Topic: How To Invest

Q: Hi, Pat. Freehold Royalties interests me. What’s your assessment of it? Cheers.

Article Excerpt

A: Freehold Royalties Ltd., $12.18, symbol FRU on Toronto (Shares outstanding: 117.8 million; Market cap: $1.4 billion; www.freeholdroyalties.com), holds the oil and natural gas rights on 6.2 million acres of land in Alberta, Saskatchewan, British Columbia, Manitoba and Ontario. These reserves consist of natural gas (39% of the total), light crude oil (36%), heavy crude oil (19%) and natural gas liquids (6%). Freehold collects royalties from oil and gas producers that operate over 42,000 wells on its land. It also holds royalty interests in seven potash mines in Saskatchewan. About 91% of its cash flow comes from long-life royalty properties. Oil and gas wells that the company has a working interest in—which includes paying a portion of their operating costs—supply the remaining 9% of cash flow. In the three months ended September 30, 2016, Freehold’s revenue fell 8.7%, to $32.9 million from $36.1 million a year earlier. That’s because lower oil and gas prices offset the positive contribution of the company’s recent acquisitions…

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