Investor Day 2021 freeholdroyalties.com TSX FRU Quality Assets Sustainable Dividends
Agenda Time Presenter Focus 1:00pm David Spyker Opening Remarks US Update: Why US Difference to Canada, Play 1:20pm Rob King, Tom Plumridge Overview, Land Overview & Play Economics Canada Update: Strategic Update, Historical…
The New Freehold Energizing the future Refreshed and Repositioned restructured to capture leadership the future team Integration of Strengthened ESG business to framework deliver long into term value to everything…
Leadership Team New Team Focused on Shareholder Returns David Spyker David Hendry Rob King Lisa Farstad Bob Lamond Ian Hantke President & CEO VP Finance & CFO VP Business VP Corporate VP Asset VP Diversified Development Services…
Not The Same Old Freehold 2022E Increasing Production Bringing Revenues to Time to All Record Levels Highs 14,300 boe/d 2018 2022E production forecast to be 14,300 boe/d, higher than 11,400 boe/d any period in Freeholds history…
Sustainable Production Base & Dividend Improving Royalty Netbacks YTD 2021 Realized Price US transactions have added higher value barrels OneMap Acq. Pricing Realized price improves materially with recently Sep-2021 Acq. Pricing…
North American Portfolio Overview 6.2 mm gross royalty acres 2022E production 9,400 boe/d Over the last 12-months, Freehold has grown its US portfolio from 200 boe/d to 4,900 boe/d in 2022E Entered the US in 2019 with…
Improved Activity US barrels improve Freeholds North American Production Growth (2018 Exit Baseline) 1.2 sustainability across a broad commodity price range 1 A diverse North American portfolio with over 350 operators provides…
Improved Economics Freeholds business remains robust across a broad price range Post Dividend 30mm Free Cashflow 150mm At current commodity price levels, Freehold able to deliver returns to shareholders several ways US40WTI Oil…
Multi-Year Changes to Portfolio Freeholds Evolution 2022E Production Breakdown Canadian portfolio has been energized with Eagle Ford (20%) a return of 3rd party capital with production Permian (10%) growth to largely offset declines…
Strong ESG Performance ESG values continue to remain integral to Freeholds business Environmental Social Governance Emissions Equity, Diversity & Inclusion Board of Directors Factoring emissions intensity into Focus on training and…
Improving Performance Top 5 US payors represent 70% of Investment in the US has improved Freeholds environmental profile total US production Top 5 CAN payors represent 40% of Top Operator Intensities Top payors within both the US…
Returns Focused Freehold Revenue 2022E 250 million 2022E Dividend 110 million Dividend Increases Acquisitions Debt Repayment Have increased our monthly 50% of funds flow available to Q3-2021 net debt to funds from…
Royalty Peer Performance Since announcing its first large US acquisition, Freehold has outperformed peers 250 Indexed Share Price Performance 200 150 100 50 Nov-2020 Nov-2021 Royalty Peer A Royalty Peer B…
Freehold Royalties Ltd. North American Advantage freeholdroyalties.com TSX FRU Quality Assets Sustainable Dividends
US Growth Wedge US expansion has introduced organic growth into Freeholds return proposition Freehold Production per Share Different from what Freehold has been able to 10% achieve in the past US royalty assets positioned to…
Portfolio Overview Clearwater Deep Basin 400 boe/d 1,800 boe/d 5% of CAD 20% of CAD Viking 1,500 boe/d Expanded North American asset base Cardium 15% of CAD 1,000 boe/d provides investors with improved 10% of CAD S.E. Sask…
North American Portfolio Overview US Production CAN Production Summary Statistics 100% 100% Canada US Total Top 4 areas 90% Gross Acres (mm) 6.2 0.8 6.9 80% 80% 2022E Production (boe/d) 9,400 4,900 14,300 Top 6 areas 70% 2022E…
US Asset Overview Rob King VP Business Development Tom Plumridge Senior US Geologist freeholdroyalties.com TSX FRU Quality Assets Sustainable Dividends
Overview of US Portfolio Production forecasts for 2022 Marathon (52%) 2021E production of 2,100 boe/d (68% liquids) Pioneer (6%) ConocoPhillips (4%) Growth to 4,900 boe/d in 2022E (70% liquids) 4,900 Exxon Mobil (4%) Portfolio…
Why the US The rationale behind recent acquisitions More Opportunity Future Upside Remaining Drilling Inventory 70% of US land in major oil and gas producing states is privately owned vs. 20,000 Bubble size represents total only…
