CALGARY, Alberta – PrairieSky Royalty Ltd. (“PrairieSky” or the “Company“) (TSX: PSK) announced today that its Board of Directors has declared a quarterly dividend of CDN $0.06 per common share, payable in cash on October 15, 2020 to shareholders of record on September 30, 2020. This dividend is designated as an “eligible dividend” for Canadian income tax purposes.
PrairieSky is also pleased to provide an update on its previously announced normal course issuer bid (the “NCIB”). During the period from July 1, 2020 to September 9, 2020, the third quarter to date (“Q3TD”), PrairieSky has purchased for cancellation a total of 7,215,000 common shares under the NCIB. Shares were purchased at a weighted average price of $9.34 per share, for a total purchase price of $67.4 million. Share purchases were funded using funds from operations and PrairieSky’s credit facility, which PrairieSky expects to pay down using excess cash flow above its quarterly dividend.
PrairieSky’s President and Chief Executive Officer, Andrew Phillips, commented, “We view the 7.2 million common share repurchase as an opportunistic acquisition at an attractive point, well below the intrinsic value of the Company. PrairieSky shareholders will continue to receive a fully-funded dividend and will own approximately 3% more of the business, equating to an acquisition of 468,000 acres of royalty lands and approximately 560 BOE per day of current royalty production. As our assets sit on the some of the best parts of the development cost curve, management views this as the highest quality acquisition available in the current environment. We also expect the share repurchase will enhance the dividend growth potential of the business over time. The Company expects to pay down the entirety of the debt incurred to make the share repurchases within the next 12 months, assuming current commodity prices, and has the flexibility to make further opportunistic share repurchases or acquisitions, which are a key component of our capital allocation strategy.”
On May 13, 2020, PrairieSky announced that it had received approval from the Toronto Stock Exchange (the “TSX”) to renew its NCIB for an additional one-year period beginning on May 19, 2020, and expiring no later than May 18, 2021. The NCIB allows the Company to purchase up to 11,600,000 common shares, which represented approximately 5% of the common shares outstanding of 232,426,991 as of May 5, 2020. Since renewing its NCIB, PrairieSky has repurchased a total of 7,425,000 common shares at a weighted average price of $9.34 per share, for a total purchase price of $69.4 million. As previously announced, all common shares repurchased by PrairieSky under the share repurchase program will be cancelled.
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 available capital, and other factors including other opportunities to expand our portfolio of royalty assets.