/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE
SERVICES OR DISSEMINATION IN THE U.S./
CALGARY, AB , Nov. 29,
2022 /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 in Saskatchewan and
Alberta, announces financial
results for the three and nine months ended September 30, 2022.
Third Quarter Highlights:
- Quarterly royalty revenue of $1,554,910, an increase of 34% compared to Q3
2021.
- Quarterly Adjusted EBITDA1 of $1,219,346 ($0.027
per share), an increase of 21% compared to Q3 2021.
- Quarterly funds from operations1 of $1,115,225 ($0.025
per share), an increase of 11% compared to Q3 2021.
- Quarterly royalty production averaged 160 boe/d (92% oil and
NGLs), a decrease of 6% compared to Q3 2021.
- Paid a quarterly dividend of $0.015 per share, resulting in a payout
ratio1 of 60%.
- Achieved an operating netback1 of $82.84 per boe and a corporate
netback1 of $75.76 per
boe.
- Ended Q3 2022 with a cash balance of $16,283,684 ($0.36
per share), an increase of 5% from June 30,
2022.
(1)
|
This is a non-GAAP
financial measure or non-GAAP ratio. Refer to the disclosure under
the heading "Non-GAAP Financial Measures & Ratios" for more
information on each non-GAAP financial measure or
ratio.
|
Financial and Operational Results
|
Three Months Ended
September 30,
|
Nine Months
Ended September 30,
|
FINANCIAL
($)
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
Royalty
revenue
|
1,554,910
|
1,161,759
|
34 %
|
4,986,098
|
3,014,804
|
65 %
|
Adjusted
EBITDA(1)
|
1,219,346
|
1,007,864
|
21 %
|
4,337,001
|
2,692,491
|
61 %
|
Per share
(basic)
|
0.027
|
0.034
|
-21 %
|
0.105
|
0.092
|
14 %
|
Funds from
operations(1)
|
1,115,225
|
1,007,864
|
11 %
|
3,717,266
|
2,683,538
|
39 %
|
Per share
(basic)
|
0.025
|
0.034
|
-26 %
|
0.090
|
0.091
|
-1 %
|
Total comprehensive
income (loss)
|
446,890
|
83,480
|
435 %
|
1,998,607
|
(394,573)
|
-
|
Per share
(basic)
|
0.010
|
0.003
|
233 %
|
0.048
|
(0.013)
|
-
|
Per share
(diluted)
|
0.010
|
0.003
|
233 %
|
0.047
|
(0.013)
|
-
|
Dividends
Paid
|
673,449
|
440,307
|
53 %
|
1,790,336(2)
|
1,025,576
|
75 %
|
Per share
|
0.015
|
0.015
|
-
|
0.045
|
0.035
|
29 %
|
Payout
ratio
|
60 %
|
44 %
|
36 %
|
48 %
|
38 %
|
26 %
|
Cash and cash
equivalents
|
16,283,684
|
961,218
|
1,594 %
|
16,283,684
|
961,218
|
1,594 %
|
Per share
(basic)
|
0.36
|
0.03
|
1,100 %
|
0.36
|
0.03
|
1,100 %
|
Average shares
outstanding (basic)
|
44,896,645
|
29,548,945
|
52 %
|
41,484,986
|
29,374,638
|
41 %
|
Shares outstanding (end
of period)
|
44,896,645
|
29,562,559
|
52 %
|
44,896,645
|
29,562,559
|
52 %
|
OPERATING
|
Average daily
production (boe/d)
|
160
|
170
|
-6 %
|
165
|
159
|
4 %
|
Percentage oil &
NGLs
|
92 %
|
94 %
|
-2 %
|
92 %
|
95 %
|
-3 %
|
Average price
realizations ($/boe)
|
105.69
|
74.18
|
42 %
|
111.00
|
69.36
|
60 %
|
Operating Netback
($/boe)(1)
|
82.84
|
64.44
|
29 %
|
96.28
|
61.80
|
56 %
|
Corporate Netback
($/boe)(1)
|
75.76
|
64.44
|
18 %
|
82.52
|
61.82
|
33 %
|
(1)
|
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.
|
(2)
|
$443,438 of this
amount was paid in the form of a "return of capital".
|
About Source Rock Royalties
Ltd.
Source Rock is a pure-play oil and gas royalty company with an
existing, light oil focused portfolio of royalty interests
concentrated in southeast Saskatchewan, east-central Alberta, west-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, the ability to complete such
acquisitions and establish such partnerships, and the estimated
costs for Source Rock to run its business. 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.
Beginning with the fourth quarter of 2021, Source Rock
changed the label of "netback" to "corporate netback" to
distinguish this measure from "operating netback", which was
introduced in the quarter. The composition of the measure remains
unchanged.
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.