Freehold Royalties Ltd. press release

Freehold Royalties Announces Second Quarter 2026 Results

2026-07-29

TSX - Toronto Stock Exchange · Oil · Natural Gas · Natural Gas Liquids · Potash · Canada · Corporate Finance

CALGARY, Alberta, July 29, 2026 (GLOBE NEWSWIRE) -- Freehold Royalties Ltd. (Freehold or the Company) (TSX:FRU) announces results for the three months ended June 30, 2026.

Second Quarter Highlights

Total production of 15,622 boe/d(1)including crude oil and natural gas liquids production of 10,277 bbls/d, representing a 66% liquids weighting in the quarter; Revenue of $100 million with crude oil and natural gas liquids production accounting for over 95% of royalty and other revenue; Funds from operations of $78 million ($0.47/share)(2)(4), a 32% increase from Q1-2026; Reduced net debt by $24 million, ending the quarter at $251 million; Returned $44 million ($0.27/share)(3) to shareholders through monthly dividends, representing a payout ratio(4)of 57%; Invested $9 million in acquisitions and related expenditures, focused on strategic, inventory rich, mineral title and royalty lands in the core of the Permian basin; Gross drilling of 300 wells across the portfolio, a 35% increase from Q1-2026 as operators increase activity in a strengthening oil price environment; Continued an active leasing program with 48 new leases signed contributing $1.6 million of bonus consideration and lease rental revenue; and Achieved an average realized price of $69.11/boe ($74.91/boe in U.S. and $64.26/boe in Canada).

President’s Message

Freehold’s second quarter reflected a constructive commodity price environment driving both strong revenue generation and a return to oil focused drilling activity across North America.

Production averaged 15,622 boe/d(1)with a 66% liquids weighting, reflecting the moderated activity levels in the latter half of 2025 when commodity prices were low. Together with higher realized pricing, Freehold generated strong royalty and other revenue of over $100 million and funds from operations of $78 million, which was a 32% increase from Q1-2026.

Freehold continued to see a meaningful increase in operator activity on our lands. Gross drilling increased 35% from Q1-2026 and 11% from Q2-2025, led by strong U.S. activity and continued investment in Canadian oil-weighted plays. We continue to see significant activity levels in the Permian where large operators have been investing in technologies that support longer lateral lengths as well as the use of surfactants and lightweight proppants to further improve well productivities. In the Permian, natural gas egress constraints at the Waha hub are expected to ease as more than 4 Bcf/d of additional takeaway capacity comes into service over the next three quarters. The additional capacity is expected to alleviate production constraints and improve market access for producers. While increased activity supports future production and cash flow growth, these benefits are expected to primarily materialize in late 2026 and early 2027 as new wells are brought on production.

Freehold returned $44 million to shareholders through dividends, representing a 57% payout ratio(4), and invested $9 million to expand our crude oil-focused royalty position in the core of the Permian basin. Freehold maintains strong financial flexibility, with net debt down over $24 million (9%) from Q1-2026 resulting in 1.0x trailing net debt to funds from operations(5).

Looking ahead, Freehold is well positioned. Our asset base is exposed to the most economic oil-weighted developments in North America, supported by a well-financed operator base, and a strong balance sheet. We expect this combination to continue supporting our dividend, funding growth opportunities and delivering attractive long-term value.

