Freehold Royalties (TSX:FRU) reported first-quarter financial results on Wednesday. The transcript from the company's first-quarter earnings call has been provided below.
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The full earnings call is available at https://edge.media-server.com/mmc/p/d43cmqxn/
<h2>Summary</h2>
Freehold Royalties reported Q1 2026 production of 15,533 barrels of oil equivalent per day, with a liquids weighting of 65%, driven by a focus on oil-weighted assets.

The company generated $59 million in funds from operations, translating to $0.36 per share, and paid $44 million in dividends, while investing $19 million in mineral title lands in the Permian Basin.

Freehold Royalties reiterated its 2026 production guidance of 15,500 to 16,300 barrels of oil equivalent per day and discussed the positive impact of $100 oil prices on future activity and revenue.

<h2>Full Transcript</h2>
OPERATOR
Good day and thank you for standing by. Welcome to the Freehold Royalties first quarter 2026 webcast. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising that. Your hand is raised to withdraw your question. Please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, David Spiker, President and CEO. Please go ahead.

David Spiker (President and CEO)
Yes, Good morning everyone. Thank you for joining us today. On the call with me is Paul Slack, our interim CFO and Todd McBride, our manager of Investor Relations. For those that don't know Paul, he's been with our organization for the past six years as our Controller and has been in the industry for 30 years. So before we get started please be advised that certain statements on this call are considered as forward looking information and we caution the listener to review the advisory on forward looking statements in the news release and MD&amp;A found on our website. So in the first quarter of this year we achieved production of 15,533 by a day with a liquids weighting of 65%. The oil and gas portion of our portfolio contribute 90% of our total revenue as our liquids focused strategy continues to drive our business and will be key in this current elevated oil price environment. As we outlined in our conference call In March, our Q1 production reflects lower drilling activities in the latter half of 2025 when oil prices were sitting below $60 a barrel. WTI we did have some seasonal impact of the winter storm that swept through the southern US in late January and resulted in approximately 300 barrels a day of production. Downtime in January or in the quarter is what, 100 boe a day on average. Activity levels in the first quarter were focused on our oil weighted assets in both Canada and the US we saw continued strong activity levels in our heavy oil plays the Clearwater and Manville in addition to very active programs in the Viking and Southeast Saskatchewan light oil with new drilling in these two light oil plays contributing over 225 barrels a day as we exited Q1. On the US side drilling was focused in the Permian and continues to be led by some of our top operators in Exxon Mobil, Occidental and Diamondback. Activity in the Eagle Ford tends to be a bit more seasonal and we see permitting and drilling activity just being initiated by ConocoPhillips and production associated with this field activity will start to show up in the back half of this year. In this current oil price environment where we have $100 a barrel oil this morning and balance of year strip pricing in the mid to upper 80s a barrel, we're starting to see licensing activity pick up in the Clearwater Southeast Saskatchewan Viking as well as some of our liquids rich gasier areas in certain parts of the Deep Basin and West Central Alberta Glauconite. We would expect to see drilling activity in these areas after spring breakup and this activity would contribute to our 2026 exit volumes. Looking ahead in the US permitting and drilling activity has not seen a significant uptick yet. However we are seeing all available frac spreads and service rigs activated to focus on bringing forward wells that have already been drilled and are awaiting completion. Given the volatility in the oil price and no clear direction yet on the duration of this price strength, operators are still developing their capital deployment strategies. All these tailwinds are positive for the industry and we expect the incremental production adds from any additional activity would show up in the latter half of 2026 and into 2027. Therefore, we are reiterating our 2026 production guidance at this time of 15,500 to 16,300 boe/day annual production in the quarter we generated 59 million of funds from operations or $0.36 per share at an oil price of $72 a barrel WTI in the first quarter with this funds flow we paid 44 million in dividends to our shareholders and we invested $19 million in oil focused mineral title lands in undeveloped drilling areas in the core of the Permian Basin. These lands are in early stages of development with mineral title lands held in perpetuity and are in areas that have significant undeveloped resource. Our net debt set a little higher as a result of these investments this quarter our North American portfolio remains very well balanced with 55% of our production coming out of Canada and 45% out of the U.S. the U.S. represents a slightly smaller share of production, but it does deliver a disproportionately higher revenue component accounting for 51% of our total revenue this quarter. This is driven by the premium pricing and higher liquids weighting that we have in our US assets. In the first quarter US royalty volumes realized a 31% pricing premium compared to our Canadian production. Beyond the quality and the strong market access of our US oil, our US natural gas also received a 58% premium over a Canadian gas price due to proximity to US Gulf Coast LNG facilities and significantly more egress options than we have in Canada. So as we think through our capital allocation priorities and this current price environment after a monthly dividend we look to have a bit of a balance of debt repayment along with strategic acquisitions that enhance our portfolio. We continue to see high quality opportunities to acquire this undeveloped mineral title lands in the core of the Permian and our focus has been on these types of deals. In the first quarter of this year we invested $19 million in what we call these ground game style deals, adding over 200 drilling locations to our inventory under Premier operators ExxonMobil, Diamondback, Occidental, ConocoPhillips and Double Eagle. Lastly through our NCIB we have the option of share buybacks. So this year marks our 30th year as a public company and over the past 30 years our production has grown at a 4% compounded annual growth rate and we maintained a monthly dividend throughout Our portfolio offers investors exposure to the premier oil and natural gas basins across North America, including our growing heavy oil segment in Northern Alberta, a lighter oil plays in Southeast Saskatchewan, exposure to Gulf coast pricing with our Eagle Ford assets and our growing light oil and natural gas production from the Permian we invite you all to join us at our annual general meeting at 3pm Calgary time this afternoon. It will be held at the 8th Avenue Place Conference center and at Suite 400, 525 8th Ave. Southwest Calgary. More details, including a link to the webcast over AGM can be found on our website@freeholdroyalties.com so with that we're pleased to take any questions

