PrairieSky Royalty Ltd. ("
PrairieSky" or the
"
Company") (TSX: PSK) is pleased to announce its
fourth quarter ("
Q4 2022") and year-end operating
and financial results for the period ended December 31, 2022.
Fourth Quarter Highlights:
- Royalty production volumes averaged 25,914 BOE per day, a 27%
increase over Q4 2021 and a 4% increase over Q3 2022, which
included 12,166 barrels per day of oil royalty production.
- Quarterly revenues totaled $150.6 million, comprised of royalty
production revenues of $144.8 million and other revenues of $5.8
million, including bonus consideration of $3.0 million.
- Quarterly funds from operations of $119.5 million ($0.50 per
share basic and diluted) were 17% above Q4 2021 due to a
combination of robust organic royalty production growth,
acquisition royalty volumes and strong commodity pricing, and
modestly behind Q3 2022 primarily as a result of a decline in WTI
benchmark pricing and a wider heavy oil differential.
- Declared a fourth quarter dividend of $57.3 million ($0.24 per
share), a 100% increase compared to Q3 2022, representing a
quarterly payout ratio of 48%.
Annual Highlights:
- Record annual funds from operations increased 86% year over
year to $507.6 million ($2.13 per share basic and $2.12 per share
diluted), driven by organic growth in oil royalty volumes,
acquisition royalty volumes and strong commodity pricing.
- Record annual revenues of $643.3 million increased 109% over
2021, comprised of:
- Royalty production revenue of $615.7 million, up 111% over
2021; and
- Other revenue of $27.6 million, including $16.2 million of
bonus consideration for entering into a record 228 new leasing
arrangements with 119 separate counterparties which we anticipate
will result in continued strong third-party drilling on these
royalty lands in 2023.
- Royalty production volumes totaled 25,206 BOE per day, 27%
higher than 2021 average royalty production volumes and comprised
of 11,739 barrels per day of oil, 2,684 barrels per day of NGL and
64.7 MMcf per day of natural gas.
- Proved plus probable reserves totaled 66,719 MBOE with a
before-tax net present value, discounted at 10%, of $1.94 billion,
up 23% from December 31, 2021.
- Declared cumulative annual dividends of $143.3 million ($0.60
per share) representing an annual payout ratio of 28%.
- Net debt totaled $315.1 million at December 31, 2022, a
decrease of 50% from December 31, 2021 net debt of $635.0 million,
as excess funds from operations were used primarily to retire
indebtedness incurred in connection with acquisitions completed
during the second half of 2021.
Sustainability Highlights:
- Ranked #51 of 15,061 companies (top 0.5%) in Sustainalytics
global universe, maintaining a "Negligible Risk" ESG Risk
Rating.
- Awarded AAA ESG Risk Rating from MSCI, a measurement of
resilience to long-term, industry material ESG risks.
- Received A- score on the CDP Climate Change Survey in 2022,
maintaining leadership status.
President’s Message
It was an exceptional year for PrairieSky with
increased commodity prices, leasing and drilling activity all
contributing to record annual oil royalty production volumes,
revenues and funds from operations. Royalty production volumes
reached 25,914 BOE per day in Q4 2022 bringing average royalty
production for the year to 25,206 BOE per day, representing year
over year organic production growth of 11% after excluding all
acquisition royalty volumes. Oil royalty volumes averaged 12,166
barrels per day in Q4 2022, up 7% from Q3 2022 due to a number of
new wells coming on production following an active Q3 2022 for
third-party drilling and up 22% over Q4 2021 removing all
acquisition royalty volumes. Annually, oil royalty volumes totaled
11,739 barrels per day, a 22% increase over 2021 after removing
acquisition royalty volumes.
Third-party operators spud 248 wells on our
Royalty Properties in Q4 2022 bringing 2022 spuds to 850 wells
(2021 - 548 wells). This significant increase in activity was
spread across our land base spanning from Northeast British
Columbia to Southwest Manitoba. Drilling activity in the quarter
was focused on oil plays with 210 wells spud, including 43
Clearwater oil wells across our 1.3 million acres of Clearwater
acreage and 46 Viking oil wells primarily on fee leases in
Saskatchewan. Management expects Q4 2022 spuds to provide organic
growth in royalty production volumes into 2023. During Q4 2022,
PrairieSky entered into 64 distinct leasing arrangements with 53
different counterparties for bonus consideration of $3.0 million.
