PrairieSky Royalty Q3 2026 Earnings Results & Report

PrairieSky Royalty EPS Results

• Actual EPS: C$0.36
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A
• EPS Beat Rate: 4 of last 8 quarters

PrairieSky Royalty Revenue Results

• Actual Revenue: C$165 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

PrairieSky is a royalty-focused company, generating royalty revenues as oil and natural gas are produced from its properties. PrairieSky has a diverse portfolio of properties that have a long history of generating free cash flow and that represent the largest and most concentrated independently-owned fee simple mineral title position in Canada.

PrairieSky Royalty Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Royalty production increased 5% year over year to 26,936 BOE per day in Q3, driven by 4% oil growth and 20% NGL growth. Revenue rose to CAD 165 million, while funds from operations increased 42% to CAD 127.9 million.
• Positive Sentiment: Drilling and leasing activity remained strong, with 230 wells spudded at a higher 6.5% average royalty rate and CAD 7.9 million in lease bonuses. Duvernay activity reached a quarterly record of 30 wells, while Mannville Stack and Clearwater production continued to grow.
• Positive Sentiment: PrairieSky reduced net debt by CAD 63.6 million during the quarter to CAD 123 million, bringing year-to-date debt reduction to 56%. The company also approved a fourth-quarter dividend of CAD 0.265 per share.
• Positive Sentiment: Management expects upcoming Duvernay completions to support light-oil growth through late 2026 and early 2027, while the Lindbergh expansion could roughly double thermal royalty oil production by 2031. Longer-term Western Saskatchewan leasing could add an estimated 4,000–5,000 royalty barrels per day from 2030 to 2040.
• Neutral Sentiment: Once debt-free, PrairieSky expects to balance dividend increases, share repurchases, and acquisitions based on relative returns. Management emphasized that acquisitions may be pursued countercyclically, but noted that attractive deals can be difficult to find compared with the company’s existing organic growth profile.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the PrairieSky Royalty third quarter 2026 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Andrew Phillips, President and CEO. Sir, please go ahead.

[Andrew Phillips, President and CEO at PrairieSky Royalty]

Thank you, Michelle. Good morning, everyone, and thank you for dialing into the PrairieSky Q3 2026 conference call. On the call from PSK are myself, Andrew Phillips, Pam Kazeil, CFO, Dan Bertram, CCO, and Mike Murphy, VP Capital Markets. Before we begin, there's certain forward-looking information and statements in our commentary today. I'd ask that listeners and investors review the forward-looking statements qualifier in our press release in MD&A, which can be found on our website. Organic growth continues in our business. Over Q3 2025, natural gas is up 2%, oil is up 4%, and NGLs are up 20% as high liquids gas replaces drier gas. Net debt decreased 34% over the prior quarter. Strong leasing activity continues as PSK entered into 39 lease arrangements with 41 oil companies. New leasing was pervasive across our entire land base and includes numerous modular SAGD leases to qualified operators.

[Andrew Phillips, President and CEO at PrairieSky Royalty]

CAD 7.9 million of lease issuance bonus was brought in over the quarter. 230 wells were spudded in Q3 at a 6.5% average royalty rate. This included 30 Duvernay wells in the quarter versus 46 in all of 2025. Our team continues to execute well and is focused on continued active leasing of our large mineral title position. With the capital cycle returning and a number of teams restarting, grassroots exploration in the basin has returned for the first time since 2013, 2014. We are uniquely positioned to capitalize on this trend with our mineral title land base. I will now turn the call over to Mike to further discuss activity on our lands.

[Mike Murphy, VP of Capital Markets at PrairieSky Royalty]

Thanks, Andrew. Drilling activity was strong in Q3, with new well spuds up 14% over 2025 at a higher average royalty rate of 6.5% compared to 5.1% last year. We had a record 30 Duvernay spuds in the quarter, bringing the total for the year to 81, including 65 in the prolific West Shale basin. As of the end of this quarter, only 22 of these West Shale wells were on production, so upcoming completions are expected to continue to support Duvernay light oil growth through Q4 and early 2027. Notably, we've seen a resurgence in other light oil plays in the basin, including short cycle time plays like the Viking, where our spud count is up 49% year-to-date. Moving to heavy oil, Mannville Stack multilateral drilling activity is up 57% through the first nine months of the year relative to the same period in 2025.

