Q4 2024 Freehold Royalties Ltd Earnings Call
Yes, good morning, everyone and thank you for joining us today.
Speaker Change: On the call from Freehold are Rob King, our COO, Dave Hendry, our CFO and Todd Mcbride, our manager of IR.
First off I would like to acknowledge David Henry's retirement that was announced yesterday.
Speaker Change: I want to say I'm very grateful to David for his strong leadership and partnership over the last six years and thank him for his significant contribution to our success.
Speaker Change: This will not be the last conference call he get with David Youll be continuing in his role until later this year as we identify and transition to his successor.
Speaker Change: Yes.
Speaker Change: So before jumping into the results I wanted to highlight that 2024 with another big step forward for freehold.
Speaker Change: We strengthened our portfolio through our focus on liquids weighted plays in both Canada and the U S. <unk>.
Speaker Change: Including building an exceptional positioning in core inventory rich lands in the Permian light oil basin.
Through this work we've had a strong production growth in heavy oil both Clearwater <unk> Doc with 15% year over year gains.
Speaker Change: First off I would like to acknowledge David Hendry retirement that was announced yesterday.
Speaker Change: We positioned 45% of our production into tariff free U S light oil basins.
Speaker Change: I'm very grateful to David for his strong leadership and partnership over the last six years and thank him for his significant contribution to our success.
Speaker Change: And as we go into 2025, we haven't estimated 66% oil and NGL waiting up from 64% in 2024, which then drives nearly a 20% increase to revenue per Boe.
Speaker Change: So let me the last conference call. He got with David you'll be continuing in his role until later this year as we identify and transition to his successor.
Speaker Change: Just to put this into perspective 100 barrels a day of oil and our portfolio will generate $3 $4 million a year in revenue.
Speaker Change: So before jumping into the results I wanted to highlight that 2024 was another big step forward for freehold.
Speaker Change: 100 BOE a day.
Speaker Change: We strengthened our portfolio through our focus on liquids weighted plays in both Canada and the U S.
Speaker Change: Damn gas will generate $50000. So these numbers are based on 2020 for pricing, but you can see how impactful moving to liquids weighting can be.
Speaker Change: Including building an exceptional position in core inventory range lands in the Permian light oil basin.
Speaker Change: Through this work we've had a strong production growth in heavy oil both Clearwater manville stock with 15% year over year gains.
Speaker Change: So we are trying to aim for our acquisitions were concentrated in the Midland basin of the Permian.
Speaker Change: There is a lot of reasons why we love the Midland Basin at.
Speaker Change: We positioned 45% of our production into tariff free U S light oil basins.
Speaker Change: It produces over two 5 million barrels a day of light oil.
It's captured 20% of the U S. Lower 48 drilling in 2024 and has been a target of over $100 billion of M&A activity in recent years.
Speaker Change: And as we go into 2025, we have an estimated 66% oil and NGL waiting.
Speaker Change: From 64% in 2024, which then drives nearly a 20% increase to revenue per Boe.
Speaker Change: Our acquisitions have expanded our ownership in some of the best reservoirs being developed by some of the best operators in North America.
Okay.
Speaker Change: Just to put this into perspective 100 barrels a day of oil and our portfolio will generate $3 4 million a year in revenue.
Speaker Change: Our exposure in the Midland Basin has increased to the extent that field is now positioned to capture an interest in one in every three well drilled in the Midland basin compared to one in every 12 wells a year prior.
Speaker Change: Oh damn gas will generate 50000.
So these numbers are based on 24 pricing, but you can see how impactful moving to liquids weighting can be.
Speaker Change: Okay.
Speaker Change: Our maiden lands are well positioned under major investment grade operators that have signaled substantial investment in and production growth from Permian asset base over the next five years and beyond.
Speaker Change: So I'm sorry for any for our acquisitions were concentrated in the Midland basin of the Permian.
Speaker Change: There is a lot of reasons why we love the Midland Basin.
Speaker Change: <unk>, our $2 5 million barrels a day of light oil.
Speaker Change: Exxonmobil for example is now pre holds largest payer in the Midland Basin, and our second largest payer overall.
Speaker Change: It's Catherine 20% of the U S lower 48 drilling in 2024.
Speaker Change: And it's been the target of over $100 billion of M&A activity in recent years.