David M. Spyker, President and Chief Executive Officer

Operating and Financial Highlights

| | Three Months Ended | | | | FINANCIAL ($ millions, except as noted) | Q2-2026 | Q1-2026 | Q2-2025 | | Royalty and other revenue | 100.3 | 77.8 | 78.3 | | Funds from operations | 77.8 | 59.0 | 56.6 | | Funds from operations per share, basic ($) (2)(4) | 0.47 | 0.36 | 0.35 | | Dividends paid per share ($) (3) | 0.27 | 0.27 | 0.27 | | Dividend payout ratio (%) (4) | 57% | 75% | 78% | | Long-term debt | 283.2 | 301.4 | 292.6 | | Net debt (5) | 251.1 | 275.3 | 270.6 | | Net debt to funds from operations for the trailing 12 months (times) (5) | 1.0x | 1.2x | 1.1x | | OPERATING | | | | | Total production (boe/d) (4) | 15,622 | 15,533 | 16,584 | | Canadian production (boe/d) (4) | 8,510 | 8,540 | 9,104 | | U.S. production (boe/d) (4) | 7,112 | 6,993 | 7,480 | | Liquids weighting (%) | 66% | 65% | 67% | | Petroleum and natural gas realized price ($/boe) (4) | 69.11 | 54.97 | 50.36 | | Cash costs ($/boe) (3)(4) | 6.55 | 7.02 | 7.38 | | Netback ($/boe) (3)(4) | 61.71 | 46.66 | 42.68 | | BENCHMARK PRICES | | | | | West Texas Intermediate (US$/bbl) | 92.79 | 71.93 | 63.74 | | NYMEX natural gas (US$/Mcf) | 3.01 | 5.23 | 3.57 | | AECO 5A Monthly Index (Cdn$/Mcf) | 1.63 | 2.01 | 1.69 | | ROYALTY INTEREST DRILLING(gross / net) | | | | | Canada | 74 / 1.8 | 72 / 4.5 | 45 / 1.1 | | U.S. | 226 / 0.9 | 151 / 0.4 | 226 / 0.6 | | | | | | | (1) See Conversion of Natural Gas to Barrels of Oil Equivalent (boe) | | | | | (2) Calculated based on the basic weighted average number of shares outstanding during the period | | | | | (3) Based on the number of shares issued and outstanding at each record date | | | | | (4) See Non-GAAP and Other Financial Measures | | | | | (5) Net debt and net debt to trailing funds from operations are capital management measures; see Non-GAAP and Other Financial Measures | | | | | | | | |

Dividend Announcement

The Board of Directors of Freehold has declared a monthly dividend of $0.09 per share to be paid on September 15, 2026, to shareholders of record on August 31, 2026. The dividend is designated as an eligible dividend for Canadian income tax purposes.

Drilling and Leasing Activity

Third-party investments on Freehold’s royalty lands resulted in a total of 300 gross wells (2.7 net) drilled on Freehold’s lands, all primarily targeting crude oil properties.

| | | Three Months Ended | | | | | | | | | Q2-2026 | Q1-2026 | Q2-2025 | | | | | | | Gross | Net (1) | Gross | Net (1) | Gross | Net (1) | | Canada | | 74 | 1.8 | 72 | 4.5 | 45 | 1.1 | | United States | | 226 | 0.9 | 151 | 0.4 | 226 | 0.6 | | Total | | 300 | 2.7 | 223 | 4.9 | 271 | 1.7 | | | | | | | | | | | (1) | Equivalent net wells are aggregate of the numbers obtained by multiplying each gross well by our royalty interest percentage; U.S. wells on Freehold’s lands generally come on production at approximately 10 times the volume that of an average Canadian well in our portfolio. | | | | | | | | | | | | | | | |

Canada

In Canada, the majority of the 74 gross locations (1.8 on a net basis) were drilled on crude oil weighted plays, including Clearwater (25 gross wells), southeast Saskatchewan (17 gross wells), and Mannville heavy oil (13 gross wells). Gross activity levels remained consistent with Q1-2026 despite spring break-up.

Freehold entered into 45 new leases with 8 counterparties during the quarter, driven largely by leasing activity in southeast Saskatchewan. A number of private companies have communicated plans to advance drilling programs in the area, with associated wells expected to start production later this year.

U.S.

During the second quarter, 226 gross (0.9 net) wells were drilled on Freehold’s U.S. lands. Activity was focused on crude oil properties with approximately 82% of drilling activity in the Permian basin.

Freehold entered into 3 new leases in the U.S., where operators continue to focus on the deeper rights which include the Barnett and Woodford formations in the Permian basin. Freehold's largest U.S. payors include ConocoPhillips, ExxonMobil, Occidental Petroleum and Diamondback Energy and alongside our private royalty payors, all remain active with their ongoing drilling programs.

