CALGARY, AB, May 30, 2023 /CNW/ – 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, announces results for the three months ended March 31, 2023.
First Quarter Highlights:
- Record quarterly royalty production of 180(1) boe/d (90% oil and NGLs), an increase of 8% over Q1 2022.
- Record monthly royalty production of 193(1) boe/d (93% oil and NGLs) in March 2023.
- Eight gross new horizontal wells began producing on Source Rock’s royalty lands, all of which were in SE Saskatchewan (7 Frobisher wells and 1 Midale well).
- Closed a $1.6 million light oil royalty acquisition in late March, adding approximately 20 bbl/d (100% oil) of royalty production in Alberta.
- Quarterly royalty revenue of $1,380,251(2), a decrease of 10% over Q1 2022.
- Quarterly Adjusted EBITDA(3) of $1,157,520 ($0.026 per share), a decrease of 17% over Q1 2022.
- Quarterly funds from operations(3) of $1,111,471 ($0.025 per share), a decrease of 5% over Q1 2022.
- Declared a quarterly dividend of $0.015 per share, resulting in a payout ratio(3) of 61%.
- Achieved an operating netback(3) of $71.45 per boe and a corporate netback(3) of $68.61 per boe.
- Ended Q1 2023 with a cash balance of $11,372,848 ($0.25 per share).
(1) |
Source Rock also benefited from 19 boe/d (100% oil) for Q1 2023 and 15 boe/d (100% oil) for March 2023, of royalty production that occurred after the effective date but prior to the closing date of the acquisition completed in March 2023. |
(2) |
Source Rock also benefited from $148,281 of sales proceeds from royalty production that occurred after the effective date but prior to the closing date of the acquisition completed in March 2023. These sales proceeds were accounted for as a reduction to the purchase price of the acquisition. |
(3) |
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. |
President’s Message
We are very pleased to report record quarterly and monthly royalty production. Record production volumes were driven by (i) a full quarter of contribution from our November 2022 SE Saskatchewan acquisition; and (ii) eight new horizontal wells producing on our SE Saskatchewan royalty lands in Q1 2023. Three different royalty payors contributed to the activity during the quarter, with the focus of this drilling being on the Frobisher formation.
We are excited to have closed another light oil royalty acquisition late in Q1 2023 and are actively seeking to further expand and diversify our portfolio of royalties. We remain focused on acquiring royalties in lands that are producing and prospective for oil. With approximately $11.5 million ($0.25 per share) of working capital, we are well positioned to increase our base royalty production and exposure to ongoing drilling activity.
Brad Docherty, President & CEO
Financial and Operational Results
Three Months Ended March 31,
|
|||
FINANCIAL ($, except as noted) |
2023 |
2022 |
Change |
Royalty revenue |
1,380,251 |
1,527,386 |
-10 % |
Adjusted EBITDA |
1,157,520 |
1,402,003 |
-17 % |
Per share (basic) |
0.026 |
0.041 |
-37 % |
Funds from operations |
1,111,471 |
1,172,431 |
-5 % |
Per share (basic) |
0.025 |
0.034 |
-26 % |
Total comprehensive income (loss) |
222,235 |
647,100 |
-66 % |
Per share (basic) |
0.005 |
0.019 |
-74 % |
Per share (diluted) |
0.005 |
0.018 |
-72 % |
Dividends Declared |
673,450 |
443,438 |
52 % |
Per share |
0.015 |
0.015 |
– |
Payout ratio (%) |
61 % |
38 % |
61 % |
Cash and cash equivalents |
11,372,848 |
14,769,345 |
-23 % |
Per share (basic) |
0.25 |
0.33 |
-24 % |
Average shares outstanding (basic) |
44,896,645 |
34,547,946 |
30 % |
Shares outstanding (end of period) |
44,896,645 |
44,896,645 |
– |
OPERATING |
|||
Average daily production (boe/d) |
180 |
166 |
8 % |
Percentage oil & NGLs (%) |
90 % |
92 % |
-2 % |
Average price realizations ($/boe) |
85.16 |
102.47 |
-17 % |
Operating Netback ($/boe) |
71.45 |
94.07 |
-24 % |
Corporate Netback ($/boe) |
68.61 |
78.67 |
-13 % |
Source Rock is a pure-play oil and gas royalty company with an existing, light oil focused portfolio of royalty interests concentrated in southeast Saskatchewan, east-central Alberta, west-central Alberta and west-central Saskatchewan. Source Rock targets a balanced growth and yield business model, using funds from operations to pursue accretive royalty acquisitions and to pay dividends. By leveraging its niche industry relationships, Source Rock identifies and acquires both existing royalty interests and newly created royalties through collaboration with industry partners. Source Rock’s strategy is premised on maintaining a low-cost corporate structure and achieving a sustainable and scalable business, measured by growing funds from operations per share and maintaining a strong netback on its royalty production.
SOURCE Source Rock Royalties Ltd.
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