We achieved our highest level of leasing activity ever in 2022
having entered into 228 new leasing arrangements with 119
counterparties (2021: 139 new leasing arrangements with 85
counterparties), generating $16.2 million in bonus consideration.
Leasing is a leading indicator of third-party field activity and we
anticipate strong third-party drilling on our royalty lands in
2023.
PrairieSky generated quarterly funds from
operations of $119.5 million or $0.50 per share (basic and
diluted). With the 100% increase to our quarterly dividend
announced in October 2022, the dividend declared to shareholders of
record on December 30, 2022 totaled $57.3 million or $0.24 per
share in the quarter resulting in a payout ratio of 48%. With
record 2022 funds from operations of $507.6 million, PrairieSky’s
annual payout ratio was 28% with excess funds from operations
generated in the year used primarily to retire debt. Net debt
decreased 50% to $315.1 million at December 31, 2022 from $635.0
million at December 31, 2021.
We were very pleased with the growth in organic
volumes in 2022 and the level of activity across our land base. We
look forward to another busy year in 2023 and will remain focused
on our core strategies of leasing land, managing controllable costs
and conducting royalty and land compliance activities. We would
like to thank our shareholders for their support, and our staff for
their continued hard work.
Andrew Phillips, President & CEO
Q4 2022 Financial
Highlights
- Funds from operations totaled
$119.5 million or $0.50 per share (basic and diluted) in Q4 2022,
an increase of 17% over Q4 2021. The increase in funds from
operations was driven by a combination of organic growth in royalty
production volumes, acquisition royalty volumes and strong
commodity pricing. Funds from operations decreased 3% from Q3 2022
primarily as a result of a decline in WTI benchmark pricing and a
wider heavy oil differential.
- PrairieSky’s total royalty
production volumes of 25,914 BOE per day generated royalty
production revenue of $144.8 million in Q4 2022. A further
breakdown is as follows:
- Oil royalty production volumes
averaged 12,166 barrels per day, a 46% increase over Q4 2021.
Excluding all acquisition royalty volumes, organic growth in oil
royalty production totaled 22% over Q4 2021 inclusive of 95 barrels
per day of royalty production from sliding scale royalties. Oil
royalty volumes were 7% above Q3 2022 due to new wells on
stream.
- Increased oil royalty production
volumes combined with average WTI benchmark pricing of US$82.64 per
barrel generated oil royalty revenue of $98.9 million in the
quarter, a 61% increase over Q4 2021 when WTI benchmark pricing
averaged US$77.19 per barrel and 8% below Q3 2022 when WTI
benchmark pricing averaged US$91.68 per barrel. During Q4 2022, oil
royalty revenue was negatively impacted by wider heavy oil
differentials which averaged US$25.66 per barrel, 75% higher than
Q4 2021 and 29% higher than Q3 2022. This impact was partially
offset by a stronger US dollar relative to the Canadian
dollar.
- Natural gas royalty production
volumes averaged 66.4 MMcf per day in Q4 2022, 11% above Q4 2021.
The increase in natural gas royalty production volumes is
attributable to organic growth from new wells on stream (including
solution gas from oil wells), acquisition royalty volumes, and
compliance recoveries more than offsetting natural declines.
Natural gas royalty production volumes were up slightly from Q3
2022 as incremental royalty production volumes from new wells on
stream offset natural declines and estimates of the impact of cold
weather freeze offs in December 2022.
- Natural gas royalty revenue totaled
$32.4 million, a 46% increase over Q4 2021 due to higher natural
gas royalty production volumes combined with stronger natural gas
index pricing with daily AECO pricing averaging $5.11 per Mcf in
the quarter and monthly AECO pricing averaging $5.58 per Mcf in the
quarter. Q4 2022 natural gas revenue increased 34% over Q3 2022 due
to stronger natural gas pricing as Q3 2022 daily AECO index pricing
was negatively impacted by pipeline maintenance restricting volumes
out of Western Canada.
