, or by issuing common shares from treasury, the common shares shall have a deemed common share value equal to the volume weighted average trading price per common share on the TSX for the ten (10) consecutive trading days immediately preceding the applicable Vesting Date and the number of common shares to be delivered shall be equal to the applicable Vesting Value divided by such deemed common share value.

If the Grantee shall no longer be a Service Provider to, either the Corporation or a subsidiary of the Corporation, all Rights held shall terminate on the date determined by the Board.

The Board may, in its sole discretion, accelerate the Vesting Dates with respect to any Rights. All Rights expire on the applicable Vesting Date regardless of whether they are in the money or not.

The 2019 Market Based Bonus Plan and any Rights granted pursuant to the 2019 Market Based Bonus Plan may be amended, modified or terminated by the Board without approval of the shareholders subject to any required approval of the TSX, provided that any amendment to the 2019 Market Based Bonus Plan that requires approval of the TSX may not be made without such approval. In addition, no amendment to the 2019 Market Based Bonus Plan or Rights granted pursuant to the 2019 Market Based Bonus Plan may be made without the consent of the Grantee, if it adversely alters or impairs any Rights previously granted to such Grantee under the 2019 Market Based Bonus Plan; provided that any amendment to the 2019 Market Based Bonus Plan to allow for the Vesting Value of any Rights to be settled by the issuance of common shares, or to comply with the requirements of the TSX, shall not be considered to adversely alter or impair any Rights previously granted under the 2019 Market Based Bonus Plan and all Grantees are deemed to have consented to such amendments.

CEO Compensation

The compensation of the CEO is reviewed annually and determined by the Board as a whole on the recommendation of the Compensation and Nominating Committee. The level of CEO compensation is determined by the Board considering all factors which they deem appropriate, including chief executive officer salaries for companies of comparable size, industry, geography and complexity. The grant of incentive awards is determined by the Board, upon recommendation

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of the Compensation and Nominating Committee, based on consideration such as the Corporation's overall performance, relative shareholder returns and/or other relevant factors.

Mr. Gee's total reported compensation and total realized compensation (amounts actually paid) for the years ended December 31, 2017 to 2021 is highlighted below.

Compensation Component	2017 ($)	2018 ($)	2019 ($)	2020 ($)	2021 ($)
Base Salary	285,000	285,000	285,000	289,300	325,000
Market Component Paid in the Year(1)	1,341,983	1,341,983	-	-	-
Value Component	120,000	175,000	-	-	600,000
Fair Value of Rights Granted in the Year	1,031,333	445,667	452,134	-	-
Fair Value of Options Granted in the Year	-	-	758,781	559,418	389,186
Total Reported Compensation	2,778,316	2,247,650	1,495,915	848,718	1,314,186
Percentage at Risk	90%	87%	81%	66%	75%

Note:

(1) The Market Component was discontinued as of December 31, 2018.

Compensation Component	2017 ($)	2018 ($)	2019 ($)	2020 ($)	2021 ($)
Base Salary	285,000	285,000	285,000	289,300	325,000
Market Component(1)	-	-	-	-	-
Value Component	120,000	175,000	-	-	600,000
Actual Value of Rights Granted in the Year(2)	-	-	-	-	-
Actual Value of Options and Rights Vested and In-the- Money(3)	-	-	-	-	-
Total Realized Compensation	405,000	460,000	285,000	289,300	925,000

Notes:

(1) The Market Component is excluded as this amount is paid out over three years of the actual value of the Rights granted in the year. The Market Component was discontinued as of December 31, 2018.
(2) The actual value of Rights is included in the year of grant despite Rights being paid out over a three year period (see " Statement of Executive Compensation – Compensation Discussion and Analysis – Market Based Bonus "). The Market Component was discontinued as of December 31, 2018.
(3) Represents the actual value of Rights and options which vested and were in-the-money at the end of the year. Pursuant to the Corporation's equity compensation plans, any Rights or options which vest and are out-of-the-money are immediately forfeited for no consideration and cancelled. See " Statement of Executive Compensation – Compensation Discussion and Analysis – Option Plan ", " – Market Component " and " – 2019 Market Based Bonus Plan " above for further details.

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The chart below compares Mr. Gee's reported compensation and realized compensation that occurs over time. Amounts in the table below are recognized in the year of grant and not in the year paid to compare reported compensation with realized compensation (amounts actually paid and the fair market value of outstanding Rights).

==> picture [487 x 204] intentionally omitted <==

Notes:

(1) Total Reported Compensation and Total Realized Compensation include salaries and other compensation on an annualized basis for comparative purposes.
(2) Realized Compensation includes actual salaries, Value Component, actual value of options and Rights under the 2019 Market Based Bonus Plan which vested and were in-the-money at the end of the year and the cash value of Rights granted in the year (see " Statement of Executive Compensation – Compensation Discussion and Analysis – Market Based Bonus "). The Market Component was discontinued as of December 31, 2018.

As of December 31, 2021, Mr. Gee held 2,101,036 common shares, representing a value of $30.1 million (based on the closing price of the common shares on the TSX on December 31, 2021, being $9.45), 673,733 options representing a value of $6.4 million (based on the closing price of the common shares on the TSX on December 31, 2021, being $9.45) and did not hold any other securities exercisable or convertible into common shares.

Three Year Named Executive Officer Compensation Versus Financial Measures

Over the past three years total Named Executive Officer (as defined below) compensation has decreased and such decreases consisted almost entirely of long-term incentives. Total Named Executive Officer compensation remains a relatively small percentage of both the Corporation's funds from operations and enterprise value.

	2019	2020	2021
Total Named Executive Officer Compensation(millions)(1)	$7.9	$3.3	$6.3
Funds from Operations(millions)	$323.1	$212.7	$469.7
Named Executive Officer Compensation as a % of Funds from Operations	2%	2%	1%
Enterprise Value(billions)	$1.8	$1.7	$2.7
Named Executive Officer Compensation as a % of Enterprise Value	0.4%	0.2%	0.2%
Shareholder Return (annual)	(36)%	(17)%	228%

Note:

(1) For further details, see Note 7 to the table under the heading " Statement of Executive Compensation – Summary Compensation Table " below.

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Compensation Consultant or Advisor

At no time in the previous two completed financial years of the Corporation, has a compensation consultant or advisor been formally retained by the Corporation to assist the Board or the Compensation and Nominating Committee to determine the compensation of the executive officers of the Corporation.

Anti-Hedging Policy and Other Restrictions on Trading Activities

The Corporation has adopted a Joint Disclosure, Confidentiality & Trading Policy which, among other things, ensures that executives and directors cannot participate in speculative activity related to the Corporation's securities to artificially protect themselves against declines in share price. The Joint Disclosure, Confidentiality & Trading Policy provides that executive officers and directors are prohibited, at any time, from: (i) entering into a sale of the Corporation's securities that they do not own or have a right to own (a speculative practice, called "selling short", which is done in the belief that the price of a stock is going to fall and the seller will then be able to cover the sale by buying the stock back at a lower price); and (ii) selling a "call option" or buying a "put option" in respect of any the Corporation's securities (as such persons could profit from the Corporation's stock price falling). Executive officers and directors are also prohibited from participating in equity monetization transactions involving any the Corporation's securities that are part of the Corporation's long-term incentive programs which have not vested or the common shares that constitute part or all of the Corporation's requirements under the Corporation's minimum share ownership guidelines. Executive officers and directors are also strictly prohibited from entering into any equity monetization transaction that is the equivalent of "selling short".

Clawback Policy (Recoupment of Incentive Compensation)

The Corporation has adopted a policy regarding recoupment of any incentive payment (including cash payments, Rights granted under the Market Component or the 2019 Market Based Bonus Plan and options granted under the Option Plan, and the common shares issuable on exercise or vesting thereof, as the case may be), to an executive officer where:

the payment or grant was predicated upon achieving certain financial results that were subsequently the cause of a substantial restatement of the Corporation's financial statements;
the Board determines the executive officer engaged in gross negligence, intentional misconduct or fraud that caused or substantially caused the need for substantial restatement of the Corporation's financial statements; and
a lower incentive compensation payment or grant would have been made to the executive officer based upon the restated financial results.

In such circumstances, the Corporation will seek to recover from such executive officer, in the case of cash incentive payments, the amount by which that executive officer's incentive payments for the relevant period exceeded the lower payment that would have been made based on the restated financial results and in the case of equity incentive awards, the number of equity incentive awards by which the executive officer's grant for the relevant period exceeded the lower number of equity incentive awards that would have been granted based on the restated financial results.

Additionally, under the policy in the event that any executive officer is found to have engaged in intentional misconduct, fraud, theft or embezzlement, the Board may in its discretion, to the full extent permitted by applicable laws and to the extent it determines that it is in best interests of Peyto to do so, require the reimbursement of some or all of the after-tax amount of any incentive compensation already paid or awarded in the previous 24 months or forfeiture of any vested or unvested incentive compensation awards regardless of whether or not a restatement of the financial statements of the Corporation has occurred or is required.

Summary

The Board believes that generating long-term shareholder value is enhanced by compensation based upon corporate performance achievements. Through the programs described above, a significant portion of the compensation for all employees, including executive officers, is based on corporate performance and generating shareholder value, as well as industry-competitive pay practices.

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Performance Graph

The following graph illustrates the Corporation's five year cumulative shareholder return, as measured by the closing price of the common shares at the end of each financial year, assuming an initial investment of $100.00 on December 31, 2017, compared to the S&P/TSX Composite Index and the S&P TSX Composite Index Energy, assuming the reinvestment of dividends where applicable.

==> picture [454 x 261] intentionally omitted <==

	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2021
Peyto Exploration & Development Corp.	49	27	15	16	36
S&P/TSX Composite Index(1)	109	99	122	129	161
S&P/TSX Composite Index Energy (Sector) (1)	93	76	92	68	101

Note:

(1) Total Return Index.

As the price of common shares at year-end is a determining factor regarding the payment of the Market Component, the total compensation of the Named Executive Officers is affected by increases and decreases in the price of the common shares.

Summary Compensation Table

The following table sets forth for the years ended December 31, 2021, December 31, 2020 and December 31, 2019 information concerning the compensation paid to the CEO and Chief Financial Officer (" CFO ") and each of the three other most highly compensated executive officers at the end of each of the years ended December 31, 2021, December 31,

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2020 and December 31, 2019 whose total compensation was more than $150,000 (each a " Named Executive Officer " and collectively, the " Named Executive Officers ").

Name and Principal Position	Year	Salary ($)	Share- Based Awards ($)	Option- Based Awards ($)	Non-Equity Incentive Plan Compensation ($)	Non-Equity Incentive Plan Compensation ($)	Pension Value ($)	All Other Compensation(2)	Total Compensation ($)(3)
					Annual Incentive Plans	Long-Term Incentive Plans
Darren Gee Chief Executive Officer	2021 2020 2019	325,000 289,300 285,000	N/A N/A N/A	389,186 559,418(1) 1,210,915(1)	600,000 - -	- - -	N/A N/A N/A	- - -	1,314,186 848,718 1,495,915
Kathy Turgeon Vice President, Finance and Chief Financial Officer	2021 2020 2019	250,400 233,500 230,000	N/A N/A N/A	491,983 326,907(1) 701,878(1)	350,000 - -	- - -	N/A N/A N/A	- - -	1,092,383 560,407 931,878
Jean-Paul Lachance President and Chief Operating Officer	2021 2020 2019	272,000 253,800 250,000	N/A N/A N/A	647,175 485,050(1) 1,042,278(1)	540,000 - -	- - -	N/A N/A N/A	- - -	1,459,175 738,850 1,293,278
David Thomas Vice President, Exploration	2021 2020 2019	246,500 243,600 240,000	N/A N/A N/A	518,377 384,583(1) 835,495(1)	425,000 - -	- - -	N/A N/A N/A	- - -	1,189,877 628,183 1,074,495
Scott Robinson Vice President, Business Development	2021 2020 2019(4)	251,700 248,700 237,585	N/A N/A N/A	527,990 296,477 611,358	425,000 - -	- - -	N/A N/A N/A	- - -	1,204,690 545,177 848,943

Notes:

(1) Represents options issued pursuant to the Option Plan and Rights issued pursuant to the 2019 Market Based Bonus Plan. The grant date fair value for compensation purposes is calculated using Black-Scholes pricing methodology. Key assumptions used in the pricing model for 2021 were: expected volatility: 2021 – 57.59%; risk-free interest rate: 2021 – 1.10%; and weighted average life: 2021 – 2 years. Key assumptions used in the pricing model for 2020 were: expected volatility: 2020 – 48.12%; risk-free interest rate: 2020 – 1.10%; and weighted average life: 2020 – 2 years. Assumptions for 2019 were: expected volatility: 2019 – 44.39%; risk-free interest rate: 2019 – 1.46%; and weighted average life: 2019 – 2 years. The Black-Scholes pricing methodology was selected due to its acceptance as an appropriate valuation model used by similar sized oil and gas companies.

(2) The value of perquisites received by each of the Named Executive Officers, including property or other personal benefits provided to the Named Executive Officers that are not generally available to all employees, were not in the aggregate greater than $50,000 or 10% of the Named Executive Officer's total salary for the financial year.

(3) Total compensation includes both cash and non-cash amounts (as set out under " Incentive Plan Awards "). The following table outlines the total cash compensation amounts for each Named Executive Officer:

Named Executive Officer	Total Cash Compensation for 2019 ($)	Total Cash Compensation for 2020 ($)	Total Cash Compensation for 2021 ($)
Darren Gee	285,000	289,300	925,000
KathyTurgeon	230,000	233,500	600,400
Jean-Paul Lachance	250,000	253,800	812,000
David Thomas	240,000	243,600	671,500
Scott Robinson	237,585	248,700	676,700

(4) Mr. Robinson was a consultant to the Corporation from February 1, 2019 to November 10, 2019 and was appointed as Vice President, Business Development of the Corporation on November 11, 2019.

Incentive Plan Awards

Please see discussion under " Compensation Discussion and Analysis – Option Plan ", " Compensation Discussion and Analysis – Reserves/Value Based Bonus ", " Compensation Discussion and Analysis – Market Based Bonus ",

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" Compensation Discussion and Analysis – 2019 Market Based Bonus Plan " and " Statement of Executive Compensation – Directors' Compensation – DSU Plan " for a description of the Corporation's incentive plan awards.

Outstanding Share-Based Awards and Option-Based Awards

The following table sets forth for each Named Executive Officer all options outstanding at the end of the year ended December 31, 2021. The Corporation does not have any share-based awards.

