CORPORATE PRESENTATION - MARCH 2021 - PrairieSky Royalty Ltd.
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CORPORATE PRESENTATION MARCH 2021
PrairieSky Royalty Snapshot
TSX
$3.0 Balance Sheet
PSK Billion Strength
Enterprise Value(1)
Annual Dividend 223.3 NCIB
$0.26
Million One of the only North
American energy
Per Common Share Shares Outstanding(1) companies continuing
Paid Quarterly to repurchase shares
8.0 8.2
Million Million 4
Provinces
Acres of Fee Lands Acres of GORR Lands
(1) Based on 223.3 million common shares as of December 31, 2020 and closing share price on the TSX of $12.90 on February 26, 2021. Bank debt as at December 31, 2020 plus closing of the $45 million
acquisition announced on February 8, 2021
Financial data in this corporate presentation is as at December 31, 2020 unless stated otherwise.
1
Dominant Land Position *
2
Acquisition Highlights
In February 2021, PrairieSky closed the acquisition of a large royalty portfolio
and seismic database for cash consideration of $45.0 million. Highlights of the
acquisition are:
640,000 net acres of producing and undeveloped royalty interests
170,000 net acres of fee mineral title
Multizonal leasing, exploration and development potential
650 BOE/d of royalty production (44% liquids)
Extensive seismic data base covering acquired and existing
land base
3,200 km2 of 3D seismic
3,100 km of 2D seismic
3
Introduction to PrairieSky Royalty
8.0 million acres of Fee Lands(1) Business model supports
dividend payments
8.2 million acres of GORR Lands(1)
Royalty operating margin(2) 98%
Lands located throughout the heart of the oil
and gas producing basins in Alberta, British
Operating margin(2) of 87%
Columbia, Saskatchewan and Manitoba
License to ~16,700 km2 of 3D seismic Strong balance sheet
covering 4.1 million acres, and
~49,200 km of 2D seismic
Low risk revenue base Experienced team aligned
with shareholder interests
No capital commitments, Management team with an unparalleled
operating costs, abandonment liabilities understanding of the value of royalties
or reclamation charges associated with Technical team with deep experience
working interest ownership in Western Canada
~63% of royalty production revenue Focused staff, all of whom have invested
received from Fee Lands(2) in PrairieSky shares
Directors and officers ownership of
2.5 million shares
(1) Fee Lands refer to lands with Petroleum and/or Natural Gas rights. GORR Lands include GRT and Crown Interest Lands.
(2) Royalty operating margin and operating margin are for the year ended December 31, 2021. See non-GAAP measures.
4
A Unique and Diversified Approach to Investing in Oil & Gas
Third Party
Operators
• 310 lessees paying royalties on
PrairieSky Royalty lands
• Operators on PrairieSky Royalty Fee
Lands include Majors, Independents,
Mid Cap and Small Cap producers
Commodity Geology
• 77% of product revenue derived • Production from over 30
from liquids volumes(1) formations from high risk, deep
• Liquids volumes make up targets to low risk shallow oil
approximately 49% of production(1) and natural gas
(1) For the year ended December 31, 2020.
5
Royalty Advantage
Ownership in PrairieSky provides a
long duration cash flow stream
and the optionality associated with
perpetual land title ownership.
Exposure to: No exposure to:
High margin cash flow streams Capital costs
New discovery/exploration optionality Environmental liabilities
Commodity price optionality Operations
Secondary and tertiary recoveries Operating costs
Shale opportunities
Technological advancements
Ownership in 10 million leasable, undeveloped acres
6
Higher Margin, Lower Risk
Margin Summary ($/BOE)
Illustrative Working Interest Operator PrairieSky Royalty
Revenue
(49% Liquids Production)(1)
$21.65/boe
PrairieSky
Royalty offers
higher margins Production
& Mineral Tax
than conventional Royalties
($0.35/BOE)
($2.40/BOE)
working interest
production Operating / No royalties
Transportation Costs payable to the
Incurred by Royalty Operating
($10.75/BOE) Crown on Fee
Working Margin(3)
Interest Lands
Providing the same
revenue per BOE, a Operators $21.30/BOE
royalty barrel realizes 98%
significantly higher F&D(2) of Revenue
($10.00/BOE)
margins than working
interest models
Operating Margin
No abandonment (Excluding F&D)
$8.60/BOE
or environmental liabilities 40% of Revenue before F&D
No capital spending
requirements (1) Excludes the impact of Other Revenues (lease rentals, bonus consideration, etc.) for the year ended December 31,
2020.
(2) Excluding acquisitions and net change in future development capital.
(3) See non-GAAP measures. Amounts per BOE for PrairieSky Royalty are for the year ended December 31, 2020.
7
Recycling the Land Base
The perpetual nature of Fee Lands allows
PrairieSky Royalty to continually recycle lands
and grow its revenue base.