- NGL royalty production volumes
averaged 2,681 barrels per day, 32% above Q4 2021 due to new wells
on stream and incremental acquisition royalty volumes offsetting
natural declines. In addition, during Q4 2021, NGL royalty
production volumes were negatively impacted by ethane volume
curtailments which were not repeated in Q4 2022. NGL royalty
production volumes were flat with Q3 2022 as new wells on stream
offset natural declines.
- NGL royalty revenue totaled $13.5
million, an increase of 26% over Q4 2021 due to increased royalty
production volumes and stronger benchmark pricing. NGL royalty
revenue decreased 5% from Q3 2022 due to lower benchmark
pricing.
- Other revenue totaled $5.8 million
in Q4 2022 which included $3.0 million in bonus consideration
earned on entering into a quarterly record 64 new leasing
arrangements with 53 different counterparties. In addition,
PrairieSky generated $2.1 million in lease rentals and $0.7 million
in other income. Compliance recoveries totaled $2.1 million in Q4
2022.
- PrairieSky’s cash administrative
expenses totaled $5.1 million or $2.14 per BOE, down 26% on a per
BOE basis from Q4 2021.
- PrairieSky declared a fourth
quarter dividend of $57.3 million ($0.24 per share), representing a
48% payout ratio. Remaining funds from operations were primarily
allocated to reducing bank debt.
ANNUAL FINANCIAL HIGHLIGHTS
- PrairieSky generated record funds
from operations of $507.6 million ($2.13 per share basic and $2.12
per common diluted) 86% above 2021, driven by strong benchmark
commodity pricing, organic growth in royalty production and
acquisition royalty volumes.
- Royalty production volumes averaged
25,206 BOE per day, a year over year increase of 27% (11% removing
all royalty acquisition volumes). Oil royalty volumes averaged
11,739 barrels per day, 56% higher than Q4 2021 (22% removing all
royalty acquisition volumes).
- Total revenues increased to a
record $643.3 million, including $615.7 million of royalty
production revenue and $27.6 million of other revenue. Other
revenue included $16.2 million of bonus consideration earned on
entering into an annual record 228 new leasing arrangements with
119 counterparties, up significantly from 139 new leases with 85
new counterparties in 2021.
- Compliance recoveries totalled $8.5
million for the year, a 102% increase over 2021.
- Cash administrative expenses
totaled $25.5 million or $2.77 per BOE in line with 2021 cash
administrative expense per BOE of $2.79.
- PrairieSky declared cumulative
annual dividends of $143.3 million or $0.60 per share with a
resulting annual payout ratio of 28%.
- At December 31, 2022, PrairieSky’s
net debt totaled $315.1 million, a decrease of $319.9 million or
50% from December 31, 2021 net debt of $635.0 million.
ACTIVITY ON PRAIRIESKY’S ROYALTY
PROPERTIES
It was another active quarter for third-party
operators across PrairieSky’s royalty properties. There were 248
wells spud (85% oil) in the quarter which included 111 wells spud
on our GORR acreage, 107 wells spud on our Fee Lands, and 30 unit
wells spud. There were 210 oil wells spud which included 48
Mannville heavy and light oil wells including 2 wells on the Onion
Lake thermal oil project, 46 Viking wells, 43 Clearwater wells, 29
Mississippian wells, 13 Cardium wells, 11 Bakken wells, and 20
additional oil wells spud in the Belly River, Charlie Lake, Doig,
Duvernay, Jurassic, Nisku and Triassic formations. There were 38
natural gas wells spud in Q4 2022, including 20 shallow natural gas
wells, 7 Montney wells, 4 Spirit River wells, 4 Mannville wells, 2
Mississippian wells and 1 Belly River well. PrairieSky’s average
royalty rate for wells spud in Q4 2022 was 6.4% (Q4 2021 - 5.7%). A
strong Q4 brings 2022 total spuds to 850 wells on PrairieSky’s
royalty properties, an increase of 55% over 2021 spuds of 548
wells. The average royalty rate for wells spud in 2022 was 7.3%
(2021 - 5.8%).