Outstanding Option Based Awards

			Option Expiration
	Options	Exercise Price	Date	Value In the Money
Darren Gee	72,000	$ 5.72	1/3 - 15/05/2022	$ 268,560
Darren Gee	76,667	$ 3.18	1/3 - 15/08/2022	$ 480,700
Darren Gee	76,667	$ 3.07	1/3 - 15/11/2022	$ 489,133
			1/3 - 01/01/2022
Darren Gee	47,400	$ 3.75	1/3 - 01/01/2023	$ 270,180
			1/3 - 08/07/2022
Darren Gee	44,000	$ 1.91	1/3 - 08/07/2023	$ 331,760
			1/3 - 20/08/2022
Darren Gee	44,000	$ 3.03	1/3 - 20/08/2023	$ 282,480
			1/3 - 19/11/2022
Darren Gee	46,000	$ 2.79	1/3 - 19/11/2023	$ 306,360
			1/3 - 01/01/2022
			1/3 - 01/01/2023
Darren Gee	99,000	$ 2.92	1/3 - 01/01/2024	$ 646,470
			1/3 - 20/05/2022
			1/3 - 20/05/2023
Darren Gee	90,000	$ 5.92	1/3 - 20/05/2024	$ 317,700
			1/3 - 20/08/2022
			1/3 - 20/08/2023
Darren Gee	78,000	$ 6.53	1/3 - 20/08/2024	$ 227,760
Scott Robinson	29,167	$ 5.72	1/3 - 15/05/2022	$ 108,792
Scott Robinson	29,167	$ 3.18	1/3 - 15/08/2022	$ 182,875
Scott Robinson	53,333	$ 3.07	1/3 - 15/11/2022	$ 340,267
			1/3 - 01/01/2022
Scott Robinson	33,000	$ 3.75	1/3 - 01/01/2023	$ 188,100
			1/3 - 08/07/2022
Scott Robinson	32,000	$ 1.91	1/3 - 08/07/2023	$ 241,280
			1/3 - 20/08/2022
Scott Robinson	32,000	$ 3.03	1/3 - 20/08/2023	$ 205,440
			1/3 - 19/11/2022
Scott Robinson	34,000	$ 2.79	1/3 - 19/11/2023	$ 226,440
			1/3 - 01/01/2022
			1/3 - 01/01/2023
Scott Robinson	75,000	$ 2.92	1/3 - 01/01/2024	$ 489,750

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			1/3 - 20/05/2022
			1/3 - 20/05/2023
Scott Robinson	68,400	$ 5.92	1/3 - 20/05/2024	$ 241,452
			1/3 - 20/08/2022
			1/3 - 20/08/2023
Scott Robinson	61,500	$ 6.53	1/3 - 20/08/2024	$ 179,580
			1/3 - 21/11/2022
			1/3 - 21/11/2023
Scott Robinson	70,000	$ 11.26	1/3 - 21/11/2024	$ -
Kathy Turgeon	41,467	$ 5.72	1/3 - 15/05/2022	$ 154,671
Kathy Turgeon	45,000	$ 3.18	1/3 - 15/08/2022	$ 282,150
Kathy Turgeon	45,000	$ 3.07	1/3 - 15/11/2022	$ 287,100
			1/3 - 01/01/2022
Kathy Turgeon	27,800	$ 3.75	1/3 - 01/01/2023	$ 158,460
			1/3 - 08/07/2022
Kathy Turgeon	28,400	$ 1.91	1/3 - 08/07/2023	$ 214,136
			1/3 - 20/08/2022
Kathy Turgeon	28,400	$ 3.03	1/3 - 20/08/2023	$ 182,328
			1/3 - 19/11/2022
Kathy Turgeon	30,000	$ 2.79	1/3 - 19/11/2023	$ 199,800
			1/3 - 01/01/2022
			1/3 - 01/01/2023
Kathy Turgeon	66,000	$ 2.92	1/3 - 01/01/2024	$ 430,980
			1/3 - 20/05/2022
			1/3 - 20/05/2023
Kathy Turgeon	60,300	$ 5.92	1/3 - 20/05/2024	$ 212,859
			1/3 - 20/08/2022
			1/3 - 20/08/2023
Kathy Turgeon	54,000	$ 6.53	1/3 - 20/08/2024	$ 157,680
			1/3 - 21/11/2022
			1/3 - 21/11/2023
Kathy Turgeon	70,000	$ 11.26	1/3 - 21/11/2024	$ -
David Thomas	50,000	$ 5.72	1/3 - 15/05/2022	$ 186,500
David Thomas	53,333	$ 3.18	1/3 - 15/08/2022	$ 334,400
David Thomas	53,333	$ 3.07	1/3 - 15/11/2022	$ 340,267
			1/3 - 01/01/2022
David Thomas	31,000	$ 3.75	1/3 - 01/01/2023	$ 176,700
			1/3 - 08/07/2022
David Thomas	30,000	$ 1.91	1/3 - 08/07/2023	$ 226,200
			1/3 - 20/08/2022
David Thomas	30,000	$ 3.03	1/3 - 20/08/2023	$ 192,600
			1/3 - 19/11/2022
David Thomas	32,000	$ 2.79	1/3 - 19/11/2023	$ 213,120
			1/3 - 01/01/2022
			1/3 - 01/01/2023
David Thomas	72,000	$ 2.92	1/3 - 01/01/2024	$ 470,160

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			1/3 - 20/05/2022
			1/3 - 20/05/2023
David Thomas	66,000	$ 5.92	1/3 - 20/05/2024	$ 232,980
			1/3 - 20/08/2022
			1/3 - 20/08/2023
David Thomas	60,000	$ 6.53	1/3 - 20/08/2024	$ 175,200
			1/3 - 21/11/2022
			1/3 - 21/11/2023
David Thomas	70,000	$ 11.26	1/3 - 21/11/2024	$ -
Jean-Paul Lachance	63,333	$ 5.72	1/3 - 15/05/2022	$ 236,233
Jean-Paul Lachance	66,667	$ 3.18	1/3 - 15/08/2022	$ 418,000
Jean-Paul Lachance	66,667	$ 3.07	1/3 - 15/11/2022	$ 425,333
			1/3 - 01/01/2022
Jean-Paul Lachance	40,000	$ 3.75	1/3 - 01/01/2023	$ 228,000
			1/3 - 08/07/2022
Jean-Paul Lachance	42,000	$ 1.91	1/3 - 08/07/2023	$ 316,680
			1/3 - 20/08/2022
Jean-Paul Lachance	42,000	$ 3.03	1/3 - 20/08/2023	$ 269,640
			1/3 - 19/11/2022
Jean-Paul Lachance	44,000	$ 2.79	1/3 - 19/11/2023	$ 293,040
			1/3 - 01/01/2022
			1/3 - 01/01/2023
Jean-Paul Lachance	90,000	$ 2.92	1/3 - 01/01/2024	$ 587,700
			1/3 - 20/05/2022
			1/3 - 20/05/2023
Jean-Paul Lachance	82,200	$ 5.92	1/3 - 20/05/2024	$ 290,166
			1/3 - 20/08/2022
			1/3 - 20/08/2023
Jean-Paul Lachance	70,500	$ 6.53	1/3 - 20/08/2024	$ 205,860
			1/3 - 21/11/2022
			1/3 - 21/11/2023
Jean-Paul Lachance	90,000	$ 11.26	1/3 - 21/11/2024	$ -

Notes:

(1) Options granted to date vest as to 1/3 on each of the first, second and third anniversaries of grant and expire 30 business days following their vesting date if not otherwise exercised. In accordance with the Option Plan, options that are cancelled, surrendered, terminated or expire prior to the exercise of all or a portion thereof shall result in the common shares that were reserved for issuance thereunder being available for a subsequent grant of options pursuant to the Option Plan to the extent of any common shares issuable thereunder that are not issued under such cancelled, surrendered, terminated or expired option. See " Compensation Discussion and Analysis – Option Plan ".

(2) Calculated based on the closing market price of the common shares on December 31, 2021 ($9.45) and the exercise price of the options.

Rights Granted During the Year Ended December 31, 2021

There were no Rights granted pursuant to the 2019 Market Based Bonus Plan to Named Executive Officers during 2021. The 2019 Market Based Bonus Plan is in effect for a one time grant of Rights, which were granted on January 1, 2019. No further Rights will be granted under the 2019 Market Based Bonus Plan. The 2,475,000 Rights granted effective January 1, 2019 pursuant to the 2019 Market Based Bonus Plan are substantially the same as the Rights previously granted by the Corporation pursuant to the Market Component except that the Board has the discretion to settle the Rights under

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the 2019 Market Based Bonus Plan in common shares (either acquired by the Corporation on the TSX or by issuance from treasury) or in cash. For more information on the 2019 Market Based Bonus Plan, please see " Compensation Discussion and Analysis – 2019 Market Based Bonus Plan ".

Incentive Plan Awards – Value Vested or Earned During the Year

The following table sets forth for each Named Executive Officer, the value of options and Rights which vested during the year ended December 31, 2021 and the value of non-equity incentive plan compensation earned during the year ended December 31, 2021. All Rights issued pursuant to the 2019 Market Based Bonus Plan may be settled in common shares or cash, at the option of the Board. See " Compensation Discussion and Analysis – 2019 Market Based Bonus Plan ".

Name	Option-Based Awards – Value Vested During the Year(1)(2) ($)	Share-Based Awards – Value Vested During the Year ($)	Non-Equity Incentive Plan Compensation – Value Earned During the Year(3) ($)
Darren Gee	1,510,627	N/A	600,000
Kathy Turgeon	908,537	N/A	350,000
Jean-Paul Lachance	1,342,617	N/A	540,000
David Thomas	1,045,363	N/A	425,000
Scott Robinson	945,323	N/A	425,000

Notes:

(1) The value of options is calculated based on the difference between the closing price of the common shares on the vesting date and the exercise price of the options multiplied by the options vested during the year.
(2) Represents the amounts paid pursuant to the Market Component. The Market Component was discontinued as of December 31, 2018. 2,475,000 Rights were issued pursuant to the 2019 Market Based Bonus Plan, which Rights may be settled in common shares or cash, at the option of the Board.
(3) Represents amounts paid pursuant to the Value Component. Such Rights are payable in cash only.

Termination and Change of Control Benefits

The Corporation has entered into executive employment agreements (" Executive Employment Agreements ") with the following Named Executive Officers that provide for termination payments as described below. Additionally, the Option Plan, Market Component and Value Component provide for certain payments to be made to the Named Executive Officers in the event of a change of control of the Corporation.

Termination by the Corporation for Just Cause

The Corporation may terminate its employment agreement with any of the Named Executive Officers at any time for just cause and is then obligated to pay such Named Executive Officer's salary (and accrued and unused vacation and reimbursable expenses) through to the termination date.

Termination by the Corporation without Just Cause

The Corporation may also terminate its employment agreement with any of the Named Executive Officers at any time for any reason other than just cause and is then obligated to pay to the applicable Named Executive Officers:

(a) such Named Executive Officer's salary (and accrued and unused vacation and reimbursable expenses) through to the termination date,
(b) in the event the Named Executive Officer has Rights that have not vested under the 2019 Market Based Bonus Plan, any of such Rights that would have vested in the twelve (12) months following the termination date had the Named Executive Officer's employment continued, shall accelerate and vest on the termination date and be settled in accordance with the 2019 Market Based Bonus Plan. Any other Rights granted under the 2019 Market Based Bonus Plan that are unvested on the termination date, and all unvested Rights pursuant to the Market Component, shall terminate and be forfeited on the termination date;

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(c) in the event that the termination date is following the completion of a calendar year, but prior to the payment of an annual reserves/value based cash bonus (the Value Component) for such completed calendar year, the Named Executive Officer shall be paid a cash bonus equal to the Average Bonus (as defined below); and
(d) a retiring allowance equal to the Total Monthly Compensation (as defined below) times the Severance Multiplier (as defined below).

For the purposes of the Executive Employment Agreements:

" Average Bonus " means the average of the annual reserves/value based cash bonuses or other cash bonuses, if any, paid to the Named Executive Officer in respect of the five (5) calendar years prior to the termination date, provided that the Average Bonus shall not be greater than $400,000 ($500,000 for Mr. Gee) nor less than $100,000 ($150,000 for Mr. Gee).

" Severance Multiplier " means twelve (12) plus one (1) for each fully completed year of employment after the Named Executive Officer's start date, up to a maximum of twenty four (24).

" Total Monthly Compensation " means one-twelfth (1/12) of the sum of:

(i) the Named Executive Officer's then annual salary;
(ii) twenty (20%) percent of the Named Executive Officer's then annual salary for the loss of benefits and perquisites; and
(iii) the Average Bonus.

Resignation by the Executive

The Named Executive may resign from the Named Executive Officer's employment on three (3) months advance notice and in such event the Corporation is obligated to pay such Named Executive Officer's salary (and accrued and unused vacation and reimbursable expenses) through to the termination date.

Resignation by the Executive for Good Reason Following a Change of Control

In the event of a change of control of the Corporation, and within 12 months of the change of control, there is an event or series of events that constitute "good reason", the Named Executive Officer may, following the event or series of events that constitute good reason, elect to terminate the Named Executive Officer's employment upon 30 days advance notice. In such event, the Corporation is obligated to pay to the Named Executive Officer the amount described above under " Termination by the Corporation without Just Cause " as would be payable to the Named Executive Officer if such person was terminated by the Corporation without just cause.

Each Executive Employment Agreement provides for confidentiality, non-competition and non-solicitation obligations standard to this type of employment agreement.

The table below provides details of the cash payment that would have been made under the Executive Employment Agreements to each of the Named Executive Officers and the value of accelerated Options and Rights (including under the Market Component, the Value Component and 2019 Market Based Bonus Plan) assuming the occurrence of a termination without just cause or in association with a change in control of the Corporation as of December 31, 2021.

Name	Cash Payment ($)(1)	Value of Outstanding Rights at December 31, 2021(2) ($)	Value of Outstanding Options at December 31, 2021(3) ($)	Total Incremental Obligation ($)
Darren Gee Chief Executive Officer	1,168,000	-	3,621,103	4,789,103

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Name	Cash Payment ($)(1)	Value of Outstanding Rights at December 31, 2021(2) ($)	Value of Outstanding Options at December 31, 2021(3) ($)	Total Incremental Obligation ($)
Kathy Turgeon Vice President, Finance and Chief Financial Officer	834,293	-	2,280,164	3,114,457
Jean-Paul Lachance President and Chief Operating Officer	1,012,800	-	3,270,652	4,283,452
David Thomas Vice President, Exploration	874,933	-	2,548,127	3,423,060
Scott Robinson Vice President, Business Development	887,413	-	2,403,976	3,291,389

Notes:

(1) Amounts payable if Named Executive Officer is terminated without just cause as described under " Termination by the Corporation without Just Cause " or resigns after change of control of the Corporation as described under " Resignation by the Executive for Good Reason Following a Change of Control ".
(2) Calculated by multiplying the number of Awards subject to early vesting by the market price of the common shares on December 31, 2021 ($9.45).
(3) Calculated based on the difference between the closing market price of the common shares on December 31, 2021 ($9.45) and the exercise price of the options subject to accelerated vesting.

Directors' Compensation

Peyto's compensation philosophy for directors is to attract and retain qualified individuals and ensure that their interests are aligned with Peyto's shareholders.

Each of the non-executive directors of Peyto receives an annual retainer plus expenses for attending meetings of the Board and committees thereof. The base retainers for each non-executive director of Peyto are $120,000 per annum. Additionally, the Chairman of the Board is entitled to an additional $60,000 annual fee, the Chairman of the Audit Committee is entitled to an additional $20,000 annual fee and the Chairman of each of the Reserves, Health, Safety and Environment Committee, the Compensation and Nominating Committee and the Environmental, Social and Governance Committee is entitled to an additional $10,000 annual fee. The retainers are payable monthly during each year of service. Half of the retainer is fixed and paid in cash, while the other half is variable and in the form of DSUs.

Prior to June 15, 2020, the variable portion was subject to the Multiplier. If shareholder value was increased during a given year, the variable portion of the directors' retainer would go up. Conversely, if shareholder value was decreased during the year, the variable portion would go down. The cash payments made to each non-executive director on June 15 of each year is adjusted up or down based on the Multiplier. It was expected that each director would use the after tax portion of the variable portion of their retainer to buy common shares on the TSX.

Commencing after June 15, 2020, the Multiplier variable portion of each directors' retainer was replaced with a quarterly payment of DSUs in accordance with the DSU Plan. For additional information regarding the DSU Plan, see " Statement of Executive Compensation – Directors' Compensation – DSU Plan ".

In 2019, the Board adopted new share ownership guidelines for the Corporation's directors and officers. See " Statement of Executive Compensation – Director and Officer Equity Ownership " for a description of the Corporation's new share ownership guidelines for directors and officers. As at December 31, 2021, all directors satisfied the minimum shareholdings requirement.

DSU Plan

In adopting the DSU Plan, the Board considered the director compensation arrangements of its peer group relative to the Corporation's director compensation practices. The Board made the decision to adopt the DSU Plan in 2020, as opposed to continuing to pay the variable 50% of the directors' annual retainer in cash in accordance with the Multiplier, to preserve cash, to bring Peyto more in line with its peer group, to ensure that the Corporation's compensation practices are aligned

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with the Corporation's current asset base, head count and operations, to eliminate the complexity of the Multiplier, to shift towards long term securities based incentive awards and to focus the organization on shareholder return and per share performance metrics. See " Statement of Executive Compensation – Compensation Discussion and Analysis " and " Statement of Executive Compensation – Directors' Compensation ".

The " Multiplier " for the variable 50% of each directors' annual retainer was calculated as follows: the weighted average of the per common share closing price of common shares traded through the facilities of the TSX on the ten (10) consecutive trading days immediately preceding the date of the Corporation's annual meeting of shareholders in a given year plus the dividends paid per common share for that year divided by the weighted average of the per common share closing price of common shares traded through the facilities of the TSX on the ten (10) consecutive trading days immediately preceding the date of the Corporation's annual meeting of shareholders of the previous year.

