Freehold Royalties Announces Second Quarter 2026 Results
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
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
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.
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
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:
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.
Conversion of Natural Gas to Barrels of Oil Equivalent (boe)
To provide a single unit of production for analytical purposes, natural gas production and reserves volumes are converted mathematically to equivalent barrels of oil (boe). We use the industry-accepted standard conversion of six thousand cubic feet of natural gas to one barrel of oil (6 Mcf = 1 bbl). The 6:1 boe ratio is based on an energy equivalency conversion method primarily applicable at the burner tip. It does not represent a value equivalency at the wellhead and is not based on either energy content or current prices. While the boe ratio is useful for comparative measures and observing trends, it does not accurately reflect individual product values and might be misleading, particularly if used in isolation. As well, given that the value ratio, based on the current price of crude oil to natural gas, is significantly different from the 6:1 energy equivalency ratio, using a 6:1 conversion ratio may be misleading as an indication of value.
Non-GAAP and Other Financial Measures
Within this news release, references are made to terms commonly used as key performance indicators in the oil and gas industry, which do not have any standardized means prescribed by Canadian GAAP. We believe that netback, cash costs, dividend payout ratio and funds from operations per share are useful non-GAAP financial measures and supplementary financial measures, respectively, for management and investors to analyze operating performance, financial leverage, and liquidity, and we use these terms to facilitate the understanding and comparability of our results of operations. However, these as terms do not have any standardized meanings prescribed by GAAP, such terms may not be comparable with the calculations of similar measures for other entities. This news release also contains the capital management measures net debt and net debt to funds from operations for the trailing 12 months, as defined in note 12 to the unaudited interim condensed consolidated financial statements as at and for the three months ended June 30, 2026.
Netback, which is also calculated on a boe basis, as average realized price less production and ad valorem taxes, operating expenses, general and administrative expense, cash-based management fees, cash-based interest charges and share-based payouts, represents the per boe netback amount which allows us to benchmark how changes in commodity pricing, net of production and ad valorem taxes, and our cash-based cost structure compare against prior periods.
Cash costs, which is calculated on a boe basis, is comprised by the recurring cash-based costs, excluding taxes, reported on the statements of operations. For Freehold, cash costs are identified as operating expense, general and administrative expense, cash-based interest charges, cash-based management fees and share-based compensation payouts. Cash costs allow Freehold to benchmark how changes in its manageable cash-based cost structure compare against prior periods.
The following table presents the computation of Cash costs and Netback for the periods indicated:
Dividend payout ratios are often used for dividend paying companies in the oil and gas industry to identify dividend levels in relation to funds from operations that are also used to finance debt repayments and/or acquisition opportunities. Dividend payout ratio is a supplementary measure and is calculated as dividends paid as a percentage of funds from operations. The following table shows the calculation of dividend payout ratio for the periods indicated:
Funds from operations per share, which is calculated as funds from operations divided by the weighted average shares outstanding during the period, provides direction if changes in commodity prices, cash costs, and/or acquisitions were accretive on a per share basis. Funds from operations per share is a supplementary measure.