Why the US The rationale behind recent acquisitions More Capital Spending More Production Over last 10 years, 8 times the capital spending US oil production is almost 3 times, and gas in the US vs. Canadian upstream production is…
US Royalty Market A more fragmented market than Canada, providing more and better opportunities Minerals Market Breakdown US680 billion market…
US Royalty M&A Market US Royalty M&A Market almost 6x larger than Canada over last 5 years Over last 5 years, US12 bn of Royalty Transactions in Canada vs. US royalty transactions in the US US3bln 26x compared to US2 bn in Canada…
North American Royalty Transactions Freehold has been able to add high quality assets at lower relative valuations Funds Flow Multiple 16x Canada Deals US Deals Over the past year Freehold has been Freehold Deals 12x able to take…
Significant US Royalty Asset Deal Flow Adj. /NRA 40k Bubble size represents aggregate The US has seen a transaction value significant number of 35k large mineral deals over the past 5 years 30k Number of owners who…
US Expansion a Measured Approach Acres Value Realized Purchase Gross % Min. 2021E 2022E CF Prod. Acquisition Core Future Liquids Pricing (Cmm) Acres Title (boe/d) (boe/d) Mult. (Ck/boe/d) /Tier 1 Dev. (C/boe) Pre-2021 & North 13…
Segmenting US Production & Future Development Production and future development dominated by the Eagle Ford & Permian Net Future N. Dakota Delaware Midland Eagle Ford Haynesville Other Total Freehold estimates 5,800 Locations…
US Portfolio How Net Wells are different between the US and Canada An average US well in Freeholds portfolio FRU Lands - Average Wells has significantly higher productivity than 1,400 an average Canadian well 12-month Cumulative…
US vs. Canada Pricing Canadian crude, particularly Western US commodities, particularly products from key Canadian Select (WCS), has experienced basins close to the Gulf Coast (Permian and Eagle much more volatility throughout the…
Review of Freeholds January 2021 Acquisition Transformative acquisition established Freehold as a North American company US58mm transaction announced in Cumulative Volumes (mboe) Cumulative Cashflow (CAD) 300 30mm Nov.…
US Basins a Technical Approach Breaking down classifications between Core, Tier 1 & Tier 2 N. Dakota Bakken Freehold has reviewed and interpreted the reservoir potential of the major US basins Appalachia to identify the highest…
Reservoir Classification Methodology Delaware and Midland Basins Both the Midland and Delaware basins are found within the larger Permian Freehold Lands basin Permian Core & Tier 1 The classification methodology between the…
Reservoir Classification Methodology Delaware The Delaware basin is over 4,000ft thick in its core, with 12 prospective zones HZ Well Count Productive Intervals 280 Upper Avalon 350 Middle Avalon Core Delaware prospective zones…
Reservoir Classification Methodology Delaware Basin 2,400 Average Production (boe/d) 2,000 Determination of the Reservoir Tiers leverages multiple mapping and analysis tools including 1,600 A combination of depth, thickness,…
Reservoir Classification Methodology Eagle Ford Basin With fewer economic zones present, the Freehold Lands approach in non-Permian basins varies Eagle Ford Core & Tier 1 slightly In the Eagle Ford (and N. Dakota 20 miles…
Reservoir Classification Methodology Eagle Ford Basin 2,400 There is a significant change in productivity and Average Production (boe/d) 2,000 economics when comparing Core to Tier 1 & 2 This same principle applies when…
Canadian Overview Susan Nagy Director, Business Development freeholdroyalties.com TSX FRU Quality Assets Sustainable Dividends
Canadian Overview Cardium (11%) A well balanced and sustainable portfolio Clearwater (3%) Deep Basin (16%) 9,400 Canadian assets remain core to boe/d Mannville Oil (13%) Freehold, representing 65% of 2022E S.E. Sask (12%)…
Canadian Drilling Activity 2018 to YTD 2021 W6 W5 W4 W3 25% 718mm In Western Canada, most acreage is WCSB owned by the provincial Crown 3% acres governments, with the remainder held Montney 72% by private individuals,…
Historical Drilling in Canada Crown vs. Mineral Title Wells Drilled by Play post-2018 8,000 100% Drilling on Crown lands dominate in the hottest plays, capturing over 60% of all 6,000 75% drilling in the WCSB Wells drilled…