OPERATOR
As a reminder. To ask a question, you will need to press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by when we compile our Q and A roster. And our first question will come from the line of Jamie Kubik of CIBC. Your line is open. Jamie, yeah, good morning.

Jamie Kubik (Equity Analyst)
Thanks for taking my question. I just had a question with respect to the US drilling activity in the quarter. Looked like it was down considerably year on year. Can you just talk about some of the nuances there and how you think that unfolds over the balance of the year? Yeah Jamie, I think that's really more a reflection of trailing $60 WTI coming out of the last quarter and that plays into the first quarter of this year. Going forward we are seeing an increase in permitting activity and US is a little bit different than Canada in that you think of that on stream time, typically taking 12 to 18 months to go from permitting to drilling a pad. And so what we are seeing is us guys probably taking a little bit more time to decide how they're going to place their capital in this environment because that drilling isn't going to capture $100 oil price that we see today. So they want to make sure that as they ramp up their programs that they're happy, which really is going to become 2027. Pricing will impact those volumes. So in Canada, we see a little bit of quicker ramp up, there's quicker cycle times. But in the US I think we're just starting to see that activity ramp up as a little bit more confidence in what late year pricing looks like and going into next year. Okay, that's all for me, thanks. Yeah, thanks, Jamie.

OPERATOR
And as a reminder, if you would like to ask a question, please press star 11 on your telephone and wait for your names to be announced. And I would now like to turn the call back to Dave for closing remarks.

David Spiker (President and CEO)
Excellent. Well, thanks everyone for joining today. And like I say, if we can make it over to the AGM this afternoon, we'd love to see you there. And thanks and have a good day. Take care.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.

Freehold Royalties (TSX:FRU) reported Q1 2026 production of 15,533 barrels of oil equivalent per day, with a liquids weighting of 65%. The company generated $59 million in funds from operations ($0.36 per share) and paid $44 million in dividends, while investing $19 million in mineral title lands in the Permian Basin. Freehold reiterated its 2026 production guidance of 15,500 to 16,300 barrels per day, highlighting the positive impact of $100 oil prices on future activity and revenue.

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Full Transcript: Freehold Royalties Q1 2026 Earnings Call