2013
FIRST QUARTER
INTERIM REPORT
FIRST QUARTER REPORT
Period ended March 31, 2013
RESULTS AT A GLANCE
Three Months Ended
March 31
FINANCIAL ($000s, except as noted)
2013
2012
Gross revenue
40,637
44,366
-8%
Net income
10,493
13,060
-20%
0.16
0.21
-24%
23,817
25,613
-7%
Per share, basic and diluted ($)
Funds from operations (1)
Per share ($) (1)
Change
0.36
0.41
-12%
14,914
13,245
13%
-
49,919
-100%
Dividends declared
27,897
26,766
4%
Per share ($) (3)
0.42
0.42
0%
Capital expenditures
Property and royalty acquisitions (2)
Cash taxes paid (4)
28,831
-
-
Long-term debt, period end
47,000
18,000
161%
Shares outstanding, period end (000s)
66,522
64,993
2%
Average shares outstanding (000s) (5)
66,375
62,571
6%
Average daily production (boe/d) (6)
9,067
8,733
4%
Average price realizations ($/boe) (6)
49.09
54.80
-10%
Operating netback ($/boe) (1) (6)
43.32
49.48
-12%
OPERATING
(1)
(2)
See Additional GAAP Measures and Non-GAAP Financial Measures.
Net of adjustments.
(3)
Based on the number of shares issued and outstanding at each record date.
(4)
Comprised of $22.6 million for the 2012 tax year and $6.2 million for the 2013 tax year (instalments).
(5)
Weighted average number of shares outstanding during the period, basic.
(6)
See Conversion of Natural Gas to Barrels of Oil Equivalent (boe).
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Management’s Discussion and Analysis
(MD&A)
The following Management’s Discussion and Analysis (MD&A) was prepared as of May 15, 2013, and is management’s opinion
about the consolidated operating and financial results of Freehold Royalties Ltd. and its wholly-owned subsidiaries
(collectively, Freehold) for the three months ended March 31, 2013, and previous periods, and the outlook for Freehold based
on information available as of May 15, 2013.
The financial information contained herein was based on information in the interim consolidated financial statements prepared
in accordance with International Financial Reporting Standards (IFRS), which are the Canadian generally accepted accounting
principles (GAAP) for publicly accountable enterprises. All comparative percentages are between the quarters ended March 31,
2013 and March 31, 2012, and all dollar amounts are expressed in Canadian currency, unless otherwise noted. This discussion
should be read in conjunction with Freehold’s annual MD&A and audited financial statements for the year ended December 31,
2012, together with the accompanying notes. Information contained in the 2012 annual MD&A that is not discussed in this
document remains substantially unchanged.
This MD&A contains additional GAAP measures, non-GAAP financial measures, and forward-looking statements that are
intended to help readers better understand our business and prospects. Readers are cautioned that the MD&A should be read
in conjunction with our disclosure under “Additional GAAP Measures”, “Non-GAAP Financial Measures”, and “Forward-Looking
Statements” included at the end of this MD&A.
Business Overview
Freehold is a dividend-paying corporation incorporated under the laws of the Province of Alberta and trades on the Toronto
Stock Exchange under the symbol FRU. The Company resulted from the reorganization of Freehold Royalty Trust effective
December 31, 2010. Freehold is directly and indirectly involved in the development and production of oil and natural gas,
predominantly in western Canada. We receive revenue from oil and natural gas properties as reserves are produced over the
economic life of the properties. Our primary focus is acquiring and managing oil and gas royalties.
The Royalty Advantage
We manage one of the largest non-government portfolios of oil and gas royalties in Canada, extending from northeastern
British Columbia to southern Ontario. Our total land holdings encompass approximately three million gross acres, 94% of
which are royalties. Of this, our mineral title lands (including royalty assumption lands), which we own in perpetuity, cover
more than 630,000 acres. In addition, we have gross overriding royalty interests in nearly 2.2 million acres.
We receive royalty income from over 200 industry operators. Royalty rates vary from less than 1% (for some gross overriding
royalties) to 22.5% (for some lessor royalties); our average royalty rate in 2012 was 1.6%. This diversity lowers our risk,
while we benefit from the drilling activity of other operators on our lands. Royalties offer the benefit of sharing in production
revenue without exposure to the capital costs, operating costs, and environmental costs typically associated with oil and gas
operations.
As a royalty interest owner, we do not pay any of the capital costs to drill and equip the wells for production, nor do we incur
costs to operate the wells, maintain production, and ultimately restore the land to its original state. All of those costs are paid
by others. On the majority of our production, we receive royalty income from gross production revenue (revenue before any
royalty expenses and operating costs are deducted). Our high percentage (71% in 2012) of royalty production results in
strong netbacks.
When Freehold was formed in 1996, all of our royalty lands were leased to third parties and producing. Over the years, our
unleased mineral title acreage has grown – through acquisitions, lease expiries, surrenders, and defaults. We now have over
100,000 unleased acres, available to lease out to industry or drill ourselves.
2
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Our Strategy
We effectively manage our assets to consistently deliver attractive returns to shareholders. Our goal is to be recognized and
respected as the preeminent royalty-focused oil and gas corporation in Canada. We employ the following strategies to sustain
production and extend reserve life:

Acquire appropriate assets, with a bias toward royalty interests, to provide long-term growth in value.

Actively manage our large portfolio of oil and gas royalty interests by maintaining an aggressive audit program to
ensure that royalty income is correctly calculated and collected.

Pursue development opportunities to optimize reserves and production.

Maintain an approach to debt management to provide financial flexibility with respect to acquisitions and development
expenditures, while maintaining stable dividends.
Business Environment
In the first quarter of 2013, the benchmark West Texas Intermediate (WTI) crude oil price averaged US$94.37 per barrel, 8%
lower than the prior year. Canadian oil producers faced greater volatility and widening discounts to world prices due to
transportation and refinery constraints. The capacity of North American pipeline systems remained tight due to increasing
production from Alberta’s oil sands, the Bakken shale play, and conventional oil fields amenable to horizontal drilling. To
offset this price discount, Canadian producers have been sourcing other transportation options, such as rail, truck and barge,
to gain access to improved pricing.
Heavy oil price differentials are expected to remain a concern in 2013 and will likely remain elevated until additional pipelines
are built and alternative modes of transportation are further developed. These developments should take place over the next
three years as various pipelines and refinery expansions become operational, although approval delays are expected.
The average benchmark AECO natural gas price was 27% higher in the first quarter of 2013 as a result of increased
residential and commercial demand over the winter. However, the pricing outlook remains bearish in the near term due to the
continuing oversupply situation. The supply and demand balance is expected to gradually improve over the long term as a
result of the phasing out of coal-fired power generation in favour of cleaner-burning natural gas, growing demand for
transportation and industrial use, and the planned development of several liquefied natural gas (LNG) export projects that
could open up access to high-demand Asian markets as early as 2016.
ROYALTY INTEREST DRILLING
Three Months Ended March 31
2013
2012
Equivalent
Gross
Non-unitized wells
Unitized wells (2)
Total
Licenced drilling locations, period end
Net (1)
67
3.6
Equivalent
Gross
Net (1)
81
5.1
41
0.2
61
0.5
108
3.8
142
5.6
68
5.2
48
2.9
(1)
Equivalent net wells are the aggregate of the numbers obtained by multiplying each gross well by our royalty interest percentage.
(2)
Production units wherein we generally have small royalty interests in hundreds of wells.
Although royalty drilling was down 32% (on an equivalent net basis) from the first quarter last year, well licence activity was
up, which is a positive indicator of the ongoing and future development potential on our royalty lands. To date in 2013,
royalty drilling has focused primarily on recognized oil trends within the Alberta and Williston basins, including the
Lloydminster heavy oil area, the Bakken resource play in southeast Saskatchewan, and the Cardium light oil play in west
central Alberta. Almost 90% of the equivalent net wells drilled in the first three months of 2013 were oil, similar to the full
year 2012. Both vertical and horizontal wells were drilled on our royalty lands, with horizontal drilling accounting for 68% of
the activity, on par with last year.
3
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
WORKING INTEREST DRILLING
Three Months Ended March 31
2013
Gross
Oil
22
2012
Net (1)
Gross
Net (1)
8.1
12
5.9
Natural gas
-
-
-
-
Other
7
0.7
-
-
Total
29
8.8
12
5.9
(1)
Excludes royalty interest portion on properties where Freehold has both a working interest and a royalty interest. The royalty interest
portion is included in equivalent net wells in the Royalty Interest Drilling table above.
We participated in the drilling of 29 (8.8 net) wells with a 100% success rate. In southeast Saskatchewan, we participated in
the drilling of one (0.4 net) vertical and three (1.2 net) horizontal Frobisher oil wells, and five (3.4 net) Bakken horizontal oil
wells. In the Lloydminster area, we participated in three (1.5 net) horizontal Cummings heavy oil wells, two (1.2 net) vertical
Sparky heavy oil wells and 12 (0.6 net) vertical wells in the Wildmere Lloydminster “A” Pool Unit, where we also have a
royalty interest. In Alberta, we drilled two (0.2 net) horizontal Viking oil wells at Redwater and one (0.3 net) horizontal
Cardium oil well at Minnehik Buck Lake.