Strong commodity pricing drove increased capital
spending by third-party operators across the Western Canadian
Sedimentary Basin and on PrairieSky’s expansive royalty land base.
Capital spending targeted oil plays, including those where
PrairieSky has made strategic investments, with the most active
plays being the Clearwater oil play, Viking light oil and the
Mannville heavy oil plays in Western Saskatchewan. PrairieSky
estimates that $1.5 billion (net capital - $84 million) in
third-party capital was spent in 2022 drilling and completing wells
on PrairieSky royalty properties, up from $783 million (net capital
- $37 million) in 2021, representing a 127% increase in net capital
spent on PrairieSky’s land base year over year.
2022 RESERVES INFORMATION
PrairieSky’s proved plus probable reserves
totaled 66,719 MBOE at December 31, 2022 (December 31, 2021 -
66,250 MBOE) and include only developed assets (developed producing
and developed non-producing properties) and do not include any
future development capital on undeveloped lands. Proved plus
probable reserves remained relatively flat year over year with a 4%
increase in total proved reserves due to third-party drilling and
improved recovery (6,841 MBOE), technical additions (2,082 MBOE),
and economic factors (1,116 MBOE). At December 31, 2022, the
before-tax net present value of total proved plus probable
reserves, discounted at 10 per cent, increased 23% to $1.94
billion (2021 - $1.58 billion).
PrairieSky’s year end 2022 reserves were
evaluated by independent reserves evaluators GLJ Ltd. The
evaluation of PrairieSky’s royalty properties was done in
accordance with the definitions, standards and procedures contained
in the Canadian Oil and Gas Evaluation Handbook and National
Instrument 51-101 – Standards of Disclosure for Oil and Gas
Activities. PrairieSky’s reserves information is included in the
Company’s Annual Information Form which is available on SEDAR
at www.sedar.com and PrairieSky’s website
at www.prairiesky.com.
GLOBAL SUSTAINABILITY
RANKINGS
Once again PrairieSky has received industry
leading scores from several globally recognized environmental,
social and governance ("ESG") rating agencies for 2022. These
results demonstrate our carbon neutral status(1) and ongoing
commitment to environmental stewardship, social responsibility, and
strong corporate governance practices and are set forth below.
2022 ESG Rankings
Rating Agency |
PrairieSky Score/Ranking |
Description of Score/Ranking |
Sustainalytics ESG Risk (All Industries) |
51 out of 15,061 |
Ranked in the top 0.5% of all companies in Sustainalytics global
coverage universe(2) and maintained "Negligible Risk" ESG Risk
Rating. |
Sustainalytics ESG Risk (Oil and Gas Producers) |
1 out of 271 |
Maintained top overall global(2) ranking and awarded Sustainalytics
"2023 Industry Top-Rated Badge". |
MSCI ESG Risk Rating |
AAA |
Increased 2022 rating to AAA from AA in 2021, maintaining "Leader"
status, denoting companies leading the industry in managing the
most significant ESG risks and opportunities. Measurement of
resilience to long-term, industry material ESG risks on a relative
ranking from AAA to CCC. |
CDP Climate Change 2022 |
A- |
Maintained leadership status compared against the North American
average of C and the global average of C. |
ISS Environmental Quality Score |
1 |
Denotes highest possible score (achieved in 2020, 2021 and
2022) |
ISS Social Quality Score |
1 |
Denotes highest possible score (achieved during 2021 and 2022) |
S&P Corporate Sustainability Assessment (CSA) |
Top Decile Ranking |
Improved year over year to 70 out of 100, achieving a top decile
ranking. PrairieSky was included as a member of The Sustainability
Yearbook 2022 for corporate sustainability excellence. |
Globe and Mail Governance Rankings |
Top Quartile Ranking |
Top quartile ranking (49 out of 226 companies in the S&P/TSX
Composite Index) with an overall score of 86 out of 100. Survey
assesses quality of governance practices. |
(1) Carbon neutral refers to PrairieSky’s
Scope 1 and Scope 2 emissions which are net zero. (2)
PrairieSky’s ranking as of February 3, 2023.