PrairieSky leases At the end of the primary lease
lands by zone – same term, any lands/rights not held
aerial acreage can be by production revert back to
leased separately for PrairieSky Royalty
multiple zones
License to ~16,700 km2 of 3D PrairieSky Royalty can re-lease to
seismic, covering over 4.1 million third parties who plan to more
acres, and ~49,200 km of 2D seismic actively exploit, explore and/or
develop those opportunities
New drilling and production PrairieSky Royalty sets lease
technologies can be utilized to terms to ensure the company
pursue previously underexploited remains competitive with adjacent
zones Crown or freehold lands
(1) Held by Production (“HBP”)
8
Production History on our Fee Lands
Cumulative production of
Historical Gross Production on PSK Fee Lands 4.5 billion BOE
300,000
250,000
200,000
150,000
100,000
50,000
-
CD Avg. Oil (bbl/d) CD Avg. Gas (BOE/d)
Source: Accumap
Additional royalty production is generated on GORR Lands (not included above).
9Reserves Replacement
Third-party capital on PrairieSky Funds from operations
lands approximately replaces returned to shareholders as
production annually. dividends and share
repurchases or used to
purchase additional royalty
2020 proved + probable reserves interests.
increased 5% over 2019.
Proved + Probable Annual Funds from
Reserves Production Operations
(MBOE) (MBOE) (millions)
2015 46,653 6,199 $177.8
2016 47,423 8,531 $200.2
2017 49,234 9,221 $290.2
2018 47,482 8,526 $229.7
2019 45,835 7,941 $220.4
2020 48,189 7,215 $146.8
10Long-term Optionality
PrairieSky’s basket of call options includes:
SAGD
Lindbergh and Onion Lake projects have multiple phase
expansion potential
New leasing of Fee Lands to integrated and independent
SAGD specialists
Emerging Clearwater and Duvernay oil plays; stacked Montney
and Spirit River liquids rich gas plays
Large scale CO2 sequestration and EOR projects
New pool discoveries and expansion of productive trends
Technological advancements
= Long-term revenue generation at no additional cost to PrairieSky.
11PrairieSky Royalty Per Share Metrics
Production per Million Shares Acres per Million Shares(1)
140 80,000
120
60,000
100
80
40,000
60
40
20,000
20
- -
Q1/14
Q2/14
Q3/14
Q4/14
Q4/15
Q1/16
Q2/16
Q3/16
Q4/16
Q1/17
Q2/17
Q3/17
Q4/17
Q1/18
Q2/18
Q3/18
Q4/18
Q1/19
Q2/19
Q3/19
Q4/19
Q1/20
Q2/20
Q3/20
Q4/20
2013
IPO Today
Q1/15
Q2/15
Q3/15
Acres per Million Shares
(1)Acres
per share based on number of common shares outstanding
Production per Share at December 31, 2020.
12Revenues Generated from Royalty Properties
PrairieSky generates revenues through Royalty Compliance analysis focuses on
leasing its Fee Lands and its GORR capturing mispaid royalties through
Interests, which includes Royalty forensic accounting.
Production Revenue, Bonus
Over $60 million in compliance
Consideration and Lease Rental Income.
recoveries collected since IPO.
Total Revenues
$400
$350
$300
Revenues ($ millions)
$250
$200
$150
$100
$50
$-
2014 2015 2016 2017 2018 2019 2020
Royalty Production Revenue from Lessor Interests on Fee Lands Royalty Production Revenue from GORR Interests Bonus Consideration Lease Rental Income Other Income
Compliance revenue is recorded with Royalty Production Revenue from Fee Lands and GORR Interests in the financial statements.
13Returns to Shareholders
1.8
IPO to 2020
From IPO to December 31, 2020, WTI down
PrairieSky has returned $1.1 1.6 ~56%
AECO down
billion in dividends and $224 ~48%
1.4
million in share buybacks to
shareholders. 1.2
1.0
$ billions
0.8
High conversion of
revenues to free cash
0.6
flow for distribution to
shareholders through all
0.4
commodity price cycles.
0.2
-
IPO (May 29, 2014) - December 31, 2020
Total Revenue Funds from Operations Returned to Shareholders
PrairieSky pays a quarterly The dividend is below the current, trailing and
dividend of $0.065 per share. forward Free Cash Flow yield.