Speaker Change: We are excited about the growth they have discussed planning to add 1 million barrels a day or 1 million BOE a day in the Permian production by 2030.
Speaker Change: Our acquisitions have expanded our ownership in some of the best reservoirs being developed by some of the best operators in North America.
Today half of our Midland production is associated with Exxonmobil lands compared to only 20% in 2023.
Speaker Change: Our exposure in the Midland Basin has been increased to the extent that <unk> is now positioned to capture the interest in one in every three wells drilled in the Midland basin compared to one in every 12 wells a year prior.
Speaker Change: The 'twenty 'twenty four acquisitions also balanced our portfolio from a revenue perspective.
Speaker Change: [noise] are made in the labs are well positioned under major investment grade operators that have signaled substantial investment in and production growth from Permian asset base over the next five years and beyond.
Speaker Change: 25%, we expect copper revenue to come from our Canadian assets and half from our U S assets.
Speaker Change: So half of our revenue is protected for all the tariff threats and actions that are in the forefront of the news right now.
Speaker Change: Exxonmobil for example is now pre holds largest payer in the Midland Basin, and our second largest payer overall.
Speaker Change: As noted earlier, our deliberate investment in oil weighted assets will be a difference maker as we think about our cash flow this year.
Speaker Change: We are excited about the growth they have discussed planning to add 1 million barrels a day, a 1 million BOE a day in the Permian production by 2030.
Speaker Change: In 2025, our liquids weighted is expected to be 66%.
Speaker Change: That's a significant move up from 55% five years ago. When we undertook the initiative to reposition that play for a portion of our portfolio away from working interest assets into a broader north American oil royalty portfolio.
Speaker Change: Today half of our mainland production is associated with Exxonmobil Lance compared to only 20% in 2023.
Speaker Change: Yeah.
Speaker Change: The 2024 acquisitions also balanced our portfolio from a revenue perspective in 2025, we expect half of our revenue to come from our Canadian assets and half from our U S assets.
Speaker Change: Our portfolio today has higher revenue generating oil barrels and areas that are attracting capital.
Speaker Change: The area that are tracking premium pricing.
And that translates to more value for our shareholders.
Speaker Change: So half of our revenue is protected for all the tariffs and actions that are at the forefront of the news right now.
Speaker Change: So specific to our Q4 and 2024 results.
Speaker Change: As noted earlier, our deliberate investment in oil weighted assets will be a difference maker as we think about our cash flows this year.
Speaker Change: In Q4, we had $61 million in funds from operations in the quarter.
Speaker Change: That translates to <unk> 40, a share and a payout ratio of 66%.
Speaker Change: In 2025, our liquids weighted is expected to be 66%.
Speaker Change: Our production was 15300, <unk>, a day, which was 65% liquids.
Speaker Change: That's a significant move up from 55% five years ago. When we undertook the initiative to reposition a portion of our portfolio away from working interest assets into a broader north American oil royalty portfolio.
Speaker Change: For the full year, we had $231 million in funds from operations, which was $1 53, a share and production of just under 15000 barrels a day at 14962 Boe per day.
Speaker Change: Our portfolio today has higher revenue generating all barrier barrels and areas that are attracting capital.
Speaker Change: On the reserve side proved developed producing reserves totaled $30 million.
Speaker Change: Any areas that are attracting premium pricing.
Speaker Change: And proven plus probable reserves totaled 65 million Boe at year end.
Speaker Change: And that translates to more value for our shareholders.
Speaker Change: An increase of 5% and 10% per share respectively.
Speaker Change: So specific to Q4 and 2024 results.
Speaker Change: <unk> on our multiyear track record of delivering reserves growth on a per share basis.
Speaker Change: In Q4, we had $61 million in funds from operations in the quarter.
Speaker Change: For 2024, we delivered organic reserve replacement of 100% on a PDP basis, and 109% on proven plus probable basis.
Speaker Change: That translates to <unk> 40, a share and our payout ratio of 66%.
Speaker Change: Our production was 15306, B, a day, which is 65% liquids.
Speaker Change: If we include the acquisitions that's 170%.
Speaker Change: For the full year, we had $231 million and funds from operations, which was $1 53, a share and production of just under 15000 barrels a day at 14962 Boe per day.
Speaker Change: Replacement on PDP and 300% replacement on proved plus probable.
Speaker Change: Drilling activity was up modestly quarter over quarter, but up 15% year over year. A result of the increased activity and increased scale of our Midland asset base.