This drilling activity had little effect on production levels in the first quarter but is expected to add to our production base as
the wells are completed and tied in over the next two quarters.
Half of our 2013 capital budget was spent in the first quarter, roughly 70% of which was on our mineral title lands in
southeast Saskatchewan. In total, we invested $11.9 million on drilling and completions and $3.0 million on new well facilities
and other.
Capital investment in the second quarter of 2013 is expected to total $5 million. As winter drilling extended well into April,
second quarter capital will be allocated roughly equally to drilling, facilities, and tie ins.
Guidance Update
In the first quarter of 2013, we paid $22.6 million for estimated 2012 corporate taxes. We also began remitting monthly
instalments for the 2013 tax year, expected to total $25 million. The large cash outlay for income taxes in 2013 is an anomaly
that we have prepared for and have the financial capacity to handle. Over the past two years, we have retained excess cash
and have paid down debt in anticipation of the 2013 tax bill. We expect corporate taxes will normalize in 2014, at
approximately 20% of pre-tax funds from operations.
The table below summarizes our key operating assumptions for 2013, updated to reflect actual results for the first quarter and
our current expectations for the remainder of the year. The changes reflect the following factors:
 As a result of higher than anticipated royalty production in the first quarter, we have increased our 2013 production
forecast by 200 boe per day. On a boe basis, production volumes for 2013 are expected to be approximately 65% oil and
NGL and 35% natural gas, similar to our current product mix. We continue to maintain our royalty focus with royalty
production accounting for 70% of forecasted 2013 production.
 Commodity prices were adjusted to reflect actual prices for the first three months of 2013 (as reported by CAPP) and our
expectations for the remainder of the year. Average WTI and WCS oil prices were reduced by $2.00 per barrel, and the
average AECO natural gas price was increased by $0.40 per Mcf.
 Under our current production and pricing assumptions (and excluding any potential acquisitions), we anticipate being able
to reduce long-term debt to $44 million by the end of this year.
4
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
KEY OPERATING ASSUMPTIONS (1)
Guidance Dated
2013 Annual Average
May 15, 2013
Daily production
Mar. 7, 2013
boe/d
8,700
8,500
US$/bbl
93.00
95.00
Western Canada Select (WCS)
Cdn$/bbl
69.00
71.00
AECO natural gas price
Cdn$/Mcf
3.50
3.10
Cdn$/US$
0.98
1.00
$/boe
5.00
5.00
WTI oil price
Exchange rate
Operating costs
General and administrative costs (2)
$/boe
2.60
2.60
Capital expenditures
$ millions
30
30
Dividends paid in shares (DRIP) (3)
$ millions
28
28
Long-term debt at year end
$ millions
44
48
Cash taxes payable in 2013 for 2012 tax year (4)
$ millions
23
23
Cash taxes payable for 2013 tax year (instalments) (4)
$ millions
25
25
millions
67
67
Weighted average shares outstanding
(1)
A sensitivity analysis of the potential impact of key variables on funds from operations per share is provided on page 5 of our 2012 Annual
MD&A.
(2)
Excludes share based and other compensation.
(3)
Assumes an average 25% participation rate in Freehold’s dividend reinvestment plan, which is subject to change at the participants’
discretion.
(4)
Corporate tax estimates will vary depending on commodity prices and other factors.
Recognizing the cyclical nature of the oil and gas industry, we continue to closely monitor commodity prices and industry
trends for signs of deteriorating market conditions. We caution that it is inherently difficult to predict activity levels on our
royalty lands since we have no operational control. As well, significant changes (positive or negative) in commodity prices
(including Canadian oil price differentials), foreign exchange rates, or production rates will result in adjustments to the
dividend rate. In particular, our 2013 forecast for Western Canada Select pricing assumes an improvement over the first
quarter of this year.
Despite commodity price volatility, we have been able to maintain a steady monthly dividend rate of $0.14 ($1.68 annually)
per share since January 2010. Based on our current guidance and commodity price assumptions, and assuming there are no
significant changes in the current business environment, we expect to maintain the current monthly dividend rate through
2013, subject to the Board's quarterly review and approval.
Results of Operations
First Quarter Highlights:
• Average production for the first quarter rose 4%, while average price realizations fell 10%, resulting in an 8% decline in
gross revenue compared to the first quarter of 2012.
• Production increases were mainly the result of last year’s drilling activities and acquisitions. Oil and natural gas liquids
(NGL) production increased 8% in the quarter, while natural gas production declined 4%. Natural gas production
accounted for 35% of boe production in the quarter but only 10% of gross revenue as a result of weak prices.
• Production for the quarter was positively affected by 450 boe per day (Q1 2012 – 550 boe per day) of prior period
adjustments, about half of which were due to our ongoing audit program.
• Royalty production remained level compared to the first quarter last year (accounting for 71% of production), while
working interest production increased 14% as a result of high activity levels, particularly on our mineral title lands in
southeast Saskatchewan. However, working interest production was down 18% from the fourth quarter of 2012, as the
preceding quarter included positive prior period adjustments as well as significant flush production from newly completed
horizontal wells.
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FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
• Funds from operations of $23.8 million was 7% lower than the first quarter of 2012, largely due to lower realized oil
prices. The effect of general and administrative and share based compensation charges on funds from operations is
typically high in the first quarter as approximately 50% of our annual budget for these items occurs in the quarter.
• Net income of $10.5 million was 20% lower than the first quarter last year, mainly as a result of lower realized prices.
Non-cash charges included in net income amounted to $15.5 million (Q1 2012 – $16.5 million).
• Dividends for the first quarter of 2013 totalled $0.42 per share, unchanged from the prior year.
• Average participation in our DRIP was 16% (Q1 2012 – 26%), allowing us to retain $4.4 million (Q1 2012 – $6.8 million)
in dividend payments by issuing shares from treasury.
• Net capital expenditures on our working interest properties totalled $14.9 million, the majority of which was invested on
our mineral title lands in in southeast Saskatchewan.
• Long-term debt was $47 million at March 31, 2013, up from $18 million at December 31, 2012.
• During the quarter, we paid cash taxes totalling $28.8 million ($22.6 million for the 2012 tax year and $6.2 million in
instalments for 2013 taxes).
Quarterly Performance and Seasonality
Quarterly variances in revenues, net income and funds from operations are caused mainly by fluctuations in commodity
prices and production volumes. Crude oil prices are generally determined by global supply and demand factors, but the
variances do not have seasonable predictability. Natural gas is a typically seasonal, weather-dependent fuel; demand is
generally higher during the winter (for heating) and summer (for cooling), and lower during the spring and fall. Over the past
eight quarters, this seasonality has been muted by ample supply. It is also affected by weather conditions, industrial
demand, and North American natural gas inventories.
Our financial results over the last eight quarters were affected by the following significant changes:
• WTI crude oil prices have exhibited volatility due to global economic and political uncertainties. Refinery outages and
pipeline bottlenecks in the U.S. Midwest have severely reduced access to the Texas and Louisiana Gulf Coast where
there is greater refinery demand. This, along with growing supply, has resulted in additional price volatility for
Canadian blends like Edmonton Par and Western Canadian Select (WCS) relative to WTI.
• Fluctuations in foreign exchange rates also affected our oil price realizations, resulting in both positive and negative
effects on our Canadian dollar oil revenues relative to the benchmark WTI, which is referenced in U.S. dollars.
• With supply outstripping demand, AECO natural gas prices fell to a 10-year low in the second quarter of 2012, before
improving modestly in the subsequent quarters.
• Production has increased as a result of drilling activities and acquisitions, as well as a number of one-time adjustments.
Due to the large number of wells in which we have royalty interests, the nature of royalty interests, the lag in receiving
production receipts from the operators, and our audit program, our reported royalty volumes usually include
adjustments (both positive and negative) for prior periods.
• On August 31, 2012, we closed a $10.9 million acquisition of mineral title lands. On January 17, 2012, we closed a
$49.3 million royalty acquisition; and on September 30, 2011, we closed a $7.3 million royalty acquisition.
• On February 29, 2012, we closed an equity offering, issuing 3.5 million shares (including the exercise in full of the
underwriters’ overallotment option) at $20.50 per share. Net proceeds of $67.6 million were used to repay the bank
indebtedness associated with acquisitions.