2023 INVESTOR DAY
PrairieSky will be hosting an investor day on
May 17, 2023, in Toronto, Ontario, where members of PrairieSky’s
management and technical team will present details on the Company’s
crude oil and natural gas plays. The investor day will be a live
webcast starting at 9:00 a.m. EDT. Interested parties may
participate in the webcast which will be available through
PrairieSky’s investor center at www.prairiesky.com. A copy of
materials will also be available on PrairieSky’s website
at www.prairiesky.com. The webcast will be archived and
accessible for replay after the event.
FINANCIAL AND OPERATIONAL
INFORMATION
The following table summarizes select
operational and financial information of the Company for the
periods noted. All dollar amounts are stated in Canadian dollars
unless otherwise noted.
A full version of PrairieSky’s management’s
discussion and analysis ("MD&A") and audited annual
consolidated financial statements and notes thereto for the fiscal
period ended December 31, 2022 is available on SEDAR at
www.sedar.com and PrairieSky’s website at www.prairiesky.com.
|
Three months ended |
Year ended |
(millions, except per share or as otherwise noted) |
December 31, 2022 |
September 30,2022 |
December 31, 2021 |
December 31, 2022 |
December 31, 2021 |
|
FINANCIAL |
|
|
|
|
|
|
Revenues |
$ |
150.6 |
|
$ |
154.7 |
|
$ |
100.6 |
|
$ |
643.3 |
|
$ |
308.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from Operations |
|
119.5 |
|
|
123.5 |
|
|
101.8 |
|
|
507.6 |
|
|
273.4 |
|
|
Per Share - basic(1) |
|
0.50 |
|
|
0.52 |
|
|
0.45 |
|
|
2.13 |
|
|
1.22 |
|
|
Per Share - diluted(1) |
|
0.50 |
|
|
0.52 |
|
|
0.45 |
|
|
2.12 |
|
|
1.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings |
|
67.3 |
|
|
76.2 |
|
|
43.7 |
|
|
317.5 |
|
|
123.3 |
|
|
Per Share - basic and diluted(1) |
|
0.28 |
|
|
0.32 |
|
|
0.19 |
|
|
1.33 |
|
|
0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared(2) |
|
57.3 |
|
|
28.7 |
|
|
21.5 |
|
|
143.3 |
|
|
70.5 |
|
|
Per Share |
|
0.24 |
|
|
0.12 |
|
|
0.09 |
|
|
0.60 |
|
|
0.31 |
|
|
|
|
|
|
|
|
|
Acquisitions |
|
6.2 |
|
|
2.5 |
|
|
745.3 |
|
|
30.6 |
|
|
987.1 |
|
|
Net debt at period end(3) |
|
315.1 |
|
|
364.2 |
|
|
635.0 |
|
|
315.1 |
|
|
635.0 |
|
|
Common share repurchases |
|
- |
|
|
- |
|
|
1.5 |
|
|
- |
|
|
22.7 |
|
|
|
|
|
|
|
|
|
Shares Outstanding |
|
|
|
|
|
|
Shares outstanding at period end |
|
238.9 |
|
|
238.8 |
|
|
238.8 |
|
|
238.9 |
|
|
238.8 |
|
|
Weighted average - basic |
|
238.8 |
|
|
238.8 |
|
|
224.8 |
|
|
238.8 |
|
|
223.3 |
|
|
Weighted average - diluted |
|
239.2 |
|
|
239.1 |
|
|
225.3 |
|
|
239.1 |
|
|
223.8 |
|
|
|
|
|
|
|
|
|
OPERATIONALRoyalty Production