[Mike Murphy, VP of Capital Markets at PrairieSky Royalty]

This has translated into 26% year-over-year production growth in the Mannville Stack, which has averaged over 1,100 bpd year to date. The Clearwater has maintained its 20% growth rate and exceeded 3,200 bpd of oil royalty production in the quarter. Waterflood operations continue to expand in the Clearwater with an estimated 60% of our production in the play under waterflood support, supporting low declines and a highly sustainable production base. I will now turn it over to Pam to discuss the financials.

[Pam Kazeil, CFO at PrairieSky Royalty]

Thank you, Mike. Good morning, everyone. PrairieSky's total royalty production averaged 26,936 BOE per day in the quarter, an increase of 5% over Q3 2025. This growth was driven by the over 1,000 bpd increase in liquids royalty production, with oil royalty volumes increasing 4% to 14,739 bpd and NGLs royalty production increasing 20% to 2,647 bpd. The Clearwater, Mannville Stack, and Duvernay plays were the biggest contributors to these volume increases.

[Pam Kazeil, CFO at PrairieSky Royalty]

Royalty production revenue totaled CAD 153.4 million in the quarter, compared to CAD 107.7 million in Q3 2025, with PrairieSky's realized oil price averaging just over CAD 100 per bbl during the quarter. Other revenue totaled CAD 11.6 million, including CAD 7.9 million of bonus consideration, bringing total revenues for the quarter to CAD 165 million. Strong quarterly revenue generated funds from operations of CAD 127.9 million, or CAD 0.55 per share, an increase of 42% over Q3 2025.

[Pam Kazeil, CFO at PrairieSky Royalty]

During the quarter, PrairieSky declared dividends of CAD 61.6 million, representing a payout ratio of 48%, and completed CAD 1 million of acquisitions targeting incremental Mannville heavy oil royalty interests. After dividends and acquisitions, excess funds from operations were directed towards debt repayment. Net debt decreased by CAD 63.6 million during the quarter to CAD 123 million at September 30th. Year to date, PrairieSky has reduced net debt by CAD 153.5 million or 56%. The board has approved a fourth quarter dividend of CAD 0.265 per share, payable on January 15th, 2027, to shareholders of record on December 31st, 2026. I will now turn the call over to the moderator to proceed with the Q&A.

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question will come from the line of Patrick O'Rourke with ATB Cormark Capital Markets. Your line is open. Please go ahead.

[Patrick O'Rourke, Analyst at ATB Cormark Capital Markets]

Hey, guys. Good morning, and thank you for taking my question. I guess, just first question, in terms of the outlook for production growth, I think it is pretty well understood ratable growth in the Clearwater, high impact Duvernay that is coming online here. In the medium and longer term, what does the outlook for the small scale SAGD? What is sort of the timing in and around those things? Just on a comment that you made on other light oil plays, maybe a little bit more color in terms of the trends that you are seeing there specifically.

[Andrew Phillips, President and CEO at PrairieSky Royalty]

Yeah, you bet. Thanks for the question, Patrick. Firstly, on the thermal volumes, the one thing that we have that is kind of in the queue right now is the Lindbergh expansion, with Strathcona, which by 2031 should get to 45,000 bbl-47,000 bbl. That should effectively double our net royalty oil production coming from thermal, from a current 1,200 bpd to just around 2,500 bpd of total royalty production. With all of the leasing we have done in Western Saskatchewan, we expect over the longer term, kind of starting in 2030 out to 2040, we should add another incremental 4,000-5,000 new royalty bbl from those plays as they are developed, using about 50% of them effectively being developed over time. We think the chance of success is higher for that because a lot of them have been substantially de-risked.

