In This Article:
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Oil Production Growth: 6% increase in oil production or 7% per debt adjusted share in 2024.
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Lease Issuance Bonus: $30.8 million received from 219 leases.
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Free Cash Flow: $380.5 million generated in 2024.
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Oil Reserves Replacement: Increased by 3.5% in 2024.
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Acquisitions: Four acquisitions totaling $73 million with expected IRRs of just under 20%.
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Dividend Increase: 4% increase to $1.04 per common share, paid quarterly.
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Q4 Oil Royalty Production: Averaged 3,317 barrels per day.
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Annual Oil Royalty Production: 13,125 barrels per day, a 6% increase over 2023.
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Funds from Operations: $99 million or $0.41 per share in Q4; $380.5 million or $1.59 per share for 2024.
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Dividend Payout Ratio: 63% with $239 million declared in dividends.
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Net Debt: $134.9 million as of December 31, 2024.
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Tax Pools: $1.3 billion to shelter future taxability.
Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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PrairieSky Royalty Ltd (PREKF) achieved a 6% organic growth in oil production per debt adjusted share in 2024, marking the third consecutive year of high single-digit growth.
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The company generated $380.5 million in free cash flow from 9.32 million barrels of royalty production in 2024.
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PrairieSky successfully closed four acquisitions totaling $73 million, expected to generate nearly 20% IRRs.
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A 4% increase in the dividend was announced, raising it to $1.04 per common share, reflecting confidence in future cash flows.
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Duvernay royalty production volumes increased by over 50% in 2024, driven by strong drilling activity.
Negative Points
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Natural gas and NGL volumes declined in 2024 due to weak natural gas pricing.
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The average royalty rate contracted in 2024 compared to 2023, attributed to a higher number of unit wells drilled.
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Net debt stood at $134.9 million as of December 31, 2024, despite efforts to allocate excess cash flow to debt repayment.
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The company faces economic impacts from lower gas pricing, affecting overall reserve replacement.
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There is uncertainty regarding future acquisitions, as the availability of high IRR opportunities is unpredictable.
Q & A Highlights
Q: How does the outlook for the upcoming year compare to last year, and where might there be surprise wins? A: Andrew Phillips, President and CEO, noted that with a significant increase in rig count year over year, they expect higher activity levels across the base. The West Shale Duvernay is seeing increased activity, and discoveries in the Mannville stack should lead to a positive year, potentially better than last year.