Prairiesky Royalty Ltd · TSX:PSK
Prairiesky Royalty — Investor Presentation (December 2023)
36 slides from Prairiesky Royalty's investor presentation, December 2023
Slide 1: Corporate Presentation December 2023
Corporate Presentation December 2023
Slide 2: PrairieSky Royalty Snapshot
PrairieSky Royalty Snapshot TSX $5.8 Balance Sheet PSK Billion Strength Enterprise Value(1) $1.8 Annual Dividend $0.96 239.0 Per Common Share Million Billion Paid Quarterly Returned to Shares Outstanding Shareholders since IPO 18.1 Net Zero 4 Million Scope 1 and 2 Emissions Provinces Acres of Royalt
Slide 3: PrairieSky's Dominant Land Position
PrairieSky’s Dominant Land Position 18.1 million acres across Western Canada 2
Slide 4: PrairieSky per Share Metrics
PrairieSky per Share Metrics Production per Million Shares(1) Acres per Million Shares(2) 140 80,000 120 89% 60,000 100 80 40,000 60 40 20,000 20 - - Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20
Slide 5: Strong quarterly activity with 246 spuds on PrairieSky lands – Q3 2023
Spuds on PrairieSky Lands – Q3 2023 With third-party activity across our royalty land base, PrairieSky has increased its oil royalty production by 6% YTD 2023 Strong quarterly activity with 246 versus YTD 2022. wells spud across PrairieSky’s land base, including: ● 92 Viking light oil wells spud ● 4
Slide 6: Clearwater Royalties
Clearwater Royalties PrairieSky has the largest Clearwater royalty acreage position with ~1,400,000 acres throughout the entire Clearwater trend. Clearwater royalty production showing sustainable organic growth with average royalty production volumes of ~1,800 BOE/d in Q3 2023. Clearwater Royalty Pr
Slide 7: 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 replaced in 2022, YTD 2023 funds from operations of after record annual productio
Slide 8: Production & Revenues Generated from Royalty Properties
Production & Revenues 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 mis-paid royalties through foren
Slide 9: Hedge to Inflation
Hedge to Inflation Low risk revenue base High margins No maintenance capital Strong revenue for upstream oil and gas producers and PrairieSky. None of the capital requirements, operating costs, abandonment liabilities or Unhedged royalty portfolio reclamation charges associated with working provides
Slide 10: Returns to Shareholders
Returns to Shareholders 3.5 From IPO to September 30, 3.0 2023, PrairieSky has returned 2.5 $1.5 billion in dividends and $246 million in share buybacks to shareholders. 2.0 $ billions High conversion 1.5 of revenues to funds from operations for distribution to 1.0 shareholders through all commodity
Slide 11: Shareholder Alignment
Shareholder Alignment Board & Management Ownership in PSK: ~2.7 million shares Shareholder “Pay for performance” long-term incentives Alignment All staff are shareholders and maximize participation in Employee Stock Purchase Plan Decisions focused on core strategy and creating long-term shareholder
Slide 12: 10 Year Funds from Operations Generation
10 Year Funds from Operations Generation YTD 2023 Average Royalty Production 24,604 BOE/d(1) 10 Year Average Annual Production (BOE/d) FX AECO WTI ($US / $CAD) ($/Mcf) ($/bbl) 22,000 24,000 26,000 28,000 30,000 10 Year Funds from Operations (Billions) % Annual Growth Rate ~(2.5%) ~(1.0%) ~0.6% ~1.5%
Slide 13: ESG Survey Results & Rankings
ESG Survey Results & Rankings ESG Survey Results Ranked #1 by Sustainalytics for Global Received AAA ranking from MSCI in 2022 & 2023. Oil and Gas Producers and #51 (top 0.5%) in Global Universe (February 3, 2023). Received A- score for CDP Climate Change in 2022, which is the leadership level. S&P
Slide 14: 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 15: ESG Policies & Practices
ESG Policies & Practices All of PrairieSky’s royalty Policies properties are in Canada which and provides the following Practices advantages: Environmental regulations are best-in-class standards and reflect global leadership. PrairieSky’s policies and practices are developed to Focus on Health and
Slide 16: Why PrairieSky?
Why PrairieSky? • 9.7 million acres of Fee Lands Vast Land Base • 8.4 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 17: Q3 2023 Activity Update & Financial Information
Q3 2023 ACTIVITY UPDATE & FINANCIAL INFORMATION
Slide 18: Quarterly Activity on PrairieSky Lands
Quarterly Activity on PrairieSky Lands Wells Spud Wells Spud 300 300 15.0% 200 200 10.0% 100 100 5.0% 0 0 0.0% LOR GORR UNIT OIL GAS RI Wells Rig Released Wells Rig Released 300 300 15.0% 200 200 10.0% 100 100 5.0% 0 0 0.0% LOR GORR UNIT OIL GAS RI Wells on Production* Wells On Production* 300 15.0%
Slide 19: Financial Highlights
Financial Highlights Year Ended December 31, $millions, unless otherwise noted Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 2022 2021(1) Production Volumes Crude Oil (bbls/d) 12,084 12,607 12,212 12,166 11,376 12,220 11,739 7,541 NGLs (bbls/d) 2,702 1,943 2,664 2,681 2,660 2,772 2,684 2,436 Natur
Slide 20: Top Payors
Top Payors Top 10 payors represent 47% Exposure to various operators with of product revenue, while the diverse expertise ranging from Top 25 payors represent 70% private companies to Majors. of product revenue. 12 months of Revenue by Top 25 Companies ($ millions) 1 2 Top 3 4 5 25 Payors 6 7 8 9 As
Slide 21: Understanding Royalties
UNDERSTANDING ROYALTIES
Slide 22: 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 23: 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 8.4 million acres the royalty hierarchy, costs Streams increase and duration Net Profit I
Slide 24: Introduction to PrairieSky Royalty
Introduction to PrairieSky Royalty 9.7 million acres of Fee Lands (1) Business model supports dividend payments 8.4 million acres of GORR Lands (1) Royalty operating margin(2) 99% Lands located throughout the heart of the oil and gas producing basins in Alberta, British Columbia, Operating margin(2)
Slide 25: A Unique and Diversified Approach to Investing in Oil & Gas
A Unique and Diversified Approach to Investing in Oil & Gas Third Party Operators • 320 lessees paying royalties on PrairieSky Royalty lands • Operators on PrairieSky Royalty Fee Lands include Majors, Independents, Mid Cap and Small Cap producers Commodity Geology • 87% of product revenue derived •
Slide 26: 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 27: Higher Margin, Lower Risk, Low Impact of Cost Inflation
Higher Margin, Lower Risk, Low Impact of Cost Inflation Margin Summary ($/BOE) Illustrative Working Interest Operator PrairieSky Royalty Revenue PrairieSky (60% Liquids Production)(1) Royalty offers $52.49/boe higher margins than conventional Production & Mineral Tax working interest ($0.70/BOE) Roy
Slide 28: Active Management of Land Base
Active Management of Land Base License to ~19,900 km2 of 3D PrairieSky actively seismic(1) over 4.9 million acres manages its Fee & ~54,000 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 29: 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 30: 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 31: 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 32: Leadership Team
Leadership Team Board of Directors Glenn A. McNamara James M. Estey, Chair of the Board Corporate Director, Former President & Chief Executive Officer and Director of Corporate Director, Retired Chairman of UBS Securities Canada Inc., and has more Heritage Resources LP, Former President of BG Canada
Slide 33: 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 34: 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 35: 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 36: 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
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