PrairieSky Royalty Ltd.

  • Date: 2016-03-01

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PRAIRIESKY ROYALTY LTD. FORM 51-102F3 MATERIAL CHANGE REPORT 1.

NAME AND ADDRESS OF COMPANY PrairieSky Royalty Ltd. ("PrairieSky" or the "Company") th 1700, 350 – 7 Avenue S.W. Calgary, Alberta T2P 3N9

2.

DATE OF MATERIAL CHANGE February 29, 2016.

3.

NEWS RELEASE A news release reporting the material change was issued on February 29, 2016 through the services of Marketwired.

4.

SUMMARY OF MATERIAL CHANGE On February 29, 2016, PrairieSky's board of directors ("Board of Directors") approved an adjustment to the Company's monthly dividend from $1.30 per common share on an annualized basis to $0.06 per common share per month or $0.72 per common share on an annualized basis, effective for the March 31, 2016 dividend record date. In addition, the Board of Directors approved the suspension of the Company's Dividend Reinvestment Plan ("DRIP") and Stock Dividend Plan ("SDP").

5.

FULL DESCRIPTION OF MATERIAL CHANGE

5.1

FULL DESCRIPTION OF MATERIAL CHANGE As a result of continued volatility and pressure on current and forward strip crude oil and natural gas prices, and consistent with PrairieSky's focus on balance sheet strength and ensuring that the Company's dividend is fully funded through internally generated funds flow, the Board of Directors approved an adjustment to the Company's monthly dividend from $1.30 per common share on an annualized basis to $0.06 per common share per month or $0.72 per common share on an annualized basis. The adjustment to the dividend will be effective for the dividend record date of March 31, 2016. Notwithstanding the revisions to the Company's dividend, future dividend rates can and may fluctuate and will be confirmed by the Board of Directors and announced by news release prior to each record date. The Board of Directors considers a number of factors in determining the dividend level, including current and projected activity levels on PrairieSky’s royalty lands, the current commodity price environment and the working capital balance and earnings of the Company. The next regularly scheduled dividend review will be in February 2017. In addition, the Board of Directors approved the suspension of the DRIP and SDP. Shareholders previously enrolled in such programs will instead receive their dividends as cash until such time as the DRIP and SDP are reinstated.

5.2

DISCLOSURE FOR RESTRUCTURING TRANSACTIONS Not applicable.

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6.

RELIANCE ON SUBSECTION 7.1(2) OF NATIONAL INSTRUMENT 51-102 Not applicable.

7.

OMITTED INFORMATION Not applicable.

8.

EXECUTIVE OFFICER For further information, contact Cameron M. Proctor, Chief Operating Officer of PrairieSky, whose business telephone number is (587) 293-4000.

9.

DATE OF REPORT March 1, 2016.

ADVISORY ON FORWARD LOOKING STATEMENTS This material change report contains forward-looking information including: the expected timing for review of the Company's dividend policy; the ability of the Company to fund the dividend through internally generated funds flow; and the reinstatement of the DRIP and SDP. This forward-looking information is provided to allow investors to better understand PrairieSky's business and prospects and may not be suitable for other purposes. The information in this material change report could differ materially from those anticipated in the forward-looking statements as a result of the risk factors set forth below: volatility in the demand, supply and market prices for crude oil, natural gas and NGL; volatility in exchange rates; liabilities inherent in petroleum and natural gas operations; uncertainties associated with estimating crude oil, natural gas and NGL reserves and future production levels; claims made or legal actions brought or realized against PrairieSky and its properties and assets; general economic, market and business conditions; and changes in tax or environmental laws or royalty or incentive programs relating to the oil and natural gas industry. Risks related to PrairieSky's business generally are described in more detail in PrairieSky annual information form for the year ended December 31, 2015 which is available under PrairieSky’s profile on SEDAR at www.sedar.com. With respect to forward looking information contained in this material change report, the following assumptions have been made including: the general stability of the economic and political environment and the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which PrairieSky has an interest in oil and natural gas properties; and future crude oil, natural gas and NGL prices and currency, exchange and interest rates. You are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forwardlooking information. PrairieSky gives no assurance that any of the events anticipated will transpire or occur, or if any of them do, what benefits we will derive from them. The forward-looking information contained herein is expressly qualified by this cautionary statement. Except as required by law, PrairieSky does not assume any obligation to publicly update or revise any forward-looking information to reflect new events or circumstances.