PrairieSky Royalty (TSE:PSK), a company that makes its money from oil & gas royalties across Canada, reported its Q1-2023 earnings results after market close today. PSK’s results were mixed, as revenues beat expectations, while earnings per share came in lower than expected.
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Revenues for Q1 2023 reached C$126.1 million, ahead of expectations of C$124 million but notably lower than last year’s figure of C$139.9 million. Additionally, earnings per diluted share came in at C$0.24 (expectations were C$0.27), below last year’s EPS of C$0.27.
Moreover, funds from operations — known as FFO, a cash-flow metric — for the quarter reached C$86.3 million or C$0.36 per share (18.2% lower year-over-year), affected primarily by lower WTI and AECO benchmark pricing.
However, not all metrics are deteriorating. Royalty production revenue grew 4% year-over-year, totaling $116.8 million, driven by C$83.8 million from oil royalty revenue, C$21.8 million from natural gas royalty revenue, and C$11.2 million from NGL royalty revenue. Other revenue amounted to C$9.3 million. Further, PrairieSky saw strong leasing activity and entered into 67 new leases with 57 counterparties in Q1 2023.
PSK anticipates more growth in production volumes throughout 2023 due to increased leasing and drilling activity, and positively, its net debt decreased by C$22.7 million to C$292.4 million quarter-over-quarter. Lastly, the company declared a dividend of C$0.24 per share, resulting in a 66% payout ratio on an FFO basis.
Is PSK Stock a Buy, According to Analysts?
PrairieSky stock has a Hold consensus rating from analysts based on one Buy and three Hold ratings assigned in the past three months. At $25.19, the average PSK stock price target implies 15.7% upside potential.
