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Investor Presentation – Freehold Royalties Ltd.

Freehold Royalties Ltd. · May 1, 2014 · 42 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. Investor Presentation – Freehold Royalties Ltd. – slide 1
    Investor Presentation May, 2014
  2. Investor Presentation – Freehold Royalties Ltd. – slide 2
    Corporate Profile TSX : FRU focused on oil and gas royalties 2014e production(1) (69% royalty production) boe per day 9,100 Annual dividend (0.14 per month) per share 1.68 Current dividend yield(2) percent 6.9 Market…
  3. Investor Presentation – Freehold Royalties Ltd. – slide 3
    The Manager TSX : FRU CN P ENSION T RUST F UNDS Pension fund for employees of Canadian National Railway 100% ownership 100% ownership Manager of the assets 27% ownership 4
  4. Investor Presentation – Freehold Royalties Ltd. – slide 4
    Investment Performance* TSX : FRU Cumulative dividends declared 181 27.45 per share (1.2 billion in dividends) 45 40 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Freehold Royalties Ltd. S&P/TSX Oil and Gas…
  5. Investor Presentation – Freehold Royalties Ltd. – slide 5
    2013 Another Strong Year TSX : FRU Increased funds flow by 15% Grew production to 8,913 boe/d Paid stable monthly dividend of 0.14 Generated a 6.3% return for shareholders 6
  6. Investor Presentation – Freehold Royalties Ltd. – slide 6
    Annual Guidance* TSX : FRU Guidance Updated Annual Average May. 14 Mar. 6 2014 2014 Daily production boe/d 9,100 8,700 WTI oil price US/bbl 98.00 97.00 Western Canada Select (WCS) Cdn/bbl 85.00 83.00 AECO natural gas price…
  7. Investor Presentation – Freehold Royalties Ltd. – slide 7
    2014 First Quarter Results TSX : FRU 2014 Annual Q1 Guidance Production boe/d 8,623 9,100 Development capital millions 11 35 Operating costs /boe 5.60 6.00 Long term debt millions 49 137 Highlights Production slightly…
  8. Investor Presentation – Freehold Royalties Ltd. – slide 8
    Royalty Acquisition TSX : FRU Freehold closed (May 2nd) an agreement to acquire royalty interests on certain lands in southeast Saskatchewan and Manitoba for approximately 111 million. Represented the 2nd largest deal in company…
  9. Investor Presentation – Freehold Royalties Ltd. – slide 9
    Why Own Freehold TSX : FRU Royalty Consistent focused strategy Focus 10
  10. Investor Presentation – Freehold Royalties Ltd. – slide 10
    Royalty-Focused Production TSX : FRU boe/d 70% 10,000 8,913 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 2013 Royalty Interest Production…
  11. Investor Presentation – Freehold Royalties Ltd. – slide 11
    Top Royalty Payors/Operators* TSX : FRU * Top 30 payors account for over 80% of royalty revenue on a trailing 12 month basis. 12
  12. Investor Presentation – Freehold Royalties Ltd. – slide 12
    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 90…
  13. Investor Presentation – Freehold Royalties Ltd. – slide 13
    Board of Directors TSX : FRU Nolan Blades Harry Campbell Peter Harrison Art Korpach Sue Mackenzie Tom Mullane David Sandmeyer Rodger Tourigny Aidan Walsh 14
  14. Investor Presentation – Freehold Royalties Ltd. – slide 14
    Why Own Freehold TSX : FRU Royalty large royalty portfolio Focus 15
  15. Investor Presentation – Freehold Royalties Ltd. – slide 15
    Development Opportunities TSX : FRU 3.2 million gross acres Heavy North Saskatchewan River Cardium Oil Viking Royalty interests 94% Working interests 6% Oil resource plays Bakken, Mississippian * Acreage reflects…
  16. Investor Presentation – Freehold Royalties Ltd. – slide 16
    5 Year Royalty Drilling Trends TSX : FRU Our diversified portfolio of assets enables exposure to a variety of established development plays within the Western Canadian Sedimentary Basin 17
  17. Investor Presentation – Freehold Royalties Ltd. – slide 17
    2013 Royalty Drilling TSX : FRU Our diversified portfolio of assets enables exposure to a variety of established development plays within the Western Canadian Sedimentary Basin 18
  18. Investor Presentation – Freehold Royalties Ltd. – slide 18
    Royalty Drilling Trends* TSX : FRU 20 53% Oil 57% Oil 44% Oil 58% Oil 85% Oil 92% Oil 83% Oil 73% Oil 35% Hz 32% Hz 30% Hz 37% Hz 59% Hz 66% Hz 70% Hz 77% Hz 15 Oil Hz Oil Vert Gas Hz 10 Gas Vert Other D&A 5 0 2007…
  19. Investor Presentation – Freehold Royalties Ltd. – slide 19
    Why Own Freehold TSX : FRU Royalty low costs Focus 20
  20. Investor Presentation – Freehold Royalties Ltd. – slide 20
    The Royalty Advantage: Netbacks TSX : FRU A Working Interest Barrel A Royalty Interest Barrel Operating netback* Operating netback* 60% of gross revenue 100%** of gross revenue Royalties Paid Operating (15%) Netback…
  21. Investor Presentation – Freehold Royalties Ltd. – slide 21
