/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE
SERVICES OR DISSEMINATION IN THE U.S./
CALGARY,
AB, June 1, 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 that it has closed the acquisition of
fee title mineral interests in two quarter sections of land (the
"Fee Title") and a 2% gross overriding royalty (the "GORR") in
approximately 5,800 gross acres (9 sections) of land in S.E.
Saskatchewan (the "GORR Lands").
The combined purchase price for the transactions was $3.3 million and they have an effective date of
May 1, 2023.
The Fee Title
The Fee Title is comprised of the following perpetual mineral
interests:
- 20% interest in 160 gross acres that is leased at a 20% royalty
rate; and
- 16.67% interest in 160 gross acres that is leased at a 20%
royalty rate.
Both Fee Title interests recently had initial drilling completed
by the respective operators. The purchase of the 20% Fee Title
interest includes a commitment to drill two additional horizontal
wells on or before October 31, 2023,
however it is anticipated that both wells will be drilled in
June 2023. Each Fee Title commitment
well not satisfied will result in $200,000 in damages being due to Source Rock.
The GORR Lands
A portion of the GORR Lands are contiguous to or directly
offsetting Source Rock's existing royalty lands that are actively
and successfully being developed. The majority of the GORR
Lands are 100% working interest lands owned and operated by Anova
Resources Inc., which provide Source Rock with exposure to multiple
new areas that are highly prospective for future development of the
Frobisher formation. The
Frobisher is a shallow,
conventional light oil play that does not require hydraulic
fracturing; it is one of the most economic light oil plays in
Canada. Portions of the GORR Lands
are also prospective for future development of the Midale and Bakken formations.
Significant Drill Commitment
As part of the purchase of the GORR, Source Rock has received a
drill commitment for 12 additional horizontal wells (each a "Drill
Commitment Well") to be drilled on Source Rock's royalty lands
prior to May 31, 2025 (the "Drill
Commitment Deadline"). Source Rock is entitled to $125,000 in damages for each Drill Commitment
Well not drilled before the Drill Commitment Deadline.
The Drill Commitment Deadline may be automatically extended as
follows:
- Upon the first time that the price of the NYMEX West Texas
Intermediate ("WTI") Light Sweet Crude Oil Futures Contract (in
U.S. Dollars) settles below $60.00
for 30 consecutive days, it shall be extended by 90 days; and
- Every time thereafter that the price of WTI settles below
$60.00 for 30 consecutive days, it
shall be extended by an additional 30 days.
President's Message
We are excited for the near-term drilling activity that is
planned on a portion of the Fee Title lands and to receive an
additional drill commitment on our royalty lands. We are also very
pleased to add acreage to our portfolio of light oil royalty lands
in S.E. Saskatchewan. Our royalty
acquisition strategy continues to be focused on a balanced approach
to increasing our base of oil focused royalty production and
expanding and diversifying exposure to drilling activity on highly
prospective undeveloped lands.
Following completion of these acquisitions Source Rock has
approximately $8.5 million of working
capital ($0.19 per share) to pursue
additional oil focused royalty acquisitions and partnerships with
operators.
Brad Docherty, President &
CEO
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 (and in
particular the Drill Commitment Wells being drilled prior to the
Drill Commitment Deadline, if at all), expectations for results
from the drilling on Source Rock's royalty lands, expectations
regarding commodity prices, Source Rock's growth strategy and
expectations with respect to future royalty acquisition and
partnership opportunities, and the ability to complete such
acquisitions and establish such partnerships. Such statements and
information are based on the current expectations of Source Rock's
management and are based on assumptions and subject to risks and
uncertainties. Although Source Rock's management believes that the
assumptions underlying these statements and information are
reasonable, they may prove to be incorrect. The forward-looking
events and circumstances discussed in this news release may not
occur by certain dates or at all and could differ materially as a
result of known and unknown risk factors and uncertainties
affecting Source Rock. Although Source Rock has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements and information, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. No forward-looking statement or
information can be guaranteed. Except as required by applicable
securities laws, forward-looking statements and information speak
only as of the date on which they are made and Source Rock
undertakes no obligation to publicly update or revise any
forward-looking statement or information, whether as a result of
new information, future events or otherwise.
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.