Freehold Royalties : Spring 2021 Investor Presentation

1. North American Royalty Company

freeholdroyalties.com

TSX FRU

Quality Assets • Sustainable Dividends

Freehold Snapshot

Proven Production Platform

(boe/d)	12,000
10,000
Production	8,000
6,000
Royalty	4,000
0
	2,000

Q1-17Q2-17Q3-17Q4-17Q1-18Q2-18Q3-18Q4-18Q1-19Q2-19Q3-19Q4-19Q1-20Q2-20Q3-20Q4-20Q1-21 2021E

Top Tier North American Portfolio

HH:WTI	$55	Half-Cycle Breakevens by Play
			Freehold Core Area
$45
	$35
	$25
Source:PV10BreakevenWTI@20:1($US/Bbl)		Midland		Marcellus	Bakken-CDN		SCOOP/STACK
Enverus,Clearwater	CompanyDelaware CharlieLake ReportsHaynesville Montney DJ EagleFord Bakken-US Shaunavon	Viking	Utica

A North American Royalty Company

Freehold Canadian Assets

2021E production ~9,500 boe/d

6.3 million gross royalty acres Q1-2021 oil pricing $58 CAD/bbl

Freehold USA Assets

2021E production ~1,300 boe/d

0.45 million gross unit drilling acres Q1-2021 oil pricing $66 CAD/bbl

Freehold

Royalty Lands

Strong Financial Position

• 0.8x net debt to trailing funds from operations
• $180 million recently renewed credit facility
• Leverage strategy <1.5x debt to funds from operations

Strong Free Funds Flow

		2021E
		dividend
		commitment
		of $53 million
At $55
US/bbl	~$15
WTI	$80 million in
million in
Freehold
cash	value
generates	enhancing
costs to
>$100	transactions
run our
million in	in 2021 YTD
business
royalty
revenue
		Pay down
		debt; Q1-
		2021 net debt
		$65 million

Near Term Catalysts

• Increased dividend three consecutive quarters from $0.015 to $0.04/share per month
• Value enhancing acquisitions through North American portfolio
• Further ramp-up of 3rd party drilling on royalty lands

2

Corporate Profile

Focused on delivering shareholder value from oil and gas royalties

2021E revenue and production from Oil & NGL (1)	80% revenue / 55% production
2021E production (1)	10,500-11,000 boe/d
Annualized dividend (2) ($0.040 per month)	$0.48/share
Dividend yield (2)(3)	6.5%
Enterprise Value (3)(4)(5)	$1.0 billion
Net Debt to Funds from Operations(5)	0.8x

1. Based on updated guidance as of May 11th, 2021
2. Based on updated monthly dividend of $0.04 per share announced on May 11th, 2021, payable on June 15th, 2021 to shareholders of record on May 31, 2021
3. Based on FRU closing share price of C$7.29/share on March 31st , 2021
4. Based on 131.4 million shares outstanding as of March 31st , 2021
5. Based on net debt as of March 31st and 12-month trailing funds from operations

Spring 2021

3

2021 First Quarter Results

		Q1/2021	Q1/2020	change
Production	boe/d	10,944	11,026	-1%
Funds from operations	$mm	32.4	20.2	60%
Period end net debt	$mm	64.8	101.8	-36%
Corporate netback	$/boe	$32.94	$20.46	61%
Payout ratio	%	24%	92%	-68%
Cash costs	$/boe	4.37	5.74	-24%

Q1-2021 highlights:

• Production averaged 10,944 boe/d, down 1% y/y
• • Q1-2021production up 13% quarter-over-quarter
• 111 (3.9 net) wells drilled on royalty lands in Q1-2021 with prospects targeting oil in the Clearwater, Viking, Permian and Eagle Ford
• Continue to see ~10 rigs on our royalty lands
• Funds from operations $32.4 million, up 60% versus the same period last year
• 2020 payout of 24%, down from 92% during the same period last year
• • Increased the monthly dividend from $0.03 to $0.04/share, the third consecutive quarterly increase
• Q1-2021cash costs of $4.37/boe, down 24% during the same period in 2020, reflecting ongoing cost reductions
• Net debt to trailing funds from operations of 0.8x retains balance sheet strength and financial flexibility

Spring 2021

4

The Royalty Advantage

Freehold provides a lower risk/return proposition than traditional E&P's

Financial Strength,

Low Risk

• Strong operating margins, enable lower breakeven commodity prices, enhancing the sustainability of payout
• Q1-2021corporate netback >$32/boe, >95% operating margin
• Ability to grow the dividend, and generate meaningful free funds flow at current commodity price levels
• Financial flexibility with debt to funds from operations <1.0x

Diversified Royalty

Portfolio

• Diversified North American portfolio with exposure to Permian, Eagle Ford, Viking, Clearwater, Bakken, Mississippian, and Cardium oil plays plus natural gas plays targeting the Spirit River, Montney and Haynesville via well funded producers
• 6.3 million royalty acres in Canada, 0.4 million in the U.S.
• 400 royalty payors provides diversified group of revenue and minimizes financial risk

Environmental,

Social, Governance

• Our approach to ESG is rooted in our collective desire to provide a long- term value proposition to our shareholders
• Royalties offer no exposure to environmental pressures
• Expect to update our ESG strategy through a sustainability report later in 2021
• Freehold has strong leadership, an engaged and idea rich workforce, and a supportive and constructive Board of Directors

Spring 2021

5