CAPP Investment Symposium
December 10 to 12, 2012
Value beneath the surface
Advisories
TSX : FRU
Forward-Looking Information
This presentation offers management’s assessment of Freehold’s future plans and operations as at
November 8, 2012, and contains forward-looking information pertaining to Freehold’s expected tax horizon,
dividend policy and timing for paying dividends, tax treatment of dividends, future business strategy, and
assumptions regarding commodity prices, production, costs, year-end debt, DRIP participation, taxes
payable, and shares outstanding. The key assumptions used in the preparation of this presentation are
footnoted on the accompanying slides. Risks and uncertainties that could significantly affect these forwardlooking statements are outlined in our Annual Information Form, which is filed on sedar.com. Forwardlooking information is provided to facilitate a better understanding of our business and prospects but should
not be unduly relied upon as actual results could differ materially. We assume no obligation to update or
revise these forward-looking statements except as required by law.
Non-GAAP Financial Measures
Within this presentation and identified where applicable, references are made to terms commonly used as
key performance indicators in the oil and gas industry, which we believe are useful supplemental measures
for management and investors to analyze operating performance, financial leverage, and liquidity. 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 Canadian generally
accepted accounting principles (GAAP) and therefore may not be comparable with the calculations of similar
measures for other entities. Additional information is provided in our most recent annual and quarterly
reports, which are filed on sedar.com.
Barrels of Oil Equivalent (boe) ratio: 6 Mcf = 1 barrel
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, 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.
Note: All dollar amounts in this presentation are in Canadian dollars, except where noted.
2
Corporate Profile
TSX : FRU
focused on oil and gas royalties
FRU share price*
$ per share
21.09
Annual dividend ($0.14 per month)
$ per share
1.68
percent
8
million
66
$ billion
1.4
times
0.3
Dividend yield*
Shares outstanding (Sept. 30)
Market capitalization*
Net debt to trailing funds from operations
* FRU closing price on November 30, 2012.
3
What Sets Us Apart
large royalty
portfolio
TSX : FRU
lower costs and
capex than typical
E&P company
ROYALTY
FOCUS
high
dividend
payout
conservative
management,
low risk profile
4
The Royalty Advantage: Netbacks
A royalty interest
offers the benefit of
sharing in
production revenue
without the
operational risks
and responsibilities
typically associated
with oil and gas
operations.
* Non-GAAP measure.
See slide 39.
** Excludes freehold
mineral taxes payable
to the Crown.
TSX : FRU
Working Interest Barrel
Royalty Interest Barrel
Operating netback*
~ 60% of gross revenue
Operating netback*
~ 100%** of gross revenue
Royalties Paid
(15%)
Operating Costs
(25%)
Operating
Netback
(60% of
gross
revenue)
Illustration does not factor in capital costs on working interest properties.
Operating
Netback
(100% of
gross
revenue)
5
Total Return*
TSX : FRU
$149
Cumulative dividends
per share
$25.57
$36
$29
$10
96
97
98
99
00
01
02
03
04
05
Freehold Royalties Ltd.
06
07
08
09
10
11
12
YTD
S&P/TSX Oil and Gas Exploration & Production Index
S&P/TSX Composite Index
* From November 25, 1996 to November 30, 2012, assuming dividend reinvestment.
6
Top Royalty Payors/Operators*
TSX : FRU
SABRE
Energy Ltd.
Arruga
Resources Ltd.
* Top 30 payors account for over 85% of royalty revenue for 2012 YTD.
7
Royalty-Focused Production
TSX : FRU
boe/d
70%
10,000
8600
royalties
8,000
6,000
4,000
2,000
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e
Royalty Interest Production
Working Interest Production
* See advisory regarding forward-looking information.
8
Harvesting Value from Royalties
TSX : FRU
2.8
million
gross acres*
North Saskatchewan River
Cardium
Viking
Royalty interests 93%
Working interests 7%
Oil resource plays
Lower
Shaunavon
* Includes January and August 2012 acquisitions.
