Q2 2026 Freehold Royalties Ltd Earnings Call

July 30, 2026

Speaker #2: Good day, and thank you for spending by. Welcome to the Freehold Royalties Q2 2026 webcast. At this time, all participants are on a listen-only mode.

Speaker #2: After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you will need to press *11 on your telephone.

Speaker #2: You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I would now like to end the conference over to your speaker.

Speaker #2: Sir David Spiker, President and CEO, please go ahead, sir.

Speaker #3: Thank you, and good morning, everyone. Thank you for joining us today. Before we begin, I’d like to remind everyone that certain statements made on this call are considered forward-looking information, and we caution listeners to review the advisory regarding forward-looking statements contained in our news release and MD&A, available on our website.

David Spyker: Thank you. Good morning, everyone. Thank you for joining us today. Before we begin, I'd like to remind everyone that certain statements made on this call are considered forward-looking information. We caution listeners to review the advisory regarding forward-looking statements contained in our news release and MD&A available on our website. On the call with me this morning is Brad Monaco, our Chief Financial Officer, and Todd McBride, our Manager of Investor Relations. Brad joined our team in June and brings extensive experience in the energy sector with a strong background in finance, capital markets, and strategic planning. We're excited to have Brad join Freehold, and we look forward to introducing him to many of you in the coming months. Turning to the quarter, production averaged 15,622 BOE per day with a liquids weighting of 66%.

Speaker #3: So, on the call with me this morning are Brad Monaco, our Chief Financial Officer, and Todd McBride, our Manager of Investor Relations. Brad joined our team in June and brings extensive experience in the energy sector, with a strong background in finance, capital markets, and strategic planning.

Speaker #3: We're excited to have Brad join Freehold, and we look forward to introducing him to many of you in the coming months. Turning to the quarter, production averaged 15,622 BOE per day, with a liquids weighting of 66%.

Speaker #3: Production was in line with the expectations that we outlined earlier this year. Over the past few quarters, our current production reflected a moderated activity level experienced through the second half of 2025, when commodity prices were much lower.

David Spyker: Production was in line with the expectations that we outlined earlier this year. Over the past few quarters, our current production reflected the moderated activity levels experienced through the H2 2025, when commodity prices were much lower. We're encouraged by the recovery in drilling activity levels that will contribute to our growth through the H2 2026. Overall, our Q2 results were strong, generating CAD 78 million of funds from operations. Our net debt is down CAD 24 million. Our balance sheet is in great shape as we head into the H2 of the year. From a portfolio perspective, our North American asset base continues to benefit from geographic diversification. Approximately 54% of our production is from Canada and 46% from the US this quarter.

Speaker #3: We're encouraged by the recovery in drilling activity levels that will contribute to our growth through the back half of 2026. Overall, our Q2 results were strong, generating 78 million of funds from operations.

Speaker #3: Our net debt is down 24 million, and our balance sheet is in great shape as we head into the second half of the year.

Speaker #3: From a portfolio perspective, our North American asset base continues to benefit from geographic diversification. Approximately 54% of our production is from Canada, and 46% from the U.S. this quarter.

Speaker #3: While the US represents a smaller portion of production, it generated higher revenues and realized pricing and is a key contributor to our cash flow generation.

David Spyker: While the US represents a smaller portion of production, it generated higher revenues and realized pricing and is a key contributor to our cash flow generation. This quarter, we had a 35% increase in drilling activity with a total of 300 gross wells drilled on Freehold lands, compared to 223 wells drilled in the Q1. On a net basis, Freehold added 1.8 net wells in Canada and 0.9 net wells in the US. Net drilling activity in the US is at the highest level we've had over the past several years. Activity across the portfolio was largely directed toward crude oil opportunities as operators responded to this much more constructive oil price environment. In Canada, 74 wells were drilled during the quarter, despite operators working around spring breakup conditions. Industry drilling has been robust coming out of breakup, with rig counts up 20% on a year-over-year basis.

Speaker #3: This quarter, we had a 35% increase in drilling wells drilled on Freehold lands, compared to 223 wells drilled in the first quarter. On a net basis, Freehold added 1.8 net wells in Canada and 0.9 net wells in the U.S.

