CALGARY, AB – Source Rock Royalties Ltd. (“Source Rock”) (TSXV: SRR) (TSXV: SRR.WT), a pure-play oil and gas royalty company with an established portfolio of light oil focused royalties in Saskatchewan and Alberta, announces financial and operating results for the three and six months ended June 30, 2022.
- Record quarterly royalty revenue of $1,903,802, an increase of 82% compared to Q2 2021 and 25% higher than Q1 2022.
- Record monthly royalty revenue of $681,323 in May 2022.
- Record quarterly Adjusted EBITDA1 of $1,715,652 ($0.038 per share), an increase of 81% compared to Q2 2021 and 23% higher than Q1 2022.
- Record quarterly funds from operations1 of $1,429,610 ($0.032 per share), an increase of 51% compared to Q2 2021 and 22% higher than Q1 2022.
- Quarterly royalty production averaged 168 boe/d (92% oil and NGLs), an increase of 2% compared to both Q2 2021 and Q1 2022.
- Paid a quarterly dividend of $0.015 per share, resulting in a payout ratio1 of 47%.
- Achieved an operating netback1 of $112.22 per boe and a corporate netback1 of $93.51 per boe.
- Ended Q2 2022 with a cash balance of $15,466,841 ($0.344 per share), an increase of 5% from March 31, 2022.
(1) This is a non-GAAP financial measure or non-GAAP ratio. Refer to the disclosure under the heading “Non-GAAP Financial Measures & Ratios” for more information on each non-GAAP financial measure or ratio. |
Royalty production in Q2 2022 was steady and robust commodity prices drove record quarterly royalty revenue as well as a new high mark for monthly royalty revenue. We continue to identify, pursue and negotiate numerous potential royalty acquisitions, but commodity price strength and volatility has led us to be patient and prudent. We remain focused on royalty acquisitions that fit our corporate mandate and that can be completed at metrics that align with the significant valuation compression that has occurred across the Canadian oil and gas industry, including the royalty companies.
Our cash position is increasing as we build-up free cash flow and currently represents ~45% of our market capitalization. With short-term interest rates rising materially over recent months we are now receiving enough interest on our cash balance to cover ~50% of our estimated costs to run the business. This provides us with significant flexibility to both expand and diversify our portfolio of royalties, and continue to provide a strong and sustainable yield to shareholders.
Brad Docherty, President & CEO
Three Months Ended June 30, |
Six Months Ended June 30, |
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FINANCIAL ($) |
2022 |
2021 |
Change |
2022 |
2021 |
Change |
Royalty revenue |
1,903,802 |
1,045,974 |
82 % |
3,431,188 |
1,853,045 |
85 % |
Interest on cash balance |
26,702 |
281 |
9,402 % |
33,179 |
956 |
3,371 % |
Administrative expenses |
188,150 |
98,936 |
90 % |
313,533 |
178,326 |
76 % |
Percentage of revenue (%) |
10 % |
10 % |
– |
9 % |
10 % |
-10 % |
Adjusted EBITDA(1) |
1,715,652 |
947,038 |
81 % |
3,117,655 |
1,674,719 |
86 % |
Percentage of revenue (%) |
90 % |
91 % |
-1 % |
91 % |
90 % |
1 % |
Per share (basic) |
0.038 |
0.032 |
19 % |
0.078 |
0.057 |
37 % |
Funds from operations(1) |
1,429,610 |
947,319 |
51 % |
2,602,041 |
1,675,676 |
55 % |
Percentage of revenue (%) |
75 % |
91 % |
-18 % |
76 % |
90 % |
-16 % |
Per share (basic) |
0.032 |
0.032 |
– |
0.065 |
0.057 |
14 % |
Total comprehensive income (loss) |
904,617 |
195,727 |
362 % |
1,551,717 |
(478,052) |
– |
Per share (basic) |
0.020 |
0.007 |
186 % |
0.039 |
(0.016) |
– |
Per share (diluted) |
0.020 |
0.006 |
233 % |
0.039 |
(0.015) |
– |
Dividends Paid |
673,449 |
439,032 |
53 % |
1,116,887(2) |
585,269 |
91 % |
Per share |
0.015 |
0.015 |
– |
0.03 |
0.03 |
– |
Payout ratio (%) |
47 % |
46 % |
2 % |
43 % |
35 % |
23 % |
Cash and cash equivalents |
15,466,841 |
963,733 |
1,505 % |
15,466,841 |
963,733 |
1,505 % |
Per share (basic) |
0.344 |
0.033 |
942 % |
0.344 |
0.033 |
942 % |
Average shares outstanding (basic) |
44,896,645 |
29,322,985 |
53 % |
39,750,883 |
29,286,040 |
36 % |
Shares outstanding (end of period) |
44,896,645 |
29,353,809 |
53 % |
44,896,645 |
29,353,809 |
53 % |
OPERATING |
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Average daily production (boe/d) |
168 |
164 |
2 % |
167 |
154 |
8 % |
Percentage oil & NGLs |
92 % |
95 % |
-3 % |
92 % |
95 % |
-3 % |
Average price realizations ($/boe) |
124.40 |
70.25 |
77 % |
113.58 |
66.65 |
70 % |
Operating netback ($/boe)(1) |
112.22 |
63.45 |
77 % |
103.14 |
60.08 |
72 % |
Corporate netback ($/boe)(1) |
93.51 |
63.48 |
47 % |
86.08 |
60.44 |
42 % |
(1) This is a non-GAAP financial measure or non-GAAP ratio. Refer to the disclosure under the heading “Non-GAAP Financial Measures & Ratios” for more information on each non-GAAP financial measure or ratio. |