Q2 2025 PrairieSky Royalty Ltd Earnings Call

Unknown Executive: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded.

Good day and welcome to Prairie Sky, Royalty, limited announces their second quarter 2025 Financial results at this time. All participants are listening mode. After the speaker's presentation, there'll be a question and answer session. Instructions will be given at that time,

Andrew Phillips: I would now like to turn the call over to Andrew Phillips, President and CEO. Please go ahead. Thank you, Michelle. Good morning, everyone.

As a reminder, this call may be recorded.

Speaker Change: I would like to turn the call over to Andrew Phillips president and CEO. Please go ahead.

Andrew Phillips: And thank you for dialing in to the PrairieSky Royalty Q2 2025 earnings call.

Andrew Phillips: On the call from PSK are Pam Kazeil, CFO, Dan Bertram, CEO. Mike Murphy, VP Capital Markets, and myself, Andrew Phillips.

Speaker Change: Thank you, Michelle. Good morning, everyone. And thank you for dialing in to the praise Sky, Royalty, Q2 2025 earnings call on the call from psk or Pam, cazelle, CFO, Dan, Bertram, CEO.

Andrew Phillips: Before we begin, there's certain forward looking information and statements in our commentary. So I'd ask listeners and investors to review the forward-looking statements qualified on our press release and MDNA, which can be found on our website. PrairieSky achieved record royalty oil production of 14,376 barrels per day, up 8% from the same quarter of the year before. In 2018, for reference, PrairieSky had 235 million shares outstanding and produced 9,000 net royalty oil barrels. Today, with the same 235 million shares outstanding, we have 14,000 net royalty overalls, an excellent result. We now have three plays with strong growth rates and decades of inventory.

Speaker Change: Mike Murphy VP Capital markets and myself and Andrew Phillips.

Speaker Change: Before we begin, there are certain forward-looking information and statements in our commentary.

Speaker Change: So I would ask listeners and investors to review the forward-looking statements qualify on our press release and mdna, which can be found on our website.

Praise guide, Chief record, royalty oil production before 14,376 barrels per day up, 8% from the same quarter of the year before.

Speaker Change: In 2018 for reference Prairie, Sky at 235 million, shares outstanding, and produce 9,000, net royalty oil barrels.

Speaker Change: Today with the same 235 million shares outstanding. We have 14,000 net, royalty oil barrels. An excellent result.

Andrew Phillips: The Clearwater is now over 2,500 barrels per day. The Mandel stack is approaching 1,000 barrels per day. And the Duvernay, with strong spud count, should double this year, adding high net back light oil barrels. In southern Alberta, a number of new discoveries have been made in the basal quartz formation. This is a light oil play with liquids rich solution gas. Payouts on the player fast, so we expect continued activity on the play. PrairieSky has a very large mineral position with complimentary 3D ownership. Ownership of Mineral Title provides investors with optionality across the basin. A number of small scale SAG-D projects will also be built on PrairieSky acreage over the next 10 years, adding long duration oil projects to our reserves and cash flows.

Speaker Change: We now have 3 plays with strong growth rates and Decades of inventory. The clear water is now over 2500 barrels per day. The mannville stack is approaching a thousand barrels per day and the duverne with strong Spud, count should double this year. Adding High, net back, light oil barrels.

In Southern Alberta, a number of new discoveries have been made in the basil quartz formation. This is a light oil, play with liquids, Rich solution gas.

Speaker Change: Payouts on the player fast. So we expect continued activity on the play.

Speaker Change: Praise guy has a very large mineral position with complimentary 3D ownership.

Andrew Phillips: Finally, PrairieSky has a massive natural gas royalty resource, and in spite of the very weak pricing, volumes remain stable.

Speaker Change: Ownership of mineral title provides investors with optionality across the Basin, a number of small-scale SD projects will also be built on, praise over the next 10 years. Adding long durational projects to our reserves and cash flow stream.

Andrew Phillips: Our expectation is for the volumes to show some growth in 2020.

Michael Murphy: I'll now turn the call over to Mike. Thanks, Andrew. We saw a similar level of drilling activity relative to last year with 117 spots in Q2 2025 versus 115 in Q2 2024. We had 61 multilateral spots in the quarter, representing 52% of all new wells, which is a new high watermark for proportion of multilateral spots in a quarter. Multilaterals were focused in the Clearwater with 47 wells, but also included wells targeting Mandel heavy oil and Mississippian light oil in southeast Saskatchewan. We are also seeing a high pace of development in the DuVernay light oil plate with 14 wells spot in the quarter and 30 spot year to date relative to 33 spot in all of 2024.

6.

I'll now turn the call over to Mike.

Mike Murphy: Thanks Andrew. We saw a similar level of drilling activity relative to last year with 117 spots in Q2 2025 versus 115. In Q2 2024, we had 61 multilateral spuds in the quarter representing 52% of all new wells which is a new high water. Mark for proportion of multilateral Spuds in a quarter.

