Q2 2024 Freehold Royalties Ltd Earnings Call Transcript
Key Points
- Production averaged 15,221 BOE a day, a 3% increase over the prior quarter.
- Oil production saw a 7% increase, averaging 7,899 barrels a day.
- Funds from operations for the quarter totaled $60 million, an 11% increase over the prior quarter.
- Net debt was reduced by $12 million while closing three tuck-in acquisitions for a combined $7.3 million.
- Drilling activity was strong with 274 wells drilled across North America, with 75% targeting oil prospects in Texas.
- Natural gas benchmark pricing was weak through the quarter.
- The payout ratio for the quarter was 68%, which may be considered high by some investors.
- The time between well permitting and completion in the US can range from 6 to 12 months, causing potential delays.
- Despite strong leasing activity, the company faces challenges in revitalizing older wells with current best practices.
- The company is heavily reliant on oil and NGLs, which represent over 95% of its revenue, making it vulnerable to oil price fluctuations.
Good morning, ladies and gentlemen. Welcome to the Freehold Royalties second quarter results conference call.
I'd like to turn the meeting over to Mr. David Spyker. Please go ahead, sir.
Good morning, everyone, and thank you for joining us today. On the call from Freehold are Rob King, our COO; and Dave Hendry, our CFO. Really pleased with our quarter with production averaging 15,221 BOE a day, a 3% increase over the prior quarter.
Oil production was driving this growth averaging 7,899 barrels a day, which was a 7% increase over the prior quarter. Our US assets grew 9% over the quarter to 5,599 BOE a day. Our result of increased drilling activity on our Eagle Ford and Permian assets, as well as the recovery from the extreme weather impacts in Q1 2024.
Funds from operations for the quarter totaled $60 million or $0.40 per share, and 11% increase over the prior quarter. This funded are $0.09 per month dividend resulting in a 68% payout ratio for the
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