Q4 2023 PrairieSky Royalty Ltd Earnings Call
[music].
Operator: Thank You for Watching Ladies and gentlemen, thank you for standing by. Welcome to PrairieSky Royalty Ltd.'s annual and fourth quarter 2023 financial results. At this time, all participants are in a listen only mode.
Yeah.
Ladies and gentlemen, thank you for standing by welcome to Prairie Sky royalty L. T V announces their annual and fourth quarter 2023 financial results.
At this time all participants are in a listen only mode. After the Speakers' streets in patient there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you wouldn't hear an automated message it bites in your hand, it's raised.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.
Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Andrew Phillips, President and Chief Executive Officer. Please go ahead.
Draw. Your question. Please press Star one one again, please be advised that today's conference is being recorded.
Would like now to turn the conference over to Andrew Phillips, President and Chief Executive Officer. Please go ahead.
Andrew Phillips: Thank you, Operator, and good morning, everyone, and thank you for dialing into the PrairieSky year-end conference call. On the call from PrairieSky are Pam Cazell, CFO, Dan Bertram, CTO, Michael Murphy, BP Geosciences and Capital Markets, as well as myself, Andrew Phillips. There's certain forward-looking information in my commentary today, so I would ask investors to review the forward-looking statement qualifier in our press release and MD&A.
Thank you operator, and good morning, everyone and thank you for dialing into the Crazy Guy year end conference call on the call from Prairie Sky or Pan because all CFO, Dan Bertram CTO, Michael Murphy, VP, Geosciences and capital markets as well as myself Andrew Phillips.
There are certain forward looking information my commentary today, So I would ask investors to review the forward looking statements qualifier in our press release and MD&A.
Andrew Phillips: As we approach our 10th year as a publicly traded company, our team continues to strive to improve our business over the next 10 years. Industry-leading organic growth rates in our liquids portfolio are the result of assets acquired years ago. 2023 was another great year on multiple levels.
As we approach our 10th year as a publicly traded company. Our team continues to strive to improve our business over the next 10 years.
The industry, leading organic growth rates, our liquids portfolio are the result of assets acquired years ago.
2023 was another great year on multiple levels.
Andrew Phillips: Organic oil growth was approximately 6%, and the 4.5 million barrels of produced Royalty oil were organically replaced by drilling. Of note, our $14 million fee title acquisition, which closed near year-end, was not included in the 2023 Reserva. During the quarter, there were 197 wells spotted on our lands, bringing the total well count to 804 wells in 2023. This included 147 Clearwater Wells, 139 Manville Heavy Oil Wells, and 236 Viking Wells. We also saw our first helium well drilled on our acreage.
Organic oil growth was approximately 6% and a $4 5 million barrels of produced royalty oil where organically replaced by drilling.
Of note, our $14 million fee title acquisition, which closed near year end was not included in the 2023 Reserve report.
During the quarter there were 197 wells spud on airlines, bringing total while it's about the 804 wells in 2023. This included 147 Clearwater Wells 139, Manville heavy oil wells and 236 Viking wells.
Also saw our first helium well drilled on our acreage.
Andrew Phillips: We estimate that $2 billion of gross capital and $112 million of net capital will be spent on PrairieSky Royalty lands in 2023, based on an estimated $26.7 billion of gross capital on conventional oil and gas assets spent in 2020. Approximately 7.5% of industry capital was spent on PrairieSky land. Net capital increased 38% year-over-year, although this is partially inflation-related. The increase led to PrairieSky's strong royalty production growth, and leasing activity remains at a high level.
We estimate the 2 billion of gross capital and $112 million of net capital was spent on Craig's got royalty lands in 2023.
Based on an estimated $26 7 billion of gross capital unconventional oil and gas assets spent in 2023.
Approximately 75% of industry capital was spent on <unk>.
Net capital increased 38% year over year. Although this was partially inflation related the increase led to price guys strong oil royalty production growth.
Leasing activity remains at high levels throughout.
Andrew Phillips: Throughout the year, we entered into 202 new leasing arrangements with 110 separate counterparties. This resulted in $26 million in bonus consideration for 2023 and $11.2 million in Q4. Leasing activity was strong across the basin, primarily for oil targets. Strong recent well data and lower costs have resulted in stronger producer interest in the DuVernay Shale, and we expect light oil growth from this play over the next 10 years. The moat around our business is our irreplicable sea mineral tidal land base. We also have seen stronger interest in viewing our large seismic database as operators are conducting exploration to expand their drilling inventory. PrairieSkyControls 54,200 linear kilometers of 2D seismic and 20,100 square kilometers of 3D sizing
Throughout the year, we entered into 202, new leasing arrangements with 110 separate counterparties.
