CALGARY, ALBERTA–(Marketwired – April 24, 2017) – PrairieSky Royalty Ltd. (“PrairieSky” or the “Company“) (TSX:PSK) is pleased to announce its first quarter operating and financial results for the period ended March 31, 2017.
2017 First Quarter Highlights:
- Average royalty production of 26,812 BOE per day, 49% liquids
- Funds from operations of $67.3 million or $0.28 per share, basic and diluted
- Revenues of $80.3 million including $73.5 million of royalty revenue
- Leased land for new and existing plays, collecting $3.0 million in lease issuance bonus consideration
- Completed acquisition of 4% gross overriding royalty on current and future phases of the Lindbergh SAGD thermal oil project
- Maintained a strong balance sheet with $97.6 million of positive working capital, including $92.4 million of cash on hand and nil debt as of March 31, 2017
It was an active first quarter for industry and across PrairieSky’s land base with over 185 wells spud on our lands. Drilling activity was primarily focused on the Viking light oil play in Western Saskatchewan, the multi-zone Deep Basin fairway of Alberta and British Columbia and light oil plays across Central Alberta including the Mannville and Viking plays. Leasing interest remained high during the quarter with PrairieSky entering into 36 new leasing arrangements with 33 different producers on our fee lands.
PrairieSky completed its previously announced acquisition of a 4% gross overriding royalty on current and future phases of Pengrowth Energy Corporation’s Lindbergh SAGD thermal oil project as well as seismic over certain lands in British Columbia and Alberta for total cash consideration of $250 million, before customary closing adjustments. In addition, PrairieSky completed $4.6 million of complementary acquisitions during the quarter, adding additional fee title lands and gross overriding royalty interests to its portfolio, including an overriding royalty on 29,440 acres of land in the Monias area of Northeast British Columbia which is prospective for future Montney development. PrairieSky continues to be selective and disciplined in our evaluation of new royalty opportunities.
PrairieSky’s large undeveloped land position, low cost structure and high margin royalty production continues to deliver strong funds flow and growth opportunities with no capital requirements. During the quarter, PrairieSky declared dividends of $43.2 million. PrairieSky increased its annual dividend to $0.75 per share per annum effective for the March 2017 dividend which was paid on April 17, 2017. PrairieSky acquired and cancelled 335,200 common shares for $10.1 million under its normal course issuer bid (“NCIB“) during the first quarter of 2017. In addition to paying the dividend and cancelling shares through the NCIB, PrairieSky continued to add internally generated cash to its balance sheet. At March 31, 2017, PrairieSky had $97.6 million of positive working capital and no debt.
PrairieSky will apply to the Toronto Stock Exchange (“TSX“) to renew its NCIB for an additional one year period. Subject to regulatory approval, PrairieSky currently intends to allocate up to $44 million over the next 12 months (approximately $3.7 million per month), net of regular monthly dividend payments, to repurchase common shares. PrairieSky intends to purchase from time to time, as it considers advisable, up to 1,600,000 of its currently issued and outstanding common shares (representing approximately 1% of the public float of common shares issued and outstanding as of April 24, 2017) over a period of twelve months. Any common shares that are purchased under the NCIB will be cancelled upon their purchase by PrairieSky. Management believes a normal course issuer bid provides an opportunity to use excess cash resources to reduce PrairieSky’s share count over time, representing an investment in PrairieSky’s high quality asset base and enhancing value for remaining shareholders. To date, PrairieSky has purchased and cancelled an aggregate of 1,356,700 common shares at a weighted average price per share of $27.91 under a normal course issuer bid that commenced on May 2, 2016 and runs to May 1, 2017.
PrairieSky is pleased to be hosting an investor day on May 24, 2017 in Toronto, Ontario, where members of PrairieSky’s management and technical team will present details on the Company’s oil and gas plays.
I would like to thank our shareholders for their continued support. Please contact Pam Kazeil, our Chief Financial Officer, at 587-293-4089 or myself at 587-293-4005 with any questions.
