This is a Canadian micro-cap that is profitable and already pays a nice dividend. Today they announced a significant acquisition. See next post.
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CALGARY, AB, Nov. 28, 2023 /CNW/ - Source Rock Royalties Ltd. ("Source Rock") (TSXV: SRR) (TSXV: SRR.WT), a pure-play oil and gas royalty company with an established portfolio of light oil focused royalties, announces results for the three and nine months ended September 30, 2023.
Third Quarter Highlights:
Record quarterly royalty production of 228 boe/d (94% oil and NGLs), an increase of 43% compared to Q3 2022 and 11% higher than Q2 2023.
Record quarterly royalty revenue of $2,018,865, an increase of 30% compared to Q3 2022 and 32% higher than Q2 2023.
Record quarterly adjusted EBITDA of $1,746,388 ($0.039 per share), an increase of 43% compared to Q3 2022 and 28% higher than Q2 2023.
Record quarterly funds from operations of $1,562,143 ($0.035 per share), an increase of 40% compared to Q3 2022 and 19% higher than Q2 2023.
Declared three monthly dividends of $0.0055 per share, resulting in a payout ratio1 of 47%.
Achieved an operating netback of $83.25 per boe and a corporate netback of $74.47 per boe.
Ended Q3 2023 with a cash balance of $8,420,133 ($0.19 per share).
President's Message
We are very pleased to report record royalty production for the second consecutive quarter. The strong production growth was the result of our 2023 acquisitions and consistent new drilling on our S.E. Saskatchewan royalty lands; several new wells were drilled on lands in which we have a higher-than-average royalty interest. Increased production and a rebound in oil prices compared to Q2 2023 led to record quarterly royalty revenue. Source Rock remains insulated from macro and industry specific inflationary pressures, which is reflected in our 2023 year-to-date administrative expenses increasing only 1% compared to 2022, despite experiencing significant growth.
Our working capital position is approximately $9.4 million ($0.21 per share) and we continue to evaluate a wide range of oil royalty acquisition opportunities. We remain focused on not only expanding and diversifying our base royalty production, but also increasing our exposure to ongoing drilling activity.
In October, we increased our monthly dividend for the second time in 2023 for a total increase of 20% this year. We believe that the new $0.006 per month dividend is comfortably funded by our existing royalty assets at current oil prices; our target dividend payout ratio is 50% to 70% of funds from operations.
Source Rock is approaching the end of its 11th year in business and we continue to execute on a balanced growth and yield model that is scalable and sustainable. Our long track-record of acquiring oil and gas royalties in Canada has us well positioned to broaden our portfolio of royalty interests and consistently provide a strong dividend to shareholders.
Brad Docherty, President & CEO
Watch List: Source Rock Royalties
Watch List: Source Rock Royalties
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Watch List: Source Rock Royalties
SOURCE ROCK ROYALTIES ACQUIRES ROYALTY INTEREST IN PRODUCING CLEARWATER OIL LANDS WITH MATERIAL DRILL COMMITMENT
Source Rock Royalties Ltd.
TODAY: 04 Dec, 2023, 16:05 ET
CALGARY, AB, Dec. 4, 2023 /CNW/ - Source Rock Royalties Ltd. ("Source Rock") (TSXV: SRR) (TSXV: SRR.WT), a pure-play oil and gas royalty company with an established portfolio of oil royalties, announces that it has closed the acquisition of a gross overriding royalty (the "GORR") in 60,800 net acres (95 sections) of largely contiguous land in the Figure Lake area of central Alberta (the "GORR Lands") for a purchase price of $8.0 million (the "Purchase Price"). The Purchase Price is subject to financial adjustments effective October 1, 2023 and was funded with cash on hand.
The GORR has a 1.5% royalty rate until cumulative royalty revenue received by Source Rock equals the Purchase Price, at which time the royalty rate reduces to 1.0%.
Rubellite Energy Inc. ("Rubellite") (TSX: RBY) is the operator of the GORR Lands. The GORR Lands comprise a portion of Rubellite's lands in the Figure Lake area and certain adjacent acreage. Production from the GORR Lands is entirely from the Clearwater formation and would have generated 43 bbl/d of heavy oil royalty production in October 2023. The GORR Lands are 80% undeveloped and there were 36 horizontal wells contributing to production in October. Rubellite has been actively drilling the GORR Lands during Q4 2023.
Material Drill Commitment
Source Rock has received a drill commitment for 59 additional horizontal wells (each a "Drill Commitment Well") to be drilled on the GORR Lands prior to June 30, 2026 (the "Drill Commitment Deadline"). Source Rock is entitled to non-performance damages for each Drill Commitment Well not drilled before the Drill Commitment Deadline. The Drill Commitment Deadline is subject to specific extension provisions if the NYMEX West Texas Intermediate crude oil futures contract price declines materially for extended periods.