14Capital-Free Returns and Diversification
PrairieSky Royalty E&Ps Midstream
Capital-Free Returns No capital investment required x Requires significant capital x Requires significant capital
or acquisitions for growth for growth
Future embedded royalties
and cash flow through x Responsibility for x Requires significant
perpetual land ownership environmental liabilities capital for maintenance
No environmental liabilities Technology increases recovery x Responsibility for
typically associated with factors and opens up new environmental liabilities
working interests resource opportunities
Technology increases
recovery factors and opens up
new resource opportunities
Stable/Diversified Asset 16.2 million acres, / x Generally concentrated in Contractual commitments
approximately 37,000 certain plays (operator/asset) (certainty of fees, volumes)
producing wells, approximately x Requires maintenance and
310 payors facilities capital
Capital Structure Strong balance sheet. No long- x Moderate to high leverage x Moderate to high leverage
term debt
15ESG Policies and Practices
All of PrairieSky’s royalty Policies
properties are in Canada which and
provides the following advantages: Practices
Environmental regulations are best-in-class
standards and reflect global leadership
PrairieSky’s policies and
Focus on Health and Safety, Human Rights and practices are developed to
Community Partnerships provide the foundation for
Technological Innovation and leading commitment to sustainability. They include:
sustainability, driving rapid rate of change and
continuous improvement. Code of Business Conduct
Environment, Climate
PrairieSky has no field operations, facilities, or end of life Change, Health & Safety
decommissioning liabilities.
Policy
Third-party operators on the Royalty Properties have a contractual
commitment to adhere to good operating practices and comply with all Human Rights Policy
laws.
Board Diversity Policy
PrairieSky is advancing further sustainability initiatives and continues to
increase disclosure around ESG. Whistleblower Policy
2019 Responsibility Report available on our website
TCFD and SASB disclosures available on our website Please see our website for a full list
Independent assurance statement of certain key performance indicators of policies: www.prairiesky.com
available on our website
“Net zero” GHG emissions (Scope 1 and Scope 2)
16ESG Policies and Practices
ESG Survey Results
We are committed to operating our Ranked #1 by Sustainalytics for Global Oil and
business in an economically, socially, Gas Producers and in 7th Percentile for Global
and environmentally responsible and Universe.
sustainable manner for the benefit of
shareholders and relevant stakeholders. Received A ranking from MSCI in 2020.
Ranked #1 by ISS QualityScore on Environment,
We conduct our business responsibly by: #2 on Social.
• Incorporating sustainability factors into our
strategy and actively managing risk. Received a A- score for CDP Climate Change in
• Proactively taking steps to minimize our 2020, which is the leadership level.
impact on the environment.
• Emphasizing sustainability criteria through
our business relationships and contractual Governance
arrangements.
The Globe and Mail, Report on Business Board
• Upholding the highest standards of
governance and ethics. Games - PrairieSky ranked in the top quartile of
Canadian companies in 2020 for excellence in
• Tying short-term and long-term Executive
governance practices.
Compensation to measurable ESG
performance criteria.
Recipient of 2020 “Women Lead Here” recognition
At PrairieSky, women make up:
Gender Diversity 75% of Managers, 50% of Senior Management and 29% of Independent Directors
17Shareholder Alignment
Board & Management
invested ~$80 million
in PSK Shares
Shareholder All staff are shareholders
“Pay for performance”
long-term incentives Alignment and maximize participation
in Employee Stock
Purchase Plan
Decisions focused
on core strategy and
creating long-term
shareholder value
18Spuds on PrairieSky Lands – Q4 2020
19Spuds on PrairieSky Lands – YTD 2020
20Quarterly Activity on PrairieSky Lands
There was limited drilling and exploration activity across Western Canada during Q2 & Q3 2020 due to the impacts of decreased benchmark pricing and
COVID-19 on global oil supply and demand.
Wells Spud Wells Spud
300 300 15.0%
200 200 10.0%
100 100 5.0%
0 0 0.0%
2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
LOR GORR UNIT OIL GAS RI
Wells Rig Released Wells Rig Released
300 300 15.0%
200 200 10.0%
100 100 5.0%
0 0 0.0%
2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
LOR GORR UNIT OIL GAS RI
Wells on Production* Wells On Production*
300 300 12.0%
250 250 10.0%
200 200 8.0%
150 150 6.0%
100 100 4.0%
50 50 2.0%
0 0 0.0%
2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
LOR GORR UNIT OIL GAS RI
*Wells on production for Q4 2020 will be reported in Q1 2021 when data is complete.
LOR represents lessor interests on Fee Lands.
RI - royalty interest
2110 Year Free Cash Flow Generation
Q4 2020 Average Royalty Production
19,281 BOE/d
10 Year Average Annual Production (boe/d)
FX
AECO WTI
($US / 17,000 19,000 21,000 23,000
($/Mcf) ($/bbl)
$CAD)
10 Year Free Cash Flow (Billions)
% Annual Growth Rate ~-2.5% ~Flat ~2% ~4%
0.76 $2.25 $30.00 $1.0 $1.1 $1.2 $1.3
0.76 $2.25 $40.00 $1.2 $1.4 $1.5 $1.6
0.76 $2.25 $50.00 $1.5 $1.6 $1.8 $2.0
0.76 $2.25 $60.00 $1.7 $1.9 $2.1 $2.3
0.76 $2.25 $70.00 $2.0 $2.2 $2.4 $2.7
A $0.50/Mcf increase in AECO increases 10-year cash flow by $0.1 billion.
22Why PrairieSky?
