PrairieSky Royalty Announces First Interim Period Results and Declares July Dividend

PrairieSky Royalty Ltd. logo (CNW Group/PrairieSky Royalty Ltd.)

(All figures are in Canadian dollars)

CALGARY, July 21, 2014 /CNW/ - PrairieSky Royalty Ltd. ("PrairieSky") (TSX:PSK) is pleased to announce its interim period results for the 35 day period ended June 30, 2014. PrairieSky commenced active operations on May 27, 2014 following the acquisition of its royalty business from Encana Corporation ("Encana"), and completed its initial public offering on May 29, 2014.

Highlights
  • Funds from operations was $31.0 million, or $0.24 adjusted per share (basic)
  • Production averaged 15,664 boe/d (44% crude oil, 10% NGLs and 46% natural gas)
  • As at June 30, 2014 working capital was $57.4 million, including $27.7 million of cash and cash equivalents and nil bank debt
"The first several weeks of active operations have been very busy and productive and I would like to thank all of our employees and Directors for their contributions and hard work in ensuring a successful start for PrairieSky" said Andrew Phillips, President & Chief Executive Officer. "Going in to the third quarter of 2014, PrairieSky is well positioned to carry out its business plan to organically grow royalty revenue, actively manage our royalty assets to ensure compliance with lease terms and contractual provisions, and pursue strategic opportunities that are low risk to PrairieSky and accretive to shareholders" added Mr. Phillips.

JULY 2014 DIVIDEND

In addition, PrairieSky is pleased to announce that its Board of Directors has declared a dividend of CDN $0.1058 per common share to be paid on August 15, 2014 to shareholders of record on July 31, 2014.

This dividend is designated as an "eligible dividend" for Canadian income tax purposes.

MANAGEMENT'S DISCUSSION AND ANALYSIS AND FINANCIAL STATEMENTS

PrairieSky has filed its Management's Discussion and Analysis and Unaudited Interim Condensed Financial Statements and Notes thereto as at and for the 35-day period ended June 30, 2014 concurrently with this press release.  Additional information about PrairieSky, including PrairieSky's Management's Discussion and Analysis and Unaudited Interim Condensed Financial Statements and Notes thereto, is available on SEDAR at www.sedar.com and PrairieSky's website at www.prairiesky.com.

CONFERENCE CALL DETAILS

A conference call to discuss the June 30, 2014 interim period results will be held for the investment community on Tuesday July 22, 2014 beginning at 6:30 a.m. MT (8:30 a.m. ET). To participate in the conference call, approximately 10 minutes prior to the conference call, please dial (888) 390-0546 (toll-free in North America) or (416) 764-8688 (Toronto & International).

JUNE 30, 2014 INTERIM PERIOD RESULTS

($ thousands, unless otherwise noted)     For the period from
May 27, 2014 to June
30, 2014
Net Earnings and Comprehensive Income     $        23,907
  Per Share - basic(2)                   1.01
  Per Share - diluted(2)                   1.00
  Adjusted Per Share - basic(1)                   0.18
  Adjusted Per Share - diluted(1)                   0.18
          
Funds from Operations(1)                   31,038
  Per Share - basic(2)                   1.31
  Per Share - diluted(2)                   1.30
  Adjusted Per Share - basic(1)                   0.24
  Adjusted Per Share - diluted(1)                   0.24
          
Revenues                   37,222
         
Dividends(3)                   13,754
  Per Share                   0.1058
          
Production Volumes        
  Natural Gas (MMcf/d)                   42.9
  Crude Oil (bbls/d)                   6,931
  NGL (bbls/d)                   1,582
Total Crude Oil & NGL (bbls/d)                   8,513
Total (BOE/d)(4)                   15,664
         
Realized Pricing        
  Natural Gas ($/Mcf)     $        4.51
  Crude Oil ($/bbl)                   98.50
  NGL ($/bbl)                   63.55
Total Crude Oil and NGL($/bbl)                   92.00
Total ($/BOE)(4)     $       62.35
         
Natural Gas Price Benchmarks        
AECO ($/Mcf)     $        4.68
         
Oil Price Benchmarks        
West Texas Intermediate (WTI) (US$/bbl)                   102.98
Edmonton Light Sweet ($/bbl)                   104.53
(1)      A Non-GAAP measure, which is defined under the Non-GAAP Measures section in our MD&A.
(2)      Net Earnings and Comprehensive Income and Funds from Operations per common share are calculated using the weighted average number of PrairieSky common shares outstanding from January 1st to June 30, 2014 giving effect to stock options.
(3)      A dividend of $0.1058 per Common Share was declared on June 18, 2014. The dividend was paid on July 15, 2014 to shareholders of record as at June 30, 2014.
(4)      See "Conversions of Natural Gas to BOE".

Forward-looking Statements

This press release includes certain statements regarding PrairieSky's future plans and operations and contains forward-looking statements that we believe allow readers to better understand our business and prospects. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "strategy" and similar expressions are intended to identify forward-looking information or statements. Forward-looking statements contained in this press release include our expectations with respect to PrairieSky's business and growth strategy and the payment of future dividends.

With respect to forward-looking statements contained in this press release, we have made several assumptions including those described in detail in our MD&A for the period ended June 30, 2014. See "Availability on SEDAR" above. Readers and investors are cautioned that the assumptions used in the preparation of such forward looking information and statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Our actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements. We can give no assurance that any of the events anticipated will transpire or occur, or if any of them do, what benefits we will derive from them.

By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, lack of pipeline capacity, currency fluctuations, imprecision of reserve estimates, royalties, environmental risks, taxation, regulation, changes in tax or other legislation, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility, and our ability to access sufficient capital from internal and external sources. In addition, PrairieSky is subject to numerous risks and uncertainties in relation to Encana, which owns a majority of PrairieSky's common shares. These risks and uncertainties include risks relating to Encana's shareholdings, the provision of certain transitional services by Encana, the potential for conflicts of interest and disputes to arise with Encana, limited ability to recover indemnification from Encana under the PSA and certain other agreements, and future changes in the relationship with Encana.  The foregoing and other risks are described in more detail in PrairieSky's final prospectus dated May 22, 2014 under "Risk Factors" and in its MD&A for the period ended June 30, 2014 under the heading "Risk Management", each of which is available at www.sedar.com.

Further, any forward-looking statement is made only as of the date of this press release, and PrairieSky undertakes no obligation to update or revise any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by applicable securities laws. New factors emerge from time to time, and it is not possible for PrairieSky to predict all of these factors or to assess in advance the impact of each such factor on PrairieSky's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward looking statements.

The forward-looking information contained in this document is expressly qualified by this cautionary statement.

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. 

SOURCE PrairieSky Royalty Ltd.

Image with caption: "PrairieSky Royalty Ltd. logo (CNW Group/PrairieSky Royalty Ltd.)". Image available at: http://photos.newswire.ca/images/download/20140721_C8375_PHOTO_EN_42209.jpg

For further information:

PrairieSky Royalty Ltd.
Investor Relations
(587) 293-4000
www.prairiesky.com

PrairieSky Royalty Ltd.
Andrew Phillips
President & Chief Executive Officer
(587) 293-4000

PrairieSky Royalty Ltd.
Geoffrey Barlow
Vice-President, Finance & Chief Financial Officer
(587) 293-4000

PrairieSky Royalty Ltd.
Cameron Proctor
Vice-President, Legal & Corporate Services
(587) 293-4000