ATB Capital Markets Inc. acted as financial advisor, Dentons Canada LLP acted as counsel
and Trimble Energy Group acted as technical advisor to Source Rock on the transaction
President's Message
We are very excited to partner with Rubellite to acquire our first royalty in the central Alberta Clearwater fairway. As a light oil focused royalty company for the 11-year history of Source Rock, this transaction represents entry into a new core area and our first heavy oil royalty transaction. With the Trans Mountain pipeline expansion expected to become operational near-term, which we believe will reduce volatility and decrease the differential in the pricing of Western Canadian Select oil, this is an opportune time to obtain exposure to heavy oil production. This acquisition strengthens our oil royalty portfolio and complements ongoing efforts to grow our light oil royalty lands in areas such as S.E. Saskatchewan, where we have been focused for several years.
This acquisition not only increases Source Rock's existing royalty production, but also expands our exposure to ongoing drilling activity through a material commitment by Rubellite on its core Figure Lake lands.
We have now deployed $16.4 million on four oil royalty acquisitions in Alberta and S.E. Saskatchewan since November 2022. Following this transaction, our working capital is approximately $1.4 million ($0.03 per share).
Brad Docherty, President & CEO
About Source Rock Royalties Ltd.
Source Rock is a pure-play oil and gas royalty company with an existing portfolio of oil 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.
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I've talked to Brad Docherty several times. He's got a good team and they are "Goal Driven". I like getting in on small-caps like this that have a good business model and believe that Brad's team has the drive to build a successful company. I will get him on a webinar in January, so you all can get to hear directly from him.
Company Website: https://www.sourcerockroyalties.com/
Source Rock Royalties Ltd.
TODAY: 04 Dec, 2023, 16:05 ET
CALGARY, AB, Dec. 4, 2023 /CNW/ - Source Rock Royalties Ltd. ("Source Rock") (TSXV: SRR) (TSXV: SRR.WT), a pure-play oil and gas royalty company with an established portfolio of oil royalties, announces that it has closed the acquisition of a gross overriding royalty (the "GORR") in 60,800 net acres (95 sections) of largely contiguous land in the Figure Lake area of central Alberta (the "GORR Lands") for a purchase price of $8.0 million (the "Purchase Price"). The Purchase Price is subject to financial adjustments effective October 1, 2023 and was funded with cash on hand.
The GORR has a 1.5% royalty rate until cumulative royalty revenue received by Source Rock equals the Purchase Price, at which time the royalty rate reduces to 1.0%.
Rubellite Energy Inc. ("Rubellite") (TSX: RBY) is the operator of the GORR Lands. The GORR Lands comprise a portion of Rubellite's lands in the Figure Lake area and certain adjacent acreage. Production from the GORR Lands is entirely from the Clearwater formation and would have generated 43 bbl/d of heavy oil royalty production in October 2023. The GORR Lands are 80% undeveloped and there were 36 horizontal wells contributing to production in October. Rubellite has been actively drilling the GORR Lands during Q4 2023.
Material Drill Commitment
Source Rock has received a drill commitment for 59 additional horizontal wells (each a "Drill Commitment Well") to be drilled on the GORR Lands prior to June 30, 2026 (the "Drill Commitment Deadline"). Source Rock is entitled to non-performance damages for each Drill Commitment Well not drilled before the Drill Commitment Deadline. The Drill Commitment Deadline is subject to specific extension provisions if the NYMEX West Texas Intermediate crude oil futures contract price declines materially for extended periods.
ATB Capital Markets Inc. acted as financial advisor, Dentons Canada LLP acted as counsel
and Trimble Energy Group acted as technical advisor to Source Rock on the transaction
President's Message
We are very excited to partner with Rubellite to acquire our first royalty in the central Alberta Clearwater fairway. As a light oil focused royalty company for the 11-year history of Source Rock, this transaction represents entry into a new core area and our first heavy oil royalty transaction. With the Trans Mountain pipeline expansion expected to become operational near-term, which we believe will reduce volatility and decrease the differential in the pricing of Western Canadian Select oil, this is an opportune time to obtain exposure to heavy oil production. This acquisition strengthens our oil royalty portfolio and complements ongoing efforts to grow our light oil royalty lands in areas such as S.E. Saskatchewan, where we have been focused for several years.
This acquisition not only increases Source Rock's existing royalty production, but also expands our exposure to ongoing drilling activity through a material commitment by Rubellite on its core Figure Lake lands.
We have now deployed $16.4 million on four oil royalty acquisitions in Alberta and S.E. Saskatchewan since November 2022. Following this transaction, our working capital is approximately $1.4 million ($0.03 per share).
Brad Docherty, President & CEO
About Source Rock Royalties Ltd.
Source Rock is a pure-play oil and gas royalty company with an existing portfolio of oil 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.
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I've talked to Brad Docherty several times. He's got a good team and they are "Goal Driven". I like getting in on small-caps like this that have a good business model and believe that Brad's team has the drive to build a successful company. I will get him on a webinar in January, so you all can get to hear directly from him.
Company Website: https://www.sourcerockroyalties.com/
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group