Prairiesky Royalty Ltd · TSX:PSK
Prairiesky Royalty — Investor Presentation (October 2024)
40 slides from Prairiesky Royalty's investor presentation, October 2024
Slide 1: Corporate Presentation October 2024
CORPORATE PRESENTATION OCTOBER 2024 1
Slide 2: PrairieSky Royalty Snapshot
PrairieSky Royalty Snapshot TSX $6.9 Balance Sheet PSK Billion Strength Enterprise Value(1) 0.4x D/CF (Q3/24 annualized) Annual Dividend Oil & Liquids $2.0 $1.00 95% Billion Per Common Share of YTD Royalty Paid Quarterly Returned to Production Revenue Shareholders since IPO 18.0 #1 ESG Ranking Canad
Slide 3: Why PrairieSky?
Why PrairieSky? • 9.7 million acres of Fee Lands Vast Land Base • 8.3 million acres of GORR Lands Experienced Team • Management and directors with an unparalleled understanding of the royalty business and are invested alongside shareholders Resource Play • Upside from resource play development on em
Slide 4: PrairieSky's Dominant Land Position
PrairieSky’s Dominant Land Position PrairieSky has more than tripled its Royalty Lands since inception, an 88% increase on a per share basis(1), including the addition of: • All Saskatchewan Fee Lands and GORR acreage • 1.4 million Clearwater acres • Mannville Stack position through acquisition from
Slide 5: PrairieSky Key Growth Metrics
PrairieSky Key Growth Metrics Production per Million Shares(1) Share of Industry Capital (2) 120 $2.5 10.0% 100 $2.0 8.0% 80 $1.5 6.0% $ billions 60 $1.0 4.0% 40 $0.5 2.0% 20 $0.0 0.0% - 2019 2020 2021 2022 2023 Gross Capital on PSK Land % of Industry Capital Oil NGL Natural Gas (boe) Avg Royalty Ra
Slide 6: Spuds on PrairieSky Lands – YTD 2024
Spuds on PrairieSky Lands – YTD 2024 With third-party activity across our royalty land base, PrairieSky has increased its oil royalty production by 6% YTD, relative to same period Strong YTD activity with 536 wells in 2023. spud across PrairieSky’s land base, including: ● 117 Viking light oil wells
Slide 7: Multilateral Wells – Driving Increased Productivity
Multilateral Wells – Driving Increased Productivity Expanding multilateral application across the basin has led to an increasing contribution to royalty production volumes. Through Q3/24, multilateral wells spud on PrairieSky lands have totaled an estimated 186 YTD, representing ~35% of drilling act
Slide 8: Clearwater Royalties – Sustainable Growth
Clearwater Royalties – Sustainable Growth PrairieSky has the largest Clearwater royalty acreage position with ~1,400,000 acres throughout the entire Clearwater trend. Clearwater royalty oil production has averaged an estimated ~1,930 bbl/d YTD 2024, representing 19% growth y/y. Clearwater Royalty Oi
Slide 9: Mannville Stack – Expanding Position
Mannville Stack – Expanding Position PrairieSky has significantly expanded its position in the Mannville Stack over the past 18 months, adding a large GOR position to complement its extensive Fee title position in the broader Cold Lake region. Discoveries have been made in 9 discrete intervals withi
Slide 10: Reserves Replacement
Reserves Replacement Third-party capital on PrairieSky lands In a royalty business with undeveloped has historically replaced produced land, all funds from operations can be reserves. returned to shareholders. Reserves steady in 2023, 2023 funds from operations of after annual production of 9,072 MB
Slide 11: Production & Revenue Generated from Royalty Properties
Production & Revenue Generated from Royalty Properties PrairieSky generates revenues through leasing its Fee Lands and its GORR Interests, which includes Royalty Production Revenue, Bonus Consideration and Lease Rental Income. Royalty Compliance focuses on capturing mispaid royalties through forensi
Slide 12: Inflation Insulated, High Margin Business Model
Inflation Insulated, High Margin Business Model Low risk High revenue base margins No maintenance capital Equally strong revenue as upstream oil and gas producers, with vastly superior None of the capital requirements, operating margins. operating costs, abandonment liabilities or Royalty operating
Slide 13: Returns to Shareholders
Returns to Shareholders 4.0 From IPO to September 30, 3.5 2024, PrairieSky has returned 3.0 $1.7 billion in dividends and 2.5 $246 million in share buybacks to shareholders (average price $ billions 2.0 of $14.77/share). High conversion 1.5 of revenues to funds from operations for distribution to 1.