This resulted in a $26 million in bonus consideration over 2023, and $11 2 million in Q4.
Leasing activity was strong across the basin, primarily for oil targets.
Recent well data and lower costs have resulted in stronger producer interest in the Duvernay shale and we expect light oil growth from this playing over the next 10 years.
The moat around our business is our IRAK applicable fee mineral title land base.
We also have seen stronger interest in viewing our large seismic database.
Operators are conducting exploration to expand their drilling inventory.
Prairie Sky controls 54200 linear kilometers of <unk> seismic.
In 20100 square kilometers of <unk> seismic.
Andrew Phillips: Our seismic data is continually improving as we receive a copy when a producer reprocesses the data. This data is available to third parties leasing our lands, and we also use it to develop prospects for industry, which we can then lease. Our compliance group, who are always busy, returned land to inventory and brought in $6.6 million throughout 2023. As we look into 2024, our team will continue to focus on controlling costs, compliance, leasing our large undeveloped land base, and executing on high-return acquisitions. We are pleased to announce a 4% increase in our annual dividend, bringing it to $1 per share and $0.25 per share quarterly. This increase is effective for the March 29, 2024 record date. We'll use excess cash flow above the dividend to retire bank debt and execute on high return on invested capital acquisition opportunities, if available. I'd like to thank our staff for the continued hard work and our shareholders for their support. I'll now turn the call over to Pam to walk through the financials. Thank you, Andrew. Good morning, everyone.
Our seismic data is continually improving as we receive a copy when a producer reprocessing the data.
This data is available to third party.
Leasing our lands and we also use it to develop prospects for our industry, which we can lend lease.
Our compliance group, who are always busy return land to inventory and brought in $6 6 million throughout 2023 as we are looking at 2024, our team will continue to focus on controlling cost compliance leasing our large undeveloped land base and executing on high return acquisitions.
We're pleased to announce a 4% increase to our annual dividend, bringing it to $1 per share and 25 per share quarterly.
This increase is effective for the March 29, 2020 for a record date.
We will use excess cash flow above the dividend to retire bank debt and execute on high return on invested capital acquisition opportunities if available I'd.
I'd like to thank our staff for the continued hard work and our shareholders for their support I'll now turn the call over to Pam to walk through the financials.
Thank you Andrew Good morning, everyone as Andrew mentioned, there are certain forward looking information in the notes today. So I would remind investors to review our forward looking statements qualifier in our press release and MD&A for Q4, and the year ended December 31 2023.
Pam Cazell: As Andrew mentioned, there's certain forward-looking information in the notes today, so I would remind investors to review our forward-looking statement qualifier in our press release and MD&A for Q4 and the year ended December 31st, 2020. PrairieSky had a strong Q4, which closed out another year of organic oil royalty production growth and momentum in leasing activity. PrairieSky's Q4 royalty production averaged 25,608 BOE per day and included a record 12,844 barrels per day of oil, 6% higher than Q4 of 2022. NGL royalty volumes averaged 2,697 barrels per day, flat with Q4 2022, and natural gas royalty volumes averaged $1.4 million a day, down 9% from Q4 2022. Annually royalty production revenue royalty production average twenty four thousand eight hundred fifty, VOE per day with a record oil royalty volume of 12,438 barrels, an increase of 6% year-over-year with growth primarily in the Clearwater and Manville Heavy Oil PrairieSky's Q4 royalty production revenue totaled $122 million, generated 90% from Liquids Royalty volume. Annually, royalty production revenue totaled $474.6 million, 88% from liquids.
<unk> had a strong Q4, which closed out another year of organic oil royalty production growth and momentum in leasing activity.
<unk> Q4 royalty production averaged 25608 <unk> per day and included a record 12844 barrels per day of oil, 6% higher than Q4 of 2022.
NGL royalty volumes averaged 2697 barrels per day flat with Q4, 2022, and natural gas royalty volumes averaged $60 4 million a day down 9% from Q4 2022.
Annually royalty production revenue royalty production averaged 24857 Boe per day with a record oil royalty volumes of 12438 barrels per day, an increase of 6% year over year with growth primarily in the clean water and manville heavy oil play.
