PrairieSky Royalty

PSK-T

Analysis and Opinions about PSK-T

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Opinion
Expert
PAST TOP PICK
PAST TOP PICK
April 22, 2020
(A Top Pick Apr 25/19, Down 53%) They sold out when they were stopped out last July. It is tough in the energy space right now. Investors have to avoid trying to be a bottom feeder and trade with tight stop loss levels.
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(A Top Pick Apr 25/19, Down 53%) They sold out when they were stopped out last July. It is tough in the energy space right now. Investors have to avoid trying to be a bottom feeder and trade with tight stop loss levels.
DON'T BUY
DON'T BUY
February 12, 2020
They reported results yesterday, which were pretty much in line with expectations. The corporate decline rate is 19%, which is manageable. He likes the management team. However, with a low beta to oil price recovery, he is looking elsewhere.
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PrairieSky Royalty (PSK-T)
February 12, 2020
They reported results yesterday, which were pretty much in line with expectations. The corporate decline rate is 19%, which is manageable. He likes the management team. However, with a low beta to oil price recovery, he is looking elsewhere.
COMMENT
COMMENT
July 22, 2019
They've been pressured by the price of oil, but PSK is a low-risk way of playing oil. PSK is spread out over thousands of royalties. This is good is you expect oil to remain flat, but not so good is oil takes off.
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They've been pressured by the price of oil, but PSK is a low-risk way of playing oil. PSK is spread out over thousands of royalties. This is good is you expect oil to remain flat, but not so good is oil takes off.
TOP PICK
TOP PICK
April 25, 2019
Great business. Around $20 or below is a great level. Well positioned going forward. When oil companies are flush with cash, money will go back into more production, and they'll benefit. Yield is 3.81%. (Analysts’ price target is $22.24)
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Great business. Around $20 or below is a great level. Well positioned going forward. When oil companies are flush with cash, money will go back into more production, and they'll benefit. Yield is 3.81%. (Analysts’ price target is $22.24)
TOP PICK
TOP PICK
July 5, 2018

This is a controversial name because it is a long term asset being valued on near term momentum and missed numbers last quarter. They don’t give projections on production numbers. They have no debt. It is a buy and hold kind of stock. (Analysts’ target: $32.07).

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This is a controversial name because it is a long term asset being valued on near term momentum and missed numbers last quarter. They don’t give projections on production numbers. They have no debt. It is a buy and hold kind of stock. (Analysts’ target: $32.07).

PAST TOP PICK
PAST TOP PICK
April 26, 2018

(A Top Pick Mar 20/17, Up 4%) His only energy stock. It is not a producer but is a royalty company. They missed on production guidance by 900 barrels and they lost 8-9% and it makes no sense to him. He likes it. It is a way to have oil exposure without capital risk. It is nice light oil. The balance sheet is impeccable.

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(A Top Pick Mar 20/17, Up 4%) His only energy stock. It is not a producer but is a royalty company. They missed on production guidance by 900 barrels and they lost 8-9% and it makes no sense to him. He likes it. It is a way to have oil exposure without capital risk. It is nice light oil. The balance sheet is impeccable.

BUY
BUY
February 1, 2018

Is the only Canadian oil stock he owns. [see CPG-Tcomment today.]

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PrairieSky Royalty (PSK-T)
February 1, 2018

Is the only Canadian oil stock he owns. [see CPG-Tcomment today.]

TOP PICK
TOP PICK
March 20, 2017

One of the oil patch casualties that has actually done okay. He likes royalty structures because you don’t have capital investment risks, and this one has no debt on the balance sheet. Oil price recovery gives them torque to the upside. During the horrific oil environment of 2015-2016, they proved their ability to generate good cash flow. Dividend yield of 2.7%. (Analysts’ price target is $34.75.)

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One of the oil patch casualties that has actually done okay. He likes royalty structures because you don’t have capital investment risks, and this one has no debt on the balance sheet. Oil price recovery gives them torque to the upside. During the horrific oil environment of 2015-2016, they proved their ability to generate good cash flow. Dividend yield of 2.7%. (Analysts’ price target is $34.75.)

