Topic: How To Invest

Pat: Can I have your advice on Freehold Royalties Ltd.? Thanks in advance.

Article Excerpt

Freehold Royalties Ltd., $17.42, symbol FRU on Toronto (Shares outstanding: 98.0 million; Market cap: $1.7 billion; www.freeholdroyalties.com), holds oil and natural gas rights on 3.5 million acres of land in Alberta, Saskatchewan, B.C., Manitoba and Ontario. These reserves are 47% natural gas, 24% light crude oil, 22% heavy crude oil and 7% natural gas liquids. Freehold collects royalties from oil and gas producers that operate over 38,000 wells on its land, in addition to holding royalty interests in seven potash mines in Saskatchewan. Long-life royalty properties account for about 75% of Freehold’s cash flow, and wells it has a working interest in, and shares the cost of operating, supply the remaining 25%. The company converted from an income trust on January 1, 2011. In the three months ended March 31, 2015, Freehold’s revenue fell 43.6%, to $27.8 million from $49.2 million a year earlier. That’s because lower oil and gas prices offset contributions from recent acquisitions. Overall cash flow dropped 28.2%, to $21.9…

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