Volumes |
|
|
|
|
|
|
Crude Oil (bbls/d) |
|
12,166 |
|
|
11,376 |
|
|
8,311 |
|
|
11,739 |
|
|
7,541 |
|
|
NGL (bbls/d) |
|
2,681 |
|
|
2,660 |
|
|
2,029 |
|
|
2,684 |
|
|
2,436 |
|
|
Natural Gas (MMcf/d) |
|
66.4 |
|
|
65.7 |
|
|
60.0 |
|
|
64.7 |
|
|
59.1 |
|
|
Royalty Production (BOE/d)(4) |
|
25,914 |
|
|
24,986 |
|
|
20,340 |
|
|
25,206 |
|
|
19,827 |
|
|
|
|
|
|
|
|
|
Realized Pricing |
|
|
|
|
|
|
Crude Oil ($/bbl) |
|
88.36 |
|
|
102.80 |
|
|
80.13 |
|
|
102.88 |
|
|
69.38 |
|
|
NGL ($/bbl) |
|
54.56 |
|
|
58.02 |
|
|
57.27 |
|
|
59.73 |
|
|
41.14 |
|
|
Natural Gas ($/Mcf) |
|
5.30 |
|
|
4.00 |
|
|
4.04 |
|
|
4.93 |
|
|
2.98 |
|
|
Total ($/BOE)(4) |
|
60.74 |
|
|
63.51 |
|
|
50.34 |
|
|
66.92 |
|
|
40.32 |
|
|
|
|
|
|
|
|
|
Operating Netback per BOE(5) |
|
57.89 |
|
|
60.64 |
|
|
46.76 |
|
|
63.43 |
|
|
37.03 |
|
|
|
|
|
|
|
|
|
Funds from Operations per BOE |
|
50.12 |
|
|
53.73 |
|
|
54.40 |
|
|
55.17 |
|
|
37.78 |
|
|
|
|
|
|
|
|
|
Oil Price Benchmarks |
|
|
|
|
|
|
Western Texas Intermediate (WTI) (US$/bbl) |
|
82.64 |
|
|
91.68 |
|
|
77.19 |
|
|
94.23 |
|
|
67.92 |
|
|
Edmonton Light Sweet ($/bbl) |
|
110.04 |
|
|
116.88 |
|
|
93.30 |
|
|
120.07 |
|
|
80.23 |
|
|
Western Canadian Select (WCS) crude oil differential to WTI
(US$/bbl) |
|
(25.66 |
) |
|
(19.86 |
) |
|
(14.64 |
) |
|
(18.22 |
) |
|
(13.04 |
) |
|
|
|
|
|
|
|
|
Natural Gas Price Benchmarks |
|
|
|
|
|
|
AECO monthly index ($/Mcf) |
|
5.58 |
|
|
5.81 |
|
|
4.94 |
|
|
5.56 |
|
|
3.56 |
|
|
AECO daily index ($/Mcf) |
|
5.11 |
|
|
4.08 |
|
|
4.66 |
|
|
5.31 |
|
|
3.62 |
|
|
|
|
|
|
|
|
|
Foreign Exchange Rate (US$/CAD$) |
|
0.7365 |
|
|
0.7662 |
|
|
0.7909 |
|
|
0.7683 |
|
|
0.7973 |
|
|
(1) |
Net Earnings
and Funds from Operations per Share are calculated using the
weighted average number of basic and diluted common shares
outstanding. |
(2) |
A dividend of $0.24 per share was declared on December 6, 2022.
The dividend was paid on January 16, 2023 to shareholders of record
as at December 30, 2022. |
(3) |
See Note 15 “Capital Management” in the interim condensed
consolidated financial statements for the three months and years
ended December 31, 2022 and 2021. |
(4) |
See "Conversions of Natural Gas to BOE". |
(5) |
Operating Netback per BOE is defined under the Non-GAAP
Measures and Ratios section of this press release. |
|
|
CONFERENCE CALL DETAILS
A conference call to discuss the results will be
held for the investment community on Tuesday, February 7, 2023,
beginning at 6:30 a.m. MDT (8:30 a.m. EDT). To participate in the
conference call, you are asked to register at the link provided
below. Details regarding the call will be provided to you upon
registration.