Speaker Change: On the reserve side proved developed producing reserves totaled 30 million Boe.
Speaker Change: And proven plus probable reserves totaled 65 million Boe at year end.
Speaker Change: Our portfolio is very well positioned to participate in the development and revitalization of heavy oil in Alberta, and Western Saskatchewan as overhaul multilateral drilling has been a game changer in these plays.
Speaker Change: An increase of 5% and 10% per share respectively.
Continuing on our multiyear track record of delivering reserves growth on a per share basis.
Speaker Change: For 2024, we delivered organic reserve replacement of 100% on a PDP basis at one one.
Speaker Change: So 30% of our wells drilled in Canada in 2024, where heavy oil wells.
Speaker Change: A sizable increase over the 19% of total we saw in 2023.
Speaker Change: 9% on proved plus probable basis.
Speaker Change: If we include the acquisitions that's 170%.
Speaker Change: This 2024 drilling contribute almost 400 barrels a day of new oil production exiting the year.
Speaker Change: Replacement on PDP at 300% replacement on proved plus probable.
Speaker Change: We expect production to continue to grow and declare water and mango stack, where we are seeing excellent drilling results in the west Nipissing Clearwater Crewing up in an area, where we hold significant undeveloped lands.
Speaker Change: Drilling activity was up modestly quarter over quarter, but up 15% year over year, a result of increased activity and increased scale of our Midland asset base.
In the greater La Missouri area production as a result of our active leasing program as well as from new drilling in areas, which had been historically developed with vertical wells.
Speaker Change: Yeah.
Speaker Change: Our portfolio is very well positioned to participate in the development and revitalization of heavy oil in Alberta, and Western Saskatchewan and overhaul multilateral drilling has been a game changer in these plays.
Speaker Change: Okay.
Speaker Change: We're also excited about the progression of multi well drilling.
Speaker Change: 30% of our wells drilled in Canada in 2024, where heavy oil wells.
Speaker Change: Element into southeast Saskatchewan.
Speaker Change: It'll drive light oil growth.
Speaker Change: A sizable increase over the 19% of total we saw in 2023.
Speaker Change: The royalty incentive programs that were put in place.
Saskatchewan government in April 2024 to encourage open hole multilateral development has resulted in operators using this drilling technique to optimize asset development.
Speaker Change: This 2024 drilling and contributed almost 400 barrels a day of new oil production exiting the year.
Speaker Change: We expect production to continue to grow into Clearwater, and Manuel stacks, where we're seeing excellent drilling results in the western Embassy Clearwater proving up in an area, where we hold significant undeveloped lands.
Speaker Change: As a reminder, field has a dominant land position in southeast Saskatchewan with over half a million acres, including about 300000 acres of mineral title lands.
Speaker Change: In the greater La Mr area production as a result of our <unk>.
Speaker Change: We're quite excited about this area as operators are just getting started in drilling these vital targets with multilateral wells.
Speaker Change: Leasing program as well as from new drilling in areas, which had been historically developed with vertical wells.
Speaker Change: We also hold a large royalty appropriate new deep basin and are well positioned to participate in the strengthening of the Canadian gas prices.
Speaker Change: Yeah.
Speaker Change: We're also excited about the progression of multi well drilling developments into southeast Saskatchewan.
Speaker Change: Although not attracting capital at the same pace in recent years, our natural gas asset base will prove valuable in April pricing improves.
Speaker Change: It will drive light oil growth.
Speaker Change: The royalty incentive programs that were put in place by the Saskatchewan government in April 2024.
Speaker Change: We talked about at the beginning of the call about how the 2024 acquisitions have positively changed our Midland footprint.
Speaker Change: Courage open hole multilateral development has resulted in operators getting this drilling techniques to optimize assay development.
Speaker Change: Our Midland position is now our largest asset with over 20% of our production.
Speaker Change: As a reminder, Regal has a dominant land position in southeast Saskatchewan with over half a million acres, including about 300000 acres of mineral title lands.
Speaker Change: Than doubling its 2023 contribution and we continue to expect low to mid single digit growth from our Midland assets.
Our Eagle Ford position has seen Conocophillips resumed drilling post their acquisition of marathon last year, and we expect Eagle Ford to continue to contribute steady high value oil weighted production.
Speaker Change: We're quite excited about this area as operators are just getting started and drilling these light oil targets with multilateral wells.
