SOURCE ROCK ROYALTIES announces quarterly and monthly returns

/ NOT FOR DISTRIBUTION TO US WIRE SERVICES OR FOR PUBLICATION IN THE US /

Calgary, dadAnd the May 31, 2022 /CNW/ – Source Rock Royalties Ltd (“Source Rock”) (TSXV: SRR – SRR.WT), a purely proprietary oil and gas company with a well-established portfolio of royalties focused on light oil in Saskatchewan And the AlbertaAnnounces the financial and operational results for the three-month period ending March 31, 2022.

Source copyright logo (CNW Group / Source Rock Royalties Ltd.)

Highlights of the first quarter:

  • Record quarterly property returns of $1,527,386an increase of 89% over the first quarter of 2021.

  • Record monthly royalty proceeds of 631202 dollars in March 2022 (40% higher than the previous record month).

  • Record Quarterly Adjusted EBITDA1 From $1,395,526 (0.04 dollars per share), an increase of 92% from the first quarter of 2021.

  • Record quarterly funds from operations1 From $1,172,431 (0.034 dollars per share), an increase of 61% from the first quarter of 2021.

  • The concession averaged quarterly production of 165 barrels of oil per day (92% oil and natural gas liquids), an increase of 15% over the first quarter of 2021.

  • Paid quarterly dividends 0.015 dollars per share (in the form of “return on capital”), resulting in a payout ratio1 38%.

  • Achieve my operational netback1 From USD 94.07 Per bank and corporate netback1 From USD 78.67 for floats.

  • Expired in the first quarter of 2022 with a cash balance of $14.769,345 ($0.33 per share).

(1)This is a non-GAAP financial measure or a non-GAAP ratio. See the disclosure under “Non-GAAP Ratios and Financial Measures” for more information about each non-GAAP financial measure or ratio.

President’s message

We are pleased to announce record quarterly and monthly financial results. Our first month as a publicly traded company coincided with an acceleration in oil prices and strong production from new drilling on our proprietary land. This resulted in royalty revenue in March far exceeding the previous highest monthly revenue.

with approximately 15 million dollars ($0.33 per share) cash on hand, we are actively (but patiently) evaluating several equity acquisition opportunities. We are keen to expand and diversify our portfolio of oil and gas revenues but will do so wisely in light of the recent physical increase in commodity prices. Our acquisition strategy focuses on supporting our balanced growth and yield business model by increasing our exposure to both long life core production and future drilling activity by equity payers.

Brad DochertyPresident and CEO

financial and operating results

The three months ended March 31,

Finance ($, except where noted)

2022

2021

they change

royalty proceeds

1,527,386

807.071

89%

Administrative expenses

125383

79,390

58%

Revenue percentage (%)

8.2%

9.8%

-16%

Adjusted EBITDA(1)

1,395,526

727682

92%

Revenue percentage (%)

91.4%

90.2%

1%

per share (principal)

0.04

0.025

60%

Funds from operations(1)

1,172,431

728355

61%

Revenue percentage (%)

76.8%

90.3%

-15th%

per share (principal)

0.034

0.025

36%

Total comprehensive income (loss)

647100

(673,779)

per share (principal)

0.019

(0.023)

per share (diluted)

0.018

(0.023)

Dividends(2)

443.438

146,236

203%

per share

0.015

0.005

200%

Pay Percentage(1) (%)

37.8%

20.1%

88%

Cash and cash equivalent

14,769,345

1,426,725

935%

per share (principal)

0.33

0.05

571%

Average Shares Outstanding (Basic)

34547946

28927271

19%

Shares outstanding (end of period)

44,896,645

29268809

53%

Employment

Average daily production (boe/d)

165.6

143.5

15th%

Percentage of oils and natural gas liquids (%)

91.6%

95.5%

-4%

Average Price Achievements (dollars/boe)

102.47

62.49

64%

Run Netback ($/boe)(1)

94.07

56.40

67%

Corporate Netback ($/boe)(1)

78.67

56.40

40%

(1)This is a non-GAAP financial measure or a non-GAAP ratio. See the disclosure under “Non-GAAP Ratios and Financial Measures” for more information about each non-GAAP financial measure or ratio.

About Source Rock Royalties Ltd.

