Corporate Presentation Fall 2014 for OPEN for BUSINESS
PrairieSky Snapshot Symbol TSX: PSK Fee Land Position 5.2 million acres & 0.6 million GORR acres Market Capitalization 4.6 billion Working Capital (1) 57.5 million (no debt) 2014 Annualized Dividend 1.27 per share Shares…
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 IPOd from Encana on May 29,…
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…
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) High margin cash flow…
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…
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 (49% Gas)…
Portfolio Approach to Investing in Oil & Gas Over 200 lessees paying revenue on PrairieSky lands Operators on PrairieSky Fee Lands include (but are not limited to) Apache Canada Ltd, Bonavista Energy Operator Corporation, Crescent…
Stable Decline Rate Relative to E&P Peers PrairieSky benefits from a relatively stable decline rate requiring lower levels of reinvestment on its lands to maintain revenues and fund its dividend Corporate decline on gross production…
Power of Royalties PrairieSky has experienced continued investment on its land base since 1962 (earliest record of public data) without significant capital commitment PrairieSky Historical Gross Production 250 200 Production…
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…
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,…
Actively Managing Land Base Employees focusing on execution Removing layers of bureaucracy to allow for quick approval of land deals Standardizing agreements on leases under five sections which require no formal approvals…
Scratching the Surface of Resource Play Potential Expansive asset base provides extensive long term exploration and development opportunities 19
Mannville Stacked Zones, Multiple Opportunities Mannville generating significant interest from lessees leading to potential for future growth 38% of 2013 revenue derived from Mannville production and only 39% of Mannville lands…
Duvernay Unlocking the Giant 800 sections of Duvernay acreage Area activity is heating up with licensing occurring on and near our land base Edges courtesy of GeoEdges Inc. 21
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 9.0% 8.0% 7.0%…
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…
Financial Summary for OPEN for BUSINESS
Financial Results For the period from May 27, ( thousands, unless otherwise noted) 2014 to June 30, 2014 Funds from Operations(1) 31,038 Revenues 37,222 Dividends(2) 13,754 Production Volumes Natural Gas (MMcf/d) 42.9 Crude…
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…
Cardium Opportunities Production Growth(1) Within Boundary(2) 60,000 50,000 40,000 Boe/d 30,000 20,000 10,000 0 2009 2010 2011 2012 2013 Industry activity targeting the Cardium has increased over the past five…
Viking Opportunities Production Growth(1) Within Boundary(2) 30,000 25,000 20,000 Boe/d 15,000 10,000 5,000 0 2009 2010 2011 2012 2013 Approximately 49% of Viking activity in the boundary area being drilled on…
Mannville Opportunities Production Growth(1) Within Boundary(2) 50,000 40,000 Boe/d 30,000 20,000 10,000 0 2009 2010 2011 2012 2013 The Cretaceous Mannville Group is commonly divided between the Upper and Lower…
Bakken Opportunities Production Growth(1) Within Boundary(2) 6,000 5,000 Boe/d 4,000 3,000 2,000 1,000 0 2009 2010 2011 2012 2013 A recent pool discovery in southern Alberta has resulted in a significant…
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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