PrairieSky Announces Second Quarter 2025 Results
CALGARY, Alberta, July 14, 2025 (GLOBE NEWSWIRE) --
PrairieSky Royalty Ltd. ("PrairieSky" or the "Company") (TSX:PSK) is pleased to announce its second quarter operating and financial results for the period ended June 30, 2025.
Second Quarter Highlights:
Record oil royalty production of 14,376 barrels per day, an 8% increase over Q2 2024(1). Total royalty production averaged 26,457 BOE per day, a 4% increase over Q2 2024.
Revenues totaled $123.6 million for Q2 2025(1) comprised of royalty production revenue of $111.2 million and other revenue of $12.4 million, including bonus consideration of $8.5 million earned on entering into 47 new leasing arrangements primarily focused on the Duvernay light oil play.
Funds from operations totaled $96.7 million or $0.41 per share, a decrease of 9% from Q2 2024 as record oil royalty production volumes, narrowed heavy and light oil price differentials and a weaker Canadian dollar were offset by lower benchmark US$ WTI pricing.
Declared a second quarter dividend of $61.2 million ($0.26 per share), representing a payout ratio of 63%.
Purchased and cancelled 84,020 common shares under the Company's normal course issuer bid ("NCIB") for $2.0 million.
Completed acquisitions for $6.5 million, primarily of non-producing gross overriding royalty interests targeting Mannville oil.
Net debt totaled $242.0 million as at June 30, 2025, a decrease of $16.8 million from March 31, 2025.
President's Message
Oil royalty production volumes reached a record 14,376 barrels per day in Q2 2025, an 8% increase over Q2 2024, bringing year-to-date oil royalty production to 13,941 barrels per day. We continue to see growth in our heavy oil portfolio with the Clearwater and Mannville Stack(2) approaching 25% of oil royalty production as third-party operators continue to execute on their drilling programs in these plays. Multilateral horizontal drilling reached a record 52% of spuds (61 wells) in the quarter which included 47 wells in the Clearwater. Year-to-date activity has been particularly strong in the Duvernay with 30 wells spud compared to 33 spud in all of 2024. We expect to see initial royalty production from multiple Duvernay wells in the West Shale Basin(2) in the third quarter and this level of third-party activity to continue to drive annual oil royalty production growth.
Funds from operations totaled $96.7 million ($0.41 per share) in the quarter driven by strong royalty production volumes of 26,457 BOE per day which generated royalty revenue of $111.2 million, 93% attributed to oil and NGL. Oil royalty production revenue totaled $95.7 million, a 14% decrease from Q2 2024, with lower US$ WTI benchmark pricing offsetting record oil royalty production volumes of 14,376 barrels per day, narrowed light and heavy oil differentials and a weaker Canadian dollar. Natural gas royalty production volumes averaged 58.4 MMcf per day in the quarter, earning $7.9 million in royalty revenue which represented an 80% increase over Q2 2024. The increase in natural gas royalty production revenue was primarily due to improved benchmark pricing with daily AECO index pricing averaging $1.69 per Mcf in the quarter, an increase of 43% over Q2 2024. NGL royalty production averaged 2,348 barrels per day, an increase of 2% from Q2 2024 and generated total NGL royalty production revenue of $7.6 million in the quarter. It was a strong quarter for other revenues which totaled $12.4 million, including bonus consideration of $8.5 million earned on entering into 47 new leases with 37 separate counterparties.
PrairieSky declared a dividend of $0.26 per share or $61.2 million in the quarter with a resulting payout ratio of 63%. Excess funds from operations after payment of the dividend were allocated to the acquisition of $6.5 million of incremental royalty interests focused on non-producing gross overriding royalty interests targeting Mannville heavy oil targets and share repurchases. The NCIB remains an important part of our long-term capital allocation strategy to create value for shareholders. During the quarter, 84,020 common shares were repurchased and cancelled with an incremental $11.0 million(3) allocated to share repurchases to be settled subsequent to June 30, 2025. PrairieSky exited the quarter with net debt of $242.0 million at June 30, 2025. Subsequent to Q2 2025, PrairieSky exercised the accordion feature of its unsecured, covenant-based credit facility with the existing syndicate of Canadian banks, increasing the commitment of lenders by $250 million, bringing the aggregate credit limit available to PrairieSky to $600 million. There were no other amendments made to the credit facility. The expanded facility provides increased liquidity and financial flexibility moving forward.