Speaker #3: Net drilling activity in the US is at the highest level we've had over the past several years. And activity across the portfolio was largely directed toward crude oil opportunities, as operators responded to this much more constructive oil price environment.

David Spyker: Activity across the portfolio was largely directed toward crude oil opportunities as operators responded to this much more constructive oil price environment. In Canada, 74 wells were drilled during the quarter, despite operators working around spring breakup conditions. Industry drilling has been robust coming out of breakup, with rig counts up 20% on a year-over-year basis.

Speaker #3: In Canada, 74 wells were drilled during the quarter, despite operators working around spring breakup conditions. Industry drilling has been robust coming out of breakup, with rig counts up 20% on a year-over-year basis.

Speaker #3: Activity on our lands in Canada is concentrated in oil-focused areas, including the Clearwater, Southeast Saskatchewan, and Mannville Heavy Oil. Across Western Canada, operators continue to focus on improving well economics through longer lateral lengths, optimized completions, enhanced reservoir targeting, and the implementation of secondary recovery schemes.

David Spyker: Activity on our lands in Canada is concentrated in oil-focused areas, including the Clearwater, Southeast Saskatchewan, and Mannville heavy oil. Across Western Canada, operators continue to focus on improving well economics through longer lateral lengths, optimized completions, enhanced reservoir targeting, and the implementation of secondary recovery schemes. These improvements, alongside higher productivity targets, have supported a 30% improvement in well performance and continues to expand the drilling inventory across our land base. We entered into 45 new leases in Canada, largely concentrated in southeast Saskatchewan. Several operators have outlined plans to advance drilling programs later this year, and we expect those production additions to begin contributing through late 2026 and into 2027. Turning to the United States, 226 gross wells were drilled on our lands during the quarter, with approximately 82% of activity occurring in the Permian Basin.

Speaker #3: These improvements alongside higher productivity targets have supported a 30% improvement in well performance and continues to expand the drilling inventory across our land base.

Speaker #3: We entered into 45 new leases in Canada, largely concentrated in Southeast Saskatchewan. Several operators have outlined plans to advance drilling programs later this year and we expect those production additions to begin contributing through late 2026 and into 2027.

David Spyker: We entered into 45 new leases in Canada, largely concentrated in southeast Saskatchewan. Several operators have outlined plans to advance drilling programs later this year, and we expect those production additions to begin contributing through late 2026 and into 2027. Turning to the United States, 226 gross wells were drilled on our lands during the quarter, with approximately 82% of activity occurring in the Permian Basin.

Speaker #3: Turning to the United States, 226 gross wells were drilled on our lands during the quarter, with approximately 82% of activity occurring in the Permian Basin.

Speaker #3: We continue to see significant activity in the Permian, where operators have been investing into technological advancements that support longer lateral lengths, as well as the use of surfactants and lightweight proppants to improve well productivities.

David Spyker: We continue to see significant activity in the Permian, where operators have been investing into technological advancements that support longer lateral lengths, as well as use of surfactants and lightweight proppants to improve well productivities. As an example, SPUDs in the Midland Basin averaged 3 miles on our acreage this quarter, approximately 10% higher than last year. We've also had an increase in activity in the Barnett Formation in the H1 of the year. We remain constructive on the opportunities in the Barnett as operators continue to demonstrate the potential of this deeper formation. This is backed off by the strong leasing and permitting activity we saw through the quarter, and drilling activity is just commencing. One area we continue to monitor is natural gas infrastructure in the Permian. During the quarter, natural gas pricing and production was negatively impacted by egress constraints at the Waha Hub.

Speaker #3: As an example, spuds in the Midland Basin averaged 3 miles on our acreage this quarter, approximately 10% higher than last year. We've also had an increase in activity in the Barnett Formation, in the first half of the year.

Speaker #3: We remain constructive on the opportunities in the Barnett as operators continue to demonstrate the potential of this deeper formation. This is backed off by the strong leasing and permitting activity we've saw through the quarter, and drilling activity is just commencing.