Great guys Q4 royalty production revenue totaled $122 million generated 90% liquids royalty volumes annually.
Annually royalty production revenue totaled $474 6 million, 88% from electric in 2023 realized oil pricing of $82.52 per barrel.
Pam Cazell: In 2023, realized oil pricing of $82.52 per barrel was 82% of Edmonton Par, and NGL realized pricing of $47.60 per barrel was 47% of Edmonton Par. We anticipate 2024 price realizations to be in line with 2026. Realized natural gas pricing was $2.60 per MCF, with approximately 90% of our volumes sold at monthly and daily ACO prices, and approximately 10% being sold at SUMAS prices.
Was 82% of Edmonton par and NGL realized pricing of $47 60 per barrel with 47% of Edmonton par pricing, we anticipate 2020 for price realizations to be in line with 2023.
Realized natural gas pricing was $2 60 per Mcf with approximately 90% of our volume felt it monthly and daily daily acre pricing and approximately 10% being sold at T map pricing.
Pam Cazell: Other revenue totaled $14.6 million in the quarter and included $11.4 million of bonus consideration. This brought annual bonus consideration to $26 million and total other revenues to $38.6 million, the highest total since 2017. PrairieSky is forecasting other revenue in the range of $25 to $30 million in 2024, including lease rental revenue, bonus consideration, and other revenue. Compliance recoveries will be incremental to this amount and included in royalty revenue.
Other revenue totaled $14 6 million in the quarter and included $11 4 million of bonus consideration.
This brought annual bonus consideration to $26 million and total other revenues to $38 6 million the highest total since 2017.
<unk> guidance forecasting other revenue in the range of $25 million to $30 million in 2024, including lease rentals bonus consideration and other revenue.
Recoveries will be incremental to this amount and included in royalty revenue.
Pam Cazell: Looking forward, PrairieSky's 2024 Annual Pricing Sensitivities, which are all net of taxes, are as follows. A $5 per barrel change in U.S. dollar WTI would increase or decrease funds from operations approximately $22.5 million. A $25 per MCF change in ACO would increase or decrease funds from operations approximately $4 million.
Looking for Reg price Sky's 2024 annual pricing sensitivities, which are all net of taxes are as follows.
$5 per barrel change in U S dollar wty with increased or decreased funds from operations approximately $22 $5 million of.
25 and <unk>.
Our MTF change in April with increased or decreased funds from operations approximately $4 million.
Pam Cazell: A $0.01 change in the U.S. to Canadian FX rate would increase or decrease funds from operations by approximately $4 million. And if the WCS oil differential moved by $1, we would see an increase or decrease in funds from operations of approximately $2.5 million. This impact would be the same for a $1 move in the MSW difference. Cash administrative expenses total $5.1 million, or $2.14 for BOE, in the quarter.
<unk> change in the U S to Canadian FX rate would increase or decrease funds from operations of approximately $4 million.
And if the U S. The WCS <unk> differential and moved by one dollar we would see an increase or decrease in funds from operation of approximately $2 $5 million.
This impact will be the same for $1 move in the MSW differentially.
Cash administrative expenses totaled $5 1 million or $2 14 per Boe in the quarter. We expect 2024 cash administrative expense to be in the range of $35 million to $40 million.
Pam Cazell: We expect 2024 cash administrative expense to be in the range of $35-40 million due to strong stock performance impacting share base compensation. Current income tax expense totaled $14.4 million in Q4, bringing 2023 current tax to $58.8 million. Entering 2024, PrairieSky has $1.4 billion of tax pools to offset future taxable income, which is primarily deductible at 10% per year. For 2024, that means the first $140 million of pre-tax cash flow is tax-free, with the incremental cash flow taxed at $23.6 billion. During the quarter, PrairieSky's funds from operations totaled $111.1 million, and we declared dividends of $57.3 million, or $0.24 per share, with a resulting payout ratio of 52%. Annually, PrairieSky generated $382.5 million in funds from operations, which were used to fund dividends.
Due to strong stock performance impacting share based compensation.
Current income tax expense totaled $14 4 million in Q4, bringing 2023 current tax to $58 8 million.
Entering 2024 pre Scott has one $4 billion of tax to us to offset future taxable income, which is primarily deductible at 10% per year for.
For 2024 that means the first $140 million of pre tax cash flow is tax free with the incremental cash flow tax at 23, 6%.
