Slide 1: Freehold Royalties Ltd.
Freehold Royalties Ltd. November 2024 FREEHOLDROYALTIES.COM | TSX FRU
Slide 2: Corporate Overview
Corporate Overview A Uniquely North American energy royalty company Corporate Snapshot Uniquely North American Growth & Leverage to Oil Market Capitalization ($billion) $2.1 Production Per Share Growth 100 CLEARWATER 2020-2023 6% CAGR Prod per mm shares 95 Shares Outstanding (million) 150.7 DEEP BAS
Slide 3: Why Own Freehold
Why Own Freehold A Uniquely North American energy royalty company Dividend Focused 8% Dividend Yield Coverage down to ~US$50/bbl WTI Target a dividend payout ratio of ~60% Liquids Weighted 9,481 bbls/d Liquids1 20% liquids production CAGR since 2020 94% of Revenue Free option on natural gas (33 MMcf
Slide 4: The Royalty Advantage
The Royalty Advantage Minerals and Royalties Represent a Simple Asset Class 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 $2.2 billion th
Slide 5: High Margin Royalty Business
High Margin Royalty Business Delivers returns through all commodity cycles Return on Capital Employed (ROCE) Freehold Returns Since IPO (CAGR) 20% 15% Freehold Royalties 10% S&P 500 5% 0% TSX Composite Index -5% -10% TSX Energy Index -15% 0% 2% 4% 6% 8% 10% 12% 2020 2021 2022 2023 Freehold Royalty P
Slide 6: Sustainable, Consistent Income Provider
Sustainable, Consistent Income Provider 29 Year Dividend History Significant & Sustainable Dividend Yield $180 12% Annual Dividend Payment ($ million) $160 Base + Variable Dividend Yield 10% $140 $120 8% $100 6% $80 $60 4% $40 2% $20 $0 0% 2 3 4 5 6 7 8 9 Freehold Peer 1 10 19 11 12 13 14 15 16 17 1
Slide 7: Leverage to Oil Price
Leverage to Oil Price High Margin Oil Weighted Portfolio & Exposure to Premium Priced US Assets $50 $45 2024E Cash Flow per boe ($/boe) $40 $35 $30 $25 $20 $15 $10 $5 $0 40 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 41 42 Peer 1 2 3 4 5 6 7 8 9 Freehold
Slide 8: Diversified North American Portfolio
Diversified North American Portfolio COMMODITY (YTD 2024) PRODUCTION VOLUMES CLEARWATER Diversified land base provides DEEP 36% BASIN MANNVILLE NATURAL 64% Oil & NGLs free option value on continued technological advancement, CARDIUM CONV GAS GAS VIKING new discoveries, and ~6% ~94% increasing develo
Slide 9: High Quality Revenue Stream
High Quality Revenue Stream Oil Weighted Focus High Quality Portfolio ▪ Approximately 94% of Freehold’s YTD 2024 WTI Breakeven (US$/bbl) revenue derived from oil and NGLs $90 $80 ▪ Eagle Ford and Permian represent ~45% of $70 Q3 2024 total revenue $60 $50 – Capital is driven by a strong group of $40
Slide 10: Aligned With Top Operators in North America
Aligned With Top Operators in North America Canada United States Top 10-payors average Top 10 payors represent Top 30 payors comprised of market cap >$20 bn ~50% of 12-month 19 Canadian payors trailing revenue and 11 US 10 Source | Company Reports
Slide 11: US Assets
US Assets Strong Economics, YTD 2024 Production % Liquids Oil Weighted Growth (boe/d) Eagle Ford 2,400 82% Midland 2,050 83% NORTH DAKOTA BAKKEN Oil weighted, high netback Delaware 380 75% 36% Production North Dakota 250 76% Other 400 29% Total US 5,533 77% 45% Revenue Higher Realized Pricing Attrac
Slide 12: US Portfolio
US Portfolio Rapidly growing Midland adding high netback production under leading Permian operators (ExxonMobil is Freehold’s number 3 payor with ~35% of Freehold’s Midland development inventory) 6,000 Freehold US Net Production (boe/d) 5,000 4,000 ~38% Midland 3,000 2,000 1,000 ~44% Eagle Ford 0 Ja
Slide 13: US Resource Advantage