David Spyker: We remain constructive on the opportunities in the Barnett as operators continue to demonstrate the potential of this deeper formation. This is backed off by the strong leasing and permitting activity we saw through the quarter, and drilling activity is just commencing. One area we continue to monitor is natural gas infrastructure in the Permian. During the quarter, natural gas pricing and production was negatively impacted by egress constraints at the Waha Hub.

Speaker #3: One area we continue to monitor is natural gas infrastructure in the Permian. During the quarter, natural gas pricing and production was negatively impacted by egress constraints at the Waha Hub.

Speaker #3: The Waha Hub is the primary point for moving gas out of the Permian. And during the quarter, natural gas pricing and production was negatively impacted by egress constraints at the Waha Hub.

David Spyker: The Waha Hub is the primary point for moving gas out of the Permian, and during the quarter, natural gas pricing and production was negatively impacted by egress constraints at the Waha Hub. This caused gas price differentials to NYMEX to widen to unusually high levels, resulting in negative gas pricing for most of the Q2. In late June, compression was added to the Gulf Coast Express expansion line, and the first phase of the Hugh Brinson Pipeline was put in service, combined adding approximately 2 BCF a day of takeaway capacity. This moved our Permian gas into positive pricing very late in the quarter and alleviated any immediate Waha egress-related production constraints in the Permian.

Speaker #3: This caused gas price differentials to Nimex to widen to unusually high levels, resulting in negative gas pricing for most of the second quarter. In late June, compression was added to the Gulf Coast Express expansion line, and the first phase of the Hugh Brinson pipeline was put in service, combined adding approximately 2 BCF a day of takeaway capacity.

Speaker #3: This moved our Permian gas into positive pricing, very late in the quarter, and alleviated any immediate Waha egress-related production constraints in the Permian. In addition to the two expansions I just mentioned, there's a total of 4.5 BCF a day of new egress capacity expected to come online by the first quarter of next year.

David Spyker: In addition to the 2 expansions I just mentioned, there's a total of 4.5 BCF a day of new egress capacity expected to come online by the Q1 of next year. This will provide producers much greater flexibility to manage their associated gas volumes and support further production growth across the basin. Looking ahead, drilling activity has improved substantially from the levels experienced through much of 2025, and operators remain focused in many of the core oil-weighted areas within our portfolio. We also continue to see an inventory of licensed and drilled and uncompleted wells across our lands. While timing of production additions ultimately depends on operator completion schedules, current activity levels support our existing outlook, and we are maintaining our 2026 production guidance of 15,500 to 16,300 BOE per day.

Speaker #3: This will provide producers much greater flexibility to manage their associated gas volumes, and support further production growth across the basin. Looking ahead, drilling activity has improved substantially from the levels experienced through March of 2025, and operators remain focused in many of the core oil-weighted areas within our portfolio.

Speaker #3: We also continue to see an inventory of licensed and drilled and uncompleted wells across the our lands. While timing of production additions ultimately depends on operator completion schedules, current activity levels support our existing outlook and we are maintaining our 2026 production guidance of 15,500 to 16,300 BOE per day.

David Spyker: We also continue to see an inventory of licensed and drilled and uncompleted wells across our lands. While timing of production additions ultimately depends on operator completion schedules, current activity levels support our existing outlook, and we are maintaining our 2026 production guidance of 15,500 to 16,300 BOE per day. With that, I'll turn the call over to Brad to review the financial results in more detail.

Speaker #3: So with that, I'll turn the call over to Brad to review the financial results in more detail.

David Spyker: With that, I'll turn the call over to Brad to review the financial results in more detail.

Speaker #2: Thank you, Dave. I'm pleased to be on the call today, and excited to have joined Freehold. This is a great business model with a high-quality royalty portfolio and I look forward to working with Dave and the team to build on that foundation.

Brad Monaco: Thank you, Dave. I'm pleased to be on the call today and excited to have joined Freehold. This is a great business model with a high-quality royalty portfolio, and I look forward to working with Dave and the team to build on that foundation. Q2 royalty and other revenue totaled CAD 100 million, up 29% compared to Q1 2026, driven mainly by stronger realized quantity prices. Crude oil pricing was particularly strong, with Freehold realizing CAD 122 per barrel in the quarter. Including NGLs and natural gas, our average realized price was just over CAD 69 per BOE, compared with approximately CAD 55 per BOE in Q1. Cash costs average approximately CAD 6.50 per BOE, improving from CAD 7.02 per BOE in Q1 and CAD 7.38 in Q2 2025. Our cost structure remains among the lowest in the oil and gas industry and is a key advantage of Freehold's royalty business model.