Yeah.
Speaker Change: We also hold a large royalty corporate near the deep basin and are well positioned to participate in a strengthening of Canadian gas prices.
Speaker Change: For 2025, we're expecting production to be in the 15800 to 17000 BOE a day range.
Speaker Change: Although not a charging capital at the same pace in recent years, our natural gas asset base will prove valuable as heiko pricing improves.
Speaker Change: At the midpoint this represents a 10% year over year production growth.
Speaker Change: Yeah.
Speaker Change: We continue to highlight the high value liquids shifting our portfolio with 2025 expected to be weighted 66% of liquids and increase from the 64% in 2024, which is expected to drive an additional 3% to <unk> per share year over year.
Speaker Change: We talked about at the beginning of the call about how the 2024 acquisitions have positively changed our Midland footprint.
Speaker Change: Our mainland position is now our largest asset with over 20% of our production more than doubling its 2023 contribution and we continue to expect low to mid single digit growth from our baseload assets.
Speaker Change: Production guidance is premised on current strip pricing with liquids driving almost 95% of our revenues in 2025.
Speaker Change: Our Eagle Ford position has seen Conocophillips resumed drilling post their acquisition of marathon last year, and we expect Eagle Ford to continue to contribute steady high value oil weighted production.
At freehold investors get a multi decade inventory of drilling locations across our expansive Canadian and U S portfolios.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: For 2025, we're expecting production to be in the 15000 817000 would be weird day range.
Speaker Change: We got $1 eight per share in annual dividend paid monthly and it would just covered at oil prices into the low fifty's.
Speaker Change: At the midpoint this represents a 10% year over year production growth.
Speaker Change: And the portfolio exposed to premium priced tariff free U S light oil production.
We continue to highlight the high value liquids shifting our portfolio, where 2025 expected to be weighted at 66% of liquids and increased from 64% in 2024, which is expected to drive an additional 3% <unk> per share year over year.
With that we're happy to take your questions.
Speaker Change: Thank you.
Speaker Change: We will now take a question from the telephone line. If you have a question. Please press star one you may quit canceled your question at any time by proceed to <unk>.
Speaker Change: Production guidance is premised on current strip pricing with liquids driving almost 95% of our revenues in 2025.
Speaker Change: Please press star one at this time, if you have a question.
Joseph: The first question is from Joseph.
Speaker Change: Sir Please go ahead.
Speaker Change: At freehold investors get a multi decade inventory of drilling locations across our expansive Canadian and U S portfolios. They.
Speaker Change: Good morning, Dave Good morning, everyone.
Speaker Change: Two questions for me can you walk us through your assumptions for the guidance of 15% to 17000 and whats youre, assuming so we can kind of figure out to approach too.
Speaker Change: They get $1 eight per share in annual dividend paid monthly and it would just cover at old prices into the low fifty's.
Our own forecast.
Speaker Change: And the portfolio is exposed to premium priced tariff free U S light oil production.
Speaker Change: Yep Yep.
Speaker Change: Joe address the trucking here so.
Speaker Change: With that we're happy to take your questions.
I'll kind of talk to the midpoint of our guidance Josef in terms of how we sort of came to that.
Speaker Change: Thank you.
Speaker Change: We will now take a question from the telephone line. If you have a question. Please press star one you may quit canceled your question at any time by 52.
As you can kind of guess at say a very bottoms up approach that that we take a cause of looking through on a well by well basis and what we anticipate activity will be both in Canada and the U S. A.
Speaker Change: Please press star one at this time, if you have a question.
Joseph: The first question is from Joseph <unk>.
Speaker Change: But in terms of a top down.
Joseph Casher: Casher. Please go ahead.
Speaker Change: To explain it to us to yourself and other stakeholders.
Speaker Change: Good morning, Dave Good morning, everyone.
Speaker Change: I'll kind of talk in terms of the U S and I'll talk in terms of Canada. So on our U S assets, our Midland assets those are growing in the mid single digit range and again, that's predominantly oil and liquids and was probably by volume.
Two questions for me could you walk us through your assumptions for the guidance of 15, 8% to 17000, and what you're assuming so we can kind of figure out to our own approach to them.
Speaker Change: Our forecast.
Speaker Change: 70, 75% of the.
Speaker Change: Yeah, Hi.
