What's The Historical Relationship Between Lease Bonuses and Drilling Activity?

Research evidence excerpt

What's The Historical Relationship Between Lease Bonuses and Drilling Activity?

Energy Producers - Junior & Intermediate

PrairieSky Royalty Ltd.

TD SECURITIES INC. - CANADA ESTIMATE CHANGES

July 14, 2026

Price: C$33.21 (07/13/2026) What's The Historical Relationship Between

Price Target: C$36.00 Lease Bonuses and Drilling Activity?

BUY (1)

Aaron Bilkoski^ THE TD COWEN INSIGHT

403 299 3294

With PSK's Q1 results, we explored the idea that Street expectations may be underestimating

aaron.bilkoski@tdsecurities.com

PrairieSky's production potential by assuming portions of the legacy asset base continue to

Dustin Besaw, CFA^ decline (see PSK: What if the Legacy Base Assets Grow This Year?). This appears to be playing

403 292 2804 out as expected with Q2 results. On the post-Q2 conference call, mgmt. indicated oil growth

dustin.besaw@tdsecurities.com

tailwinds will continue in H2.

Key Data

Symbol TSX: PSK-T Event: TD Looks at Relationship Between Lease Issuance Bonuses and Activity

12-Month Div (Est.): C$1.06

Impact: NEUTRAL

Beta: 0.86

12-Month Total 11.6% While the legacy base is likely benefiting from commodity-price drilling tailwinds, in this note

Return:

we explore the more proactive side of PSK's business - leasing activity. PrairieSky's recent

52-Week Range: C$35.89-C$23.17

leasing momentum is not only a source of high-margin revenue but is likely, in our view, a

Market Cap: C$7.8B

leading indicator of future drilling activity and royalty volume growth.

Net Debt (MM): C$187.0

■Leasing is an early indicator, not just a revenue line item: We believe the market focuses

Dil. Shares Out (MM): 233.8

too heavily on PrairieSky's lease bonus revenue and not enough on what it signals about

Float Shares (mm): 230.7

future third-party capital deployment.

Float Cap ($mm): C$7,661