During the quarter price guys funds from operations totaled $111 1 million and we declared dividends of $57 3 million or <unk> 24 per share with a resulting payout ratio of 52%.
Annually priced igen rate of $382 $5 million in funds from operations, which we used to fund dividends.
'twenty two.
Sorry, $229 2 million with remaining cash flow used primarily to reduce price guys bank debt at December 31, 2023, <unk> net debt totaled $222 1 million a decrease of 30% from December 31 2022.
Operator: $229.2 million, with remaining cash flow used primarily to reduce PrairieSky's bank debt. At December 31, 2023, PrairieSky's net debt totaled $222.1 million, a decrease of 30% from December 31, 2023. Once again in 2024, PrairieSky will receive the full pricing reduction related to our sustainable credit facility based on the evaluation by third-party rating agency Sustainalytics, which included PrairieSky in its list of the Global 50 Top Rated ESG Companies for 2024. We will now turn it over to the moderator to proceed with the Q&A. Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. The first question comes from Michael Dunn with Steeple.
Once again in 2024 pre sky will receive the full pricing reduction related to our sustainable credit facility based on the evaluation by third party rating agencies sustainability, which included pre sky in its list of the global 50 top rated ESG companies for 2024.
We will now turn it over to the moderator to proceed with the Q&A.
Thank you.
As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.
Please standby, while we compile the Q&A roster.
Okay.
Okay.
The first question comes from Michael Dunn with Stifel. Your line is now open.
Thanks, Good morning all.
Questions from me.
Just looking at your second half spuds on your lands folks.
Michael Dunn: Your line is now open. Thanks, good morning all. A couple questions from me.
More manville and less Viking than if we'd looked at the second half of 2022.
Andrew Phillips: Just looking at your second half spuds on your lands folks, more manville and less biking than if we looked at the second half of 2022. Just noticing from your reserves disclosures of your oil production in 2023, it looks like it was about 52% light, 48% heavy bitumen, kind of the same split as in 2022. How do you think the second half activity, from 2023, plays out, I guess, into your heavy versus light split into 2024 and maybe any thoughts on the absolute level of oil production in the first half of this year relative to Q4. Yeah, I'd hate to speculate on the actual levels of production in the first half of the year.
Just noticing from your reserves disclosures your your of your oil production in 2023, it looks like it was about 52% like 48% heavy bitumen kind of the same split as in 2022.
How do you think the second half activity.
From 2023 plays out I guess into your heavy versus light split into 2024.
And maybe any thoughts on.
On the absolute level of oil production.
In the first half of this year I guess relative to Q4.
Yeah, I'd hate to speculate good morning, Michael.
I'd hate to speculate on the actual levels of production in the first half of the year.
Andrew Phillips: We do expect some growth over the year again with the strong leasing activity and the strong drilling activity we've seen. Then, as it ties to the reserves, I do think you're going to see the bitumen reserves go above 50%. I think 2023 was a year of multiple discoveries. There were over nine different horizons within the man-built stack that were proved commercial.
We do expect some growth over the year again with the strong leasing activity and the strong drilling activity we've seen.
And then as it ties to the reserves I do think youre going to see the.
Bitumen reserves go above 50% I think the.
There has been 2023 with a year of multiple discoveries there was over nine different horizons within the manville stocks that were approved commercial but of course, because we just book the one individual well.
Andrew Phillips: But of course, because we just booked the one individual well in our reserve report and probably conservatively given their new wells, it didn't add a huge amount of new barrels from a reserve standpoint. But I do think as people start to develop those, which we're already seeing today, there are quite a few rigs running around the Cold Lake region. We should see a significant uptick in those reserves over 2024. Thanks. I thought I'd try the guidance there, Andrew, but then.
In our reserve report and probably conservatively given their new wells it.
It didn't add a huge amount of new barrels from a reserve standpoint, but I do think as people start to develop those which we're already seeing today, there's quite a few rigs running around the cold Lake region, we should see a significant uptick in those reserves over 'twenty 'twenty four.
Okay.
Thanks, So I thought I'd try on the guidance there Andrew but.
And then.
Secondly, they are looking at the.
Andrew Phillips: Second, they're looking at your year-end reserves. Your oil reserves were both flat year over year, and of course, they're all developed reserves, but your Q4 oil production was up, close to 6% year-over-year, so is that implying a little bit shorter PD, like developed reserve life, or is it just exit volumes were lower than Lower than, than the Q4 average? Or how should we think about the lack of oil reserve growth? Yeah, that's interesting.
