Freehold Royalties Ltd. · TSX:FRU
Freehold Royalties — Q1 2025 Earnings Presentation
43 slides from Freehold Royalties's earnings presentation, May 14, 2025
Slide 1: Freehold Royalties
Freehold Royalties May 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 more than 360 royalty counterparties N. DAKOTA BAKKEN ▪ ~6.1 million gross acres in Canada, and ~1.2 mill
Slide 3: Why Own Freehold
A Uniquely North American Energy Royalty Company Why Own Freehold Dividend Focused 9.0% Dividend Yield Coverage down to ~US$50/bbl WTI Target a dividend payout ratio of ~60% Liquids Weighted ~11,000 bbls/d 16% CAGR on liquids production since 2020 Liquids1 ~88% of Revenue Free option on natural gas
Slide 4: Snapshot of Freehold
Balanced North American Portfolio; Oil Weighted; Best-in-Class Operators Snapshot of Freehold Freehold’s 3 key areas (boe/d) Production 57% 43% Midland 3,700 Q1 2025 48% of Total Eagle Ford 2,500 Heavy Oil 1 1,525 67% Oil Weighted Revenue 46% 54% Q1 2025 Plus ~34 MMcf/d of corporate gas exposure 65%
Slide 5: Income Growth and Durable Returns, the Results
Freehold’s Strategy Income Growth and Durable Returns, the Results Creating Value Enhancing Value Delivering Value Production per million Funds from operations, and Total shareholder shares outstanding dividends per share return since 2019 (boe/d/mm shares) ($ per share) 2020 – 2024 per Share Growth
Slide 6: High Margin Barrels – Best in the Business
Freehold’s Value Proposition High Margin Barrels – Best in the Business 2025E cashflow per boe 1 Freehold realized pricing Q1-2025 ($/boe) $40 US US +21% premium oil Canada Cdn. $30 $0 $20 $40 $60 $80 $100 $120 ($/bbl) $20 US US +47% premium boe $10 Cdn. Canada $0 $20 $40 $60 $80 ($/boe) $0 Peers 1
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 ~24,000* 30 25 ~30 years development locations development locations 20 ~$10.3 billion ~$6.3 billion* 15 undi
Slide 9: Conservatively Balancing Dividends with Leverage
Finance and Dividend Strength Conservatively Balancing Dividends with Leverage ▪ Low cost structure provides robust Dividend Payout Ratio Net debt to last funds from operations to support (dividends paid/funds from operations) twelve months funds dividend from operations 80% 1.5x Conservative levera
Slide 10: Disciplined Investment Framework Drives Profitable Growth
Track Record of Capital Discipline Disciplined Investment Framework Drives Profitable Growth FRU’s Return on Average Capital Employed 1 FRU vs. Peers 1 – Return on Average Capital Employed 30% 30% 25% Average ROACE 12% 20% 20% 10% 15% ROACE 10% 0% 5% -10% 0% ROACE ROACE Avg -20% -5% 2020 2021 2022 2
Slide 11: Returns Continue to Grow as Freehold Grows
Finance and Dividend Strength Returns Continue to Grow as Freehold Grows ▪ Freehold’s dividend has Cumulative dividends paid ($ millions) been a permanent feature through all $2,500 commodity price cycles $2.3 billion $2,000 dividends paid ▪ Current monthly since inception (>$36/share) dividend of 9
Slide 12: Dividend Resiliency
Finance and Dividend Strength Dividend Resiliency 2025E WTI breakeven pricing1 (US$/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
US Portfolio FREEHOLDROYALTIES.COM | TSX FRU
Slide 15: US Portfolio Overview
US Portfolio Overview Freehold US asset map Production summary Summary Q1 2025 (Q1 2025) (boe/d) Midland 3,700 Eagle Ford 2,500 Delaware 350 Other 450 0% 25% 50% 75% 100% Total ~7,000 Oil NGLs Gas Revenue summary US M&A lookback (Q1 2025) $685 million deployed between 20 unique transactions has gene
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 1.8 1.6 60 other operators 1.4 24% 1.2 32% 1.0 3% 0.8 7% 0.6 0.4 10% 24% 0.2 - 1Q21 1Q22 1Q23 1Q24 1Q25 Permits Spuds TILs (turn-in-line/on-prod) Note | 1 Assumes Freehold owned a
Slide 17: FRU's Midland Basin Position
~$392mm of Midland focused acquisitions in 2024 has reshaped FRU’s position FRU’s Midland Basin Position ▪ 2024 acquisitions focused on building out Midland Production (% of Corporate Production) “wall to wall carpeting” in the Midland basin 2025E 2025E Doubled since 2023 ▪ Market share has grown 20