• 8.0 million acres of Fee Lands
Vast Land Base
• 8.2 million acres of GORR Lands
• Management and directors with an unparalleled understanding of the
Experienced Team royalty business and are invested alongside shareholders
Resource Play • Upside from resource play development on emerging plays including the
Upside Duvernay, Clearwater and multi-zonal Deep Basin plays
Diversification • Approximately 310 lessees producing from over 30 geologic horizons
• Exposure to both oil and natural gas prices
• Technology, new pool discoveries, optimization of legacy production and
Optionality secondary and tertiary recoveries all provide long-term option value
• Fee Simple land never expires
• Conservative dividend payout ratio
Sustainability • No capital expenditures, operating costs, abandonment or environmental
liabilities
• Strong balance sheet
Attractive Free • Trading at attractive FCF yield, no capital requirements to maintain current
Cash Flow Yield free cash flow generation
23FINANCIAL INFORMATION
Financial Highlights
Year Ended December 31,
$millions, unless otherwise noted Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019
2020 2019
Production Volumes
Crude Oil (bbls/d) 7,313 6,572 6,035 8,582 8,884 8,011 7,124 8,633
NGLs (bbls/d) 2,285 2,473 2,586 2,945 2,819 2,334 2,571 2,607
Natural Gas (Mmcf/d) 58.1 58.2 60.3 63.8 63.0 61.0 60.1 63.1
Total Production (BOE/d)(1) 19,281 18,745 18,671 22,160 22,203 20,512 19,712 21,757
Financial Information
Royalty Production Revenue 43.6 38.4 25.1 49.1 63.4 51.9 156.2 244.9
Other Revenues 3.4 5.1 3.1 3.6 3.7 6.9 15.2 23.5
Total Revenues 47.0 43.5 28.2 52.7 67.1 58.8 171.4 268.4
Funds from Operations 41.1 37.9 21.3 46.5 55.8 48.8 146.8 220.4
per Share(2) $0.18 $0.16 $0.09 $0.20 $0.24 $0.21 $0.64 $0.94
per BOE $23.17 $21.98 $12.53 $23.06 $27.32 $25.86 $20.35 $27.75
Net Earnings 14.1 9.4 (0.4) 8.6 24.3 16.7 31.7 111.4
per Share $0.06 $0.04 ($0.00) $0.04 $0.10 $0.07 $0.14 $0.48
Working Capital at Period End (42.0) (66.2) (8.7) (5.2) (3.1) (7.4) (42.0) (3.1)
(1) See “Conversions of Natural Gas to boe”.
(2) Per share calculation uses the weighted average (basic) number of shares outstanding.
PrairieSky has no long-term debt, no operating expenses, no mandatory
capital expenditures and no environmental liabilities.
25Top Payors
Top 10 payors represent 48% Exposure to various operators with
of product revenue, while the diverse expertise ranging from
Top 25 payors represent 71% private companies to Majors.
of product revenue
12 months of Revenue by Top 25 Companies ($ millions)
1 Top
3
25 Payors
5
7
Artis Exploration Pacific Canbriam Energy
9
Baytex Energy Persist Oil And Gas Inc.
11 Bonavista Energy Pine Cliff Energy
13
Cenovus Energy Spur Petroleum
Canadian Natural Resources Strathcona Resources
15
Crescent Point Tamarack Valley
17 Ember Resources TAQA North
19
IPC Canada Ltd. Teine Energy
Karve Energy Tourmaline Oil
21
Lynx Energy Venturion Oil
23 NAL Resources Vesta Energy
25
Nuvista Energy Whitecap Resources
Ovintiv Inc.
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0
26APPENDICES
HIGH QUALITY ROYALTIES = OPTIONALITY
Future Optionality
29Industry Capital on PrairieSky Lands
Third-party operators invest capital
on PrairieSky’s lands to develop
and produce oil and natural gas.
2014 2015 2016 2017 2018 2019 2020
Industry Capital(1) (billions) $46.9 $31.6 $23.0 $28.7 $27.4 $25.8 $15.3
Gross Capital on PSK Lands(2) (billions) $1.9 $1.1 $0.7 $1.1 $1.3 $1.1 $0.5
% of Gross Capital on PSK Lands 4.1% 3.5% 3.2% 4.0% 4.7% 4.3% 3.1%
% of Gross Capital Oil Plays 72% 52% 69% 73% 78% 74% 89%
% of Gross Wells on Oil Plays 74% 73% 90% 89% 94% 94% 95%
Net Capital(2) (millions) $176 $84 $68 $74 $75 $58 $27
Source: Arc Energy Charts (February 1, 2021). Represents total capital spent on conventional oil and natural gas in Canada.
(1) Includes capital spending on oil sands. Gross capital represents the capital investment by a third-party operator. Net capital represents the gross capital multiplied by
the PSK net royalty interest.
