CALGARY, Alberta, Nov. 07, 2024 (GLOBE NEWSWIRE) -- Freehold Royalties Ltd. (Freehold or the Company) (TSX:FRU) announces third quarter results for the period ended September 30, 2024.
Third Quarter Summary
- $74 million in revenue;
- $56 million in funds from operations ($0.37/share)(1)(3);
- $41 million in dividends paid ($0.27/share)(2);
- 9,367 bbls/d of total liquids production;
- An increase of 3% from Q3-2023 and a 4% increase YTD 2024 compared to YTD 2023;
- Realized crude oil and NGL price averaged approximately $82/bbl in Q3-2024;
- 14,608 boe/d total production;
- U.S. production remained near record levels at 5,533 boe/d;
- 278 gross (6.3 net) wells drilled in the quarter;
- 37% increase from the 4.6 net wells drilled in Q3-2023; and
- $54.36/boe average realized price ($65.58/boe in the U.S. and $47.52/boe in Canada);
- 38% pricing premium on our U.S. production reflecting higher liquids weighting, higher quality crude oil and reduced transportation costs to get our product to market.
Despite the volatility in commodity prices making headlines this quarter, Freehold's oil weighted portfolio, underpinned by premium operators in core basins across North America, continued to deliver significant value to the Company and our shareholders. Our total Q3-2024 production of 14,608 boe/d delivered strong netbacks(3)(4) of $47.78/boe, driving $55.7 million of funds from operations(3) in the quarter.
Liquids production increased by 3%, while gas volumes decreased by 4% compared to Q3-2023. Our U.S. production of 5,533 boe/d remained near last quarter's record levels, despite declines from flush production from several high interest, multi-well pads in Midland (Permian) that came on-line in Q2-2024. Canadian production averaged 9,075 boe/d, down 6% compared to the prior quarter reflecting a slowdown in gas weighted drilling activity and voluntary shut-ins of about 250 boe/d as a result of the lowest AECO pricing in over 20 years in the quarter. In Canada, Q3-2024 gas volumes are 6% lower than Q3-2023 volumes, impacting top line production numbers but given the weak pricing, had a negligible impact on funds from operations in the current quarter.
We had robust U.S. drilling activity in Q3-2024 and exited the quarter with 503 gross wells (1.9 net wells) that were drilled and uncompleted, while third party operators permitted (licensed) 387 gross wells (1.7 net wells) on Freehold's U.S. lands. In Canada, we had significant increases in drilling activity as operators focused on oil weighted prospects. Net drilling activity in Canada was up 41% compared to the same period last year.
We paid $41 million to our shareholders through dividends (73% of our funds from operations) and maintained our balance sheet strength with net debt(5)(6) reduced by approximately $12 million during the quarter to $187 million (0.8x trailing funds from operations(5)).
David M. Spyker, President and Chief Executive Officer
2024 Investor Day and Asset Book
Freehold will be hosting an Investor Day on December 3, 2024, beginning at 10:00am MST at the Calgary Petroleum Club in Calgary, Alberta. Due to limited capacity, in-person attendance is by invitation only. This event will include a presentation by Freehold's management and technical team, highlighting the Company's North American strategy and an overview of Freehold's asset base. Attendance will be both in-person and through participation in the live webcast on www.freeholdroyalties.com. Freehold will also be releasing its 2024 Asset Book on December 3, 2024. A copy of the 2024 Investor Day presentation and the 2024 Asset Book will be made available on Freehold's website at www.freeholdroyalties.com on the day of the event.
Operating and Financial Highlights
| FINANCIAL ($ millions, except as noted) | Q3-2024 | Q2-2024 | Q3-2023 |
| West Texas Intermediate (US$/bbl) | 75.09 | 80.57 | 82.26 |
| AECO 7A Monthly Index (Cdn$/Mcf) | 0.81 | 1.44 | 2.42 |
| Royalty and other revenue | 73.9 | 84.5 | 84.2 |
| Funds from operations (3) | 55.7 | 59.6 | 65.3 |
| Funds from operations per share, basic ($) (1)(3) | 0.37 | 0.40 | 0.43 |
| Dividends paid per share ($) (2) | 0.27 | 0.27 | 0.27 |
| Dividend payout ratio (%) (3) | 73% | 68% | 62% |
| Long-term debt | 205.8 | 228.0 | 141.2 |
| Net debt (5) (6) | 187.1 | 199.1 | 113.4 |
| Net debt to trailing funds from operations (times) (5) | 0.8x | 0.8x | 0.4x |
| OPERATING | |||
| Total production (boe/d) (4) | 14,608 | 15,221 | 14,605 |
| Canadian production (boe/d)(4) | 9,075 | 9,622 | 9,178 |
| U.S. production (boe/d)(4) | 5,533 | 5,599 | 5,427 |
| Oil and NGL (%) | 64% | 64% | 63% |
| Petroleum and natural gas realized price ($/boe) (4) | 54.36 | 59.74 | 61.55 |
| Cash costs ($/boe) (3)(4) | 5.42 | 9.80 | 5.10 |
| Netback ($/boe) (3) (4) | 47.78 | 49.44 | 55.63 |
| ROYALTY INTEREST DRILLING (gross / net) | |||
| Canada | 96 / 5.5 | 65 / 2.1 | 116 / 3.9 |
| U.S. | 182 / 0.8 | 209 / 1.0 | 135 / 0.7 |
(2) Based on the number of shares issued and outstanding at each record date
(3) See Non-GAAP and Other Financial Measures
(4) See Conversion of Natural Gas to Barrels of Oil Equivalent (boe)
(5) Net debt and net debt to trailing funds from operations are capital management measures
(6) The Q3-2023 balances have been restated due to the retrospective adoption of IAS 1 (see note 2 of September 30, 2024, unaudited condensed consolidated financial statements)
Dividend Announcement
The board of directors of Freehold has declared a monthly dividend of $0.09 per share to be paid on December 16, 2024, to shareholders of record on November 29, 2024. The dividend is designated as an eligible dividend for Canadian income tax purposes.
