Prairiesky Royalty (PSK) Q4 2023 earnings summary

Executive summary

• Q4 royalty production averaged 25,608 BOE/d, including record oil volumes of 12,844 bbl/d; annual production averaged 24,857 BOE/d, flat YoY.

• Active leasing generated record-high bonus consideration since 2017 for both Q4 ($11.2 million) and FY 2023 ($26.0 million).

Financial highlights

• Q4 revenue was $136.6 million, including $122.0 million in royalty production revenue and $14.6 million in other revenue; FFO was $111.1 million, or $0.46/share, up 18% QoQ and down 7% YoY.

• FY revenue totaled $513.2 million; FFO was $382.5 million, or $1.60/share, down 25% YoY as record oil volumes and leasing bonuses were more than offset by lower commodity prices.

• Net earnings were $67.4 million ($0.28/share) in Q4 and $227.6 million ($0.95/share) for FY 2023, versus $67.3 million and $317.5 million, respectively, in 2022.

Outlook and guidance

• Oil royalty volumes are expected to maintain momentum into 2024 amid third-party drilling and leasing activity; 2024 is expected to remain active.

• Duvernay leasing is expected to support long-term light oil royalty growth, complementing heavy oil growth in the Clearwater and Mannville Stack plays.

• Annual dividend increased 4% to $1.00/share, paid quarterly at $0.25/share, effective for the March 29, 2024 record date.