6
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
QUARTERLY REVIEW
2013
2012
2011
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Revenue, net of royalty expense
39,332
43,832
40,294
34,498
43,036
44,217
34,614
39,560
Dividends declared
27,897
27,787
27,616
27,399
26,766
25,585
25,322
25,111
Per share ($) (1)
0.42
0.42
0.42
0.42
0.42
0.42
0.42
0.42
10,493
13,431
11,975
7,862
13,060
16,033
11,290
16,717
0.16
0.20
0.18
0.12
0.21
0.26
0.19
0.28
23,817
31,475
26,272
20,522
25,613
38,245
28,772
33,891
0.36
0.48
0.40
0.31
0.41
0.63
0.48
0.57
4,381
6,672
7,013
6,940
6,789
10,232
8,765
7,798
16
24
25
25
26
40
35
31
243
10,789
(99)
49,919
(195)
7,297
44
Financial ($000s, except as noted)
Net income
Per share, basic and diluted ($)
Funds from operations (2)
Per share ($) (2)
Dividends paid in shares (DRIP)
Average DRIP participation rate (%) (3)
Property and royalty acquisitions (4)
-
Capital expenditures
14,914
7,743
9,160
6,598
13,245
10,910
5,537
4,537
Long-term debt
47,000
18,000
25,000
23,000
18,000
48,000
51,000
54,000
Weighted average (000s)
66,375
66,091
65,677
65,159
62,571
60,811
60,198
59,716
At quarter end (000s)
66,522
66,270
65,879
65,440
64,993
61,141
60,492
59,954
9,067
9,510
8,654
8,501
8,733
7,773
7,195
7,445
Shares outstanding
Operating ($/boe, except as noted)
Daily production (boe/d) (5)
71
66
68
76
74
74
72
77
Average selling price
49.09
51.55
51.71
45.74
54.80
61.90
52.80
57.61
Operating netback (2)
43.32
44.59
45.59
40.64
49.48
56.56
46.86
53.82
4.88
5.51
5.02
3.96
4.68
5.28
5.43
4.57
16.91
16.36
15.47
16.47
17.86
19.91
19.47
19.73
3.47
2.25
1.88
2.13
3.31
2.05
2.16
2.36
94.37
88.18
92.22
93.49
102.93
94.06
89.75
102.56
0.99
1.01
1.01
0.99
1.00
0.98
1.02
1.03
Edmonton Par crude oil (Cdn$/bbl)
88.16
83.99
84.33
83.95
92.23
97.35
91.74
103.07
Western Canada Select (WCS) (Cdn$/bbl)
62.96
69.43
69.99
71.29
81.61
85.48
70.63
82.09
Royalty interest production (%)
Operating expenses
Working interest properties
Net general and administrative expenses (6)
Benchmark Prices
WTI crude oil (US$/bbl)
Exchange rate (US$/Cdn$)
(6.21)
(4.19)
(7.89)
(9.54)
(10.70)
3.29
1.99
0.51
(25.20)
(14.56)
(14.34)
(12.66)
(10.62)
(11.87)
(21.11)
(20.98)
3.08
3.06
2.19
1.83
2.52
3.47
3.72
3.74
High ($)
24.48
22.45
20.34
19.67
21.59
19.75
21.58
23.28
Low ($)
21.00
19.62
17.83
17.25
19.16
14.51
16.04
19.37
Close ($)
23.38
22.40
19.76
18.44
19.59
19.41
16.36
19.64
Volume (000s)
7,203
7,435
5,656
7,483
8,076
7,114
7,780
5,317
WTI/Edmonton Par differential ($/bbl)
Edmonton Par/WCS differential (Cdn$/bbl)
AECO natural gas (Cdn$/Mcf)
Share Trading Performance
(1)
Based on the number of shares issued and outstanding at each record date.
(2)
(3)
See Additional GAAP Measures and Non-GAAP Financial Measures.
Average participation in our dividend reinvestment plan (DRIP) ranged between 16% and 40% over the past eight quarters and is subject
to change monthly at the participants’ discretion.
(4)
(5)
Net of adjustments.
Reported production for a period may include minor adjustments from previous production periods.
(6)
Excludes share based and other compensation.
7
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
AVERAGE DAILY PRODUCTION
Three Months Ended
March 31
2013
2012
Change
Royalty interest (1)
Oil (bbls/d)
3,436
NGL (bbls/d)
3,385
2%
357
280
28%
15,941
16,676
-4%
6,450
6,444
0%
2,037
1,717
19%
108
94
15%
Natural gas (Mcf/d)
2,832
2,865
-1%
Oil equivalent (boe/d)
2,617
2,289
14%
5,473
5,102
7%
Natural gas (Mcf/d)
Oil equivalent (boe/d)
Working interest (1)
Oil (bbls/d)
NGL (bbls/d)
Total
Oil (bbls/d)
NGL (bbls/d)
Natural gas (Mcf/d)
Oil equivalent (boe/d)
Number of days in period (days)
Total volumes during period (Mboe)
(1)
465
374
24%
18,773
19,541
-4%
9,067
8,733
4%
90
91
-1%
816
795
3%
On certain properties where we have both a royalty interest and a working interest, production is allocated based on the applicable royalty
and working interest percentages.
Over the past two years, the composition of our oil production has become lighter, largely as a result of our exposure to the
Bakken and Cardium light oil plays. Our production mix for the first quarter of 2013 was approximately 65% liquids (34%
light and medium oil, 26% heavy oil, and 5% NGL) and 35% natural gas.
Oil and NGL production was 8% higher than the first quarter last year, largely due to drilling and completion activity in
southeast Saskatchewan. Natural gas production was down 4% in the quarter as a result of lower industry activity. Production
for the quarter was positively affected by 450 boe per day (Q1 2012 – 550 boe per day) of prior period adjustments.
Royalty interests comprised 71% (Q1 2012 – 74%) of total volumes produced in the first quarter 2013. We use government
reporting databases and past production receipts to estimate revenue accruals. Due to the large number (over 28,000) of
wells in which we have royalty interests, the nature of royalty interests, the lag in receiving production receipts from the
operators, and our audit program, our reported royalty volumes usually include adjustments (both positive and negative) for
prior periods.
Working interest production in the quarter was 14% higher than the same period last year as a result of high activity levels,
particularly our mineral title lands in southeast Saskatchewan. However, production was down 18% compared to the fourth
quarter of 2012, as the preceding quarter included significant flush production from newly completed horizontal wells.
Marketing and Hedging
Our royalty lands consist of a large number of properties with generally small volumes per property. A provision of most leases
calls for our natural gas to be marketed with the lessees’ production. Some of our leases allow us to take our oil production inkind. In the first quarter of 2013, we marketed approximately 25% of our royalty oil production using 30-day contracts.
8
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
We market most of our working interest oil production using 30-day contracts to ensure competitive pricing. In the first
quarter of 2013, approximately 25% of our working interest natural gas production was sold under marketing arrangements
tied to the Alberta monthly or daily spot price (AECO) or other indexed referenced prices, and the balance was marketed with
the operators’ production.
To date we have not hedged any of our production. Our hedging policy is monitored on an ongoing basis and is reviewed
quarterly by the Board.
AVERAGE BENCHMARK PRICES (1)
Three Months Ended
March 31
2013
WTI crude oil (US$/bbl)
Exchange rate (US$/Cdn$)
2012
Change
94.37
102.93
-8%
0.9913
0.9989
-1%
Edmonton Par crude oil (Cdn$/bbl)
88.16
92.23
-4%
Western Canada Select (WCS) (Cdn$/bbl)
62.96
81.61
-23%
WTI/Edmonton Par differential ($/bbl)
Edmonton Par/WCS differential (Cdn$/bbl)
AECO natural gas (Cdn$/Mcf)
(1)
(6.21)
(10.70)
-42%
(25.20)
(10.62)
137%
3.08
2.52
22%
Source for commodity prices: Canadian Association of Petroleum Producers.
WTI is an important benchmark for Canadian crude oil as it reflects onshore North American prices. The price we receive for
our production is primarily driven by the U.S. dollar price of WTI, adjusted to western Canada. Therefore, an increase in the
value of the Canadian dollar relative to the U.S. dollar will reduce the revenue received. About one quarter of our total
production is heavy crude, which trades at a discount to light crude. Compared to the first quarter of last year, the average
WTI/Edmonton Par differential narrowed by 42% (ignoring the foreign exchange impact), while the average Edmonton
Par/WCS differential widened by 137%.
AVERAGE SELLING PRICES
Three Months Ended
March 31
2013
2012
Change
Oil ($/bbl)
68.18
81.47
NGL ($/bbl)
57.55
60.42
-5%
Oil and NGL ($/bbl)
67.35
80.03
-16%
Natural gas ($/Mcf)
Oil equivalent ($/boe)
-16%
2.41
2.06
17%
49.09
54.80
-10%
In the first quarter of 2013, prior period adjustments negatively affected natural gas price realizations. On a boe basis, our
average selling prices was 10% lower in the first quarter of 2013, largely because of wider Canadian oil differentials compared
to the same period last year.
9
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Revenue
GROSS REVENUE BY PRODUCT
Three Months Ended
March 31
($000s)
2013
2012
Change
Royalty interest revenue
Oil
20,514
24,845
-17%
NGL
1,903
1,591
20%
Natural gas
3,283
3,090
6%
573
703
-18%
26,273
30,229
-13%
Other (1)
Working interest revenue
Oil
13,066
12,979
1%
NGL
503
465
8%
Natural gas
790
579
36%
5
114
-96%
14,364
14,137
2%
Other (1)
Total gross revenue
Oil
33,580
37,824
-11%
NGL
2,406
2,056
17%
Natural gas
4,073
3,669
11%
578
817
-29%
40,637
44,366
-8%
Other (1)
(1)
Other includes potash, sulphur, lease rentals, and other revenue for royalty interest, and processing fees, interest and other revenue for
working interest.
