/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES./
CALGARY,
AB, Dec. 10, 2024 /CNW/ - Freehold Royalties
Ltd. (Freehold or the Company) (TSX: FRU) is pleased to announce
that, as a result of excess demand, it has agreed with the
syndicate of underwriters co-led by RBC Capital Markets, CIBC
Capital Markets and TD Securities Inc. (the Underwriters) to
increase the size of its previously announced bought-deal equity
financing (the Equity Financing) from $125.1
million to $150 million.
The Underwriters have agreed to purchase for resale to the
public, on a bought-deal basis, a total of 11.5 million common
shares (Common Shares) of Freehold at a price of $13.00 per Common Share for gross proceeds of
approximately $150.0 million. The
Underwriters will have an option to purchase up to an additional
15% of the upsized Common Shares issued under the Equity Financing
at a price of $13.00 per Common Share
to cover over-allotments and for market stabilization purposes
exercisable in whole or in part at any time until 30 days after
closing.
As previously announced, Freehold has entered into a definitive
agreement with a private seller to acquire mineral title and
royalty interests in the core of the Midland Basin in Texas (the Acquisition and the Acquired
Assets) for approximately $216
million, net of estimates for exchange rate and customary
closing adjustments. As part of the Acquisition, Freehold has
the option to acquire up to an additional $65 million of interest in the Acquired Assets,
on the same terms and conditions. With the additional proceeds from
the upsize of the Equity Financing, Freehold will acquire
$~22 million of additional interest in the Acquired Assets (an
increase of 10%, for a total of $238
million), subject to the closing conditions of the
Acquisition. As a result of the upsize, Freehold
estimates 2025E production from the Acquired Assets to be 1,375 –
1,475 boe/d (approximately 61% light oil, 20% natural gas liquids
and 19% natural gas) representing approximately $34 million in 2025E net royalty revenue (net of
production and ad valorem taxes) based on US$70/bbl WTI, with limited tax burden in the
near term.
It is anticipated that Freehold will fund the Acquisition with
net proceeds of the Equity Financing and Freehold's existing credit
facilities. Closing of the Equity Financing is not conditional on
the closing of the Acquisition. In the event that the
Acquisition does not close, the net proceeds from the Equity
Financing will be used to fund general corporate purposes including
repayment of amounts outstanding under the Company's credit
facilities.
Completion of the Equity Financing is subject to customary
closing conditions, including the receipt of all necessary
regulatory approvals, including the approval of the Toronto Stock
Exchange. Closing of the Equity Financing is expected to occur on
December 13, 2024.
The Common Shares have not been and will not be registered under
the United States Securities Act of 1933, as amended (the U.S.
Securities Act) or any U.S. state securities laws, and may not be
offered or sold in the United
States or to, or for the account of benefit of, United States persons absent registration or
any applicable exemption from the registration requirements of the
U.S. Securities Act and applicable U.S. state securities laws. No
securities regulatory authority has either approved or disapproved
of the contents of this news release. This news release shall not
constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of the securities in the United States or in any other jurisdiction
in which such offer, solicitation or sale would be unlawful.
Freehold is uniquely positioned as a leading North American
energy royalty company with approximately 6.1 million gross acres
in Canada and approximately 1.1
million gross drilling acres in the
United States. Freehold's common shares trade on the Toronto
Stock Exchange in Canada under the
symbol FRU.
Forward-Looking Statements
This news release offers our assessment of Freehold's future
plans and operations as at December 10,
2024 and contains forward-looking information including,
without limitation, forward-looking information with regards to the
expected terms of the Equity Financing; the anticipated purchase
price for the acquisition; and the expected use of proceeds from
the Equity Financing; the expected timing of closing the Equity
Financing; Freehold's estimates for 2025 production for the
Acquired Assets and net royalty revenue (net of production and ad
valorem taxes) for 2025; the anticipated tax burden associated in
the near future; the expected attributes and benefits to be derived
by Freehold pursuant to the Acquisition; and the future performance
of the Acquired Assets following the completion of the
Acquisition.