Bakken,
Mississippian
9
FRU Mirrors Industry Activity
Number of wells
drilled by industry
TSX : FRU
Number of gross wells
drilled on Freehold’s royalty
lands at no cost to Freehold
30,000
1,000
25,000
800
20,000
600
15,000
400
10,000
5,000
Industry Drilling, WCSB
200
Drilling on our Royalty Lands
0
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
10
Royalty Drilling Trends
20
Equivalent
Net Wells
Drilled on
Freehold’s
Royalty
15
Land
TSX : FRU
53% Oil
28% Hz
57% Oil
27% Hz
44% Oil
29% Hz
58% Oil
35% Hz
85% Oil
57% Hz
88% Oil
59% Hz
2007
2008
2009
2010
2011
2012 YTD
10
Oil Hz
Oil Vert
Gas Hz
5
Gas Vert
Other
D&A
0
* 2012 year to date to September 30.
11
Capex Requirements
TSX : FRU
Capital Expenditures as a Percentage
of Funds from Operations
150%
125%
Sector average 104%
100%
75%
Freehold average 23%
50%
25%
0%
2009
2010
2011
Sector Average
* See non-GAAP measures.
2012e
2013e
Freehold
12
Unleased Mineral Title Lands
TSX : FRU
100,000 gross acres and growing
We own the rights in perpetuity
We can choose to drill or lease out
13
Investing Capital
2013 budget
 $33 million
TSX : FRU
2013 Capital Allocation
($33 million)
 40 gross wells
(13 net risked)
Drilling on our title lands
 Southeast Saskatchewan
» Midale, Frobisher, Alida,
Tilston and Bakken light oil
 Lloydminster heavy oil
 Cardium light oil
Drilling and Completions - $24 million
Facilities and Equipping - $7 million
Land and Seismic - $2 million
* See advisory regarding forward-looking information.
14
Acquisition Strategy
Focused on
Royalties
Buy existing
royalties
 MTLs and GORRS
Manufacture
royalties
 Capital contribution
in return for a GORR
Equity financings in 2001, 2005, 2009, and 2012.
TSX : FRU
Accretive
Acquisitions
$650 million
since inception
 90% royalties
 8,300 boe/d initial
production
 $78,000 per boe/d
average cost
15
Conservative Capital Structure
TSX : FRU
Debt to Funds from Operations*
(multiple)
3.0
2.5
$185 million
(WTI US$/bbl)
$120
available credit capacity
(at September 30, 2012)
$100
2.0
$80
1.5
$60
1.0
$40
0.5
$20
0.0
$0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e
Sector Average
Freehold
Avg. WTI Oil Price
* See advisory regarding non-GAAP financial measures. Source: CIBC World Markets.
16
Stable, Attractive Dividend
TSX : FRU
Annual Dividend
($/share)
$1.68
$2.00
$1.68
$1.68
$1.68
$1.40
$1.50
$1.00
$0.50
$0.00
2009
2010
2011
2012
2013e
Eligible dividends for Canadian tax purposes.
* See advisory regarding forward-looking information.
17
Annual Guidance*
Key Assumptions
TSX : FRU
2012
(as at November 8, 2012)
2013
boe/d
8,600
8,400
US$/bbl
95.00
95.00
Western Canada Select (WCS)
Cdn$/bbl
75.00
76.00
AECO natural gas price
Cdn$/Mcf
2.25
3.25
Cdn$/US$
1.00
1.00
Operating costs
$/boe
4.80
5.00
G&A costs
$/boe
2.65
2.60
Capital expenditures
$ millions
35
33
Dividends paid in shares (DRIP)
$ millions
27
28
Long-term debt at year end
$ millions
18
48
Cash taxes payable in 2012
$ millions
4.6
--
Cash taxes payable for 2012 tax year
$ millions
--
25
Cash taxes payable for 2013 tax year (instalments)
$ millions
--
25
millions
65
67
Daily production
WTI oil price
Exchange rate
Weighted average shares outstanding
* See advisory regarding forward-looking information.
18
Solid Investment
TSX : FRU
Low risk
profile
The Royalty
Advantage
Sustainable
asset base
Stable
dividend
19
Investor Relations
tf. 888.257.1873
t. 403.221.0891
w. freeholdroyalties.com
Value beneath the surface