The volumes are oil and Ngls from our Permian assets.
Speaker Change: Hi, Joe address that drop came here, so maybe I'll kind of talk to the midpoint of our guidance Josef in terms of how we sort of came to that.
Speaker Change: And then our Eagle Ford assets, that's one where.
Speaker Change: Marathon Conoco has been so far approach and that is very much as a maintenance type mode, where they're maintaining activity too.
Speaker Change: You can kind of guess as opposed to say a very bottoms up approach that Todd that we take a turn so looking through on a well by well basis and what we anticipate activity will be both in Canada and the U S.
Two to hold the production steady on our on our Eagle Ford assets in Canada, I would sort of say the overall from a BOE perspective is probably flat to modestly up but the makeup of those barrels are.
Speaker Change: But in terms of a top down.
Speaker Change: <unk> two to explain it to to yourself and other stakeholders.
Speaker Change: I'll kind of talk in terms of the U S and I'll talk to in terms of Canada. So on our U S assets, our Midland assets those are growing in the mid single digit rate and again, that's predominantly oil and liquids, there's probably five volume set.
Speaker Change: Our changing.
Speaker Change: In terms of that with the current gas pricing, we are seeing areas like the deep basin like the cardium not getting as much capital and we are sourcing some of the boe's, they're actually declining kind of a year over year I'd say, we're offsetting that with growth in places like Mad.
Speaker Change: 70, 75% of the of the volumes are are oil and Ngls from our Permian assets.
Speaker Change: And then our Eagle Ford assets now that's one where.
Speaker Change: And you'll have the like clear water and is as David Spyker mentioned just in terms of the positive impact that has on our cash flow per share.
Speaker Change: Marathon Conoco has been so far approaching that is very much as a maintenance type mode, where they're maintaining activity too.
Speaker Change: Move from 64% liquids weighting in 2024% to 66% liquids weighting in 2025 and that adds over 3%.
Speaker Change: To to hold the production steady on our on our Eagle Ford assets in Canada, I'd sort of say the overall from a BOE perspective is probably flat to modestly up but the makeup of those barrels are are changing.
Speaker Change: <unk> per share.
Speaker Change: Okay.
Speaker Change: Excellent thanks for that.
Speaker Change: In terms of that the current gas pricing. We are seeing you know areas like the deep basin like the Cardium nod.
Speaker Change: In terms of going forward.
Speaker Change: Is the goal always to get debt to cash flow below one times seven eight.
Speaker Change: Getting as much capital and you know we are sourcing some of the BLA there, you'll actually declining kind of year over year I'd say, we're offsetting that with growth in places like Nashville, heavy like clear water and is as David Spyker mentioned just in terms of the positive impact that has on.
Speaker Change: And then at that point to ready to do.
Speaker Change: Further acquisitions or is there a number just under a one times or what do you look at it in terms of where you want the balance sheet to be before you make the next growth phase.
Speaker Change: Uh huh.
Dave Hendry: Dave Hendry here.
Speaker Change: <unk>.
Speaker Change: It's a little bit of it depends question I mean, it depends on the size of the acquisition and the metrics and cash flows related to the acquisitions.
Speaker Change: Our cash flow per share.
Speaker Change: Move from 64% liquids weighting in 2024% to 66% liquids weighting in 2025, because that adds over 3%.
Speaker Change: Well I, obviously, our targeted ranges as leverage of less than one five times, our comfort range. Obviously that gives us flexibility is lower to that one times range. So is that the triggers to do acquisitions not necessarily but I mean, obviously, maybe the scale.
Speaker Change: <unk> per share.
Okay.
Speaker Change: Excellent thanks for that.
Speaker Change: In terms of going forward.
Speaker Change: Is the goal always to get debt to cash flow below one times <unk> 7.8.
Speaker Change: All of the acquisition.
Speaker Change: And then at that point, you're ready to do.
Speaker Change: And that again is more of a longer term target. So if there's the right acquisition.
Speaker Change: Further acquisitions or is there a number just under a one times or what do you look at it in terms of where you want the balance sheet to be before you make the next growth phase.
We are comfortable up to that one five times range.
Speaker Change: But over the long term, we generally will trend downwards towards that one times or lower which then gives us the flexibility for acquisitions, but it's not a binary trigger itself. It's just a range.
Speaker Change: Hi, This is Dave Hendry here.
