CALGARY, ALBERTA--(Marketwired - Nov. 9, 2015) -
PrairieSky Royalty Ltd. ("PrairieSky" or the "Company") (TSK:PSK) is pleased to announce its third quarter operating and financial results for the period ended September 30, 2015.
2015 Third Quarter Highlights:
- Funds from Operations of $36.5 Million or $0.23 per share, basic and diluted
- Revenues of $44.0 Million including $42.1 Million of Product Revenue with an Operating Cash Flow Netback of $23.80 per boe
- Average production of 16,026 BOE per day
- Reduced cash G&A expenses to $3.39 per boe, down 11.2% from Q1 2015
- Closed bought deal financing for net proceeds of $189.5 Million
- Maintained a strong balance sheet with $203.4 Million of positive working capital and nil debt as of September 30, 2015
PRESIDENT'S MESSAGE
PrairieSky continues to execute on its strategy of delivering strong, risk adjusted returns for its shareholders through the leasing of undeveloped land while focusing on cost controls in our business. The downturn in commodity prices has resulted in continued pressure on western Canadian drilling activity with the WCSB rig count down over 50% since the beginning of the year. In spite of current industry headwinds, PrairieSky continues to see leasing interest from new and existing lessees with recent leasing activity yielding three new oil discoveries on our fee lands during the quarter. The discoveries were made by well capitalized, private companies that are currently following up on their initial success. We anticipate continued development of these plays during 2016 with capital commitments on lands through 2017.
PrairieSky remains committed to cost control within our business. During the quarter, we recorded cash G&A of $3.39/boe down 11.2% year to date. The reduction in G&A was achieved while still investing in new systems development to improve efficiencies longer term.
During the third quarter, PrairieSky completed a bought deal prospectus offering for net proceeds of $189.5 million. We continue to see quality acquisition opportunities including small and medium sized potential transactions. We remain disciplined in our approach and believe that the acquisitions we complete in this cyclical downturn will position PrairieSky to generate strong risk-adjusted returns in the coming years.
Andrew Phillips, President & CEO
FINANCIAL AND OPERATIONAL INFORMATION
The following table summarizes selected operational and financial information of the Company for the periods noted. All dollar amounts are stated in Canadian dollars unless otherwise noted.
FINANCIAL RESULTS
| ($ Millions, unless otherwise noted) |
|
Three months ended September 30, 2015 |
|
Three months ended September 30, 2014 |
|
Nine months ended September 30, 2015 |
|
For the period from May 27, 2014 to September 30, 2014 |
| FINANCIAL |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
44.0 |
|
$ |
91.4 |
|
$ |
170.2 |
|
$ |
129.1 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Funds from Operations(1) |
|
|
36.5 |
|
|
68.7 |
|
|
117.8 |
|
|
99.9 |
| |
Per Share - basic and diluted (2) |
|
|
0.23 |
|
|
0.53 |
|
|
0.78 |
|
|
1.68 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Earnings and Comprehensive Income |
|
|
14.1 |
|
|
61.2 |
|
|
55.0 |
|
|
85.6 |
| |
Per Share - basic and diluted(2) |
|
|
0.09 |
|
|
0.47 |
|
|
0.36 |
|
|
1.44 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends declared(3) |
|
|
50.8 |
|
|
41.3 |
|
|
147.9 |
|
|
55.0 |
| |
Per Share |
|
|
0.3250 |
|
|
0.3174 |
|
|
0.9750 |
|
|
0.4232 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisitions including non-cash consideration |
|
|
5.2 |
|
|
11.5 |
|
|
61.9 |
|
|
11.5 |
| Working Capital |
|
|
203.4 |
|
|
75.2 |
|
|
203.4 |
|
|
75.2 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Shares Outstanding |
|
|
156.3 |
|
|
130.0 |
|
|
156.3 |
|
|
130.0 |
| |
Weighted average - basic |
|
|
155.6 |
|
|
130.0 |
|
|
151.5 |
|
|
59.5 |
| |
Weighted average - diluted |
|
|
156.0 |
|
|
130.1 |
|
|
151.9 |
|
|
59.6 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONAL
Production Volumes |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Natural Gas (MMcf/d) |
|
|
59.5 |
|
|
44.1 |
|
|
60.5 |
|
|
43.8 |
| |
Crude Oil (bbls/d) |
|
|
4,800 |
|
|
6,599 |
|
|
5,502 |
|
|
6,690 |
| |
NGL (bbls/d) |
|
|
1,309 |
|
|
1,493 |
|
|
1,503 |
|
|
1,517 |
| Total (BOE/d)(4) |
|
|
16,026 |
|
|
15,448 |
|
|
17,088 |
|
|
15,507 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Realized Pricing |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Natural Gas ($/Mcf) |
|
$ |
2.76 |
|
$ |
4.94 |
|
$ |
2.75 |
|
$ |
4.82 |
| |
Crude Oil ($/bbl) |
|
|
54.38 |
|
|
88.58 |
|
|
50.14 |
|
$ |
91.41 |
| |
NGL ($/bbl) |
|
|
25.10 |
|
|
70.94 |
|
|
23.16 |
|
$ |
68.82 |
| Total ($/BOE)(4) |
|
$ |
28.55 |
|
$ |
58.80 |
|
$ |
27.91 |
|
$ |
59.79 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Cash Flow Netback(1) |
|
$ |
23.80 |
|
$ |
52.47 |
|
$ |
22.13 |
|
$ |
53.29 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Funds from Operations per BOE(1) |
|
$ |
24.76 |
|
$ |
48.34 |
|
$ |
25.25 |
|
$ |
50.73 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Natural Gas Price Benchmarks |
|
|
|
|
|
|
|
|
|
|
|
|
| |
AECO ($/Mcf) |
|
$ |
2.75 |
|
$ |
4.22 |
|
$ |
2.79 |
|
$ |
4.45 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Oil Price Benchmarks |
|
|
|
|
|
|
|
|
|
|
|
|
| |
West Texas Intermediate (WTI) (US$/bbl) |
|
$ |
46.94 |
|
$ |
97.44 |
|
$ |
50.92 |
|
$ |
100.21 |
| |
Edmonton Light Sweet ($/bbl) |
|
$ |
57.95 |
|
$ |
98.11 |
|
$ |
58.58 |
|
$ |
101.32 |
| (1) |
A Non-GAAP measure which is defined under the Non-GAAP Measures section in the MD&A. |
| (2) |
