First Quarter Highlights
Total royalty production grew 4% over Q1 2025(1) averaging 26,293 BOE per day in the quarter, and included a 2% increase in oil royalty production which averaged 13,733 barrels per day and a 6% increase in NGL royalty production which averaged 2,677 barrels per day.
Earned royalty production revenue of $118.5 million and other revenue of $15.3 million to bring total revenues to $133.8 million for Q1 2026(1). Other revenue included bonus consideration of $12.3 million earned on entering into 48 new leasing arrangements.
Generated funds from operations totaling $94.9 million ($0.41 per share), an increase of 11% from Q1 2025 driven by increased royalty production volumes and strong bonus consideration.
Declared a first quarter dividend of $61.6 million ($0.265 per share), representing a dividend payout ratio of 65%.
Purchased and cancelled 269,077 common shares under the Company's normal course issuer bid ("NCIB") for $8.3 million, including commissions and before tax.
Completed acquisitions for $4.2 million, primarily of non-producing gross overriding royalty interests targeting heavy oil in the Mannville play and light oil in the Basal Quartz play.
Net debt totaled $257.7 million at March 31, 2026, a decrease of $18.8 million from December 31, 2025.
Dividend Declaration
The Board of Directors has approved the Company's second quarter 2026 dividend of $0.265 per share which is expected to be paid on July 15, 2026 to shareholders of record on June 30, 2026.
President's Message
PrairieSky generated funds from operations of $94.9 million ($0.41 per share) in Q1 2026, an 11% increase over Q1 2025. Funds from operations were driven by a 4% increase in royalty production volumes and an active quarter of leasing which earned $12.3 million. PrairieSky entered into 48 new leasing arrangements with 37 separate counterparties as oil and gas companies continue to consolidate and expand their drilling inventories.
Total royalty production averaged 26,293 BOE per day in the quarter, an increase of over 950 BOE per day as compared to Q1 2025, and generated royalty production revenue of $118.5 million. PrairieSky's oil royalty portfolio delivered a 2% increase over Q1 2025 averaging 13,733 barrels per day with growth focused in the Clearwater and Mannville Stack heavy oil plays and the Duvernay light oil play. The Clearwater continues to reach new highs for the Company, averaging over 2,850 barrels per day in Q1 2026 and representing a compounded annual growth rate of 20% since 2022. The Duvernay light oil play delivered average royalty production of approximately 1,500 BOE per day in Q1 2026 (79% oil and liquids), an increase of 95% over Q1 2025. A record 26 Duvernay wells were spud in the quarter, including 20 in the prolific West Shale Basin(2). This level of drilling activity is expected to drive meaningful oil production growth in the second half of 2026. Natural gas and NGL royalty volumes both increased 6% with growth primarily due to Montney natural gas drilling in the second half of 2025.
Third-party operators spud 201 wells on PrairieSky's royalty acreage during Q1 2026, in line with the 200 wells spud in Q1 2025. The average royalty rate for wells spud in the quarter was 6.0% (Q1 2025 - 6.9%). Multilateral drilling on our lands continues to be strong with an estimated 66 spuds in the quarter, up from 41 in Q1 2025, and representing 33% of new wells on our royalty properties.
PrairieSky declared a dividend of $0.265 per share or $61.6 million with a resulting payout ratio of 65% during Q1 2026. Funds from operations after payment of the dividend were allocated to the repurchase and cancellation of 269,077 common shares for $8.3 million, acquisitions totaling $4.2 million of gross overriding royalty interests, primarily targeting light oil in the Basal Quartz and heavy oil in the Mannville, and the repayment of $6.0 million of bank debt. At March 31, 2026, PrairieSky maintained a strong balance sheet with net debt of $257.7 million.
It was another strong quarter as third-party operators continued to be very active across PrairieSky's land base bringing wells on production and leasing our fee lands. At current benchmark commodity pricing, we anticipate the level of activity on our land base and the growth in oil and NGL royalty production to continue. I would like to thank our staff for their hard work throughout the quarter and our shareholders for their continued support.
Andrew Phillips, President & CEO
ACTIVITY ON PRAIRIESKY'S ROYALTY PROPERTIES
Third-party operators spud 201 wells on PrairieSky's royalty acreage at an average royalty rate of 6.0%, as compared to 200 wells spud in Q1 2025 at an average royalty rate of 6.9%. Spuds were comprised of 105 wells on gross overriding royalty acreage, 81 wells on fee lands and 15 unit wells. There were a total of 177 oil wells (88% of wells) spud during the quarter which included 43 Mannville light and heavy oil wells, 35 Viking wells, 31 Clearwater wells, 20 Duvernay wells, 13 Bakken wells and 35 additional oil wells across Alberta, Saskatchewan and Manitoba. There were 24 natural gas wells spud in the quarter, including 10 Mannville wells, 6 Duvernay wells, 5 Montney wells and 3 other natural gas wells.
NORMAL COURSE ISSUER BID
PrairieSky will apply to the Toronto Stock Exchange ("TSX") to extend its NCIB for an additional one-year period. The renewal of the NCIB has been approved by the Company's board of directors; however, the NCIB, including the limit of purchases thereunder, will be subject to acceptance by the TSX and, if accepted, will be made in accordance with the applicable rules and policies of the TSX and applicable securities laws. Under the NCIB, common shares may be repurchased in open market transactions on the TSX, and/or other Canadian exchanges or alternative trading systems. The price that PrairieSky will pay for common shares in open market transactions will be the market price at the time of purchase. Common shares acquired under the NCIB will be cancelled. If approved, the NCIB is expected to commence shortly after regulatory approvals are obtained and after expiry of the current program on June 3, 2026.
PrairieSky believes renewing the NCIB as part of its capital management strategy is in the best interests of the Company and represents an attractive opportunity to use cash resources to reduce PrairieSky's share count over time and thereby enhance the value of the common shares held by remaining shareholders. Decisions regarding increases to the NCIB will be based on market conditions, share price, best use of funds from operations, and other factors including debt repayment and opportunities to expand our portfolio of royalty assets.
NOTES AND REFERENCES
In this press release, the financial reporting periods are referred to as follows: "Q1 2026", "the quarter" or the "the first quarter" refers to the three months ended March 31, 2026; "Q1 2025" refers to the three months ended March 31, 2025.
For further details on the "West Shale Basin" and "Mannville Stack", we refer you to PrairieSky's most recent Corporate Presentation contained on PrairieSky's website at www.prairiesky.com.
Unless otherwise indicated or the context otherwise requires, terms used in this press release but not defined above are as defined in the Company's Annual Information Form for the year ended December 31, 2025 which is available on SEDAR+ at www.sedarplus.ca and PrairieSky's website at www.prairiesky.com.
FINANCIAL AND OPERATIONAL INFORMATION
The following table summarizes select operational and financial information of the Company for the periods noted. All dollar amounts are stated in Canadian dollars unless otherwise noted.
A full version of PrairieSky's management's discussion and analysis ("MD&A") and unaudited interim condensed consolidated financial statements and notes thereto for the three-months ended March 31, 2026 and 2025 are available on SEDAR+ at www.sedarplus.ca and PrairieSky's website at www.prairiesky.com.
Three months ended
March 31
March 31
($ millions, except $ per share or as otherwise noted)
2026
2025
FINANCIAL
Royalty production revenue
118.5
119.9
Other revenue
15.3
8.2
Revenues
133.8
128.1
Funds from operations
94.9
85.8
Per share - basic and diluted(1)
0.41
0.36
Net earnings
55.8
58.4
Per share - basic and diluted(1)
0.24
0.25
Dividends declared(2)
61.6
61.2