Speaker Change: It's a little bit of it depends question I mean, it depends on the size of the acquisition and the metrics and cash flows related to the acquisitions.
Speaker Change: We are we view ourselves as being a relatively conservative leverage company, yet because we wanted to deliver dividends back to shareholders rather than pay interest on debt.
Well I, obviously, our our targeted ranges as leverage of less than one five times, our comfort range. Obviously that gives us flexibility is lower to that one times range. So is that the triggers to do acquisitions not necessarily Budd I mean, obviously, maybe the scale.
Speaker Change: Okay. That's it for me thanks very much.
Speaker Change: Thanks Joseph.
Thank you once again, please press star one if you have a question.
Speaker Change: There are no further questions registered at this time I would now like to turn the meeting over to Mr. David Spyker. Please go ahead.
Speaker Change: With the acquisition and that again is more of a longer term target. So if there's the right acquisition.
Speaker Change: I've got a couple of questions I was just coming in on.
Speaker Change: On the tax line. So we'll just have to handle those.
Speaker Change: Where you are comfortable up to that one and a half times range.
Speaker Change: Sure. So the first question is what is the approximate hurdle rate for new acquisitions at cost price.
But over the long term, we generally will trend downwards towards that one times or lower which then gives us the flexibility for acquisitions, but it's not a binary trigger itself. It's just a range, but we are we view ourselves as being a relatively conservative leverage company, because we wanted to deliver dip.
Speaker Change: This is Rob speaking so that we're still targeting as you I think we're always targeting at least mid teen IRR for our opportunities on an after tax basis.
I think the other the other pieces when we're looking at any asset.
Speaker Change: <unk> back to shareholders rather than pay interest on debt.
Speaker Change: Portfolio.
Speaker Change: That it adds value both on a on a near term and longer term basis on a <unk> per share.
Speaker Change: Okay. That's it for me thanks very much.
Joseph Casher: Thanks Joseph.
Once again, please press star one if you have a question.
Speaker Change: Perspective.
As well as on a production and reserves per share and that longer term basis on a net asset value.
Speaker Change: On an accretive basis and I think the other piece is really focused on continuing to grow in our oil and liquids areas.
Speaker Change: There are no further questions registered at this time I would now like to turn the meeting over to Mr. David Spyker. Please go ahead.
Speaker Change: Got a couple of questions that are just coming in.
Thanks, and the next question is about buybacks.
Speaker Change: And on the tax line. So we'll just have to handle those.
Speaker Change: These strategies capital buyback stock prices stayed where they are today.
Speaker Change: Sure. So the first question is what is the approximate hurdle rate for new acquisitions at current spot prices, Yeah, I'd say I'd, rather speaking so that we're still targeting as you I think we're always targeting at least mid teen IRR steel for our opportunities on an after tax basis.
Andrew: Hi, it's Andrew here again.
Speaker Change: Buybacks are something we do discuss internally I think right now.
Andrew: Paying down debt as we are above.
Andrew: One times is probably our first priority.
I think the other another pieces when we're looking at and any asset to add to the portfolio.
Andrew: Do evaluate sort of those metrics when we're looking at acquisitions does that mean no effort to buybacks absolutely not it's something that is a consideration just not realistically something that we're likely to do in the near term.
Speaker Change: That it adds value both on a on a near term and longer term basis on a.
<unk> per share.
Speaker Change: Perspective.
Speaker Change: As well as on a production and reserves per share and that longer term basis on a net asset value.
Andrew: And so if you put in a program right. Now then that would effectively be a little bit disingenuous, unless you realistically would be utilizing it and if share prices are sorry, if commodity prices go down which may impact our share price then that obviously affects how much free cash flow you are actually going.
Speaker Change: Accretive basis, and I think the other pieces really focused on continuing to grow in our oil and liquids areas.
Speaker Change: Thanks, and the next question is about buybacks.
Speaker Change: These better use of capital buying back stock prices stay where they are today.
Andrew: You have available and our targeted payout is still 60%, obviously buybacks factor into that consideration. It was a little bit elevated last year, obviously the acquisitions. We've done in the constructed portfolio should see that that payout ratio go down.
Andrew: Hi, it's Andrew here again.
Speaker Change: Buybacks are something we do discuss internally I think right now.
Speaker Change: Paying down debt as we are above.
Speaker Change: One times is probably our first priority.
Andrew: But it's something we will continue to consider but not likely to implement.
