Thank you, Chris. Good morning, everyone, and thank you for dialing into the PrairieSky Q4 2021 year-end conference call.

On the call from PrairieSky are Cam Proctor, COO; Pam Kazeil, CFO; and myself, Andrew Phillips. Before we get started, there are certain forward-looking information in my notes today, so I'd ask investors to review the forward-looking statements qualified in our press release and MD&A for Q4 and the year ended December 31st, 2021.

Q4 saw strong organic growth in our crude oil royalty portfolio as a result of increased drilling activity across the Western Canadian sedimentary basin. Volumes are up 10% from Q3, reflecting the strong trailing activity number of 193 spuds from the third quarter.

Q4 also had a strong activity number with 166 spuds versus 74 one year ago. Activity was broadly spread across the base and geographically and also across operators and play type.

2021 was a successful year for PrairieSky. We executed on approximately $1 billion of accretive M&A transactions, adding producing and undeveloped assets in the best parts of the cost curve including 3 million acres of oil prone predominantly fee title lands, while issuing less than 10% of our outstanding shares.

Our strong cash flow per share growth and unhedged commodity portfolio has allowed us to increase the dividend by 33% and still pay down all the debt incurred on the Heritage P title asset acquisition within three -- two years. The new quarterly dividend is $0.12 per quarter or $0.48 per share per year.

By using the excess cash flow to reduce our debt, we'll be well-positioned to execute on quality opportunities as they become available. Our technical team is busy prospecting and identifying new opportunities across the vast PrairieSky land base.

Strong industry cash flows have operators looking for new opportunities to expand their asset basis. In addition, there are numerous new startup companies working in the basin.

Our total proved plus probable reserves grew to 66.2 5 million barrels at year end, up 37% year-over-year. This included the addition of 10.5 million barrels related to the 2021 acquisitions as well as the 9.7 million barrels related to third-party drilling and technical revisions, which more than exceeded our 2021 royalty production volumes.

There was also an incremental 5 million barrels added to strong -- due to strong pricing. At year end, the NPV of our total proved plus probable reserves discount of 10% or $1.6 billion, 88% above 2020 and this represents of course, only the producing wells on our lands, no future wells.

Our early entrance into the Clearwater play differentiates us as we have near-term development lands that will see our net royalty oil volumes grow to over 1,600 barrels per day by year end 2022 on the play. Our proved plus probable reserves in the Clearwater grew to 2.6 million BOE from 435,000 last year.

Excluding the 1.45 million barrels we purchased in Martin Hills, our Clearwater reserves grew over 2.7 times in a single year. In addition to these already developing areas, we are the largest holder of exploration acreage in the Clearwater fairway.

The active exploration across this acreage will result in sizeable new developments over the next few years at no additional cost to PrairieSky owners. We are hard at work on our newly acquired fee title lands and expect to enter into numerous leases with qualified counterparties to enhance the growth profile of our oil-prone assets.

We'd like to thank our shareholders existing and new for their support as we build the premier North American royalty business, as well as the team at PrairieSky for their hard work and crisp execution during an active year for the company. I'll now turn the call over to Pam to summarize the financial highlights.

Thank you, Andrew. Good morning everyone.

As Andrew mentioned, there are certain forward-looking information in my notes today. So, I would remind investors to review the forward looking statements qualified in our press release and MD&A for Q4 and the year ended December 31st, 2021.

PrairieSky generated record funds from operations in Q4 of $101.8 million or $0.45 per common share. This was 54% above Q3.

The increase in funds from operations was as a result of strong royalty revenue of $94.2 million generated from average royalty production volumes of 20,340 BOE per day as well as our income tax recovery in the quarter of $12.4 million. PrairieSky's oil royalty production grew to 8,311 barrels per day, a 10% increase over Q3 2021 and included 190 barrels per day of incremental acquisition volumes and 48 barrels per day of increased sliding scale pricing volumes.

The quarter included only one day of contribution from the Heritage acquisition, which was effective December 31st, 2021. We will see the full impact from this acquisition in Q1 2022.

The remainder of the oil royalty volume increase was due to organic growth on the royalty properties following an active Q3 drilling programs by third-party operators. These higher volumes and strong benchmark pricing combined to generate oil royalty revenue of $61.3 million, 22% above Q3.

