Corporate Presentation November 2014 for OPEN for BUSINESS
PrairieSky Snapshot Symbol TSX: PSK Land Position 5.2 million acres, 0.6 million GORR acres Market Capitalization 4.7 billion Working Capital (1) 75.2 million (no debt) Current Dividend 1.27 per share Shares Outstanding 130…
Introduction to PrairieSky 5.2 million acres of Fee title lands dating back to 1881 and 0.6 million acres of GORR lands Lands located throughout the heart of the oil and gas producing basins in Alberta and Saskatchewan PrairieSky…
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%…
The Royalty Advantage Fee lands equivalent to Crown lands Can recycle or re-lease land that is not held by production Over one million acres scheduled to revert back to PrairieSky in the next three years(1) Gross Overriding…
Higher Margin, Lower Risk Margin Summary (/boe) Illustrative Working PrairieSky Providing the same revenue per Interest Operator Royalty boe, a royalty barrel realizes a significantly higher operating margin Revenue (48% Gas)…
Portfolio Approach to Investing in Oil & Gas Over 200 lessees paying revenue on PrairieSky lands Operator Operators on PrairieSky Fee Lands include Majors, Independents, Mid Cap and Small Cap producers Over 75% of revenue…
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 20%,…
Range Royalty Transaction OPEN for BUSINESS
Range Royalty Snapshot Acquisition Price 699 million Land Position 3.5 million acres - 0.1 million Fee acres, - 3.0 million GORR acres - 0.2 million GRT acres - 0.2 million crown acres Production 3,000boe/d Average Royalty 5%…
Strategic Rationale of Range Royalty Acquisition Large royalty land position of 3.5 million acres with significant future growth opportunities 17% CAGR in production over past five years and 31% five-year CAGR in oil volumes…
Proforma Snapshot Land Position 9.3 million acres - 5.3 million Fee acres - 3.6 million GORR acres - 0.2 million GRT acres - 0.2 million Crown acres Production (1) 18,365 boe/d Dividend 1.30 per share Payout Ratio…
Future Development and Optionality OPEN for BUSINESS
Scratching the Surface of Resource Play Potential Expansive asset base provides extensive long term exploration and development opportunities 14
Capex Multiplier Illustrative Example Oil Gas (4) Incremental Third Party Capital Spent (MM) 100 100 Illustrative Capital Efficiency (/boe/d) (1) 35,000 20,000 Gross Production Generated 2,857 5,000 PrairieSky Royalty…
Mannville Demonstrating Strong Returns Lithic Mannville in early gestation of development on PrairieSky lands Expected to be cornerstone of future growth Play delivers quick payouts 450 MannvilleType Curves US80/bbl WTI, US0.90/C,…
Viking a Focus of Future Growth Viking Highlights: Large OOIP of 6 11 mmbbl Shallow depths, low risk and predictable oil rates Excellent vertical well control Improvement in completions leading to higher IPs and quick payouts Only…
Optionality Case Study 1: 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 drilled…
Optionality Case Study 2: Technology Multi-zone 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…
Optionality Case Study 3: 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 PrairieSky…
Future Opportunities Grow Manage Acquire Organic growth through Proactively monitor and Opportunistically evaluate structured and customized manage third party compliance accretive acquisitions that deals (e.g., lease terms,…
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 maintain and grow cash flow 12.0% 10.0%…
Why PrairieSky 5.2 million acres of Fee Simple lands Vast Land Base 0.6 million acres of GORRs Long tenured team with direct experience in land negotiations, royalty compliance Experienced Team and geology/engineering Management…
Appendix: Addition Information OPEN for BUSINESS
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 long End of Primary Term Current potential…
PrairieSky Crown Land Sales Crown Land Sales since Jan 2012 (Within PSK Area) Bonus 477 MM Acreage(Ha) 1,649,278 Ha /Ha 289/ha Crown Land Sales since Jan 2012 (Offsetting PSK land) Bonus 161 MM Acreage(Ha) 407,939 Ha /Ha 394/ha…
Financial Results Three Months Ended ( millions, unless otherwise noted) September 30, 2014 Funds from Operations(1) 68.7 Revenues 87.7 Dividends 41.3 Production Volumes Natural Gas (MMcf/d) 44.1 Crude Oil (bbls/d) 6,599…
12 Month Revenue by Top 25 Royalty Payors (MM) 1 2 3 4 5 6 7 8 9 10 13% 11 12 13 14 15 16 17 18 19 20 87% 21 Top 25 Companies 22 23 24 25 0 5 10 15 20 25 30 35 40 Revenue MM Gas Oil NGLs Top 25 royalty…
Executive Team Andrew M. Phillips, President & CEO / Director Most recently, CEO of Home Quarter Resources (acquired by a public oil and gas company in 2014) Over 15 years of experience in the oil & gas industry Held increasingly…
Analyst Coverage Firm Analyst AltaCorp Jeremy McCrea, Klazina van den Berg BMO Gordon Tait, Scott Van Bolhuis CIBC Arthur Grayfer, Dennis Fong, Shahzaib Merwat First Energy Michael Dunn GMP Stacey McDonald, Holly Craven National Bank…
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