[Andrew Phillips, President and CEO at PrairieSky Royalty]

On the conventional side, we have been very actively leasing a lot of conventional plays, that had been quite quiet over the last five years and even some new technological advancements, multilateral drilling, et cetera, coming towards some of these plays and new waterflood opportunities on some of the older plays. I think you should start to potentially see that conventional portfolio flatten out to potentially grow sometime in the next three years, assuming oil price hangs in there.

[Patrick O'Rourke, Analyst at ATB Cormark Capital Markets]

Okay, thanks. Maybe just shifting gears in terms of, I think you guys have been fairly clear about the countercyclicality of your acquisition strategy. Debt came down in excess of CAD 60 million in the quarter. I think most of myself and my peers across the street would see you guys being debt-free in the first half of 2027. How do you think about allocation of capital, whether it be returns to shareholders or M&A, acquisitions in the context of the current market and releasing some of that cash you are going to build on the shareholders, either through acquisitions or direct returns, in 2027?

[Andrew Phillips, President and CEO at PrairieSky Royalty]

Yeah, when you are looking at 2027, we will review the dividend in February as a board. We are looking to show dividend increases every year. I think we definitely have the ability to do higher ones, but I think we will keep it very pragmatic and kind of smaller dividend increases because we see a lot of value in share repurchases over time, potentially acquisitions as well. Even in 2025, which was a pretty frothy market, we were able to do CAD 100 million of M&A with high teens returns. Whatever provides a better return, we are willing to execute on. I think it has been nice over the last five years, we have seen the share count come down 3%, paid CAD 1 billion in dividends, and our royalty oil production is roughly doubled. We are in a good position now.

[Andrew Phillips, President and CEO at PrairieSky Royalty]

We expect more organic growth over the next five years, and it is hard to find acquisitions that look as good as our current business with mid plus single-digit growth rates, a mid single-digit free cash flow yield. Then some of this higher return M&A taking it to almost a mid-teens returns on an unlevered basis. Again, we think we see a lot of value in the buyback, but we will try and do it countercyclically.

[Patrick O'Rourke, Analyst at ATB Cormark Capital Markets]

Okay, thanks, guys.

[Andrew Phillips, President and CEO at PrairieSky Royalty]

Appreciate the questions.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Aaron Bilkoski with TD Cowen. Your line is open. Please go ahead.

[Aaron Bilkoski, Analyst at TD Cowen]

Thanks. Morning, guys. My question's on the potential royalty concessions from the province. There's obviously an expectation that we're going to see some royalty concessions. It's a bit ambiguous whether that's just going to be on heavy oil or conventional's going to be included. To any extent that you can share, I'd be curious how you think this might impact PrairieSky.

[Andrew Phillips, President and CEO at PrairieSky Royalty]

Yeah. When you think about the royalty concessions, I know Saskatchewan's been very aggressive with the royalty concessions, and you did see capital flows into the province. I think for us, one of the bigger impacts would be if they loosen some of the regulations on water recycling for modular SAGD. We have a number of opportunities in the Cold Lake region that we think would be excellent SAGD opportunities with low SORs. Because they're smaller projects, 6,000 bbl-12,000 bbl projects, they would require some type of relaxation on water recycling regulations similar to what they have in Saskatchewan. So we think that would be the bigger incentive. I think overall, already what the federal government's put in, the tax incentives and depreciation incentives, that just puts more cash flow into the system, then there's more capital to deploy into the field, which ends up impacting us positively.

[Aaron Bilkoski, Analyst at TD Cowen]

That's helpful. Thank you.

[Andrew Phillips, President and CEO at PrairieSky Royalty]

Thanks for your question.

[Operator]

Thank you. I would now like to hand the conference back over to Andrew Phillips for his closing remarks.

[Andrew Phillips, President and CEO at PrairieSky Royalty]

Well, thank you very much for dialing into the PrairieSky Q3 2026 conference call. Please feel free to call Pam, Mike, or myself if you have any questions, and have a great rest of your day.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

Participants

Executives

• Andrew Phillips, President and CEO
• Mike Murphy, VP of Capital Markets
• Pam Kazeil, CFO

Analysts

• Patrick O'Rourke, Analyst at ATB Cormark Capital Markets
• Aaron Bilkoski, Analyst at TD Cowen