We are very encouraged by the growth already seen in our oil royalty volumes in Q4 and by the level of activity through the fourth quarter and already into Q1. Natural gas royalty volumes average 60 million a day, an increase of 3% over Q3.

Higher production volumes and strong April pricing generated $22.2 million in royalty revenue, a 42% increase over Q3. Revenues from natural gas alone are more than enough to fund our Q4 dividend.

NGL royalty volumes average 2,029 barrels per day, down from Q3, primarily as a result of ethane curtailments due to strong benchmark pricing for PrairieSky's NGL royalty revenue. For PrairieSky's NGLs, royalty revenues still increased 6% over Q3 to $10.7 million.

There were 951 BOE per day of prior period adjustments in Q4, which were 32% liquid in the quarter. These prior period adjustments included 357 BOE a day from compliance activities and an additional 594 BOE a day of other prior period adjustments related to new wells on stream and better well performance.

The compliance group recovered missed and incorrect royalties through forensic accounting, collecting $1.4 million in the quarter and bringing 2021 annual collections to $4.2 million. There were 166 wells spud in Q4, which were 95% oil.

The Viking was the most active play with 60 wells and that was followed by the Clearwater with 44 spuds. Additional activity took place across the basin with wells spud in the Mannville, Mississippian, Duvernay, and Cardium.

In 2021, there were a total of 548 wells spud in PrairieSky lands, 95% oil. This is up from 288 wells in 2020.

PrairieSky estimates that $783 million of gross capital and $37 million of net capital was spent on our lands in 2021. We anticipate that third-party capital budgets in 2022 will be higher than 2021 and we expect to benefit from this incremental activity across the land base, including on the additional 3 million acres of royalty properties added to the portfolio in 2021.

Looking forward, PrairieSky's 2022 annual price and sensitivities which are all net of G&A and taxes are as follows. A $5 change in U.S.

dollar WTI would increase or decrease funds from operations approximately $19 million; $0.25 per MCF change in [indiscernible] would increase or decrease funds from operations approximately $4 million and a $0.01 change in the U.S. to Canadian FX rate would increase or decrease funds from operations approximately $3.5 million.

Other revenue totaled $6.4 million in the quarter and included $2 million in lease rentals, $0.5 million of other income and $3.9 million of bonus consideration for entering into 48 new leases with 42 different counterparties. This brings annual other revenues to $16.2 million.

In 2021, we entered into 139 new leasing arrangements, up from 85 in 2020. New leasing is typically a precursor to increase field activity and we anticipate near-term drilling on many of these new leases in 2022.

PrairieSky is forecasting other revenue in the range of $20 million in 2022, including lease rentals, bonus consideration, and other revenue. Compliance recoveries will be in an increment to this amount.

Cash administrative expenses totaled $5.4 million or $2.89 per BOE. This brings annual cash administrative expense to $20.2 million or $2.79 per BOE.

We expect cash administrative expenses to be well below $3 per BOE again in 2022. PrairieSky recorded at $12.4 million current tax recovery in Q4 through the use of the tactical deductions from the Heritage acquisition.

This brings 2021 annual current tax to $4.6 million. Entering into 2022, PrairieSky has $1.75 billion of tax pools to offset future taxable income.

During the quarter, PrairieSky declared dividends of $21.5 million or $0.09 per share with a resulting payout ratio of 21%. Annually, PrairieSky generated $273.4 million in funds from operation, which were used to fund dividends of $70.5 million and repurchase shares for $22.7 million, with remaining cash flow put towards the acquisition.

PrairieSky's net debt at December 31st, 2021 was $635 million, which we expect to reduce in 2022, with excess funds from operations over increased annual dividend of approximately $115 million or $0.48 per share. Due to our updated Sustainalytics ESG report, which ranks us number 68 in the world with a rating of negligible risk, PrairieSky will receive the full pricing reduction related to our sustainable credit facility.

Given current commodity prices, we expect to repay the debt use for the Heritage acquisition within 24 months. Since IPO, PrairieSky has generated approximately $1.7 billion in funds from operations and returned $1.4 billion to shareholders through dividends and buybacks.

We will now turn it over to the moderator to proceed with the Q&A.