Live call participants registration
URL:
https://register.vevent.com/register/BI2342fa348a4e4aa1abd0f7166375ca16
FORWARD-LOOKING STATEMENTS
This press release includes certain statements
regarding PrairieSky’s future plans and operations and contains
forward-looking statements that we believe allow readers to better
understand our business and prospects. The use of any of the words
"expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans",
"intends", "strategy" and similar expressions are intended to
identify forward-looking information or statements. Forward-looking
statements contained in this press release include estimates
regarding our expectations with respect to PrairieSky’s business
and growth strategy; expectations of future organic royalty
production growth from PrairieSky’s existing royalty asset
portfolio, including but not limited to the Clearwater oil play,
and contributions from acquisitions; estimates of organic
production growth excluding acquisition volumes; estimates
regarding the quality of PrairieSky’s existing royalty asset
portfolio; leasing leading to third-party drilling and exploration
activity on our royalty asset portfolio in 2023; Q4 2022 spuds
leading to royalty production growth in 2023; and collections from
compliance activities.
With respect to forward-looking statements
contained in this press release, we have made several assumptions
including those described in detail in our MD&A and the Annual
Information Form for the year ended December 31, 2022. Readers and
investors are cautioned that the assumptions used in the
preparation of such forward-looking information and statements,
although considered reasonable at the time of preparation, may
prove to be imprecise and, as such, undue reliance should not be
placed on forward-looking statements. Our actual results,
performance, or achievements could differ materially from those
expressed in, or implied by, these forward-looking statements. We
can give no assurance that any of the events anticipated will
transpire or occur, or if any of them do, what benefits we will
derive from them.
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 including inflation, industry conditions, volatility of
commodity prices, lack of pipeline capacity, currency fluctuations,
increasing interest rates, imprecision of reserve estimates,
competitive factors impacting royalty rates, 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, political and geopolitical instability and our ability
to access sufficient capital from internal and external sources. In
addition, PrairieSky is subject to numerous risks and uncertainties
in relation to acquisitions. These risks and uncertainties include
risks relating to the potential for disputes to arise with
counterparties, and limited ability to recover indemnification
under certain agreements. The foregoing and other risks are
described in more detail in PrairieSky’s MD&A, and the Annual
Information Form for the year ended December 31, 2022 under the
headings "Risk Management" and "Risk Factors", respectively, each
of which is available at www.sedar.com and PrairieSky’s
website at www.prairiesky.com.
Further, any forward-looking statement
is made only as of the date of this press release, and PrairieSky
undertakes no obligation to update or revise any forward-looking
statement or statements 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 PrairieSky to predict all of these
factors or to assess in advance the impact of each such factor on
PrairieSky’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 information contained in this document is
expressly qualified by this cautionary statement.
CONVERSIONS OF NATURAL GAS TO
BOE
To provide a single unit of production for
analytical purposes, natural gas production and reserves volumes
are converted mathematically to equivalent barrels of oil (BOE).
PrairieSky uses the industry-accepted standard conversion of six
thousand cubic feet of natural gas to one barrel of oil (6 Mcf = 1
bbl). The 6:1 BOE ratio is based on an energy equivalency
conversion method primarily applicable at the burner tip. It does
not represent a value equivalency at the wellhead and is not based
on either energy content or current prices. While the BOE ratio is
useful for comparative measures and observing trends, it does not
accurately reflect individual product values and might be
misleading, particularly if used in isolation. As well, given that
the value ratio, based on the current price of crude oil to natural
gas, is significantly different from the 6:1 energy equivalency
ratio, using a 6:1 conversion ratio may be misleading as an
indication of value.
NON-GAAP MEASURES AND
RATIOS
Certain measures and ratios in this document do
not have any standardized meaning as prescribed by International
Financial Reporting Standards ("IFRS") and, therefore, are
considered non-GAAP measures and ratios. These measures and ratios
may not be comparable to similar measures and ratios presented by
other issuers. These measures and ratios are commonly used in the
crude oil and natural gas industry and by PrairieSky to provide
potential investors with additional information regarding the
Company’s liquidity and its ability to generate funds to conduct
its business. Non-GAAP measures and ratios include operating
netback per BOE, payout ratio, cash administrative expenses and
cash administrative expenses per BOE. Management’s use of these
measures and ratios is discussed further below. Further information
can be found in the Non-GAAP Measures and Ratios section of
PrairieSky’s MD&A.
