Freehold Royalties Ltd T.FRU

Alternate Symbol(s): FRHLF

Freehold Royalties Ltd. is a Canada-based royalty company. The Company manages non-government portfolios of oil and natural gas royalties in Canada with an expanding land base in the United States. Its primary focus is to acquire and actively manage royalties, while providing a lower risk income vehicle for its shareholders. Its total land holdings encompass approximately 6.2 million gross acres in Canada. It has royalty interests in more than 19,000 producing wells and almost 400 units spanning five provinces and eight states and receives royalty income from over 360 industry operators throughout North America. It has two geographical segments: Canada, which includes exploration and evaluation assets and the petroleum and natural gas interests in Western Canada, and US includes petroleum and natural gas interests primarily held in the Permian (Midland and Delaware), Eagle Ford, Haynesville and Bakken basins largely located in the states of Texas, Louisiana, and North Dakota.

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Freehold Royalties Ltd > RBC

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Post by retiredcfon Nov 08, 2024 8:36am

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Post# 36302761

RBC

November 7, 2024

Freehold Royalties Ltd.
Q3/24 - Inline Quarter; Strong Mannville/Clearwater Activity

TSX: FRU | CAD 13.84 | Outperform | Price Target CAD 17.00

Sentiment: Neutral

Our view: Freehold's Q3/24 results were in-line with Street expectations, with 2024 FY production guidance unchanged. The company noted active oil drilling activity across the portfolio, particularly in the US where activity reached a multi-year high. FRU remains focused on M&A (US biased), though we expect a slower pace (and smaller deals) on increased competition.

Conference Call. Friday, November 7th at 7am MT (9am ET) | Link here | 1-800-952-5114, passcode 5398315#

Q3/24 results - In-Line. Q3/24 volumes averaged 14,608 boe/d (64% liquids), tracking in-line with RBC estimates of 14,651 (Street: 15,120 boe/d). CFPS mapped to $0.37 which was in-line with RBC/Street estimates of $0.36/$0.37. Freehold posted a 73% payout ratio in Q3/24 with $41 million in dividends paid ($1.08/share annually) in context of $56 million in CF.
2024 outlook - Reiterated. Freehold reiterated 2024 royalty production guidance of 14.7-15.7 mboe/d (+3% y/y at the midpoint). Management expects moderate growth in the US primarily driven by the Permian, and a flattish outlook for Canadian volumes with activity centered in the Clearwater, Viking, SE Sask, and emerging Mannville heavy oil activity.
Active Drilling, Leasing and DUCs. FRU noted 96 gross Canadian wells were drilled (+41% y/y) which represented the highest level of Canadian heavy oil drilling activity for the company in the last several years (49 wells in the Clearwater/Mannville Stack). Management noted robust leasing during the quarter with 11 new leases signed (Sask, Mannville stack and Cardium), weighted to key oil plays with seven counterparties. The company saw 182 (0.8 net) wells drilled on its lands with the United States (70% Permian/30% Eagle Ford) seeing 65% of FRU's activity, up 14% y/y. The company noted 503 (gross) DUCs and 387 licensed wells on US lands, foreshadowing volume growth.
Balance sheet - In good shape. Freehold exited Q3/24 with $187 million in net debt (RBC: $184 million), down $12 million sequentially and now mapping to 0.8x D/CF.
Investor Day. FRU will host an investor day on December 3, 2024 at 10am MT in Calgary.