Speaker #2: Q2 royalty and other revenue totaled $100 million, up 29% compared to Q1 26, driven mainly by stronger realized commodity prices. Crude oil pricing was particularly strong, with Freehold realizing $122 Canadian per barrel in the quarter.

Speaker #2: Including NGLs and natural gas, our average realized price was just over $69 per BOE, compared with approximately $55 per BOE in the first quarter.

Brad Monaco: Including NGLs and natural gas, our average realized price was just over CAD 69 per BOE, compared with approximately CAD 55 per BOE in Q1. Cash costs average approximately CAD 6.50 per BOE, improving from CAD 7.02 per BOE in Q1 and CAD 7.38 in Q2 2025. Our cost structure remains among the lowest in the oil and gas industry and is a key advantage of Freehold's royalty business model.

Speaker #2: Cash costs averaged approximately $650 per BOE, improving from $702 per BOE in the first quarter and $738 in Q2 25. Our cost structure remains among the lowest in the oil and gas industry, and is a key advantage of Freehold's royalty business model.

Speaker #2: Funds from operations totaled $78 million, or $47 cents per share, up 30% from Q1 26. We returned $44 million to shareholders through dividends, representing a 57% payout ratio, and investing approximately $9 million in acquisitions.

Brad Monaco: Funds from operations totaled CAD 78 million or CAD 0.47 per share, up 30% from Q1 2026. We returned CAD 44 million to shareholders through dividends, representing a 57% payout ratio, and investing approximately CAD 9 million in acquisitions. Year to date, Freehold has invested approximately CAD 29 million in mineral title and royalty interests in the Permian Basin. These tuck-in investments have added 12,500 acres in core areas of Texas and New Mexico, including Loving, Martin, Midland, and Lee counties. The focus remains on adding high-quality, undeveloped acreage that can support future production growth as operators develop these lands. We also strengthened the balance sheet in Q2, with net debt declining by CAD 24 million during the quarter to CAD 251 million, while our net debt to trailing funds from operations ratio improved to one times. This provides the capacity to continue pursuing value-add acquisitions while consistently returning capital to shareholders.

Speaker #2: Year to date, Freehold has invested approximately $29 million, in mineral title and royalty interests in the Permian Basin. These tuck-in investments have added $12,500 acres in core areas of Texas and New Mexico, including Loving, Martin, Midland, and Lee counties.

Speaker #2: The focus remains on adding high-quality undeveloped acreage that can support future production growth as operators develop these lands. We also strengthened the balance sheets in Q2, with net debt declining by 24 million during the quarter to $251 million, while our net debt to trailing funds from operations ratio improved to 1 times.

Brad Monaco: The focus remains on adding high-quality, undeveloped acreage that can support future production growth as operators develop these lands. We also strengthened the balance sheet in Q2, with net debt declining by CAD 24 million during the quarter to CAD 251 million, while our net debt to trailing funds from operations ratio improved to one times. This provides the capacity to continue pursuing value-add acquisitions while consistently returning capital to shareholders.

Speaker #2: This provides the capacity to continue pursuing value-add acquisitions, while consistently returning capital to shareholders. Capital allocation is central to how we create per-share value.

Brad Monaco: Capital allocation is central to how we create per-share value. For Freehold, every dollar needs to be thought about carefully, whether it is deployed through acquisitions to make our business better, used to add financial flexibility through debt reduction, or returned to shareholders. We are coming from a position of strength, and we built additional flexibility after a strong Q2. With that, I'll turn the call back to Dave.

Speaker #2: For Freehold, every dollar needs to be thought about carefully, whether it is deployed through acquisitions to make our business better, used to add financial flexibility through debt reduction, or return to shareholders.

Speaker #2: We are coming from a position of strength, and we've built additional flexibility after a strong second quarter. With that, I'll turn the call back to Dave.