Slide 14: Countercyclical Capital Deployment
Countercyclical Capital Deployment History of acquiring assets near low points of the commodity cycle, with major acquisitions completed between US$44-70/bbl WTI. Share buybacks have been completed across a time period when WTI averaged US$54/bbl including ~$86 million of share repurchases in Q2/Q3
Slide 15: Oil Production Growth Decoupled from Western Canada
Oil Production Growth Decoupled from Western Canada Following the acquisition from Oil Production Growth (from Q1/22 Baseline) Heritage Royalty in December 2021, 25.0% PrairieSky has organically exceeded 20.0% the growth rate of the Western Canadian Sedimentary Basin on oil 15.0% volumes through: 10
Slide 16: 10 Year Funds from Operations Generation
10 Year Funds from Operations Generation 2023 Average Royalty Production 24,857 BOE/d(1) With no capex requirements, Funds from Operations are fully available for shareholder returns. 10 Year Average Annual Production (BOE/d) FX AECO WTI 24,000 26,000 28,000 30,000 32,000 ($US / $CAD) ($/Mcf) ($/bbl
Slide 17: Shareholder Alignment
Shareholder Alignment Board & Management Ownership in PSK Shareholder “Pay for performance” Alignment All staff are shareholders and maximize participation long-term incentives in Employee Stock Purchase Plan Decisions focused on core strategy and creating long-term shareholder value 17
Slide 18: ESG Survey Results & Rankings
ESG Survey Results & Rankings ESG Survey Results Ranked #1 by Sustainalytics for Global Oil and Gas Producers and #30 (top 0.2%) in Global Universe (October 9, 2024). Received the ESG Global 50 Top Rated Badge awarded to top 50 ranked companies in Sustainalytics' Global Universe. S&P Global CSA – Re
Slide 19: ESG Practices & Initiatives
ESG Practices & Initiatives We are committed to operating our business in an economically, socially, and environmentally responsible and sustainable manner for the benefit of shareholders and relevant stakeholders. We conduct our business responsibly by: Sustainability-Linked • Incorporating sustain
Slide 20: ESG Policies & Practices
ESG Policies & Practices All of PrairieSky’s royalty properties are in Canada which Policies provides the following and advantages: Practices Environmental regulations are best-in-class standards and reflect global leadership. PrairieSky’s policies and Focus on health and safety, human rights practi
Slide 21: Q3 2024 Activity Update & Financial Information
Q3 2024 ACTIVITY UPDATE & FINANCIAL INFORMATION 21
Slide 22: Quarterly Activity on PrairieSky Lands
100 200 300 0 100 200 300 0 100 200 300 0 2017 Q1 2017 Q1 2017 Q1 2017 Q2 2017 Q2 2017 Q2 2017 Q3 2017 Q3 2017 Q3 2017 Q4 2017 Q4 2017 Q4 2018 Q1 2018 Q1 2018 Q1 2018 Q2 RI: Royalty interest. 2018 Q2 2018 Q2 2018 Q3 2018 Q3 2018 Q3 2018 Q4 2018 Q4 2018 Q4 2019 Q1 2019 Q1 2019 Q1 2019 Q2 2019 Q2 2019
Slide 23: Financial Highlights
Financial Highlights Year Ended December 31, $millions, unless otherwise noted Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 2023 2022 Production Volumes Crude Oil (bbls/d) 12,733 13,312 13,142 12,844 12,084 12,607 12,438 11,739 NGLs (bbls/d) 2,189 2,308 2,535 2,697 2,702 1,943 2,502 2,684 Natural
Slide 24: Top Royalty Payors
Top Royalty Payors Top 10 payors represent 49% Exposure to various operators with of product revenue, while the diverse expertise ranging from Top 25 payors represent 74% private companies to Majors. of product revenue. Top 25 Payors Artis Exploration Aspenleaf Energy Cardinal Energy HWN Energy Jour
Slide 25: Understanding Royalties
PRAIRIESKY 1» ROYALTY UNDERSTANDING ¥
Slide 26: History of Fee Lands
History of Fee Lands 1676 1887 1958 2002 2014 2021 King Charles II of Dominion of Canada CPR creates Encana created PrairieSky completes PrairieSky completes England granted stops granting Canadian Pacific through merger of acquisition of Range multiple acquisitions 948 million acres of mines and mi
Slide 27: Types of Royalties
Types of Royalties The following Crown Royalties figure outlines the Fee Simple Mineral Title - PrairieSky owns 9.7 million acres royalty hierarchy. As you move down Gross Overriding Royalties - PrairieSky owns 8.3 million acres the royalty hierarchy, Streams costs increase and duration Net Profit I