Hey, good morning, guys. Thanks for taking my question here.

Just in terms of the dividend from here and sort of the messaging in terms of capital allocation and debt repayment, just wondering what was the catalyst for the dividend increase here? Obviously, activity levels were very strong in the quarter based on spuds, but commodity price is also strong.

Is it is one? The other?

Is it some combination of both? And then as we think out into the future here and sort of the path of shareholder returns and how you're thinking about it, how you're leaning in terms of that debt repayment and further dividend increases, kind of, through 2022 here?

I know that debt repayment has been an important part of the thesis and strategy for the company post the Heritage acquisition.

Yes, thanks for the question, Patrick and on the dividend, we -- we're fortunate that since the Heritage acquisition, the excess cash flow returning to shareholders is in line with the increased cash flow generating ability to business, so we still almost have the exact same debt repayment schedule. So, it's just directly in line with that.

And then when you look out three, five and 10 years, we should have pretty strong dividend growth when you think about the business. This is a business that has paid 85% of cash flow to the dividend.

In times, we can't find high quality acquisitions to increase the per share value of our business. So, the dividend growth could be pretty substantial.

We'll obviously be paying down a huge amount of debt in the next two years at the current commodity prices. Even lower commodity prices, we'll still pay down quite quickly.

So, I think that'll bode well for future shareholder returns in the form of the dividend. And we kind of look from a buyback perspective, we almost looked at this acquisition as prefunding the buyback rather than fully advertising the deal.

Two-thirds of it was done with just over 2% leverage and now we're paying that down. So, we almost did the buyback.

We look at it in the 13th.

Okay. And then just on the activity levels in the quarter and looking forward here, you guys obviously have your thumb on the pulse of activity in the basin.

I'm wondering you've got the core four plays there, but with the run-in in prices here, maybe some better capital access, are you seeing a bit of an uptick in activity in terms of maybe the secondary place in the portfolio?

For sure, we are, Patrick, I think, we had 42 -- like just in the last quarter alone, we had almost $4 million in these issuance bonus, 42 leases -- 42 different counterparties, 48 different leases. So, we're leasing across the entire basin from Manitoba all the way to Northern Alberta.

So, it was quite a broad leasing program. And then when you look at the spuds across the basin, it's been on every play, every geographic region.

So, it's a more balanced recoveries than it was in 2017, when it was very concentrated in a few core plays. The other thing we're seeing that's kind of unique is given the recycling of a lot of the teams over the last year, there's a lot of privates that had sold and some public mergers, we're seeing a lot of new teams starting up.

So, we're very busy here presenting to numerous teams on the acreage potential and potential leasing opportunities and our seismic data rooms busy again. So, it's -- we're starting to see those new startups enter the market as well.

Okay, thank you very much.

Thanks for the question.

Yes. Hi guys.

I was wondering if you could comment more on the M&A environment here today, just with commodity prices? Is it as easy as to do deals now with a lot of the operators having the cash flow?

Is there still as many opportunities out there? And anything on almost kind of mines there?

Yes, and I hate to speculate on what the whole year looks like, Jeremy, but I think when you think about the M&A environment, some of the manufactured-type royalties were a result of the very low trading multiples of some of the public producers, but them still wanting to enhance the value of their business. And so I think some of that likely becomes available.

But for sure, there's going to be higher expectations given this high price deck and we typically discount that a little bit. So, I think it'll probably be a little thinner this year would be my guess, just given the industry cash flows and people paying down bank lines.

But, I guess time will tell.

Okay. That's perfect.

That's all I have here for today. Thank you.

Thanks Jeremy.

Hey, good morning, Andrew and Pam. I just wanted to clarify, did you say current or exit Clearwater volumes of be at about 1,600 barrels a day this year?

That's correct. Yes, we expected -- we were in and around 1,000 BOE, we had net royalties oil production.

That's probably a conservative number because it includes no exploration or development on some of the new discoveries that have been made across the basin -- across our Clearwater acreage. But just with kind of Nipissing and Martin Hills, which are our two core areas right now, we're expecting it to grow by 60% this year from 1,000 to 1,600 exit this year.

Got you. That's helpful.

