I think royalties can be a timing a issue (so, lower rate earlier in development, rising later) and also location. As summarized in the Saturn Q3 MD&A:
"Royalties as a percentage of gross petroleum and natural gas sales increased for the three months ended September 30, 2023, reflecting increases in royalty rates for wells no longer eligible for royalty incentives. Royalties as a percentage of gross petroleum and natural gas sales decreased for the nine months ended September 30, 2023, which was primarily attributable to the Ridgeback Acquisition, reflecting lower associated royalties on acquired Alberta assets than the Company’s Southeast Saskatchewan Oxbow assets."
Interesting comparing them, I don't know why such a big difference in royalties, but their value would be very similar if SGY had comparable royalties. The div can be cancelled, but not the royalties.
As ever, a solid review by MB. Thanks for this.
I think royalties can be a timing a issue (so, lower rate earlier in development, rising later) and also location. As summarized in the Saturn Q3 MD&A:
"Royalties as a percentage of gross petroleum and natural gas sales increased for the three months ended September 30, 2023, reflecting increases in royalty rates for wells no longer eligible for royalty incentives. Royalties as a percentage of gross petroleum and natural gas sales decreased for the nine months ended September 30, 2023, which was primarily attributable to the Ridgeback Acquisition, reflecting lower associated royalties on acquired Alberta assets than the Company’s Southeast Saskatchewan Oxbow assets."
Do you consider management's track record when investing in O&G companies?
Interesting comparing them, I don't know why such a big difference in royalties, but their value would be very similar if SGY had comparable royalties. The div can be cancelled, but not the royalties.