Freehold Royalties Ltd. · TSX:FRU
Freehold Royalties — Investor Presentation (May 2016)
20 slides from Freehold Royalties's investor presentation, May 2016
Slide 1: Investor Presentation Spring 2016
Investor Presentation Spring 2016
Slide 2: Corporate Profile
Corporate Profile TSX : FRU focused on oil and gas royalties 2016e production (80% royalty production) boe per day 11,400 2016e operating income from royalties 94% 2016e annualized dividend(1)(2)($0.04 per month) $ per share 0.48 Current dividend yield(2)(3) 4.3% Market capitalization(2)(3) $ billio
Slide 3: Investment Performance
Investment Performance(1) TSX : FRU Long track record delivering value, cumulative dividends declared $30.11 per share ($1.4 billion in dividends) $95 $31 $16 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Freehold Royalties Ltd. S&P/TSX Oil and Gas Exploration & Production Index S&P
Slide 4: Transaction Highlights
Transaction Highlights TSX : FRU On May 25, 2016 Freehold acquired a diverse package of royalty assets and fee lands for $165 million. Deal highlights: 1. Accretive to Freehold, increasing annualized 2016 production and operating income by 1,700 boe/d and $11.4 million, respectively 2. Adds a divers
Slide 5: Enhancing Pro Forma Freehold
Enhancing Pro Forma Freehold TSX : FRU Before Husky Husky Royalty Pro Forma (2016E) (2016E) Freehold Production (boe/d) 10,400 1,000 11,400 Royalties % 78% 100% 80% Royalties % of 93% 100% 94% operating income Mineral title acres 0.7 0.3 1.0 (mm) Royalty acres 3.4 2.5 5.9 (mm) ● 2016 estimated basic
Slide 6: Strong Overlap with Existing Royalties
Strong Overlap with Existing Royalties TSX : FRU Grande Prairie Shaunavon Multi-zone Oil Play Targets Mississippian / Bakken Oil Plays Further complements our existing suite of assets 6
Slide 7: Acquired Assets Area Summary
Acquired Assets Area Summary TSX : FRU % Revenue % Total Fee Land H1 2015 5% 17% 12% 14% 15% 16% 30% 68% 23% Northern AB/BC Northern AB/BC Grande Prairie/Rocky Mt. House Grande Prairie/Rocky Mt. House Southern AB Southern AB Southwest SK Southwest SK Southeast SK/MB Southeast SK/MB Diversified asset
Slide 8: Major Operators
Major Operators TSX : FRU Acquired Assets - Major Operators (>100 wells) Enerplus Corp 256 Husky Oil Ltd. Direct Energy 272 Marketing Ltd 105 Apache Cda Ltd 227 Crescent Point Energy Corp 211 Bonavista Energy Corp 133 City of Medicine Hat 284 Cenovus Energy Inc Canadian Natural 221 Resources Ltd 704
Slide 9: The Freehold Advantage
The Freehold Advantage TSX : FRU Majority of cash flow derived from royalty assets We are different than Free cash flow vehicle your typical E&P Low cash costs 9
Slide 10: Royalty Focused Cash Flow
Royalty Focused Cash Flow TSX : FRU 2015 % of Operating Income Working Interest 13% Production Volume Royalties 9% 40% Mineral Title Royalties Gross Overriding Royalties 38% 94% of our Operating Income in 2016E is expected to be derived from royalties, offering higher netback, lower risk barrels S
Slide 11: 2016 Free Cash Flow Sensitivities
2016 Free Cash Flow Sensitivities TSX : FRU $0.10 Free Cash Flow Per Share Monthly $0.09 Funds From Operations $0.08 Free Cash Flow $0.07 Capital Spending $0.06 $0.05 Free cash flow available for $0.04 dividend $0.03 $0.02 $0.01 $0.00 $30/bbl WTI, $40/bbl WTI, $50/bbl WTI, $60/bbl WTI, $0.70 CAD/USD
Slide 12: Cash Costs
Cash Costs TSX : FRU Royalty model offers a material cost advantage over E&P’s Freehold $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 Cash Costs ($/boe) (OPEX, Transportation, Royalties, G&A , Interest and Taxes) Source: TD Securities Research Peer group includes: ARC, Bonavi
Slide 13: Low Capex as a % of Cash Flow
Low Capex as a % of Cash Flow TSX : FRU Capital Expenditures represent a small percentage of Freehold’s Funds from Operations enabling sustainability in a low price environment 150% Sector average 110% 125% 100% 75% Freehold < 10% 50% 25% 0% 2010 2011 2012 2013 2014 2015 2016e Sector Average Freehol
Slide 14: The Freehold Advantage
The Freehold Advantage TSX : FRU Assets spanning five provinces from over 40,000 wells Diversity Long Term Receive royalties from over 200 Option Value industry partners Multiple years of free drilling on our lands 14
Slide 15: Royalty Net Drilling Trends
Royalty Net Drilling Trends TSX : FRU * 2015 includes wells drilled from January 1st on our acquisition lands 15
Slide 16: Quality Long Life Asset Base
Quality Long Life Asset Base TSX : FRU +10 YEARS OF FUTURE DRILLING POTENTIAL(3) 130+ Locations Belly River, Mannville, (1) Pekisko, Devonian 550+ Locations Widely Diversified Portfolio Mannville Heavy Oil Play 3100+ (~40% booked) (2) Locations 950+ Locations Viking Light Oil Play 760+ Locations 400
Slide 17: Advisories
Advisories TSX : FRU Forward-Looking Information This presentation offers our assessment of Freehold’s future plans and operations as at May 27, 2016 and contains forward-looking information including, expectation of Freehold's 2016 net debt to funds from operations, expectation of Freehold’s 2016 n
Slide 18: Advisories cont.
Advisories cont. TSX : FRU Non-GAAP Financial Measures Within this presentation, references are made to terms commonly used as key performance indicators in the oil and natural gas industry. We believe that "operating income", "net debt to funds from operations", "free cash flow" and "payout ratio"
Slide 19: Advisories cont.
Advisories cont. TSX : FRU Drilling Locations cont. The drilling locations on which wells are drilled will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information tha
Slide 20: Investor Relations
Investor Relations toll free. 888.257.1873 telephone. 403.221.0833 website. freeholdroyalties.com
Freehold Royalties — Investor Presentation (May 2016) on 6ix