Freehold Royalties Ltd. · TSX:FRU
Freehold Royalties — Q4 2024 Earnings Presentation
44 slides from Freehold Royalties's earnings presentation, March 2025
Slide 1: Freehold Royalties
Freehold Royalties March 2025 FREEHOLDROYALTIES.COM | TSX FRU
Slide 2: North American Portfolio Overview
DEEP BASIN CLEARWATER Freehold’s Value Proposition North American Portfolio Overview MANNVILLE HEAVY OIL CARDIUM VIKING SE SASKATCHEWAN ▪ Exposure to major conventional oil and shale basins with >360 royalty counterparties N. DAKOTA BAKKEN ▪ ~6.1 million gross acres in Canada, and ~1.2 million gross
Slide 3: Why Own Freehold
A Uniquely North American Energy Royalty Company Why Own Freehold Dividend Focused 8.7% Dividend Yield Coverage down to ~US$50/bbl WTI Target a dividend payout ratio of ~60% Liquids Weighted ~11,000 bbls/d 21% CAGR on liquids production since 2020 Liquids1 ~91% of Revenue Free option on natural gas
Slide 4: Snapshot of Freehold
Balanced North American Portfolio; Oil Weighted; Best-in-Class Operators Snapshot of Freehold Freehold’s 3 key areas (boe/d) Production 57% 43% Midland 3,600 47% of Total Eagle Ford 2,550 Heavy Oil 1 1,325 70% Oil Weighted Revenue 50% 50% Plus ~34 MMcf/d of corporate gas exposure 66% 1 Includes Mann
Slide 5: Income Growth and Durable Returns, the Results
Freehold’s Strategy Income Growth and Durable Returns, the Results Creating Value Enhancing Value Delivering Value Production per million Funds from operations, and Total shareholder shares outstanding dividends per share return since 2019 (boe/d/mm shares) ($ per share) 2020 – 2024 per Share Growth
Slide 6: Resilient Cashflow Margins
Freehold’s Value Proposition Resilient Cashflow Margins 2025E cashflow per boe 1 Freehold realized pricing 2024 ($/boe) $50 US US +18% premium oil $40 Canada Cdn. $70 $80 $90 $100 $110 $30 ($/bbl) $20 US US +42% premium boe Cdn. Canada $10 $0 $20 $40 $60 $80 ($/boe) $0 Peers 1 FRU Expanding into the
Slide 7: Evolution of a Freehold BOE
Freehold’s Value Proposition Evolution of a Freehold BOE ▪ The shift in product mix over the 9,781 boe/d 15,800 – 17,000 boe/d last 5 years to higher value oil 70% 55% Liquids ~66% Liquids and liquids results in each BOE generating almost 20% more 60% revenue than in 2020 50% ▪ In 2025, Freehold exp
Slide 8: Decades of Inventory
Portfolio of Oil-Weighted Areas Provide Growth and Optionality Decades of Inventory Asset Book highlights Development inventory by region (years) 40 Canada United States 35 ~40 years ~18,000 ~18,500* 30 25 ~30 years development locations development locations 20 ~$10.3 billion ~$5.3 billion* 15 undi
Slide 9: Conservatively Balancing Dividends with Leverage
Finance and Dividend Strength Conservatively Balancing Dividends with Leverage ▪ Low cost structure provides Dividend Payout Ratio Net debt to last robust funds from operations to (dividends paid/funds from operations) twelve months funds from operations support dividend 80% 1.5x Conservative levera
Slide 10: Disciplined Investment Framework Drives Profitable Growth
Track Record of Capital Discipline Disciplined Investment Framework Drives Profitable Growth FRU’s Return on Average Capital Employed 1 FRU vs. Peers 1 – Return on Average Capital Employed 30% 30% 25% Average ROACE 12% 20% 20% 15% 10% ROACE 10% 0% 5% -10% 0% ROACE ROACE Avg -5% -20% 2020 2021 2022 2
Slide 11: Returns Continue to Grow as Freehold Grows
Finance and Dividend Strength Returns Continue to Grow as Freehold Grows ▪ Freehold’s dividend has Cumulative dividends paid ($ millions) been a permanent feature through all $2,500 commodity price cycles $2.3 billion $2,000 dividends paid ▪ Current monthly since inception ($36.22/share) dividend of
