Opinions Swanzy Quarshie
PrairieSky RoyaltyPSK.TOWAITFeb 10, 2016
Swanzy QuarshieStock price when the opinion was issued
As of Jun 05, 2026. Market Open.
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Exceptionally well run. All-time high today. His struggle has always been what's the fair multiple on a royalty company? Trades at 19.5x PE, 18x for next year, and FCF yield is 5% (not compelling). Yield is 3%.
He owns some in his income fund. If you're really bullish on oil, royalty is not the way to go.
Eric NuttallStrong performer over past several years, so trades at fairly high multiple (for example, twice that of FRU earlier this year). Extraordinarily good exposure to the Clearwater, good job with its business model. He struggles with what a fair multiple is. About 10% upside from here, and that doesn't do it for him. Yield is 3.8%, not overly compelling.
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Premium contentOur PAST TOP PICK with PSK has triggered its stop at $23. To remain disciplined, we recommend covering the position at this time. This will result in a net investment gain of 27%, when combined with our previous recommendations.
FRU is such a low-cost producer, it hasn't benefited as much as marginal producers have in the uptick in oil/gas prices. So its margins haven't increased as much. FRU asset package is so good, he's happy to own it despite this year's price action. He likes both names.
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(Market Call Minute.) There is talk about a dividend cut, and thinks it is quite likely. They don’t want to carry any debt, and the payout ratio is over 100% right now. They can pay out almost all their cash flow because they don’t have to spend any money to drill. However, with Canadian Natural Resources (CNQ-T) selling their royalty assets to Prairiesky, you have to recognize that CNQ has a 19% ownership. They could cover off some of their debt to CNQ shareholders in the form of a dividend. Wait until that is over.