The DSU Plan replaces the Multiplier component of the Corporation's compensation arrangements for non-executive directors. The Corporation will not pay any further directors' annual retainer pursuant to the Multiplier. For a description of the Multiplier, see " Statement of Executive Compensation – Directors' Compensation ".

Grants under the DSU Plan are included in the 16,487,418 maximum number of common shares that may be issued under all security based compensation arrangements of the Corporation, which are the Option Plan, the 2019 Market Based Bonus Plan (no further Rights will be granted under the 2019 Market Based Bonus Plan) and the DSU Plan. Up to 6,703,850 common shares will be available for future grants under the DSU Plan which amount will be shared with grants under all other security based compensation arrangements, which includes the Option Plan, based on the number of outstanding awards under each of the Option Plan, the 2019 Market Based Bonus Plan and the DSU Plan.

Description of the DSU Plan

The full text of the DSU Plan is attached to the Corporation's information circular – proxy statement dated March 15, 2021 as Schedule "A". The following is a summary of certain key provisions of the DSU Plan. This summary is subject to, and qualified by, the specific provisions of the DSU Plan. Capitalized terms used in the summary below and defined in the DSU Plan have the meanings given to them in the DSU Plan.

The DSU Plan allows the Compensation and Nominating Committee to grant deferred share units to members of the Board, who are not also full time employees of Peyto.

The purposes of the DSU Plan are to: (i) promote greater alignment of the interests between Peyto's directors and Peyto's shareholders; (ii) support compensation that is competitive and rewards our long term success as measured in total shareholder return; and (iii) attract and retain qualified individuals with the experience and ability to serve as directors. In addition, the DSU Plan has been designed to reduce the amount of cash compensation paid to non-executive directors of Peyto.

The DSU Plan is administered by the Compensation and Nominating Committee. Subject to the Compensation and Nominating Committee's reporting to and obtaining approval from the Board on all matters relating to the DSU Plan, the Compensation and Nominating Committee has sole and absolute discretion to administer the DSU Plan.

Participants will receive 50% of their annual retainer remuneration that is otherwise payable in cash (which was previously subject to the Multiplier) in the form of deferred share units. Additionally, the Compensation and Nominating Committee may also from time to time determine that special circumstances justify the approval of a grant of deferred share units in addition to the other compensation to which the participant is entitled.

Deferred share units are not transferable or assignable.

Subject to an extension for blackouts, the Corporation will credit deferred share units to a participant's deferred share unit account on the date that the remuneration would otherwise be payable (see " Statement of Executive Compensation – Directors' Compensation "). The number of deferred share units credited is determined by dividing the amount of the participant's deferred remuneration by the fair market value (as defined in the DSU Plan) of the common shares on the date the deferred share units are credited.

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The number of common shares reserved for issuance from time to time pursuant to outstanding deferred share units granted and outstanding under the DSU Plan and all other established or proposed security based compensation arrangements of Peyto (including the Option Plan and the 2019 Market Based Bonus Plan) is limited to 16,487,418 common shares.

If any deferred share units granted under the DSU Plan expire, terminate or are cancelled for any reason without the common shares issued thereunder having been issued in full, any unissued common shares to which such deferred share units relate shall be awardable for the purposes of granting of further deferred share units.

The aggregate number of deferred share units granted to any single participant cannot exceed 1% of the issued and outstanding common shares. In addition, the value of all deferred share units granted to any participant during a calendar year, as calculated on the grant date (excluding deferred share units granted in lieu of Board and committee retainers and meeting fees), under the DSU Plan and combined with the value of grants to such participant under all other established or proposed security based compensation arrangements of Peyto, shall not exceed $150,000 in value.

The number of common shares that are available to be issued to insiders within one year pursuant to the DSU Plan and combined with all other established or proposed security based compensation arrangements of Peyto, and issuable to insiders at any time, under the DSU Plan and combined with all other established or proposed security based compensation arrangements of Peyto (including the Option Plan and the 2019 Market Based Bonus Plan), shall not exceed 10% of the issued and outstanding common shares. Additionally, the number of common shares that are available to be issued to any one insider and such insider's associates within any one year period under the DSU Plan and combined with all other established or proposed security based compensation arrangements of Peyto (including the Option Plan and the 2019 Market Based Bonus Plan), shall not exceed 10% of the issued and outstanding common shares.

Dividends paid on the common shares before the maturity date of the deferred share units will be credited as deferred share units to the participant's account as of the dividend payment date and such additional deferred share units shall be subject to the same terms regarding vesting and payment date as the underlying deferred share units to which they relate.

In the event that the Corporation determines to pay a non-cash dividend on the common shares, the Board may, in its sole discretion and subject to TSX approval, determine that this non-cash dividend, or cash equivalent amount determined in the sole discretion of the Board, can also be provided to participants under the DSU Plan in the same manner as such noncash dividend is provided to shareholders. In such an event, participants would receive such non-cash dividend at the same time as the shareholders and there would be no credit of deferred share units to any participant's account. If a participant does not participate in a non-cash dividend, the Board will, in its sole discretion, determine the cash value of such non-cash dividend and credit it as deferred share units to the participant's account. The Corporation does not expect to declare non-cash dividends to its shareholders.

Deferred share units vest immediately upon being credited to a participant's account.

Following the date on which the participant ceases to hold all positions with us and our subsidiaries, partnerships, trusts or other controlled entities (the " Termination Date "), except as a result of death, all deferred share units credited to a participant's account will be redeemed as of the maturity date. The maturity date for US taxpayers is the Termination Date.

For directors who are not US taxpayers, the maturity date is December 1[st] of the calendar year immediately following the year of the Termination Date. Directors may file an irrevocable maturity date acceleration election subsequent to the Termination Date. Subject to the exceptions below, the elected maturity date must be no earlier than 180 days after the Termination Date and no later than December 1[st] of the calendar year following the Termination Date. The elected maturity date may be any time between the Termination Date and December 1st of the following calendar year, if one of the following exceptions apply: (i) the director resigns pursuant to the "majority voting" or similar policy; (ii) the director fails to be elected as a director at a shareholder meeting after being included as a nominee in our information circular; or (iii) the director is removed from office by a vote of shareholders.

Following a participant's Termination Date except as a result of death, the participant will have the right to have the deferred share units credited to their account redeemed by us. All deferred share units and dividend entitlements thereon (if any) will be redeemed for a cash payment except that, at our election, we may redeem deterred share units and dividend entitlements thereon (if any) issued as compensation for annual board and committee retainers and meeting attendance

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fees, in cash or through the issuance of common shares from treasury or purchased on the market and any combination of these. The cash payment will be equal to the number of deferred share units and dividend entitlements thereon (if any) in the participant's account as of the Termination Date, multiplied by the fair market value of our common shares determined at the maturity date.

If a participant dies while in office or after the Termination Date but before the maturity date, we must make a lump sum cash payment to the participant's legal representative within 90 days of the participant's death. The cash payment will be equal to the number of deferred share units in the participant's account as of the date of the participant's death, multiplied by the fair market value of our common shares determined at the date of death.

Participants have no further rights respecting any redeemed deferred share units. Deferred share units are deemed cancelled upon redemption.

The DSU Plan may be amended, modified or terminated by our board of directors without shareholder approval, subject to any required approval of the TSX. Notwithstanding the foregoing, the DSU Plan and any deferred share units granted under the plan may not be amended without shareholder approval to: (i) increase the fixed number of common shares available to be issued under outstanding deferred share units at any time; (ii) extend the term of any outstanding deferred share units; (iii) permit a holder to transfer or assign deferred share units to a new beneficial holder other than in the case of death of the holder; (iv) increase the number of common shares that may be issued to participants above the restrictions in the DSU Plan; (v) increase the number of common shares that may be issued to insiders above the restriction contained in the DSU Plan; or (vi) amend the amendment provision.

In addition, no amendment to the DSU Plan or deferred share units granted pursuant to the plan may be made without the consent of the holder, if it adversely alters or impairs any right previously granted to such holder under the DSU Plan.

The DSU Plan also contains anti-dilution provisions which allow the Board to make such adjustments to the DSU Plan and to any deferred share units as the Board may, in its sole discretion, consider appropriate in the circumstances to prevent dilution or enlargement of the rights granted to participants thereunder, as well as specific considerations for any participants who are US taxpayers.

Directors' Summary Compensation Table

The following chart highlights all the payments made to the Corporation's directors for the 2021 year:

Name	2021 Fees Earned Fixed ($)	Share- Based Awards (DSUs) ($)(1)(2)	Option- Based Awards ($)	Non-Equity Incentive Plan Compensation ($)	Pension Value ($)	All Other Compensation ($)	Total ($)
Donald Gray	90,000	93,746	-	-	-	-	183,746
Michael MacBean	70,000	72,914	-	-	-	-	142,914
Brian Davis	65,000	67,705	-	-	-	-	132,705
Gregory Fletcher	65,000	67,705	-	-	-	-	132,705
John W. Rossall	65,000	67,705	-	-	-	-	132,705

Notes:

(1) The value of DSUs is based on the number of DSUs granted multiplied by the 5 day volume weighted average price per common share on the TSX prior to the date of the grant. This methodology for calculating the fair value of the DSU awards on the grant date is consistent with the initial fair value determined in accordance with IFRS 2.

(2) The number of DSUs reflects dividends paid on Common Shares to December 31, 2021.

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Directors' Outstanding Option-Based Awards and Share-Based Awards

Other than the DSUs, there are no option-based or share-based awards outstanding as to non-executive directors at December 31, 2021. The following table sets forth all DSUs held by non-executive directors at the end of the year ended December 31, 2021.

Name	Number of DSUs(1)	Market or Payout Value of Vested DSUs Not Paid Out ($)(1)
Donald Gray	44,789	423,256
Michael MacBean	34,834	329,181
Brian Davis	32,347	305,679
Gregory Fletcher	32,347	305,679
John W. Rossall	32,347	305,679

Notes:

(1) Calculated based on the number of DSUs held at December 31, 2021 multiplied by the closing price per common share on the TSX December 31, 2021 ($9.45) adjusted to reflect dividends.

Directors' Incentive Plan Awards – Value Vested or Earned During the Year

The following table sets forth for each director, the value of DSUs which vested during the year ended December 31, 2021 and the value of non-equity incentive plan compensation earned during the year ended December 31, 2021. There are no other option-based or share-based awards outstanding as to non-executive directors at December 31, 2021.

Name	Option-Based Awards – Value Vested During the Year ($)	Share-Based Awards – Value Vested During the Year ($)(1)	Non-Equity Incentive Plan Compensation – Value Earned During the Year ($)
Donald Gray	-	93,746	90,000
Michael MacBean	-	72,914	70,000
Brian Davis	-	67,705	65,000
Gregory Fletcher	-	67,705	65,000
John W. Rossall	-	67,705	65,000

Note:

(1) Calculated based on the number of DSUs granted multiplied by the 5 day volume weighted average price per common share on the TSX on the prior to the grant date.

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Liability Insurance of Directors and Officers and Indemnification

Peyto maintains directors' and officers' liability insurance coverage, in the amount of $80 million, for losses to Peyto if it is required to reimburse directors and officers, where permitted, and for direct indemnity of directors and officers where corporate reimbursement is not permitted by law. The insurance protects Peyto against liability (including costs), subject to standard policy exclusions, which may be incurred by directors and/or officers acting in such capacity for Peyto. All directors and officers of Peyto are covered by the policy and the amount of insurance applies collectively to all. The cost of this insurance policy is currently $376,450 per annum.

In addition, Peyto has entered into indemnification agreements with its directors and officers. The indemnification agreements generally require that Peyto indemnify and hold the indemnitees harmless to the greatest extent permitted by law for liabilities arising out of the indemnitees' service to Peyto as directors and officers, if the indemnitees acted honestly and in good faith with a view to the best interests of Peyto and, with respect to criminal or administrative actions or proceedings that are enforced by monetary penalty, if the indemnitee had no reasonable grounds to believe that his or her conduct was unlawful. The indemnification agreements also provide for the advancement of defence expenses to the indemnitees by Peyto.

Director and Officer Equity Ownership

The Board has adopted share ownership guidelines to encourage alignment with the interests of shareholders by requiring its directors and management to build and hold equity in the Corporation in accordance with prescribed guidelines. The Board has determined that each non-executive director must hold a minimum number of common shares representing three times his or her total annual cash retainer, which minimum level of ownership must be achieved by each new director within three years of such director's appointment or election to the Board. Officers of the Corporation are required, within three years of their executive appointment, to accumulate a multiple of their annual salary in the form of common shares, as follows: CEO (five times); and other executive officers (three times). For directors, share-based compensation arrangements in the form of DSUs may be counted in determining if their ownership target has been achieved. The valuation of the common shares is determined on an annual basis as the fair market value at the closing trading price of the common shares on the TSX on December 31 or last day on which the common shares traded on such exchange prior to December 31.

The following tables set out the value of the holdings of each of Peyto's directors and officers based on the closing price of the common shares on the TSX on the last trading day of 2021 being $9.45 per common share on December 31, 2021.

Non-Executive Directors

Director	Equity Ownership Guideline	Equity Ownership Guideline		Shareholdings	Shareholdings	Shareholdings	Guideline Met or Investment Required to Meet Guideline ($) (1)
	Multiple of Annual Compensation	Amount of Annual Compensation Retainer ($)	Common Shares Held as at December 31, 2021	DSUs(2)	Holdings as Multiple of Retainer	Value of Equity Holdings ($)
Donald Gray	3x	90,000	948,136	44,789	104x	9,383,141	Guideline Met
Michael MacBean	3x	70,000	108,510	34,834	19x	1,354,601	Guideline Met
Brian Davis	3x	65,000	145,640	32,347	26x	1,681,977	Guideline Met
Gregory Fletcher	3x	65,000	19,000	32,347	7x	485,229	Guideline Met

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Director	Equity Ownership Guideline	Equity Ownership Guideline		Shareholdings	Shareholdings	Shareholdings	Guideline Met or Investment Required to Meet Guideline ($) (1)
	Multiple of Annual Compensation	Amount of Annual Compensation Retainer ($)	Common Shares Held as at December 31, 2021	DSUs(2)	Holdings as Multiple of Retainer	Value of Equity Holdings ($)
John W. Rossall	3x	65,000	107,000	32,347	20x	1,316,829	Guideline Met

Notes:

(1) Directors have three years from their appointment to meet the target common share or share equivalent ownership. (2) The number of DSUs reflects dividends paid on Common Shares to December 31, 2021.

Officers

Officer	Equity Ownership Guideline	Equity Ownership Guideline		Shareholdings	Shareholdings	Guideline Met or Investment Required to Meet Guideline (1)
	Multiple of Annual Compensation	Amount of Annual Base Salary ($)	Common Shares	Holdings as Multiple of Retainer	Value of Equity Holdings ($)
Darren Gee	5x	325,000	2,101,036	61x	19,854,790	Guideline Met
Kathy Turgeon	3x	250,400	133,224	5x	1,258,967	Guideline Met
Jean-Paul Lachance	3x	272,000	170,000	6x	1,606,500	Guideline Met
David Thomas	3x	246,500	253,872	10x	2,399,090	Guideline Met
Scott Robinson	3x	251,700	438,507	16x	4,143,891	Guideline Met

Notes:

(1) Executive officers have three years from their appointment to meet the target common share ownership.

The following tables set out each current directors' and officers' equity ownership interest in Peyto and any changes in ownership interests since March 15, 2021.

Non-Executive Directors

Directors' Equity Ownership and Changes Therein	Directors' Equity Ownership and Changes Therein	Directors' Equity Ownership and Changes Therein
Equity Ownership as at March 15, 2021	Equity Ownership as at March 15, 2022	Net Change in Equity Ownership
Common Shares	Common Shares	Common Shares
948,136	948,136	-
108,510	108,510	-
145,640	145,640	-
19,000	19,000	-
107,000	107,000	-

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Officers

	Officers' Equity Ownership and Changes Therein	Officers' Equity Ownership and Changes Therein	Officers' Equity Ownership and Changes Therein	Market Value of Equity Holdings as at March 15, 2022 ($)
	Equity Ownership as at March 15, 2021	Equity Ownership as at March 15, 2022	Net Change in Equity Ownership
Officer	Common Shares	Common Shares	Common Shares
Darren Gee	2,001,369	2,111,311	109,942	22,020,974
Kathy Turgeon	110,610	139,141	28,531	1,451,241
Jean-Paul Lachance	120,760	193,634	72,874	2,019,603
David Thomas	253,872	253,872	-	2,647,885
Scott Robinson	301,507	468,020	166,513	4,881,449

Securities Authorized for Issuance Under Equity Compensation Plans

The following sets forth information in respect of securities authorized for issuance under the Corporation's equity compensation plans as at December 31, 2021.

