Oil production is beginning to recover after it was curtailed by an average of 30% in the second quarter due to low crude prices, PrairieSky Royalty Ltd. said Tuesday.
The Calgary-based company, which earns revenue by sharing in production from lands for which it holds the petroleum mineral rights, said it produced 18,670 barrels of oil equivalent per day in the three months ended June 30, down 16% from the first quarter.
No new wells were started on its properties in the three months ended June 30 but there are signs that activity will pick up later this year as oil pricesstrengthen, said CEO Andrew Phillips on a conference call.
“We do expect greater activity than we would have two months ago… I don’t know that will show an effect for us in the back half of this year, but it certainly will improve in 2021,” he said.
PrairieSky’s production shortfalls are expected to be a common theme as larger oilpatch players including Suncor Energy Inc. and Cenovus Energy Corp. roll out second quarter results later this week.
Producers in Western Canada are estimated to have shut down wells producing more than 800,000 barrels per day of oil at times in the second quarter due to plunging prices amid the economic downturn associated with the COVID-19 lockdowns.
Crude oil production at PrairieSky fell by 30% to 6,035 barrels per day over the quarter from 8,740 bpd in the year-earlier period as its average realized price fell to C$24.31 per barrel from C$65.48.
PrairieSky says as much as 40% of its oil output was curtailed in May.
Natural gas output was down 7.5% from the second quarter of 2019 despite the average price rising from 74 cents per thousand cubic feet to $1.39.
The company’s second quarter production revenue was $25.1 million, off by 39% compared with the first quarter of 2020 and 60% from the second quarter of 2019.
PrairieSky reported a net loss of $400,000 or zero cents per share in the quarter, compared with a net profit of $44 million or 19 cents in the year-earlier period, largely matching analyst expectations.
Its stock rose by as much as seven% to $8.90 on the Toronto Stock Exchange on Tuesday.
The company reported completing $6 million in royalty interest acquisitions in northeastern B.C. during the quarter and added it is continuing to look for expansion opportunities.