Conference Call Details

A webcast to discuss financial and operational results for the period ended June 30, 2026, will be held for the investment community on Thursday, July 30, 2026, beginning at 6:30 AM MT (8:30 AM ET).

The 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 live webcast in listen-only mode, you can register using the following link: https://edge.media-server.com/mmc/p/izxg9own.

For sell-side analysts intending to ask questions on the webcast, please register in advance at: https://register-conf.media-server.com/register/BI7e584cc731134395bd673adbd7cb8c31.

Once registered, you will receive a unique PIN to access the call.

For further information contact

Freehold Royalties Ltd. Todd McBride, CPA, CMA Investor Relations t. 403.221.0833 e. tmcbride@freeholdroyalties.com

Select Quarterly Information

| | 2026 | 2025 | 2026 | | | | | | | | | | | | | | | Financial ($millions, except as noted) | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | | | | | | | | | | Royalty and other revenue | 100.3 | | 77.8 | | 69.8 | | 74.4 | | 78.3 | | 91.1 | | 76.9 | | 73.9 | | | Net Income (loss) | 57.0 | | 35.1 | | 14.1 | | 34.2 | | 6.2 | | 37.3 | | 51.1 | | 25.0 | | | Per share, basic ($) (1) | 0.35 | | 0.21 | | 0.09 | | 0.21 | | 0.04 | | 0.23 | | 0.33 | | 0.17 | | | Cash flows from operations | 71.6 | | 46.2 | | 55.0 | | 60.0 | | 57.4 | | 62.9 | | 59.1 | | 64.1 | | | Funds from operations | 77.8 | | 59.0 | | 51.1 | | 58.9 | | 56.6 | | 68.1 | | 61.3 | | 55.7 | | | Per share, basic ($) (1)(3) | 0.47 | | 0.36 | | 0.31 | | 0.36 | | 0.35 | | 0.42 | | 0.40 | | 0.37 | | | Acquisitions & related expenditures | 8.8 | | 20.0 | | 9.3 | | 5.8 | | 15.2 | | 13.9 | | 277.0 | | 1.8 | | | Dividends paid | 44.3 | | 44.3 | | 44.3 | | 44.3 | | 44.3 | | 44.3 | | 40.7 | | 40.7 | | | Per share ($) (2) | 0.27 | | 0.27 | | 0.27 | | 0.27 | | 0.27 | | 0.27 | | 0.27 | | 0.27 | | | Dividends declared | 44.3 | | 44.3 | | 44.3 | | 44.3 | | 44.3 | | 44.3 | | 41.9 | | 40.7 | | | Per share ($) (2) | 0.27 | | 0.27 | | 0.27 | | 0.27 | | 0.27 | | 0.27 | | 0.27 | | 0.27 | | | Dividend payout ratio (%) (3) | 57 | % | 75 | % | 87 | % | 75 | % | 78 | % | 65 | % | 66 | % | 73 | % | | Long-term debt | 283.2 | | 301.4 | | 282.9 | | 283.6 | | 292.6 | | 294.3 | | 300.9 | | 205.8 | | | Net debt (4) | 251.1 | | 275.3 | | 268.3 | | 263.3 | | 270.6 | | 272.2 | | 282.3 | | 187.1 | | | Net debt to trailing funds from operations (4) | 1.0 | | 1.2 | | 1.1 | | 1.1 | | 1.1 | | 1.1 | | 1.2 | | 0.8 | | | Average shares outstanding, basic (000s) (5) | 164.0 | | 164.0 | | 164.0 | | 164.0 | | 164.0 | | 164.0 | | 153.4 | | 150.7 | | | Operating | | | | | | | | | | | | | | | | | | Light and medium crude oil (bbl/d) | 6,384 | | 6,432 | | 6,456 | | 6,661 | | 6,940 | | 6,880 | | 6,296 | | 6,080 | | | Heavy crude oil (bbl/d) | 1,475 | | 1,459 | | 1,619 | | 1,481 | | 1,557 | | 1,552 | | 1,516 | | 1,315 | | | NGL (bbl/d) | 2,418 | | 2,245 | | 2,690 | | 2,335 | | 2,550 | | 2,203 | | 2,066 | | 1,972 | | | Total liquids (bbl/d) | 10,277 | | 10,136 | | 10,765 | | 10,477 | | 11,047 | | 10,635 | | 9,878 | | 9,367 | | | Natural gas (Mcf/d) | 32,070 | | 32,392 | | 33,180 | | 33,459 | | 33,220 | | 33,678 | | 32,564 | | 31,447 | | | Total production (boe/d) (6) | 15,622 | | 15,533 | | 16,294 | | 16,054 | | 16,584 | | 16,248 | | 15,306 | | 14,608 | | | Crude oil and NGL (%) | 66 | % | 65 | % | 66 | % | 65 | % | 67 | % | 65 | % | 65 | % | 64 | % | | Petroleum & natural gas realized price ($/boe) | 69.11 | | 54.97 | | 45.88 | | 48.92 | | 50.36 | | 59.29 | | 53.80 | | 54.36 | | | Cash costs ($/boe) (3)(6) | 6.55 | | 7.02 | | 7.26 | | 5.58 | | 7.38 | | 7.00 | | 5.93 | | 5.42 | | | Netback ($/boe) (3)(6) | 61.71 | | 46.66 | | 37.42 | | 42.82 | | 42.68 | | 53.01 | | 47.25 | | 47.78 | | | Benchmark Prices | | | | | | | | | | | | | | | | | | West Texas Intermediate crude oil (US$/bbl) | 92.79 | | 71.93 | | 59.14 | | 64.93 | | 63.74 | | 71.42 | | 70.27 | | 75.09 | | | Exchange rate (Cdn$/US$) | 1.38 | | 1.37 | | 1.39 | | 1.38 | | 1.38 | | 1.43 | | 1.40 | | 1.37 | | | Edmonton Light Sweet crude oil (Cdn$/bbl) | 131.74 | | 93.49 | | 76.57 | | 86.39 | | 84.25 | | 95.32 | | 94.90 | | 97.85 | | | Western Canadian Select crude oil (Cdn$/bbl) | 107.97 | | 79.22 | | 66.89 | | 75.10 | | 73.96 | | 84.30 | | 80.75 | | 83.95 | | | NYMEX natural gas (US$/Mcf) | 3.01 | | 5.23 | | 3.68 | | 3.18 | | 3.57 | | 3.79 | | 2.86 | | 2.24 | | | AECO 5A Monthly Index (Cdn$/Mcf) | 1.63 | | 2.01 | | 2.23 | | 0.63 | | 1.69 | | 2.17 | | 1.48 | | 0.69 | | | | | | | | | | | | | | | | | | | | | (1) Calculated based on the basic weighted average number of shares outstanding during the period | | | | | | | | | | | | | | | | | | (2) Based on the number of shares issued and outstanding at each record date | | | | | | | | | | | | | | | | | | (3) See Non-GAAP and Other Financial Measures | | | | | | | | | | | | | | | | | | (4) Net debt and net debt to trailing funds from operations are capital management measures; see Non-GAAP and Other Financial Measures | | | | | | | | | | | | | | | | | | (5) Weighted average number of shares outstanding during the period, basic | | | | | | | | | | | | | | | | | | (6) See Conversion of Natural Gas to Barrels of Oil Equivalent (boe) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Forward-Looking Statements

This news release offers our assessment of Freehold’s future plans and operations as of July 29, 2026, and contains forward-looking statements that we believe allow readers to better understand our business and prospects. These forward-looking statements include our expectations for the following:

the expectation that natural gas egress constraints at the Waha hub will ease as more than 4 Bcf/d of additional takeaway capacity comes into service over the next three quarters, that the additional capacity will alleviate production constraints and improve market access for producers and the anticipated timing of these benefits; our belief that, looking ahead, Freehold is well-positioned as a result of, among other things, the exposure of our asset base to the most economic oil-weighted developments in North America, supported by a well-financed operator base, and Freehold's strong balance sheet; our expectation that we will be in a position to continue supporting our dividend, funding selective growth opportunities and delivering attractive long-term value; expectations regarding certain private companies' plans to advance drilling programs in southeast Saskatchewan, and the expected timing of the start of production for associated wells; and other similar statements.