30Multi-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 1950’s Future
Homeglen Rimbey Duvernay, Banff
Leduc Oil horizontal, Nordegg,
Ellerslie, Upper
Mannville
1960’s Post 2010
Nordegg Natural Glauc Oil and Gas,
Gas multi-stage fracs,
Leduc Infill
1970’s 2000’s
Hoadley Barrier Glauc Oil and Gas,
Glauc Gas first horizontal wells,
CBM
1980’s 1990’s
Glauc Gas, Banff, Pekisko Oil, Leduc Oil
Pekisko and Infill, Glauc Oil
Ellerslie Oil
31Saskatchewan Viking Continues to Attract Capital
Saskatchewan Viking
remains a key play for
many producers based
on superior economics,
short cycle times and low
capital requirements
< $1 million to bring
well on-stream and
quick payouts
Wells produce > 50
years
~100 miles
Over 10 Mmboe of oil
in place per section
32Development of an Economic Resource Play
Saskatchewan Viking
Wells Drilled Before 2010
2,650 vertical wells drilled (in this map area)
36 horizontal wells drilled
Horizontal lateral length 1 mile or 0.5 mile
PrairieSky
Drilling density 4 to 8 wells per section Inventory
Most wells target vertical well development areas Based on:
Wells Drilled as of January 2013
16 wells
per section
800 total horizontal wells drilled in infill sections
Horizontal lateral length mostly 0.5 miles
Drilling Density 8 to 16 wells per section 8 wells
Development extends vertical pool boundaries per section
in offset sections
Wells Drilled as of December 2020
3,008 total horizontal wells drilled
Horizontal lateral length 0.5 to 1.5 mile
Drilling density 16 to 28 wells per section
Development is delineating new pool boundaries
33Central Alberta Duvernay
Over 1,000,000 acres of royalty lands
in the oil and volatile oil window of
an emerging shale resource play.
Duvernay is in early stages of
contributing to PrairieSky’s revenues:
Trailing 12-month
production Potential for
averaged royalty significant
production of royalty
~310 BOE/d, production
up from 20 BOE/d growth.
in 2016.
34Alberta Viking – Growth in Activity
Production on PrairieSky Lands
16,000
Gross Oil Production (bbl/d)
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2014 2015 2016 2017 2018 2019 2020
pre-2014 RR 2014 RR 2015 RR 2016 RR
2017 RR 2018 RR 2019 RR 2020 RR
Activity has grown
in the Alberta
Viking representing
~26% of Viking
~240 miles activity from 2020
versus 3% in 2016.
35Investing in Future Growth Opportunities
PrairieSky has re-invested its cash lease
bonus consideration into new emerging oil An emerging
resource play opportunities to provide capital efficient
liquids growth in the medium to long term. oil play, with
scale and
large OOIP
reservoirs in
the Clearwater
group sands.
Over
850,000
acres in
Marten Hills,
Godin, Nipisi
and Ukalta(1)
areas.
(1)Ukalta not shown on map
36Upper Montney Light Oil Exposure
GORR on ~110 sections
of prospective Upper
Montney light oil lands in
Two Rivers region of
British Columbia
PrairieSky will benefit
from future development
of play without capital
expenditures, operating
costs or abandonment
and environmental
liabilities
0 6 Miles
37Enhanced Oil Recovery
Unit on single section
of land first started
producing in 1979
Production has increased
dramatically with EOR scheme,
averaging ~$36,000 per month
in royalty revenue over the 12-
month trailing period.
0 1 Mile
1,600
1,400
Gross Oil Production (bbl/d)
1,200
1,000
800
600
400
200
0
1978 1983 1988 1993 1998 2003 2008 2013 2018
38Multi-Zoned, Prolific Spirit River Exposure
Spirit River Royalty HZ Production on GORR Lands
$35,000
Gross Production (boe/d)
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Pre-2011 RR 2011 RR 2012 RR 2013 RR
2014 RR 2015 RR 2016 RR 2017 RR
2018 RR 2019 RR 2020 RR
Horizontal drilling and
improved completion
techniques have resulted in
improved drilling results
0 24 Miles
IPs, EURs and costs make
the Spirit River competitive
with the Marcellus and Utica
Well capitalized operators
39Legacy Production
Unit was discovered in 1956 and
developed vertically until 1965
Placed under a partial waterflood
in 2003
Operator has an inventory of
166 net wells, 93 are booked locations (1)
First horizontal well drilled in 2011,
51 drilled to date (35 in 2012)
3,000
Gross Production (boe/d)
2,500
2,000
1,500
1,000 (1) Inventory as of December 31, 2017, inventory not disclosed subsequently.
500
0
2000 2005 2010 2015 2020
40Technology
Unit started producing in the 1950s.
Horizontal, multi-stage fracture
development started in ~2012
increasing production to levels not
seen since the 1960s.
Increased horizontal drilling activity
on a number of units across
PrairieSky lands.
Provides significant development
opportunity.