Securities Authorized for Issuance Under Equity Compensation Plans

==> picture [482 x 179] intentionally omitted <==

----- Start of picture text -----

Number of securities remaining
Number of securities to Weighted average available for future issuance under
be issued upon exercise exercise price of equity compensation plans
of outstanding Options, outstanding Options, (excluding securities reflected in
warrants and rights warrants and rights ($) column (a))
Plan Category (a) (b) (c) [(1)]
Equity compensation plans
approved by 9,349,806 5.02 2,272,705
securityholders [(1)]
Equity compensation plans
- - -
not approved by
securityholders
Total 9,349,806 5.02 2,272,705
----- End of picture text -----

Notes:

(1) The total dilution from the Option Plan, the 2019 Market Based Bonus Plan and the DSU Plan is limited, in the aggregate, to 16,487,418 common shares representing 10% of the number of issued and outstanding common shares on the date such plans (other than the DSU Plan) were adopted by the Board. For a summary of the Option Plan, the 2019 Market Based Bonus Plan and the DSU Plan, see " Statement of Executive Compensation – Compensation Discussion and Analysis – Option Plan ", " Statement of Executive Compensation – Compensation Discussion and Analysis – 2019 Market Based Bonus Plan " and " Statement of Executive Compensation – Directors' Compensation – DSU Plan" , respectively.

Annual Burn Rate Under Equity Compensation Plans

The following sets forth the number of options granted under the Option Plan, Rights granted under the 2019 Market Based Bonus Plan and DSUs granted under the DSU Plan during the period noted below and the potential dilutive effect of such options and Rights.

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Period	Number of Rights Granted	Number of Options Granted	Weighted Average Common Shares Outstanding(1)	Burn Rate(2) (%)
2021	-	4,887,516	166,107,837	3
2020	-	3,458,873	164,894,920	2
2019(4)	2,475,000(3)	7,736,401	164,874,175	6

Notes:

(1) Pursuant to the requirements of the TSX, the weighted average number of common shares outstanding during the period is the number of common shares outstanding at the beginning of the period, adjusted by the number of common shares bought back or issued during the period multiplied by a time-weighting factor. The time-weighting factor is the number of days that the common shares are outstanding as a proportion of the total number of days in the period.
(2) The burn rate for a given period is calculated by dividing the number of options subject to the Option Plan and DSUs subject to the DSU Plan granted during such period by the weighted average number of common shares outstanding during such period.
(3) Assumes that the outstanding Rights granted pursuant to the 2019 Market Based Bonus Plan will be settled in common shares. 923,133 Rights were cancelled and forfeited on or before December 31, 2019, including 825,000 Rights which vested on December 31, 2019, but were out-of-the-money on vesting and, as such, have been cancelled and forfeited. 825,667 Rights were cancelled and forfeited on or before December 31, 2020, including 726,200 Rights which vested on December 31, 2020, but were out-of-the-money on vesting and, as such, have been cancelled and forfeited. These forfeited Rights are not included in the table above.
(4) The DSU Plan was not adopted by the Board until 2020 and subsequently approved by shareholders at the annual and special meeting of shareholders held on May 7, 2020. The Option Plan was not adopted by the Board until 2019 and subsequently approved by shareholders at the annual and special meeting of shareholders held on May 9, 2019. Additionally, prior to the adoption of the 2019 Market Based Bonus Plan, no Rights could be settled in common shares.

For further information regarding the outstanding options and Rights held by the Named Executive Officers, see " Statement of Executive Compensation – Incentive Plan Awards " and for further information regarding the outstanding DSUs held by directors, see " Statement of Executive Compensation – Directors' Compensation – DSU Plan" .

CORPORATE GOVERNANCE PRACTICES

National Instrument 58-101 – Disclosure of Corporate Governance Practices (" NI 58-101 ") requires that if management of an issuer solicits proxies from its securityholders for the purpose of electing directors that certain prescribed disclosure respecting corporate governance matters be included in its management information circular. The TSX also requires listed companies to provide, on an annual basis, the corporate governance disclosure which is prescribed by NI 58-101.

The prescribed corporate governance disclosure for the Corporation is that contained in Form 58-101F1 which is attached to NI 58-101 (" Form 58-101F1 Disclosure ").

Set out below is a description of the Corporation's current corporate governance practices, relative to the Form 58-101F1 Disclosure.

1. Board of Directors

(a) Disclose the identity of directors who are independent.

The following five directors of the Corporation are independent (for purposes of NI 58-101):

Donald Gray (Chairman) Michael MacBean (Lead Director) Brian Davis Gregory Fletcher John W. Rossall

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For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationship with the Corporation which could, in the view of the Board, be reasonably expected to interfere with the exercise of a director's independent judgement. Mr. Gray ceased to be the President and CEO of the Corporation in 2006, which was over 15 years ago. Peyto's Compensation and Nominating Committee, as well as the Board as a whole, have reviewed and considered the relationship of Mr. Gray to the Corporation, including the statutory guidance with respect to the meaning of independence contained in NI 58-101 and, specifically, the period of time that has elapsed since Mr. Gray was an executive officer of the Corporation. As a result of such review and consideration, both the Compensation and Nominating Committee and the Board have determined that this relationship does not interfere with the exercise of the independent judgement of Mr. Gray in his role as a member of the Board.

(b) Disclose the identity of directors who are not independent, and describe the basis for that determination.

Darren Gee is not independent as he occupies the position of CEO of the Corporation.

Kathy Turgeon is not independent as she occupies the position of Vice President, Finance and CFO of the Corporation.

(c) Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the board of directors (the Board) does to facilitate its exercise of independent judgement in carrying out its responsibilities.

A majority of the directors of the Corporation (currently five of seven) are independent (for purposes of NI 58-101).

(d) If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.

The following directors are presently directors of other issuers that are reporting issuers (or the equivalent):

Name of Director Donald Gray Gregory Fletcher Mick MacBean John W. Rossall	Name of Other Reporting Issuers
	Gear Energy Ltd. Petrus Resources Ltd. Calfrac Well Services Ltd. Whitecap Resources Inc. TerraVest Industries Inc. Pipestone Energy Corp.

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The Board's mandate does not specifically prohibit interlocking board positions. The Board prefers to examine each situation on its own merits with a view to examine material relationships which may affect independence. As at the date hereof, there were no interlocking board memberships among Peyto's directors.

(e) Disclose whether or not the independent directors hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. If the independent directors hold such meetings, disclose the number of meetings held since the beginning of the issuer's most recently completed financial year. If the independent directors do not hold such meetings, describe what the Board does to facilitate open and candid discussion among its independent directors.

At the end of or during each meeting of the Board, the members of management of the Corporation and the non-independent directors of the Corporation who are present at such meeting leave the meeting in order for the independent directors to meet. In addition, as the Compensation and Nominating Committee is comprised of all the independent directors, other than Donald Gray, it also serves as a forum for discussion amongst independent members of the Board. Further, other meetings of the independent directors may be held from time to time if required. The Chairs of the Board and the Board committees follow up with the President and CEO as necessary with respect to matters requiring management action that are raised at these in-camera meetings. The Chairman of the Board also communicates informally, from time to time, with the independent members. Additionally, the Board also excuses members of management and any non-independent directors from portions of any meeting at which a potential conflict arises or where otherwise appropriate. Two (2) meetings of only the independent directors have been held since the beginning of the Corporation's most recently completed financial year.

(f) Disclose whether or not the chair of the Board is an independent director. If the Board has a chair or lead director who is an independent director, disclose the identity of the independent chair or lead director, and describe his or her role and responsibilities. If the Board has neither a chair that is independent nor a lead director that is independent, describe what the Board does to provide leadership for its independent directors.

The Chairman of the Board is Donald Gray, who is an independent member of the Board. The Chairman presides at all meetings of the Board and, unless otherwise determined, at all meetings of shareholders and acts to enforce the rules of order in connection with such meetings. The Chairman is to provide overall leadership to the Board without limiting the principle of collective responsibility and the ability of the Board to function as a unit. The Chairman is to endeavour to fulfill his Board responsibilities in a manner that will ensure that the Board is able to function independently of management and is to consider, and allow for, when appropriate, a meeting of independent directors, so that Board meetings can take place without management being present. The Chairman is also to endeavour to ensure that reasonable procedures are in place to allow directors to engage outside advisors at the expense of the Corporation in appropriate circumstances.

Notwithstanding that the Chairman of the Board is independent, Michael MacBean, an independent member of the Board, has been appointed as Lead Director. Among other things, the Lead Director assists the Chairman in endeavouring to ensure that the Board leadership responsibilities are conducted in a manner that will ensure that the Board is able to function independently of management.

(g) Disclose the attendance record of each director for all Board meetings held since the beginning of the issuer's most recently completed financial year.

The attendance record of each of the directors of the Corporation for Board meetings and committee meetings held since January 1, 2021, is as follows:

Name of Director Darren Gee(1)	Attendance Record
	7 out of 8 Board Meetings

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Name of Director Don Gray Michael MacBean Brian Davis Gregory Fletcher Kathy Turgeon(2) John W. Rossall	Attendance Record
	5 out of 8 Board Meetings 8 out of 8 Board Meetings 4 out of 4 Audit Committee Meetings 3 out of 3 Reserves, Health, Safety and Environment Committee Meetings 1 out of 1 Compensation and Nominating Committee Meetings 1 out of 1 Environmental, Social and Governance Committee Meetings 8 out of 8 Board Meetings 4 out of 4 Audit Committee Meetings 3 out of 3 Reserves, Health, Safety and Environment Committee Meetings 1 out of 1 Compensation and Nominating Committee Meetings 1 out of 1 Environmental, Social and Governance Committee Meetings 8 out of 8 Board Meetings 4 out of 4 Audit Committee Meeting 3 out of 3 Reserves, Health, Safety and Environment Committee Meetings 1 out of 1 Compensation and Nominating Committee Meetings 1 out of 1 Environmental, Social and Governance Committee Meetings 6 out of 8 Board Meetings 8 out of 8 1 out of 1 Board Meetings Compensation and Nominating Committee Meetings 3 out of 3 Reserves, Health, Safety and Environment Committee Meetings 1 out of 1 Environmental, Social and Governance Committee Meetings

Name of Director
Don Gray
Michael MacBean
Brian Davis
Gregory Fletcher
Kathy Turgeon(2)
John W. Rossall

Attendance Record

5 out of 8
Board Meetings
8 out of 8
Board Meetings
4 out of 4
Audit Committee Meetings
3 out of 3
Reserves, Health, Safety and Environment Committee
Meetings
1 out of 1
Compensation and Nominating Committee Meetings
1 out of 1
Environmental, Social and Governance Committee
Meetings
8 out of 8
Board Meetings
4 out of 4
Audit Committee Meetings
3 out of 3
Reserves, Health, Safety and Environment Committee
Meetings
1 out of 1
Compensation and Nominating Committee Meetings
1 out of 1
Environmental, Social and Governance Committee
Meetings
8 out of 8
Board Meetings
4 out of 4
Audit Committee Meeting
3 out of 3
Reserves, Health, Safety and Environment Committee
Meetings
1 out of 1
Compensation and Nominating Committee Meetings
1 out of 1
Environmental, Social and Governance Committee
Meetings
6 out of 8
Board Meetings
8 out of 8
1 out of 1
Board Meetings
Compensation and Nominating Committee Meetings
3 out of 3
Reserves, Health, Safety and Environment Committee
Meetings
1 out of 1
Environmental, Social and Governance Committee
Meetings

Notes:

(1) Mr. Gee is not a member of any committees as he is the CEO of the Corporation; however, Mr. Gee attended all Audit Committee, Reserves, Health, Safety and Environment Committee and Compensation and Nominating Committee meetings since January 1, 2021.
(2) Ms. Turgeon is not a member of any committees as she is the Vice President, Finance and CFO of the Corporation; however, Ms. Turgeon attended all Audit Committee, Reserves, Health, Safety and Environment Committee and Compensation and Nominating Committee meetings since January 1, 2021.
Board Mandate – Disclose the text of the Board's written mandate. If the Board does not have a written mandate, describe how the Board delineates its role and responsibilities.

The mandate of the Board is attached to this information circular – proxy statement at Schedule "B".

3. Position Descriptions

(a) Disclose whether or not the Board has developed written position descriptions for the chair and the chair of each Board committee. If the Board has not developed written position descriptions for the chair and/or the chair of each Board committee, briefly describe how the Board delineates the role and responsibilities of each such position.

The Board has developed written position descriptions for the Chairman of the Board as well as the Chairman of each of the committees of the Board. The position descriptions are available on the Corporation's website under the heading "Corporate Responsibility".

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(b) Disclose whether or not the Board and Chief Executive Officer have developed a written position description for the Chief Executive Officer. If the Board and Chief Executive Officer have not developed such a position description, briefly describe how the Board delineates the role and responsibilities of the Chief Executive Officer.

The Board, with the input of the CEO, has developed a written position description for the CEO. The position description is available on the Corporation's website under the heading "Corporate Responsibility".

Orientation and Continuing Education

(a) Briefly describe what measures the Board takes to orient new directors regarding (i) the role of the Board, its committees and its directors, and (ii) the nature and operation of the issuer's business.

As new directors join the Board, management provides these individuals with the Corporation's corporate policies, historical information about the Corporation, as well as information on the Corporation's performance and its strategic plan with an outline of the general duties and responsibilities entailed in carrying out their duties. The Board believes that these procedures are a practical and effective approach in light of the Corporation's particular circumstances, including the size of the Corporation, limited turnover of the directors and the experience and expertise of the members of the Board.

(b) Briefly describe what measures, if any, the Board takes to provide continuing education for its directors. If the Board does not provide continuing education, describe how the Board ensures that its directors maintain the skill and knowledge necessary to meet their obligations as directors.

Presentations are made regularly to the Board and committees to educate and inform them of changes within the Corporation and on appropriate other subjects such as regulatory and industry requirements and standards, capital markets, cybersecurity, commodity pricing and corporate governance. The Audit Committee has quarterly presentations on emerging trends and issues in the accounting and audit fields from management and the auditor of the Corporation is present at all audit committee meetings. The Board has quarterly presentations on operational results and technical and regulatory issues pertaining to reserves evaluation from management and the independent reserves evaluator is present at a minimum of one of the Board meetings each year. The Board also receives quarterly updates from Burnet, Duckworth & Palmer LLP on material changes in securities regulation and other corporate matters. Management provides the Board with an annual update on corporate governance "best practices" from third party publications as well as quarterly reports on new legislation or regulation relating to health, safety and environmental matters.

The Corporation also encourages directors to attend, enrol or participate in courses and/or seminars dealing with financial literacy, corporate governance and related matters and has agreed to pay the cost of such courses and seminars. Each director of the Corporation has the responsibility for ensuring that he maintains the skill and knowledge necessary to meet his obligations as a director. In February 2007, Michael MacBean received his Chartered Directors (C. Dir) designation from McMaster University. In January 2009, Gregory Fletcher graduated from the Directors' Education Program sponsored by the Institute of Corporate Directors and Haskayne School of Business at the University of Calgary.

5. Ethical Business Conduct

(a) Disclose whether or not the Board has adopted a written code for the directors, officers and employees. If the Board has adopted a written code:

The Corporation has adopted a Code of Business Conduct and Ethics for directors, officers and employees (the " Code ").

(i) disclose how a person or company may obtain a copy of the code;

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A copy of the Code may be obtained by contacting the Manager, Human Resources of the Corporation at ([email protected]) and is also available on SEDAR at www.sedar.com or on the Corporation's website under the heading "Corporate Responsibility".

(ii) describe how the Board monitors compliance with its code, or if the Board does not monitor compliance, explain whether and how the Board satisfies itself regarding compliance with its code; and

The Board monitors compliance with the Code by requiring each of the executive officers of the Corporation to affirm in writing on an annual basis his or her agreement to abide by the Code, as to his or her ethical conduct and with respect to any conflicts of interest. Please also see item 5(c) below for a discussion of the Corporation's whistleblower policy.

(iii) provide a cross-reference to any material change report filed since the beginning of the issuer's most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the code.

