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CIBC ENERGY CONFERENCE – Freehold Royalties Ltd.

Freehold Royalties Ltd. · Apr 16, 2013 · 43 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 1
    CIBC Energy Conference April 16, 2013
  2. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 2
    Corporate Profile TSX : FRU focused on oil and gas royalties FRU share price(1) per share 23.44 Annual dividend (0.14 per month) per share 1.68 Dividend yield(1) percent 7.2 Shares outstanding(2) million 66.5 Market…
  3. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 3
    Sustainable Business Model TSX : FRU Harvesting value from leased royalty lands Capturing value from unleased mineral titles Investing capital to develop our properties Acquiring properties with a focus on…
  4. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 4
    Development Opportunities TSX : FRU 3 million gross acres North Saskatchewan River Cardium Viking Royalty interests 94% Oil resource plays Bakken, Mississippian Lower Shaunavon 5
  5. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 5
    FRU Mirrors Industry Activity TSX : FRU Wells drilled by Gross wells drilled on industry our royalty lands at no cost to Freehold 30,000 1200 150 1,000 150 25,000 1000 800 20,000 800 100 100 600 15,000 600 400 10,000 400…
  6. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 6
    Annual Guidance* TSX : FRU Key Assumptions (as at March 7, 2013) 2013 Daily production boe/d 8,500 WTI oil price US/bbl 95.00 Western Canada Select (WCS) Cdn/bbl 71.00 AECO natural gas price Cdn/Mcf 3.10 Exchange rate Cdn/US 1.00…
  7. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 7
    Supplemental Information
  8. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 8
    Professional Management TSX : FRU CN P ENSION T RUST F UNDS Pension fund for employees of Canadian National Railway 100% ownership 100% ownership 26% ownership 9
  9. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 9
    Board of Directors TSX : FRU Nolan Blades Harry Campbell Peter Harrison Bill Ingram Arthur Korpach P. Michael Maher David Sandmeyer Rodger Tourigny 10
  10. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 10
    Our History TSX : FRU Established as Freehold Royalty Trust in 1996 Converted to a corporation December 31, 2010 Wholly owned by CN Pension Trust Funds Operating since 1979 Operating since 1983 Held royalty interest…
  11. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 11
    Freehold Ownership TSX : FRU 90% Canadian held Investor Profile Largest shareholder is CN Pension Trust Funds at 26% 46% Canadian Institutional 45% Canadian Retail 6% U.S./Foreign Retail 3% U.S. Institutional 12
  12. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 12
    Proud Owner of Legacy Lands TSX : FRU Mineral titles are held in The 8s and 26s perpetuity Historic land grant to the Hudsons Bay Company (HBC) in 1670 by the King of England HBC surrendered land to Canada in 1870 in exchange…
  13. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 13
    What Sets Us Apart TSX : FRU lower costs and large royalty capex than typical portfolio E&P company ROYALTY FOCUS high conservative dividend management, payout low risk profile 14
  14. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 14
    What is a Royalty TSX : FRU A payment based on a percentage of gross production Crown Royalty Mineral rights owned by the government (Crown) Leases auctioned at Crown land sales Royalty rates set by the Crown Held by the Crown in…
  15. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 15
    Benefits of Royalties TSX : FRU no exploration or lower drilling costs risk no abandonment or reclamation liabilities no Crown or third higher party royalties netback no production or operating costs 16
  16. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 16
    The Royalty Advantage: Netbacks TSX : FRU Working Interest Barrel Royalty Interest Barrel Operating netback* Operating netback* 60% of gross revenue 100%** of gross revenue Royalties Paid Operating (15%) Netback Operating…
  17. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 17
    Top Royalty Payors/Operators* TSX : FRU SABRE Energy Ltd. * Top 30 payors accounted for over 80% of royalty revenue in 2012. 18
  18. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 18
    Royalty-Focused Production TSX : FRU boe/d 70% 10,000 8,850 royalties 8,000 6,000 4,000 2,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e Royalty Interest Production…
  19. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 19
    Royalty Drilling Trends TSX : FRU 20 53% Oil 57% Oil 44% Oil 58% Oil 78% Oil 85% Oil Equivalent 28% Hz 27% Hz 29% Hz 35% Hz 59% Hz 66% Hz Net Wells Drilled on Freeholds Royalty Land 15 10 Oil Hz Oil Vert Gas Hz 5 Gas Vert…
  20. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 20
    Capex Requirements TSX : FRU Capital Expenditures as a Percentage of Funds from Operations 150% 125% Sector average 101% 100% 75% 50% Freehold average 22% 25% 0% 2009 2010 2011 2012 2013e Sector Average Freehold…
  21. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 21
    Unleased Mineral Title Lands TSX : FRU 100,000 gross acres and growing We own the rights in perpetuity We can choose to drill or lease out 22
  22. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 22
    Investing Capital TSX : FRU 2013 budget 2013 Capital Allocation (30 million) 30 million 40 (13 net) wells Drilling on our title lands Southeast Saskatchewan Midale, Frobisher, Alida, Tilston and Bakken light oil Lloydminster…