12,000
10,000
Gross Oil Production (bbl/d)
8,000
6,000
4,000
2,000
-
1960 1970 1980 1990 2000 2010 2020
41New Pool Discovery and Development
The pool encompasses 32 sections of
Fee Land, currently under natural gas
flood
4,500
Gross Oil Production (bbl/d)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2012 2013 2014 2015 2016 2017 2018 2019 2020
Production began in early 2012 and reached
peak production of over 4,000 bbls/d
Over $110 million in royalty production revenue
on this pool since 2012
42UNDERSTANDING ROYALTIES
History of PrairieSky’s Fee Lands
1676 1887 1958 2002 2014 Present
King Charles II of Dominion of CPR creates Encana created PrairieSky completes PrairieSky is the largest
England granted Canada stops Canadian Pacific through merger of acquisition of Range fee simple mineral title
948 million acres of Royalty Limited landowner in Western
granting mines and Oil and Gas, to PanCanadian Energy
mineral title land to Partnership in Canada, including 8.0
the Hudson’s Bay mineral rights as which all mineral Corporation and December 2014, a million acres of Fee
Company, later part of land sales – title was Alberta Energy best in class private Simple Mineral Title
ceded to the no more Fee lands conveyed. Company. royalty company with lands with petroleum
Dominion of are created. 3.5 million acres of and/or natural gas
Canada. royalty lands. rights. These rights are
held in perpetuity.
1881 1905 1971 2014 2015
25 million acres of CPR initiates PanCanadian PrairieSky Royalty PrairieSky acquires
Fee lands granted to Petroleum Limited acquires fees substantially all of
the Canadian Pacific irrigation projects,
Canadian Natural
Railway (CPR) in checkerboard (predecessor to simple mineral title
Resources royalty
consideration for selection PanCanadian Energy lands from Encana assets, gaining
completing the abandoned in Corporation) created and completes unparalleled fee simple
national railway. exchange for by the amalgamation initial public mineral title exposure in
building a large of Canadian Pacific offering. the Viking light oil play in
CPR able to select irrigation system. Oil and Gas And Western Saskatchewan
lands from the odd Central –Del Rio Oils. and royalty interests in
numbered sections in multiple resource plays
a belt of land 24 in the Deep Basin of
miles wide on each Alberta and British
side of the railway Columbia.
creating the
checkerboard pattern
still seen today.
44Types of Royalties
Crown Royalties
The following figure Fee Simple Mineral Title -
outlines the royalty PrairieSky owns
8.0 million acres
hierarchy. As you Gross Overriding Royalties -
PrairieSky owns 8.2 million acres
move down the
royalty hierarchy, Streams
costs increase and
duration decreases. Net Profit Interest
Volumetric Production Payment
Working Interest
45Active Management of Land Base
License to ~16,700 km2 of 3D
PrairieSky actively seismic(1) over 4.1 million acres &
manages its Fee ~49,200 km of 2D seismic(1)
Lands:
PrairieSky’s Seismic Coverage
Meeting with operators
and providing updates
on available lands
Providing seismic to
lessors and generating
prospects internally
Posting prospects on
PrairieSky’s website
and advertising to
industry
Proactively monitoring
and managing
producer commitments
46Leadership Team
Board of Directors
James M. Estey, Chair of the Board Robert Robotti
Corporate Director, Retired Chairman of UBS Securities Canada Inc., and has Founder and Chief Investment Officer Robotti & Company Advisors, LLC
more than 30 years of experience in financial markets Chair of Pulse Seismic Inc. and a director of AMREP Corporation
Chairman of Gibson Energy Inc.
Grant A. Zawalsky
Andrew M. Phillips, President & CEO / Director Managing Partner of Burnet, Duckworth & Palmer LLP (Barristers and
Solicitors)
P. Jane Gavan Director of NuVista Energy Ltd. and Whitecap Resources Inc.
President, Asset Management of Dream Unlimited Corp.
Board of Directors of Dream Unlimited Corp., Colliers International and on the
Board of Trustees of Dream Office REIT Executive Team
Margaret A. McKenzie Andrew M. Phillips, President & CEO / Director
Corporate Director, Former VP, Finance and Chief Financial Officer of Range Previously, President, CEO & Director of Home Quarter Resources
Royalty and prior thereto was VP, Finance and Chief Financial Officer of Profico (acquired by a public oil and gas company in 2014)
Energy Management Ltd.