By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our control, including general economic conditions, volatility in market prices for crude oil, NGL and natural gas, risks and impacts of tariffs (or other retaliatory trade measures) imposed by Canada or the U.S. (or other countries) on exports and/or imports into and out of such countries, the risks that following the July 1, 2026 joint review of the United States-Mexico-Canada Agreement ("USMCA"), the parties are unable to agree on future amendments to or an extension of USMCA, or a party ultimately withdraws from USMCA and the impacts on the Canadian economy and the Company's business, inflation and supply chain issues, the impacts of the ongoing U.S., Israel and Iran war (and other Middle-East conflicts), Russia-Ukraine war (and any associated sanctions) and actions taken by OPEC+ on the global economy and commodity prices, geopolitical instability, political instability, industry conditions, volatility of commodity prices, future production levels, future capital expenditure levels, currency fluctuations, imprecision of reserve estimates, royalties, environmental risks, taxation, regulation, changes in tax or other legislation, competition from other industry participants, inaccurate assumptions on supply and demand factors affecting the consumption of crude oil, NGLs and natural gas, inaccurate expectations for industry drilling levels on our royalty lands, the failure to complete acquisitions on the timing and terms expected, the failure to satisfy conditions of closing for any acquisitions, the lack of availability of qualified personnel or management, stock market volatility, our inability to come to agreement with third parties on prospective opportunities and the results of any such agreement and our ability to access sufficient capital from internal and external sources. Risks are described in more detail in our Annual Information Form for the year-ended December 31, 2025, available at www.sedarplus.ca.

With respect to forward-looking statements contained in this news release, we have made assumptions regarding, among other things, future commodity prices, future capital expenditure levels, future production levels, future exchange rates, future tax rates, future legislation, the cost of developing and producing our assets, the quality of our counterparties and the plans thereof, our ability and the ability of our lessees to obtain equipment in a timely manner to carry out development activities, our ability to market our crude oil and natural gas successfully to current and new customers, the performance of current wells and future wells drilled by our royalty payors, our expectation for the consumption of crude oil and natural gas, our expectation for industry drilling levels, our expectation for completion of wells drilled, our ability to obtain financing on acceptable terms, shut-in production, production additions from our audit function, our ability to execute on prospective opportunities and our ability to add production and reserves through development and acquisition activities.

You are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Our actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements. We can give no assurance that any of the events anticipated will transpire or occur, or if any of them do, what benefits we will derive from them. The forward-looking information contained in this document is expressly qualified by this cautionary statement. To the extent any guidance or forward-looking statements herein constitute a financial outlook, they are included herein to provide readers with an understanding of management's plans and assumptions for budgeting purposes and readers are cautioned that the information may not be appropriate for other purposes. Our policy for updating forward-looking statements is to update our key operating assumptions quarterly and, except as required by law, we do not undertake to update any other forward-looking statements.

You are further cautioned that the preparation of financial statements in accordance with International Financial Reporting Standards (IFRS), which are the Canadian generally accepted accounting principles (GAAP) for publicly accountable enterprises, requires management to make certain judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates may change, having either a positive or negative effect on net income, as further information becomes available and as the economic environment changes.

To the extent any guidance or forward-looking statements herein constitutes a financial outlook, they are included herein to provide readers with an understanding of management's plans and assumptions for budgeting purposes and readers are cautioned that the information may not be appropriate for other purposes. You are further cautioned that the preparation of financial statements in accordance with IFRS requires management to make certain judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates may change, having either a positive or negative effect on net income, as further information becomes available and as the economic environment changes.