Freehold Royalties completes major acquisition of mineral title
- Freehold Royalties Ltd. completed the acquisition of mineral title and royalty interests in the Midland Basin for approximately $259 million.
- The acquisition is expected to generate about 1,500-1,600 barrels of oil equivalent per day and around $37 million in net royalty revenue in 2025.
- The company's proactive strategies enhance financial stability and shareholder returns through increased credit facilities and a declared monthly dividend.
On December 13, 2024, in Calgary, Alberta, Freehold Royalties Ltd., a North American energy royalty company, announced the successful closure of its acquisition of mineral titles and royalty interests in the Midland Basin, located in Texas. The transaction was valued at approximately $259 million, adjusted for exchange rates, expenses, and customary closing costs. This acquisition is projected to yield 1,500 to 1,600 barrels of oil equivalent per day, predominantly from light oil, with an estimated net royalty revenue of about $37 million in 2025, assuming a West Texas Intermediate price of $70 per barrel. In conjunction with this acquisition, Freehold Royalties has increased its credit facilities by $50 million, bringing the total to $450 million. This increase reflects the company's broader strategic approach to enhancing its operating capabilities and financial stability. The board of directors also approved a monthly dividend of $0.09 per share, which will be disbursed on January 15, 2025. Shareholders of record by December 31, 2024 will be eligible for this dividend, reaffirming Freehold's commitment to providing returns to its investors. The company, which holds approximately 6.1 million gross acres in Canada and about 1.2 million gross drilling acres in the United States, is well-positioned in the energy market. The acquired assets are expected to contribute positively to its funds flow per share, free cash flow, and overall production metrics. With these acquisitions, Freehold aims to maximize shareholder value while capitalizing on the beneficial market conditions in the oil sector. Moreover, the announcement includes forward-looking statements concerning production forecasts and revenue projections, indicating the company's confidence in its operational strategies and market dynamics. These estimates are based on various assumptions, including future oil prices and development activity timelines, and highlight the potential growth trajectory following this significant acquisition. Investors and market analysts are keenly observing these developments as they signify Freehold's proactive stance in optimizing its resource portfolio amid fluctuating energy prices.