SELL
SELL
October 7, 2016

He would Sell this in favour of more conventional producers. It’s an awesome company, but from a stock perspective, he is kind of challenged to be asked to pay 27X cash flow. Feels the stock is approaching fair value.

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He would Sell this in favour of more conventional producers. It’s an awesome company, but from a stock perspective, he is kind of challenged to be asked to pay 27X cash flow. Feels the stock is approaching fair value.

PAST TOP PICK
PAST TOP PICK
September 16, 2016

(A Top Pick Sept 2/15. Up 8.33%.) This is an easy one, because it is a royalty. There is no drilling involved. Essentially, all the cash flow can be paid out to shareholders. There is no debt involved in the story. However, the valuation is really stretched now.

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PrairieSky Royalty (PSK-T)
September 16, 2016

(A Top Pick Sept 2/15. Up 8.33%.) This is an easy one, because it is a royalty. There is no drilling involved. Essentially, all the cash flow can be paid out to shareholders. There is no debt involved in the story. However, the valuation is really stretched now.

COMMENT
COMMENT
September 7, 2016

A less volatile play than a regular producer, as they don’t have the same operating leverage. It is a royalty business, which means they don’t own trucks etc., but are still ultimately at the whim of commodity prices. A very long-term high-quality business where you look at the free cash flow you are getting today under certain scenarios. The key, over the long, long term, is the optionality. You benefit from things like improvements in technology. A great model. Good management.

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PrairieSky Royalty (PSK-T)
September 7, 2016

A less volatile play than a regular producer, as they don’t have the same operating leverage. It is a royalty business, which means they don’t own trucks etc., but are still ultimately at the whim of commodity prices. A very long-term high-quality business where you look at the free cash flow you are getting today under certain scenarios. The key, over the long, long term, is the optionality. You benefit from things like improvements in technology. A great model. Good management.

COMMENT
COMMENT
July 27, 2016

He loves this at $15. Because other people drill their land, you don’t quite know how the world is going to play out. The gas market has had a great jump in gas, and this looks a lot better. It is a great thing to own long-term, but he would just like to try and steal it if he can be patient. He came within $2 in the spring.

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He loves this at $15. Because other people drill their land, you don’t quite know how the world is going to play out. The gas market has had a great jump in gas, and this looks a lot better. It is a great thing to own long-term, but he would just like to try and steal it if he can be patient. He came within $2 in the spring.

COMMENT
COMMENT
July 5, 2016

A royalty company that gets its money at the top, as opposed to an operating company. Have a good land position, and their participation is high on the food chain. A great place to park funds.

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A royalty company that gets its money at the top, as opposed to an operating company. Have a good land position, and their participation is high on the food chain. A great place to park funds.

COMMENT
COMMENT
June 15, 2016

If you owned Canadian Natural Resources (CNQ-T), then you now own some of this stock’s shares. A royalty company and very, very expensive.

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If you owned Canadian Natural Resources (CNQ-T), then you now own some of this stock’s shares. A royalty company and very, very expensive.

SELL
SELL
May 27, 2016

(Market Call Minute.) He really likes the CEO, but the valuation is beyond nosebleed level.

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(Market Call Minute.) He really likes the CEO, but the valuation is beyond nosebleed level.

COMMENT
COMMENT
April 20, 2016

A very good business model. You collect a nice stream of cash, depending on how much people put into the ground in your zone. Keep in mind that there is torque to the model. When energy prices are higher, more people want to drill and you get better pricing. Today it is the exact opposite. Management is very competent and are return oriented. If looking for a high-quality way to play energy, this is the perfect type of business.

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A very good business model. You collect a nice stream of cash, depending on how much people put into the ground in your zone. Keep in mind that there is torque to the model. When energy prices are higher, more people want to drill and you get better pricing. Today it is the exact opposite. Management is very competent and are return oriented. If looking for a high-quality way to play energy, this is the perfect type of business.

