MARCH 2020 CORPORATE PRESENTATION
PrairieSky Royalty Snapshot $ 1.9 TSX Balance Sheet Billion PSK Strength Enterprise Value (1) 233.1 $ 50 Quarterly Dividend $ 0.06 Million Million Per Common Share Shares Outstanding (1) NCIB Commencing Q2 2020 7.8 7.8 4 Million Million NW NE Provinces SW SE Acres of Fee Lands Acres of GORR Lands (1) Based on 233.1 million common shares outstanding as at December 31, 2019 and closing share price on the TSX of $8.02 on March 13, 2020. Financial data in this corporate presentation is as at December 31, 2019 unless stated otherwise. 1
Balance Sheet Strength PrairieSky has no long-term debt, PrairieSky has a unique business no operating costs, no mandatory capital expenditures and no model and balance sheet, ideally environmental liabilities. suited to paying dividends. Year Ended December 31, 2019 2018 $millions ASSETS Current Assets 37.9 20.6 Royalty Assets 682.5 756.5 Exploration and evaluation assets 1,368.1 1,408.8 Goodwill 631.0 631.0 Total Assets 2,719.5 2,816.9 LIABILITIES AND SHAREHOLDER’S LAIABILITES Current Liabilities 41.0 31.0 Lease obligation 2.2 - Share-based compensation 1.0 1.1 Deferred income taxes 189.6 211.2 Total Liabilities 233.8 243.3 Shareholders Equity 2,485.7 2,573.6 Total Liabilities & Shareholders’ Equity 2,719.5 2,816.9 2
Dominant Land Position 3
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) SW SE Operating margin (2) of 98% Lands located throughout the heart of the oil and gas producing basins in Alberta, British Operating netback (2) of 88% Columbia, Saskatchewan and Manitoba Strong balance sheet License to ~13,000 km 2 of 3D seismic 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 Over 66% 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 year ended December 31, 2019. Operating margin represents royalty revenue less production & mineral tax expense. Operating netback represents operating margin less G&A expense. (3) For the year ended December 31, 2019. 4
A Unique and Diversified Approach to Investing in Oil & Gas Third Party Operators • 325 lessees paying royalties on PrairieSky Royalty lands • Operators on PrairieSky Royalty Fee Lands include Majors, Independents, Mid Cap and Small Cap producers Geology Commodity • 88% 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 52% of production (1) (1) For the year ended December 31, 2019. 5
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 6
Higher Margin, Lower Risk Margin Summary ($/BOE) Illustrative Working Interest Operator PrairieSky Royalty Revenue (52% Liquids Production) (1) $30.84/boe PrairieSky Royalty offers higher margins Production & Mineral Tax than conventional ($0.58/BOE) Royalties ($4.50/BOE) working interest production Operating / No royalties Transportation Costs payable to the Incurred by ($10.25/BOE) Operating Margin (3) Crown on Fee Working Lands $30.26/BOE Interest Providing the same Operators revenue per boe, a royalty barrel realizes significantly 98% higher margins than F&D (2) of Revenue working interest models ($10.00/boe) No abandonment Operating Margin or environmental liabilities (Including F&D) $6.09/boe 20% of Revenue No capital spending requirements (1) Excludes the impact of Other Revenues (lease rentals, bonus consideration, etc.) for the year ended December 31, 2019. (2) Excluding acquisitions and net change in future development capital. (3) Operating margin is calculated as average realized price ($/boe), less Production & Mineral Tax expense ($/boe), divided by the average realized price ($/boe). Amounts per boe for PrairieSky Royalty are for the year ended December 31, 2019. 7
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 (1) Held by Production (“HBP”) 8
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). 9
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 10
Long-term Optionality PrairieSky’s basket of call options includes: SAGD Lindbergh and Onion Lake projects have multiple phase expansion potential New leasing to integrated and independent SAGD specialists Emerging Clearwater and Duvernay oil plays Large scale CO2 sequestration and EOR projects New pool discoveries and expansion of productive trends NW NE SW SE Technological advancements = Long-term liquids growth at no additional cost to PrairieSky. 11
PrairieSky Royalty Per Share Metrics Acres per Million Shares (1) Production per Million Shares 140 80,000 120 60,000 100 80 40,000 60 40 20,000 20 - - IPO Today 2013 Q1/14 Q2/14 Q3/14 Q4/14 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/15 Q2/15 Q3/15 (1) Acres per share based on number of common shares outstanding at December 31, 2019. 12
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 $ 55 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 Royalty Production Revenue from Lessor Interests on Fee Lands Royalty Production Revenue from GORR Interests Bonus Consideration Lease Rental Income Compliance revenue is recorded with Royalty Production Revenue from Fee Lands and GORR Interests in the financial statements. 13
Returns to Shareholders From IPO to December 31, 2019, 1.8 WTI down ~ 37 % PrairieSky has returned $ 1.0 AECO down 1.6 billion in dividends and $ 133 ~62 % million in share buybacks to 1.4 shareholders 1.2 $ billions 1.0 0.8 High conversion of revenues to free cash 0.6 flow for distribution to 0.4 shareholders through all commodity price cycles 0.2 - IPO (May 29, 2014) - December 31, 2019 Total Revenue Funds from Operations Returned to Shareholders Declared a dividend of $0.065 per share for March 2020, beginning The dividend is below the current, trailing and forward Free Cash Flow yield. Q2 2020, PrairieSky will pay a quarterly dividend of $0.06 per share. 14
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