Slide 12: Dividend Resiliency
Finance and Dividend Strength Dividend Resiliency 2025E WTI breakeven pricing1 (US$/bbl WTI) Blue bars denote peers with a $80 dividend yield above 5% $70 $60 $50 $40 $30 $20 $10 $0 FRU Peers 1 FRU 12 13 16 19 20 23 10 11 14 15 17 18 21 22 24 25 26 3 6 9 2 4 5 7 8 Peer 1 Freehold’s dividend is susta
Slide 13: Key Item Sensitivities & Guidance
2025E Range of 15,800 – 17,000 boe/d – Higher Liquids Drives FFO Improvement Key Item Sensitivities & Guidance $0.02/sh 2025E Range +/- $0.01 FX $3.8mm 15,800 – 17,000 boe/d $0.02/sh +/- US$1/bbl WTI $3.8mm ~10% YoY Production Growth +/- 100 BOE/d US Prod $0.01/sh 2% increase in liquids weighting in
Slide 14: US Portfolio
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Slide 15: Freehold's US Portfolio Overview
Freehold’s US Portfolio Overview Freehold US asset map Production summary Basin summary (2024) (boe/d) Midland2 3,600 Eagle Ford 2,550 Delaware 350 Other 450 0% 25% 50% 75% 100% Total ~6,950 Oil NGLs Gas Revenue summary US M&A lookback (2024) $685 million deployed between 20 unique transactions has
Slide 16: Drilling Activity Led by Top Operators
Drilling Activity Led by Top Operators Net activity wells on Freehold’s US lands Freehold’s top US drillers (2023-2024) 1.8 1.6 60 other operators 1.4 26% 1.2 1.0 43% 0.8 6% 0.6 7% 0.4 8% 9% 0.2 - 1Q21 1Q22 1Q23 1Q24 Permits Spuds TIL (turn-in-line/on prod) 16 Source | Company Reports
Slide 17: FRU's Midland Basin Position
~$377mm of Midland focused acquisitions in 2024 has reshaped FRU’s position FRU’s Midland Basin Position ▪ 2024 acquisitions Midland Production focused on building out (% of Corporate Production) “wall to wall carpeting” in the Midland basin 2025E 2025E Doubled since 2023 ▪ Market share has grown 20
Slide 18: Positioned In Front of the Drill Bit
Why Freehold Likes the US Positioned In Front of the Drill Bit Midland Basin activity heatmap 1 ▪ 60% of basin activity is concentrated in the Midland, Martin and Howard counties, where the majority of Freehold’s acreage is positioned – represents ~60% of Freehold’s Midland production ▪ Operator com
Slide 19: Midland Basin Bench Overview
Resource Expansion Midland Basin Bench Overview Clearfork 7,000 ▪ Significant running room Upper Spraberry in the 1st Generation and 7,500 Middle Spraberry 2nd Generation benches Jo Mill 8,000 ▪ Emerging benches are Lower Spraberry being tested with results 8,500 Dean thar are on par with Wolfcamp A
Slide 20: Midland Production Evolution
Resource Expansion Midland Production Evolution Emerging Benches Midland Basin oil production by bench generation ~10,000 bbls/d from 380 wells (mmbbl/d of oil) 2.5 Second Generation Benches 2.0 ~600,000 bbls/d from ~5,000 wells 1.5 First Generation Benches ~1,600,000 bbls/d from ~20,000 wells 1.0 0
Slide 21: Concentrated Footprint in the Core of the Eagle Ford
Resource Expansion Concentrated Footprint in the Core of the Eagle Ford ▪ 20 years1 of prospective development inventory Lower Eagle Ford development since 2010 ▪ Freehold’s inventory locations are split evenly between the Lower Eagle Ford, and upper zones ▪ Freehold acreage mostly in core Karnes Co
Slide 22: Canadian Portfolio
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Slide 23: Freehold's Canadian Portfolio Overview
Freehold’s Canadian Portfolio Overview Freehold Canadian asset map Production summary Basin summary 2024 (2024) (boe/d) Viking 1,200 SE Sask. 1,150 0% 25% 50% 75% 100% Cardium 1,000 Oil NGLs Gas Mannville 900 Revenue summary Heavy Oil 850 (2024) Clearwater 475 Other 3,850 Total ~9,400 0% 25% 50% 75%
