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CALGARY,
AB, April 22, 2024 /CNW/ - Source Rock
Royalties Ltd. ("Source Rock") (TSXV: SRR), a pure-play oil and gas
royalty company with an established portfolio of oil focused
royalties, announces results for the three-month period and year
ended December 31, 2023.
Annual Highlights:
- Record annual royalty revenue of $6,646,3261, an increase of 2% over
2022.
- Record annual funds from operations3 of $5,653,618 ($0.126
per share), an increase of 10% over 2022.
- Record annual Adjusted EBITDA3 of $5,793,204 ($0.129
per share), an increase of 1% over 2022.
- Record annual royalty production of 2084 boe/d (93%
oil and NGLs), an increase of 25% over 2022.
- Declared $2,968,990 in dividends
($0.066 per share), resulting in
a payout ratio3 of 53%.
- Achieved an operating netback3 of $76.30 per boe and a corporate
netback3 of $74.47.
- Completed $13.23 million of
royalty acquisitions in central Alberta and S.E. Saskatchewan.
- 26 gross horizontal wells drilled on royalty lands in S.E.
Saskatchewan (24) and central
Alberta (2).
Fourth Quarter Highlights:
- Quarterly royalty revenue of $1,720,2641, an increase of 14% over
Q4 2022.
- Record quarterly funds from operations3 of
$1,663,376 ($0.037 per share), an increase of 18% over Q4
2022.
- Quarterly Adjusted EBITDA3 of $1,525,386 ($0.034
per share), an increase of 9% over Q4 2022.
- Quarterly royalty production averaged 2184 boe/d
(94% oil and NGLs), an increase of 29% over Q4 2022.
- Declared three monthly dividends of $0.006 per share, resulting in a payout
ratio3 of 49%.
- Achieved an operating netback3 of $76.06 per boe and a corporate
netback3 of $82.94 per
boe.
- Completed an $8 million royalty
acquisition in the central Alberta
Clearwater heavy oil fairway.
Financial and Operational Results
|
Three Months Ended
December 31,
|
Year Ended December
31,
|
FINANCIAL ($, except
as noted)
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
Royalty
revenue
|
1,720,264(1)
|
1,504,421(2)
|
14 %
|
6,646,326(1)
|
6,490,519(2)
|
2 %
|
Adjusted
EBITDA(3)
|
1,525,386
|
1,399,621
|
9 %
|
5,793,204
|
5,736,622
|
1 %
|
Per share
(basic)
|
0.034
|
0.031
|
10 %
|
0.129
|
0.136
|
-5 %
|
Funds from
operations(3)
|
1,663,376
|
1,411,440
|
18 %
|
5,653,618
|
5,128,706
|
10 %
|
Per share
(basic)
|
0.037
|
0.031
|
19 %
|
0.126
|
0.121
|
4 %
|
Total comprehensive
income (loss)
|
382,367
|
559,447
|
-32 %
|
1,566,310
|
2,558,054
|
-39 %
|
Per share
(basic)
|
0.008
|
0.012
|
-33 %
|
0.035
|
0.060
|
-42 %
|
Per share
(diluted)
|
0.008
|
0.012
|
-33 %
|
0.034
|
0.059
|
-42 %
|
Dividends
declared
|
812,850
|
673,450
|
21 %
|
2,968,990
|
2,693,798
|
10 %
|
Per share
|
0.018
|
0.015
|
20 %
|
0.066
|
0.06
|
10 %
|
Payout
ratio(3)
|
49 %
|
48 %
|
2 %
|
53 %
|
53 %
|
-
|
Cash and cash
equivalents
|
1,462,040
|
13,152,502
|
-89 %
|
1,462,040
|
13,152,502
|
-89 %
|
Per share
(basic)
|
0.03
|
0.29
|
-90 %
|
0.03
|
0.29
|
-90 %
|
Average shares
outstanding (basic)
|
45,139,091
|
44,896,645
|
1 %
|
45,022,140
|
42,344,911
|
6 %
|
Shares outstanding (end
of period)
|
45,231,645
|
44,896,645
|
1 %
|
45,231,645
|
44,896,645
|
1 %
|
OPERATING
|
Average daily
production (boe/d)
|
218(4)
|
169(5)
|
29 %
|
208(4)
|
166(5)
|
25 %
|
Percentage oil &
NGLs
|
94 %
|
92 %
|
2 %
|
93 %
|
92 %
|
1 %
|
Average price
realizations ($/boe)
|
85.86
|
96.55
|
-11 %
|
87.54
|
107.28
|
-18 %
|
Operating netback
($/boe)(3)
|
76.06
|
90.02
|
-16 %
|
76.30
|
94.68
|
-19 %
|
Corporate netback
($/boe)(3)
|
82.94
|
90.78
|
-9 %
|
74.47
|
84.65
|
-12 %
|
(1)
|
Source Rock also
benefited from $211,892 (Q4 2023) and $373,437 (fiscal 2023) of
sales proceeds from royalty production that occurred after the
effective date but prior to the closing date of acquisitions. These
proceeds were accounted for as a reduction to the purchase price of
the acquisitions.
|
(2)
|
Source Rock also
benefited from $85,268 (Q4 2022) and $25,268 (fiscal 2022) of sales
proceeds from royalty production that occurred after the effective
date but prior to the closing date of acquisitions. These proceeds
were accounted for as a reduction to the purchase price of the
acquisitions.
|
(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.
|
(4)
|
Source Rock also
benefited from 29 boe/d (100% oil & NGLs) for Q4 2023 and 12
boe/d (100% oil & NGLs) for fiscal 2023, of royalty production
that occurred after the effective date but prior to the closing
date of acquisitions.
|
(5)
|
Source Rock also
benefited from 9 boe/d (100% oil & NGLs) for Q4 2022 and 2
boe/d (100% oil & NGLs) for fiscal 2022, of royalty production
that occurred after the effective date but prior to the closing
date of acquisitions.
|
2023 Reserves Information
Source Rock's reserves data and other oil and natural gas
information, as required under National Instrument 51-101, will be
filed on SEDAR+ at www.sedarplus.ca on or before April 29, 2024.