Your year end reserves.
Your oil reserves were both flat year over year and of course, they're all developed reserves.
Q4 oil production was up close to 6% year over year. So.
Is that implying a little bit shorter PD like developed reserve life or is it just exit volumes were lower than.
Lower than.
Then the Q4 average or how should we think about the I guess, the lack of oil reserves growth.
Andrew Phillips: I think the flat was a pretty good result for us replacing every barrel that was produced without making any PDP acquisitions. I think one of the things that we saw this year was just from an inflation standpoint on the operating costs, and the tail of the wells were truncated. So again, if people can get their operating costs down in future years, you can see that come back. Again, we do believe a lot of those do have long RLIs or reserve life indexes, but I think there was some truncation based on inflation and operating costs on the tail end of the well.
Yes, it's interesting I think the flat was a pretty good result for us, replacing every barrel that was produced without making any PDP acquisitions I think one of the things that we saw this year was.
Just from an inflation standpoint on the operating cost in the tail of the wells were truncated.
So again, if people can get their operating costs down in future years, you can see that come back again.
Again, we do believe a lot of those do have.
Long our lives our reserve life Index is but I think there was some truncation based on based on inflation and operating costs on the tail end of the.
Michael Dunn: Otherwise, we would have seen growth there. But again, it's always a good result when you don't spend money on any PDP acquisitions and you replace every barrel you produce, which generates, right now, over 90% of our cash flow. Understandable. Makes sense.
Of the world otherwise, we would've seen growth there, but again, it's always a good result, when you don't spend money on any PDP acquisitions and you replace every barrel you produce which generate.
Right now over 90% of our cash flow.
Adam Schwartz: That's all for me. Thanks, folks. One moment for the next question. The next question comes from Adam Schwartz with Black Bear Value Partners. Your line is open. Thank you. Good morning.
Understood makes sense, that's all for me thanks folks thank.
Thank you for the questions.
One moment for the next question.
The next question comes from Adam Schwartz with correct clear value partners. Your line is open.
Andrew Phillips: First, as a shareholder, thank you for your quality stewardship of the company. We appreciate it. Curious if you can comment on where share buybacks fit into your plan and when you look at the acquisitions for potential M&A, are they more attractive than the stock or the same, or how you think about that? Because today it seems like the stock price is in a pretty benign energy price environment and virtually no value for any kind of volume growth or call options that you guys call out in your presentations, which I think are real. And over the long haul, the intrinsic value of a share could compound at even higher rates than you've been experiencing. If you use this tool, so I'm just curious, you know, buybacks aren't always a good idea. But when a stock is really cheaper, including fairly bearish, not benign assumptions if you're positive on the outlook on things, could be pretty helpful. Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com/valueadd, and you know action, so just if you can comment on that, I'd appreciate it. Yeah, good morning, Adam.
Thank you good morning.
First the shareholder thank you for your quality stewardship of the company. We appreciate it.
<unk>.
Curious if you can comment on where share buybacks fit into your plan and.
When you look at the acquisitions or potential M&A or are they more attractive in the stock or the same or how you think about that because.
Today, It seems like the stock prices has been a pretty benign energy price environment and virtually no value for any kind of volume growth or call options that you guys called out in your presentations, which I think are real and over the long haul the intrinsic value per share can compound at even higher rates than we've been experiencing.
If you use this tool so so I'm just curious buybacks aren't always a good idea, but when the stock is really cheaper than <unk>.
Including fairly bearish not been benign assumptions you're positive on the outlook on vans it could be a pretty helpful.
Value add.
Action. So just if you can comment on that I'd appreciate it. Thank you.
Andrew Phillips: And thanks for the question. And we do see tremendous value in the shares right now. And I will say that when looking at any acquisitions, the hurdle rate is quite a bit higher, just given the value we do see in the shares. And I do think it is a unique compounding business which, over time, generates a lot of cash. We've kind of refreshed our 10 year budget, and you generate almost your entire market cap and free cash flow, net of tax, net of G&A, and have a business that's likely bigger at the end of that period. So we do see great value in the shares right now, but we always trade below intrinsic value.
Yeah, Good morning, Adam and thanks for the question and we do see tremendous value in the shares right now and I will say that when looking at any acquisitions to hurdle rates quite a bit higher.
