Freehold Royalties Ltd. · TSX:FRU
Freehold Royalties — Investor Presentation (January 2025)
41 slides from Freehold Royalties's investor presentation, January 2025
Slide 1: Freehold Royalties
Freehold Royalties January 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% Dividend Yield Coverage down to ~US$50/bbl WTI Target a dividend payout ratio of ~60% 10,660 bbls/d Liquids Weighted Liquids1 20% liquids production CAGR since 2020 94% of Revenue Free option on natural gas (34 MMc
Slide 4: Strategic Midland Basin Acquisition
$259 Million Acquisition in the Core of the Midland Basin Strategic Midland Basin Acquisition Acquired assets map Acquisition highlights ▪ ~244,000 gross drilling acres; increasing Freehold’s Midland Basin acreage by ~35% ▪ ~85% of acreage concentrated in core Midland Basin (Martin & Midland countie
Slide 5: Positioning Portfolio into Undeveloped Lands Strengthens Future Growth Position
Positioning Portfolio into Undeveloped Lands Strengthens Future Growth Position Strategic Midland Basin Acquisition ~25% of the acquisition is Undeveloped ▪ Significant “white space” DSUs with more than 25% of the Acquired Assets acreage characterized as undeveloped with no 2010 -2024 Horizontal Wel
Slide 6: Pro forma Freehold
Balanced North American Portfolio; Oil Weighted; Best-in-Class Operators Pro forma Freehold Key metrics including the Dec 2024 acquisition Freehold’s top 3 areas (boe/d) Midland 3,600 49% of Total Production 58% 42% Eagle Ford 2,400 Heavy Oil 1 1,300 69% Oil Weighted Revenue 49% 51% ~34 MMcf/d of co
Slide 7: Income Growth and Durable Returns, the Results
Freehold’s Strategy Income Growth and Durable Returns, the Results Creating Value Enhancing Value Delivering Value Production per million Funds from operations, and Last 5 years total shares outstanding dividends per share shareholder return (boe/d/mm shares) ($ per share) 2020 – 2023 per Share Grow
Slide 8: Resilient Cashflow Margins
Freehold’s Value Proposition Resilient Cashflow Margins 2025E cashflow per boe1 Freehold realized pricing 2024 YTD ($/boe) ($/boe) $50 US US +19% premium oil $40 Canada Cdn. $70 $80 $90 $100 $110 $30 US US +43% premium $20 boe Cdn. Canada $10 $0 $20 $40 $60 $80 Expanding into the US has delivered a
Slide 9: 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 ~$5.3 billion* 15 undi
Slide 10: Conservatively Balancing Dividends with Leverage
Finance and Dividend Strength Conservatively Balancing Dividends with Leverage ▪ Low cost structure provides Annual dividends paid Net debt to last robust funds from operations to ($ millions) twelve months funds from operations support dividend $180 1.5x Conservative leverage ▪ Freehold continues t
Slide 11: Invested Capital and Dividends Drive Returns
Finance and Dividend Strength Invested Capital and Dividends Drive Returns Return on capital employed1 Dividend payout ratio (dividends paid/funds from operations) 20% 80% 15% 10% 60% 5% 0% 40% -5% -10% 20% -15% 2020 2021 2022 2023 YTD 2024 0% Freehold Royalty Peer Average 2020 2021 2022 2023 2024 Y
Slide 12: Returns Continue to Grow as Freehold Grows
Finance and Dividend Strength Returns Continue to Grow as Freehold Grows ▪ Freehold’s dividend has Cumulative dividends paid ($ millions) been a permanent feature through all $2,500 commodity price cycles $2.26 billion $2,000 dividends ▪ Current monthly paid since inception dividend of 9 cents per $
Slide 13: 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 Peers1 Peer 1 FRU 9 2 3 4 5 6 8 11 13 15 10 12 14 16 17 18 19 20 21 22 23 24 25 26 27 Freehold’s dividend is susta
Slide 14: The Freehold Story
DEEP BASIN CLEARWATER The Freehold Story CARDIUM VIKING ▪ Royalty ownership provides significant exposure to SE SASKATCHEWAN high margin assets with zero maintenance capital N. DAKOTA BAKKEN ▪ Positioned at the low-end of the North American upstream supply cost curve, alongside operators focused on
Slide 15: US Portfolio
US Portfolio FREEHOLDROYALTIES.COM | TSX FRU
Slide 16: Freehold's US Portfolio Overview
Freehold’s US ortfolio Overview Freehold US asset map Production summary Basin summary (YTD 2024) (boe/d) Midland 3,600 Eagle Ford 2,400 Delaware 370 Other 600 0% 25% 50% 75% 100% Total 6,970 Oil NGLs Gas Revenue summary US M&A lookback (YTD 2024) $685 million deployed between 20 unique transactions
Slide 17: 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 YTD) 1.6 1.4 60 other operators 1.2 25% 1.0 42% 0.8 7% 0.6 0.4 8% 8% 10% 0.2 - 1Q21 1Q22 1Q23 1Q24 Permits Spuds TIL (turn-in-line/on prod) 17 Source | Company Reports
Slide 18: Positioned In Front of the Drill Bit
Why Freehold Likes the US Positioned In Front of the Drill Bit Midland Basin activity heatmap1 ▪ 60% of basin activity is concentrated in the Midland, Martin and Howard counties, where the majority of Freehold’s acreage is positioned ▪ 2023 and 2024 YTD operator completions have been primarily focus