Modest production gains in the first quarter were more than offset by weaker commodity prices, resulting in an 8% decline in
gross revenue. The following table demonstrates the net effect of price and volume variances on gross revenues.
GROSS REVENUE VARIANCES
Three Months Ended
March 31
($000s)
2013 vs. 2012
2012 vs. 2011
Oil and NGL
Production increase
2,427
4,989
Price increase (decrease)
(6,321)
3,858
Net increase (decrease)
(3,894)
8,847
(214)
720
Natural gas
Production increase (decrease)
Price increase (decrease)
618
(1,414)
Net increase (decrease)
404
(694)
Other (1)
(239)
Gross revenue increase (decrease)
(1)
(3,729)
Other revenue includes potash, sulphur, lease rentals, processing fees, interest and other.
10
FREEHOLD ROYALTIES LTD.
(19)
8,134
2013 Q1
PERIOD ENDED
MARCH 31, 2013
NET REVENUE
Three Months Ended
March 31
($000s)
2013
2012
Gross revenue
40,637
44,366
-8%
Royalty expense (1)
(1,305)
(1,330)
-2%
Net revenue
39,332
43,036
-9%
(1)
Change
Royalty expense includes both Crown charges and royalty payments to third parties.
Expenses
ROYALTY EXPENSE (1)
Three Months Ended
March 31
($000s, except as noted)
2013
Working interest
Per boe ($)
Per boe ($)
Per boe ($)
Change
1,302
1,207
5.53
5.80
-5%
3
123
-98%
Royalty interest (2)
Total
2012
8%
0.01
0.21
-95%
1,305
1,330
-2%
1.60
1.67
-4%
(1)
Royalty expense includes both Crown charges and royalty payments to third parties.
(2)
Comprised of freehold mineral tax, which was payable in the first quarter last year and is payable in the second quarter this year.
Oil and gas producers pay royalties to the owners of mineral rights from whom they have acquired leases. These are paid to
the Crown (provincial and federal governments) and freehold mineral title owners. Crown royalty rates are tied to commodity
prices and the level of oil and gas sales. We do not incur Crown or third party royalty expenses on production from our royalty
interest properties. As the royalty owner, we receive the royalty as income from other companies.
OPERATING EXPENSES
Three Months Ended
March 31
($000s, except as noted)
2013
Working interest
Per boe ($)
Royalty interest (1)
Per boe ($)
Total operating expenses
Total ($/boe)
(1)
2012
Change
3,982
3,719
7%
16.91
17.86
-5%
-
-
-
-
-
3,982
3,719
7%
-
4.88
4.68
4%
We do not incur operating expenses on production from our leased royalty lands.
On certain properties where we have both a royalty interest and a working interest, production is allocated based on the
royalty/working interest percentages. However, all of the operating costs relating to that production have been allocated to
the working interest component.
11
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Netback Analysis
As a royalty owner, we share in production revenue without incurring the operational costs, risks, and responsibilities typically
associated with oil and natural gas operations. The table below demonstrates the advantage of our royalty lands, which are
unencumbered by operating or royalty expenses (other than minor freehold mineral taxes). Royalty interests accounted for
65% of gross revenue in the first quarter of 2013, but contributed 74% of operating income.
OPERATING INCOME
Three months ended March 31, 2013
($000s)
Royalty Interest
Gross revenue (1)
26,273
Royalty expense(2)
(3)
Net revenue
26,270
Operating expense
-
Operating income
26,270
(1)
Gross revenue includes potash, sulphur, lease rentals, processing fees, interest and other.
(2)
Royalty expense includes both Crown charges and royalty payments to third parties.
Working Interest
Total
14,364
40,637
(1,302)
(1,305)
13,062
39,332
(3,982)
(3,982)
9,080
35,350
OPERATING NETBACK
Three Months Ended
March 31
($/boe)
2013
2012
Gross revenue (1)
49.80
55.83
Royalty expense (2)
(1.60)
(1.67)
Operating expenses
(4.88)
(4.68)
Operating netback (3)
43.32
49.48
Change
-11%
-4%
4%
-12%
(1)
Gross revenue includes potash, sulphur, lease rentals, processing fees, interest and other.
(2)
(3)
Royalty expense includes both Crown charges and royalty payments to third parties.
Operating netback is calculated by subtracting royalty and operating expenses from gross revenue. See Non-GAAP Financial Measures.
Operating netback declined 12% in the quarter, mainly as a result of lower oil prices.
GENERAL AND ADMINISTRATIVE EXPENSES
Three Months Ended
March 31
($000s, except as noted)
2013
Gross general and administrative expenses
3,215
Less: capitalized and overhead recoveries
(385)
Net general and administrative expenses
Per boe ($)
2012
2,963
(336)
Change
9%
15%
2,830
2,627
8%
3.47
3.31
5%
General and administrative (G&A) expenses include direct costs and reimbursement of G&A expenses incurred by the
Manager on behalf of Freehold (see Related Party Transactions). G&A expenses are typically highest in the first quarter of the
year as a number of annual expenses are paid in the first quarter.
12
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
MANAGEMENT FEES (PAID IN SHARES)
Three Months Ended
March 31
Shares issued in payment of management fees
Ascribed value ($000s) (1)
Per boe ($)
(1)
2013
2012
Change
48,028
47,013
2%
1,122
922
22%
1.38
1.16
19%
The ascribed value of the management fees is based on the closing share price at the end of each quarter.
The Manager receives a management fee in shares. In accordance with the management agreement, the issue of shares from
treasury related to the DRIP, and the equity offering in February 2012, resulted in pro-rata increases in the number of shares
issued as the management fee (see Shareholders’ Capital).
SHARE BASED AND OTHER COMPENSATION
Three Months Ended
March 31
($000s, except as noted)
2013
2012
Change
Gross LTIP
503
217
132%
Less: capitalized portion
(76)
(32)
138%
Net LTIP
427
185
131%
Deferred share unit plan
386
374
3%
Retirement benefit
Share based and other compensation
Per boe ($)
57
13
338%
870
572
52%
1.07
0.72
49%
We are responsible for funding a portion of the long-term incentive compensation plan (the LTIP) for employees of the
Manager. The 2010 LTIP grants vested in the first quarter of 2013 and $2.0 million of share based compensation was paid
out. The 2009 LTIP grants vested in the first quarter of 2012 and $3.7 million was paid out.
Fully-vested deferred share units are granted annually in the first quarter to non-management directors and are redeemable
for an equal number of shares (less tax withholdings) any time after the director’s retirement. As at March 31, 2013, there
were 139,457 deferred share units outstanding, and as at May 14, 2013, there were 140,282 deferred share units
outstanding.
Related Party Transactions
Freehold does not have any employees. Rife Resources Management Ltd. (the Manager) is the manager of Freehold. The
Manager is a wholly-owned subsidiary of Rife Resources Ltd. (Rife), and two of Rife’s directors are also directors of Freehold.
Rife is 100% owned by the CN Pension Trust Funds (the pension funds for the employees of Canadian National Railway
Company), which in turn is a shareholder of Freehold. The Manager recovers its general and administrative costs and a portion
of its long-term incentive plan costs and retirement benefit costs, and receives a quarterly management fee paid in shares.
The Manager provides certain services for a fee based on a specified number of shares per quarter, pursuant to the amended
and restated management agreement, which will be renewed in November 2013 for a three-year term. For the three months
ended March 31, 2013, Freehold issued 48,028 shares (2012 – 47,013) as a management fee to the Manager pursuant to the
management agreement. The ascribed value of $1.1 million (2012 – $0.9 million) was based on the closing price of the
shares on the last trading day of each quarter.
For the three months ended March 31, 2013, the Manager charged $2.4 million in general and administrative costs (2012 –
$2.2 million). At March 31, 2013, there was $0.5 million (2012 – $0.5 million) in accounts payable and accrued liabilities
relating to these costs. All transactions were in the normal course of operations and were measured at the exchange amount,
which was the amount of consideration established and agreed to by both parties.
13
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Freehold maintains ownership interests in certain oil and gas properties operated by Rife. A portion of net operating revenues
and capital expenditures represent joint operations amounts from Rife. All transactions were in the normal course of
operations and were measured at the exchange amount, which was the amount of consideration established and agreed to by
both parties. At March 31, 2013, there was $2.5 million (2012 – $5.3 million) in accounts payable and accrued liabilities
relating to these transactions.
Canpar Holdings Ltd. (Canpar) is also managed by Rife and owned 100% by the CN Pension Trust Funds, and two of Canpar’s
directors are also directors of Freehold. Canpar acts as an agent to Freehold on a majority of its freehold title lands. All
transactions were in the normal course of operations and were measured at the exchange amount, which was the amount of
consideration established and agreed to by both parties. At March 31, 2013, there was $nil (2012 – $0.6 million) in accounts
payable and accrued liabilities relating to these transactions.
INTEREST AND FINANCING
Three Months Ended
March 31
($000s, except as noted)
2013
Interest and financing expense
Per boe ($)
2012
Change
466
664
-30%
0.57
0.84
-32%
In the first quarter of 2013, interest and financing expense decreased due to lower average debt levels. The average effective
interest rate on advances under our credit facilities was 3.2% (Q1 2012 – 3.2%).