Slide 24: Multilateral Adoption in Canada
What Freehold is Excited About Multilateral Adoption in Canada ▪ New technology continues to Clearwater net royalty Mannville fairway net production heavy oil wells spud unlock substantial resource that (boe/d) may have been marginal under 500 4 previous drilling techniques 400 ▪ Exposure via the Cl
Slide 25: Robust Position Across Multiple Exploration Plays
Clearwater Developments Robust Position Across Multiple Exploration Plays Net Clearwater royalty production Basin summary (boe/d) Peace River 600 500 Peavine Nipisi 400 300 Marten Hills 200 West Marten & McLeod Lake Figure Lake 100 Clearwater Wells Greater Jarvie Exploratory Region 0 Developing Regi
Slide 26: Serious Exploration Potential
Clearwater Developments Serious Exploration Potential Freehold Clearwater asset development stage ▪ Continuous size of circle denotes number of Nipisi evaluation of new 12 development locations ▪ Waterflood expansion ▪ Infill drilling Marten pools within the ▪ Step-out exploration Hills greater fair
Slide 27: The Mannville Cornerstone
Early Innings of Mannville Growth for Freehold The Mannville Cornerstone Mannville oil royalty Mannville fairway net Mannville Mannville land map volumes heavy oil wells spud ownership (bbls/d) stats 1,200 4 Mannville oil volumes 975,000 acres up ~15% since mid-2023 1,100 3 1,825 heavy oil locations
Slide 28: Southeast Saskatchewan Resurgence
Canadian Resource Expansion Southeast Saskatchewan Resurgence ▪ Significant momentum in activity with >25% YoY SE Sask. net drilled wells increase in spuds on Freehold’s acreage 3.5 3.0 ▪ Dominant position with 525,000 gross acres of royalty 2.5 lands (including 300,000 gross acres of mineral title
Slide 29: Supplemental Slides
Supplemental Slides 29
Slide 30: Fourth Quarter & 2024 Results
Fourth Quarter & 2024 Results Q4-2024 Q3-2024 2024 2023 WTI crude oil US$/bbl $70.27 $75.09 $75.72 $77.62 Production boe/d 15,306 14,608 14,962 14,714 Liquids Production bbls/d (% liquids) 9,878 (65%) 9,367 (64%) 9,581 (64%) 9,186 (62%) Funds from operations C$ millions $61 $56 $231 $240 Netback C$
Slide 31: December 2024 Strategic Midland Basin Acquisition
$259 Million Acquisition in the Core of the Midland Basin December 2024 Strategic Midland Basin Acquisition Acquired assets map Acquisition highlights ▪ ~244,000 gross drilling acres; increasing Freehold’s Midland Basin acreage by ~35% ▪ ~85% of acreage concentrated in core Midland Basin (Martin & M
Slide 32: December 2024 Strategic Midland Basin Acquisition
Positioning Portfolio into Undeveloped Lands Strengthens Future Growth Position December 2024 Strategic Midland Basin Acquisition ~25% of the acquisition is Undeveloped ▪ Significant “white space” DSUs with more than 25% of the Acquired Assets acreage characterized as undeveloped with no 2010 -2024
Slide 33: The Royalty Advantage
Minerals and Royalties Represent a Simple Asset Class The Royalty Advantage High Margin Return of Balance Sheet Model Capital Strength Operating Margin of 85% 2024 with Consistent, sustainable dividend Capacity to fund future growth no operating or capital cost with >$35/share or ~$2.3 billion throu
Slide 34: 2024 Royalty Drilling
2024 Royalty Drilling NORTH DAKOTA BAKKEN Deep Basin Clearwater Mannville Viking MIDLAND Cardium DELAWARE EAGLE FORD SE Saskatchewan CANADA TOP CANADIAN PLAYS UNITED STATES TOP US PLAYS GROSS WELLS NET WELLS GROSS WELLS NET WELLS Viking 72 5.3 Midland 479 1.1 Mannville Heavy 68 4.1 Eagle Ford 183 1.
