PrairieSky Royalty

PSK-T

Analysis and Opinions about PSK-T

Signal
Opinion
Expert
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.

TOP PICK
TOP PICK
January 20, 2015

A royalty company, meaning that their cost structure is extremely low, less than $10 total cash cost per BOE. They don’t go out and drill. They have 3rd parties come on to their acreage and drill. This used to act like a defensive stock but is now acting more like a higher beta stock, because there is a growing Short that they are going to have to cut their dividend. This is a small possibility, but as long as the price of oil remains over $50, they can easily support their 5.21% dividend. Big inside ownership.

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PrairieSky Royalty (PSK-T)
January 20, 2015

A royalty company, meaning that their cost structure is extremely low, less than $10 total cash cost per BOE. They don’t go out and drill. They have 3rd parties come on to their acreage and drill. This used to act like a defensive stock but is now acting more like a higher beta stock, because there is a growing Short that they are going to have to cut their dividend. This is a small possibility, but as long as the price of oil remains over $50, they can easily support their 5.21% dividend. Big inside ownership.

BUY
BUY
November 27, 2014

They own royalties only. Millions of acres are under their control. They don’t have to put up any money to drill wells or process oil. They just take royalties right off the top. Fits well into 50 year portfolios like life insurance companies have.

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PrairieSky Royalty (PSK-T)
November 27, 2014

They own royalties only. Millions of acres are under their control. They don’t have to put up any money to drill wells or process oil. They just take royalties right off the top. Fits well into 50 year portfolios like life insurance companies have.

BUY WEAKNESS
BUY WEAKNESS
September 12, 2014

Encana (ECA-T) has decided to Sell the rest of their position and did it at a fair discount. He had got some of the issue and sold it when it ran up. Stock has now been sloshing around. His feeling on value is $38-$40. He would like it $1-$2 down before it would be a Buy.

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PrairieSky Royalty (PSK-T)
September 12, 2014

Encana (ECA-T) has decided to Sell the rest of their position and did it at a fair discount. He had got some of the issue and sold it when it ran up. Stock has now been sloshing around. His feeling on value is $38-$40. He would like it $1-$2 down before it would be a Buy.

DON'T BUY
DON'T BUY
September 9, 2014

She is still not very interested in this. Provides a yield of about 3.5%, which is not huge. Have a huge land base and it is all royalty income, but they don’t really have control of how much the royalty holder drills. There is also some exposure to commodity prices. For yield, you could go somewhere else and get a more sustainable, visible cash flow stream. For gas exposure, she feels there are other companies that are more attractive.

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PrairieSky Royalty (PSK-T)
September 9, 2014

She is still not very interested in this. Provides a yield of about 3.5%, which is not huge. Have a huge land base and it is all royalty income, but they don’t really have control of how much the royalty holder drills. There is also some exposure to commodity prices. For yield, you could go somewhere else and get a more sustainable, visible cash flow stream. For gas exposure, she feels there are other companies that are more attractive.

HOLD
HOLD
August 19, 2014

(Market Call Minute) It’s too expensive now if you didn’t get it on the IPO.

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(Market Call Minute) It’s too expensive now if you didn’t get it on the IPO.

COMMENT
COMMENT
July 16, 2014

This was a spin out from Encana (ECA-T) on the royalty lands they held. These were fee lands granted to CP Rail (CP-T) when it was built in the 1800s. This is an asset base that is very unique and could not be replicated. There is significant production of about 15,000 BOE’s a day, so there is a lot of cash flow. Dividend is quite secure. The curious thing about a royalty barrel is that there is no cost attached to it. A producer produces 100 barrels of oil, gives this company their 10 barrels, and pays everything out of his 90 barrels. The upside is that there are 5,000,000+ acres of land that is undeveloped, and producers are coming with proposals to drill. Upside could be quite material. At the upper end of valuation, but don’t rule out additional drilling on the lands. If you are a long-term player, it is probably something you want to own in your portfolio.

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This was a spin out from Encana (ECA-T) on the royalty lands they held. These were fee lands granted to CP Rail (CP-T) when it was built in the 1800s. This is an asset base that is very unique and could not be replicated. There is significant production of about 15,000 BOE’s a day, so there is a lot of cash flow. Dividend is quite secure. The curious thing about a royalty barrel is that there is no cost attached to it. A producer produces 100 barrels of oil, gives this company their 10 barrels, and pays everything out of his 90 barrels. The upside is that there are 5,000,000+ acres of land that is undeveloped, and producers are coming with proposals to drill. Upside could be quite material. At the upper end of valuation, but don’t rule out additional drilling on the lands. If you are a long-term player, it is probably something you want to own in your portfolio.

WAIT
WAIT
June 5, 2014

It is always hard to tell where the issue price is going to meet up with the market price on IPOs. He would rather wait, and see how it settles out and trades in the marketplace. If it is a good stock now; it will be a good one in 5, 10 and 15 years. No need to be in too much of a rush. Prefers Freehold Royalties (FRU-T), which trades at almost half the valuation and twice the yield.

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It is always hard to tell where the issue price is going to meet up with the market price on IPOs. He would rather wait, and see how it settles out and trades in the marketplace. If it is a good stock now; it will be a good one in 5, 10 and 15 years. No need to be in too much of a rush. Prefers Freehold Royalties (FRU-T), which trades at almost half the valuation and twice the yield.

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