Slide 18: U.S. Investments Providing Significant Returns
Why Multi-Basin Exposure Is Important U.S. Investments Providing Significant Returns Cumulative US royalty revenue Freehold’s US royalty production ($ millions) (boe/d) 6,970 boe/d $600 ~$510 million 7,000 $500 6,000 5,532 5,102 $400 5,000 4,395 78% $300 4,000 liquids $200 3,000 2,169 $100 2,000 $0
Slide 19: Midland – Staggering Efficiency Gains
19 continuing with Efficiency gains are average feet drilled Average feet drilled by ~150% since 2014 and ~87% since 2019 per rig improving by per rig has increased 14% in 2024 over 2023 Total Midland Rigs (#) 0 50 250 100 150 200 01-Mar-14 01-Jun-14 01-Sep-14 01-Dec-14 01-Mar-15 01-Jun-15 01-Sep-15
Slide 20: 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 21: 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 22: 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 23: 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 24: Canadian Portfolio
Canadian Portfolio FREEHOLDROYALTIES.COM | TSX FRU
Slide 25: Canadian Portfolio Overview
Canadian Portfolio Overview Freehold Canadian asset map Production summary Summary Q1 2025 (Q1 2025) (boe/d) Viking 1,100 SE Sask 1,150 0% 25% 50% 75% 100% Heavy Oil 1,020 Oil NGLs Gas Clearwater 530 Revenue summary Cardium 900 (Q1 2025) Deep Basin 2,775 Mannville 825 Other 975 0% 25% 50% 75% 100% O
Slide 26: Multilateral Adoption in Canada
What Freehold is Excited About Multilateral Adoption in Canada ▪ New technology continues to unlock substantial Multilateral Spuds on Freehold Lands resource that may have been marginal under 120 40% previous drilling techniques 100 30% Multilateral Spuds (#) ▪ Exposure via the Clearwater and Mannvi
Slide 27: 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 28: 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 29: 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 Mannville oil volumes 4 up >20% since mid-2023 975,000 acres 1,100 3 1,825 heavy oil locations
Slide 30: 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 31: Supplemental Slides
Supplemental Slides 31
Slide 32: First Quarter 2025 Results
First Quarter 2025 Results Q1-2025 Q4-2024 Q1-2024 WTI crude oil US$/bbl $71.42 $70.27 $76.96 Production boe/d 16,248 15,306 14,714 Liquids Production bbls/d (% liquids) 10,635 (65%) 9,878 (65%) 9,278 (63%) Funds from operations C$ millions $68 $61 $54 Netback C$ per boe $53.01 $47.25 $46.62 Dividen
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 >$36/share or ~$2.3 billion throu
Slide 34: Q1-2025 Royalty Drilling
Q1-2025 Royalty Drilling NORTH DAKOTA BAKKEN Deep Basin Clearwater Mannville Viking MIDLAND Cardium DELAWARE EAGLE FORD SE Saskatchewan CANADA TOP CANADIAN PLAYS UNITED STATES TOP US PLAYS GROSS WELLS NET WELLS GROSS WELLS NET WELLS Viking 33 2.3 Midland 183 0.5 SE Saskatchewan 12 0.5 Eagle Ford 23
Slide 35: Deep Knowledge of our Land Base Drives Value
Strong Leasing Activity in Canada Deep Knowledge of our Land Base Drives Value Number of leases Production from leasing Leasing activity breakdown since 2020 issued per year activity since 2020 (boe/d) Privates Juniors Small Caps Mid Caps Large Caps 140 400 0% 25% 50% 75% 100% 120 100 300 80 200 60
Slide 36: Deep Knowledge of our Land Base Drives Value
Portfolio Optimization in Canada Deep Knowledge of our Land Base Drives Value ▪ Capitalize on our extensive land base Optimization, Audit & Compliance revenue since 2021 ($ 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: Advisories
Advisories FREEHOLDROYALTIES.COM | TSX FRU
Slide 39: 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 40: 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 41: Advisories
Advisories our expectation to continue as we see growth in oil weighted plays like Midland, Mannville Stack, Clearwater and SE Sas katchewan – in addition to gro wth through value enhancing acquisitions; our expectati on there will be increased licensing activity in the Mannville; estimated future d
Slide 42: 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 43: 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