US Resource Advantage Permian dominates in terms of thickness, potential, & production Permian Primary Development Bench Emerging Development Bench Freehold’s US Focus Areas Permian and Eagle Ford are key focus areas for current and future opportunities ▪ Thickest stack of pay in North America ▪ Sca
Slide 14: Midland (Permian)
Midland (Permian) Aligned with growth focused operators ▪ ~1 in 5 wells drilled in Midland on Freehold’s land (1) ▪ ~35% production growth since Q1-2023 ▪ Development inventory concentrated under growth focused operators ▪ ExxonMobil and Diamondback represent ~36% and ~21%, respectively, of Freehold
Slide 15: Midland (Permian)
Midland (Permian) Significant resource thru development of Primary, Emerging and Upside benches Horizontal % Developed Wells in Basin FRU Lands Zone Wells Per DSU 1 mile x 2 mile unit Growth Engine for Freehold 217 0% Clearfork 55 0% Upper Spraberry Primary Benches – Lots of running room Middle ▪ ~3
Slide 16: US Resource Advantage – Free In the Money Options
US Resource Advantage – Free “In the Money” Options Technical Advancements Improving Productivity and Upside ▪ Permian operators have been Emerging & Upside Targets in Midland Growing at Impressive Rate moving towards developing 400% the entire resource stack Emerging Benches (both primary and emerg
Slide 17: Eagle Ford
Eagle Ford Concentrated under ConocoPhillips (Marathon) and EOG Approximately 1 in 8 wells in Eagle Ford are drilled on FRU land Freehold Eagle Ford Development Inventory Other 26% 49% 25% ConocoPhillips acquires Marathon for US$23 billion “We see over a decade of runway in the Eagle Ford.”(1) 6 12
Slide 18: Canadian Assets
Canadian Assets Stable Production Base Deep Basin Key area for royalty 64% Production optimization initiatives Clearwater 9% YTD 2024/2023 production growth 55% Revenue Mannville Stack >150% YoY increase in drilling Diversified, Quality Payors Cardium activity YTD 2024 8% YTD 2024/2023 production gr
Slide 19: Canadian Portfolio
Canadian Portfolio Stable, low PDP decline production base with modest investments (~$40 million) in early- 12,000 stage Clearwater assets over last five years 10,000 Freehold Cdn Net Production (boe/d) 8,000 6,000 Looking ahead ▪ Record leasing in 2023 and strong YTD 2024 results; particularly 4,00
Slide 20: Clearwater
Clearwater ~460 boe/d, ~400,000 gross acres 500 Clearwater Production (boe/d) 400 300 200 100 0 2020 2021 2022 2023 YTD 2024 Expectations For Continued Growth ▪ ~20% of production under waterflood in Nipisi ▪ Core area development in Figure Lake & Nipisi ▪ Tamarack deploying fan drilling technology
Slide 21: Mannville Stack
Mannville Stack ~1.4 million gross acres of Mannville royalty ownership Heavy Oil – Multilateral Drilling ▪ 16% production per share growth since Q2-2023 ▪ Active leasing and legacy land base resurgence Edmonton` ▪ 1,315 bbls/d of total heavy oil production in Q3-2024 Lloydminster (includes Clearwat
Slide 22: Canadian Leasing Activity
Canadian Leasing Activity Organic growth through leasing Resurgence of operator Drilling associated with leasing activity activity in SE Saskatchewan in 2023 is expected to serve as an oil along with advancements in growth driver; ~20% of 2023 leases have multi-lateral drilling already been drilled
Slide 23: Canadian Asset Optimization and Audit/Compliance
Canadian Asset Optimization and Audit/Compliance Enhancing a Quality Portfolio 10,500 10,000 Canadian Production (boe/d) 9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 FRU CAD (ex-Opt/Audit/Comp) Optim
Slide 24: Why Freehold?