PAST TOP PICK
PAST TOP PICK
March 17, 2016

(A Top Pick April 2/15. Down 16.23%.) Has been trimming his position. Valuation is rich, especially when comparing to a Freehold Royalty (FRU-T). Also, Canadian Natural Resources (CNQ-T) vended their freehold land and gross overriding royalties into this company for an almost 20% shareholder basis. They’ve given indications that they want to dividend half of those 44 million shares to CNQ shareholders, selling the other half on the market. That creates an overhang for shareholders of Prairie Sky. Still likes the company.

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(A Top Pick April 2/15. Down 16.23%.) Has been trimming his position. Valuation is rich, especially when comparing to a Freehold Royalty (FRU-T). Also, Canadian Natural Resources (CNQ-T) vended their freehold land and gross overriding royalties into this company for an almost 20% shareholder basis. They’ve given indications that they want to dividend half of those 44 million shares to CNQ shareholders, selling the other half on the market. That creates an overhang for shareholders of Prairie Sky. Still likes the company.

PAST TOP PICK
PAST TOP PICK
February 23, 2016

(A Top Pick Jan 20/15. Down 12.92%.) Down because of energy prices, but also companies are drilling less on their lands. Also, did a large asset swap with Canadian Natural Resources (CNQ-T) in exchange for shares, and because of financial concerns of CNQ, they may want to be selling some of those shares. The Short interest in this company is very high because of concerns that they are going to cut their dividend. That should really shock no one.

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PrairieSky Royalty (PSK-T)
February 23, 2016

(A Top Pick Jan 20/15. Down 12.92%.) Down because of energy prices, but also companies are drilling less on their lands. Also, did a large asset swap with Canadian Natural Resources (CNQ-T) in exchange for shares, and because of financial concerns of CNQ, they may want to be selling some of those shares. The Short interest in this company is very high because of concerns that they are going to cut their dividend. That should really shock no one.

BUY
BUY
February 22, 2016

A massive land holder in Western Canada who just made another massive acquisition. The dividend (6.3%) could be cut under current pressures, however. You have to be in the sector. A dividend cut is probably largely discounted in the stock price.

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PrairieSky Royalty (PSK-T)
February 22, 2016

A massive land holder in Western Canada who just made another massive acquisition. The dividend (6.3%) could be cut under current pressures, however. You have to be in the sector. A dividend cut is probably largely discounted in the stock price.

WAIT
WAIT
February 10, 2016

(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.

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PrairieSky Royalty (PSK-T)
February 10, 2016

(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.

WATCH
WATCH
January 6, 2016

Royalties are a great way to play commodities. You have no operating exposure and they have had a big correction here. If and when you turn positive on the energy complex, this would be a great buy. Well-managed and have a clean balance sheet. If we get oil and gas looking a little better in the spring, this will be a big beneficiary.

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Royalties are a great way to play commodities. You have no operating exposure and they have had a big correction here. If and when you turn positive on the energy complex, this would be a great buy. Well-managed and have a clean balance sheet. If we get oil and gas looking a little better in the spring, this will be a big beneficiary.

COMMENT
COMMENT
December 8, 2015

This is a royalty company. They have been buying assets from producers who are looking to raise capital. Thinks they are now over distributing, so there is potential of a dividend cut. He didn’t buy into it because he thought the valuation multiple was too high.

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PrairieSky Royalty (PSK-T)
December 8, 2015

This is a royalty company. They have been buying assets from producers who are looking to raise capital. Thinks they are now over distributing, so there is potential of a dividend cut. He didn’t buy into it because he thought the valuation multiple was too high.

TOP PICK
TOP PICK
November 11, 2015

It is very rare that you get a brand-new, almost another energy class, of shares to buy, and this is it. A royalty company does not pay drilling, operating or abandonment costs. Companies farm on royalty lands and the royalty owner gets a cheque off the top. Operating costs are less than $5 BOE, which is remarkable. This has a very, very long-term lifespan.

