PrairieSky Royalty Ltd.

Ladies and gentlemen, thank you for standing by. Prairie Sky Rural LTD announces their third quarter 2023 financial results. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Andrew Phillips, President and Chief Executive Officer. Please go ahead.

Thank you, Michelle, and good morning, everyone, and thank you for dialing into the Prairie Sky Q3 2023 earnings call. On the call from PSK are Pam Cazell, CFO, Dan Bertram, CTO, and myself, Andrew Phillips. There's certain forward-looking information in my commentary today, so I would ask investors to review the forward-looking statements qualifier in our press release in MDA. Prairie Sky achieved its highest total production in the third quarter since our IPO at 25,469 BOE per day. This included 12,084 barrels per day of crude oil royalties, up 6% from the same quarter in 2022. Natural gas volumes were positively impacted by the return of shut-in volumes from wildfires and a significant well pad at Wembley placed on production. 246 spuds occurred on Prairie Sky lands over Q3 at an average royalty rate of 7.1%. 45 of these were clearwater oil wells, and 92 of the total were Viking oil wells. 35 Mandel stack, multilateral, and fishbone wells were drilled, which is on pace with our record 37 wells in Q3 2022. Leasing activity remains very strong, as it has for the last two years, and we entered into 46 new leasing arrangements with 40 different counterparties. Leasing was spread across the entire basin with a focus on oil. Our team executed on $15.6 million in acquisitions throughout the quarter, focused on the Manville stack play in the heavy oil fairway. These lands will see immediate activity and provide strong returns, allowing us to compound at a faster rate. Given our fee mineral title, seismic, and relationships with top-tier developers, we expect to remain active, adding to this opportunity set. These lands will provide decades of inventory to an already industry-leading opportunity set. Prairie Sky will review its capital allocation priorities in February and make its decision on the dividend at that time. Using strip pricing, we'll be in a net cash position in 18 months. After achieving 22% oil growth in 2022 and 6% year-to-date, we are confident that our strong organic growth rates will continue in this pricing environment. The transformation of the primary heavy oil region in Western Canada with new drilling techniques will benefit our shareholders for years to come. I will now turn the call over to Pam to walk through the financials.

Thank you, Andrew. Good morning, everyone. There are certain forward-looking information in the notes today, so I would remind investors to review the forward-looking statements qualifier in our press release and MD&A for Q3 2023. As Andrew mentioned, this was a record Q3 for Prairie Sky royalty volumes, which totaled 25,469 BOE per day. Oil royalty production volumes averaged 12,084 barrels per day, a decrease from Q2 2023, which was expected as fewer new wells come on stream following spring breakups. Oil royalty production increased 6% over Q3 2022 with strong production growth in the Clearwater and Mandelstack. We anticipate higher oil royalty volumes into Q4 in 2024 due to the level of activity on our lands. Prairie Sky generated $102.8 million of oil royalty revenue in the quarter at a realized price of $92.53 per barrel. Natural gas royalty volumes averaged $64.1 million a day and NGL royalty volumes averaged 2,702 barrels per day, as shut-in volumes related to Q2 wildfires and operational downtime came back on production. The overpayment recognized in Q2 was not repeated in the quarter, and new Montney wells came on stream. Prairie Sky generated $11.6 million of natural gas revenue and $13 million of NGL revenue in the quarter, bringing total royalty production revenue to $127.4 million. Other revenue totaled 5.7 million and included 3.6 million of bonus consideration for entering into 46 new leases with 40 different counterparties. In addition, 1 million in lease rentals and 1.1 million of other income. Cash administrative expenses totaled $17.9 million in the quarter and included a $13.3 million one-time payment. This was a cash outflow for the period but had a lesser impact on net income as $10.5 million of the payment had been accrued over the past four years until payout, primarily as stock-based compensation. Prairie Sky recorded a current tax expense of $14.9 million in the quarter. Entering the year, Prairie Sky had $1.55 billion of tax pools to offset future taxable income. So in 2023, the first $155 million of cash flow is tax-free, with remainder taxed at a statutory tax rate of approximately 23.5%. First Guy generated quarterly funds from operations of $93.8 million, or $0.39 per common share, and declared dividends of $57.3 million, or $0.24 per share, with the resulting payout ratio of 61%. Excess funds from operations above the dividend and our $15.6 million in acquisitions were used to retire bank debt. Net debt at September 30, 2023, was $253.7 million, a decrease of 19% since December 31, 2022. Prairie Sky has generated approximately $2.5 billion in funds from operations and returned $1.8 billion to shareholders through dividends and buybacks since our IPO. We will now turn it over to the moderator to proceed with the Q&A.