Mike Murphy: Multilateral we're focused in the clear water with 47 Wells but but also included Wells targeting mandle heavy oil and Mississippi and light oil, in southeast Saskatchewan.

Michael Murphy: We are encouraged by step change improvements in initial well productivity in the DuVernay oil window in the West Shale Basin, and expect improved half cycle economics to drive meaningful growth programs for third party operators in this region moving forward, positively impacting our royalty oil volumes.

Mike Murphy: We are also seeing a high patient development in the dubernet, light oil plate, with 14 Wells, but in the quarter and 30 Spud here to date, relative to 33 spot in all of 2024.

Pamela Kazeil: I'll now pass it over to Pam to discuss the financial. Thank you, Mike. Good morning, everyone. Royalty production revenue totaled $111.2 million in Q2 2025, driven by our record 14,376 barrels per day of oil production, which generated $95.7 million of revenue. Natural Gas and NGL Revenue added $15.5 million on relatively flat volumes compared to We generated an incremental $12.4 million of other revenues, which included bonus consideration of $8.5 million from entering into 47 new leases with 37 different counterparts. During the quarter, PrairieSky's funds from operations totaled $96.7 million, or $0.41 per share. We declared dividends of $61.2 million, or $0.26 per share, with a resulting payout ratio of 63%.

Mike Murphy: We are encouraged by step change improvements in initial wealth productivity in the new Renee oil window in the west shell Basin and expect improved half cycle, economic to drive meaningful growth programs for third-party operators. In this region, moving forward, positively impacting our royalty oil volumes,

I'll now pass it over to Pam to discuss the financials.

Pam Cazelle: Thank you, Mike, good morning everyone. Royalty production, Revenue told 111.2 million, in Q2, 2025 driven by our record 14376 barrels per day of oil production, which generated 95.7 million of Revenue.

Pam Cazelle: Natural gas and NGL. Revenue added 15.5 million on relatively flat volumes compared to Q2 2024.

Pam Cazelle: We generated an incremental 12.4 million of other revenues. Which included bonus consideration of 8.5 million from entry into 47, new leases with 37 different counterparties.

during the quarter Pros, guys, funds from operations till 96.7 million or 41 cents per share,

Pamela Kazeil: Excess funds from operations were used to acquire incremental royalty interest, totaling $6.5 million, primarily targeting Mandel Oil, and we repurchased and cancelled $2 million worth of stocks. We continue to purchase shares under our automatic share purchase plan throughout blackout committee to spend an incremental $11 PrairieSky exited the quarter with net debt of $242 million. Subsequent to quarter end, we also exercise the accordion feature of our credit facility, increasing it by $250 million to $600 million.

Pam Cazelle: We declared dividends of 61.2 million, 26, cents per share with the resulting payout ratio of 63%.

Pam Cazelle: Excess funds from operations were used to acquire incremental, royalty interests, totaling 6.5 million primarily targeting mandle oil and we repurchased and cancelled 2 million dollars worth of stock.

we continue to purchase shares under our automatic share purchase plan throughout blackout committee to spend an incremental, 11 million

Prescott exited the quarter with net debt of 242 million.

Pam Cazelle: and we also,

Accordion feature of our credit facility.

Increasing it by 250 million.

Pamela Kazeil: Increasing the facility provides us with incremental liquidity and financial flexibility.

Pam Cazelle: To 600 million.

Unknown Executive: We will now turn it over to the moderator to proceed with the Q&A. Thank you. If you'd like to ask a question, please press star 1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1 again. One moment while we compile the Q&A roster. Again, if you'd like to ask a question, please press star 11. I'm not showing any questions at this time.

Pam Cazelle: Increasing the facility provides us with incremental liquidity and financial flexibility.

We will now turn it over to the moderator to proceed with the Q&A.

Pam Cazelle: Thank you, if you'd like to ask a question. Please press star 1 1.

If your question has been answered and you'd like to remove yourself from the queue, please press star 1. Again, 1 moment while we compile the Q&A roster,

Pam Cazelle: Again, if you'd like to ask a question, please press star 1, 1 1.

Andrew Phillips: I'd like to turn the call back over to Andrew Phillips. Well, thanks very much for dialing into the PrairieSky Q2 conference call. And please feel free to call Pam, Mike or myself with any questions. And I guess printing right after stampede keeps the question count low. Hope everyone has a great day. Thank you for your participation.

I'm not showing any questions at this time. I'd like to turn the call back over to Andrew Phillips.

Andrew Phillips: Well, thank you very much for uh, dialing into the praise guy Q2 conference call. And uh please feel free to call Pam, Mike or myself with any questions and I guess uh printing right after stampedes keeps the question, how low hope everyone has a great day?

Unknown Executive: This does conclude the program and you may now disconnect. Everyone have a great day.

Andrew Phillips: Thank you for your participation. This has include the program and you may now disconnect everyone have a great day.

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