"Operating Netback per BOE" represents the cash
margin for products sold on a BOE basis. Operating netback per BOE
is calculated by dividing the operating netback (royalty production
revenues less production and mineral taxes and cash administrative
expenses) by the average daily production volumes for the period.
Operating netback per BOE is used to assess the cash generating and
operating performance per unit of product sold and the
comparability of the underlying performance between years.
Operating netback per BOE measures are commonly used in the crude
oil and natural gas industry to assess performance comparability.
Refer to the Operating Results table starting on page 7 of
PrairieSky’s MD&A.
"Payout Ratio" is calculated as dividends
declared as a percentage of funds from operations. Payout ratio is
used by dividend paying companies to assess dividend levels in
relation to the funds generated and used in operating
activities.
"Cash Administrative Expenses" represent
administrative expenses excluding the volatility and fluctuations
in share-based compensation expense for RSUs, PSUs, ODSUs and DSUs
and stock options that were not settled in cash in the period. Cash
administrative expenses are calculated as total administrative
expenses, adjusting for share-based compensation expense in the
period, plus any actual cash payments made under the RSU, PSU, ODSU
or DSU plans. Management believes cash administrative expenses are
a common benchmark used by investors when comparing companies to
evaluate operating performance.
"Cash Administrative Expenses per BOE"
represents cash administrative expenses on a BOE basis and is
calculated by dividing cash administrative expenses by the average
daily production volumes for the period. Cash administrative
expenses per BOE assists management and investors in evaluating
operating performance on a comparable basis.
Cash Administrative
Expenses
The following table presents the computation of
cash administrative expenses:
|
Three Months Ended |
Year Ended |
($
millions) |
December 31,2022 |
September 30,2022 |
December 31,2021 |
December 31, 2022 |
|
December 31, 2021 |
|
Total Administrative Expenses |
$ |
16.4 |
|
$ |
10.4 |
|
$ |
9.8 |
|
$ |
48.8 |
|
$ |
32.0 |
|
Share-Based Compensation
Expense |
|
(11.3 |
) |
|
(5.5 |
) |
|
(4.4 |
) |
|
(28.3 |
) |
|
(12.5 |
) |
Cash Payments Made - Share Unit
Awards Incentive Plan |
|
- |
|
|
- |
|
|
- |
|
|
5.0 |
|
|
0.7 |
|
Cash Administrative Expenses |
$ |
5.1 |
|
$ |
4.9 |
|
$ |
5.4 |
|
$ |
25.5 |
|
$ |
20.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABOUT PRAIRIESKY ROYALTY
LTD.
PrairieSky is a royalty company, generating
royalty production revenues as petroleum and natural gas are
produced from its properties. PrairieSky has a diverse portfolio of
properties that have a long history of generating funds from
operations and that represent the largest and most consolidated
independently-owned fee simple mineral title position in Canada.
PrairieSky's common shares trade on the Toronto Stock Exchange
under the symbol PSK.
FOR FURTHER INFORMATION PLEASE
CONTACT:
Andrew PhillipsPresident & Chief Executive Officer PrairieSky
Royalty Ltd.(587) 293-4005Investor Relations(587)
293-4000www.prairiesky.com |
Pamela KazeilVice President, Finance & Chief Financial
OfficerPrairieSky Royalty Ltd.(587) 293-4089 |
|
|
PDF
available: http://ml.globenewswire.com/Resource/Download/6b6d19bd-2cbe-4e89-96a7-e17116e18933
PrairieSky Royalty (TSX:PSK)
Historical Stock Chart
From Jul 2024 to Aug 2024
PrairieSky Royalty (TSX:PSK)
Historical Stock Chart
From Aug 2023 to Aug 2024