There have been no material change reports filed since the beginning of the Corporation's most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the Code.

(b) Describe any steps the Board takes to ensure directors exercise independent judgement in considering transactions and agreements in respect of which a director or executive officer has a material interest.

In accordance with the ABCA, directors who are a party to, or are a director or an officer of a person which is a party to, a material contract or material transaction or a proposed material contract or proposed material transaction are required to disclose the nature and extent of their interest and not to vote on any resolution to approve the contract or transaction. In addition, in certain cases, an independent committee of the Board may be formed to deliberate on such matters in the absence of the interested party.

In addition to the Code, the Board has also adopted a "Whistleblower Policy" wherein employees and consultants of the Corporation are provided with the mechanics by which they may raise concerns about incorrect financial reporting, unlawful activities, actions that violate the Code and any other serious improper conduct in a confidential, anonymous process. The Corporation did not receive any complaints under the Whistleblower Policy during the year ended December 31, 2021. A copy of this policy is available on the Corporation's website under the heading "Corporate Responsibility".

6. Nomination of Directors

(a) Describe the process by which the Board identifies new candidates for Board nomination.

The Compensation and Nominating Committee is responsible for recommending suitable candidates as nominees for election or appointment as director, and recommending the criteria governing the overall composition of the Board and governing the desirable characteristics for directors. In making such recommendations, the Compensation and Nominating Committee is to consider: (i) the competence and skills that the Board considers to be necessary for the Board, as a whole, to possess; (ii) the competence and skills that the Board considers each existing director to possess; (iii) the competencies and skills that each new nominee will bring to the Board; and (iv) whether or not each new nominee can devote sufficient time and resources to his or her duties as a member of the Board. The Board has adopted the Board Renewal Policy. See item 10 below.

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The Board and Compensation and Nominating Committee regularly discuss and evaluate the experience, qualification and skills of our directors with a view to ensuring the appropriate skill and experience profile is represented at the Board and committee level. See " Matters to be Acted Upon at the Meeting – Election of Directors – Experience and Background of Directors ". Some of the key competencies that the Corporation believes directors should have are: corporate executive experience, capital markets experience, crude oil and natural gas operational experience, crude oil and natural gas contracts and land experience, financial acumen and expertise, and knowledge in the areas of compensation, governance and health, safety and environment. Character and behavioral qualities including credibility, integrity, professionalism and communication skills are also important attributes taken into account when recruiting new directors. The Compensation and Nominating Committee also reviews on a periodic basis the composition of the Board to ensure that an appropriate number of independent directors sit on the Board, and analyze the needs of the Board and recommend nominees who meet such needs. The Chairman and CEO from time to time arrange meetings with such candidates to determine interest and availability with a view to making recommendations to the Board if and when appropriate. When necessary, the Compensation and Nominating Committee may engage the services of a search firm to assist them in the identification of director candidates with the necessary skills or experience the Board requires.

The Board has adopted a majority voting policy, which provides that if a nominee for election as a director receives a greater number of votes "withheld" than votes "for" at an uncontested meeting of the shareholders of the Corporation, such nominee shall offer his or her resignation as a director to the Board promptly following the meeting of shareholders at which the director was elected. Upon receiving such offer of resignation, the Compensation and Nominating Committee will consider such offer and make a recommendation to the Board whether to accept it or not. In the absence of special circumstances, it is expected that the Board will accept the resignation consistent with an orderly transition. The director will not participate in any Compensation and Nominating Committee or Board deliberations on the resignation offer. It is anticipated that the Board will make its decision to accept or reject the resignation within 90 days. See " Matters to be Acted Upon at the Meeting – Election of Directors – Majority Voting for Directors ".

In addition, the Corporation's By-laws include Advance Notice Provisions designed to: (i) facilitate an orderly and efficient annual meeting or, where the need arises, special meeting, process; (ii) ensure that all shareholders receive adequate notice of director nominations and sufficient information with respect to all nominees; and (iii) allow shareholders to register an informed vote having been afforded reasonable time for appropriate deliberation. As a whole, these provisions are intended to provide shareholders, directors and management of the Corporation with a clear framework for nominating directors. See " Matters to be Acted Upon at the Meeting – Election of Directors – Advance Notice Provisions " for a detailed description of the Advance Notice Provisions.

(b) Disclose whether or not the Board has a nominating committee composed entirely of independent directors. If the Board does not have a nominating committee composed entirely of independent directors, describe what steps the Board takes to encourage an objective nomination process.

The Compensation and Nominating Committee, which is responsible for nominating directors, is comprised of only independent directors.

(c) If the Board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.

See item 6(a) above.

7. Compensation

(a) Describe the process by which the Board determines the compensation for the issuer's directors and officers.

Compensation of Directors

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The Compensation and Nominating Committee conducts a yearly review of directors' compensation having regard to various reports on current trends in directors' compensation and compensation data for directors of reporting issuers of comparative size to the Corporation.

Please also see discussion under the heading " Statement of Executive Compensation – Directors' Compensation ".

Compensation of Officers

The Chairman of the Compensation and Nominating Committee has ongoing communication with the CEO regarding compensation matters for the upcoming fiscal year. After such background communication, the two meet in person to discuss compensation matters, with the Chairman and the CEO striving to ensure that executive compensation is consistent with the general principles as set forth under the heading " Statement of Executive Compensation – Compensation Discussion and Analysis – Executive and Employee Compensation Principles and Strategy ". The Chairman and CEO go through the proposed compensation for each executive officer, other than the CEO, including salary and participation levels in the bonus plans. The Chairman then meets with the other members of the Compensation and Nominating Committee and briefs them on the discussions held with the CEO. The full Compensation and Nominating Committee discuss the proposed executive officer compensation, in light of the strategic, operating and financial objectives of the Corporation as well as industry norms and conditions. If general or specific issues are raised, the Compensation and Nominating Committee will debate them. The full Compensation and Nominating Committee then meets with the CEO to discuss such matters and raise any questions or issues they may have regarding executive compensation. In light of the Corporation's size and small number of employees, these meetings allow the Compensation and Nominating Committee to get a sense of the practical issues involved in determining compensation levels for executives. The Compensation and Nominating Committee then deals specifically with setting the compensation of the CEO. The Compensation and Nominating Committee then discusses and debates, as necessary, the specific executive officer compensation proposals. If further clarification is necessary, the Chairman will ask the CEO for information. Once compensation levels are agreed to by the members of the Compensation and Nominating Committee, they are formally approved.

Please also see discussion under the heading " Statement of Executive Compensation – Compensation Discussion and Analysis – Executive and Employee Compensation Principles and Strategy ", " Statement of Executive Compensation – Compensation Discussion and Analysis – CEO Compensation " and " Statement of Executive Compensation – Compensation Discussion and Analysis – Three Year Named Executive Officer Compensation Versus Financial Measures ".

(b) Disclose whether or not the Board has a compensation committee composed entirely of independent directors. If the Board does not have a compensation committee composed entirely of independent directors, describe what steps the Board takes to ensure an objective process for determining such compensation.

The Compensation and Nominating Committee is comprised entirely of independent directors.

(c) If the Board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.

The Compensation and Nominating Committee's responsibility is to formulate and make recommendations to the Board in respect of compensation issues relating to directors and officers of the Corporation. Without limiting the generality of the foregoing, the Compensation and Nominating Committee has the following duties:

(i) advise the Board on executive compensation matters;
(ii) review and recommend a compensation philosophy, guidelines and plans for the Corporation's executives and employees;

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(iii) review and approve corporate goals and objectives relevant to CEO compensation;
(iv) evaluate the CEO's performance in light of those goals, and make recommendations to the Board with regard to the CEO's compensation based on this evaluation;
(v) in consultation with the CEO, review and approve non-CEO compensation, incentive-compensation plans, and equity-based plans;
(vi) review and approve all discretionary compensation granted;
(vii) review and approve fees to be paid to members of the Board;
(viii) review executive compensation disclosure before it is publicly disclosed; and
(ix) be the forum for meetings of all independent directors of the Corporation.

The Compensation and Nominating Committee is required to be comprised of at least three directors, or such greater number as the Board may determine from time to time. All members of the Compensation and Nominating Committee are required to be independent, as such term is defined for this purpose under applicable securities law requirements. Pursuant to the mandate and terms of reference of the Compensation and Nominating Committee, meetings of the Compensation and Nominating Committee are to take place at least two times per year and at such other times as the Chairman of the Compensation and Nominating Committee may determine.

(d) If a compensation consultant or advisor has, at any time since the beginning of the issuer's most recently completed financial year, been retained to assist in determining compensation for any of the issuer's directors and officers, disclose the identity of the consultant or advisor and briefly summarize the mandate for which they have been retained. If the consultant or advisor has been retained to perform any other work for the issuer, state that fact and briefly describe the nature of the work.

A compensation consultant or advisor has not, at any time since the beginning of the Corporation's most recently completed financial year, been retained to assist in determining compensation for any of the Corporation's directors and officers. Peyto does participate in the Mercer Total Compensation Survey for the Energy Sector.

Other Board Committees – If the Board has standing committees other than the audit, compensation and nominating committees, identify the committees and describe their function.

In addition to the Audit Committee and the Compensation and Nominating Committee, the Corporation has established a Reserves, Health, Safety and Environment Committee and an Environmental, Social and Governance Committee.

Reserves, Health, Safety and Environment Committee

The Reserves, Health, Safety and Environment Committee is comprised of four directors, each of whom is independent.

The Reserves, Health, Safety and Environment Committee is responsible for various matters, including relating to reserves of the Corporation that may be delegated to the Reserves, Health, Safety and Environment Committee pursuant to National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (" NI 51-101 ") and health, safety, environment and sustainability, including:

(a) reviewing the Corporation's procedures relating to the disclosure of information with respect to oil and gas activities, including reviewing its procedures for complying with disclosure requirements and restrictions set forth under applicable securities law requirements;

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(b) reviewing the Corporation's procedures for providing information to the independent evaluator;
(c) meeting, as considered necessary, with management and the independent evaluator to determine whether any restrictions placed by management affect the ability of the evaluator to report without reservation on the Reserves Data (as defined in NI 51-101) (the " Reserves Data ") and to review the Reserves Data and the report of the independent evaluator thereon (if such report is provided);
(d) reviewing the appointment of the independent evaluator and, in the case of any proposed change to such independent evaluator, determining the reason therefor and whether there have been any disputes with management;
(e) reviewing qualifications and independence of the independent evaluator to ensure the independent evaluator being considered for appointment or re-appointment is technically qualified and competent, independent of management, that there are no restrictions affecting the ability of the independent evaluator to report on the Corporation's oil and natural gas reserves without reservations and to establish the terms of their engagement;
(f) reviewing any matters relating to the preparation, assumptions, evaluation processes and resulting outcomes for any report on the Corporation's reserves (including reserves to be acquired) for material acquisitions or which may form the basis of any public disclosure by the Corporation;
(g) providing a recommendation to the Board as to whether to approve the content or filing of the statement of the Reserves Data and other information that may be prescribed by applicable securities law requirements including any reports of the independent engineer and of management in connection therewith;
(h) reviewing the Corporation's procedures for reporting other information associated with oil and gas producing activities;
(i) regularly assessing whether management has in place appropriate policies and processes to prevent and detect inaccuracies in estimating reserves and disclosing reserves and related oil and gas information in compliance with regulatory requirements;
(j) generally reviewing all matters relating to the preparation and public disclosure of estimates of the Corporation's reserves;
(k) reviewing the Corporation's strategies, policies, programs and internal control systems with respect to health, workforce safety, asset integrity, process safety and environmental protection and monitor the Corporation's performance relative to internal improvement objectives and industry best practice;
(l) reviewing and recommending to the Board for approval fundamental policies pertaining to health, workforce safety, asset integrity, process safety and environmental protection having the potential to impact the Corporation's activities and strategies;
(m) reviewing the Corporation's policies and programs for achieving full and continuous compliance with engineering standards, codes, regulations and applicable laws;
(n) reviewing and monitoring the Corporation's emergency response policies and plans and the Corporation's state of readiness to respond to crisis situations, including, but not limited to, monitoring notices from management and reviewing circumstances involving any major emergencies reported by the Corporation;
(o) reviewing and reporting to the Board:

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on the Corporation's performance in the areas of health, workforce safety, process safety, environmental protection, field operational excellence and compliance with codes, standards, regulations and applicable laws;
on emerging trends, issues and regulations related to health, workforce safety, process safety, environmental protection and field operational excellence that are relevant to the Corporation;
the findings of any significant report by regulatory agencies, external health, safety and environmental consultants or auditors concerning the Corporation's performance in health, safety and environment and any necessary corrective measures taken to address issues and risks with regards to the Corporation's performance in the areas of health, safety and environment that have been identified by the Corporation, external auditors or by regulatory agencies;
any civil or criminal occupational health and safety or environmental proceedings, claims, orders, actions or government investigation contemplated or threatened against the Corporation, including notices from management in respect thereof;
the results of any review with management, outside accountants and legal advisors of the implications of major corporate undertakings such as the acquisition or expansion of facilities or decommission of facilities as it relates to health, safety and environment that are relevant to the Corporation and, in the Committee's discretion, make recommendations to the Board for consideration;
a framework for management's decisions on abandonment and reclamation, including appropriate asset retirement obligation determination; and
policies and other directives of the Corporation relating to security and the safeguarding of the Corporation's premises, installations, assets and personnel;
(p) periodically reviewing the relationship of the Corporation with the communities affected by its business and operations and consider and implement policies for the improvement of the relationship of the Corporation with the communities affected by its business and operations;
(q) reviewing the insurable risks related to environment, health and safety issues and evaluate cost/insurance benefits associated with those risks; concerning insurance, the Committee shall consult with and review the recommendations of the Audit Committee of the Board and if desirable, recommend changes to the Corporation's insurance program including coverage for operations, property damage, business interruption and liabilities;
(r) reviewing and recommending to the Board the Corporation's approach to corporate social responsibility and sustainability reporting;
(s) reviewing any matters relating to the preparation, assumptions, evaluation processes and resulting outcomes for any corporate social responsibility and sustainability report of the Corporation;
(t) annually reviewing the Reserves, Health, Safety and Environment Committee's mandate and work plan and provide the work plan and any recommended changes to the mandate to the Chair of the Board; and
(u) performing any other activities consistent with the mandate of the Reserves, Health, Safety and Environment Committee as the Reserves, Health, Safety and Environment Committee or the Board deems necessary or appropriate; and
(v) having the authority to investigate any activity of the Corporation that has an impact on or relating to the Reserves, Health, Safety and Environment Committee's mandate and responsibilities.

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Environmental, Social and Governance Committee

The Environmental, Social and Governance Committee is comprised of four directors, all of whom are independent.

The Environmental, Social and Governance Committee is responsible for various matters relating to environmental, social and governance (" ESG ") and sustainability matters and its primary duties and responsibilities for the oversight of ESG and sustainability matters are as follows:

(a) review, approve or recommend to management of the Corporation and/or the Board policies and priorities related to ESG and sustainability matters, including the following:
climate and energy;
Indigenous rights and relationships;
stakeholder engagement;
community investment;
community and landowner awareness on pipeline safety; and
political contributions;
(w) receive and review periodic reports from management regarding the Corporation's initiatives and opportunities to optimize its climate related and sustainability performance including processes to reduce or substitute energy and water use, reduce emissions and waste and minimize land disturbance;
(x) provide oversight of the Corporation's programs to identify social, political and environmental trends in public debate, public policy, regulation and legislation that may impact the Corporation's strategies and business interests and recommend, where significant, appropriate responses to management of the Corporation and/or the Board;
(y) provide oversight of the Corporation's performance, engagement and communications directed towards building public confidence and stakeholder trust;
(z) review and provide oversight of the Corporation's conduct of business in a socially responsible, ethical and transparent manner;
(aa) review and provide oversight on the incorporation of ESG factors in the Corporation's reporting and public disclosure on ESG and sustainability matters, including use of reporting frameworks and methodologies for annual and specialized disclosure, as well as the Corporation's position in relevant independent ranking systems;
(bb) review and provide oversight of the Corporation's programs and processes for community, Indigenous and governments relations, including community investment and partnerships and communication, consultation and engagement with key stakeholders, rights-holders and decision makers, to ensure a rigorous and systemic approach;
(cc) provide oversight with respect to risk management in ESG and sustainability areas; and
(dd) address any other matter properly referred to the Environmental, Social and Governance Committee by the Chair of the Board, the Board, a director, the CEO, or the management of the Corporation for review, recommendation or decisions.