DEPLETION AND DEPRECIATION
Three Months Ended
March 31
($000s, except as noted)
2013
2012
Depletion and depreciation
15,899
16,811
-5%
19.49
21.15
-8%
Per boe ($)
Change
Oil and gas properties and royalty interests, including the cost of production equipment, future capital costs associated with
proved plus probable reserves, and the capitalized portion of the decommissioning liability, are depleted on the unit-ofproduction method based on estimated proved plus probable oil and gas reserves.
Income Tax
As a corporation, taxable income is based on revenues (which will vary depending on commodity prices and production
volumes), less allowable expenses including claims for both accumulated tax pools and tax pools associated with current year
expenditures. In the three months ended March 31, 2013, Freehold recorded $6.0 million of current income tax expense
(2012 – $6.4 million). The current taxes liability at March 31, 2013 was reduced to $0.3 million from $23.1 million at
December 31, 2012, as income taxes for the 2012 tax year were paid.
The deferred income tax liability resulted from the partnership deferral and the net difference between the tax values and
accounting values (referred to as temporary differences) effected at substantively enacted tax rates expected to apply when
the differences reverse. Freehold had a deferred income tax liability of $46.7 million as at March 31, 2013 (December 31,
2012 – $49.2 million). The decrease in the deferred tax liability results from temporary differences narrowing as current
income tax expense is recognized.
14
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Liquidity and Capital Resources
Operating Activities
Net income and funds from operations were both lower in the first quarter of 2013, as a result of lower revenues. Non-cash
charges included in net income amounted to $15.5 million (Q1 2012 – $16.5 million).
NET INCOME AND FUNDS FROM OPERATIONS
Three Months Ended
March 31
($000s, except as noted)
2013
Net income
10,493
13,060
-20%
0.16
0.21
-24%
23,817
25,613
-7%
0.36
0.41
-12%
Per share, basic and diluted ($)
Funds from operations (1)
Per share ($) (1)
(1)
2012
Change
See Additional GAAP Measures.
Financing Activities
We retain working capital primarily to fund capital expenditures or acquisitions and reduce bank indebtedness. In the oil and
natural gas industry, accounts receivable from industry partners are typically settled in the following month. However, due to
administrative complexity, payments to royalty owners are often delayed longer. Working capital at each period end can vary
due to volume and price changes during the period.
COMPONENTS OF WORKING CAPITAL
Mar. 31
Dec. 31
($000s)
2013
2012
Cash
229
102
125%
Accounts receivable
23,615
23,225
2%
Current assets
23,844
23,327
2%
Dividends payable
(9,312)
(9,278)
0%
(21,635)
(12,743)
70%
(299)
(23,095)
-99%
Accounts payable and accrued liabilities
Current taxes payable
Change
(1,064)
(2,108)
-50%
Current liabilities
(32,310)
(47,224)
-32%
Working capital
(8,466)
(23,897)
-65%
Current portion of share based and other compensation payable
Accounts payable and accrued liabilities increased during the first quarter as a result of higher activity levels on working
interest properties and an active capital program. Current taxes payable declined during the first quarter as income taxes for
the 2012 tax year were paid.
DEBT ANALYSIS
($000s)
Mar. 31
Dec. 31
2013
2012
Change
Long-term debt
47,000
18,000
Short-term debt
-
-
47,000
18,000
161%
8,466
23,897
-65%
55,466
41,897
32%
Total debt
Working capital deficency
Net debt obligations
15
FREEHOLD ROYALTIES LTD.
161%
-
2013 Q1
PERIOD ENDED
MARCH 31, 2013
During the first quarter, long-term debt increased by $29 million. Following conversion to a corporation on December 31,
2010 and becoming subject to corporate tax, we began to retain excess cash in preparation for the upcoming tax bill; the
excess cash was temporarily applied to debt repayments. In 2013, we used this excess cash to pay income taxes for the 2012
tax year.
We have a $195 million extendible revolving term credit facility with a syndicate of three Canadian chartered banks and a $15
million extendible revolving operating facility. Borrowings under the facilities bear interest at the bank’s prime lending rate,
bankers’ acceptance or LIBOR rates plus applicable margins and standby fees. The facilities are secured with $300 million
demand debentures over Freehold’s petroleum and natural gas assets but do not contain any financial covenants. At
March 31, 2013, we had $163 million of available capacity under our credit and operating facilities.
Our borrowing base is dependent on our lenders’ annual review and interpretation of our reserves and future commodity
prices. The lenders at any time can request a redetermination of the borrowing base, which may require a repayment to the
lenders within 90 days of receiving notice. The last review was completed in May 2013, with no changes to our borrowing base.
FINANCIAL LEVERAGE AND COVERAGE RATIOS (1)
Mar. 31
Dec. 31
2013
2012
Net debt to funds from operations (times) (2)
0.5
0.4
25%
Net debt to dividends (times)
0.5
0.4
25%
54.3
49.0
11%
15
12
25%
Dividends to interest expense (times)
Net debt to net debt plus equity (%)
(1)
(2)
Change
Funds from operations, dividends, and interest expense are 12-months trailing.
See Additional GAAP Measures and Non-GAAP Financial Measures.
At March 31, 2013, net debt to funds from operations was 0.5 times and net debt was approximately 15% of total
capitalization.
Under our credit facilities, we are restricted from declaring dividends if we are or would be in default under the facilities or if
our borrowings thereunder exceed our borrowing base. As at March 31, 2013, we were in compliance with all such covenants.
We are also restricted from declaring dividends if we do not satisfy the liquidity and solvency tests under the Business
Corporations Act (Alberta).
SHAREHOLDERS’ CAPITAL
March 31, 2013
Shares
December 31, 2012
Amount
Shares
Balance, beginning of period (1)
Amount
($000s)
($000s)
66,270,230
422,728
61,140,673
323,115
204,206
4,381
1,489,741
27,414
48,028
1,122
189,816
3,808
Issued for equity offering
-
-
3,450,000
70,725
Issue costs, net of tax effect
-
-
Issued for dividend reinvestment plan
Issued in lieu of management fee
Balance, end of period
(1)
66,522,464
428,231
66,270,230
(2,334)
422,728
The balance, beginning of period, December 31, 2012 was adjusted due to a recastment of the consolidated financial statements for the year ended
December 31, 2012.
On February 29, 2012, Freehold closed an equity offering and issued 3,450,000 shares at a price of $20.50 per share for
gross proceeds of $70.7 million. The issues costs including underwriters’ fees were approximately $3.1 million ($2.3 million
net of tax effect) with net proceeds being $67.6 million.
16
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
SHARES OUTSTANDING
Three Months Ended
March 31
2013
2012
Change
Weighted average
Basic
66,374,821 62,570,803
6%
Diluted
66,495,455 62,664,854
6%
66,522,464 64,992,834
2%
At period end
As at March 31, 2013, there were 66,522,464 shares outstanding, and as at May 14, 2013, there were 66,593,471 shares
outstanding.
Dividend Policy
The Board reviews and determines the dividend rate quarterly after considering expected commodity prices, foreign exchange
rates, economic conditions, production volumes, DRIP participation levels, tax payable, and our capacity to finance operating and
investing obligations. The dividend rate is established with the intent of absorbing short-term market volatility over several
months. It also recognizes our intention to fund capital expenditures primarily through funds from operations and to maintain a
strong balance sheet to take advantage of acquisition opportunities and withstand potential commodity price declines.
Freehold’s dividends are designated as eligible dividends for Canadian income tax purposes.
RECONCILIATION OF DIVIDENDS DECLARED
Three Months Ended
March 31
($000s)
2013
2012
Funds from operations (1)
23,817
25,613
-7%
4,381
6,789
-35%
Proceeds from the DRIP
Issuance of shares, net of issue costs
-
Debt additions (repayments)
29,000
Deposit on acquisition
Property and royalty acquisitions (net)
67,597
(30,000)
-
5,000
-
Change
-197%
-
(49,919)
-100%
Capital expenditures
(14,914)
(13,245)
13%
Working capital change
(14,387)
14,931
Dividends declared
(1)
27,897
See Additional GAAP Measures.
17
FREEHOLD ROYALTIES LTD.
26,766
-196%
4%
2013 Q1
PERIOD ENDED
MARCH 31, 2013
ACCUMULATED DIVIDENDS
Three Months Ended
March 31
2013
Dividends declared ($000s)
2012
27,897
26,766
Accumulated, beginning of period
1,103,549
993,981
Accumulated, end of period
1,131,446
1,020,747
Dividends per share ($) (1)
0.42
0.42
Accumulated, beginning of period
25.57
23.89
Accumulated, end of period
25.99
24.31
(1)
Based on the number of shares issued and outstanding at each record date.
Dividend Reinvestment Plan (DRIP)
In the first quarter of 2013, average participation in Freehold’s DRIP was 16% (Q1 2012 – 26%). We issued 204,206 (Q1
2012 – 355,148) shares related to the DRIP with an ascribed value of $4.4 million (Q1 2012 – $6.8 million). The ascribed
value was based on the weighted average closing price for the 10 trading days preceding each payment date.
