Mr. David Spyker reports

FREEHOLD ROYALTIES LTD. ANNOUNCES THIRD QUARTER 2021 RESULTS AND INCREASES DIVIDEND BY 20%

Freehold Royalties Ltd. has released its third quarter results for the period ended Sept. 30, 2021.

President's message

"The third quarter of 2021 was transformational for Freehold as the company was able to close greater than $250-million in portfolio-enhancing transactions (before closing adjustments). These transactions were focused in core U.S. and Canadian oil basins and further solidify Freehold's position as a North American royalty company.

"As a result of this hard work, Freehold's portfolio is positioned to generate organic growth into the coming years with significantly increased funds from operations which will allow us to continue to build and enhance our business. The 'new look' Freehold has the following attributes:

• "Positioned in some of the best oil and gas basins in North America with core positions added in the Permian (Delaware and Midland) and Eagle Ford in the United States, and the Clearwater in Canada;
• "Q3 2021 production of 11,265 boe/d is 23 per cent higher on an absolute and 10 per cent on a per share measure over the same period in 2020;
• "2022 guidance of 13,750 to 14,750 boe/d represents a greater-than-25-per-cent increase from the current quarter with production per share expected to grow by 12 per cent at the midpoint of guidance;
• "Funds from operations of $48.2-million (36 cents per share) in Q3 2021 and expected to grow materially higher with the acquisitions completed during the year fully incorporated in Q4 2021;
• "179 gross wells (six net) drilled on Freehold lands in the quarter more than doubles, on a net basis, the activity levels on our royalty lands through the first half of 2021.

"With the strength in our business model, we are continuing our measured approach to setting Freehold's monthly dividend, increasing it by 20 per cent from five cents per share to six cents per share, or 72 cents per share annualized. Projected 2021 payout levels are below our stated dividend policy levels, which outlines a payout ratio starting at 60 per cent over the long term based on forward-looking funds from operations. This dividend increase strikes a balance between returning value to our shareholders, managing our balance sheet and positioning Freehold to remain active on the acquisition front, as the opportunities to further build on the quality of our portfolio remains robust, within both U.S. and Canada.

"On Nov. 25, 2021, Freehold will celebrate its 25th anniversary from its initial public offering. From an offering of $10 per share, Freehold has returned almost $33 per share in dividends, while providing a lower-risk income vehicle for investors. I would like to personally thank all of our shareholders for their support over that time, and also thank our board and employees that contribute to the ideas, the energy and the inspiration that have made an investment in Freehold a success.

"We have enjoyed the first 25 years and strongly believe that we are positioning Freehold for another 25 years of continued success."

David M. Spyker

President and chief executive officer

Dividend announcement

The board of directors has declared a dividend of six cents per share to be paid on Dec. 15, 2021, to shareholders of record on Nov. 30, 2021. The dividend to be paid on Dec. 15, 2021, represents a 20-per-cent increase over the five-cent-per-common-share dividend to be paid on Nov. 15, 2021, to shareholders on record on Oct. 31, 2021. The dividend is designated as an eligible dividend for Canadian income tax purposes.

Fourth quarter 2021 guidance update

After incorporating Q3 2021 results and including all of the recent acquisition work completed by Freehold, the company is implementing guidance for Q4 2021. The relevant table summarizes the company's key operating assumptions for Q4 2021, where production is expected to be weighted approximately 60 per cent oil and NGLs (natural gas liquids), and 40 per cent natural gas.

2022 guidance

With Freehold's most recent acquisitions, the company is updating its 2022 production guidance in addition to introducing commodity price guidance. The relevant table summarizes the company's key operating assumptions for 2022 where production is expected to be weighted approximately 60 per cent oil and NGLs, and 40 per cent natural gas.

Shelf prospectus

On Nov. 10, 2021, Freehold's board of directors approved the filing of a preliminary short-form base shelf prospectus with securities regulators in each province and territory of Canada. Upon filing of the final base short-form shelf prospectus, Freehold will be able to, from time to time, offer and sell common shares, preferred shares, subscription receipts, warrants and units at an aggregate amount of up to $500-million during the next 25-month period following the filing of such final base short form shelf prospectus. Freehold has no immediate plans to raise equity capital; however, the filing of a shelf prospectus is a natural and prudent step for the company for financial flexibility and as it continues to improve and expand its asset base. Freehold anticipates filing the preliminary short-form base shelf prospectus on or about Nov. 12, 2021.

Conference call details

A conference call to discuss financial and operational results for the three months ended Sept. 30, 2021, will be held for the investment community on Wednesday, Nov. 10, 2021, beginning at 4 p.m. MDT (6 p.m. EST). To participate in the conference call, approximately 10 minutes prior to the conference call, please dial 1-800-806-5484 (toll-free in North America). The participant pass code is 1753446, followed by the pound key.

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