Speaker #3: Thanks, Brad. And with that, we're pleased to take questions from the audience.

David Spyker: Thanks, Brad. With that, we're pleased to take questions from the audience.

Speaker #4: Thank you. Ladies and gentlemen, if you have a question at this time, you will need to press star 11 on your telephone and wait for your name to be announced.

Operator: Thank you. Ladies and gentlemen, if you have a question at this time, you will need to press star 11 on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. One moment for a question. We have a question coming from the line of Jamie Kubek with CIBC. Your line is now open.

Speaker #4: Please stand by while we compile the Q&A roster. One moment for a question. And we have a question coming from the lineup. Jamie, can you be with CIBC?

Speaker #4: Your line is now open.

Speaker #5: Yeah. Good morning. Thanks for taking my question. Just interested if you could talk about the drilling activity increase that you saw in the US this quarter.

Jamie Kubek: Yeah. Good morning. Thanks for taking my question. Just interested if you could talk about the drilling activity increase that you saw in the US this quarter and any timing factor expectations for when that production possibly comes online. Then can you just talk about what you're seeing for recent activity and how you think that translates into Q3, Q4 net drills on the US side? Thanks.

Jamie Kubik: Yeah. Good morning. Thanks for taking my question. Just interested if you could talk about the drilling activity increase that you saw in the US this quarter and any timing factor expectations for when that production possibly comes online. Then can you just talk about what you're seeing for recent activity and how you think that translates into Q3, Q4 net drills on the US side? Thanks.

Speaker #5: And any timing factor expectations for when that production possibly comes online? And then can you just talk about what you're seeing for recent activity and how you think that translates into Q3, Q4 net drills on the US side?

Speaker #5: Thanks.

Speaker #3: Yeah. Jamie, Dave here. Yeah, with respect to the US, we expect that most of the activity in the quarter was directed in the Permian, and so we'll expect to see that kind of ramp up.

David Spyker: Yeah. Jamie, Dave here. With respect to the US, most of the activity in the quarter was directed in the Permian, so you will expect to see that kind of ramp up into Q4, into early Q1. The Eagle Ford or other big area in the US, we've got indication from ConocoPhillips that that's a back-half program. Whether we're going to see those Eagle Ford wells come on in late 2026 or early 2027, not 100% sure yet. A bit of a function of timing on that. Will be a strong drilling activity in the US just going into the back half of the year. I would say that's the same for Canada, where you had the first four months of the year, we had 75 wells drilled on their lands. Over 100 in the last three months.

Speaker #3: Into Q4 and into early Q1, the Eagleford or other big area in the US, we've got indication from Conoco that that's a back half program.

Speaker #3: So whether we're going to see those Eagleford wells come on in late 2026 or early 2027, not 100% sure yet, a bit of a function of timing.

Speaker #3: On that, but we'll be a strong drilling activity in the US just going into the back half of the year. I would say that's the same for Canada, where kind of the first four months of the year, we had 75 wells drilled on their lands.

Speaker #3: Over 100 in the last three months. So you can see that that activity is really ramping up quite sharply. So again, that kind of feeds what we've been messaging all along here is that really the ramp up in production both in Canada and the US based on where we're seeing the drilling activity directed will be a lot of part of the year.

David Spyker: You can see that that activity is really ramping up quite sharply. Again, that kind of feeds what we've been messaging all along here, is that really the ramp-up in production, both in Canada and the US, based on where we're seeing the drilling activity directed, will be the latter part of the year.

Speaker #5: Okay. Thanks for the color. I'll hand it back.

Jamie Kubek: Okay, thanks for the color. I'll hand it back.

Jamie Kubik: Okay, thanks for the color. I'll hand it back.

Speaker #4: Thank you. Our next question in Q, coming from the lineup. Patrick O'Rourke with ATV, former capital markets. Your line is now open.

Operator: Thank you. Our next question in queue coming from the line of Patrick O'Rourke with ATB Capital Markets. Your line is now open.

Speaker #6: Hey, guys. Good morning and thanks for taking my questions. And I guess first off, congrats to Brad on the appointment and we look forward to hearing from you.