Source Rock is a purely proprietary oil and gas company with an existing portfolio focused on light oil and of proprietary interests concentrated in the Southeast SaskatchewanAnd the Middle East AlbertaMidwest Alberta and West Central Saskatchewan. Source Rock aims to achieve a balanced growth and revenue-generating business model, using funds from operations to pursue accrued equity acquisitions and pay dividends. Leveraging its specialist industry relationships, Source Rock identifies and obtains both existing equity and newly created royalties through collaboration with industry partners. Source Rock’s strategy is to maintain a low-cost corporate structure and achieve a sustainable and scalable business, measured by increasing money from operations per share and maintaining a strong net return on equity production.

forward-looking statements

This news release contains forward-looking statements and forward-looking information within the meaning of the Canadian securities laws. Often, but not always, forward-looking information can be identified using words such as “plans,” “expects,” “expects,” “scheduled,” “intends,” “expects,” “expects,” “believes,” “suggests.” or variations (including grammatical and passive variations) of these words and phrases, or stating that some action, event, or outcome ‘may’, ‘could’, ‘may’, or ‘will’ be taken, occur, or realized. Forward-looking statements in this press release include statements regarding Source Rock’s dividend strategy, the amount and timing of future dividends (and their sustainability), the possibility of future exploration of Source Rock’s proprietary land, projections regarding commodity prices, Source Rock’s growth strategy and expectations regarding acquisition and partnership opportunities in future, and the ability to complete these acquisitions and establish such partnerships. Such statements and information are based on the current expectations of the management of Source Rock and are based on assumptions and are subject to risks and uncertainties. Although the management of Source Rock believes that the assumptions on which this data and information are based are reasonable, they may be incorrect. The forward-looking events and conditions discussed in this press release may not occur on certain dates or may differ at all as a result of known and unknown risk factors and uncertainties affecting Source Rock. Although Source Rock attempts to identify significant factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements and information, there may be other factors that cause actual actions, events or results to differ from those expected, 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 they are made and Source Rock undertakes no obligation to publicly update or revise any statement or forward-looking information, whether as a result of new statements. information, future events, or otherwise.

Non-GAAP financial ratios and metrics

This press release uses the terms “funds from operations” and “adjusted EBITDA” which are non-GAAP financial standards and the terms “ratio of return,” “net operating recoveries” and “net company recoveries” which are ratios Not compliant with generally accepted accounting principles. These measures and financial ratios do not have Unified standard meaning under GAAP and these measures and ratios may not be comparable with accounting for similar measures disclosed by other entities.

Management uses EBITDA to analyze a company’s profitability based on the company’s primary business activities before how those activities are financed, how assets are depreciated, amortized, and impaired, and how the results are taxed. In addition, amounts relating to equity-based compensation expense, sale of assets, fair value adjustments on financial assets and liabilities, other non-cash items and certain non-standard expenses are eliminated, as the Company does not consider these to be related to the performance of its main business. Adjusted EBITDA is not intended to represent net profit (or loss) as calculated in accordance with IFRS.

Cash flow from operating activities is the financial measure most directly comparable to money from operations. Money from operations is defined as the cash flow from operating activities before the change in non-cash working capital. Source Rock believes that the timing of the collection, payment or incurred of these non-cash items involves a high degree of discretion and, therefore, may not be useful for evaluating the operating performance of Source Rock. Source Rock considers funds from operations a key measure of operating performance because 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 interpreted as a substitute for income or cash flow from operating activities identified in accordance with GAAP as an indicator of Source Rock’s performance.

The Company’s Net Recovery is calculated as funds from operations divided by the cumulative production volumes for the period. Corporate netback is used by Source Rock to better analyze the financial performance of its revenue against prior periods and to assess the cost efficiency of its overall company platform as it relates to production volumes. There is no standardized meaning of ‘institutional net bounce’ and this metric as used by Source Rock may not be comparable to the computation of similar metrics disclosed by other entities, and therefore should not be used for comparisons.

Net operating recovery is the cash margin for products sold. Net operating recovery is calculated as revenue minus cash administrative expenses divided by cumulative production volumes for the period. Net operating recovery is used by Source Rock to evaluate the cash and operating performance of its revenue against prior periods and to assess the cost efficiency of its operating platform as it relates to production volumes. There is no standardized meaning of “netback run” and this metric as used by Source Rock may not be comparable to calculating similar metrics disclosed by other entities, and therefore should not be used for comparisons.

The Payout Ratio is calculated as the sum of the cash dividends paid in a period divided by the funds from operations realized in that period. Source Rock’s payout ratio is a key metric for evaluating Source Rock’s ability to finance operations, acquisition opportunities, dividend payments, cash taxes, and debt repayments, if applicable.

Beginning in the fourth quarter of 2021, Source Rock changed the designation of “netback” to “corporate netback” to distinguish this metric from “netback operation,” which was introduced that quarter. The composition of the measure remains unchanged.

Neither TSX Venture Exchange nor the Regulatory Services Provider (as defined in the TSX Venture Exchange policies) accept responsibility for the adequacy of this release.

Source: Rock Royalties Ltd.

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