Thank you to our staff for their hard work in the quarter and our shareholders for their continued support.
Andrew Phillips, President & CEO
ACTIVITY ON PRAIRIESKY'S ROYALTY PROPERTIES
Third-party operators spud 117 wells on PrairieSky's royalty acreage at an average royalty rate of 4.8%, as compared to the 115 wells spud in Q2 2024 at an average royalty rate of 6.6%. Drilling activity generally slows in the second quarter across the Western Canadian Sedimentary Basin as a result of spring break-up. Spuds were comprised of 74 wells on gross overriding royalty acreage, 33 wells on fee lands and 10 unit wells. There were a total of 113 oil wells (97% of wells) spud during the quarter which included 47 Clearwater wells, 17 Mannville light and heavy oil wells, 13 Duvernay wells, 11 Viking wells, 11 Mississippian wells and 14 additional oil wells across Alberta and Saskatchewan. There were 3 Mannville natural gas wells and 1 Duvernay natural gas well spud in Q2 2025.
NOTES AND REFERENCES
(1)
In this press release, the financial reporting periods are referred to as follows: "Q2 2025", "the quarter" or the "the second quarter" refers to the three months ended June 30, 2025; "Q2 2024" refers to the three months ended June 30, 2024.
(2)
For further details on the "Mannville Stack" and "West Shale Basin", we refer you to PrairieSky's most recent Corporate Presentation contained on PrairieSky's website at www.prairiesky.com.
(3)
Included in accounts payable and accrued liabilities at June 30, 2025 is $11.0 million related to common share repurchases of which $1.0 million related to common share repurchases that were pending settlement at June 30, 2025 and the remaining $10.0 million related to a provision for share repurchases under the Company's automatic share purchase plan with an independent broker.
Unless otherwise indicated or the context otherwise requires, terms used in this press release but not defined above are as defined in in the Company's Annual Information Form for the year ended December 31, 2024 which is available on SEDAR+ at www.sedarplus.com and PrairieSky's website at www.prairiesky.com.
FINANCIAL AND OPERATIONAL INFORMATION
The following table summarizes select operational and financial information of the Company for the periods noted. All dollar amounts are stated in Canadian dollars unless otherwise noted.
A full version of PrairieSky's management's discussion and analysis ("MD&A") and unaudited interim condensed consolidated financial statements and notes thereto for the fiscal period ended June 30, 2025 are available on SEDAR+ at www.sedarplus.com and PrairieSky's website at www.prairiesky.com.
Three months ended
Six months ended
June 30
March 31
June 30
June 30
June 30
($ millions, except $ per share or as otherwise noted)
2025
2025
2024
2025
2024
FINANCIAL
Royalty production revenue
111.2
119.9
125.5
231.1
238.7
Other revenue
12.4
8.2
10.1
20.6
17.6
Revenues
123.6
128.1
135.6
251.7
256.3
Funds from operations
96.7
85.8
106.1
182.5
189.1
Per share - basic and diluted(1)
0.41
0.36
0.44
0.77
0.79
Net earnings
56.3
58.4
60.3
114.7
107.8
Per share - basic and diluted(1)
0.24
0.25
0.25
0.48
0.45
Dividends declared(2)
61.2
61.2
59.7
122.4
119.4
Per share
0.26
0.26
0.25
0.52
0.50
Dividend payout ratio(3)
63%
71%
56%
67%
63%
Acquisitions(4)
6.5
63.6
12.3
70.1
21.1
Net debt(5)