Slide 35: Deep Knowledge of our Land Base Drives Value
Strong Leasing Activity in Canada Deep Knowledge of our Land Base Drives Value Number of leases Production from leasing Leasing activity breakdown since 2020 issued per year activity since 2020 (boe/d) Privates Juniors Small Caps Mid Caps Large Caps 140 400 0% 25% 50% 75% 100% 120 100 300 80 200 60
Slide 36: Deep Knowledge of our Land Base Drives Value
Portfolio Optimization in Canada Deep Knowledge of our Land Base Drives Value ▪ Capitalize on our extensive land base Optimization, Audit & Compliance revenue since 2021 ($ millions) with royalty optimization 2021 2022 2023 2024 Total ▪ Maximize Freehold’s royalty interests Optimization $1.2 $10.8 $
Slide 37: Net Debt to Funds From Operations
Strong Balance Sheet 5.0x 4.5x ▪ Proforma December 2024 Midland Acquisition, Freehold’s net debt to 4.0x trailing funds from operations is ~1.1x Net Debt to Funds From Operations 3.5x ▪ At current commodity price levels and dividend level, Freehold has 3.0x capacity to pay down debt or pursue 2.5x a
Slide 38: A&D Returns Substantially Above Cost of Capital
Why Freehold Likes the US A&D Returns Substantially Above Cost of Capital Net US royalty production Cumulative US royalty revenue (boe/d) 5,532 ($ millions) 6,000 BOE/d $500 ~$460 2024 million $400 4,000 $300 2,000 $200 $100 0 $0 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Since 2020, Freehold
Slide 39: Advisories
Advisories FREEHOLDROYALTIES.COM | TSX FRU
Slide 40: Advisories
Advisories Non-GAAP Measures Within this presentation, references are made to terms commonly used as key performance indicators in the oil and gas in dustry. We believe that net revenue, cash costs, netback, dividend payout ratio, funds from operations per share and return on capital employed are us
Slide 41: Advisories
Advisories Third Party Information and Public Information This presentation contains information regarding lands and interests from which Freehold Royalties Ltd. ("Freehold", "FRU", the "Corporation", "us", "we" or "our") collects or may in the future collect royalties and associated revenues. It al
Slide 42: Advisories
Advisories our expectation to continue as we see growth in oil weighted plays like Midland, Mann ville Stack, Clearwater and SE Saskatchewan – in addition to growth through value enhancing acquisitions; our expectation there will be increased licensing activity in the Mannville; our expectations of
Slide 43: Advisories
Advisories Advisory Relating to Presentation of Oil and Natural Gas Reserves, Revenue and ProductionInformation This presentation contains information relating to crude oil, natural gas and NGL reserves and other information prepared in accordance with the requirements of Canadian securities laws in
Slide 44: Advisories
Advisories Conversion of Natural Gas to Barrels of Oil Equivalent (boe) To provide a single unit of production for analytical purposes, natural gas production and reserves volumes are converted mathematically to equivalent barrels of oil ("boe"). We use the industry-accepted standard conversion of s