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PrairieSky Royalty (PSK-T)
November 11, 2015

It is very rare that you get a brand-new, almost another energy class, of shares to buy, and this is it. A royalty company does not pay drilling, operating or abandonment costs. Companies farm on royalty lands and the royalty owner gets a cheque off the top. Operating costs are less than $5 BOE, which is remarkable. This has a very, very long-term lifespan.

COMMENT
COMMENT
September 9, 2015

His model price is $14.93 a 42% downside. Thinks the stock moves lower. It has to go to $20.87.

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PrairieSky Royalty (PSK-T)
September 9, 2015

His model price is $14.93 a 42% downside. Thinks the stock moves lower. It has to go to $20.87.

TOP PICK
TOP PICK
September 2, 2015

Div 0.11 yield 4.54% It's great to have a portfolio because you can then diversify. They don't have as much risk as the companies that do it all. They won't be doing as much exploration right now, but with higher oil prices will do well. Lots of cash on their books, lots of assets. They will end up stronger.

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PrairieSky Royalty (PSK-T)
September 2, 2015

Div 0.11 yield 4.54% It's great to have a portfolio because you can then diversify. They don't have as much risk as the companies that do it all. They won't be doing as much exploration right now, but with higher oil prices will do well. Lots of cash on their books, lots of assets. They will end up stronger.

HOLD
HOLD
July 31, 2015

Hasn’t worked out too well for those who jumped into the new issue, but as a royalty firm, he thinks the payout is good. Have good properties. They are still hovering under Alberta’s black cloud. Until we actually see some stabilization, and perhaps a move into the high $50s/low $60s in oil, he is not willing to step into that market. If you are there, your income is probably reasonably safe.

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Hasn’t worked out too well for those who jumped into the new issue, but as a royalty firm, he thinks the payout is good. Have good properties. They are still hovering under Alberta’s black cloud. Until we actually see some stabilization, and perhaps a move into the high $50s/low $60s in oil, he is not willing to step into that market. If you are there, your income is probably reasonably safe.

COMMENT
COMMENT
July 28, 2015

A tricky company to assess, because there are all sorts of little things they can do. A royalty company, so they don’t really drill the wells. If the commodity situation is really bad and nobody drills wells and you are in a decline curve, your production goes down and there is nothing you can do about it. This company is still too expensive.

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A tricky company to assess, because there are all sorts of little things they can do. A royalty company, so they don’t really drill the wells. If the commodity situation is really bad and nobody drills wells and you are in a decline curve, your production goes down and there is nothing you can do about it. This company is still too expensive.

TOP PICK
TOP PICK
July 23, 2015

There are different kinds of royalty streams. Theirs come from surface to basement royalties that extend over a tremendous section of the country. It provides certainty for companies with a drilling plan. Their margins are excellent.

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There are different kinds of royalty streams. Theirs come from surface to basement royalties that extend over a tremendous section of the country. It provides certainty for companies with a drilling plan. Their margins are excellent.

COMMENT
COMMENT
July 14, 2015

The chart is kind of a “go nowhere” pattern. These kinds of patterns don’t really interest him unless they break out one way or another.

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The chart is kind of a “go nowhere” pattern. These kinds of patterns don’t really interest him unless they break out one way or another.

HOLD
HOLD
July 13, 2015

Sell PrairieSky (PSK-T) and move to White Cap (WCP-T)? It depends on what your cost is in this company. If you have a good cost base and you have good money, he doesn’t think he would Sell to buy White Cap, although he thinks it is the best run of all the dividend companies out there.

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Sell PrairieSky (PSK-T) and move to White Cap (WCP-T)? It depends on what your cost is in this company. If you have a good cost base and you have good money, he doesn’t think he would Sell to buy White Cap, although he thinks it is the best run of all the dividend companies out there.

