Prairiesky Royalty Ltd. ((TSE:PSK)) has held its Q1 earnings call. Read on for the main highlights of the call.
PrairieSky Royalty Ltd. recently held an earnings call that showcased a robust performance in oil production and strategic acquisitions, underscoring a sustainable financial trajectory. Despite facing challenges with natural gas volumes and market volatility, the company demonstrated resilience through its sustainable dividend policy and strategic asset management.
Record Oil Volumes
PrairieSky Royalty Ltd. achieved a milestone in Q1 2025 with record oil volumes of 13,502 barrels per day of net royalty production. This achievement highlights the company’s strong operational capabilities and positions it favorably in the energy sector.
Increase in Wells Spud
The company reported a significant increase in wells spud, with over 200 wells initiated in Q1. This marks an increase of 26 wells from the same period in 2024, alongside an improved average royalty rate of 6.9% compared to 6% last year, reflecting enhanced operational efficiency.
Strategic Acquisitions
PrairieSky made strategic moves by acquiring the Petro-Canada fee title package in Southeast Saskatchewan for $50 million and repurchasing 3.4 million shares. These actions have increased shareholder value by adding a 1.4% interest for remaining shareholders.
Strong Financial Performance
The company reported robust financial metrics with royalty production revenue totaling $119.9 million, 93% of which came from liquids. Funds from operations were $85.8 million, and dividends declared amounted to $61.2 million, maintaining a payout ratio of 71%.
Expansion in Oil Sands Leases
PrairieSky expanded its footprint by adding over 100,000 acres of oil sands leases, securing years of new economic drilling inventory and reinforcing its long-term growth strategy.
Sustainable Dividend
The company’s dividend policy remains sustainable even at oil prices below $50, showcasing resilience in its financial planning and commitment to shareholder returns.
Decline in Natural Gas Volumes
A decline in natural gas volumes was noted, averaging 55.9 million a day compared to Q1 2024. This decrease was partly attributed to cold weather downtime, impacting overall production.
Market Volatility and Oil Price Decline
Following the quarter-end, PrairieSky faced market volatility and a decline in oil prices, posing challenges to its financial outlook.
Increase in Net Debt
Net debt increased to $258.8 million as of March 31st, primarily due to strategic share repurchases, reflecting the company’s focus on enhancing shareholder value.
Forward-Looking Guidance
Looking ahead, PrairieSky Royalty Ltd. remains optimistic with plans to renew its NCIB and continue its strategic growth initiatives. The company is well-positioned with its current net debt level and aims to capitalize on its recent acquisitions and lease expansions to drive future growth.
In summary, PrairieSky Royalty Ltd.’s earnings call conveyed a positive sentiment, highlighting strong oil production, strategic acquisitions, and a sustainable financial approach. Despite challenges in natural gas volumes and market volatility, the company remains resilient with a focus on shareholder value and long-term growth.