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Assessments – Disclose whether or not the Board, its committees and individual directors are regularly assessed with respect to their effectiveness and contribution. If assessments are regularly conducted, describe the process used for the assessments. If assessments are not regularly conducted, describe how the Board satisfies itself that the Board, its committees, and its individual directors are performing effectively.

The Compensation and Nominating Committee is responsible by its terms of reference to evaluate the effectiveness of the Board, its committees and individual directors. The Compensation and Nominating Committee has developed a questionnaire that assesses the effectiveness of the Board as a whole, individual Board members and each of the committees of the Board. Assessments are conducted annually. The results of the assessment are summarized by the Corporate Secretary and provided to the Chairman of the Compensation and Nominating Committee as well as the Chairman of the Board. The Chairman of the Compensation and Nominating Committee presents a summary of the results to the Board as a whole and communicates the results of the committee assessment to each committee Chairman. The assessment for 2020 was conducted in the first quarter of 2021.

10. Director Term Limits and Other Mechanisms of Board Renewal

When considering nominees for the Board, the Compensation and Nominating Committee reviews the skills and experience of the current directors of the Corporation to assess whether the Board's skills and experience need to be strengthened in any area. In addition to considering the skills and experience of the Board, the Compensation and Nominating Committee also assesses the knowledge and character of all nominees to the Board and other factors such as independence of the directors to ensure that the Board is operating effectively and independently of management. The Compensation and Nominating Committee considers both the term of service and age of individual directors, the average term of the Board as a whole and turnover of directors over the prior years when proposing nominees for election of the directors of the Corporation. The Compensation and Nominating Committee considers the benefits of regular renewal in the context of the needs of the Board at the time and the benefits of the institutional knowledge of the Board members.

The Board has adopted the Board Renewal Policy which provides a framework for the Corporation to allow for renewal of the Board by providing for, where appropriate, the "deemed resignation" of a director on the earlier of the director: (i) reaching the age of seventy-five (75); or (ii) having served as a non-executive director of the Corporation for fifteen (15) years since January 1, 2011, being the effective date of the Corporation's conversion from Peyto Energy Trust.

Upon receipt of a "deemed resignation", the Compensation and Nominating Committee will consider whether the continued service of the director would be in the best interests of the Corporation in light of, among other relevant considerations, the individual director's and the Board's competencies and skills, the size of the Board and the composition of the Board in light of Peyto's Board Diversity Policy (as discussed below) and will make a recommendation to the Board to accept or reject the deemed resignation of the individual director.

If the Compensation and Nominating Committee recommends that the Board accept the director's deemed resignation, it shall recommend that the deemed resignation be accepted in conjunction with the Corporation's next annual meeting of shareholders or such other date as it reasonably believes will allow for orderly transition. The Board shall consider but is not obligated to follow the recommendation of the Compensation and Nominating Committee.

If the deemed resignation of a director pursuant to the Board Renewal Policy is not accepted, the director shall be deemed to re-submit such resignation on January 1[st] of each calendar year thereafter.

The Board Renewal Policy is available on the Corporation's website under the heading "Corporate Responsibility".

11. Policies Regarding the Representation of Women on the Board

The Board has adopted the Board Diversity Policy which recognizes that the nomination and appointment of candidates with multiple perspectives, skills, expertise, industry experience and personal characteristics such as

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age, gender, ethnicity and other distinctions will contribute to the continued success of the Corporation. This Board Diversity Policy sets out the framework for Peyto's approach to Board diversity and outlines the key criteria for the composition of the Board to promote the Corporation's commitment and aspirational targets to diversity and inclusion.

The Compensation and Nominating Committee oversees the evaluation and assesses and considers the effectiveness, of the Board as a whole, the committees of the Board and the contribution of individual members on a periodic basis. The Compensation and Nominating Committee, in conjunction with the Board, also reviews the experience, qualifications and skills of Peyto's incumbent directors to ensure that the composition of the Board and committees and the competencies of the members are in line with those that the Compensation and Nominating Committee considers that the Board and its respective committees should possess.

In considering suitable candidates for appointment or re-election to the Board, or whether to accept the deemed resignation of a director pursuant to the Board Renewal Policy, and to assist us in attaining our targeted representation, the Compensation and Nominating Committee shall: (i) consider all aspects of diversity including, but not limited to, those described above, in order to enable the Compensation and Nominating Committee to discharge its duties and responsibilities effectively; (ii) assess the skills and backgrounds collectively represented on the Board to ensure that they reflect the diverse nature of the business environment in which Peyto operates; (iii) consider candidates on merit against objective criteria having due regard to the benefits of diversity on the Board; and (iv) engage, as deemed necessary, qualified independent external advisors to identify and assess candidates that meet the Board's skills and diversity criteria.

In addition, the Compensation and Nominating Committee will review the number of women considered or brought forward as potential nominees for board positions when the Board is looking to add additional members or replace existing members and will evaluate the skills, knowledge, experience and character of any such women candidates relative to other candidates to ensure that women candidates are being fairly considered relative to other candidates.

Any search firm engaged to assist the Compensation and Nominating Committee in identifying candidates for appointment to the Board will be specifically directed to include diverse candidates generally, and multiple women candidates in particular.

In addition, each year the Compensation and Nominating Committee will: (i) assess the effectiveness of the Board Diversity Policy and related objectives; (ii) monitor and review the Corporation's progress in achieving its aspirational target for gender diversity; (iii) monitor the implementation of the Board Diversity Policy; and (iv) report to the Board and recommend any revisions that may be necessary.

As all recommendations of director nominees need to be approved by the Compensation and Nominating Committee, the Board has concluded that appropriate measures are in place to ensure that the Board Diversity Policy is effectively implemented.

The Peyto Board Diversity Policy is available on the Corporation's website under the heading "Corporate Responsibility".

12. Consideration of the Representation of Women in the Director Identification and Selection Process

See item 11.

13. Consideration Given to the Representation of Women in Executive Officer Appointments

The Board believes that the appointment of executive officers should be made based on each candidate's experience, knowledge, education, management capabilities and competency, as well as the effect of the appointment on the diversity of the Corporation's executive officers as a whole. The Corporation is staffed with a large female contingent (42%) and given its focus on the identification, assessment and development of internal candidates to build leadership capability and strengthen overall succession, the Corporation believes it is poised to ensure it has strong internal female candidates to drive both short and long-term performance. The

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Corporation's philosophy of development and promotion from within will strengthen its values and culture, aid in retention of talent and provide a diversity of options for succession. See item 14.

14. Issuer's Targets Regarding the Representation of Women on the Board and in Executive Officer Positions

The Board does not specifically consider the level of female representation in executive officer positions when making such appointments nor does it have targets in respect of appointing women to these positions. In making appointments to executive officer positions, the Board considers each candidate's experience, knowledge, education, management capabilities and competency, as well as the effect of the appointment on the diversity of the Corporation's executive officers as a whole. Also see item 13. As all recommendations of appointments of executive officers need to be approved by the Compensation and Nominating Committee, the Board has concluded that appropriate measures are in place to ensure that the Corporation's approach to executive officer appointments is effectively implemented.

15. Number of Women on the Board and in Executive Officer Positions

There is presently one woman serving on the Board, which represents 14.3% of the Board. There is presently one woman serving in an executive officer position at the Corporation, which represents 11% of the number of executive officer positions at the Corporation.

Other Matters Relating to the Board

The Board holds regularly scheduled meetings at least quarterly to perform its responsibilities. The Board and members of management hold strategic planning sessions annually and revisit the strategic plan at each quarterly meeting of the Board. Significant operational decisions and all decisions relating to: (i) the acquisition and disposition of properties in excess of limits established by the Board from time to time; (ii) the approval of capital expenditure budgets; (iii) the establishment of credit facilities; (iv) issuances of additional common shares or debt; and (v) the determination of the amount of the monthly dividends, are made by the Board.

The Board and its committees have access to senior management on a regular basis as Mr. Darren Gee, CEO, and Ms. Kathy Turgeon, the Vice President, Finance and CFO, are directors and attend all meetings of the Board along with other executive officers who are invited to attend such meetings to provide necessary information to facilitate decision making. Additionally, Mr. Jean-Paul Lachance, the President and Chief Operating Officer, attends all meetings of the Board to provide necessary information to facilitate decision making.

Succession Planning

The Corporation spends considerable time and energy on succession planning for its executive officers and other key personnel. The Corporation focuses on developing leadership bench-strength and future management candidates from within the organization. On an annual basis, the executive officers meet to discuss succession planning within the organization and to identify high potential employees for additional leadership development opportunities. The Board takes responsibility for senior officer succession planning and specifically succession planning for the CEO. Succession planning is frequently a part of the Board agenda and in-camera discussions and is discussed formally at least on an annual basis. At these sessions, the Board and the CEO discuss succession plans and candidates for all executive officer positions, including the CEO role. The review includes an assessment of each individual's strengths and development requirements, an estimate as to when such individuals may be prepared to accept such a role change, and any current plans for such individual's career and educational development.

Shareholder Engagement

We communicate with our shareholders in a wide variety of ways, including through the Corporation's website, annual responsibility reports, news releases, annual and quarterly reports, management information circulars, annual information forms, investor presentations, group meetings and industry conferences, annual meetings of shareholders and one-on-one meetings with shareholders. The Corporation holds conference calls for quarterly earnings releases and major corporate developments as soon as practicable after they are publicly disclosed, and such calls are open to be heard by the public. Details of the time, place and method of accessing any such call and instructions as to where are broadly disseminated.

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The Board has adopted a Shareholder Engagement Policy, which formalizes its commitment to engaging in constructive communications with our shareholders and expresses our directors' interest in meeting with key shareholders to discuss specific matters of mutual interest and concern. Shareholders may initiate communication directly with the Board by contacting our Lead Director by mail or email at:

Peyto Exploration & Development Corp. Attention: Lead Director of the Board 300, 600 – 3[rd] Avenue S.W. Calgary, Alberta T2P 0G5

Email: [email protected]

The Shareholder Engagement Policy is available on the Corporation's website under the heading "Corporate Responsibility".

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

Neither the Corporation, nor any director or executive officer of the Corporation, any proposed nominee for election as a director of the Corporation, nor any associate of any of the foregoing, is, or has at any time since the beginning of the Corporation's last completed financial year, been indebted to the Corporation, nor is or has the indebtedness of any such persons to another entity been the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or any of its subsidiaries.

CORPORATE SUSTAINABILITY

The Corporation is committed to conducting its business in a safe and responsible manner to protect both the health and safety of employees, contractors, stakeholders, and the public as well as the environment. Safeguarding the environment and maintaining the integrity of the Corporation's infrastructure is inherent in its day-to-day operations. The Corporation's culture promotes responsibility and accountability for health, safety and environmental performance throughout the entire organization. Recognizing the more prominent role that environmental and sustainability factors are playing in the Corporation's business, in 2020, the Board formed the Environmental, Social and Governance Committee. This committee is comprised of independent directors, who are responsible for, among other things, reviewing the Corporation's policies and practices pertaining to environment, health and safety, and sustainability matters and reviewing procedures designed to minimize environmental, occupational health and safety and other risks to asset value and mitigate such risks. See " Corporate Governance Practices – Other Board Committees ".

The Corporation has been reporting on sustainability initiatives since 2016 through annual sustainability reports using metrics tracked back from 2013. See the Corporation's website for the 2021 ESG Report for more information. An updated report for 2022 will be available later this year.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Except as disclosed herein, there were no material interests, direct or indirect, of directors or executive officers of the Corporation, any proposed director of the Corporation, any securityholder who beneficially owns, directly or indirectly, or exercises control or direction over more than 10% of the outstanding common shares, or any other Informed Person (as defined in National Instrument 51-102 – Continuous Disclosure Obligations ) or any known associate or affiliate of such persons, in any transaction since the commencement of the last completed financial year of the Corporation or in any proposed transaction which has materially affected or would materially affect the Corporation or any of its subsidiaries.

INTEREST OF CERTAIN PERSONS AND COMPANIES IN MATTERS TO BE ACTED UPON

Management is not aware of any material interest of any director or executive officer or anyone who has held office as such since the beginning of the Corporation's last financial year, any proposed nominee for election as a director or of any associate or affiliate of any of the foregoing in any matter to be acted on at the meeting, save as is disclosed herein.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this information circular – proxy statement relate to matters that are not historical facts and may constitute forward-looking statements. These statements are identified by the use of words such as "could", "should", "anticipate", "expect", "will", "may" and similar expressions and statements. Forward-looking statements contained herein include, but are not limited to, statements regarding the Corporation's expected approach to its compensation practices. These statements are based on certain assumptions and analysis made by Peyto in light of its experience and its perception of historical trends and expected future developments as well as other factors it believes are appropriate in the circumstances. Whether actual results, performance or achievements will conform to Peyto's expectations is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from Peyto's expectations.

By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, royalties, environmental risks, taxation, regulation, changes in tax or other legislation, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility, and our ability to access sufficient capital from internal and external sources. The foregoing and other risks are described in more detail in Peyto's management's discussion and analysis for the year ended December 31, 2021 and Peyto's annual information form for the year ended December 31, 2021 under the headings " Risk Management " and " Risk Factors ", respectively, each of which is available at www.sedar.com.

Further, any forward-looking statement is made only as of the date of this information circular – proxy statement, and Peyto undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by applicable securities laws. New factors emerge from time to time, and it is not possible for Peyto to predict all of these factors or to assess in advance the impact of each such factor on Peyto's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

The forward-looking statements contained in this information circular – proxy statement are expressly qualified by this cautionary statement.

ADDITIONAL INFORMATION

Additional information relating to the Corporation is available on SEDAR at www.sedar.com. Financial information in respect of the Corporation and its affairs is provided in the Corporation's annual audited comparative financial statements for the year ended December 31, 2021 and the related management's discussion and analysis. Copies of the Corporation's financial statements and related management's discussion and analysis are available upon request from the Corporation at Suite 300, 600 – 3[rd] Avenue S.W., Calgary, Alberta T2P 0G5, Attention: Kathy Turgeon, telephone (403) 263-2950, or telecopy (403) 451-4100.

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OTHER MATTERS

Management of the Corporation knows of no amendment, variation or other matter to come before the meeting other than the matters referred to in the notice of annual and special meeting. However, if any other matter properly comes before the meeting, the accompanying proxy will be voted on such matter in accordance with the best judgment of the person voting the proxy.

The contents and the sending of this information circular – proxy statement have been approved by the Board.

Shareholders are encouraged to contact management of the Corporation or members of the Board with respect to any questions or concerns regarding the Corporation, its business, operations and/or governance matters. Darren Gee, the Corporation's CEO, may be reached by telephone at (403) 237-8911; Jean-Paul Lachance, the Corporation's President and COO, may be reached by telephone at (403) 451-4111; Kathy Turgeon, the Corporation's Vice President, Finance and CFO, may be reached by telephone at (403) 263-2950; and Michael MacBean, the Corporation's Lead Director, may be reached by telephone at (403) 225-1144. Additionally, shareholders may call Lydia Hamaliuk, Manager, Human Resources for the Corporation, at 1-844-847-9706 (toll free in North America) or (403) 261-6081 (for outside of North America).

Dated: March 23, 2022

SCHEDULE "A"

PEYTO EXPLORATION & DEVELOPMENT CORP.

SHARE OPTION PLAN

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PEYTO EXPLORATION & DEVELOPMENT CORP.

AMENDED AND RESTATED SHARE OPTION PLAN

1. Purpose of Plan

The purpose of this plan is to develop the interest of officers, employees of and consultants to, Peyto Exploration & Development Corp. (the " Corporation ") and its subsidiaries or persons providing services on an ongoing basis thereto in the growth and development of the Corporation and its subsidiaries by providing them with the opportunity through options to acquire an increased proprietary interest in the Corporation.