Extensive experience in the oil & gas industry with past senior roles at Profico
Director of CN, Ovintiv Inc. and Inter Pipeline Ltd. Energy Management and Renaissance Energy
Myron M. Stadnyk Cameron M. Proctor, Chief Operating Officer
Corporate Director, Former President & Chief Executive Officer and Director of Previously, EVP, Chief Legal Officer and Director of Sinopec Canada and
ARC Resources Ltd. prior thereto VP, General Counsel and Corporate Secretary of Daylight
Director of Crescent Point Energy Corp. and Chair of the University of Energy
Saskatchewan Engineering Advancement Trust Former lawyer with Blake, Cassels & Graydon LLP
Sheldon Steeves Pamela Kazeil, VP Finance & Chief Financial Officer
Corporate Director, Previously President & CEO of EchoEx; Executive Vice Previously, EVP and Chief Financial Officer of Sinopec Canada and prior
President & COO at Renaissance Energy Ltd. thereto VP, Finance of Daylight Energy
Director of Enerplus Corporation and NuVista Energy Ltd. Formerly VP Finance of Sword Energy Ltd. and held increasingly senior roles
at its predecessor, Thunder Energy Trust, including VP Finance and CFO
Senior leadership team offers unique expertise managing royalty assets,
significant technical capabilities and broad, long-standing industry relationships.
47Disclaimer & Cautionary Statements
Cautionary Statement on Forward Looking Information
This presentation contains “forward looking information” and “forward looking statements” within the meaning of applicable securities laws, which may include, but are not limited to: statements with respect
to future events or future performance; management’s expectations regarding PrairieSky’s growth and realization of future value from the Royalty Properties; PrairieSky’s expectations regarding its
acquisition as described in the presentation; PrairieSky’s estimates regarding contributions from the acquisition, including anticipated production and liquids percentage; results of operations of third parties
active on the Royalty Properties; expectations that the number of wells reported as on production in the current quarter will increase in the following quarter when data is updated; estimated future
revenues; future dividends and share buybacks; production estimates; costs and revenue; future demand for and prices of commodities; business prospects; future application of Carbon Sequestration and
Storage (CCS) and EOR schemes and other secondary and tertiary recovery methods to improve recovery factors on the Royalty Properties; expectations regarding downspacing and infill drilling;
expectations regarding continued improvement in technology and application of new drilling and completion techniques, including application of horizontal drilling in areas otherwise largely delineated with
vertical wells; expectations regarding ongoing and continued activity levels on the Royalty Properties; estimated historical capital spent on the Royalty Properties and capital efficiencies related thereto, and
future capital spend on the Royalty Properties; expectations regarding new discoveries and the contribution to the reserves, production and financial results of the Company; expectations regarding
historical and future optimization efforts on certain plays and the resulting effect on declines in production; PrairieSky’s ability to lease large amounts of land, and its corresponding ability to attract
associated bonus consideration revenue and capital spent on the Royalty Properties; expectations that data from drilling activities will lead to exploitation of additional zones and substances that were not
otherwise targeted; and expectations regarding the future development on the Company’s lands, including the Duvernay and Clearwater land positions, including expectations that they will add significant
growth to royalty revenue and production over time; and the prospectivity of lands that are not included in this presentation and the Company’s expectations regarding the same. Such forward looking
statements reflect management’s current beliefs and are based on information currently available to management. Often, but not always, forward looking statements can be identified by the use of words
such as “plans”, “expects”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”, “predicts”, “projects”, “intends”, “targets”, “aims”, “anticipates” or “believes” or variations (including negative
variations) of such words and phrases or may be identified by statements to the effect that certain actions “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. Forward looking
statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of PrairieSky to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking statements. A number of factors could cause actual events or results to differ materially from any forward looking
statement, including, without limitation: the current and future potential impact of the COVID-19 pandemic; fluctuations in the prices of crude oil, natural gas and NGL that drive royalty revenue; changes in
national, provincial and local government legislation and regulations, including permitting and licensing regimes and taxation policies and the enforcement thereof; regulatory and political or economic
developments in any of the jurisdictions where properties in which PrairieSky holds a royalty interest are located; risks related to the operators of the properties in which PrairieSky holds a royalty interest,
including changes in the ownership and control of such operators; influence of macroeconomic developments; business opportunities that become available to, or are pursued by PrairieSky; reduced
access to debt and equity capital; litigation; title, permit or license disputes related to interests on any of the properties in which PrairieSky holds a royalty interest; excessive cost escalation as well as
development, permitting, infrastructure, operating or technical difficulties on any of the properties in which PrairieSky holds a royalty interest; actual hydrocarbon content may differ from the reserves and
resources contained in technical reports; rate and timing of production differences from resource estimates and other technical reports; risks and hazards associated with the business of exploration and
development on any of the properties in which PrairieSky holds a royalty interest, including, but not limited to unusual or unexpected geological conditions, natural disasters, terrorism, civil unrest or a
political change; and the integration of acquired assets. The statements contained in this presentation are based upon assumptions management believes to be reasonable, including, without limitation: the
ongoing operation of the properties in which PrairieSky holds a royalty interest by the owners or operators of such properties in a manner consistent with good oilfield practices and all applicable
regulations; the availability of capital to such operators to further develop such properties; the accuracy of public statements and disclosures made by the operators on the Royalty Properties; no material
adverse change in the market price of the commodities that underlie the asset portfolio; no material changes to existing tax treatment; no adverse development in respect of any significant property in which
PrairieSky holds a royalty interest; the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production; integration of acquired assets; the accuracy of
assumptions and information used in PrairieSky’s internal assessments of its Royalty Properties and the prospectivity thereof, including with respect to acquired assets; and the absence of any other factors
that could cause actions, events or results to differ from those anticipated, estimated or intended. However, there can be no assurance that forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated in such statements and investors are cautioned that forward looking statements are not guarantees of future performance. PrairieSky
cannot assure investors that actual results will be consistent with these forward-looking statements. Accordingly, investors should not place undue reliance on forward looking statements due to the inherent
uncertainty therein. For additional information with respect to risks, uncertainties and assumptions, please refer to the “Risk Factors” section of our most recent AIF filed with the Canadian securities
regulatory authorities available at www.sedar.com and on our website at www.prairiesky.com. The forward-looking statements herein are made as of February 8, 2021 only and PrairieSky does not assume
any obligation to update or revise them to reflect new information, estimates or opinions, future events or results or otherwise, except as required by applicable law.
