CALGARY, ALBERTA–(Marketwired – Oct. 30, 2017) – PrairieSky Royalty Ltd. (“PrairieSky” or the “Company“) (TSX:PSK) is pleased to announce its third quarter operating and financial results for the period ended September 30, 2017.
2017 Third Quarter Highlights:
- Revenues of $71.7 million including $54.2 million of royalty revenue and $15.5 million of lease bonus consideration generated by leasing land for new and existing plays
- Funds from operations of $66.8 million or $0.28 per share, basic and diluted, and net income of $19.4 million or $0.08 per share, basic and diluted
- Average royalty production of 24,183 BOE per day, 48% liquids
- Completed acquisitions of additional royalty interests, as well as seismic, for aggregate cash consideration of $20.3 million
- Maintained a strong balance sheet with cash on hand of $102.0 million and no debt as of September 30, 2017
During Q3 2017, PrairieSky remained focused on our core strategy of leasing for multiple play types across our extensive land base. During the quarter, PrairieSky entered into 23 leasing arrangements with 20 different counterparties generating $15.5 million in cash lease bonus consideration, with the primary focus area being the Duvernay light oil play where PrairieSky has over one million acres of royalty interests. Leasing of our undeveloped acreage is a precursor to drilling activity and future royalty production revenues at no cost to PrairieSky.
Producers spud 245 wells on PrairieSky’s land base during the quarter. This was up from 104 wells spud in Q2 2017. Drilling activity was focused on the Viking oil play in both Western Saskatchewan and Central Alberta. Other active plays included the multi-zone Deep Basin fairway of Alberta and British Columbia and light and heavy oil plays across Central Alberta, including the East Shale Duvernay.
The current commodity price environment continues to provide opportunities to selectively acquire royalty assets that are near-term accretive and enhance medium and long-term value for shareholders. During the quarter, PrairieSky acquired gross overriding royalties on producing and undeveloped lands for cash proceeds of $20.3 million which provide exposure to existing and future development across a number of plays. Of this total, approximately $16 million was spent on emerging resource plays that currently do not generate cash flow. PrairieSky continues to be selective and disciplined in our evaluation of new royalty opportunities.
PrairieSky’s high margin royalty production and low cost structure continue to deliver strong funds flow and growth opportunities. PrairieSky’s cash administrative expenses for the quarter were $2.29 per boe. Cash administrative expenses are expected to be in the low $3.00 per boe range for 2017. During the quarter, PrairieSky declared dividends of $44.3 million and acquired and cancelled 333,200 common shares for $9.5 million under its normal course issuer bid at an average price per share of $28.58. At September 30, 2017, PrairieSky had $102.0 million of cash on hand and no debt.
I would like to thank our shareholders for their continued support. Please contact Pam Kazeil, our Chief Financial Officer, at 587-293-4089, or myself at 587-293-4005 with any questions.
Andrew Phillips, President & CEO
FINANCIAL AND OPERATIONAL INFORMATION
The following table summarizes select operational and financial information of the Company for the periods noted. All dollar amounts are stated in Canadian dollars unless otherwise noted.
|($ Millions, except per share or as otherwise noted)||Three months
|YTD 2017||YTD 2016|
|Funds from Operations||66.8||54.2||209.1||138.4|
|Per Share – basic(1)(4)||0.28||0.24||0.88||0.61|
|Per Share -diluted (1)(4)||0.28||0.24||0.88||0.60|
|Net Earnings and Comprehensive Income||19.4||7.9||80.7||3.9|
|Per Share – basic and diluted(1)||0.08||0.03||0.34||0.02|
|Acquisitions including non-cash consideration||20.3||5.0||299.7||32.6|
|Working Capital at end of period||98.7||168.1||98.7||168.1|
|Weighted average – basic||236.4||228.6||236.6||228.7|
|Weighted average – diluted||236.7||228.8||236.9||228.9|
|Natural Gas (MMcf/d)||75.3||74.8||79.1||73.6|
|Crude Oil (bbls/d)||9,033||8,278||9,614||8,413|
|Natural Gas ($/Mcf)||$||1.25||$||1.84||$||1.90||$||1.43|
|Crude Oil ($/bbl)||47.61||45.79||51.22||41.52|
|Operating Netback per BOE(4)||$||19.77||$||20.43||$||24.17||$||17.76|
|Funds from Operations per BOE||$||30.02||$||25.56||$||29.98||$||21.87|
|Natural Gas Price Benchmarks|
|Oil Price Benchmarks|
|West Texas Intermediate (WTI) (US$/bbl)||48.15||45.33||50.07||41.10|
|Edmonton Light Sweet ($/bbl)||57.46||54.14||62.19||50.44|
- Net Earnings and Comprehensive Income and Funds from Operations per common share are calculated using the weighted average number of common shares outstanding.
- A dividend of $0.0625 per common share was declared on September 14, 2017 and paid on October 16, 2017 to shareholders of record as at September 29, 2017.
- See “Conversions of Natural Gas to BOE”.
- 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 September 30, 2017 is available on SEDAR at www.sedar.com and PrairieSky’s website at www.prairiesky.com.
CONFERENCE CALL DETAILS
A conference call to discuss the results will be held for the investment community on Tuesday, October 31, 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:
(844) 657-2668 (toll-free in North America)
(612) 979-9882 (Toronto & International)