  23. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 23
    2012 Results TSX : FRU 12 months ended December 31 2012 2011 Change Gross revenue millions 168.1 157.9 +6% Net income millions 46.3 55.3 -16% Cash flow from operating activities millions 138.1 118.4 +17% Dividends declared…
  24. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 24
    2012 Operational Highlights TSX : FRU Focus on Royalties Royalty Working Total Royalty Interest Interest Company Percent Net reserves Mboe 19,017 5,408 24,425 78% Average production boe/d 6,263 2,587 8,850 71% Acquisitions(1)…
  25. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 25
    Production and Revenue TSX : FRU 2012 2012 Production Gross Revenue Oil & NGL - 64% Oil & NGL - 90% Natural gas - 8% Natural gas - 36% Other - 2% 26
  26. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 26
    Net Revenue TSX : FRU 70 60 50 40 30 20 10 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 Revenue, net of royalty expense ( millions) Average selling price (/boe) 27
  27. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 27
    2013 Sensitivities TSX : FRU Estimated Change in Funds From Change Operations Variable (+/-) ( per share) WTI oil price US1.00/bbl 0.02 Canadian/U.S. dollar exchange rate US0.01 0.02 Edmonton Par/WCS differential Cdn1.00/bbl…
  28. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 28
    Land Holdings TSX : FRU 3.0 million gross acres Land Profile 21% held in perpetuity (630,000 gross acres of mineral title and royalty assumption lands; 80% leased) 833,000 gross acres undeveloped Undeveloped land…
  29. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 29
    Reserves Profile TSX : FRU Net Reserves Net Proved Plus Probable Reserves 15.1 MMboe proved 57% oil and NGL 5.9 year RLI 24.4 MMboe P+P 60% oil and NGL 8.5 year RLI 93% Light and medium crude oil - 24% Heavy crude oil -…
  30. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 30
    Production Profile TSX : FRU Production Profile 2012 average 8,850 boe/d 71% royalty production 64% oil and NGL Our oil-weighted production is currently unhedged Light and medium crude oil - 35% Heavy crude oil - 24%…
  31. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 31
    Conservative Capital Structure TSX : FRU Debt to Funds from Operations* 192 million (multiple) (WTI US/bbl) 3.0 120 available credit capacity 2.5 (at December 31, 2012) 100 2.0 80 1.5 60 1.0 40 0.5 20 0.0 0…
  32. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 32
    Acquisition Strategy TSX : FRU Focused on Accretive Royalties Acquisitions Buy existing 650 million royalties since inception Development 90% royalties funding Capital contribution in return for a royalty Equity financings…
  33. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 33
    Accretive Acquisitions TSX : FRU Initial Production Cost Acquired Year Area ( millions) (boe/d) 1997 Alberta/Saskatchewan 22 700 2001 Southeast Saskatchewan 25 800 2005 Petrovera (CNRL) 352 3,800 2007 Alberta/Saskatchewan…
  34. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 34
    2012 Acquisitions TSX : FRU Alberta, Sask., B.C. Alberta, Sask. January 17, 2012 August 31, 2012 49.3 million 10.9 million 250,000 gross acres 6,100 net acres Production Production 530 boe/d 90 boe/d Mostly natural gas 75%…
  35. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 35
    Stable, Attractive Dividend TSX : FRU Annual Dividend (/share) 2.00 1.68 1.68 1.68 1.68 1.40 1.50 1.00 0.50 0.00 2009 2010 2011 2012 2013e Eligible dividends for Canadian tax purposes. See advisory regarding…
  36. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 36
    Attractive Dividend TSX : FRU Dividend Selling Price (/share) (/boe) 3.00 2.91 80 70 2.50 2.10 60 2.00 1.92 1.92 50 1.70 1.73 1.68 1.68 1.68 1.56 1.50 1.40 40 1.32 1.31 1.10 30 1.00 0.78 0.65 20 0.50 10 0.13 0.00 0…
  37. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 37
    Dividend Payout Ratio* TSX : FRU 150 120 79% 88% 85% 90 96% 92% 59% 65% 57% 60 30 0 2009 2010 2011 2012 Cash flow from operating activities Column1 Dividends paid in cash Dividends paid in shares * Dividends as a…
  38. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 38
    Total Return* TSX : FRU Cumulative dividends declared 169 26.13 per share 38 31 10 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 YTD Freehold Royalties Ltd. S&P/TSX Oil and Gas Exploration & Production Index…
  39. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 39
    FRU Stock Price Tracks Oil Price TSX : FRU WTI in US* FRU in C* 150 30 125 25 100 20 75 15 50 10 25 5 0 0 2008 2009 2010 2011 2012 2013 WTI Oil Price (US) FRU Share Price (CDN) * To March 31, 2013. 40
  40. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 40
    Average Benchmark Oil Prices TSX : FRU 150 125 100 75 50 25 0 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 WTI (US/bbl) Edm. Par (Cdn/bbl) WCS (Cdn/bbl) To March 31, 2013. (WCS for March is estimated.) 41
  41. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 41
    Average AECO Natural Gas Prices TSX : FRU 15 12 9 6 3 0 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 AECO One Month Spot (Cdn/Mcf) To March 31, 2013. 42
  42. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 42
    Solid Investment TSX : FRU Low risk profile The Royalty Sustainable Advantage asset base Stable dividend 43
  43. CIBC ENERGY CONFERENCE – Freehold Royalties Ltd. – slide 43
    Investor Relations tf. 888.257.1873 t. 403.221.0891 w. freeholdroyalties.com

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