2 PrairieSky Snapshot Symbol TSX: PSK Land Position (1) 5.5 million Fee acres; 3.4 million GORR acres Market Capitalization 4.3 billion Production (2) 17,500boe/d Balance Sheet Positive working cap, no debt Current…
3 Introduction to PrairieSky 5.5 million acres of Fee title lands and 3.4 million acres of GORR lands (1) Lands located throughout the heart of the oil and gas producing basins in Alberta and Saskatchewan License to 12,000 km2 of 3D…
4 The Royalty Advantage Over 10 High margin million cash flow leasable, through all undeveloped cycles acres Perpetual Optionality The Royalty Advantage
5 Higher Margin, Lower Risk Margin Summary (/boe) Illustrative Working PrairieSky Interest Operator Royalty Providing the same revenue per Revenue (58% Gas Production) Revenue (58% Gas Production)(2) boe, a royalty barrel realizes…
6 Portfolio Approach to Investing in Oil & Gas Over 285 lessees paying revenue on PrairieSky lands Operators Operators on PrairieSky Fee Lands include Majors, Independents, Mid Cap and Small Cap producers 69% of product…
7 Underlying Commodity Exposure without Liabilities PrairieSky provides unlevered, unhedged exposure to the underlying commodity without operational risk and working interest liabilities Limited impact on funds flow margin during…
8 Diversity in Top Payers Top 10 payers represent 57% of trailing 12 month revenue, while the top 25 payers represent 80% of revenue Exposure to various operators with diverse expertise ranging from private companies to Majors No…
9 Power of Royalties PrairieSky has experienced continued investment on its Fee Land since 1962 (earliest record of public data) without significant capital commitment Production base exhibits a relatively stable decline rate of…
10 Multi-zone Potential Exploration and development has taken place since the 1950s in the form of new pool discoveries as well as through redevelopment with evolving technology 1950s 1990s Homeglen Rimbey Pekisko Oil, Leduc Oil…
11 Acquisition Opportunities Closed 198 Million equity financing Completed 40 Million of acquisitions during Q2 (1) 21 Million acquisition of over 200,000 acres of fee simple lands, including 115boe/d (93% natural gas) of net…
Future Development and Optionality
13 Optionality Case Study 1: Multiple horizons Area has been on production since the 1950s and has seen steady discoveries for the past thirty years Primary target was Mannville natural gas with Mannville oil production increasing…
14 Optionality Case Study 2: Legacy Production Unit was discovered in 1956 and developed vertically until 1965. Was placed under a partial water flood in 2003 In 2011 the first horizontal well was drilled with the last horizontal…
15 Optionality Case Study 3: Technology Area initially developed vertically. Horizontal, multi-stage fracture development started in 2009 (following an acquisition of working interest production on Fee Lands) Over 75 Fee sections in…
16 Optionality Case Study 4: New Pool Discovery The pool encompasses 32 sections of Fee land Production began in early 2012 and has averaged nearly 3,000bbl/d in 2014 to-date from 44 total producing wells Royalty revenue to…
17 Free Cash Flow and Capex Requirements Matter PrairieSky generates significant free cash flow compared to other oil and gas investments; however, unlike its peers, no capex is required to generate this cash flow 12.00% 10.00% (1)…
18 Why PrairieSky Royalty Profitability Royalty business sees minimal margin compression during periods of weak pricing After-tax cash funds flow margin 77% (1) Balance Sheet Strength Significant cash reserves allow PSK to move…
Appendix
20 Executive Team Board of Directors Andrew M. Phillips, President & CEO / Director James M. Estey, Chair of the Board Most recently, CEO of Home Quarter Resources (acquired by a public oil and Retired Chairman of UBS Securities…
21 Royalty Hierarchy Government owns mineral rights (90% of Alberta) Crown Revenue received from E&P companies with producing wells located on Crown lands Fee Simple Corporations/Individuals own the mineral rights (9% and 1%…
22 Recycling the Land Base At the end of the primary lease term, any lands / rights not held by production revert back to PrairieSky Royalty Primary lease term is typically up to five years End of Primary Term long (1) Current…
23 Scratching the Surface of Resource Play Potential Expansive asset base provides extensive long term exploration and development opportunities
24 Financial Results For the three month period ( millions, unless otherwise noted) ended June 30, 2015 Funds from Operations(1) 43.6 Revenues 71.8 Dividends declared 48.5 Production Volumes Natural Gas (MMcf/d) 59.5…
25 Analyst Coverage Firm Analyst Barclays Grant Hofer BMO Gordon Tait CIBC Arthur Grayfer Dundee Chad Ellison FirstEnergy Michael Dunn GMP Stacey McDonald, Holly Craven Macquarie Securities Brian Bagnell National Bank Kyle…
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