And I know your biggest growth yield would be spur, but can you provide some commentary on other producers that are operating in that play that you have exposure to?

Yes, you bet. I think there have been a couple of other discoveries made in the South Clearwater, just West of Peavine as well.

And then a little bit of work in some other exploration areas that we can't comment on, just because it's been conducted by privates. And -- but it is -- the play has expanded and I think the South Clearwater is probably the one seeing the most development right now.

And Rolling Hills has made some pretty good discoveries and some compartmentalized pools that we think could be really conducive to polymer floods and so there's -- that’s expanded pretty dramatically as well. But I think in the two core areas, what you're seeing is just type curves of cost substantially.

Each new wells, the EURs are 35% higher than they were the year before. So, that's where we got the big uptick in reserves on just the proven.

Got you, that's helpful. Thanks.

Thanks for the question, Luke.

Morning. I had a couple questions just following up on some of Pam's comments.

In terms of lease expiries, is there anything significant that's up for renewal this year that you guys think could be meaningful, especially now that we're sitting at $90 WTI?

Yes, that's a -- it's a good question. I think we did see a nice uptick in lease issuance bonus in Q4, almost $4 million.

We did -- we do have a large expiry West the Homeglen reef in DuVernay shale. We've already, kind of -- we're working with a couple of counterparties on some smaller leasing arrangements there, but there is a large piece of land available there and there's been some pretty significant results.

And, of course, the play that's very sensitive just given the very high initial rates and then the higher declines because the multistage -- multitrack well, it's very sensitive, the per share oil price and gas price and of course, both of those are very strong right now. So, we do expect some leasing opportunities there with industry.

So, I just hate to speculate on -- as to when those happens. But in the next 12 months, we do expect some leasing there.

And then I think, one of the things we saw in 2020, our compliance team was really active and really busy, making sure that we got back all the rights we could in the downturn. And as a result of that, we got back over 4,000 leases in 2020.

And now industry is looking to release a lot of those smaller pieces of acreage across the basin to reactivate well, to reactivate a waterflood, et cetera. So, we're expecting that to be busy as well on the conventional side, Aaron.

Perfect. Thanks.

That's really helpful. If I can ask another question, I know it's early days on the recently acquired assets.

But I'd be curious if you had any initial comments on the potential magnitude of compliance revenue from those properties?

That's -- on the compliance, that's -- that is one that takes quite a bit of time. Sometimes a contract can be 100 pages and you got to go through every little detail of it to understand that we did a lot of work prior to the acquisition.

We worked on it obviously for almost six months last year. So, we did identify a number of opportunities, but these are these situations where you got to make sure you're a long ways advanced, so you know exactly what the opportunity is there.

So, we think it's significant. I don't think you'll see a significant bump in compliance revenue from that specific asset in 2022, but I do think you're going to see some strong numbers come out of their past that.

Thanks. And if I ask one more question, this is sort of a follow-up to I guess, Patrick's first question.

When I look at the royalty space, most of your peers have a targeted dividend payout range. At the E&P level, producers are starting to, I guess, increasingly outlined targets that return a portion of free cash flow back to shareholders.

Do you foresee PrairieSky becoming more formulaic in the strategy around shareholder returns?

Yes, it's a good question. I don't think we will.

Aaron, I think, one of the reasons we like to be flexible is because we like to do what's best for the business and what's best for shareholders. And I think when you get too formulaic, you get boxed in.

And even when it is a variable dividend, you end up -- it's basically a dividend that you've committed to and the formulaic approach doesn't allow you to change your strategy slightly when the opportunity presents itself. And I think last year, it was -- it's very unique, we had a very low payout ratio, we did a $1 billion in M&A and diluted shareholders by less than 10%.

So, it really allowed us to grow the business and compound the business over time. And then, in 2017, 2018, and 2019, we paid -- we had around an 80% payout ratio, paid $185 million in annual dividends and just because we couldn't find the right opportunities, and did very little M&A in those years.

And when you get back to that, that's the opportunity at the time. So, I don't see us getting more formulaic.

I don't see special dividends being reflected in multiples and we're just -- we'll do what's best for the business on that front.

Perfect. Thank you very much.

Thanks for questions, Aaron.

Hi, how you're well. Thanks for taking my question.