Slide 28: Introduction to PrairieSky Royalty
Introduction to PrairieSky Royalty 9.7 million acres Business model Low risk Experienced team of Fee Lands(1) aligned with supports dividend revenue base 8.3 million acres payments shareholder interests of GORR Lands(1) Lands located throughout Royalty operating margin(2) No maintenance capital Mana
Slide 29: A Unique and Diversified Approach to Investing in Oil & Gas
A Unique and Diversified Approach to Investing in Oil & Gas Third Party Operators • Approximately 335 lessees paying royalties on PrairieSky Royalty lands • Operators on PrairieSky Royalty Fee Lands include Majors, Independents, Mid Cap and Small Cap producers Commodity Geology • 95% of product reve
Slide 30: Royalty Advantage
Royalty Advantage Ownership in PrairieSky provides a long duration cash flow stream, no capital expenditure requirements or maintenance capital and the optionality associated with perpetual land title ownership. Exposure to: No exposure to: High margin cash flow streams Capital costs New discovery/e
Slide 31: Higher Margin, Lower Risk, Low Impact of Cost Inflation
Higher Margin, Lower Risk, Low Impact of Cost Inflation Margin Summary ($/BOE) Revenue (61% Liquids Production)(1) $50.61/boe PrairieSky Illustrative Working Royalty offers Interest Operator PrairieSky Royalty higher margins than conventional Production & Mineral Tax Royalties ($0.39/BOE) working in
Slide 32: Active Management of Land Base
Active Management of Land Base License to ~20,100 km2 of 3D PrairieSky actively seismic(1) over 5.0 million acres manages its Fee & ~54,200 km of 2D seismic Lands: PrairieSky’s Seismic Coverage Meeting with operators and providing updates on available lands Providing seismic to lessors and generatin
Slide 33: Recycling the Land Base
Recycling the Land Base The perpetual nature of Fee Lands allows PrairieSky Royalty to continually recycle lands and grow its revenue base. PrairieSky leases At the end of the primary lease lands by zone – same term, any lands/rights not held aerial acreage can be by production revert back to leased
Slide 34: Long-term Optionality
Long-term Optionality PrairieSky’s basket of call options includes: SAGD Lindbergh and Onion Lake projects have multiple phase expansion potential New leasing of Fee Lands to integrated and independent SAGD specialists Emerging Clearwater, Duvernay and Mannville Stack oil plays; stacked Montney and
Slide 35: Future Optionality
Future Optionality Optionality Beyond Current Valuation Expansion of productive trends Material new pool discoveries Improvements in drilling and completions technologies: incremental recovery via optimized completions, tighter inter-wells spacing, and additional application of multi-leg horiz
Slide 36: Leadership Team
Leadership Team Board of Directors Executive Team Margaret A. McKenzie, Chair of the Board Andrew M. Phillips, President & CEO / Director Corporate Director, Former VP, Finance and Chief Financial Officer of Range Royalty Previously, President, CEO & Director of Home Quarter Resources (acquired by a
Slide 37: Disclaimer & Cautionary Statements
Disclaimer & Cautionary Statements Cautionary Statement on Forward Looking Information This presentation contains “forward looking information” and “forward looking statements” within the meaning of applicable securities laws, which may include, but are not limited to: statements with respect to fut
Slide 38: Non-GAAP Measures and Ratios
Non-GAAP Measures and Ratios Certain measures and ratios in this presentation do not have any standardized meaning as prescribed by IFRS and therefore, are considered non-GAAP measures and ratios. These measures and ratios may not be comparable to those presented by other issuers. These measures and
Slide 39: Other Disclosure
Other Disclosure 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). We use the industry-accepted standard conversion of six thousand cubic feet
Slide 40: Contact Information
CONTACT INFORMATION PRAIRIESKY ROYALTY LTD. 1700, 350 – 7 Avenue SW Calgary, AB T2P 3N9 T 587.293.4000 E Investor.relations@prairiesky.com PRAIRIESKY.COM 40
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