About Source Rock Royalties Ltd.
Source Rock is a pure-play oil and gas royalty company with an
existing, oil focused portfolio of royalty interests concentrated
in southeast Saskatchewan, 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.
Forward-Looking Statements
This news release includes forward-looking statements and
forward-looking information within the meaning of Canadian
securities laws. Often, but not always, forward-looking information
can be identified by the use of words such as "plans", "is
expected", "expects", "scheduled", "intends", "contemplates",
"anticipates", "believes", "proposes" or variations (including
negative and grammatical variations) of such words and phrases, or
state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements in this news release include statements
regarding Source Rock's dividend strategy and the amount and timing
of future dividends (and the sustainability thereof), the potential
for future drilling on Source Rock's royalty lands, expectations
regarding commodity prices, Source Rock's growth strategy and
expectations with respect to future royalty acquisition and
partnership opportunities, and the ability to complete such
acquisitions and establish such partnerships. Such statements and
information are based on the current expectations of Source Rock's
management and are based on assumptions and subject to risks and
uncertainties. Although Source Rock's management believes that the
assumptions underlying these statements and information are
reasonable, they may prove to be incorrect. The forward-looking
events and circumstances discussed in this news release may not
occur by certain dates or at all and could differ materially as a
result of known and unknown risk factors and uncertainties
affecting Source Rock. Although Source Rock has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements and information, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. No forward-looking statement or
information can be guaranteed. Except as required by applicable
securities laws, forward-looking statements and information speak
only as of the date on which they are made and Source Rock
undertakes no obligation to publicly update or revise any
forward-looking statement or information, whether as a result of
new information, future events or otherwise.
Non-GAAP Financial Measures & Ratios
This news release uses the terms "funds from operations" and
"Adjusted EBITDA" which are non-GAAP financial measures and the
terms "payout ratio", "operating netback" and "corporate netback"
which are non-GAAP ratios. These financial measures and ratios do
not have a standardized prescribed meaning under GAAP
and these measures and ratios may not be comparable with the
calculation of similar measures disclosed by other
entities.
"Adjusted EBITDA" is used by management to analyze the
Corporation's profitability based on the Corporation's principal
business activities prior to how these activities are financed, how
assets are depreciated, amortized and impaired, and how the results
are taxed. Additionally, amounts are removed relating to
share-based compensation expense, the sale of assets, fair value
adjustments on financial assets and liabilities, other non-cash
items and certain non-standard expenses, as the Corporation does
not deem these to relate to the performance of its principal
business. Adjusted EBITDA is not intended to represent net profit
(or loss) as calculated in accordance with IFRS.
The most directly comparable GAAP financial measure to funds
from operations is cash flow from operating activities. "Funds from
operations" is defined as cash flow from operating activities
before the change in non-cash working capital. Source Rock believes
the timing of collection, payment or incurrence of these non-cash
items involves a high degree of discretion and as such may not be
useful for evaluating Source Rock's operating performance. Source
Rock considers funds from operations to be a key measure of
operating performance as it demonstrates Source Rock's ability to
generate funds to fund operations, acquisition opportunities,
dividend payments and debt repayments, if applicable. Funds from
operations should not be construed as an alternative to income or
cash flow from operating activities determined in accordance with
GAAP as an indication of Source Rock's performance.
"Corporate netback" is calculated as funds from operations
divided by cumulative production volumes for the period. Corporate
netback is used by Source Rock to better analyze the financial
performance of its royalties against prior periods and to assess
the cost efficiency of its overall corporate platform as it relates
to production volumes. There is no standardized meaning for
"corporate netback" and this metric as used by Source Rock may not
be comparable with the calculation of similar metrics disclosed by
other entities, and therefore should not be used to make
comparisons.
"Operating netback" represents the cash margin for products
sold. Operating netback is calculated as revenue minus cash
administrative expenses divided by cumulative production volumes
for the period. Operating netback is used by Source Rock to assess
the cash generating and operating performance of its royalties
against prior periods and to assess the costs efficiency of its
operating platform as it relates to production volumes. There is no
standardized meaning for "operating netback" and this metric as
used by Source Rock may not be comparable with the calculation of
similar metrics disclosed by other entities, and therefore should
not be used to make comparisons.
"Payout ratio" is calculated as the aggregate of cash
dividends paid in a period divided by funds from operations
realized in such period. Source Rock considers payout ratio to be a
key measure to assess Source Rock's ability to fund operations,
acquisition opportunities, dividend payments, cash taxes and debt
repayments, if applicable.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy of
this release.
SOURCE Source Rock Royalties Ltd.