Just given the value we do see in the shares that I do think it is a unique compounding business over time generates a lot of cash.
We've kind of refresh our 10 year budget.
Egypt generate almost your entire market cap and free cash flow net of tax out of G&A and have a business thats likely bigger at the end of that period. So.
We do see great value.
In the shares right now, we always trade below intrinsic value, so I think that our.
Andrew Phillips: But our priority right now is retiring the debt, so any acquisitions that we enter into, the IRR hurdles have to be quite a bit higher. So again, it's definitely a higher hurdle rate right now. But the retirement of the debt is definitely our number one priority right now. Interest rates are again at a pretty high historical level based on the last 15 years, anyway, and we'd like to have the option of having all of the debt retired.
Our priority right now is retiring the debt at any acquisitions that we enter into the <unk>.
There are hurdles have to be quite a bit higher so again.
It's definitely a higher hurdle rate right now, but the retirement of the debt is definitely our number one priority right now.
Right Sir.
Again pretty highest historical level based on the last 15 years anyway.
And we'd like to have the optionality of having all of the debt retired.
Andrew Phillips: So hopefully that helps answer your question. But we definitely do see value in the buybacks. We do have a buyback in place that we could execute on at any time. And I think it will be part of the capital return over the next three, five, and 10 years as part of the returns to our shareholders. You know, that's helpful. I would say just as far as a comment.
So hopefully that helps answer your question, but we definitely do see value in the buybacks, we do have a buyback in place.
We could execute on at any time and I think.
It will be part of the capital return over the next three five and 10 years.
Part of the returns to our shareholders.
Yeah. That's helpful. I would say just as far as the comment.
Adam Schwartz: It's great for it to be a tool to use if the stock's cheap, but if it's not, then don't. But clearly, you know, if it stays around here or even meaningfully higher, it still seems... very attractive given the given prospect, so thank you for everything you guys do. You're doing a great job. Appreciate the question and thanks for the comment. One moment for our next question. The next question comes from Jamie Kubik with CIBC. Your line is open. Yep. Good morning. Thanks for taking my question. I've got two here for you.
It's great for it to be a tool used if the stock's cheap if it's not then they have been done but clearly.
It stays around here or even meaningfully higher still seems very.
Very attractive given the given the prospect. So thank you for everything you guys do are doing a great job.
I appreciate the question and thanks for the comments.
One moment for our next question.
The next question comes from Jamie Kubik with CIBC. Your line is open.
Yes. Good morning, Thanks for taking my question I've got two here for Ya I'm, hoping you can talk a little bit more about.
Jamie Kubik: I'm hoping you can talk a little bit more about the bonus revenue in the quarter and expand a little bit on it as you know it was the highest. Pam, your comments indicate that other revenues... Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com.uk. Yeah, you bet. So the bigger leasing arrangements that we entered into in Q4 were West Shale Basin arrangements, Jamie, and I think that's where we've seen a fair bit of activity recently. One intermediate producer had plans for very significant growth in the area. And I think just with cost coming down and the kind of the net being cracked in terms of the technical application of fracking, and we're seeing some very good well results and wells that are likely well over 500,000 barrels per individual well. So again, pretty good results and costs are getting figured out. So I think that's where the majority of the bonus was for last year, particularly Q4.
Bonus revenue in the quarter and expand a little bit on it.
It was the highest since you've or since 2017.
Tom Your comments indicate that are the revenues in 2024 be between 25% to $30 million, but I'm wondering is there more to do on the bonus side as it relates to the Duvernay and can you expand a little bit more on that side.
Yeah, you bet so.
The bigger leasing arrangements that we entered into in Q4 were west shale basin.
Arrangements, Jamie and I think that's where we've seen recently a fair bit of activity one intermediate producer plans for very significant growth in the area and I think just with cost coming down and.
Kind of not being cracked in terms of the technical application of fracking.
We're seeing some very good well results.
Well is it likely or well over 500000 barrels.
On an individual well, so again pretty pretty good results.
Costs are getting figured out so I think thats, where the majority of the bonus was for last year, particularly Q4.
