SUMMER 2020 CORPORATE PRESENTATION
PrairieSky Royalty Snapshot $ 2.0 TSX Balance Sheet Billion PSK Strength Enterprise Value (1) 232.2 NCIB Quarterly Dividend $ 0.06 Million One of the only North American energy Per Common Share Shares Outstanding (1) companies continuing to repurchase shares Commencing Q2 2020 7.8 7.8 4 NW NE Million Million Provinces SE SW Acres of Fee Lands Acres of GORR Lands (1) Based on 232.2 million common shares outstanding as at June 30, 2020 and closing share price on the TSX of $8.58 on June 30, 2020. Financial data in this corporate presentation is as at June 30, 2020 unless stated otherwise. 1
Dominant Land Position 2
Introduction to PrairieSky Royalty Business model supports 7.8 million acres of Fee Lands (1) NW NE dividend payments 7.8 million acres of GORR Lands (1) SE SW Operating margin (2) of 99% Lands located throughout the heart of the oil and gas producing basins in Alberta, British Operating netback (2) of 86% Columbia, Saskatchewan and Manitoba License to ~13,000 km 2 of 3D seismic Strong balance sheet covering 3.3 million acres , and ~46,000 km of 2D seismic Experienced team aligned Low risk revenue base with shareholder interests No capital commitments, Management team with an unparalleled understanding of the value of royalties operating costs, abandonment liabilities or reclamation charges associated with Technical team with deep experience working interest ownership in Western Canada ~ 61% of royalty production revenue Focused staff, all of whom have invested in PrairieSky shares received from Fee Lands (3) Directors and officers ownership of 2.5 million shares (1) Fee Lands refer to lands with Petroleum and/or Natural Gas rights. GORR Lands include GRT and Crown Interest Lands. (2) For the six months ended June 30, 2020. Operating margin represents royalty revenue less production & mineral tax expense. Operating netback represents operating margin less G&A expense. (3) For the six months ended June 30, 2020. 3
A Unique and Diversified Approach to Investing in Oil & Gas Third Party Operators • 320 lessees paying royalties on PrairieSky Royalty lands • Operators on PrairieSky Royalty Fee Lands include Majors, Independents, Mid Cap and Small Cap producers Geology Commodity • • 77% of product revenue derived Production from over 30 from liquids volumes (1) formations from high risk, deep targets to low risk shallow oil • Liquids volumes make up and natural gas approximately 49% of production (1) (1) For the six months ended June 30, 2020. 4
Royalty Advantage Ownership in PrairieSky provides a long duration cash flow stream and the optionality associated with perpetual land title ownership. Exposure to: No exposure to: High margin cash flow streams Capital costs New discovery/exploration optionality Environmental liabilities Commodity price optionality Operations Secondary and tertiary recoveries Operating costs Shale opportunities Technological advancements Ownership in 10 million leasable, undeveloped acres 5
Higher Margin, Lower Risk Margin Summary ($/BOE) Illustrative Working Interest Operator PrairieSky Royalty Revenue (49% Liquids Production) (1) $19.98/boe PrairieSky Royalty offers higher margins Production & Mineral Tax than conventional ($0.27/BOE) Royalties ($2.80/BOE) working interest production Operating / No royalties Transportation Costs payable to the Incurred by ($10.25/BOE) Operating Margin (3) Crown on Fee Working $ 19.71/BOE Lands Interest Providing the same Operators revenue per boe, a royalty 99% barrel realizes significantly of Revenue higher margins than F&D (2) working interest models ($10.00/BOE) No abandonment Operating Margin or environmental liabilities (Excluding F&D ) $6.93/BOE 35% of Revenue before F&D No capital spending requirements (1) Excludes the impact of Other Revenues (lease rentals, bonus consideration, etc.) for the six months ended June 30, 2020. (2) Excluding acquisitions and net change in future development capital. (3) Operating margin is calculated as average realized price ($/boe), less Production & Mineral Tax expense ($/boe), divided by the average realized price ($/boe). Amounts per boe for PrairieSky Royalty are for the six months ended June 30, 2020. 6
