OPPORTUNITY KNOCKS THE ROYALTY ADVANTAGE FALL 2016
Corporate Profile TSX : FRU focused on oil and gas royalties 2016E production (80% royalty production) 11,700 boe/d 2016E operating income from royalties 93% 2016E annualized dividend(1)(2)(0.04 per month) 0.48/share Current…
Why Own Freehold Attractive yield 4-5% yield Torque to upside in oil prices 10/bbl USD change in WTI (40 to 50/bbl) increases our free cash flow by 40% Sustainability Low cash costs, low corporate decline…
Royalty Focused Cash Flow YTD 94% of Operating Income From Royalties Gross Mineral Title Overriding 44% 41% Royalties Royalties 9% 6% Production Volume Working Royalties Interest 6
2016 Free Cash Flow Sensitivities 0.14 Monthly Free Cash Flow Per Share 0.12 Funds From Operations Free Cash Flow 0.10 Capital Spending 0.08 Free cash flow available for dividend; 0.06 even at depressed prices…
Free Cash Flow Illustration 1100 Royalty Free Cash Flow (2016-2020) 1000 9.00 per 900 share 800 7.00 per 700 share mm 600 500 5.00 per share 400 300 3.00 per share 200 30 40 50 60 West Texas Intermediate…
Royalties=Strong Operating Margins 35 30 Operating Margin (/boe) Royalties (/boe) 25 Op costs (/boe) per boe 20 87% Operating Margin Q2/2016 Freehold realizes significantly 15 higher margins than traditional E&Ps 10…
Q2-2016 Cash Costs Royalty model offers a Freehold material cost advantage over traditional E&Ps 0 5 10 15 20 25 30 35 Cash Costs (/boe) (OPEX, Transportation, Royalties, G&A , Interest and Taxes) Source: TD Securities…
Disciplined Acquirer Cost Initial Production Year Area ( millions) Acquired (boe/d) 2005 Petrovera (CNRL) 352 3,800 2007 AB/SK 90 700 2010 AB, SK and BC 38 400 2011 NW AB 7 100 2012 AB, SK and BC 60 600 2013 Numerous small acquisitions…
3-Year Track Record 2014 2015 2016E Production (boe/d) 9,180 10,945 11,700 Heavy oil as a % of 24% 20% 19% production Royalties as a % of 78% 87% 93% operating income Royalty acres (mm) 3.0 3.7 5.9 Tax pools (mm) 473 966 1,000…
Per Share Metrics Royalty production (boe/d) Royalty acres per million shares per million shares 100 50,000 90 80 40,000 70 60 30,000 50 40 20,000 30 20 10,000 10 0 0 2012 2013 2014 2015 2016E 2012 2013 2014 2015…
Per Share Metrics Accumulated dividends Funds from operations per share per share 32 2.00 30 1.50 28 26 1.00 24 0.50 22 20 0.00 2012 2013 2014 2015 2012 2013 2014 2015 15
Royalty Drilling Trends * Includes wells drilled from January 1st on our acquisition lands 16
Quality Long Life Asset Base +10 years of future drilling potential(3) 130+ Locations Royalty drilled locations on Freehold land Belly River, Mannville, holdings Pekisko, Devonian Jan 2014 current (1) Freehold Royalties Ltd. land…
Diversified Royalty Payors 1. Diversified group of payors: Top 30 account for over 80% of royalty revenue on a trailing 12 month basis. 18
Long Term Value Creation Maintain Focused Growth conservatism collection of through acquisitions, through balance royalty payments free drilling, sheet and through strong creation of royalties dividend policy audit function and…
Near Term Priorities Allocate a Continue to high portion pursue of free cash acquisitions flow to our shareholders Be proactive in leasing out our mineral title land position 20
Why Own Freehold long track record conservatively attractive of generating managed with a yield strong returns strong balance sheet 10yrs of free positioned in the torque to oil upside drilling on our highest netback…
Supplemental Information
2016 Guidance 2016 Annual Average Aug 4, 2016 May 11, 2016 Mar 3, 2016 Nov 12, 2015 Daily production (boe/d) 11,700 11,400 9,800 9,800 WTI oil price U.S./bbl 40.00 40.00 35.00 50.00 Western Canadian Select /bbl 34.00 34.00 31.00…
Husky Acquisition On May 25, 2016 Freehold acquired a diverse package of royalty assets and fee lands for 165 million. Deal highlights: 1. Accretive to Freehold; at time of deal increasing annualized 2016E production and operating…
Strong Overlap with Existing Royalties Grande Prairie Multi-Zone Targets Shaunavon Oil Play Mississippian / Bakken Oil Plays Further complements our existing suite of assets 25
Managing Royalties for more than 30 years CN P ENSION T RUST F UNDS Pension fund for employees of Canadian National Railway 100% ownership 100% ownership Manager of the assets 21%(1) ownership 1) Based on 117.7…
Strong Financial Position Debt to Funds from Operations 160 million (multiple) 5.0 4.5 available credit capacity 4.0 (at June 30, 2016) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1999 2008 1997 1998 2000 2001 2002 2003…
Counter Party Risk Mitigation Mineral title leases to third parties have default mechanisms for protection and repossession of lessee interest, including the ability to take in kind. We own the land in perpetuity. Gross Overriding…
Low Capex as a Percent of Cash Flow Capital Expenditures represent a small percentage of Freeholds Funds from Operations enabling sustainability in a low price environment 150% 125% 100% Sector average 110% 75% 50% Freehold…
FRU Stock Price Tracks Oil Price WTI in US 150.00 59% FRU in C 30.00 oil and NGL 125.00 production 25.00 100.00 20.00 75.00 15.00 50.00 100% 10.00 25.00 unhedged 5.00 - - WTI Oil Price (US) FRU Share Price (CDN)…
Proud Owner of Legacy Lands 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 for cash and…
Advisories cont. 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…
Advisories cont. 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…
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