CALGARY, Alberta, Dec. 20, 2017 (GLOBE NEWSWIRE) — Consistent with our strategy of enhancing the quality of our underlying asset base, Freehold Royalties Ltd. (“Freehold”) (TSX:FRU) is pleased to announce the closing today of the acquisition of a long life, light oil gross overriding royalty (GORR).
Freehold is acquiring a new 2% GORR in petroleum and natural gas rights in the Cardium in 173,440 gross (120,960 net) acres of land in the greater Pembina area. The purchase price of the GORR is $52 million plus the assignment by Freehold of minor working interest assets, and is forecast to generate approximately $3.6 million in operating income (based on strip pricing) and approximately 210 boe/d (74% light oil) in 2018. The GORR is to be paid by an E&P producer with multiple years of drilling inventory.
The acquisition was funded through our existing credit line. As a result of the acquisition, Freehold’s proforma 2017 year-end net debt to funds from operations is expected to be 0.7 times, with approximately $90 million available on our existing facility.
We see the transaction as enhancing the sustainability of Freehold’s dividend, increasing the number of drilling locations on our royalty lands and adding to the quality of our asset base. Freehold will give 2018 guidance as part of our Q4-2017 results which will be released after market on March 8th, 2018.
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