PrairieSky Royalty Reports Strong Fourth Quarter and Year-End Results, Increases Annual Dividend
CALGARY – PrairieSky Royalty Ltd. (TSX: PSK) has announced its operating and financial results for the fourth quarter and year-end, ending on December 31, 2023. The company, which holds an extensive portfolio of royalty lands across Canada, reported a steady performance in its oil royalty production, achieving record volumes. In addition, PrairieSky has increased its annual dividend by 4% to $1.00 per common share.
During the fourth quarter, PrairieSky’s royalty production volumes reached an average of 25,608 barrels of oil equivalent per day (BOE/d), including a record-breaking oil royalty production of 12,844 barrels per day. The company also generated $136.6 million in quarterly revenues, with $122.0 million coming from royalty production and an additional $14.6 million from other sources. Notably, PrairieSky earned the highest bonus consideration since 2017, amounting to $11.2 million.
Funds from operations for the quarter amounted to $111.1 million, or $0.46 per share, both basic and diluted. This impressive performance was primarily driven by the company’s organic oil royalty production growth and substantial bonus consideration from active leasing. PrairieSky declared a dividend of $57.3 million, or $0.24 per share, for the fourth quarter, maintaining a 52% payout ratio.
Looking at the full year, PrairieSky reported average royalty production volumes of 24,857 BOE/d, which remained consistent with 2022. Annual revenues reached $513.2 million, with royalty production revenue of $474.6 million. However, there was a 23% decrease in comparison to the previous year, mainly due to lower benchmark commodity prices. The annual funds from operations were $382.5 million, or $1.60 per share, supported by organic production growth in oil royalty volumes and an additional $26.0 million in bonus consideration.
A significant highlight for PrairieSky is the reduction in net debt, which decreased by 30% to $222.1 million by the end of 2023, down from $315.1 million in the previous year. The company achieved this by applying excess funds from operations to retire bank debt after accounting for dividend payments and royalty acquisitions. Furthermore, PrairieSky continues to demonstrate its commitment to sustainability, earning a “Negligible Risk” ESG Risk Rating and receiving recognition as a top performer in various global sustainability assessments.
In terms of leadership, PrairieSky recently appointed Michael Murphy as Vice-President, Geosciences and Capital Markets. Murphy brings 19 years of industry and equity research experience to the team, further strengthening the company’s expertise in these areas.
Analyst comment
Positive news. PrairieSky Royalty reported strong fourth-quarter and year-end results, with record oil royalty production and increased annual dividend. The market is expected to respond positively, with increased investor confidence and potential growth in share value.