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 inventor locations are split evenl between the Lower Eagle Ford, and upper zones ▪ Freehold acreage mostly in core Karnes Coun
Slide 22: Canadian Portfolio
Canadian Portfolio FREEHOLDROYALTIES.COM | TSX FRU
Slide 23: Freehold's Canadian Portfolio Overview
Freehold’s Canadian ortfolio Overview Freehold Canadian asset map Production summary Basin summary (YTD 2024) (boe/d) Viking 1,300 SE Sask. 1,100 0% 25% 50% 75% 100% Cardium 1,100 Oil NGLs Gas Mannville 900 Revenue summary Heavy Oil 830 (YTD 2024) Clearwater 450 Other 3,800 Total 9,480 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 3 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 500 Peavine 400 Nipisi 300 Marten Hills 200 West Marten & McLeod Lake 100 Figure Lake Greater Jarvie Clearwater Wells 0 Sub-Area Outlines 2020 2021 2022 2023
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
Canadian Cashflow Machine The Mannville Cornerstone Mannville oil royalty Mannville fairway net Mannville Mannville land map volumes heavy oil wells spud ownership (bbls/d) stats 1,200 3 975,000 acres 1,100 1,825 heavy 2 oil locations 1,000 46% 3,575 other Mannville 1 locations 900 20% Increasing 80
Slide 28: Southeast Saskatchewan Resurgence
Canadian Resource Expansion Southeast Saskatchewan Resurgence ▪ Dominant position with 525,000 gross acres of royalty SE Sask. net drilled wells lands (including 300,000 gross acres of mineral title land) 3.0 2.5 ▪ Operators have continued to realize improved economics by drilling multilateral wells
Slide 29: Supplemental Slides
Supplemental Slides 29
Slide 30: 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% YTD 2024 Consistent, sustainable dividend Capacity to fund future growth with no operating or capital cost with >$35/share or ~$2.3 billion t
Slide 31: Q1 – Q3 2024 Royalty Drilling
Q1 – Q3 2024 Royalty Drilling NORTH DAKOTA BAKKEN Deep Basin Clearwater Mannville Viking MIDLAND Cardium DELAWARE EAGLE FORD SE Saskatchewan CANADA TOP CANADIAN PLAYS UNITED STATES TOP US PLAYS GROSS WELLS NET WELLS GROSS WELLS NET WELLS Viking 53 4.5 Midland 360 0.8 Mannville Heavy 59 3.5 Eagle For
Slide 32: Deep Knowledge of our Land Base Drives Value
Strong Leasing Activity in Canada Deep Knowledge of our Land Base Drives Value Number of leases Production from leasing Leasing activity breakdown since 2020 issued per year activity since 2020 (boe/d) Privates Juniors Small Caps Mid Caps Large Caps 140 400 0% 25% 50% 75% 100% 120 100 300 80 200 60
Slide 33: Deep Knowledge of our Land Base Drives Value
Portfolio Optimization in Canada Deep Knowledge of our Land Base Drives Value ▪ Capitalize on our extensive land base Optimization, Audit & Compliance revenue since 2021 ($ millions) with royalty optimization 2021 2022 2023 20241 Total ▪ Maximize Freehold’s ro alt interests Optimization $1.2 $10.8 $
Slide 34: Strong Balance Sheet
Strong Balance Sheet 5.0x 4.5x ▪ Proforma December 2024 acquisition, Freehold’s net debt to trailing funds 4.0x Net Debt to Funds From Operations from operations is ~1.1x 3.5x ▪ At current commodity price levels and dividend level, Freehold has 3.0x capacity to pay down debt or pursue 2.5x acquisiti
Slide 35: 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) ($ millions) 6,000 5,420 $409 $400 BOE/d million 4,000 YTD 2024 $300 $200 2,000 $100 0 $0 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024 Since 2020,
Slide 36: Advisories
Advisories FREEHOLDROYALTIES.COM | TSX FRU
Slide 37: Advisories
Advisories Non-GAAP Measures Within this presentation, references are made to terms commonly used as key performance indicators in the oil and gas industry. We believe that net revenue, cash costs, netback, dividend payout ratio, funds from operations per share and return on capital employed are use
Slide 38: 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 39: Advisories
Advisories that Freehold has significant “white space” DSUs with more than 25% of the c uired ssets acreage characterized as undeveloped with no prior horizontal drilling activity, which lands are positioned to benefit from cube development; that Freehold's low cost structure provides robust funds f
Slide 40: Advisories
Advisories Freehold cannot assure investors that actual results will be consistent with these forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. To the extent any guidance or forward-looking statem
Slide 41: Advisories
Advisories Advisory Related to Analogous Information Certain information in this presentation may constitute "analogous information" as defined in NI 51-101 with respect to the certain drilling results, number of wells drilled, or offset well production from other producers with operations that are
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