Prairiesky Royalty (PSK) Q1 2025 earnings summary

Executive summary

• Achieved record oil royalty production of 13,502 barrels per day in Q1 2025, up 3% year-over-year, with total royalty production averaging 25,339 BOE per day.

• Over 200 wells were spud in Q1 2025, with an average royalty rate of 6.9%, driven by strong third-party drilling and multilateral well adoption.

• Closed a CAD 50 million acquisition of Petro-Canada fee title package in Southeast Saskatchewan, adding new leasing opportunities.

• Repurchased and canceled 3.4 million shares for CAD 90 million under the NCIB, reducing share count by 1.4% and increasing remaining shareholders' interest.

• Maintains a low-risk, high-margin business model with no maintenance capital, operating costs, or environmental liabilities.

Financial highlights

• Royalty production revenue reached CAD 119.9 million in Q1 2025, with 93% from liquids.

• Funds from operations totaled CAD 85.8 million ($0.36/share), up 3% year-over-year, and dividends declared were CAD 61.2 million (CAD 0.26 per share), with a payout ratio of 71%.

• Net earnings for Q1 2025 were $58.4 million ($0.26/share), up from $47.5 million in Q1 2024.

• Net debt at March 31, 2025 was $258.8 million, up from $134.9 million at year-end 2024.

• Oil royalty revenue rose 10% year-over-year to $101.1 million, while natural gas royalty production fell 10% to 55.9 MMcf/d.

Outlook and guidance

• Management expects continued organic growth in oil royalty production, supported by a vast inventory of undeveloped lands and third-party drilling.

• Dividend and funds from operations growth are targeted over the next decade, with no capex requirements and high free cash flow yields.

• Dividend is sustainable well below CAD 50 oil price.

• Investor Day scheduled for May 14, 2025, will provide a new royalty asset book and 10-year outcome scenarios.

• Anticipates further ramp-up in Duvernay and Mannville activity, with potential for strong growth in 2025 and beyond.