Third Quarter Highlights
- Royalty and other revenue totalled $73.9 million, down 13% versus the previous quarter reflecting 7% lower WTI oil pricing, 7% lower Edmonton Light sweet crude oil pricing and 44% lower AECO natural gas pricing.
- Freehold's corporate realized price was $54.36/boe, a decrease of 9% from the prior quarter due to the commodity price movements noted above.
- Recorded a netback(1) of $47.78/boe during the period, down 3% from $49.44/boe in the previous quarter.
- Funds from operations totalled $55.7 million ($0.37/share) (1)(2).
- Dividends declared for Q3-2024 totaled $40.7 million ($0.27 per share)(3). Freehold's dividend payout ratio(1) for Q3-2024 was 73%. Freehold's dividend remains sustainable at oil and natural gas prices materially below current commodity price levels.
- Average production of 14,608 boe/d in Q3-2024, reflecting a 3% increase in liquids production from the same quarter in the previous year. Oil and NGL production represented 64% of total corporate production in the quarter.
- Net debt(1) of $187.1 million at the end of Q3-2024 decreased by $12.0 million from the previous quarter and reflects 0.8 times trailing funds from operations during the period.
- No changes to Freehold's 2024 production guidance range of 14,700 - 15,700 boe/d.
(2) Weighted average number of shares outstanding during the period, basic
(3) Based on the number of shares issued and outstanding at each record date
Drilling and Leasing Activity
In total, 278 gross wells were drilled on Freehold's royalty lands during Q3-2024, an 11% increase versus the same period in 2023. The increase in drilling reflects the expansion of the Company's U.S. asset base and overall strength in oil pricing in the first three quarters of 2024.
On a gross basis, 98% of the total prospects drilled in the quarter targeted oil. Approximately 35% of gross wells drilled in Q3-2024 were in Canada (79% on Freehold's gross overriding lands and 21% on mineral title prospects); and 65% targeted Freehold's U.S. royalty acreage (76% drilled on mineral title lands).
| Q3-2024 | Q2-2024 | Q3-2023 | ||||
| Gross | Net (1) | Gross | Net (1) | Gross | Net (1) | |
| Canada | 96 | 5.5 | 65 | 2.1 | 116 | 3.9 |
| United States | 182 | 0.8 | 209 | 1.0 | 135 | 0.7 |
| Total | 278 | 6.3 | 274 | 3.1 | 251 | 4.6 |
Canada
In Q3-2024, 96 gross (5.5 net) wells were drilled on Freehold's Canadian royalty lands; a modest decrease on a gross basis but a 41% increase on a net basis over the same quarter last year. The increase in net well activity represents higher net royalty interest drilling in the Mannville Stack and Clearwater formations - our top focus plays this quarter - with approximately half of our Q3-2024 drilling focused on these areas. This represents the highest level of quarterly heavy oil drilling that we have had on our lands over the past several years.
Over the quarter, drilling in Canada was led by a portfolio of oil weighted plays including the Mannville Stack (29 gross wells), southeast Saskatchewan (24 gross wells), Clearwater (20 gross wells) and the Viking (9 gross wells).
During the first nine months of 2024, Freehold entered into 46 new leases with numerous counterparties totalling $1.1 million of bonus revenue, including 11 new agreements with seven counterparties for the quarter. The majority of this new leasing focus was in southeast Saskatchewan, the Mannville Stack and the Cardium.
U.S.