Recycling the Land Base The perpetual nature of Fee Lands allows PrairieSky Royalty to continually recycle lands and grow its revenue base. PrairieSky leases At the end of the primary lease lands by zone – same term, any lands/rights not held aerial acreage can be by production revert back to leased separately for PrairieSky Royalty multiple zones License to ~13,000 km 2 of 3D PrairieSky Royalty can re-lease to third parties who plan to more seismic, covering over 3.3 million actively exploit, explore and/or acres , and ~46,000 km of 2D seismic develop those opportunities PrairieSky Royalty sets lease New drilling and production terms to ensure the company technologies can be utilized to remains competitive with adjacent pursue previously underexploited Crown or freehold lands zones Held by Production (“HBP”) (1) 7
Production History on our Fee Lands Cumulative production of 4.4 billion BOE Historical Gross Production on PSK Fee Lands 300,000 250,000 200,000 150,000 100,000 50,000 - CD Avg. Oil (bbl/d) CD Avg. Gas (Boe/d) Source: Accumap Additional royalty production is generated on GORR Lands (not included above). 8
Reserves Replacement Funds from operations Third-party capital on PrairieSky returned to shareholders as lands approximately replaces dividends and share production annually. repurchases or used to purchase additional royalty In 2019, replaced 119% of oil interests. royalty production volumes and 151% of NGL royalty production volumes. Proved + Probable Annual Funds from Reserves Production Operations (MBOE) (MBOE) (millions) 2015 46,653 6,199 $177.8 2016 47,423 8,531 $200.2 2017 49,234 9,221 $290.2 2018 47,482 8,526 $229.7 2019 45,835 7,941 $220.4 9
Long-term Optionality PrairieSky’s basket of call options includes: SAGD Lindbergh and Onion Lake projects have multiple phase expansion potential New leasing of Fee Lands to integrated and independent SAGD specialists Emerging Clearwater and Duvernay oil plays; stacked Montney and Spirit River liquids rich gas plays Large scale CO 2 sequestration and EOR projects New pool discoveries and expansion of productive trends NW NE SE SW Technological advancements = Long-term liquids growth at no additional cost to PrairieSky. 10
PrairieSky Royalty Per Share Metrics Production per Million Shares Acres per Million Shares (1) 140 80,000 120 60,000 100 80 40,000 60 40 20,000 20 - - IPO Today (1) Acres per share based on number of common shares outstanding at June 30, 2020. 11
Revenues Generated from Royalty Properties PrairieSky generates revenues through Royalty Compliance analysis focuses on leasing its Fee Lands and its GORR capturing mispaid royalties through Interests, which includes Royalty forensic accounting. Production Revenue, Bonus Over $ 60 million in compliance Consideration and Lease Rental Income. recoveries collected since IPO. Total Revenues $400 $350 $300 Revenues ($ millions) $250 $200 $150 $100 $50 $- 2014 2015 2016 2017 2018 2019 2020 Royalty Production Revenue from Lessor Interests on Fee Lands Royalty Production Revenue from GORR Interests Bonus Consideration Lease Rental Income Other Income Compliance revenue is recorded with Royalty Production Revenue from Fee Lands and GORR Interests in the financial statements. 12
Returns to Shareholders 1.8 WTI down From IPO to June 30, 2020, ~ 59 % 1.6 PrairieSky has returned $ 1.1 AECO down ~53 % billion in dividends and $ 142 1.4 million in share buybacks to shareholders. 1.2 1.0 $ billions High conversion of 0.8 revenues to free cash flow for distribution to 0.6 shareholders through all commodity price cycles. 0.4 0.2 - IPO (May 29, 2014) - June 30, 2020 Total Revenue Funds from Operations Returned to Shareholders PrairieSky pays a quarterly The dividend is below the current, trailing and dividend of $0.06 per share. forward Free Cash Flow yield. 13
Capital-Free Returns and Diversification PrairieSky Royalty E&Ps Midstream x Requires significant capital x Requires significant capital ✓ No capital investment required Capital-Free Returns or acquisitions for growth for growth ✓ Future embedded royalties x Responsibility for x Requires significant and cash flow through perpetual land ownership environmental liabilities capital for maintenance x Responsibility for ✓ No environmental liabilities ✓ Technology increases recovery typically associated with factors and opens up new environmental liabilities working interests resource opportunities ✓ Technology increases recovery factors and opens up new resource opportunities ✓ 15.6 million acres, ✓ / x Generally concentrated in ✓ Contractual commitments Stable/Diversified Asset certain plays (operator/asset) (certainty of fees, volumes) approximately 38,000 producing wells, approximately x Requires maintenance and 320 payors facilities capital x Moderate to high leverage x Moderate to high leverage ✓ Minor working capital Capital Structure deficiency. No long-term debt. 14
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