2. Defined Terms

Where used herein, the following terms shall have the following meanings, respectively:

(a) " associate " has the meaning set forth in the Securities Act (Alberta);
(b) " Black-Out Period " means the period during which the relevant Optionee is prohibited from exercising an Option due to trading restrictions imposed by the Corporation pursuant to any policy of the Corporation respecting restrictions on trading that is in effect at that time;
(c) " Board " means the board of directors of the Corporation;
(d) " Business Day " a day other than a Saturday, Sunday or other than a day when banks in the City of Calgary, Alberta are generally not open for business;
(e) " Change of Control " means:
(i) the sale to a person or acquisition by a person not affiliated with the Corporation or its subsidiaries of net assets of the Corporation or its subsidiaries having a value greater than 50% of the fair market value of the net assets of the Corporation and its subsidiaries determined on a consolidated basis prior to such sale whether such sale or acquisition occurs by way of reconstruction, reorganization, recapitalization, consolidation, amalgamation, arrangement, merger, transfer, sale or otherwise;
(ii) any change in the holding, direct or indirect, of shares of the Corporation by a person not affiliated with the Corporation as a result of which such person, or a group of persons, or persons acting in concert, or persons associated or affiliated with any such person or group within the meaning of the Business Corporations Act (Alberta), are in a position to exercise effective control of the Corporation whether such change in the holding of such shares occurs by way of takeover bid, reconstruction, reorganization, recapitalization, consolidation, amalgamation, arrangement, merger, transfer, sale or otherwise if members of the Board who are members of the Board immediately prior to the earlier of such change and the first public announcement of such change cease to constitute a majority of the Board at any time within sixty days of such change; and for the purposes of this Plan, a person or group of persons holding shares or other securities in excess of the number which, directly or following conversion thereof, would entitle the holders thereof to cast 50% or more of the votes attaching to all shares of the Corporation which, directly or following conversion of the convertible securities forming part of the holdings of the person or group of persons noted above, may be cast to elect directors of the Corporation shall be deemed, other than a person holding such shares or other securities in the ordinary course of business as an investment manager who is not using such holding to exercise effective control, to be in a position to exercise effective control of the Corporation; or
(iii) the winding up or liquidation of the Corporation or the sale, lease or transfer of all or substantially all of the directly or indirectly held assets of the Corporation to any other person or persons (other than pursuant to an internal reorganization or in circumstances where the

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business of the Corporation is continued and where the shareholdings or other securityholdings, as the case may be, in the continuing entity and the constitution of the board of directors or similar body of the continuing entity is such that the transaction would not be considered a "Change of Control" if paragraph (e)(ii) above was applicable to the transaction);

(f) " Cessation Date " means the date, subject to Section 8(a), that is the earlier of:
(i) the date of the Optionee's termination or resignation, as the case may be; or
(ii) the date that the Optionee ceases to be in the active performance of the usual and customary day-to-day duties of the Optionee's employment or consultant position or function;
(iii) regardless of whether adequate or proper advance notice of termination or resignation shall have been provided in respect of such cessation of being as Optionee;
(g) " Common Shares " means the common shares of the Corporation or, in the event of an adjustment contemplated by Section 12 or 13 hereof, such other securities to which an Optionee may be entitled upon the exercise of an Option as a result of such adjustment;
(h) " Corporation " means Peyto Exploration & Development Corp., and includes any successor corporation thereof;
(i) " Exchange " means the Toronto Stock Exchange or, if the Common Shares are not then listed and posted for trading on the Toronto Stock Exchange, on such stock exchange in Canada on which such shares are listed and posted for trading as may be selected for such purpose by the Board;
(j) " Good Reason " means any materially adverse change by the Corporation without the agreement of an Optionee, in any of the Optionee's duties, powers, rights, salary, title or lines of reporting, such that immediately after such change or series of changes, the responsibilities and status of such Optionee, taken as a whole, are fundamentally diminished compared to those assigned to the Optionee immediately prior to such change or series of changes, or any other reason that would be considered to amount to constructive dismissal by a court of competent jurisdiction in Alberta;
(k) " Holder " means a person, a group of persons or persons acting jointly or in concert, or persons associated or affiliated, within the meaning of the Securities Act (Alberta), with any such person, group of persons or any of such persons acting jointly or in concert;
(l) " Insider " has the meaning set forth in the applicable rules of the Exchange for this purpose;
(m) " Market Price " means, as at any date when the Market Price is to be determined, the volume weighted average trading price per Common Share on an Exchange, for the last five (5) consecutive trading days immediately prior to the date of determination, provided that if the Common Shares are not then listed and posted for trading on an Exchange, then the Market Price shall be determined by the Board in its sole discretion acting reasonably and in good faith;
(n) " Optionees " means persons to whom Options are granted and which such Options, or a portion thereof, remain unexercised;
(o) " Options " means options to purchase Common Shares granted pursuant to the provisions hereof;
(p) " Outstanding Common Shares " at the time of any share issuance or grant of Options means the aggregate number of Common Shares that are outstanding immediately prior to the share issuance or grant of Options in question on a non-diluted basis, or such other number as may be determined under the applicable rules and regulations of all regulatory authorities to which the Corporation is subject, including any Exchange on which the Common Shares may be listed;

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(q) " Participants " means officers, employees of, and consultants to, the Corporation or its subsidiaries and other Service Providers;
(r) " Plan " means this share option plan of the Corporation, as the same may be amended or varied from time to time;
(s) " Service Provider " means a person or company engaged by the Corporation or its subsidiaries to provide services for an initial, renewable or extended period of twelve months or more;
(t) " Shareholders " means the holders of Common Shares;
(u) " Surrender Price " means the closing price of the Common Shares on the Exchange on the date the Options are surrendered to the Corporation in accordance with Section 10 or Section 11 hereof, as applicable, provided that if the Common Shares are not then listed and posted for trading on an Exchange, then the Surrender Price shall be determined by the Board in its sole discretion acting reasonably and in good faith; and
(v) " Take-over Proposal " means any proposal or offer by a third party, whether or not subject to a due diligence condition and whether or not in writing, to acquire in any manner, directly or indirectly, beneficial ownership of or control or direction over more than 50% of the Corporation's outstanding voting shares whether by way of arrangement, amalgamation, merger, consolidation or other business combination, including any single or multi-step transaction or series of related transactions that is structured to permit such third person to acquire in any manner, directly or indirectly, more than 50% of its outstanding voting shares.

3. Administration

The Plan shall be administered by the Board. The Board may, from time to time, adopt such rules and regulations for administering the Plan as it may deem proper and in the best interests of the Corporation and may, subject to applicable law, delegate its powers hereunder to administer the Plan to a committee of the Board. The Board may delegate to any committee of the Board any duties relating to the Plan as the Board may deem advisable, and where so delegated, any reference to the Board in the Plan shall be deemed to be a reference to such committee. In addition, the Board may delegate to one or more of its members or to one or more agents any duties as it may deem advisable, and the Board or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Board or such person may have under the Plan.

4. Granting of Options

Subject to this Section 4, the Board may from time to time designate officers, employees of, and consultants to, the Corporation or its subsidiaries and other Service Providers to whom Options may be granted and the number of Common Shares to be optioned to each, provided that the number of Common Shares to be optioned shall not exceed the limitations provided in Section 5 hereof.

5. Limitations to the Plan

Notwithstanding any other provision of the Plan:

(a) unless otherwise approved by the Shareholders, the aggregate number of Common Shares that may be issued pursuant to the exercise of Options awarded under the Plan and all other established or proposed share compensation arrangements of the Corporation shall not exceed 10% of the Outstanding Common Shares;
(b) the number of Common Shares reserved for issuance to Insiders, at any time, pursuant to the Plan and all other established or proposed share compensation arrangements of the Corporation, shall not exceed 10% of the Outstanding Common Shares;

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(c) the number of Common Shares issued to Insiders, within any one year period, pursuant to the Plan and all other established or proposed share compensation arrangements of the Corporation, shall not exceed 10% of the Outstanding Common Shares; and
(d) the number of Common Shares issued within any one year period, pursuant to the Plan and all other established or proposed share compensation arrangements of the Corporation, to any one Insider and such Insider's associates shall not exceed 10% of the Outstanding Common Shares.

For the purposes of this Section 5, any increase in the Outstanding Common Shares (whether as a result of the exercise of Options or otherwise) will result in an increase in the number of Common Shares that may be issued on exercise of Options outstanding at any time and any decrease in the number of Options granted, due to the exercise of Options, will make new grants available under the Plan.

In determining the number of Common Shares issued within any one year period for the purposes of subclauses (b) and (c) above, the number of Common Shares shall be determined on the basis of the number of Common Shares that are outstanding immediately prior to the Common Share issuance, excluding any Common Shares issued pursuant to share compensation arrangements of the Corporation over the preceding one year period.

Options that are cancelled, surrendered, terminated or expire prior to the exercise of all or a portion thereof shall result in the Common Shares that were reserved for issuance thereunder being available for a subsequent grant of Options pursuant to the Plan to the extent of any Common Shares issuable thereunder that are not issued under such cancelled, surrendered, terminated or expired Option.

6. Vesting of Options

The Board may, in its sole discretion, determine: (i) the time during which Options shall vest; (ii) the method of vesting; or (iii) that no vesting restriction shall exist. In the absence of any determination by the Board to the contrary, Options will vest and be exercisable as to one-third (1/3) of the total number of Common Shares subject to the Options on each of the first, second and third anniversaries of the date of grant (computed in each case to the nearest full share) (subject to acceleration of vesting at the discretion of the Board).

7. Option Price

The exercise price of Options granted under the Plan shall be fixed by the Board when such Option is granted, provided that if the Common Shares are listed on a stock exchange, the exercise price of the Options shall not be less than the Market Price or such other minimum price as may be required by the Exchange on which the Common Shares are listed at the time of grant.

8. Option Terms

The period during which an Option is exercisable shall, subject to the provisions of the Plan requiring or permitting acceleration of rights of exercise, be such period, as may be determined from time to time by the Board but subject to the rules of any stock exchange or other regulatory body having jurisdiction, and in the absence of any determination to the contrary will be five (5) years from the date of grant.

Should the expiry date of an Option fall within a Black-Out Period or within nine trading days following the expiration of a Black-Out Period, such expiry date of the Option shall be automatically extended without any further act or formality to that date which is the tenth business day after the end of the Black-Out Period, such tenth business day to be considered the expiry date for such Option for all purposes under the Plan. The ten business day period referred to in this paragraph may not be extended by the Board.

Each Option shall, among other things, contain provisions to the effect that the Option shall be personal to the Optionee and shall not be assignable. In addition, each Option shall provide that:

(a) upon the death of the Optionee, the Option shall terminate on the date determined by the Board which shall not be more than twelve (12) months from the date of death; and

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(b) if the Optionee shall no longer be a director or officer of or be in the employ of, or consultant or other Service Provider to, either the Corporation or a subsidiary of the Corporation (other than by reason of death), the Option shall terminate on the expiry of the period not in excess of six (6) months prescribed by the Board at the time of grant, following the Cessation Date and, in the absence of any determination to the contrary, will be sixty (60) days following the Cessation Date;

provided that the number of Common Shares that the Optionee (or his or her heirs or successors) shall be entitled to purchase until such date of termination of the Option shall be the number of Common Shares which the Optionee was entitled to purchase on sixtieth (60[th] ) day following the Cessation Date (other than by reason of death or termination for cause), and on the Cessation Date in the event of termination of the Optionee's service for cause.

The Plan does not confer upon an Optionee any right with respect to continuation of employment or service by the Corporation or any subsidiary thereof, nor does it interfere in any way with the right of the Optionee, the Corporation or a subsidiary thereof to terminate the Optionee's employment or service provision at any time.

Notwithstanding any other provisions contained herein, the Board may, in its sole discretion, accelerate the expiry date or shorten the time period within which Options shall be exercisable in connection with a Change of Control.

9. Exercise of Option

Subject to the provisions of the Plan, an Option may be exercised from time to time by delivery to the Corporation at its head office in Calgary, Alberta or such other place as may be specified by the Corporation, of a written notice of exercise specifying the number of Common Shares with respect to which the Option is being exercised and accompanied by payment in full of the exercise price unless such exercise is made in accordance with Sections 10 or 11 hereof. The exercise price is payable in lawful money of Canada by cash, cheque, certified cheque, bankers' draft, wire transfer or such other manner of payment acceptable to the Corporation.

10. Exercise for Cash

Notwithstanding anything else contained herein, an Optionee may elect to surrender, in whole or in part, his or her rights under any Option by written notice given to the Corporation stating that such Optionee wishes to surrender his or her Option in exchange for a payment by the Corporation of a cash amount per Option equal to the difference (if positive) between the Surrender Price (as calculated on the date of surrender) and the exercise price of the Option. The Board has the sole discretion to consent to or reject the election of the Optionee to receive cash pursuant to this Section 10. If the Board rejects the election, such Optionee may (i) exercise the Option under Section 9 (read without reference to Section 10); (ii) provided that the Corporation has not rejected a request of such Optionee to exercise any Options pursuant to Section 11 in the previous six (6) months, exercise the Option under Section 11 (the Board may still reject the Optionee's election to exercise pursuant to Section 11); or (iii) retract the request to exercise such Option.

11. Cashless Exercise

Notwithstanding anything else contained herein, an Optionee may elect to surrender, in whole or in part, his or her rights under any Option by written notice given to the Corporation stating that such Optionee wishes to surrender his or her Option in exchange for the issuance of Common Shares equal to the number determined by dividing the Surrender Price (calculated as at the date of surrender) into the difference (if positive) between the Surrender Price (calculated as at the date of surrender) and the exercise price. The Board has the sole discretion to consent to or reject the election of such Optionee to receive Common Shares pursuant to this Section 11. If the Board rejects the election, such Optionee may (i) exercise the Option under Section 9 (read without reference to Section 11); (ii) provided that the Corporation has not rejected a request of such Optionee to exercise any Options pursuant to Section 10 in the previous six (6) months, exercise the Option under Section 10 (the Board may still reject the Optionee's election to exercise pursuant to Section 10); or (ii) retract the request to exercise such Option.

12. Alterations in Shares

In the event, at any time or from time to time, that the share capital of the Corporation shall be consolidated or subdivided prior to the exercise by the Optionee, in full, of any Option in respect of all of the shares granted or the Corporation shall pay a dividend upon the Common Shares by way of issuance to the holders thereof of additional

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Common Shares, Options with respect to any shares which have not been purchased at the time of any such consolidation, subdivision or stock dividend shall be proportionately adjusted so that the Optionee shall from time to time, upon the exercise of an Option, be entitled to receive the number of shares of the Corporation the Optionee would have held following such consolidation, subdivision or stock dividend if the Optionee had purchased the shares and had held such shares immediately prior to such consolidation, subdivision or stock dividend. In any such case, the Board may, subject to obtaining all requisite consents which may be required by the Exchange, make such adjustments to any Options and to any Option Agreements outstanding under the Plan as the Board may, in its sole discretion, acting reasonably, consider appropriate in the circumstances to prevent dilution or enlargement of the rights granted to Optionees hereunder. Upon any such adjustments being made, the Optionee shall be bound by such adjustments and shall accept the terms of such Options in lieu of the Options previously outstanding.

13. Mergers, Amalgamation and Sale

If the Corporation shall become merged (whether by plan of arrangement or otherwise) or amalgamated in or with another corporation or shall sell the whole or substantially the whole of its assets and undertakings for shares or securities of another corporation or other entity, the Corporation shall, subject to this Section 13, make provision that, upon exercise of an Option during its unexpired period after the effective date of such merger, amalgamation or sale, the Optionee shall receive such number of shares of the continuing successor corporation or other entity in such merger or amalgamation or the securities or shares of the purchasing corporation or other entity as the Optionee would have received as a result of such merger, amalgamation or sale if the Optionee had purchased the shares of the Corporation immediately prior thereto for the same consideration paid on the exercise of the Option and had held such shares on the effective date of such merger, amalgamation or sale and, upon such provision being made, the obligation of the Corporation to the Optionee in respect of the Common Shares subject to the Option shall terminate and be at an end and the Optionee shall cease to have any further rights in respect thereof.

