- Freehold Royalties (FRU) has completed its purchase of diversified oil and gas royalty assets in the United States for US$58 million (C$73.55 million)
- The acquisition is expected to represent 11 per cent of the company’s total production and is forecast to generate $12 million in 2021
- It comes as part of an effort to strengthen the resiliency of Freehold’s portfolio and enhance both near-term and long-term sustainability
- To facilitate the transaction, the company completed two private placements, raising a total of C$60.7 million
- Freehold Royalties is currently up 0.54 per cent to C$5.54 per share
Freehold Royalties (FRU) has completed its purchase of diversified oil and gas royalty assets in the United States for US$58 million (C$73.55 million).
Pursuant to an announcement dated November 24, the assets include a total of 400,000 acres of mineral titles and overriding royalty interests across 12 basins in eight U.S. states.
They cover in excess of 2,400 development locations through more than 100 well-funded royalty payers, and are expected to collectively generate C$12 million in funds from operations over the course of 2021, accounting for roughly 11 per cent of Freehold’s total production.
The company said the portfolio will play a pivotal role in strengthening the resilience of its portfolio, particularly given the current volatile environment, and will enhance both near-term and long-term sustainability of Freehold’s dividends.
Freehold said the assets will “enhance our near-term growth profile and further position Freehold ‘ahead of the drill bit’ with royalty acres that we believe will attract capital at or below the current WTI price environment.”
To facilitate the transaction, the company completed two separate private placements, which collectively raised approximately C$60.7 million.
Under the first, Freehold issued just almost 9.86 million subscription receipts at a price of C$4.80 each, which included an over-allotment option granted to the underwriters.
Under the second, the company issued a further 2.79 million subscription receipts at the same price, which were purchased by the pension trust funds for employees of TSX-listed railway operator CN.
With the deal complete, Freehold has confirmed its 2021 production guidance of between 10,000 and 10,500 barrels of oil equivalent per day, representing a 13 per cent increase compared to the company’s third quarter production figure for 2020.
Freehold Royalties is currently up 0.54 per cent to C$5.54 per share at 10:57am EST.