CALGARY, ALBERTA–(Marketwired – Oct. 25, 2016) – PrairieSky Royalty Ltd. (“PrairieSky” or the “Company“) (TSK:PSK) is pleased to announce its third quarter operating and financial results for the period ended September 30, 2016.
2016 Third Quarter Highlights:
- Average production of 23,050 BOE per day, 46% liquids
- Revenues of $59.3 million, including product revenues of $52.2 million and $5.6 million in lease issuance bonus consideration
- Funds from Operations of $54.2 million or $0.24 per share
- Cash administrative expenses of $2.45 per BOE, down 11% from Q2 2016 and 28% from Q3 2015
- Maintained a strong balance sheet with $168.1 million of positive working capital and nil debt as of September 30, 2016
- Dividends declared in the quarter of $41.1 million ($0.18 per share) resulting in a payout ratio of 76%
Q3 2016 was a strong quarter with PrairieSky focusing on its core strategy of leasing mineral title lands to crude oil and natural gas producers. During Q3 2016, PrairieSky entered into 29 leasing arrangements with 26 different counterparties across our extensive land base, collecting $5.6 million in lease issuance bonus consideration. For the nine month period ended September 30, 2016, PrairieSky entered into over 80 leasing arrangements with 57 different counterparties, establishing the foundation for future drilling activity on existing plays, as well as exploration targets with new discovery potential. During the quarter, over 200 wells were spud on PrairieSky lands, an increase from approximately 80 wells in Q2 2016 and approximately 100 wells in Q1 2016. Drilling and licensing activity was focused on the Viking light oil play in western Saskatchewan, as well as light oil plays in the Mannville in central Alberta, the Bakken in southern Alberta and Saskatchewan, and multiple liquids rich resource play targets in the Deep Basin including the Montney, Spirit River and Duvernay formations.
PrairieSky’s ongoing cost optimization efforts were reflected in a quarter over quarter cash G&A reduction to $2.45 per BOE, down 11% from Q2 2016 and 28% from Q3 2015. In addition, PrairieSky’s staff continued their focus on ensuring timely and accurate royalty payments, having collected $4.9 million in royalty compliance recoveries year to date.
Consistent with its long term strategy, PrairieSky continued to identify and execute on opportunities to expand its land and royalty portfolio to new and emerging plays. During Q3 2016, PrairieSky deployed $4.8 million in acquisition capital, acquiring royalty interests combined with a significant land position in two emerging heavy oil plays in Alberta, and consolidating a 100% working interest in certain seismic assets in Central Alberta. PrairieSky continues to see quality acquisition opportunities including small and medium sized potential transactions, and will remain selective and disciplined in our evaluation of new royalty opportunities.
PrairieSky remains committed to paying dividends and reducing the share count using internally generated free cash flow, while continuing to add cash on the balance sheet. During the quarter PrairieSky generated excess funds from operations after paying dividends of $41.1 million (Q3 2016 – $0.18 per common share) and approximately $10.1 million to acquire 390,500 common shares under PrairieSky’s Normal Course Issuer Bid. PrairieSky maintained a strong balance sheet with $168.1 million of positive working capital, including $159.4 million of cash on hand at September 30, 2016.
I would like to thank our owners for their continued support. Please contact Pam Kazeil, our Chief Financial Officer, or myself with any questions.
Andrew Phillips, President & CEO
FINANCIAL AND OPERATIONAL INFORMATION
The following table summarizes selected operational and financial information of the Company for the periods noted. All dollar amounts are stated in Canadian dollars unless otherwise noted.
A full version of PrairieSky’s Management’s Discussion and Analysis (“MD&A“) and unaudited interim condensed financial statements and notes thereto for the fiscal period ended September 30, 2016 is available on SEDAR at www.sedar.com and PrairieSky’s website at www.prairiesky.com.
|($ Millions, unless otherwise noted)||Q3 2016||Q3 2015||YTD 2016||YTD 2015|
|Funds from Operations(1)||54.2||36.5||138.4||117.8|
|Per Share – basic(2)||0.24||0.23||0.61||0.78|
|Per Share – diluted(2)||0.24||0.23||0.60||0.78|
|Net Earnings (Loss) and Comprehensive Income (Loss)||7.9||14.1||3.9||55.0|
|Per Share – basic and diluted(2)||0.03||0.09||0.02||0.36|
|Acquisitions including non-cash consideration||5.0||5.2||32.6||61.9|
|Weighted average – basic||228.6||155.6||228.7||151.5|
|Weighted average – diluted||228.8||156.0||228.9||151.9|
|Natural Gas (MMcf/d)||74.8||59.5||73.6||60.5|
|Crude Oil (bbls/d)||8,278||4,800||8,413||5,502|
|Natural Gas ($/Mcf)||$||1.84||$||2.76||$||1.43||$||2.75|
|Crude Oil ($/bbl)||45.79||54.38||41.52||50.14|
|Operating Cash Flow Netback(1)||$||20.43||$||23.80||$||17.76||$||22.13|
|Funds from Operations per BOE(1)||$||25.56||$||24.76||$||21.87||$||25.25|
|Natural Gas Price Benchmarks|
|Oil Price Benchmarks|
|West Texas Intermediate (WTI) (US$/bbl)||$||45.33||$||46.94||$||41.10||$||50.92|
|Edmonton Light Sweet ($/bbl)||$||54.14||$||57.95||$||50.44||$||58.58|
|(1)||A non-GAAP measure which is defined under the Non-GAAP Measures section in the MD&A.|
|(2)||Net Earnings (Loss) and Comprehensive Income (Loss) and Funds from Operations per Common Share are calculated using the weighted average number of Common Shares outstanding.|
|(3)||A dividend of $0.06 per Common Share was declared on September 15, 2016. The dividend was paid on October 17, 2016 to shareholders of record as at September 30, 2016.|
|(4)||See “Conversions of Natural Gas to BOE”.|
CONFERENCE CALL DETAILS
A conference call to discuss the results will be held for the investment community on Wednesday, October 26, 2016 beginning at 6:30 a.m. MT (8:30 a.m. ET). To participate in the conference call, approximately 10 minutes prior to the conference call, please dial:
(866) 413-7174 (toll free in North America)
(647) 427-2293 (International)