The DRIP allows for the issuance of shares from treasury at a 5% discount to market (i.e. 95% of the weighted average
closing price for the 10 trading days preceding each payment date). Registered shareholders who wish to enrol in the DRIP
may do so by contacting Computershare Trust Company of Canada, the Plan Agent. Beneficial shareholders who wish to
participate in the DRIP should contact the broker or other nominee through which their shares are held to obtain appropriate
enrolment instructions, ensuring any deadlines or other requirements that such broker or nominee may impose or be subject
to are met. U.S. residents may not participate in the DRIP.
DIVIDENDS PAID
Three Months Ended
March 31
($000s)
2013
2012
Dividends paid in cash
23,482
19,437
Dividends paid in shares (DRIP)
Total dividends paid
4,381
6,789
27,863
26,226
Dividends paid in cash as a percentage of funds from operations (1)
(1)
99%
76%
See Additional GAAP Measures.
Investing Activities
ACQUISITIONS AND CAPITAL EXPENDITURES
Three Months Ended
March 31
($000s)
2013
Property and royalty acquisitions (net)
Capital expenditures
2012
Change
-
49,919
-100%
14,914
13,245
13%
14,914
63,164
-76%
On August 31, 2012, Freehold closed an acquisition of royalty and working interests on certain producing and non-producing
lands in Alberta and Saskatchewan for $10.9 million, including adjustments.
18
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
On January 17, 2012, Freehold closed an acquisition of royalty interests on certain producing and non-producing lands in
Alberta, British Columbia and Saskatchewan for $49.3 million, including adjustments.
Certain prior year acquisitions include requirements for subsequent payments if the vendor drills additional wells. A 2011
acquisition has a maximum of $3.2 million of total payments and no payments shall be made after December 31, 2013. A
2009 acquisition has requirements remaining of $0.5 million to March 31, 2014, if the vendor drills additional wells.
In the first quarter of 2013, capital expenditures for development of working interest properties amounted to approximately
63% (Q1 2012 – 52%) of funds from operations. We invested $11.9 million on drilling and completions and $3.0 million on
new well facilities and other, roughly 70% of which was spent in southeast Saskatchewan. We have no capital requirements
with respect to our royalty properties.
Contingency
In May 2009, a statement of claim was filed against Freehold for $9 million. The claim involves disputed land interests and
royalty obligations. After receiving external legal advice, Freehold has assessed the claim, believes it has no merit and intends
to aggressively defend itself in the claim. The claim’s outcome is not determinable and therefore no liability has been recorded
in the financial statements.
Additional Information
Additional information about Freehold, including our annual information form (AIF), is available on SEDAR at www.sedar.com
and on our website at www.freeholdroyalties.com.
Internal Controls
Freehold is required to comply with National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim
Filings. The certification of interim filings requires us to disclose in the MD&A any changes in our internal controls over
financial reporting that have materially affected, or are reasonably likely to materially affect our internal control over financial
reporting. We confirm that no such changes were made to the internal controls over financial reporting during the three
months ended March 31, 2013. The Chief Executive Officer and Chief Financial Officer have signed form 52-109F2,
Certification of Interim Filings, which can be found on SEDAR at www.sedar.com.
Forward-looking Statements
This document offers our assessment of Freehold’s future plans and operations as at May 15, 2013, and contains forward-looking
statements that we believe allow readers to better understand our business and prospects. Forward-looking statements are
contained in the MD&A under Business Environment, and include our expectations for the following:
 our outlook for commodity prices including supply and demand factors relating to crude oil, heavy oil, and natural gas;
 light/heavy oil price differentials;
 changing economic conditions;
 foreign exchange rates;
 industry drilling, development and licensing activity on our royalty lands, our exposure in emerging resource plays, and
the potential impact of horizontal drilling on production and reserves;
 development of working interest properties;
 participation in the DRIP and our use of cash preserved through the DRIP;
 estimated capital budget and expenditures and the timing thereof;
 long-term debt at year end;
 average production and contribution from royalty lands;
 key operating assumptions;
 amounts and rates of income taxes and timing of payment thereof;
 maintaining our monthly dividend rate through 2013 and our dividend policy; and
 the announced officer changes.
19
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Such statements are generally identified by the use of words such as “anticipate”, “continue”, “estimate”, “expect”, “forecast”,
“may”, “will”, “project”, “should”, “plan”, “intend”, “believe”, and similar expressions (including the negatives thereof). By
their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our
control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, lack of
pipeline capacity, 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, and our ability to access sufficient capital from internal and external sources. Risks
are described in more detail in our Annual Information Form.
In this MD&A, we make references to "flush" production rates, which is the first yield from a flowing oil well during its most
productive period. Such "flush" production rates are not determinative of future production rates. Additionally, such rates may
also include recovered "load oil" fluids used in well completion stimulation. Readers are cautioned not to place reliance on
such rates in estimating future production rates for Freehold.
With respect to forward-looking statements contained in this MD&A, we have made assumptions regarding, among other
things, future oil and natural gas prices, future capital expenditure levels, future production levels, future exchange rates,
future tax rates, future participation rates in the DRIP and use of cash retained through the DRIP, future legislation, the cost
of developing and producing our assets, our ability and the ability of our lessees to obtain equipment in a timely manner to
carry out development activities, our ability to market our oil and natural gas successfully to current and new customers, our
expectation for the consumption of crude oil and natural gas, our expectation for industry drilling levels, our ability to obtain
financing on acceptable terms, and our ability to add production and reserves through development and acquisition activities.
The key operating assumptions with respect to the forward-looking statements referred to above are detailed in our
discussion of the Business Environment.
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
statements. Our actual results, performance, or achievement could differ materially from those expressed in, or implied by,
these forward-looking statements. 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 in this document is expressly
qualified by this cautionary statement. 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 IFRS 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.
Conversion of Natural Gas to Barrels of Oil Equivalent (BOE)
To provide a single unit of production for analytical purposes, natural gas production and reserves volumes are converted
mathematically to equivalent barrels of oil (boe). We use the industry-accepted standard conversion of six thousand cubic feet
of natural gas to one barrel of oil (6 Mcf = 1 bbl). The 6:1 boe ratio is based on an energy equivalency conversion method
primarily applicable at the burner tip. It does not represent a value equivalency at the wellhead and is not based on either
energy content or current prices. While the boe ratio is useful for comparative measures and observing trends, it does not
accurately reflect individual product values and might be misleading, particularly if used in isolation. As well, given that the
value ratio, based on the current price of crude oil to natural gas, is significantly different from the 6:1 energy equivalency
ratio, using a 6:1 conversion ratio may be misleading as an indication of value.
Additional GAAP Measures
This MD&A contains the term “funds from operations”, which does not have a standardized meaning prescribed by GAAP and
therefore may not be comparable with the calculations of similar measures for other entities. Funds from operations, as
presented, is not intended to represent operating cash flow or operating profits for the period nor should it be viewed as an
alternative to net income or other measures of financial performance calculated in accordance with GAAP. We consider funds
from operations to be a key measure of operating performance as it demonstrates Freehold’s ability to generate the
20
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
necessary funds to fund capital expenditures, sustain dividends, and repay debt. We believe that such a measure provides a
useful assessment of Freehold’s operations on a continuing basis by eliminating certain non-cash charges. It is also used by
research analysts to value and compare oil and gas companies, and it is frequently included in their published research when
providing investment recommendations. Funds from operations per share is calculated based on the weighted average
number of shares outstanding consistent with the calculation of net income per share.
Non-GAAP Financial Measures
Within this MD&A, references are made to terms commonly used as key performance indicators in the oil and natural gas
industry. We believe that operating income, operating netback, and net debt to funds from operations are useful
supplemental measures for management and investors to analyze operating performance, financial leverage, and liquidity,
and we use these terms to facilitate the understanding and comparability of our results of operations and financial position.
However, these terms do not have any standardized meanings prescribed by GAAP and therefore may not be comparable with
the calculations of similar measures for other entities.
Operating income, which is calculated as gross revenue less royalties and operating expenses, represents the cash margin for
product sold. Operating netback, which is calculated as average unit sales price less royalties and operating expenses,
represents the cash margin for product sold, calculated on a per boe basis (see Netback Analysis).
Net debt to funds from operations is calculated as net debt (total debt less working capital) as a proportion of funds from
operations for the previous twelve months (see Debt Analysis).
In addition, we refer to various per boe figures, such as revenues and costs, also considered non-GAAP measures, which
provide meaningful information on our operational performance. We derive per boe figures by dividing the relevant revenue
or cost figure by the total volume of oil and natural gas production during the period, with natural gas converted to equivalent
barrels of oil as described above.
