Mr. Andrew Phillips reports

PRAIRIESKY ANNOUNCES FIRST QUARTER 2024 RESULTS, RECORD OIL ROYALTY PRODUCTION

PrairieSky Royalty Ltd. has released its first quarter (Q1 2024) operating and financial results for the three-month period ended March 31, 2024.

First quarter highlights:

• Royalty production volumes averaged 26,027 BOE (barrels of oil equivalent) per day and included record oil royalty production of 13,142 barrels per day, an 8-per-cent increase over Q1 2023 and a 2-per-cent increase over Q4 2023.
• Quarterly revenues totalled $120.7-million, comprising royalty production revenues of $113.2-million and other revenues of $7.5-million, including bonus consideration of $4.2-million earned on entering into 50 new leasing arrangements primarily for Mannville medium and heavy oil and Duvernay light oil acreage.
• Quarterly funds from operations totalled $83.0-million (35 cents per share basic and diluted).
• Declared a quarterly dividend of 25 cents per share.
• Acquired gross overriding royalty interests primarily in lands prospective for Mannville heavy and light oil for $8.8-million.
• Net debt decreased to $208.3-million as at March 31, 2024, as excess funds from operations over the dividend and acquisitions were used to reduce net debt.

President's message

PrairieSky's positive oil royalty production momentum continued into Q1 2024 delivering a record 13,142 barrels per day. Oil royalty production increased 8 per cent above Q1 2023 and 2 per cent over Q4 2023 with growth primarily generated from the Mannville Stack and Clearwater heavy oil plays which have highly competitive full-cycle economics and have been the focus area of many well-capitalized private and public company operators on our royalty lands. We have positioned ourselves in the most economic conventional oil plays in Western Canada and are pleased with the level of oil royalty production growth we have seen on our lands, adding almost 2,000 barrels of oil per day since Q1 2022, the first quarter following the Heritage Royalty acquisition. Oil royalty production generated $92.3-million in royalty revenue in the quarter, 82 per cent of total royalty revenue. NGL royalty volumes added an incremental $10.2-million of royalty revenue and natural gas royalty volumes added $10.7-million as AECO benchmark pricing remained weak in the quarter. Royalty revenue totalled $113.2-million in the quarter generated from total average royalty production volumes of 26,027 BOE per day (60 per cent liquids). Other revenues added $7.5-million, including lease rentals, bonus consideration, water disposal fees and potash royalty revenues.

Leasing activity remained strong in Q1 2024. PrairieSky entered into 50 new leases with 42 different counterparties earning an aggregate of $4.2-million in bonus consideration. Leasing was primarily focused on Mannville medium and heavy oil targets with 40 wells spudded as well as the Duvernay where drilling activity more than doubled from Q1 2023 with 14 wells spudded. Activity was slower in the Viking and the Clearwater year over year with Clearwater activity focused on secondary recovery schemes. The company is seeing early stage success in waterflood and polymer floods on the company's Clearwater assets which it expects to lead to increased recoveries and lower declines on its royalty properties. Based on third party producer budgets and current commodity pricing, the company anticipates strong Clearwater activity throughout 2024. There were also 14 Montney and six Mannville liquids-rich natural gas wells spud in northwest Alberta and British Columbia in the quarter.

PrairieSky generated quarterly funds from operations of $83.0-million or 35 cents per share (basic and diluted). Funds from operations were in line with Q1 2023 as increased oil royalty production and a narrower heavy oil differential offset the negative impacts of lower natural gas benchmark pricing and a wider light oil differential on royalty revenues. Funds from operations were lower than Q4 2023 primarily as a result of weaker benchmark pricing for oil, lower bonus consideration following a strong Q4 2023 and the annual payment of employee and officer long-term incentive compensation. PrairieSky declared a dividend of 25 cents per share or $59.7-million in the quarter. Excess funds from operations were used to reduce net debt, with $8.8-million used to acquire gross overriding royalty interests that are complementary to PrairieSky's existing asset base and are primarily targeting Mannville heavy and light oil. PrairieSky exited Q1 2024 with net debt of $208.3-million, down $13.8-million from Dec. 31, 2023.

The company would like to thank its dedicated staff for their efforts and its shareholders for the continued support.

Andrew Phillips, president and chief executive officer

Activity on PrairieSky's royalty properties

Third party operators spudded 174 wells (84 per cent oil) on PrairieSky's royalty acreage in Q1 2024, down from 214 wells (87 per cent oil) in Q1 2023. Spuds included 83 wells on the company's fee lands, 83 wells on its GORR acreage and eight unit wells. There were 147 oil wells spudded which included 40 Mannville light and heavy oil wells, 40 Viking wells, 21 Mississippian wells, 12 Clearwater wells, 12 Bakken wells, eight Duvernay wells, eight Cardium wells and nine additional oil wells spudded in the Belly River, Dunvegan, Jurassic, Montney and Triassic formations. There were 26 natural gas wells spudded in Q1 2024, including 14 Montney gas wells, six Mannville gas wells and six Duvernay gas wells. There was also one helium well spud in the quarter. PrairieSky's average royalty rate for wells spudded in Q1 2024 was 6.0 per cent (Q1 2023 -- 8.2 per cent).

Financial and operational information

The attached 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 fiscal period ended March 31, 2024, is available on SEDAR+ and PrairieSky's website.

Normal course issuer bid

PrairieSky will apply to the Toronto Stock Exchange (TSX) to extend its normal course issuer bid (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 upon expiry of the current program on May 31, 2024.

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. The board currently intends to evaluate the NCIB, and the level of purchases thereunder, on an annual basis in conjunction with PrairieSky's annual financial results. The next regularly scheduled review will be in February, 2025.

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 options to expand the company's portfolio of royalty assets.

Conference call details

A conference call to discuss the results will be held for the investment community on Tuesday, April 23, 2024, beginning at 6:30 a.m. MT (8:30 a.m. ET).

About PrairieSky Royalty Ltd.

PrairieSky is a royalty-focused company, generating royalty revenues as petroleum and natural gas are produced from its properties. PrairieSky has a diverse portfolio of properties that have a long history of generating free cash flow and that represent the largest and most concentrated independently owned fee simple mineral title position in Canada. PrairieSky common shares trade on the Toronto Stock Exchange under the symbol PSK.

We seek Safe Harbor.