I was wondering if you could comment more on the Heritage acquisition. I saw just from the purchase agreement; a couple assets were held back and just more about the -- what's the long-term kind of potential of why you guys really thought it was an attractive acquisition?

You bet. So, it's a good question.

I think it's one of those -- it's the premier fee title asset in the oil portion of the Western Canadian sedimentary basin. So, it's a very oily asset.

There's been a major step change in technology with multilateral drilling and better drilling fluid systems that have really unlocked the potential of it. It's at 2,700 barrels per day of net royalty production.

Without us doing anything, we think it's on a modest growth profile. We think with strong leasing program over the next 10 years, we can grow it in higher single-digits.

So, we think it's a great growth asset with no future capital and it's only 20% lease. So, we just believe it's under managed from the standpoint that we can get a lot more of those lands lease.

So, what's great about it's got this very strong cash flow profile, it's over a 10% free cash yield on the purchase price to be paid, but 80% of the lands are currently not generating revenue. So, that's the potential for shareholders.

And that's the difference between this and a lot of other royalty asset acquisitions is not only do you get this really strong cash flow stream at a very reasonable discount rate, but then you also get -- in 2030, you've got the growth potential on those undeveloped lands. So, that was the rationale behind it.

It's something we've coveted for a long time, we bid on it. With Franco Nevada on this asset in 2015 and they were the successful acquirer, so we've kind of want to own it ever since.

Something we can add very scalable -- scalably, we had zero staff in order to manage another 1.9 million acres. So, we're well-equipped on it.

It's extremely, extremely helpful. And I guess my question is on -- somewhere in the presentation, you guys present an extraordinarily helpful slide about production over time on PrairieSky lands.

And with this recent downturn has been declined, just wondering in terms of what you guys view on -- is there an inflection happening currently off that chain?

Yes, we have seen an inflection in activity in the basin. We, kind of, started to see in the middle part of last year where we saw some growth across a lot of the basin.

I think our view is that there's enough activity right now in the basin to grow production on our lands, which is great. So, we have seen an inflection on the commercial activity.

The other thing that's differentiated us a little bit is we've invested all our acquisitions in the lowest cost parts of the cost -- lowest cost parts of the cost curve on the oil cost curve. So, we've -- which allows us to outperform the basin.

Assets like the Clearwater, again, have the lowest full cycle up in the basin on the light oil side of the Viking and we're the largest royalty owner on both of those. So, that allows us to outpace the basin as well.

So, we should see a stronger inflection on PrairieSky's acreage.

Okay. Thank you very much.

Thanks for questions, Omar.

All right. Thanks.

I just think I wanted to clarify something said earlier, you said exiting 2021, your net production on Clearwater acreage was about 1,000 BOE a day, is that correct?

Correct. Yes, that's correct, Matthew.

And this is expected to grow to about 1,600 net by the end of 2022?

That's correct, yes. So, the Clearwater alone should grow to 1,600.

And of course, it’s a reasonably conservative estimate because we're kind of just including the core areas of Nipissing and Martin Hills. But, of course, we have a huge acreage position outside of that as well, that totals only 100,000 acres over a 1 million acres on the play.

So, there's potential upon seeing further developments from outside there. But I think that's a reasonable estimate.

Do I -- on -- if you had an estimate on how many rigs in the industry we're operating on PrairieSky lands in the quarter and compared to what you're seeing now?

Yes, we don't actually -- we don't put that out and part of the reason is, it can sometimes be misleading because, of course, sometimes you can have a rig or two operating in a unit where you have a 0.2% interest and sometimes you're going to have four rigs running in an area where you have 17.5% and a half percent royalty. So, it's -- we don't put out that specific number, but because of our broad swap acreage from Manitoba all the way BC, we get a pretty significant share of that rig count.

And today, there's 225 rigs running versus 180 this same day last year. So, obviously, there's an uptick, so it looks like capital spent will be higher in the basin and this year, and we'll get our share of that as PrairieSky acreage owner.

Okay, thanks. I appreciate it.

That's all my questions. I'll turn it back.

Thanks for the question Matt.

Well, thank you everyone for dialing into the PrairieSky Q4 2021 conference call and please feel free to call Pam or myself if you have any further questions. Have a good day.