PrairieSky Royalty: Trading At About 9 Times Cash Flow Using $80 WTI And $3.75 Natgas

Vadzim Kushniarou/iStock via Getty Images Introduction

I like royalty companies in the oil and gas space. I have a substantial long position in Freehold Royalties ( OTCPK:FRHLF ) (oil and gas) and Topaz Energy ( OTCPK:TPZEF ) (natural gas). I missed out on PrairieSky Royalty ( OTCPK:PREKF ) but after carefully looking at the recent results and taking the newest acquisition into consideration, perhaps I should consider going long PrairieSky anyway. Data by YCharts PrairieSky’s most liquid listing is on the Toronto Stock Exchange where it’s trading with PSK as its ticker symbol . The average daily volume exceeds 600,000 shares which represents a monetary value of in excess of C$10M per day. As the company also reports in Canadian Dollars, I will use the CAD as base currency throughout this article, and I will refer to the Canadian listing. A very satisfying result in 2021

I will be rather brief about the 2021 results as the overview of last year’s results are meant as a starting point to back my expectations for 2022.

In 2021, PrairieSky’s attributable production increased to just over 19,800 barrels of oil-equivalent per day with a strong performance in the final quarter of the year wherein the attributable production rate exceeded 20,300 boe/day. Looking at the full-year results, the breakdown consists of just over 7,500 barrels of crude oil per day, just over 2,400 boe/day in NGLs with the remainder of the oil-equivalent production (approximately 50%) consisting of natural gas. PrairieSky Investor Relations As this is a royalty company, the capital expenditures are pretty close to zero: the business model tends to have a high up-front cost (the acquisition of the land package) but as the development is carried out by the operator, PrairieSky can just sit back, relax, and deposit the royalty […]

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