21
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Consolidated Balance Sheets
($000s) (unaudited)
March 31
December 31
2013
2012
Assets
Current assets:
Cash
$
Accounts receivable
Exploration and evaluation assets (note 2)
Petroleum and natural gas interests (note 3)
229
$
102
23,615
23,225
23,844
23,327
25,528
25,905
399,086
399,005
$
448,458
$
448,237
$
9,312
$
9,278
Liabilities and Shareholders' Equity
Current liabilities:
Dividends payable
Accounts payable and accrued liabilities
Current taxes payable
Current portion of share based and other compensation payable (note 7)
Decommisioning liability
Share based and other compensation payable (note 7)
21,635
12,743
299
23,095
1,064
2,108
32,310
47,224
17,298
16,714
819
1,290
Long-term debt (note 4)
47,000
18,000
Deferred income tax liability
46,731
49,194
428,231
422,728
2,422
2,036
Shareholders' equity:
Shareholders' capital (note 5)
Contributed surplus
Deficit
(126,353)
(108,949)
304,300
$
See accompanying notes to interim consolidated financial statements.
22
FREEHOLD ROYALTIES LTD.
448,458
315,815
$
448,237
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Consolidated Statements of Income
and Comprehensive Income
Three Months Ended
(unaudited)
March 31
($000s, except per share and weighted average data)
2012
2013
Revenue:
Royalty income and working interest sales
$
Royalty expense
40,637
$
44,366
(1,305)
(1,330)
39,332
43,036
3,982
3,719
2,830
2,627
Share based and other compensation (note 7)
870
572
Interest and financing
466
664
15,899
16,811
98
89
1,122
922
25,267
25,404
14,065
17,632
6,035
6,427
(2,463)
(1,855)
3,572
4,572
Expenses:
Operating
$
General and administrative (note 6)
Depletion and depreciation
Accretion of decommisioning liability
Management fee (note 6)
Income before taxes
Income tax:
Current expense
Deferred recovery
Net income and comprehensive income
10,493
Net income per share, basic and diluted
$
0.16
13,060
$
0.21
Weighted average number of shares:
Basic
66,374,821
62,570,803
Diluted
66,495,455
62,664,854
See accompanying notes to interim consolidated financial statements.
23
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Consolidated Statements of Cash Flows
Three Months Ended
March 31
($000s) (unaudited)
2012
2013
Operating:
Net income
$
10,493
$
13,060
Items not involving cash:
Depletion and depreciation
15,899
Share based and other compensation
16,811
870
Deferred income tax recovery
572
(2,463)
Accretion of decommisioning liability
(1,855)
98
Shares issued in lieu of management fee
89
1,122
Expenditures on share based and other compensation
922
(2,075)
Decommisioning expenditures
(3,780)
(127)
Funds from operations
Changes in non-cash working capital
(206)
23,817
25,613
(23,707)
10,722
110
36,335
Financing:
Issuance of shares, net of issue costs
-
67,597
Long-term debt
29,000
(30,000)
Dividends paid
(23,482)
(19,437)
5,518
18,160
Deposit on acquisition
-
5,000
Property and royalty acquisitions
-
(49,919)
(14,914)
(13,245)
9,413
4,506
(5,501)
(53,658)
Investing:
Capital expenditures
Changes in non-cash working capital
Increase in cash
127
Cash, beginning of period
837
102
Cash, end of period
$
See accompanying notes to interim consolidated financial statements.
24
FREEHOLD ROYALTIES LTD.
229
164
$
1,001
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Consolidated Statements of
Changes in Shareholders’ Equity
Three Months Ended
March 31
($000s) (unaudited)
2013
2012
Shareholders' capital:
Balance, beginning of period (note 5)
$
422,728
Shares issued for dividend reinvestment plan
4,381
Shares issued in lieu of management fee
1,122
Shares issued for equity offering
$
6,789
922
-
Issue costs, net of tax effect
70,725
-
Balance, end of period
323,115
(2,334)
428,231
399,217
2,036
1,480
386
374
2,422
1,854
Contributed surplus:
Balance, beginning of period
Share based compensation expense
Balance, end of period
Deficit:
Balance, beginning of period
(108,949)
Net income and comprehensive income
Dividends declared
Balance, end of period
(45,709)
10,493
13,060
(27,897)
(26,766)
(126,353)
Total shareholders' equity
$
See accompanying notes to interim consolidated financial statements.
25
FREEHOLD ROYALTIES LTD.
304,300
(59,415)
$
341,656
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Notes to Interim
Consolidated Financial Statements
For the three months ended March 31, 2013 and 2012.
1. Basis of Presentation
Freehold Royalties Ltd. (Freehold) is a dividend-paying corporation incorporated under the laws of the Province of Alberta.
Freehold’s primary focus is acquiring and managing oil and gas royalties and developing and producing its working interest oil
and gas assets.
Freehold’s principal place of business is located at 400, 144 4th Avenue SW, Calgary, Alberta, Canada T2P 3N4.
(a) Statement of Compliance
These interim consolidated financial statements have been prepared by management in accordance with International
Financial Reporting Standards (IFRS) and International Accounting Standard (IAS) 34 Interim Financial Reporting. These
interim consolidated financial statements have been prepared following the same accounting policies and methods of
computation as the consolidated financial statements and notes for the year ended December 31, 2012, except as disclosed in
Note 1(c), and should be read in conjunction with the audited consolidated financial statements and notes for the year ended
December 31, 2012. In the opinion of management, these interim consolidated financial statements contain all adjustments
of a normal recurring nature necessary to present fairly Freehold’s financial position as at March 31, 2013 and the results of
its operations and cash flows for the three months then ended.
These interim consolidated financial statements were approved by the Board of Directors on May 15, 2013.
(b) Basis of Measurement and Principles of Consolidation
These interim consolidated financial statements have been prepared on a historical cost basis and include the accounts of
Freehold and its wholly-owned subsidiaries: Freehold Resources Ltd. and Freehold Royalties Partnership. All inter-entity
transactions have been eliminated.
(c) Changes in Accounting Policy
As disclosed in the audited consolidated financial statements and notes for the year ended December 31, 2012, effective
January 1, 2013, Freehold adopted the following standards and amendments as issued by the IASB. Freehold has reviewed its
methodology and disclosure for each standard and has concluded that no additional disclosure or changes are required.





IFRS 10, Consolidated Financial Statements, eliminates the current risk and rewards approach and establishes control
as the single basis for determining the consolidation of an entity.
IFRS 11, Joint Arrangements, requires joint operations to be proportionately consolidated and joint ventures to be
equity accounted, whereas previously under IAS 31, joint ventures could be proportionately accounted.
IFRS 12, Disclosure of Interests in Other Entities, which outlines the required disclosures for interests in subsidiaries
and joint arrangements. The disclosures require information that will assist financial statement users to evaluate the
nature, risks and financial effects associated with an entity’s interests in subsidiaries and joint arrangements.
IFRS 13, Fair Value Measurement, which provides a common definition of fair value, establishes a framework for
measuring fair value under IFRS and enhances the disclosures required for fair value measurements.
IAS 19, Post Employment Benefits, which amends the recognition and measurement of defined pension expense and
expands disclosures for all employee benefit plans.
26
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
2. Exploration and Evaluation Assets
($000s)
Balance, beginning of period
March 31
December 31
2013
2012
25,905
25,045
-
9,514
Additions
Transfers to petroleum and natural gas interests (note 3)
(377)
Balance, end of period
25,528
(8,654)
25,905
There were no impairments for the period ended March 31, 2013.
3. Petroleum and Natural Gas Interests
($000s)
Cost
Balance, beginning of period
March 31
December 31
2013
2012
560,594
Property and royalty acquisitions
460,980
-
51,338
14,914
36,746
76
301
Transfers from exploration and evaluation assets (note 2)
377
8,654
Decommisioning liability additions and revisions
613
2,575
576,574
560,594
(161,589)
(97,013)
(15,899)
(64,576)
(177,488)
(161,589)
399,086
399,005
Capital expenditures
Capitalized portion of long term incentive plan
Balance, end of period
Accumulated depletion and depreciation
Balance, beginning of period
Depletion and depreciation
Balance, end of period
Net book value, end of period
Certain prior year acquisitions include requirements for subsequent payments if the vendor drills additional wells. A 2011
acquisition has a maximum of $3.2 million of total payments and no payments shall be made after December 31, 2013. A
2009 acquisition has requirements remaining of $0.5 million to March 31, 2014, if the vendor drills additional wells.
There were no impairments for the period ended March 31, 2013.
4. Long-term Debt
Freehold has a $195 million extendible revolving term credit facility with a syndicate of three Canadian chartered banks, on
which $47 million was drawn at March 31, 2013. In addition, Freehold has available a $15 million extendible revolving
operating facility.
The facilities are secured with $300 million demand debentures over Freehold’s petroleum and natural gas assets but do not
contain any financial covenants. The lenders at any time can request a redetermination of the borrowing base, which may
require a repayment to the lenders within 90 days of receiving notice. The facilities are extendible annually with the latest
review completed in May 2013. Freehold’s borrowing base is dependent on the lenders annual review and interpretation of
Freehold’s reserves and future commodity prices, with the next renewal to occur by May 2014. In the event that the lenders
do not consent to an extension, the revolving credit facility would revert to a two-year, non-revolving term facility with equal
quarterly principal repayments. The first quarterly payment would commence on January 1 of the year following the end of
the revolving period.