Andrew Phillips: And then what we're seeing is a similar thing happening in the East Shale Basin in both the Westerdale Embayment and the Ghost Pine Embayment where some improvements have really changed the URs there per well, and costs have come down there as well. So I do expect some leasing arrangements to center on there as well this year, just don't know the exact timing. And as a refresher, the stuff in the West Shale Basin, there are 200,000 acres that we had leased to NKANA and now have been upon the IPO that had eight years until expiry. And again, so we finally have received all that land back, and are now entering into lease arrangements with well-capitalized producers. But what we're more excited about, rather than the lease bonus, is that it's very significant individual well events, and we do see a huge amount of resource there. It's a very thick shale, and it'll really complement. We kind of have pretty good visibility into our growth on the heavy oil portfolio. This will complement that growth with some light oil, which is about 40 degrees ApiOil, and then a lot of liquids rich in solution gas.
And then what we're seeing is similar thing happening in the East shale basin in both the western deal environment and that goes planet payment were.
Some improvements have really changed.
You are there per well costs have come down there as well so I do expect from leasing arrangements entered into there as well. This year just don't know the exact timing of it and as a refresher the stuff in the west shale base and theirs.
200000 acres that we at least two in Canada now of Vantiv upon the IPO that had eight years to expiry.
And again, so we finally received all about land back and now entering into.
What's your interest with well capitalized producers.
What we're more excited about rather than lease bonuses.
Very significant individual well events and we do see a huge amount of resource there, it's very thick shale.
It will really complement we kind of pretty good visibility into our growth on the heavy oil portfolio. Both in terms of the mantle stock with Clearwater, but this will complement that growth with some light oil which is can be a 40 degree API oil and then a lot of liquids rich solution gas so.
Andrew Phillips: So likely, over the next 10 years, the proportion of solution gas will go significantly over one third of our total gas volume. So, again, some positives there. We are definitely excited about the play. But I do think there will be some more leasing arrangements, but probably not of that. Okay, got it. Yep, yep, noted. Other question is whether Persky did acquire $22 million in properties in the corridor. You do outline a little bit between the Mandelstack and Central Alberta as being the areas. Can you break it apart a little bit further what was acquired in the quarter? What has you excited on that side? types of opportunities that are coming across your desk. Yeah, you bet. There are a few royalty packages out there, and as we said with the previous question from Adam, the hurdle rates are definitely high right now for us as a company.
Over the next 10 years.
Proportion of solution gas.
Goes over a third are significantly over a third of our total gas volumes. So again, some some positive there.
We're definitely excited about the play but I do think there will be some more leasing arrangements, but probably not of that size.
Okay got it.
Thanks for your question.
Yes.
Other question is for Scott did acquire 22 million properties in the quarter.
Could you outline a little bit between.
The amount of stock in Central Alberta has been the areas that you acquired can can you break apart a little bit further what was acquired in the quarter. What has you excited on that side and can you talk about what what the types of opportunities are that are coming across your desk. These days. Thanks.
Yes, you bet there are a few royalty packages out there and as we said with the previous question from Adam The hurdle rates are definitely high right now for us as a company.
Andrew Phillips: The $14 million acquisition, which was mostly fee mineral title and also a handful of gores, was in southeastern Alberta, so we see both Manville and biking potential there. We've actually already entered into a lease. The $8 million was spent on six different private operators to acquire 15-year oil sands leases in the Manville stack, so we're expecting some drilling to test those opportunities over the next year.
The $14 million acquisition, which was mostly fee mineral title and also handful of course that was since south eastern Alberta, So we see both manville and biking potential there we've actually already entered into a lease.
Two days after closing that acquisition, which could has the potential to grow that asset in the double digits.
And again it was a really good IRR even on just the PDP. So so that's a key mineral title acquisition. That's the last of the old Apache fee mineral title not in Canada. So $8 26 is primarily.
And then the $8 million was spent on six different private operators to acquire 15 year leases.
Jamie Kubik: Okay, great. That's it for me. Thanks for your question, Jim. I have no further questions at this time. I would now like to turn the call back to Andrew for closing remarks. Thank you again everyone for dialing into the PrairieSky conference call and I hope everyone has a great rest of their week. This concludes today's conference call. Thank you for your participation. You may now disconnect. Have a great day. Thanks for watching!
Leases in the amount of build stock so we're expecting some.
Drilling to test those opportunities over the next year.
Okay, great. That's it for me thanks.
Thanks.
Thanks for the question here.
I show no further questions at this time I would now like to turn the call back to Andrew for closing remarks.
Thank you again, everyone for dialing into the <unk> conference call and hope everyone has great rest of the week.
This concludes today's conference call. Thank you for your participation you may now disconnect have a great day.
Okay.
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Okay.
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