This forward-looking information is provided to allow readers to
better understand our business and prospects and may not be
suitable for other purposes. By its nature, forward-looking
information is subject to numerous risks and uncertainties, some of
which are beyond our control, including the demand for oil and
natural gas, general economic conditions, industry conditions, the
impact of the Russia-Ukraine war and the Israel-Hamas-Hezbollah
conflict on the global economy and commodity prices, volatility of
commodity prices, currency fluctuations, imprecision of reserve
estimates, royalties, environmental risks, taxation, regulation,
changes in tax or other legislation, competition from other
industry participants, the lack of availability of qualified
personnel or management, stock market volatility, our ability to
access sufficient capital from internal and external sources. The
closing of the Acquisition, Equity Financing could be delayed if
Freehold or the other parties are not able to obtain the necessary
regulatory and stock exchange approvals on the timelines
anticipated. The Acquisition and Equity Financing may not be
completed if these approvals are not obtained or some other
condition to the closing of the Acquisition is not satisfied.
Accordingly, there is a risk that the Acquisition, Equity Financing
will not be completed within the anticipated time or at all. In
addition, the Equity Financing is not conditional on the closing of
the Acquisition and as such the proceeds from the Equity Financing
may be used for purposes other than the payment of the purchase
price pursuant to the Acquisition. Risks are described in more
detail in Freehold's annual information form for the year ended
December 31, 2023 which is available
under Freehold's profile on SEDAR+ at www.sedarplus.ca.
With respect to forward looking information contained in this
press release including relating to the 2025 forecast production
and 2025 royalty revenue from the Acquired Assets, we have made
assumptions regarding, among other things; future oil and natural
gas prices (for the purposes of the estimates in this press release
we have assumed a West Texas Intermediate price of US$70/barrel of oil and a NYMEX natural gas price
of US$3.30/MMbtu); future exchange
rates (for the purposes of the estimates in this press release we
have assumed an exchange rate of US$1.00 for every CDN$1.40); that drilled uncompleted wells will be
completed in the short term and brought on production; that wells
that have been permitted will be drilled and completed within a
customary timeframe; expectations as to additional wells to be
permitted, drilled, completed and brought on production in 2024 and
2025 based on Freehold's review of the geology and economics of the
plays associated with the Acquired Assets; expected production
performance of wells to be drilled and/or brought on production in
2024 and 2025; the ability of our royalty payors to obtain
equipment in a timely manner to carry out development activities;
the ability and willingness of royalty payors to fund development
activities relating to the Acquired Assets; and such other
assumptions as are identified herein. You are cautioned that the
assumptions used in the preparation of such information, although
considered reasonable at the time of preparation, may prove to be
imprecise and, as such, undue reliance should not be placed on
forward looking information. We can give no assurance that any of
the events anticipated will transpire or occur, or if any of them
do, what benefits we will derive from them. The forward-looking
information contained herein is expressly qualified by this
cautionary statement. To the extent any guidance or forward-looking
statements herein constitute a financial outlook, they are included
herein to provide readers with an understanding of management's
plans and assumptions for budgeting purposes and readers are
cautioned that the information may not be appropriate for other
purposes. Our policy for updating forward-looking statements is to
update our key operating assumptions quarterly and, except as
required by law, we do not undertake to update any other
forward-looking statements. You are further cautioned that the
preparation of financial statements in accordance with
International Financial Reporting Standards requires management to
make certain judgments and estimates that affect the reported
amounts of assets, liabilities, revenues, and expenses. These
estimates may change, having either a positive or negative effect
on net income, as further information becomes available and as the
economic environment changes.
Currency
All references in this press release to dollar amounts are to
Canadian dollars unless otherwise indicated.
SOURCE Freehold Royalties Ltd.
