Good morning, ladies and gentlemen, and welcome to the PrairieSky Royalty Limited announces their second quarter 2021 financial results conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to hand the conference over to your host, Mr. Andrew Phillips, President and CEO. Thank you, sir. Please go ahead. Thank you, Whitney. Good morning, and thank you for dialing into the PrairieSky Royalty Q2 earnings call. On the call from PrairieSky are Cam Proctor, COO, Pam Kazeil, CFO, and myself, Andrew Phillips. While Q2 represents the traditionally slow activity quarter in the field due to spring breakup, our team has been very busy in the office. Leasing remains strong as we entered into 34 new leases with 32 different counterparties. This generated CAD 2.3 million in bonus consideration for both natural gas and oil opportunities. We also executed on our largest acquisition since 2017. We stood in the batter's box for three years and finally saw the perfect pitch. This asset is the quickest payout, lowest cost oil asset in the basin. It currently produces 10,000 barrels per day and will double by 2024 without the need for external capital. Individual well tails and months produce to 100% owned and operated battery and are pipeline connected. Secondary recovery initiatives are planned on this asset. The addition of this asset will see us exit 2021 at over 1,000 barrels per day of Clearwater production. This was funded with our bank line, and we will write off the interest and can take leverage to zero at the end of 2022 with cash flow on top of the recently increased dividend. The 38% dividend increase rewards shareholders that have allowed us to make capital allocation decisions based on what is best for long-term shareholders. Our industry-low payout ratio has allowed us to cancel 5% of the outstanding shares below CAD 10 per share over the last 18 months, execute on an acquisition that will be 5% of our production in a few years, and become the dominant Clearwater royalty company in terms of both production and undeveloped land, which will provide future growth at no cost to PrairieSky. The new dividend will still be a payout ratio below 50% in 2022 at CAD 50 WTI. This will allow us to continue to pursue acquisitions that improve our business and cancel shares below intrinsic value, giving owners a bigger share in the company. PrairieSky is the best way to profit from increasing capital spending in the Western Canadian Sedimentary Basin and will continue to work hard at leasing land, controlling costs, ensuring compliance, making quality acquisitions, improving our ESG scores, which will continue to differentiate our business. I will now pass the call to Pam to walk through the financials. Thank you, Andrew. Good morning, everyone. PrairieSky generated funds from operations of CAD 56.5 million or CAD 0.25 per share in the quarter, up 16% from Q1. Royalty production revenue totaled CAD 64.9 million, generated from average production volumes of 19,723 BOE per day. Oil royalty revenue totaled CAD 42.9 million, an 8% increase over Q1, primarily due to strong WTI benchmark pricing and narrow light and heavy oil differentials. Revenue was generated from oil volumes of 7,028 barrels per day, which were down 3% from Q1 as new wells brought on stream and incremental production from the acquisition in Q1 only partially offset natural declines and downtime at Onion Lake due to a turnaround. Natural gas revenue totaled CAD 13.7 million, which was 8% above Q1 due to increased production combined with strong AECO and Station 2 benchmark pricing. Natural gas volumes totaled 60.5 million a day, up 5% due to incremental volumes from the Q1 Deep Basin acquisition and the resumption of production that was shut in during Q1 due to cold weather freeze-offs. NGL royalty revenue increased 11% from Q1 due to strong benchmark pricing and a 4% increase in royalty production volumes to 2,612 barrels per day. NGL volumes increased due to production from new wells on stream and incremental volumes from the acquisition. There were 919 BOE per day of prior period adjustments, which were 38% liquids and included 163 BOE a day from compliance activities and an additional 756 BOE a day of other prior period adjustments related to new wells on stream and better well performance. The compliance group continues to recover missed and incorrect royalties through its forensic accounting and collected CAD 1.1 million in the quarter. There were 89 wells spud, which were 98% oil. The Viking was the most active play with 47 wells spud. In addition, there were 13 Mississippian, seven Lindbergh five Deep oil wells, seven Clearwater oil wells, three Cardium, and two Duvernay oil wells spud in the quarter. Other revenue totaled CAD 4.9 million and included CAD 2.3 million of bonus consideration. It was an active quarter. We entered 34 new leases with 32 different counterparties. We also earned CAD 2.3 million in lease rentals and CAD 0.3 million of other income. Cash administrative expenses totaled CAD 4.8 million, or CAD 2.67 per BOE. Cash administrative expense was 16% lower than Q1, which included the annual long-term incentive expense of CAD 700,000 that was paid to staff. There will be no incremental staff required to manage the new Marten Hills royalty acquisition that Andrew discussed. The additional production will reduce G&A per BOE go forward. During Q2, PrairieSky declared dividends of CAD 14.5 million, with a resulting payout ratio of 26%. Year-to-date, PrairieSky has generated CAD 105.3 million in funds from operations, which were used to fund dividends of CAD 29 million, repurchase shares of CAD 13.2 million, make acquisitions totaling CAD 51.7 million, and repay debt of CAD 8.8 million. At June 30, 2021, to fund the Marten Hills acquisition, we increased our revolving credit facility by CAD 50 million using the permitted increase under our current agreement. Debt upon closing of the acquisition was approximately CAD 190 million. Since IPO, PrairieSky has generated approximately CAD 1.5 million in funds from operations and returned CAD 1.4 billion to shareholders through dividends and buybacks. We will now turn it over to the moderator to proceed with the Q&A. Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Please hold. Your first question is from the line of Aaron Bilkoski with TD Securities. Thanks. Morning, everyone. I guess my first question comes on your growth expectations, the acquired property. I guess my question is: Was the deal backstopped by a capital commitment or a well commitment? If not, what are you using to underpin your growth assumptions? Yeah, that's a good question, Aaron. There's no capital commitment on the deal we structured. These are the fastest pay plays. This is the fastest pay play in North America. The wells paid multiple times in a single year at $50 U.S. WTI. We're very comfortable that the capital will be spent, and they've got a pretty conservative drilling program and have been very conservative in the way they've grown the asset to date. We're very comfortable with the 10,000-20,000 barrel growth profile. We actually didn't include any improvements in type curves, and we've seen pretty significant increases in the EURs and initial production rates of the wells with the new drilling fluids and drilling methods. I think we probably actually see a better growth trajectory than that, and then a lower decline as well, assuming some of the water flooding initiatives are successful. We didn't factor any of that into the acquisition, so that's part of the optionality, part of the acquisition. Great. Thanks. If I could follow up with another question. I'm curious to hear your thoughts on what the pipeline looks like for potentially more Canadian deals with high growth, say, double-digit annual growth and comparable metrics. Do you think this was a one-off? You've obviously waited a long time to do something like this, or are more of these opportunities emerging? Yeah. When you look across the entire basin, it's pretty rare to find oil growth opportunities. This is one of the plays that can grow at CAD 45 oil, and it can grow even faster at CAD 70. This is very unique. I think there are a number of other smaller opportunities potentially out there, but this was a very unique asset. It was one of the few that exists out there. The other piece that's very good is just to the south of this, Canadian Natural has a very similar thickness, similar payout asset. It's unlikely that they would do something like this. Thanks. Final question. You talked about the ability to pay down debt to zero by year-end 2022. Does this include the continuation of the NCIB at the current pace, or if you continue the NCIB at the historical run rate, would that require exiting 2022 with some debt? On the NCIB, it definitely gets taken down a level as we repay the bank line. I think structurally, we've never wanted to run the business with permanent debt. We are comfortable using it. It's a very low interest rate. Of course, we're taxable, so we can write off the interest. That was more just to show the period in time in which we could pay that off. We'll have a lot of flexibility to execute on other acquisitions and/or continue along with the buyback. I think the buyback probably sits in the back seat to the debt repayment over the next 18 months, Aaron. Perfect. Thanks, guys. I appreciate that. Thanks for the questions. Again, to ask a question, please press star then the number one on your telephone keypad. Your next question is from the line of Luke Davis with RBC. Hey, thanks. Good morning. Just wondering what total Clearwater production is now on your line between Spur and other operators, and roughly where you expect that to grow to over the next two years. You bet. Thanks for the question, Luke. Our Clearwater exited last year at about 250 barrels per day. We expected that to grow at 100% CAGR, so that was going to exit this year at about 500. The Martin Hills acquisition will be in the range of 600-plus barrels per day of net royalty oil production. It'll be over 1,000 barrels per day total. We expect over the next five years for this asset to grow by about double to somewhere in the range of 2,000-plus barrels per day. We think the ultimate productive capacity in the Clearwater is north of 3,000 barrels per day. The pace at which it gets to that level will be determined by oil price and availability of capital. One unique thing about this play, and part of the reason we've been so active in this play since 2017, is because it's self-funding, doesn't require external equity or debt. That's what really differentiates it, because you can be very comfortable with the growth profiles when you look out five, 10, or 15 years in a variety of different environments. That's great. Super helpful. Thanks. Thanks for the question, Luke. Your next question is from the line of Jamie Kubik with CIBC. Good morning, guys, thanks for taking my question here. Just curious if you can talk about how much downtime impacted your oil volumes in the quarter, how do you think oil volumes trend from here, given the drilling through Q2 and additional licensing you're seeing on your lands? Respecting that you don't give guidance, can you give us a sense of direction on how you think oil volumes move from here? You bet, Jamie. I'll let Pam talk a little bit about the downtime in Q2, and then I can just talk about a little bit, although we don't give guidance, a little bit about what we're seeing from a leasing and licensing perspective. Pam, do you want to start? Yeah. For downtime, in Onion Lake, that was approximately just under 50 barrels a day that impacted the quarter, which really offset the acquisition volumes that were included in the quarter. We have estimated about another 50 barrels a day that were shut-in. In aggregate, about 100 barrels a day for the quarter was the impact of turnarounds and downtime. Yeah. When you think about Q3, traditionally, Q2 is just a little slower just because of breakup. There were