President & CEO
FINANCIAL AND OPERATIONAL INFORMATION
The following table summarizes select operational and financial information of the Company for the periods noted. All dollar amounts are stated in Canadian dollars unless otherwise noted.
|($ Millions, except per share or as otherwise noted)||Three months ended March 31, 2017||Three months ended March 31, 2016|
|Funds from Operations||67.3||41.4|
|Per Share – basic and diluted (1)(4)||0.28||0.18|
|Net Earnings and Comprehensive Income||20.8||1.7|
|Per Share – basic and diluted(1)||0.09||0.01|
|Acquisitions including non-cash consideration||254.5||2.7|
|Working Capital at end of period||97.6||202.5|
|Weighted average – basic||236.5||228.6|
|Weighted average – diluted||236.9||228.8|
|Natural Gas (MMcf/d)||81.6||70.7|
|Crude Oil (bbls/d)||10,214||8,748|
|Natural Gas ($/Mcf)||$||2.26||$||1.80|
|Crude Oil ($/bbl)||52.81||34.16|
|Operating Netback per BOE(4)||$||27.14||$||15.66|
|Funds from Operations per BOE||$||27.89||$||19.71|
|Natural Gas Price Benchmarks|
|Oil Price Benchmarks|
|West Texas Intermediate (WTI) (US$/bbl)||51.79||32.34|
|Edmonton Light Sweet ($/bbl)||64.29||42.18|
|(1)||Net Earnings and Comprehensive Income and Funds from Operations per common share are calculated using the weighted average number of common shares outstanding.|
|(2)||A dividend of $0.0625 per common share was declared on March 9, 2017 and paid on April 17, 2017 to shareholders of record as at March 31, 2017.|
|(3)||See “Conversions of Natural Gas to BOE”.|
|(4)||A Non-GAAP measure which is defined under the Non-GAAP Measures section in PrairieSky’s MD&A.|
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 March 31, 2017 is available on SEDAR at www.sedar.com and PrairieSky’s website at www.prairiesky.com.
NORMAL COURSE ISSUER BID
PrairieSky will apply to extend its NCIB for an additional one year period. Under the renewed NCIB, and subject to prior approval of the TSX, PrairieSky intends to repurchase up to $44 million of common shares (approximately $3.7 million per month) over a 12 month period. The NCIB has been approved by the Company’s board of directors; however, it is subject to acceptance by the TSX and, if accepted, will be made in accordance with the applicable rules and policies of the TSX and applicable securities laws. Under the NCIB, common shares may be repurchased in open market transactions on the TSX, and/or other Canadian exchanges, or by such other means as may be permitted by the TSX and applicable securities laws. The price that PrairieSky will pay for common shares in open market transactions will be the market price at the time of purchase. Common shares acquired under the NCIB will be cancelled.
PrairieSky will file a Notice of Intention to Make a NCIB to purchase and cancel up to 1,600,000 currently issued and outstanding common shares, representing approximately 1% of the public float of common shares issued and outstanding as of April 24, 2017. The NCIB is expected to commence shortly after regulatory approvals are obtained. Common shares may be repurchased under the program over a period of up to one year. To date, PrairieSky has purchased and cancelled an aggregate of 1,356,700 common shares at a weighted average price per share of $27.91 under a normal course issuer bid that commenced on May 2, 2016 and runs to May 1, 2017.
PrairieSky will be entering into an automatic purchase plan with its broker in order to facilitate purchases of its common shares. The automatic purchase plan allows for purchases by the Company of its common share at any time, including, without limitation, when the Company would ordinarily not be permitted to make purchases due to regulatory restriction or self-imposed blackout periods. Purchases will be made by PrairieSky’s broker based upon the parameters prescribed by the TSX and the terms of the parties’ written agreement.
PrairieSky believes renewing the NCIB as part of its capital management strategy is in the best interests of the Company and represents an attractive opportunity to use cash resources, net of regular dividend payments, to reduce PrairieSky’s share count over time and thereby enhance the value of the shares held by remaining shareholders. The Board currently intends to evaluate the NCIB, and the level of purchases thereunder, on an annual basis in conjunction with PrairieSky’s annual dividend review. The next regularly scheduled dividend review will be in February 2018.
While PrairieSky currently intends to only use $44 million to effect NCIB purchases over the next 12 months, the Company’s board of directors may consider, from time to time, applying to the TSX to increase the amount of NCIB purchases. Decisions regarding increases to the NCIB will be based on market conditions, share price, best use of funds from operations, and other factors including other options to expand our portfolio of royalty assets.
PrairieSky will be hosting an investor day on May 24, 2017 in Toronto, Ontario, where members of PrairieSky’s management and technical team will present details on the Company’s oil and gas plays. The investor day will be live webcast starting at 9:00 AM eastern daylight time. Interested parties may participate in the webcast 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.
CONFERENCE CALL DETAILS
A conference call to discuss the results will be held for the investment community on Tuesday, April 25, 2017 beginning at 6:30 a.m. MDT (8:30 a.m. EDT). 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)