Freehold Royalties (FRU) Q1 2026 earnings summary

Executive summary

• Q1 2026 production averaged 15,533 BOE/day with 65% liquids weighting, 45% from the U.S., and 90% of revenue from oil and NGLs.

• U.S. assets contributed 51% of total revenue, benefiting from premium pricing and higher liquids weighting.

• Funds from operations totaled CAD 59 million (CAD 0.36/share), with CAD 44 million returned to shareholders via dividends and CAD 19 million invested in Permian royalty lands.

• Drilling focused on oil-weighted assets in both Canada and the U.S., with 223 gross (4.9 net) wells drilled, 68% in the U.S.

• Portfolio is diversified across top-tier North American basins, with strong operator alignment and a pure-play royalty model.

Financial highlights

• Royalty and other revenue was $77.8 million in Q1 2026, with net income of $35.1 million and funds from operations per share at $0.36.

• Dividend payout ratio was 75%, and net debt stood at $275.3 million, with a net debt to funds from operations ratio of 1.2x.

• U.S. royalty volumes realized a 31% pricing premium over Canadian production; U.S. natural gas received a 58% premium over Canadian gas.

• Maintains a TSX-leading ~6% dividend yield, with a $0.09/share monthly dividend supported down to US$50/bbl WTI.

• $2.4 billion in dividends returned to shareholders to date.

Outlook and guidance

• 2026 annual production guidance reiterated at 15,500–16,300 BOE/day, weighted 66% to oil and NGLs.

• Production expected to remain moderate in Q2 2026, with growth anticipated in late 2026 and into 2027 from increased licensing and drilling activity.

• Multi-decade drilling inventory in both U.S. (30+ years) and Canada (40+ years) supports long-term sustainability.

• ExxonMobil’s Permian growth plan could add ~1,000 BOE/day by 2030, a 25% uplift from current Midland levels.

• Sensitivities highlight strong cash flow resilience to commodity price and FX changes.