Patrick O'Rourke: Hey, guys. Good morning, and thanks for taking my questions. I guess first off, congrats to Brad on the appointment, and we look forward to hearing from you. I guess, maybe building a little bit on what Jamie asked, it's fairly apparent the uptick in activity, we can see that in terms of well SPUDs. I guess if we could maybe look a little bit under the hood in terms of what that means in terms of well productivity and sort of meters drilled, and how the sort of the nature of the wells is also changing. Maybe perhaps some color there.

Speaker #6: I guess maybe building a little bit on what Jamie asked, but it's fairly apparent the uptick in activity we can see that in terms of well spuds.

Speaker #6: But I guess if we could maybe look a little bit under the hood in terms of what that means in terms of well productivity and sort of meters drilled and how does sort of the nature of the wells is also changing, maybe perhaps some color there.

Speaker #3: Yeah. Lots of layers in that one. Patrick, but I think what we're seeing in the particularly what focus on the Permian, because that's where we're seeing the biggest growth in the US side.

David Spyker: Yeah. Lots of layers in that one, Patrick. I think what we're seeing Particularly, I'll focus on the Permian, because that's where we're seeing the biggest growth in the US side. I think, consistent with what we're seeing with some of our core operators as they walk through their Q2 results, is that productivity improvements related to surfactants are real. We're seeing a significant shift in initial well productivity improvements with the surfactants, particularly on the ExxonMobil side. We're seeing improvements associated with their use of this lightweight proppant that is a coke-based material that comes out of their refineries. On the well length side, we are seeing, again, just this continual movement to longer wells, well length up 10% quarter-over-quarter.

Speaker #3: And I think, consistent with what we're seeing with some of our core operators as they walk through their second quarter results, is that productivity improvements related to surfactants are real.

Speaker #3: Where we're seeing significant shift in initial well productivity improvements with the surfactants, particularly on the ExxonMobil side. We're seeing improvements associated with their use of lightweight proppant that is a coke-based material that comes out of their refineries.

Speaker #3: And on the well length side, we are seeing again, just this continual movement to longer wells, well length up 10%, quarter over quarter. And what we're seeing in not only on our asset space, but in the literature, as well as a lot of third parties kind of pouring through all the data of the US, is that certainly a shift in the mandate of declining well productivities, where the technology advancements on many different fronts are kind of reversing that per lateral foot production productivity decline that had been seen over the last couple of years, whereas today, those numbers are being reversed.

David Spyker: What we're seeing, not only on our asset space but in the literature as well, there's a lot of third parties kind of poring through all the data of the US, is that certainly a shift in the mandate of declining well productivity is where the technology advancements on many different fronts are kind of reversing that per lateral foot production productivity decline that had been seen over the last couple of years. Whereas today, those numbers are being reversed, I think it's a function of just the technology. As operators, there's a lot of reservoir intervals to pursue in the Permian, and operators are also just starting to drill those. We've seen some fantastic well results out of the Barnett, and really that's being led by Diamondback right now as a key operator. We see that continuing to expand across the portfolio.

Speaker #3: And I think that's a function of just the technology and those operators there's a lot of reservoir intervals to pursue in the Permian. And operators are also starting to drill those.

David Spyker: As operators, there's a lot of reservoir intervals to pursue in the Permian, and operators are also just starting to drill those. We've seen some fantastic well results out of the Barnett, and really that's being led by Diamondback right now as a key operator. We see that continuing to expand across the portfolio. It's certainly where our leasing has been focused on. We're pretty bullish on well productivity in the US, not only from the existing zones, but from a number of zones that operators are pushing for.

Speaker #3: We've seen some fantastic well results out of the Barnett and really that's being led by Diamondback right now as the key operator. And we could see that continue to expand across the portfolio, certainly where our leasing has been focused on.

David Spyker: It's certainly where our leasing has been focused on. We're pretty bullish on well productivity in the US, not only from the existing zones, but from a number of zones that operators are pushing for.

Speaker #3: So we're pretty bullish on well productivity in the US, not only from the existing zones, but from a number of new zones that operators are pushing for.