Freeholds Canadian Portfolio A well-performing mix of Mineral Title and GORR acreage Targeted GORR acquisitions have positioned Freehold ahead of the drill bit which Acreage Breakdown has resulted in increased activity across the…
Historical Canadian Drilling Results Drilling (gross wells) YTD-2021 2020 2019 3rd party spending split Teine Energy 38 77 108 relatively evenly between Alberta and Saskatchewan Tamarack Valley 31 15 n/a Bonterra Energy 30 17 19…
Viking Dodsland 12 years of inventory, with steady production Freehold Viking Drilling Activity Initial entrance in 2015 with 8.5% 50% GORR across 76,000 acres 12+ years of remaining inventory 916 gross future drilling locations,…
Clearwater 160,000 acres of exposure to the top growth areas in Canada 2018 2021 Initial entrance in 2018 with a GORR Nipisi & 2018 2019 Figure Total/ Ukalta Craigend Average across 109,000 acres in the Nipisi and Jarvie Lake…
Royalty Optimization Results New Royalty Optimization Wells 400 120 Target high net royalty, +24 wells (Q4-2021) consolidated lands under 350 105 well capitalized operators that are seeing below 300 90 Production…
Finance and Integration David Hendry Chief Financial Officer freeholdroyalties.com TSX FRU Quality Assets Sustainable Dividends
Lower Risk Leverage Strategy Responsible leverage use with plenty of available dry powder Freehold targets a lower risk leverage profile Trailing 12-Month Net Debt to Funds from Operations with net debt to funds from…
Corporate Income Tax With stronger prices and volumes, comes improved cash flow and income tax Tax pools added in 2021 totalled approximately 385 million, with 40 million deductible against earnings in 2022 Freehold expects to…
Integration of Acquired Assets Freehold has the resources and processes in place to integrate acquired US interests Measured entrance into the US allowed Freehold to build its understanding, systems and processes to manage royalty…
Audit and Compliance Freeholds dedicated Audit and Compliance function adds significant value 81mm Freehold has dedicated Audit/Compliance Audit has incremental professionals who ensure that all royalties due added value to…
Closing Remarks David Spyker President and Chief Executive Officer freeholdroyalties.com TSX FRU Quality Assets Sustainable Dividends
Why Own Freehold Strong Balance Quality Long High Margins Sustainable Sheet, Low Risk Duration Assets, Business Multi-year Upside Greater than 97% Dividend increased five Q3-2021 net debt to Positioned in the top tier operating…
Whats Next for Freehold Diversifying our suite of assets Continue to Evaluated a number of potash deals in 2021 and expect to remain active build our in growing our portfolio into 2022 knowledge Completed lease agreements…
Continued Strategy Execution We remain committed to executing our North American strategy Continue to maintain Bigger, better Acquisition environment low-risk identity. Freehold. Royalty remains robust, Sustainable debt,…
Advisories Forward-Looking Statements This presentation offers our assessment of Freeholds future plans and operations as at December 8, 2021 and contains forward-looking information including, without limitation, forward-looking…
Advisories continued Forward-Looking Statements continued You are further cautioned that the preparation of financial statements in accordance with International Financial Reporting Standards requires management to make certain…
Advisories continued Non-GAAP Financial Measures Within this presentation, references are made to terms commonly used as key performance indicators in the oil and gas industry. We believe that payout ratio, free funds flow from…
Advisories continued Light and Natural Heavy Natural BOE Medium Gas Crude Oil Gas (boe/d) Crude Oil Liquids (bbl/d) (mmcf/d) (bbl/d) (bbl/d) 2022 Aggregate Forecast Production 14,300 5,800 1,100 34.8 1,600 2022 Forecast Canadian…
Advisories continued Production Profiles and Economics In this presentation, Freehold has presented certain production profiles or type curves associated with Core Wells, Tier 1 Wells and Tier 2 Wells in both the Delaware Basin and…
Investor Relations tf. 888.257.1873 t. 403.221.0833 w. freeholdroyalties.com freeholdroyalties.com TSX FRU Quality Assets Sustainable Dividends
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