In the U.S., 182 gross (0.8 net) wells were drilled on Freehold's U.S. royalty lands in Q3-2024; representing an increase of 14% on a net well basis compared to the same quarter last year. In the quarter, approximately 70% targeted the Permian basin and the balance targeting the Eagle Ford. The increased activity represents continued strength in overall development of Freehold's U.S. lands.
Although Freehold's U.S. net well additions were lower than in Canada, U.S. wells generally come on production at approximately ten times that of an average Canadian well in the Company's portfolio. However, a U.S. well can take upwards of six to twelve months on average from initial license to first production, compared to three to four months in Canada.
During the first nine months of 2024, Freehold entered into 12 new leases with five counterparties, totalling $1 million of bonus revenue, including one new lease this quarter. All leasing activity has been focused on Freehold's mineral title interests in the Midland and Delaware basins of the Permian.
Conference Call Details
A webcast to discuss financial and operational results for the period ended September 30, 2024, will be held for the investment community on Friday November 8, 2024, beginning at 7:00 AM MT (9:00 AM ET).
A live audio webcast will be accessible through the link below and on Freehold's website under "Events & Presentations” on Freehold's website at www.freeholdroyalties.com. To participate in the conference call, you can register using the following link: Live Audio Webcast URL: https://edge.media-server.com/mmc/p/uv3fzz54
A dial-in option is also available and can be accessed by dialing 1-800-952-5114 (toll-free in North America) participant passcode is 5398315#.
For further information contact
| Freehold Royalties Ltd. | |
| Todd McBride, CPA, CMA | Nick Thomson, CFA |
| Investor Relations | Investor Relations |
| t. 403.221.0833 | t. 403.221.0874 |
| e. [email protected] | e. [email protected] |
| 2024 | 2023 | 2022 | ||||||
| Financial ($millions, except as noted) | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 |
| Royalty and other revenue | 73.9 | 84.5 | 74.3 | 80.1 | 84.2 | 73.7 | 76.6 | 98.5 |
| Net Income (loss) | 25.0 | 39.3 | 34.0 | 34.3 | 42.3 | 24.3 | 31.1 | 40.7 |
| Per share, basic ($) (1) | 0.17 | 0.26 | 0.23 | 0.23 | 0.28 | 0.16 | 0.21 | 0.27 |
| Cash flows from operations | 64.1 | 47.6 | 52.5 | 70.7 | 53.7 | 49.9 | 42.6 | 82.7 |
| Funds from operations | 55.7 | 59.6 | 54.4 | 62.8 | 65.3 | 53.0 | 58.6 | 80.0 |
| Per share, basic ($) (1)(3) | 0.37 | 0.40 | 0.36 | 0.42 | 0.43 | 0.35 | 0.39 | 0.53 |
| Acquisitions & related expenditures | 1.8 | 11.5 | 121.5 | 2.1 | 1.2 | 3.2 | 4.3 | 7.2 |
| Dividends paid | 40.7 | 40.7 | 40.7 | 40.7 | 40.7 | 40.7 | 40.7 | 40.7 |
| Per share ($) (2) | 0.27 | 0.27 | 0.27 | 0.27 | 0.27 | 0.27 | 0.27 | 0.27 |
| Dividends declared | 40.7 | 40.7 | 40.7 | 40.7 | 40.7 | 40.7 | 40.7 | 40.7 |
| Per share ($) (2) | 0.27 | 0.27 | 0.27 | 0.27 | 0.27 | 0.27 | 0.27 | 0.27 |
| Dividend payout ratio (%) (3) | 73% | 68% | 75% | 65% | 62% | 77% | 69% | 51% |
| Long-term debt | 205.8 | 228.0 | 223.6 | 123.0 | 141.2 | 152.0 | 159.1 | 156.6 |
| Net debt (5) | 187.1 | 199.1 | 210.5 | 100.9 | 113.4 | 136.9 | 122.3 | 135.5 |
| Shares outstanding, period end (000s) | 150.7 | 150.7 | 150.7 | 150.7 | 150.7 | 150.7 | 150.7 | 150.7 |
| Average shares outstanding (000s) (1) | 150.7 | 150.7 | 150.7 | 150.7 | 150.7 | 150.7 | 150.7 | 150.7 |
| Operating | ||||||||
| Light and medium oil (bbl/d) | 6,080 | 6,551 | 6,094 | 6,308 | 6,325 | 6,093 | 6,102 | 6,418 |
| Heavy oil (bbl/d) | 1,315 | 1,348 | 1,300 | 1,182 | 1,127 | 1,167 | 1,253 | 1,218 |
| NGL (bbl/d) | 1,972 | 1,902 | 1,884 | 1,878 | 1,678 | 1,845 | 1,788 | 1,781 |
| Total liquids (bbl/d) | 9,367 | 9,801 | 9,278 | 9,368 | 9,130 | 9,105 | 9,143 | 9,417 |
| Natural gas (Mcf/d) | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
| |||||||