PAST TOP PICK
PAST TOP PICK
July 8, 2015

(Top Pick, August 7, 2014, LONG Freehold Royalties down 37.94%, SHORT PrairieSky Royalty up 22.52%) Pairs trade, likes both business models. Felt that when PrairieSky came out last year it was overhyped and overvalued. PrairieSky was twice the evaluation. Prairiesky's yield was 3%, and Freehold's yield was 6%. When oil prices went down, they both went down. They exited the position in January.

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(Top Pick, August 7, 2014, LONG Freehold Royalties down 37.94%, SHORT PrairieSky Royalty up 22.52%) Pairs trade, likes both business models. Felt that when PrairieSky came out last year it was overhyped and overvalued. PrairieSky was twice the evaluation. Prairiesky's yield was 3%, and Freehold's yield was 6%. When oil prices went down, they both went down. They exited the position in January.

COMMENT
COMMENT
June 12, 2015

This has done well. Has obviously had some challenges with oil prices. Their timing was unfortunate. Doesn’t have to do any drilling or rely on 3rd parties. They have cash on the books. Recent pullback has given her an opportunity to add to her holdings. Dividend yield of 4.1%.

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This has done well. Has obviously had some challenges with oil prices. Their timing was unfortunate. Doesn’t have to do any drilling or rely on 3rd parties. They have cash on the books. Recent pullback has given her an opportunity to add to her holdings. Dividend yield of 4.1%.

TOP PICK
TOP PICK
April 2, 2015

The secondary issue where Encana (ECA-T) sold the rest of their stake was done a $36.50, so this is an opportunity to pick the company up at a discount. He likes some of the attributes of this company. Dividend yield of 4.13% is very safe and sustainable. The company has no debt and a positive working capital. Have an undrawn $100 million credit facility. Likes the business model which is based around the fee simple lands, or the mineral rights that Encana used to own. They have 5.3 million acres of mineral rights plus gross overriding royalties on 3.6 million acres. Trades at a very high valuation multiple at about 26X enterprise value to adjusted cash flow, but it has a cost of capital to go to do additional acquisitions of these types of royalty interests.

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The secondary issue where Encana (ECA-T) sold the rest of their stake was done a $36.50, so this is an opportunity to pick the company up at a discount. He likes some of the attributes of this company. Dividend yield of 4.13% is very safe and sustainable. The company has no debt and a positive working capital. Have an undrawn $100 million credit facility. Likes the business model which is based around the fee simple lands, or the mineral rights that Encana used to own. They have 5.3 million acres of mineral rights plus gross overriding royalties on 3.6 million acres. Trades at a very high valuation multiple at about 26X enterprise value to adjusted cash flow, but it has a cost of capital to go to do additional acquisitions of these types of royalty interests.

TOP PICK
TOP PICK
March 30, 2015

They don’t have to spend any money at all. There is going to be some reduction in activity on their lands, but they are low decline rate fields.

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They don’t have to spend any money at all. There is going to be some reduction in activity on their lands, but they are low decline rate fields.

BUY
BUY
February 4, 2015

Stock vs. Stock. FRU-T or PSK-T. Both don’t take on operating risk. When inflation creeps up they don’t have to worry about it. FRU-T is not a bad company. He would prefer PSK-T right now because it is bigger and did not cut the dividend recently, like FRU-T.

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PrairieSky Royalty (PSK-T)
February 4, 2015

Stock vs. Stock. FRU-T or PSK-T. Both don’t take on operating risk. When inflation creeps up they don’t have to worry about it. FRU-T is not a bad company. He would prefer PSK-T right now because it is bigger and did not cut the dividend recently, like FRU-T.

COMMENT
COMMENT
January 21, 2015

This company is definitely impacted by low oil prices because there have been large cutbacks in drillings. They are still profitable on all of the things that they have. The dividend would only be in danger if oil stays here in the $40’s for a while. 5.3% dividend yield is safe for now.

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PrairieSky Royalty (PSK-T)
January 21, 2015

This company is definitely impacted by low oil prices because there have been large cutbacks in drillings. They are still profitable on all of the things that they have. The dividend would only be in danger if oil stays here in the $40’s for a while. 5.3% dividend yield is safe for now.