    The Royalty Advantage: Peers TSX : FRU FRUs liquids weighting and low cost model drive top decile economics. 2013 Operating Costs (/boe) 2013 Operating Netback (/boe) 22
  22. Investor Presentation – Freehold Royalties Ltd. – slide 22
    Capex Requirements TSX : FRU Capital Expenditures as a Percentage of Funds from Operations 150% Sector average 109% 125% 100% 75% Freehold average 24% 50% 25% 0% 2010 2011 2012 2013 2014e Sector Average Freehold *…
  23. Investor Presentation – Freehold Royalties Ltd. – slide 23
    2014 Capital Allocation* TSX : FRU 58 (14 net) wells 35 million Lloydminster Heavy Oil/Cardium Light Oil Southeast 60% Saskatchewan 40% * Per guidance dated May 14th, 2014. 24
  24. Investor Presentation – Freehold Royalties Ltd. – slide 24
    Why Own Freehold TSX : FRU Royalty Attractive payout Focus 25
  25. Investor Presentation – Freehold Royalties Ltd. – slide 25
    Stable, Attractive Dividend* TSX : FRU Annual Dividend (/share) 1.68 1.68 1.68 1.68 1.68 2010 2011 2012 2013 2014e Eligible dividends for Canadian tax purposes. * See advisory regarding forward-looking information. 26
  26. Investor Presentation – Freehold Royalties Ltd. – slide 26
    Dividend History 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 1.68 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…
  27. Investor Presentation – Freehold Royalties Ltd. – slide 27
    Strong Financial Position TSX : FRU Debt to Funds from Operations* (multiple) 3.0 50 million credit 2.5 capacity- with ability to increase 2.0 (at May 2, 2014) 1.5 1.0 0.5 0.0 1997 1998 1999 2000 2001 2002 2003 2004…
  28. Investor Presentation – Freehold Royalties Ltd. – slide 28
    FRU Stock Price Tracks Oil Price TSX : FRU WTI in US 150.00 64% 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…
  29. Investor Presentation – Freehold Royalties Ltd. – slide 29
    2014 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…
  30. Investor Presentation – Freehold Royalties Ltd. – slide 30
    Why Own Freehold TSX : FRU Royalty Performance Focus 31
  31. Investor Presentation – Freehold Royalties Ltd. – slide 31
    Total Return Since December 31, 2010 TSX : FRU 150 +45.3% 125 17.3% 100 -7.2% 75 50 Dec 2010 Dec 2011 Dec 2012 Dec 2013 FRU S&P/TSX Composite S&P/TSX Oil & Gas E&P To March 31 31, 2014. 32
  32. Investor Presentation – Freehold Royalties Ltd. – slide 32
    5-Year Relative Performance(div adj) TSX : FRU Peyto 471% Trilogy 442% Twin Butte 354% Baytex 252% Freehold: 223% Freehold 223% ARC 166% Vermilion 165% Crescent Point 111% S&P/TSX Composite 54% Enerplus 52%…
  33. Investor Presentation – Freehold Royalties Ltd. – slide 33
    3-Year Relative Performance(div adj) TSX : FRU Whitecap 175% Peyto 120% Advantage 103% ARC 68% Freehold Freehold: 52% 52% Vermilion 43% TSX Composite 20% Crescent Point 19% Bonavista 11% Trilogy 10% Twin Butte 0% Enerplus…
  34. Investor Presentation – Freehold Royalties Ltd. – slide 34
    2014 Relative Performance(div adj) TSX : FRU Perpetual 64% Advantage 50% Enerplus 30% Bonavista 28% Peyto 25% Whitecap 18% Zargon 18% Vermilion 16% Lightstream 14% Freehold Freehold: 13% 13% ARC 13% Baytex 13% Pengrowth…
  35. Investor Presentation – Freehold Royalties Ltd. – slide 35
    Supplemental Information
  36. Investor Presentation – Freehold Royalties Ltd. – slide 36
    Land Holdings* TSX : FRU 3.1 million gross acres Land Profile 22% held in perpetuity (691,000 gross acres of mineral title and royalty assumption lands; 80% leased) 822,000 gross acres undeveloped Undeveloped land…
  37. Investor Presentation – Freehold Royalties Ltd. – slide 37
    Reserves Profile* TSX : FRU Net Proved Plus Probable Net Reserves Reserves 14.5 MMboe proved 59% oil and NGL 6.0 year RLI 23.1 MMboe P+P 61% oil and NGL 8.5 year RLI 94% Light and medium crude oil - 25% of our proved…
  38. Investor Presentation – Freehold Royalties Ltd. – slide 38
    Production Profile TSX : FRU Production Profile 2013 average 8,913 boe/d 70% royalty production 64% oil and NGL 2014 forecast* 9,100 boe/d Our oil-weighted production is currently Light and medium crude oil - 34% Heavy…
  39. Investor Presentation – Freehold Royalties Ltd. – slide 39
    Freehold Ownership TSX : FRU 68,157,287 shares outstanding (March 31, 2014) Insider holdings CN Pension Trust Funds 18,490,611 (27.1%) Rife: 4,449,509 (6.5%) (included in above number for CNID) Institutional (59%) Canadian…
  40. Investor Presentation – Freehold Royalties Ltd. – slide 40
    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…
  41. Investor Presentation – Freehold Royalties Ltd. – slide 41
    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…
  42. Investor Presentation – Freehold Royalties Ltd. – slide 42
    Investor Relations toll free. 888.257.1873 telephone. 403.221.0833 website. freeholdroyalties.com

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