Mr. David Spyker reports

FREEHOLD ROYALTIES ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 RESULTS, RESERVES AND GUIDANCE FOR 2024

Freehold Royalties Ltd. has released fourth quarter and year-end results for the period ended Dec. 31, 2023.

President's message

Freehold showcased the strength of its unique North American portfolio in 2023, with exposure to a stable production base in Canada and growing oil-weighted volumes in the United States. Over the last four years, it has structurally improved its business through exposure to the top-tier basins across North America, enhancing the sustainability of drilling on its lands and returns to its shareholders. It achieved 100-per-cent organic reserves replacement in 2023, demonstrating the strength of its asset base. This evolution has resulted in $163-million in dividends returned to its shareholders while maintaining conservative debt levels (0.4 times net debt to trailing funds from operations).

Two thousand twenty-three and fourth quarter highlights included:

• $315-million in revenue; $80-million during the fourth quarter;
• $240-million in funds from operations ($1.59 per share); $63-million (42 cents per share) during the fourth quarter;
• $163-million ($1.08 per share) in dividends paid in 2023, at record levels of dividends paid and up 15 per cent versus 2022;
• $115-million in core Permian basin acquisitions announced late 2023, closed in January, 2024;
• Record leasing in Canada with 122 agreements signed through 2023, up 53 per cent versus 2022;
• Record U.S. annual average production of 5,102 barrels of oil equivalent per day, a 16-per-cent increase over 2022;
• Canadian annual production averaged 9,612 boe/d, flat versus 2022;
• 993 gross wells drilled, 466 wells in Canada and 527 wells in the United States;
• $57.65 per boe average annual realized price ($70.50 per boe in the U.S. and $50.82 per boe in Canada);
• Proven and probable reserves totalled 54.5 million boe as at Dec. 31, 2023;
• Proven developed producing reserves totalled 26.3 MMboe as at year-end 2023, a 2-per-cent improvement versus 2022; the reserve additions were the result of infill drilling and improved recovery within Freehold's portfolio;
• Freehold replaced 115 per cent of proven developed producing reserves and 128 per cent of proven reserves; reserve replacement ratios were consistent with 2022, with 115 per cent of proven reserves replaced organically.

Production volumes for the year averaged 14,714 boe/d, a 4-per-cent increase and a 6-per-cent growth in liquids volumes versus 2022. Freehold continues to build its U.S. portfolio with production averaging 5,102 boe/d in 2023 or 16 per cent higher than the previous year. In the Midland basin in the Permian, it saw volumes grow 25 per cent versus 2022 as its strong suite of payers executed their growth plans. In Canada, production remained flat year over year in the absence of a material acquisition, with volumes averaging 9,612 boe/d for the year, highlighting the asset quality of its Canadian portfolio. Two thousand twenty-three also represented a record year of leasing for Freehold, with the company completing 122 agreements with 41 distinct counterparties, with the majority of the focus in southeastern Saskatchewan and the emerging Mannville oil play.

Late in 2023, Freehold announced the acquisition of two royalty assets, increasing its exposure in the Midland and Delaware basins for $115-million, which closed in January, 2024. These transactions further Freehold's North American strategy, increasing the company's Permian production by 30 per cent and overall U.S. corporate volumes by 12 per cent.

Freehold exited the year with long-term debt of $123-million or 0.5 times long-term debt to funds from operations. After completing the above transactions in January, 2024, Freehold expects to continue to maintain considerable financial flexibility throughout 2024. Freehold paid record dividends to its shareholders in 2023, and at current commodity price levels, it believes the dividend is rightsized, with potential to grow through further portfolio investment, accelerated third party development on its royalty lands and/or a fundamental shift in the underlying commodity price environment.

Looking into 2024, it has set a production guidance range of 14,700 to 15,700 boe/d, which implies approximately 3-per-cent growth at the midpoint over 2023. It is assuming West Texas Intermediate prices average $75 (U.S.) per barrel through the year, which is forecast to provide significant revenue, funds from operations and dividend sustainability, allowing the company to execute its strategy and provide consistent returns for its shareholders.

David M. Spyker, president and chief executive officer, would like to thank employees, shareholders, the board of directors and all those who have supported Freehold throughout the year.

Dividend announcement

The board of directors of Freehold has declared a monthly dividend of nine cents per share to be paid on April 15, 2024, to shareholders of record on March 28, 2024. The dividend is designated as an eligible dividend for Canadian income tax purposes.

2024 guidance

An attached table summarizes key operating assumptions for 2024.

2023 reserves information

Freehold's year-end 2023 reserves were evaluated by independent reserve evaluators Trimble Engineering Associates Ltd. and Ryder Scott, and were completed in accordance with the definitions, standards and procedures contained in the Canadian oil and gas evaluation handbook and National Instrument 51-101 (Standards of Disclosure for Oil and Gas Activities). Freehold's reserve information is included in the company's annual information form, which is available on SEDAR+ and Freehold's website.

Conference call details

A webcast to discuss financial and operational results for the period ended Dec. 31, 2023, will be held for the investment community on Thursday, Feb. 29, 2024, beginning at 7 a.m. MST (9 a.m. EST).

A live audio webcast will be accessible on Freehold's website under events and presentations.

To participate in the conference call, you are asked to register.

A dial-in option is also available by dialling 1-800-952-5114 (toll-free in North America) with the participant passcode 5916138 followed by the number sign.

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