In short: The second Canadian royalty name on the list (with Freehold) — royalty owners collect a cut of production without the operating cost or capital spend, which is how he prefers to take the Canadian discount in his own account ("I have for my own account for many years bought mineral royalties and rights").
PrairieSky is the second royalty name on the Canadian list, alongside Freehold. Like Freehold it owns the mineral title and takes a cut of production from wells other companies pay to drill — no operating costs, no capital budget, and no exposure to a producer's cost overruns.
In a thesis whose whole premise is that the industry must resume heavy spending, a royalty owner is the cleanest position on the board: the spending is someone else's problem, the production is partly yours.
36:24Birchcliff, Peyto, PrairieSky Royalty. There's seven or eight names up there that if somebody is willing to hold them till 2030 will by then think that you and I were very good guys for having talked about them now.
36:48All right, that's a lot of names. Thank you. I may have recommended about half of them in various places in my newsletters. Good. Well, it will inure to your benefit over the next five years. Yeah, we actually had ARC right up until it was taken over. That was a good one.
In short: The model of a land-and-royalty company that understands the difference between a perpetuity (surface acreage) and depletable minerals: in the 12 years since its IPO it tripled acreage from 5 million to 18 million acres and doubled acres per share — about 6% a year on top of revenue and earnings growth. A 750-mile land position across three Canadian provinces means it need not reinvest cash flow into new royalty contracts, so the budget goes to dividends, buybacks and land. Executives must buy 2x–5x their salary in stock with cash within three years of appointment, separate from stock comp.
PrairieSky owns land and mineral rights across roughly 18 million acres in western Canada and lets other companies drill it, taking a cut of whatever they produce. It carries none of the drilling cost or risk.
What Horizon Kinetics singles out is the capital allocation. In twelve years since going public, PrairieSky more than tripled its acreage — and still doubled the acres backing each individual share, roughly 6% a year of free per-share growth before a single dollar of revenue growth. Because the existing land is so large and so lightly drilled, the company doesn't have to spend its cash buying more royalties just to stand still; the cash can go to dividends, buybacks and opportunistic land purchases. The firm also flags a governance detail it clearly likes: executives are required to buy, with their own cash, stock worth two to five times their salary within three years of being appointed — on top of whatever shares they're granted. That is what a management team looks like when it expects to be around for the long compounding stretch.
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In short: The other royalty pick — "huge optionality": the Duvernay was never in its original playbook, now ~10–15% of oil volumes. Royalties sit wherever the next play emerges.
PrairieSky is the other royalty name — same model as Topaz: it owns land/mineral rights and earns a cut of whatever operators produce on them, without paying to drill.
Its edge is optionality. McCrea's example: the "Duvernay" play was never even in PrairieSky's original plans, yet it's now ~10–15% of its oil volumes — the royalty owner automatically captures new plays that emerge on its acreage. For an investor who wants exposure to Canada's production growth but with less risk than a driller, PrairieSky is his pick alongside Topaz.
43:52And that's where for I'll go back to prairie sky for example the duvernay was never a play that was contemplated in their original asset playbook and here it's now become a good 10 15% of their productive like oil volumes here. So it's just where new players are developing.
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