Prairiesky Royalty (PSK) Q2 2024 earnings summary

Executive summary

• Oil royalty volumes reached 13,312 barrels per day in Q2 2024, up 6% year-over-year, driven by operator drilling efficiencies and technological improvements, with further gains expected as development continues.

• Total royalty production averaged 25,320 BOE per day, up 8% year-over-year, with about one-third of wells drilled unstimulated, enhancing ultimate oil recovery through water and polymer flood techniques.

• Leasing activity remained robust, with 55 new arrangements involving 46 oil companies, generating $6.7 million in lease bonuses, and all employees are shareholders, aligning interests.

• Funds from operations totaled $106.1 million ($0.44 per share), a 16% increase over Q2 2023, supporting dividend payments and debt reduction.

• Marked 10-year anniversary, having tripled land base and focused on low-cost oil plays for sustained growth.

Financial highlights

• Total production averaged 25,300 BOE per day in Q2 2024; oil royalty volumes up 6% year-over-year and 7% year-to-date, mainly from Clearwater and Mannville Stack.

• Realized oil price was $91.75 per barrel, up $14 from Q1 2024, aided by stronger WTI pricing and a tighter WCS differential post-Trans Mountain Pipeline.

• Royalty production revenue was $125.5 million; other revenues added $10.1 million, including $6.7 million in bonus consideration.

• Net earnings for Q2 2024 were $60.3 million ($0.25 per share), up from $48.0 million in Q2 2023.

• Net debt reduced to $174.6 million as of June 30, 2024, down 21% from year-end.

Outlook and guidance

• Anticipates continued robust activity in Clearwater and Mannville Stack, supporting strong oil royalty production for the remainder of the year.

• Expects waterfloods and polymer floods to increase recoveries and lower declines at no incremental cost.

• 2024 cash administrative expense forecast remains $35–40 million.

• Expect to be debt-free by mid to late 2025, providing flexibility for future capital allocation.

• Investment in low-cost oil plays will support short, medium, and long-term growth and future cash flows.