a few pad drilling sites on our lands where they drilled right through breakup, which is starting to happen more and more, we're seeing in the Western Canadian Basin. I think, of course, there's downtime both in terms of individual well batteries where they couldn't haul oil, those sorts of things. You should see a modest recovery on that front. I think the bigger impact is just kind of the overall leasing, and we're seeing it on every play, and we're seeing drilling, not just on a concentrated number of plays, but in plays like the Banff and the Nisku. We're seeing drilling activity come back in the Belly River. I think we're likely to see a more broad array of drilling in the back half of the year, and it should start to-- Excluding this new acquisition, should start to positively impact oil volumes in the back half of the year, as we've talked about a little bit. And certainly we've, excluding this acquisition, saw some single-digit growth over the next 18 months. That's great. It leads to a bit of another question. Are you seeing increased activity coming through the private operators on your acreage, or is it mostly publics that are increasing activity at this point? Yeah. It's a great question. I think the privates have seen a far more substantial uptick in activity than the publics have. A lot of the privates that are operators on our land, in certain situations, we have land funds with them or have done a bunch of leasing with them. They came into this last downturn or into COVID with zero debt or very low debt levels. Their incremental cash flow that's coming in, they're typically using it in the field to grow. There's one private operator that drilled two wells on our land last year, has plans for 30 this year on our royalty lands. They've already licensed 22. I think the privates are seeing a much bigger uptick. I saw a chart yesterday on the U.S., and the U.S. is seeing a similar phenomena where the privates are increasing capital at a faster rate than the publics for a number of different reasons, and public market reasons as well. Okay. Thanks for the color. I'll turn it back to you guys. Thanks, Jamie. Your next question is from the line of Elias Foscolos with Industrial Alliance. Good morning, and thanks for taking my question. First of all, forgive me if this is a basic 101-type question, but I'll ask it anyway. Given the acquisition, and I believe you have no history of hedging, would you consider some hedging right now? Yeah, it's a good question, Elias. I think when we look at hedging, because we don't have any structural bank debt or bank debt that's going to be permanently on our balance sheet, and our capital program is zero over the next couple of years, we're very comfortable with the repayment of that. I think we'll continue with our strategy of a no-hedging policy going forward. I think our belief in hedging, because we have very low debt levels and because we don't have capital, that we'd rather not speculate with investors' money and just take the spot market, which has been excellent this year. It's excellent right now for both NGLs, natural gas, and oil. Certainly, if we were protecting capital programs, it would be a different discussion. Because we don't have those, we're comfortable being unhedged. Got it. Thanks. Maybe another question, too. Today's call has been focused on Clearwater. Is there any other area that we, in the basin, that we might set our sights to, that you think might be another focus area that directly impacts PrairieSky? Yeah. That's a great question. I appreciate that question because there are kind of three other areas that we're seeing substantial upticks, and I think they will positively impact the business over a three and five year period, and certainly in the back half of the year, we should start to see the impact of them. One is the Viking, of course. It's our largest part of the royalty land base. We have a 20 year inventory at for 300-plus wells per year, and that's all just pure development inventory. The one change we've seen in the Viking is there's a lot of people pursuing secondary recovery initiatives, so water floods, et cetera. I think a lot of those have shown pretty good success, and they've moderated the decline rates and improved the recovery factors. The Viking is starting to uptick. The second part of the portfolio that's becoming more active, and we've actually been active leasing land on, is the heavy oil portfolio, which has been very inactive over the last five years. We've been leasing in both Western Saskatchewan and Eastern Alberta for a lot of heavy oil opportunities, and I think we're going to see the drilling coming in the next six to nine months on some of those leases. That's a part of the portfolio that's been very important traditionally. I think the last part is we're seeing a lot of companies go after some of these older reservoirs for secondary and tertiary recovery schemes. I think one of the things that people have found, and I think investors have caught on to this, is part of the reason CNRL can pay so many dividends, pay down so much debt, is because they have an 11% corporate decline. A lot of these assets are very conducive to returning capital to shareholders because you need a very low amount of maintenance capital to maintain those assets. We're seeing quite a bit of activity on that front, and that'll likely be a focus of our next investor day two years from now. I know we just had one, but it is a very important part of the portfolio, and I think it's something that more and more companies are starting to pursue because it gives you a more sustainable business. Great. Thanks very much for that extra color. That's it for me for now. I'll turn it back to the queue. Thank you, Elias. At this time, there are no further questions. Great. Well, thank you everyone very much for calling in to the PrairieSky conference call, and hope everyone has a great week. Okay, ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may all disconnect.