Mr. Andrew Phillips reports

PRAIRIESKY ANNOUNCES 2023 THIRD QUARTER RESULTS

PrairieSky Royalty Ltd. has released its third quarter results for the three-month period ended Sept. 30, 2023.

Third quarter highlights:

• Royalty production volumes averaged 25,469 barrels of oil equivalent per day, an increase of 8 per cent over second quarter 2023 and 2 per cent over third quarter 2022. Quarterly oil royalty production averaged 12,084 barrels per day, a 4-per-cent decrease from Q2 2023 and a 6-per-cent increase over Q3 2022.
• Quarterly revenues totalled $133.1-million, composed of royalty production revenue of $127.4-million and other revenues of $5.7-million. Total revenues were 13 per cent higher than Q2 2023 and 14 per cent below Q3 2022.
• Funds from operations of $93.8-million (39 cents per common share, basic and diluted) were driven by strength in both royalty production volumes and commodity pricing during Q3 2023. Funds from operations were 3 per cent above Q2 2023 and 24 per cent below Q3 2022.
• The company declared a third quarter dividend of $57.3-million (24 cents per common share), representing a payout ratio of 61 per cent. Excess cash flow was allocated to $15.6-million of royalty acquisitions related primarily to exploration projects in the Mannville Stack and the balance to retiring bank debt, bringing net debt to $253.7-million as at Sept. 30, 2023.

Board renewal and leadership update

PrairieSky announces the following planned changes to its board of directors at the next annual general meeting of shareholders scheduled for April 23, 2024.

• James Estey, chair of the board, plans to retire as board chair and a director of the company at the 2024 AGM.
• The board intends to appoint Margaret McKenzie as board chair following the 2024 AGM.
• Grant Zawalsky will not stand for re-election as a director at the 2024 AGM.

Anna Alderson has been appointed to the board of directors, effective Oct. 23, 2023, and will serve as a member of the audit committee of the board of directors.

In addition to changes to the board of directors, PrairieSky announced the appointment of Dan Bertram as vice-president, business development, and chief commercial officer, effective Oct. 10, 2023.

President's message

"It was another active quarter for third party operators across PrairieSky's royalty properties. There were 246 wells spud, including 238 oil wells with activity focused in the Clearwater, Mannville Stack and Viking plays. Leasing activity remained strong in the quarter with PrairieSky earning $3.6-million in lease bonus consideration on entering into 46 leases with 40 different counterparties. Leasing activity is a leading indicator of future drilling, and we anticipate [fourth quarter] 2023 to be another active quarter for third party operators on PrairieSky lands. During the quarter, we executed on $15.6-million in acquisitions primarily for undeveloped land in the Mannville Stack, which continues to attract significant third party capital due to the play's strong economics. PrairieSky expects to earn a high return on invested capital from the newly acquired assets as they will see immediate third party drilling activity.

"Total royalty production volumes averaged 25,469 boe per day for Q3 2023, an increase of 8 per cent over Q2 2023 and 2 per cent above Q3 2022. Oil royalty production averaged 12,084 barrels per day in Q3 2023, 4 per cent below Q2 2023, as anticipated, following spring breakup, when there is lower activity across the basin and 6 per cent above Q3 2022 due to active drilling across PrairieSky's land base over the last 12 months.

"PrairieSky generated $127.4-million in royalty production revenue due to a combination of increased total royalty production volumes and the strength in realized oil pricing, which drove PrairieSky's $93.8-million in funds from operations (39 cents per share) in the quarter. PrairieSky declared dividends of $57.3-million or 24 cents per common share for shareholders of record on Sept. 29, 2023, resulting in a payout ratio of 61 per cent. Excess funds from operations after the dividend and royalty acquisitions were allocated to debt repayment, reducing net debt to $253.7-million at Sept. 30, 2023.

"James Estey has informed the board that he will retire as board chair and director at the 2024 AGM. The board intends to appoint Margaret McKenzie as chair of the board.

"On behalf of the board, I want to express my gratitude to Jim for his many contributions in guiding PrairieSky to the company it is today. Jim has been the chair of PrairieSky since its initial public offering in 2014 and has played a significant role in transformational transactions, growing PrairieSky from just over five million acres of royalty lands in Alberta to over 18 million acres across Western Canada.

"We are pleased to welcome Anna Alderson to our board of directors and Dan Bertram to PrairieSky. We believe these additions strengthen our leadership team, and we look forward to working with them. As we look forward to our next 10 years, I am confident in PrairieSky's future success with this management team and Margaret's leadership. As always, we would like to thank our staff for their hard work and shareholders for their support."

Andrew Phillips, president and chief executive officer

Retirement of board chair and board renewal

The following board of directors changes are expected to take effect following the 2024 AGM:

• Mr. Estey will retire as chair of the board of directors at the 2024 AGM.
• The board intends to appoint Ms. McKenzie as the board chair following the 2024 AGM. Ms. McKenzie has served on the PrairieSky board of directors since 2014 and has significant royalty experience as a founder and chief financial officer of Range Royalty.
• "We are pleased to announce Margaret as the incoming chair of the board. Her understanding of royalties, financial expertise, and business and strategic planning experience make her the ideal candidate to takeover as chair," said Mr. Estey.
• After serving on the board of directors since December, 2014, Mr. Zawalsky will not stand for re-election as a director at the 2024 AGM.
• "PrairieSky has benefited from Grant's strategic thinking, years of capital markets and securities law experience and his understanding of the Canadian energy industry," said Mr. Estey. "We thank Grant for his many contributions as a director."

PrairieSky is also pleased to announce the appointment of Ms. Alderson to the board of directors, effective today. Ms. Alderson will serve as a member of the company's audit committee. Ms. Alderson is an experienced corporate director based in Calgary with over 35 years of experience in all sectors of the energy industry, as well as financial services. Ms. Alderson retired from KPMG in 2019 after a distinguished career as an audit partner in Calgary, Toronto and Hong Kong. Ms. Alderson is a chartered professional accountant, holds her ICD.D designation from the Institute of Corporate Directors and earned a bachelor of commerce degree (with great distinction) from the University of Saskatchewan.

PrairieSky believes these changes demonstrate its commitment to board renewal and position it well for the future.

Financial and operational information

The attached table summarizes select operational and financial information of the company for the periods noted.

A full version of PrairieSky's management's discussion and analysis, unaudited interim condensed consolidated financial statements, and notes thereto for the fiscal period ended Sept. 30, 2023, is available on SEDAR+ and PrairieSky's website.

Conference call details

A conference call to discuss the results will be held for the investment community on Tuesday, Oct. 24, 2023, beginning at 6:30 a.m. MDT (8:30 a.m. EDT). To participate in the conference call, you are asked to register. Details regarding the call will be provided to you upon registration.

About PrairieSky Royalty Ltd.

PrairieSky is a royalty company, generating royalty production 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 funds from operations and that represent the largest and most consolidated independently owned fee simple mineral title position in Canada. PrairieSky's common shares trade on the Toronto Stock Exchange under the symbol PSK.

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