Cautionary Statement Regarding Future-Oriented Financial Information
This presentation also contains future-oriented financial information and financial outlook information (collectively, "FOFI") about our prospective results, funds from operations, future development of the
Royalty Properties, future drilling locations, future reserve additions and in each case values associated therewith, all of which are subject to the same assumptions, risk factors, limitations, and
qualifications as set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be
imprecise and, as such, undue reliance should not be placed on FOFI and forward-looking statements. PrairieSky’s actual results, performance, realization or achievement of anticipated values could differ
materially from those expressed in, or implied by, these forward-looking statements and FOFI, or if any of them do so, what benefits PrairieSky will derive therefrom. PrairieSky has included the forward-
looking statements and FOFI in this presentation in order to provide readers with a more complete perspective on PrairieSky’s future value proposition and future development potential and such
information may not be appropriate for other purposes. PrairieSky disclaims any intention or obligation to update or revise any forward-looking statements or FOFI, whether as a result of new information,
future events or otherwise, except as required by law.
48Other Disclosure
NON-GAAP MEASURES
Certain measures in this presentation do not have any standardized meaning as prescribed by IFRS and therefore, are considered
non-GAAP measures. These measures may not be comparable to similar measures presented by other issuers. These measures
are commonly used in the oil and gas industry and by the Company to provide potential investors with additional information
regarding the Company’s liquidity and its ability to generate funds to finance its operations. This presentation includes the following
Non-GAAP measures: 1) Free Cash Flow which is defined as Funds from Operations, a GAAP measure used in PrairieSky’s
annual consolidated financial statements for the year ended December 31, 2020; 2) Cash Administrative Expense which is defined
in PrairieSky’s management’s discussion & analysis for the three months and year ended December 31, 2020 represents
administrative expenses excluding the volatility and fluctuations in non-cash share-based compensation expense; 3) Operating
Margin which is defined in PrairieSky’s management’s discussion & analysis for the three months and year ended December 31,
2020 as royalty revenue less production and mineral taxes and cash administrative expenses. 4) Royalty operating margin is the
operating margin before cash administrative expenses. These measures are used to demonstrate the comparability between the
operations of PrairieSky and production and exploration companies. Further information on Non-GAAP measures can be found in
PrairieSky Royalty’s management discussion & analysis and audited annual consolidated financial statements and notes thereto for
the year ended December 31, 2020, which are available on SEDAR at www.sedar.com or PrairieSky Royalty’s website at
www.prairiesky.com.
CONVERSIONS OF NATURAL GAS TO BOE
To provide a single unit of production for analytical purposes, natural gas production and reserves volumes are converted
mathematically to equivalent barrels of oil (boe). We use the industry-accepted standard conversion of six thousand cubic feet of
natural gas to one barrel of oil (6 Mcf = 1 bbl). The 6:1 boe ratio is based on an energy equivalency conversion method primarily
applicable at the burner tip. It does not represent a value equivalency at the wellhead and is not based on either energy content or
current prices. While the boe ratio is useful for comparative measures and observing trends, it does not accurately reflect individual
product values and might be misleading, particularly if used in isolation. As well, given that the value ratio, based on the current
price of crude oil to natural gas, is significantly different from the 6:1 energy equivalency ratio, using a 6:1 conversion ratio may be
misleading as an indication of value.
CURRENCY AND REFERENCES TO PRAIRIESKY ROYALTY
All information included in this presentation is shown on a Canadian dollar basis.
For convenience, references in this document to the “Company”, “we”, “us”, “our”, and “its” may, where applicable, refer only to
PrairieSky Royalty.
49CONTACT
INFORMATION
WWW.PRAIRIESKY.COM
PRAIRIESKY ROYALTY LTD.
1700, 350 – 7 Avenue SW
Calgary, AB T2P 3N9
T 587.293.4000
E Investor.relations@prairiesky.comYou can also read