Why Freehold? A Low-Risk Investment Vehicle Mirroring North American Development North American Oil Proven Asset Base Weighted Business Model Oil & Liquids ▪ Free cash flow business Canada US Canada US % of Geography ▪ Hedge against inflation Gross Acres (millions) ~6.2 ~1.1 Revenue 92% 98% ▪ High m
Slide 25: Supplemental Slides
Supplemental Slides 25
Slide 26: Third Quarter Results
Third Quarter Results Q3-2024 Q2-2024 Q3-2023 WTI crude oil US$/bbl $75.09 $80.57 $82.26 Production boe/d 14,608 15,221 14,605 Funds from operations C$millions $56 $60 $65 Quarter end net debt C$millions $187 $199 $113 Netback C$per boe $47.78 $49.44 $55.63 Dividend payout ratio % 73% 68% 62% Gross
Slide 27: YTD 2024 Royalty Drilling
YTD 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 Ford 15
Slide 28: US vs. Canadian Land
US vs. Canadian Land Canadian Royalty Lands ▪ Across Canada, ~90% is Crown (Federal or Provincial) and 10% is mineral title (owned by individuals and companies) – Alberta 81% is crown, 19% private (mineral title) ▪ The government holds significant control over the majority of mineral resources in Ca
Slide 29: Size of the Prize
Size of the Prize >$500 Billion Opportunity Set ▪ ~$530 billion mineral title opportunity set in the Total Mineral Title Market Size in the Permian1 Permian basin in Texas with a very active market ▪ Fragmented and private mineral title ownership structure in the US creates a significant market of m
Slide 30: 2024E Guidance
2024E Guidance 2024E ANNUAL AVERAGE Average production boe/d 14,700-15,700 West Texas Intermediate crude oil US$/bbl $75.00 AECO natural gas Cdn$/mcf $1.50 NYMEX natural gas US$/mmbtu $2.50 Exchange rate US$/Cdn$ 1.33 30
Slide 31: Corporate History
Corporate History UNIQUELY NORTH AMERICAN 31
Slide 32: Royalty Production History
Royalty Production History 15,700 16,000 15,041 14,724 14,667 15,221 14,605 14,863 14,714 14,608 14,700 14,005 13,676 14,219 14,000 13,453 12,000 11,026 10,944 11,137 11,265 Royalty Production (boe/d) 10,000 9,681 9,285 9,143 8,000 6,000 4,000 2,000 0 Q2-20 Q3-24 2024E 2024E Q1-20 Q3-20 Q4-20 Q1-21
Slide 33: Strong Balance Sheet
Strong Balance Sheet ▪ Freehold exited Q3-2024 with net 5.0x debt to trailing funds from operations 4.5x of 0.8x Net Debt to Funds from Operations 4.0x ▪ At current commodity price levels 3.5x and dividend level, Freehold has 3.0x capacity to pay down debt or pursue acquisitions with free funds from
Slide 34: Benefitting From Strength of Operators
Benefitting From Strength of Operators ▪ We have seen strong upward 16,000 1,200 momentum in activity on Freehold’s royalty land along with the broader 14,000 Western Canadian Sedimentary 1,000 portfolio 12,000 800 ▪ Participate in approximately 2.5% of Production (boe/d) Gross wells drilled 10,000
Slide 35: US Asset Performance – Exceeding Expectations
US Asset Performance – Exceeding Expectations US investments forecast payout in 2026 Cumulative Revenue C$ million $1,400 ▪ ~$565 million invested to YE-2023 $1,200 Plus $112 million in January 2024 $1,000 ▪ Financial performance exceeding expectations $800 First major US acquisition paid out in 3.5
Slide 36: 2023 Reserves Overview
2023 Reserves Overview PDP reserve volumes up ~2% (absolute and per share) Reserves PDP Proven Proven + Probable ▪ Increased from 25.8 MMboe to 26.3 MMboe Oil (MMboe) 11.9 14.7 27.8 Proven reserve volumes up ~5% (absolute and per share) Gas (MMboe) 10.9 11.6 18.3 ▪ Increased from 28.9 MMboe to 30.3
Slide 37: Advisories
Advisories Forward-Looking Statements This presentation offers our assessment of Freehold’s future plans and operations as at September 30, 2024 and contains forward-looking information or statements (collectively, "forward-looking statements" or "forward- looking information") within the meaning of
Slide 38: Advisories cont
Advisories cont Third-Party Information Certain market, third party and industry data contained in this presentation is based upon information from government or other industry publications and reports or based on estimates derived from such publications and reports. Government and industry publicat
Slide 39: Advisories cont
Advisories cont Production Except as otherwise indicated, all production disclosed herein is considered net production for the purposes of National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities, which includes Freehold's working interest (operating and non-operating) share a
Slide 40: Advisories cont
Advisories cont Drilling Locations This Presentation discloses anticipated future drilling or development locations associated with Freehold assets. Certain locations have been identified as booked locations as proved and/or probable reserves have been attributed to such locations in the Trimble Rep
Slide 41: Investor Presentation
INVESTOR PRESENTATION Main (403) 221-0833 Fax (403) 221-0888 FREEHOLDROYALTIES.COM