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May 2010 Investor Presentation – Freehold Royalties Ltd.

Freehold Royalties Ltd. · May 12, 2010 · 29 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. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 1
    14th Annual Meeting of Unitholders Calgary, Alberta May 12, 2010
  2. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 2
    Freehold Royalty Trust 2 Forward-Looking Statements This presentation offers management?s assessment of Freehold?s future plans and operations as at May 12, 2010 and contains forward looking statements pertaining to estimated capital,…
  3. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 3
    Freehold Royalty Trust 3 Board of Directors Tullio Cedraschi Peter Harrison Manager Appointed Nolan Blades Harry Campbell Chair Bill Ingram Michael Maher David Sandmeyer Manager Appointed Rodger Tourigny
  4. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 4
    Freehold Royalty Trust 5 Freehold Profile TSX: FRU.UN ? 57.9 million Trust Units outstanding ? Enterprise value ~$1.1 billion Ownership: ? 85% Canadian ? 58% Institutions ? Mutual Funds, Pension Funds, Money Managers ? CN Pension…
  5. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 5
    Freehold Royalty Trust 6 Distinguishing Features Focused on oil and gas royalties 1 (mineral titles and GORRs) Low cost royalty advantage 2 = high payout versus peers Large, diversified land base 3 with upside development…
  6. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 6
    Freehold Royalty Trust 7 Benefits of Royalties ?No exploration or drilling costs ?No Crown or third party royalties ?No production or operating costs ?No abandonment or reclamation liabilities Development potential with low risk
  7. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 7
    Freehold Royalty Trust 8 2009 Operational Highlights Royalty Interest Working Interest Total Trust Percent Royalties Land holdings (000s gross acres) 2,174 212 2,386 91% Net reserves (Mboe) 18,557 5,497 24,054 77% Average…
  8. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 8
    Freehold Royalty Trust 9 High Operating Netbacks* $0 $10 $20 $30 $40 FRU.UN VET.UN PEY.UN NAE.UN ZAR.UN PMT.UN BTE.UN DAY.UN PWT.UN ERF.UN PGF.UN AET.UN BNP.UN TET.UN 2009 Operating Netback ($/boe) (includes hedging…
  9. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 9
    Freehold Royalty Trust 10 Low Capital Requirements 0% 10% 20% 30% 40% 50% 60% 70% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e Sector Average Freehold Development Expenditures as a Percentage of Cash…
  10. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 10
    Freehold Royalty Trust 11 Cumulative Distributions: $20.95/Unit $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD $ per Trust Unit Funds generated…
  11. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 11
    Freehold Royalty Trust 12 Strategies for Value Creation ?Free Drilling? by >200 industry operators on our royalty lands Investing capital to develop our properties Pursuing acquisitions, with a focus on royalties 1 2 3
  12. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 12
    Freehold Royalty Trust 13 Activity Reflects the WCSB 0 200 400 600 800 1,000 1,200 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0 5,000 10,000 15,000 20,000 25,000 30,000 Drilling on Freehold\'s Lands…
  13. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 13
    Freehold Royalty Trust 14 Free Drilling Adds No-Cost Production 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 7,200 new royalty wells drilled since 1996 Base…
  14. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 14
    Freehold Royalty Trust 15 Top Royalty Payors/Operators SABRE ENERGY LTD.
  15. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 15
    Freehold Royalty Trust 16 Exposure to Resource Plays 2.4 million gross acres of land Alberta Sask. Calgary Saskatoon Regina Edmonton North Saskatchewan River Freehold?s land holdings
  16. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 16
    Freehold Royalty Trust 17 Southeast Saskatchewan Acquired in 2001 ? 95,000 gross acres mineral titles (held in perpetuity) Bakken exposure Freehold?s land holdings Bakken Fairway Regina Saskatoon
  17. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 17
    Freehold Royalty Trust 18 Bakken Mineral Title Lands 2009 ? 2 (2.0 net) wells on 100% title lands 2010 ? $14 million ? 15 (6.5 net) wells Freehold?s land holdings Most of Freehold?s Bakken-prone title lands are unleased
  18. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 18
    Freehold Royalty Trust 19 Cardium Resource Play Mineral title interests ? From 27% to 100% ? Leased out to third parties Freehold?s land holdings Edmonton Calgary ? ARC ? NAL ? Penn West ? Suncor ? Devon ? Bonterra ?…
  19. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 19
    Freehold Royalty Trust 20 Pembina Cardium Unit #9 ? 9.97% working interest and 0.6% royalty interest ? Operator is Penn West (90%) ? Active field redevelopment ? Horizontal drilling and multi-stage fracture technology ? 2010…
  20. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 20
    Freehold Royalty Trust 21 Major Acquisitions ? 90% Royalties Year Area Cost ($ millions) Initial Production Acquired (boe/d) 1997 PRL $ 22 700 2001 Southeast Saskatchewan 25 800 2005 Petrovera (CNRL) 352 3,750 2007…
  21. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 21
    Freehold Royalty Trust 22 Recent Royalty Acquisitions Bigstone/NW Alberta ? December 21, 2009 ? $10 million ? 43,214 gross acres ? Reserves: 0.3 MMboe ? RLI: 6 years ? 2010 production ~145 boe/d Alberta, Sask., B.C.* ? February…
  22. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 22
    Freehold Royalty Trust 23 Equity Financings Initial Public Offering ? 1996: 26.4 million units @ $10.00 = $264 million Three subsequent offerings ? 2001: 3.3 million units @ $9.65 = $32 million ? 2005: 13.5 million units @ $15.55 =…
  23. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 23
    Freehold Royalty Trust 24 15.5% Compound Annual Return 9.8% 7.1% 17.6% 22.2% 17.9% 14.2% 15.6% 10.6% 11.0% 11.2% 13.0% 18.7% 13.3% 0% 5% 10% 15% 20% 25% 30% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008…
  24. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 24
    Freehold Royalty Trust 25 First Quarter Results Three months ended March 31 2010 2009 2008 Gross revenue $ millions 36.6 26.6 48.6 Cash provided by operating activities $ millions 27.2 21.6 33.8 Funds generated from operations* $…
  25. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 25
    Freehold Royalty Trust 26 0 20 40 60 80 100 120 140 160 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 (WTI) 5 0 10 15 20 25 30 FRU.UN WTI Monthly Average Price (US$/bbl) FRU.UN Monthly Closing…
  26. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 26
    Freehold Royalty Trust 27 2010 Guidance* As at May 12, 2010 Average daily production boe/d 7,600 Average WTI oil price US$/bbl 80.00 Average AECO natural gas price Cdn$/Mcf 4.20 Average exchange rate Cdn$/US$ 0.96 Average operating…
  27. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 27
    Freehold Royalty Trust 29 Corporate Conversion* SIFT Tax Strategy Committee Recommendation ? Moving forward to convert Freehold to a dividend paying corporation ? Special Meeting of Unitholders in late 2010 Freehold?s business model…
  28. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 28
    Freehold Royalty Trust 30 Corporate Conversion* Corporate income tax ? Expect to defer until at least 2012 Cash flow dependent on ? Commodity prices ? Production ? Capital expenditures ? Acquisitions ? Tax pools ($214.4 million…
  29. May 2010 Investor Presentation – Freehold Royalties Ltd. – slide 29
    Freehold Royalty Trust 31 Low Risk Profile Focused on oil and gas royalties 1 (low costs, high netbacks) Low risk marketing strategy 2 (no hedging) Conservative balance sheet 3 (low debt to cash flow ratio) 4 Experienced at…

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