Speaker Change: We do evaluate sort of those metrics when we're looking at acquisitions does that mean no ever so buybacks absolutely not it's something that is a consideration just not realistically something that we're likely to do in the near term.
Andrew: Anytime in the near future.
And the next question is.
Andrew: Whereas some of the trends youre seeing in drilling activity. So far this year.
Andrew: <unk> progress going forward.
Speaker Change: And so if you put in a program right. Now then that would effectively be a little bit disingenuous, unless you realistically would be utilizing and if share prices are sorry, if commodity prices go down which may impact our share price then that obviously affects how much free cash flow youre actually.
Andrew: Sure.
Andrew: It's really two months into the into the year. So you know the.
Andrew: They're they're they're up there are some trends you can sort of point to when we look in both U S and Canada right now.
Andrew: Drilling activity to date is in line with what our expectations were.
Andrew: At the beginning of the year in Canada Q1 is one of our most important quarters from a drilling perspective, almost a third of our historical net activity has been in the first quarter. So we've been encouraged that we've seen at <unk>.
Speaker Change: You're going to have available our targeted payout is still 60%, obviously buybacks factor into that consideration. It was a little bit elevated last year, obviously, the acquisitions, we've done and constructed portfolio should see that.
As much activity as we have.
When you look at the broader trends in Canada from a licensing activity January and February and licensing results are up over 10% relative to this time last year a lot of that is in the Nashville heavy oil space, where freehold has.
Speaker Change: The payout ratio go down.
Speaker Change: But it's something we'll continue to consider but not likely to implement anytime.
Speaker Change: Anytime in the near future.
Speaker Change: Great and the next question is.
Speaker Change: What are some of the trends youre seeing in drilling activity. So far this year and how do you expect it to progress going forward.
Speaker Change: Pat a lot of success third of our wells were drilled.
Marketing heavy oil and in 2024.
Speaker Change: Sure.
Speaker Change: It's probably a few months into the into the year. So you know that.
Speaker Change: The U S side Similarly in line with what our without what our expectations are.
Speaker Change: They're they're they're up but there are some trends you can sort of point to when we look at both U S and Canada right now.
Speaker Change: Dave Spyker mentioned Conoco was back drawing on our Eagle Ford land. So we're encouraged by that.
Speaker Change: Willing activity to date is in line with what our expectations were.
Speaker Change: At the beginning of the year you know in Canada. You know Q1 is one of our most important quarters from a drilling perspective, almost a third of our historical net activity has been in the first quarter. So we've been encouraged that we've seen as a.
Speaker Change: There's no more online questions alternative data to.
Speaker Change: Nicole.
Speaker Change: Great well, thanks, everyone for participating today, so good questions and yes, we're excited about 2025.
Speaker Change: There will be a lot of new <unk>.
Speaker Change: As much activity as we have.
Speaker Change: Evolve our portfolio will continue to have.
Speaker Change: When you look at the broader trends in Canada from a licensing activity January and February licensing results.
Speaker Change: Good balance of revenue across Canada, and the U S and we continue to build the oil weighting and liquids weighting in our portfolio. So thank you very much for your time today.
Speaker Change: It's up over 10% relative to this time last year.
Speaker Change: A lot of that is in the Nashville had the oil space, where you know freehold has.
Speaker Change: Thank you. The conference has now ended please disconnect. Your line at this time and thank you for your participation.
Speaker Change: Had a lot of success third of our wells were drilled.
Speaker Change: Targeting heavy oil and in 2024.
Speaker Change: The U S side Similarly in line with what our without what our expectations are as as a as Dave Spyker mentioned Conoco was back drilling on our Eagle Ford land. So we're encouraged by that.
Speaker Change: There is no more online questions alternative data to.
Speaker Change: On the call.
Speaker Change: Great well, thanks, everyone for participating today, so good questions and yes, we're excited about 2025.
Speaker Change: It will be a lot of it's new.
Speaker Change: And evolve our portfolio will continue to have good.
Speaker Change: A good balance of revenue across Canada, and the U S and we continue to build the oil weighting and liquids weighting in our portfolio. So thank you very much for your time today.
Speaker Change: Thank you. The conference has now ended please disconnect. Your line at this time and thank you for your participation.
Speaker Change: Yeah.
Speaker Change: This conference is no longer being recorded.
Please go ahead.