CALGARY - PrairieSky Royalty Ltd. (TSX: PSK) reported its fourth quarter and year-end operating and financial results for the period ended December 31, 2023, along with a 4% increase in its annual dividend to $1.00 per common share. The company, which owns a vast portfolio of royalty lands across Canada, saw a steady performance in its oil royalty production, achieving record volumes.
In the fourth quarter, PrairieSky's royalty production volumes reached an average of 25,608 barrels of oil equivalent per day (BOE/d), which included a record oil royalty production of 12,844 barrels per day. The company's quarterly revenues were $136.6 million, with royalty production revenues of $122.0 million and other revenues of $14.6 million. Notably, the quarter saw the highest bonus consideration earned since 2017, amounting to $11.2 million.
Funds from operations for the quarter stood at $111.1 million, or $0.46 per share, both basic and diluted. This performance was primarily driven by the company's organic oil royalty production growth and significant bonus consideration from active leasing. The company declared a fourth-quarter dividend of $57.3 million, or $0.24 per share, reflecting a 52% payout ratio.
For the full year, PrairieSky reported average royalty production volumes of 24,857 BOE/d, consistent with 2022. Annual revenues totaled $513.2 million, with royalty production revenue of $474.6 million, marking a 23% decrease from 2022, primarily due to lower benchmark commodity prices. The annual funds from operations amounted to $382.5 million, or $1.60 per share, supported by organic production growth in oil royalty volumes and $26.0 million in bonus consideration.
PrairieSky's net debt decreased by 30% to $222.1 million at the end of 2023, down from $315.1 million the previous year. The reduction in debt was attributed to the application of excess funds from operations after dividend payments and royalty acquisitions towards retiring bank debt.
The company's commitment to sustainability was also highlighted, with PrairieSky maintaining a "Negligible Risk" ESG Risk Rating and receiving recognition as a top performer in several global sustainability assessments.
In terms of leadership, PrairieSky announced the appointment of Michael Murphy as Vice-President, Geosciences and Capital Markets, bringing 19 years of industry and equity research experience to the team.
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