16-07-2025
PrairieSky Royalty Ltd (PREKF) Q2 2025 Earnings Call Highlights: Record Oil Production and ...
Royalty Production Revenue: $111.2 million in Q2 2025.
Oil Production Revenue: $95.7 million from 14,376 barrels per day.
Natural Gas and NGL Revenue: $15.5 million.
Other Revenues: $12.4 million, including $8.5 million from new leases.
Funds from Operations: $96.7 million or $0.41 per share.
Dividends Declared: $61.2 million or $0.26 per share.
Payout Ratio: 63%.
Net Debt: $242 million at quarter end.
Credit Facility Increase: Exercised accordion feature to increase by $250 million to $600 million.
Warning! GuruFocus has detected 7 Warning Sign with WFC.
Release Date: July 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
PrairieSky Royalty Ltd (PREKF) achieved record royalty oil production of 14,376 barrels per day, an 8% increase from the same quarter the previous year.
The company has strong growth rates in three plays: Clearwater, Mannville stack, and Duvernay, with significant inventory for future development.
New discoveries in the Basal Quartz formation in Southern Alberta are expected to continue due to fast payouts.
PrairieSky has a large mineral position with complementary 3D ownership, providing investors with optionality across the basin.
The company generated $111.2 million in royalty production revenue, with $95.7 million from oil production and $15.5 million from natural gas and NGLs.
Despite a massive natural gas royalty resource, the company faces very weak pricing in the natural gas market.
PrairieSky exited the quarter with a net debt of $242 million, indicating a significant level of leverage.
The company had to exercise the accordion feature of its credit facility, increasing it by $250 million to $600 million, which may indicate a need for additional liquidity.
Funds from operations were $96.7 million, but the payout ratio was 63%, which may limit future financial flexibility.
The company repurchased and canceled only $2 million worth of stock, which might be seen as a limited buyback effort.
Q: Can you provide an overview of PrairieSky's oil production performance in Q2 2025? A: Andrew Phillips, President and CEO, reported that PrairieSky achieved record royalty oil production of 14,376 barrels per day, marking an 8% increase from the same quarter the previous year. This growth is attributed to strong performance across three key plays: Clearwater, Mannville stack, and Duvernay.
Q: What are the expectations for PrairieSky's natural gas volumes given the current pricing environment? A: Andrew Phillips noted that despite weak natural gas pricing, volumes have remained stable. The company anticipates some growth in natural gas volumes in 2026.
Q: How did PrairieSky's financials perform in Q2 2025? A: Pamela Kazeil, CFO, stated that royalty production revenue totaled $111.2 million, driven by record oil production. Funds from operations were $96.7 million, with a payout ratio of 63%. The company declared dividends of $61.2 million and used excess funds to acquire additional royalty interests and repurchase stock.
Q: What strategic financial moves did PrairieSky make during the quarter? A: Pamela Kazeil highlighted that PrairieSky increased its credit facility by $250 million to $600 million, enhancing liquidity and financial flexibility. The company also repurchased and canceled $2 million worth of stock and committed to spending an additional $11 million on share purchases.
Q: What is the status of drilling activity and development in PrairieSky's key plays? A: Michael Murphy, VP of Geosciences and Capital Markets, reported a similar level of drilling activity compared to the previous year, with 117 spuds in Q2 2025. The company saw a high pace of development in the Duvernay light oil play and a record proportion of multilateral spuds, particularly in the Clearwater play.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