14. Change of Control

In the circumstances where the Corporation has entered into an agreement relating to, or otherwise becomes aware of, a transaction which, if completed, would result in a Change of Control, the Corporation shall give written notice of the proposed transaction to the Participants, together with a description of the effect of such Change of Control on outstanding Options. Such notice shall be given not less than fifteen (15) Business Days prior to the closing of the transaction resulting in the Change of Control. Notwithstanding anything else in the Plan or any agreements entered into between the Corporation and each Optionee to whom an Option is granted hereunder to the contrary, the Board may, in connection with a Change of Control and at its sole option and without the consent of any Participant: (i) take such steps as are necessary or desirable to cause the conversion or exchange or replacement of any outstanding Options into or for, rights or other securities of substantially equivalent value (or greater value), as determined by the Board in its discretion, in any entity participating in or resulting from a Change of Control; or (ii) accelerate the vesting of any or all outstanding Options to provide that such outstanding Options shall be fully vested upon (or immediately prior to) the completion of the transaction resulting in the Change of Control if: (a) the required steps, as determined by the Board in its discretion, are not being taken in connection with such Change of Control to cause the conversion or exchange or replacement of any outstanding Options into or for rights or other securities of substantially equivalent value (or greater value), as determined by the Board in its discretion, in any entity participating in or resulting from a Change of Control; or (b) the Corporation has entered into an agreement relating to a transaction which, if completed, would result in a Change of Control and the counterparty or counterparties to such agreement require that all outstanding Options will be either (x) exercised immediately before the effective time of such transaction, or (y) terminated on or after the effective time of such transaction.

Notwithstanding anything contained herein, in the event of any Change of Control prior to the Expiry Date of any outstanding Option: (i) an Optionee is terminated without cause in connection with such Change of Control or within the six (6) months following a Change of Control, all Options held by the Optionee shall vest and the Optionee shall, if such termination occurs prior to, or at, the effective time of such Change of Control, be entitled to exercise all Options held by the Optionee until immediately prior to the effective time of such Change of Control (or such other time as may be designated by the Board) and, if such termination period occurs following such Change of Control, the Optionee shall be entitled to exercise all Options held by such Optionee until the date that is 90 days after the Cessation Date, all Options which have not been exercised prior to the required dates as set in this paragraph (i) shall become null and void and all rights to receive Common Shares thereunder shall be forfeited by the Optionee; or (ii) within six (6) months following a Change of Control, the Optionee voluntarily resigns for an event or events which constitute Good Reason, all Options held by the Optionee shall vest and the Optionee shall be entitled to exercise all Options held by such Optionee until the

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date that is 90 days after the Cessation Date and after such date all Options which have not been exercised shall become null and void and all rights to receive common shares thereunder shall be forfeited by the Optionee.

The Board may, in its sole discretion, by Board resolution provide that, whenever the Corporation's Shareholders receive a Take-over Proposal, such Options may be exercised as to all or any of the Common Shares in respect of which such Option has not previously been exercised (including in respect of Common Shares not otherwise vested at such time) by the Participant (the " Take-over Acceleration Right "), but any such Option not otherwise vested and deemed only to have vested in accordance with the foregoing may only be exercised for the purposes of tendering to such Take-over Proposal. If for any reason any such Common Shares are not so tendered or, if tendered, are not, for any reason taken up and paid for by the offeree pursuant to the Take-over Proposal, any such Common Shares so purchased by the Participant shall be and shall be deemed to be cancelled and returned to the treasury of the Corporation, and shall be added back to the number of Common Shares, if any, remaining unexercised under the Option (and shall thus be available for exercise of the Option in accordance with the terms thereof) and upon presentation to the Corporation of share certificates representing such Common Shares properly endorsed for transfer back to the Corporation, the Corporation shall refund to the Participant all consideration paid by him or her in the initial purchase thereof. The Take-over Acceleration Right shall commence at such time as is determined by the Board, provided that, if the Board approves the Take-over Acceleration Right but does not determine commencement and termination dates regarding same, the Take-over Acceleration Right shall commence on the date of the Take-over Proposal and end on the earlier of the expiry time of the Option and the tenth (10th) day following the expiry date of the Take-over Proposal. Notwithstanding the foregoing, the Take-over Acceleration Right may be extended for such longer period as the Board may resolve.

15. No Rights as a Shareholder

An Optionee shall not have any of the rights or privileges of a Shareholder in respect of any Common Shares issuable upon exercise of an Option until certificates representing such Common Shares have been issued and delivered.

16. Regulatory Authorities Approvals

The Plan shall be subject to the approval, if required, of any stock exchange on which the Common Shares are listed for trading. Any Options granted prior to such approval and after listing on any such stock exchange shall be conditional upon such approval being given and no such Options may be exercised unless such approval, if required, is given.

17. Option Agreements

A written agreement will be entered into between the Corporation and each Optionee to whom an Option is granted hereunder, which agreement will set out the number of Common Shares subject to Option, the exercise price, the vesting dates, circumstances when vesting of Options may be accelerated, the expiry date and any other terms approved by the Board, all in accordance with the provisions of the Plan. The agreement will be in such form as the Board may from time to time approve or authorize the officers of the Corporation to enter into and may contain such terms as may be considered necessary in order that the Option will comply with any provisions respecting Options in the income tax or other laws in force in any country or jurisdiction of which the person to whom the Option is granted may from time to time be a resident or citizen or the rules of any regulatory body having jurisdiction over the Corporation. Such agreements may also contain such other provisions not inconsistent with the provisions hereof as the Board may determine.

18. Amendment or Discontinuance of the Plan

The Plan and any Options granted pursuant to the Plan may be amended, modified or terminated by the Board without approval of the Shareholders subject to any required approval of the Exchange. Notwithstanding the foregoing, the Plan or any Options may not be amended without shareholder approval to:

(a) increase the number of Common Shares reserved for issuance under the Plan pursuant to Section 5(a) hereof;
(b) increase the number of Common Shares reserved for issuance to Insiders or issuable to Insiders in any one year period pursuant to Section 5(b) hereof;
(c) reduce the Exercise Price of any Option granted pursuant to the Plan;

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(d) extend the expiry date of any outstanding Options other than as permitted pursuant to the Plan;
(e) make any amendment that would reduce the Exercise Price of an outstanding Option (including a cancellation and reissue of an Option that constitutes a reduction of the Exercise Price);
(f) expand the categories of individuals contained in the definition of "Participants" who are eligible to participate in the Plan;
(g) permit an Optionee to transfer or assign Options to a new beneficial holder, other than for estate settlement purposes; or
(h) amend this Section 18.

In addition, no amendment to the Plan or Options granted pursuant to the Plan may be made without the consent of the Optionee, if it adversely alters or impairs the rights of any Optionee in respect of any Option previously granted to such Optionee under the Plan.

19. Tax Withholding

The Corporation shall have the power and the right to deduct or withhold, or require (as a condition of exercise), an Optionee to remit to the Corporation, the required amount to satisfy, in whole or in part, federal, provincial, and local taxes, domestic or foreign, required by law or regulation to be withheld in respect to any taxable event arising as a result of the Plan, including the grant or exercise of Options granted under the Plan. With respect to required withholding, the Corporation shall have the irrevocable right to (and the Optionee consents to) the Corporation setting off any amounts required to be withheld, in whole or in part, against amounts otherwise owing by the Corporation to such Optionee (whether arising pursuant to the Optionee providing services on an ongoing basis to the Corporation or otherwise), or may make such other arrangements satisfactory to the Optionee and the Corporation. In addition, the Corporation may elect in its sole discretion, to satisfy the withholding requirement, in whole or in part, by withholding such number of Common Shares as it determines are required to be sold by the Corporation, as trustee to satisfy the withholding obligation net of selling costs (which costs shall be the responsibility of the Optionee and which shall be and are authorized to be deducted from the proceeds of the sale). The Optionee consents to such sale and grants to the Corporation an irrevocable power of attorney to effect the sale of such Shares and acknowledges and agrees that the Corporation does not accept responsibility for the price obtained on the sale of Common Shares. Any reference in the Plan to the issuance of Common Shares or a payment of cash is expressly subject to this Section 19.

20. No Guarantee Regarding Tax Treatment

Participants (or their beneficiaries) shall be responsible for all taxes with respect to any Option under the Plan, whether arising as a result of the grant or exercise of Options or otherwise. The Corporation and the Board make no guarantees to any person regarding the tax treatment of an Option or payments made under the Plan and none of the Corporation, its subsidiaries or any of its employees or representatives shall have any liability to a Participant with respect thereto.

21. Independent Advice

Participants are encouraged to seek tax advice in respect of the grant and exercise of Options and the issuance of the resulting Common Shares. Participants who are not employees, officers or directors of the Corporation (i.e. consultants and other Service Providers) should be aware that the tax consequences of being granted and exercising Options and selling Common Shares may be materially less favourable than the consequences to employees, officers and directors of the Corporation who are granted Options as such and receive the benefit of the "stock option rules" under the Income Tax Act (Canada).

22. Effective Time

This Plan shall be effective as of March 29, 2019, as amended and restated effective March 23, 2022 (subject to regulatory and shareholder approval), and as amended, or amended and restated from time to time in accordance with the provisions of this Plan.

SCHEDULE "B"

PEYTO EXPLORATION & DEVELOPMENT CORP.

MANDATE OF THE BOARD OF DIRECTORS

The Board of Directors (the " Board ") of Peyto Exploration & Development Corp. (the " Corporation ") is responsible for the stewardship of the Corporation. In discharging its responsibility, the Board will exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances and will act honestly and in good faith with a view to the best interests of the Corporation. In general terms, the Board will:

A. in consultation with the chief executive officer of the Corporation (the " CEO "), define the principal objective(s) of the Corporation;
B. supervise the management of the business and affairs of the Corporation with the goal of achieving the Corporation's principal objective(s) as defined by the Board;
C. discharge the duties imposed on the Board by applicable laws; and
D. for the purpose of carrying out the foregoing responsibilities, take all such actions as the Board deems necessary or appropriate.

Without limiting the generality of the foregoing, the Board will perform the following duties:

Strategic Direction, Operating, Capital and Financial Plans

require the CEO to present annually to the Board a yearly business plan for the Corporation's business, which plans must:
(a) be designed to achieve the Corporation's principal objectives,
(b) identify the principal strategic and operational opportunities and risks of the Corporation's business, and
(c) be approved by the Board as a pre-condition to the implementation of such plans;
review progress towards the achievement of the goals established in the strategic, operating and capital plans;
identify the principal risks of the Corporation's business and take all reasonable steps to ensure the implementation of the appropriate systems to manage these risks;
approve the annual operating and capital plans, as may be amended from time to time;
approve issuances of additional common shares of the Corporation or other securities to the public;
monitor the Corporation's progress towards its goals, and to revise and alter its direction through management in light of changing circumstances;

Management and Organization

appoint the CEO and determine the terms of the CEO's employment with the Corporation;
in consultation with the CEO, develop a position description for the CEO;
evaluate the performance of the CEO at least annually;
in consultation with the CEO, establish the limits of management's authority and responsibility in conducting the Corporation's business;

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in consultation with the CEO, appoint all officers of the Corporation and approve the terms of each officer's employment with the Corporation;
receive annually from the CEO the CEO's evaluation of the performance of each senior officer;
approve any proposed significant change in the management organization structure of the Corporation;
approve all retirement plans, if any, for officers and employees of the Corporation;
in consultation with the CEO, establish a communications/disclosure policy for the Corporation;
generally provide advice and guidance to management;

Finances and Controls

use reasonable efforts to ensure that the Corporation maintains appropriate systems to manage the risks of the Corporation's business;
monitor the appropriateness of the Corporation's capital structure;
ensure that the financial performance of the Corporation is properly reported to shareholders, other security holders and regulators on a timely and regular basis;
in consultation with the CEO, establish the ethical standards to be observed by all officers and employees of the Corporation and use reasonable efforts to ensure that a process is in place to monitor compliance with those standards;
require that the CEO institute and monitor processes and systems designed to ensure compliance with applicable laws by the Corporation and its officers and employees;
require that the CEO institute, and maintain the integrity of, internal control and information systems, including maintenance of all required records and documentation;
review insurance coverage of significant business risks and uncertainties;
review and approve the Corporation's hedging program;
review and approve material contracts to be entered into by the Corporation;
recommend to the shareholders of the Corporation a firm of chartered accountants to be appointed as the Corporation's auditors;
review dividend levels, based on information from and consultation with management;
approve all changes to dividend levels;
take all necessary actions to gain reasonable assurance that all financial information made public by the Corporation (including the Corporation's annual and quarterly financial statements) is accurate and complete and represents fairly the Corporation's financial position and performance;

Governance

in consultation with the Chairman of the Board, develop a position description for the Chairman of the Board;
facilitate the continuity, effectiveness and independence of the Board by, amongst other things,
(a) selecting nominees for election to the Board,

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(b) appointing a Chairman of the Board who is not a member of management,
(c) appointing from amongst the directors an audit committee and such other committees of the Board as the Board deems appropriate,
(d) defining the mandate of each committee of the Board,
(e) ensuring that processes are in place and are utilized to assess the size of the Board, the effectiveness of the Chairman of the Board, the Board as a whole, each committee of the Board and each director,
(f) review the orientation and education program for new members to the Board to ensure that it is adequate and effective, and
(g) establishing a system to enable any director to engage an outside adviser at the expense of the Corporation;
review annually the adequacy and form of the compensation of directors.

Delegation

The Board shall determine the composition of all committees and ensure that such composition is in compliance with all applicable laws.

The Board may delegate its duties to and receive reports and recommendations from any committee of the Board.

Meetings

the Board shall meet at least four times per year and/or as deemed appropriate by the Board Chair;
minutes of each meeting shall be prepared;
the CEO or his designate(s) may be present at all meetings of the Board;
Vice Presidents and such other staff as appropriate to provide information to the Board shall attend meetings at the invitation of the Board.

AI assistant

Peyto Exploration and Development Corp. — Proxy Solicitation & Information Statement 2022

46718_rns_2022-04-08_93020f38-f9e9-4611-b8e2-97744b6d46e6.pdf

PEYTO EXPLORATION & DEVELOPMENT CORP.

Notice of Annual and Special Meeting of Shareholders to be held on May 12, 2022

PEYTO EXPLORATION & DEVELOPMENT CORP.

PROXIES

Solicitation of Proxies

Attendance at Meeting Discouraged in light of COVID-19 Pandemic

Advice to Beneficial Holders of Common Shares

Notice-And-Access

Revocability of Proxy

Persons Making the Solicitation

Exercise of Discretion by Proxy

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

QUORUM FOR MEETING

APPROVAL REQUIREMENT

MATTERS TO BE ACTED UPON AT THE MEETING

Election of Directors

Directors' Biographies

Nominee for Election as

Experience and Background of Directors

Advance Notice Provisions

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Personal Bankruptcies

Majority Voting for Directors

Risk Oversight by the Board

Appointment of Auditors

Advisory Vote on Executive Compensation

Amendments to the Share Option Plan

Background

STATEMENT OF EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Role of Compensation and Nominating Committee

Executive and Employee Compensation Principles and Strategy

Base Salaries

Option Plan

Description of the Option Plan

Reserves/Value Based Bonus

Market Component

2019 Market Based Bonus Plan

Description of the 2019 Market Based Bonus Plan

CEO Compensation

Three Year Named Executive Officer Compensation Versus Financial Measures

Compensation Consultant or Advisor

Anti-Hedging Policy and Other Restrictions on Trading Activities

Clawback Policy (Recoupment of Incentive Compensation)

Summary

Performance Graph

Summary Compensation Table

Incentive Plan Awards

Outstanding Share-Based Awards and Option-Based Awards

Rights Granted During the Year Ended December 31, 2021

Incentive Plan Awards – Value Vested or Earned During the Year

Termination and Change of Control Benefits

Termination by the Corporation for Just Cause

Termination by the Corporation without Just Cause

Resignation by the Executive

Resignation by the Executive for Good Reason Following a Change of Control

Directors' Compensation

DSU Plan

Description of the DSU Plan

Directors' Summary Compensation Table

Directors' Outstanding Option-Based Awards and Share-Based Awards

Directors' Incentive Plan Awards – Value Vested or Earned During the Year

Liability Insurance of Directors and Officers and Indemnification

Director and Officer Equity Ownership

Non-Executive Directors

Officers

Non-Executive Directors

Officers

Securities Authorized for Issuance Under Equity Compensation Plans

Securities Authorized for Issuance Under Equity Compensation Plans

Annual Burn Rate Under Equity Compensation Plans

CORPORATE GOVERNANCE PRACTICES

1. Board of Directors

(a) Disclose the identity of directors who are independent.

(b) Disclose the identity of directors who are not independent, and describe the basis for that determination.

(c) Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the board of directors (the Board) does to facilitate its exercise of independent judgement in carrying out its responsibilities.

(d) If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.

Peyto Exploration and Development Corp. Proxy Solicitation & Information Statement 2022