Freehold Royalties Ltd. · TSX:FRU
Freehold Royalties — Shareholder Meeting (May 2023)
14 slides from Freehold Royalties's shareholder meeting presentation, May 10, 2023
Slide 1: 2023 Annual General Meeting
2023 Annual General Meeting May 10, 2023 Quality Assets • Sustainable Dividends FREEHOLDROYALTIES.COM | TSX FRU
Slide 2: Performance North American Royalty Peers
Performance North American Royalty Peers U.S. Royalty Transaction Nov-2020 YE-2022 ▪ Outperformance driven by a Freehold +248% combination of: – Upgrade in Basin quality and Peer A development opportunities – Enhanced sustainability through Peer B improved realized pricing – Robust payor list, with
Slide 3: Investment Highlights
Investment Highlights A North American energy royalty company 7.6 dividend yield % Torque to commodity direct returns to shareholders current dividend coverage to $50 WTI without cost inflation ESG friendly investment High margin asset class rated top 1% among global oil producers >90% netback Diver
Slide 4: Long History of Returns
Long History of Returns No matter the underlying commodity environment, Freehold has ALWAYS provided a dividend $180 Annual Dividend Payment ($mm) $160 $140 $120 $100 $80 $60 $40 $20 $0 2023E 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 201
Slide 5: Torque to Commodities
Torque to Commodities Royalties are a high margin asset class, with upside to commodity prices $, millions Annual Dividend @ $0.09/share $50/bbl WTI $80/bbl WTI $100/bbl WTI 2023E Funds from Operations ($mm) Cash Costs ($mm) Cash Tax ($mm) Costs approximately $30 million per year to run our business
Slide 6: Balanced Portfolio
Balanced Portfolio COMMODITY GEOGRAPHY PRODUCTION VOLUMES 36% CLEARWATER ~20% NATURAL DEEP 65% BASIN MANNVILLE GAS CARDIUM REVENUE PRODUCTION ~80% CONV VIKING GAS 60% SE SASK REVENUE ND 64% BAKKEN REVENUE OIL & NGLs SUPERIOR OIL AND GAS PRICING (Q1-2023) Nymex Natural Gas $4.46/mcf 35% FRU Realized
Slide 7: Q1-2023 Royalty Drilling Results
Q1-2023 Royalty Drilling Results N. Dakota Bakken Deep Basin Clearwater Highest Canadian Viking gross drilling since Midland Q1-2020 Haynesville Cardium 200 Miles Record level 200 Delaware Eagle Ford SE Saskatchewan Miles of Gross Drilling on TOP CANADIAN PLAYS TOP U.S. PLAYS CANADA GROSS WELLS NET
Slide 8: Canadian Portfolio
Canadian Portfolio 12,000 Q1-2023 gross Canadian drilling is 240 the highest quarterly total since Q1-2020 10,000 200 Gross Wells Drilled 8,000 160 (boe/d) 6,000 120 4,000 80 2,000 40 0 0 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Canadian Production (LHS) Gross Wells Dr
Slide 9: U.S. Portfolio
U.S. Portfolio 6,000 240 5,000 200 Gross Wells Drilled 4,000 160 (boe/d) 3,000 120 2,000 80 1,000 40 0 0 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 US Production (LHS) Gross Wells Drilled (RHS) Active rigs on our U.S. land base averaged over 30 in March, U.S. drilling is
Slide 10: First Quarter 2023 Results
First Quarter 2023 Results Q1 2023 Q1 2022 CHANGE West Texas Intermediate US$/bbl $76.13 $94.29 (19%) Production boe/d 14,724 13,676 8% Funds from operations millions $58.6 $71.9 (19%) Period end net debt millions $115.8 $101.2 14% Netback per boe $50.79 $66.17 (23%) Dividend payout ratio % 69% 38%
Slide 11: Enhanced Scale
Enhanced Scale 5 yr. Avg. 5 yr. Avg. Record Revenue in $147 million $125 million Record Funds 2022 of $393 $393 $316 from Operations million of $316 million $190 +170% vs 5- year 209 +153% vs 5-year $152 $145 $121 $118 average $75 $141 $69 $73 average 2017 2018 2019 2020 2021 2022 2017 2018 2019 202
Slide 12: Diversity Amongst Payors
Diversity Amongst Payors Diversified Group of Well Capitalized Producers North American No payor represents Top 10 payors represent portfolio provides exposure > 15% of 12-months ~ 50% of 12-month to a broad group trailing revenue trailing revenue of oil and gas plays across Top 30 payors comprised
Slide 13: ESG Focused
ESG Focused Advancing Freehold’s ESG strategy January 2023 Sustainability Report published – Outlines commitment to creating value for all stakeholders with sustainability a top priority As a royalty business Freehold is not directly responsible for the operations on our leased land – though we stri
Slide 14: Freehold Return Profile
Freehold Return Profile ~60% Dividend Payout Ratio RETURN OF Dividend of $0.09/share is the highest level since 2015; Over CAPITAL TO $160 million forecast to be returned to shareholders in 2023 SHAREHOLDERS Current dividend reflects ~60% dividend payout at US $80/bbl WTI for 2023 2023E FUNDS FROM L