Speaker #6: I guess maybe just to put a finer point on it, because it was a bit convoluted there. With my question, when you're seeing the results come in at an individual well level, the receipts that you're receiving, are they trending higher?

Patrick O'Rourke: I guess maybe just to put a finer point on it, because it was a bit convoluted there with my question. When you're seeing the results come in at an individual well level, the receipts that you're receiving, are they trending higher?

David Spyker: As a general rule, they're trending higher, yes. Our well productivity year over year, both in Canada and the US, are higher. Look, in Canada, well productivity was up about 30% year over year, and in the US, it's about 15%.

Speaker #3: Is the general rule they're trending higher? Yes. Our well productivity year over year, both in Canada and the US, are higher. And in Canada, well productivity was up about 30% year over year.

Speaker #3: And in the US, it's about 15%.

Speaker #6: Okay. And then just maybe over to the finance and capital side of the business — debt continues to inch down here. I know we're in a very buoyant commodity environment, but you did get below the 60% level in terms of payout.

Patrick O'Rourke: Okay. Just maybe over to the sort of finance capital side of the business. Debt continues to sort of inch down here. I know we were in a very buoyant commodity environment, but you did get below the 60% level in terms of payout. In terms of when you think about the interplay between the debt on the balance sheet and the payout ratio, what are the conditions that sort of facilitate a return to dividend growth here for Freehold?

Speaker #6: In terms of when you think about the interplay between the debt on the balance sheet and the payout ratio, what are the conditions that sort of facilitate a return to dividend growth here for Freehold?

Brad Monaco: I can take that one. Thanks for the question, Patrick. Look, I think certainly pleased with the payout ratio in Q2 at under 60%, as you noted. Probably like to see that continue for a few quarters before we really change, I think, the outlook for share distributions as a whole. As you know, that all will factor in dividend growth. We also have an NCIB, which we can determine if we'll become active on. I think given the volatility in commodity prices over the last little while, the amount of deal flow that we're seeing, particularly in the US, of all shapes and sizes, frankly, we've been focusing on strengthening the balance sheet to make sure we have dry powder, and maintain the dividend with where we're at.

Speaker #3: I can take that one. Thanks for the question, Patrick. Look, I think certainly pleased with the payout ratio in Q2 at under 60%, as you noted, probably like to see that continue for a few quarters before we really change I think the outlook for shared distributions, as a whole.

Speaker #3: And as you know, that'll factor in dividend growth. We also have an NCIB, which we can determine if we'll become active on. And given the volatility in commodity prices over the last little while, and the amount of deal flow that we're seeing, particularly in the US, of all shapes and sizes, frankly, we've been focusing on strengthening the balance sheet to make sure we have dry powder.

Speaker #3: And maintain the dividend with where we're at. And going forward, there's some work for us to do on our framework and communicating how we allocate every dollar.

Brad Monaco: I think going forward, there's some work for us to do on our framework and communicating how we allocate every dollar. I referred to that a little bit in my comments. Certainly something I'm partnering with Dave on, in dividend growth, share buybacks, certainly, going hard on the acquisitions given the deal flow we're seeing is very much part of the framework moving forward.

Speaker #3: And I refer to that a little bit in my comments. Certainly something I'm partnering with Dave on in dividend growth, share buybacks, and certainly going hard on the acquisitions given the deal flow we're seeing is very much part of the framework moving forward.

Speaker #6: Okay. Thank you very much.

Patrick O'Rourke: Okay. Thank you very much.

Speaker #4: Thank you. And as I wanted to ask a question, please press star 11 on your touchdown telephone and wait for your name to be announced.

Operator: Thank you. As a reminder, to ask a question, please press *11 on your touch-tone telephone and wait for your name to be announced. We'll give it a moment. I'm showing there are no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. David Spyker for any closing comments.

Speaker #4: We'll give it a moment. And I'm showing there are no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. David Spiker for any closing comments.

Speaker #3: Thank you. And thanks everyone for their participation in the call today. And I look forward to reconnecting with our Q3 results. Thank you.

David Spyker: Thank you. Thanks everyone for their participation in the call today. I look forward to reconnecting with our Q3 results. Thank you.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Q2 2026 Freehold Royalties Ltd Earnings Call

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