Net Earnings and Comprehensive Income and Funds from Operations per common share are calculated using the weighted average number of Common Shares outstanding. |
| (3) |
A dividend of $0.10833 per Common Share was declared on September 21, 2015. The dividend was paid on October 15, 2015 to shareholders of record as at October 30, 2015. |
| (4) |
See "Conversions of Natural Gas to BOE". |
A full version of PrairieSky's Management's Discussion and Analysis ("MD&A") and unaudited interim condensed financial statements and notes thereto for the fiscal period ended September 30, 2015 is available on SEDAR at www.sedar.com and PrairieSky's website at www.prairiesky.com.
CONFERENCE CALL DETAILS
In light of today's announcement by PrairieSky regarding the combination of its royalty assets with Canadian Natural Resources, the conference call to discuss PrairieSky's third quarter 2015 results has been cancelled. Questions about the quarterly results can be directed to Investor Relations by phone at (587) 293-4000 or by email to investor.relations@prairiesky.com.
FORWARD-LOOKING STATEMENTS
This press release includes certain statements regarding PrairieSky's future plans and operations and contains forward-looking statements that we believe allow readers to better understand our business and prospects. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "strategy" and similar expressions are intended to identify forward-looking information or statements. Forward-looking statements contained in this press release include our expectations with respect to PrairieSky's business and growth strategy, additional land leasing activities, potential business development and acquisition opportunities, the potential for additional drilling activity adjacent to new oil discoveries, and the use of proceeds of PrairieSky's $198 million bought deal prospectus offering of common shares completed in July 2015.
With respect to forward-looking statements contained in this press release, we have made several assumptions including those described in detail in our MD&A, the Annual Information Form for the period ended December 31, 2014 and PrairieSky's short form prospectus dated June 26, 2015. Readers and investors are cautioned that the assumptions used in the preparation of such forward-looking information and statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Our actual results, performance, or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. We can give no assurance that any of the events anticipated will transpire or occur, or if any of them do, what benefits we will derive from them.
By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, lack of pipeline capacity, currency fluctuations, imprecision of reserve estimates, royalties, environmental risks, taxation, regulation, changes in tax or other legislation, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility, and our ability to access sufficient capital from internal and external sources. In addition, PrairieSky is subject to numerous risks and uncertainties in relation to the acquisitions. These risks and uncertainties include risks relating to the potential for disputes to arise with counterparties, and limited ability to recover indemnification under certain agreements. The foregoing and other risks are described in more detail in PrairieSky's MD&A, the Annual Information Form for the period ended December 31, 2014, and PrairieSky's short form prospectus dated June 26, 2015 under the headings "Risk Management" and "Risk Factors", respectively, each of which is available at www.sedar.com.
Further, any forward-looking statement is made only as of the date of this press release, and PrairieSky undertakes no obligation to update or revise any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by applicable securities laws. New factors emerge from time to time, and it is not possible for PrairieSky to predict all of these factors or to assess in advance the impact of each such factor on PrairieSky's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
The forward-looking information contained in this document is expressly qualified by this cautionary statement.
CONVERSIONS OF NATURAL GAS TO BARRELS OF OIL EQUIVALENT
To provide a single unit of production for analytical purposes, natural gas production and reserves volumes are converted mathematically to equivalent barrels of oil (BOE). PrairieSky Royalty uses the industry-accepted standard conversion of six thousand cubic feet of natural gas to one barrel of oil (6 Mcf = 1 bbl). The 6:1 BOE ratio is based on an energy equivalency conversion method primarily applicable at the burner tip. It does not represent a value equivalency at the wellhead and is not based on either energy content or current prices. While the BOE ratio is useful for comparative measures and observing trends, it does not accurately reflect individual product values and might be misleading, particularly if used in isolation. As well, given that the value ratio, based on the current price of crude oil to natural gas, is significantly different from the 6:1 energy equivalency ratio, using a 6:1 conversion ratio may be misleading as an indication of value.
ABOUT PRAIRIESKY ROYALTY LTD.
PrairieSky is a royalty-focused company, generating royalty revenues as petroleum and natural gas are produced from its properties. PrairieSky has a diverse portfolio of properties that have a long history of generating free cash flow and that represent one of the largest and most concentrated independently-owned fee simple mineral title positions in Canada. PrairieSky Royalty's common shares trade on the Toronto Stock Exchange under the symbol PSK.