27
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Borrowings under the facilities bear interest at the bank’s prime lending rate, bankers’ acceptance or LIBOR rates plus
applicable margins and standby fees. At March 31, 2013 and December 31, 2012 the fair value of the long-term debt
approximated its carrying value, as the long-term debt carries interest at prevailing market rates.
For the three months ended March 31, 2013, the average effective interest rate on advances under the credit facilities was
3.2% (2012 – 3.2%).
5. Shareholders’ Capital
Freehold has authorized an unlimited number of common shares, without stated par value. Freehold has authorized
10,000,000 preferred shares, without stated par value, of which none have been issued.
SHARES ISSUED AND OUTSTANDING
March 31, 2013
Shares
December 31, 2012
Amount
Shares
($000s)
Balance, beginning of period (1)
Issued for dividend reinvestment plan
Issued in lieu of management fee (note 6)
Issued for equity offering
Issue costs, net of tax effect
(1)
66,270,230
422,728
61,140,673
323,115
204,206
4,381
1,489,741
27,414
48,028
1,122
-
-
-
Balance, end of period
Amount
($000s)
66,522,464
428,231
189,816
3,808
3,450,000
70,725
66,270,230
(2,334)
422,728
The balance, beginning of period, December 31, 2012 was adjusted due to a recastment of the consolidated financial statements for the year ended
December 31, 2012.
6. Related Party Transactions
Freehold does not have any employees. Rife Resources Management Ltd. (the Manager) is the manager of Freehold. The
Manager is a wholly-owned subsidiary of Rife Resources Ltd. (Rife), and two of Rife’s directors are also directors of Freehold.
Rife is 100% owned by the CN Pension Trust Funds (the pension funds for the employees of Canadian National Railway
Company), which in turn is a shareholder of Freehold. The Manager recovers its general and administrative costs and a portion
of its long-term incentive plan costs and retirement benefit costs, and receives a quarterly management fee paid in shares.
The Manager provides certain services for a fee based on a specified number of shares per quarter, pursuant to the amended
and restated management agreement, which will be renewed in November 2013 for a three-year term. For the three months
ended March 31, 2013, Freehold issued 48,028 shares (2012 – 47,013) as a management fee to the Manager pursuant to the
management agreement. The ascribed value of $1.1 million (2012 – $0.9 million) was based on the closing price of the
shares on the last trading day of each quarter.
For the three months ended March 31, 2013, the Manager charged $2.4 million in general and administrative costs (2012 –
$2.2 million). At March 31, 2013, there was $0.5 million (2012 – $0.5 million) in accounts payable and accrued liabilities
relating to these costs. All transactions were in the normal course of operations and were measured at the exchange amount,
which was the amount of consideration established and agreed to by both parties.
Freehold maintains ownership interests in certain oil and gas properties operated by Rife. A portion of net operating revenues
and capital expenditures represent joint operations amounts from Rife. All transactions were in the normal course of
operations and were measured at the exchange amount, which was the amount of consideration established and agreed to by
both parties. At March 31, 2013, there was $2.5 million (2012 – $5.3 million) in accounts payable and accrued liabilities
relating to these transactions.
Canpar Holdings Ltd. (Canpar) is also managed by Rife and owned 100% by the CN Pension Trust Funds, and two of Canpar’s
directors are also directors of Freehold. Canpar acts as an agent to Freehold on a majority of its freehold title lands. All
transactions were in the normal course of operations and were measured at the exchange amount, which was the amount of
28
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
consideration established and agreed to by both parties. At March 31, 2013, there was $nil (2012 – $0.6 million) in accounts
payable and accrued liabilities relating to these transactions.
7. Share Based and Other Compensation
(a) Long-term Incentive Plan
Freehold participates in its proportionate share of a long-term incentive plan (LTIP) for all employees of the Manager. The
2010 LTIP grants of valued at $2.0 million were paid out in 2013. For the three months ended March 31, 2013, Freehold
expensed $0.4 million (2012 – $0.2 million) of share based compensation.
The following table reconciles the change in total accrued share-based incentive compensation:
($000s)
Balance, beginning of period
Increase in liability
Cash payout
March 31
December 31
2013
2012
3,148
4,891
503
2,004
(2,040)
(3,747)
1,611
3,148
Current portion of liability
999
2,042
Long-term portion of liability
612
1,106
Balance, end of period
The following table reconciles the incentive plan activity for the period:
PHANTOM COMMON SHARES
March 31
December 31
2013
2012
136,062
218,304
35,154
33,976
2,162
11,723
Cash payout
(61,578)
(127,941)
Balance, end of period
111,800
Balance, beginning of period
Issued
Dividends reinvested
136,062
(b) Deferred Share Unit Plan
Fully-vested deferred share units (DSUs) are granted annually to non-management directors. As at March 31, 2013, there
were 139,457 DSUs outstanding (2012 – 112,775), which are redeemable for an equal number of shares any time after the
director’s retirement. For the three months ended March 31, 2013, Freehold expensed $0.4 million (2012 – $0.4 million) of
share based compensation with a corresponding increase to contributed surplus.
DEFERRED SHARE UNITS
Balance, beginning of period
Annual grants
Additional resulting from dividends
Balance, end of period
29
FREEHOLD ROYALTIES LTD.
March 31
December 31
2013
2012
122,296
93,551
14,731
18,844
2,430
9,901
139,457
122,296
2013 Q1
PERIOD ENDED
MARCH 31, 2013
(c) Retirement Benefit
Freehold participates in its proportionate share of a retirement benefit for certain employees of the Manager. For the three
months ended March 31, 2013, Freehold expensed $57,000 (2012 – $13,000) with a corresponding increase to the obligation.
($000s)
Accrued benefit obligation, beginning of period
March 31
December 31
2013
2012
250
Current service cost
274
57
112
Payments
(35)
(136)
Accrued benefit obligation, end of period
272
250
65
66
207
184
Current portion of liability
Long-term portion of liability
8.
Supplemental Cash Flow Disclosure
CASH EXPENSES PAID
Three months ended
March 31
($000s)
2012
2013
Interest
556
Taxes
28,831
613
-
9. Contingency
In May 2009, a statement of claim was filed against Freehold for $9 million. The claim involves disputed land interests and
royalty obligations. After receiving external legal advice, Freehold has assessed the claim, believes it has no merit and intends
to aggressively defend itself in the claim. The claim’s outcome is not determinable and therefore no liability has been recorded
in the financial statements.
10. Comparative Figures
Certain comparative figures have been reclassified to conform with the current year’s presentation.
30
FREEHOLD ROYALTIES LTD.
2013 Q1
PERIOD ENDED
MARCH 31, 2013
Corporate information
Board of Directors
Head Office
D. Nolan Blades (2)
President
Sunny Gables Holdings Ltd.
Freehold Royalties Ltd.
400, 144 – 4 Avenue SW
Calgary, AB T2P 3N4
t. 403.221.0802
f. 403.221.0888
w. freeholdroyalties.com
Harry S. Campbell, Q.C. (2)(4)
Chairman
Burnet, Duckworth & Palmer LLP
The Manager
Peter T. Harrison (4)
Manager, Oil and Gas Investments
CN Investment Division
Rife Resources Management Ltd.
t. 403.221.0800
w. rife.com
William O. Ingram
President and Chief Executive Officer
Rife Resources Ltd.
Arthur N. Korpach
Corporate Director
Investor Relations
Karen C. Taylor
Manager, Investor Relations and Corporate Secretary
t. 403.221.0891
tf. 888.257.1873
e. ktaylor@rife.com
(1)(3)
P. Michael Maher (1)(2)
Professor, Haskayne School of Business
University of Calgary
David J. Sandmeyer
Corporate Director
Auditors
KPMG LLP
(3)(4)
Bankers
Rodger A. Tourigny (1)(3)
President
Tourigny Management Ltd.
Canadian Imperial Bank of Commerce
Officers
The Toronto-Dominion Bank
D. Nolan Blades
Chair of the Board
Legal Counsel
Royal Bank of Canada
Burnet, Duckworth & Palmer LLP
William O. Ingram
President and Chief Executive Officer
Reserve Evaluators
Thomas J. Mullane
Executive Vice-President and Chief Operating Officer
Trimble Engineering Associates Ltd.
Darren G. Gunderson
Vice-President, Finance and Chief Financial Officer
Toronto Stock Exchange (TSX)
Common Shares: FRU
Garry W. Bieber
Vice-President, Production
Transfer Agent and Registrar
Stock Exchange and Trading Symbol
Computershare Trust Company of Canada
600, 530 – 8 Avenue SW
Calgary, AB T2P 3S8
t. 514.982.7555
tf. 800.564.6253
f. 888.453.0330
e. service@computershare.com
w. computershare.com
J. Frank George
Vice-President, Exploration
Michael J. Stone
Vice-President, Land
Michael J. Mogan
Controller
Karen C. Taylor
Manager, Investor Relations and Corporate Secretary
(1)
(2)
(3)
(4)
Audit Committee
Governance and Nominating Committee
Compensation Committee
Reserves Committee
31
FREEHOLD ROYALTIES LTD.