SOURCE ROCK ROYALTIES ANNOUNCES Q3 2024 RESULTS INCLUDING ITS THIRD CONSECUTIVE QUARTER OF RECORD ROYALTY PRODUCTION

Canada NewsWire

CALGARY, AB, Nov. 28, 2024

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE U.S./

CALGARY, AB, Nov. 28, 2024 /CNW/ - Source Rock Royalties Ltd. ("Source Rock") (TSXV: SRR), a pure-play oil and gas royalty company with an established portfolio of oil royalties, announces results for the three and nine month interim periods ended September 30, 2024 ("Q3 2024").

Q3 2024 Highlights:

   -- Record quarterly royalty production of 257 boe/d (94% oil and NGLs), an 
      increase of 13% over Q3 2023. 
 
   -- Quarterly royalty revenue of $1,987,999, a decrease of 2% over Q3 2023. 
 
   -- Quarterly adjusted EBITDA2 of $1,670,376 ($0.037 per share), a decrease 
      of 4% (5% per share) over Q3 2023. 
 
   -- Quarterly funds from operations2 of $1,477,458 ($0.032 per share), a 
      decrease of 5% (6% per share) over Q3 2023. 
 
   -- Declared $0.0195 per share in dividends, resulting in a payout ratio2 of 
      60%. 
 
   -- Achieved an operating netback2 of $70.65 per boe and a corporate netback2 
      of $62.49. 
 
   -- Ended Q3 2024 with cash and cash equivalents of $3,865,103 ($0.09 per 
      share). 

Nine Months Ended September 30, 2024 Highlights:

   -- Royalty production of 250 boe/d (95% oil and NGLs), an increase of 22% 
      over 2023. 
 
   -- Royalty revenue of $5,818,341, an increase of 18% over 2023. 
 
   -- Adjusted EBITDA2 of $5,107,116 ($0.113 per share), an increase of 20% 
      (19% per share) over 2023. 
 
   -- Funds from operations2 of $4,482,413 ($0.099 per share), an increase of 
      12% (11% per share) over 2023. 
 
   -- Declared $0.057 per share in dividends, resulting in a payout ratio2 of 
      58%. 
 
   -- Achieved an operating netback2 of $74.26 per boe and a corporate netback2 
      of $65.18. 

President's Message

Source Rock's portfolio of oil royalties continued to benefit from drilling by various operators in Q3 2024. During the quarter, 11 new horizontal oil wells began producing on our royalty lands, including 7 Clearwater heavy oil wells in Figure Lake, Alberta and 4 Frobisher light oil wells in S.E. Saskatchewan.

Our working capital is increasing as we continue to pursue additional oil-focused royalty acquisitions to compound growth for existing shareholders. Target acquisitions aim to achieve a balance of increasing our existing royalty production and expanding exposure to identifiable upside drill locations on undeveloped lands. Source Rock's current working capital is approximately $4.5 million ($0.10 per share).

Financial and Operational Results

 
                  Three months ended September     Nine months ended September 30, 
                  30, 
FINANCIAL ($)     2024        2023        Change   2024        2023          Change 
Royalty revenue    1,987,999   2,018,865     -2 %   5,818,341  4,926,062(1)    18 % 
 Adjusted 
  EBITDA(2)        1,670,376   1,746,388     -4 %   5,107,116     4,267,818    20 % 
Per share 
 (basic)               0.037       0.039     -5 %       0.113         0.095    19 % 
Funds from 
 operations(2)     1,477,458   1,562,143     -5 %   4,482,413     3,990,242    12 % 
Per share 
 (basic)               0.032       0.035     -6 %       0.099         0.089    11 % 
Total 
 comprehensive 
 income (loss)       247,925     529,845    -53 %     993,404     1,183,943   -16 % 
Per share 
 (basic)               0.005       0.012    -58 %       0.022         0.026   -15 % 
Per share 
 (diluted)             0.005       0.011    -55 %       0.021         0.026   -19 % 
Dividends 
 declared            888,863     741,895     20 %   2,585,076     2,156,140    20 % 
Per share 
 (basic)              0.0195      0.0165     18 %       0.057         0.048    19 % 
Payout ratio(2) 
 (%)                    60 %        47 %     28 %        58 %          54 %     7 % 
Cash and cash 
 equivalents       3,865,103   8,420,133    -54 %   3,865,103     8,420,133   -54 % 
Per share 
 (basic)                0.09        0.19    -53 %        0.09          0.19   -53 % 
Average shares 
 outstanding 
 (basic)          45,495,207  44,937,406      1 %  45,320,871    44,910,381     1 % 
Shares 
 outstanding 
 (end of period)  45,582,727  44,996,645      1 %  45,582,727    44,996,645     1 % 
OPERATING 
Average daily 
 production 
 (boe/d)                 257         228     13 %         250        205(3)    22 % 
Percentage oil & 
 NGLs                   94 %        94 %        -        95 %          93 %     2 % 
Average price 
 realizations 
 ($/boe)               83.94       96.33    -13 %       85.00         88.15    -4 % 
Operating 
 netback(2) 
 ($/boe)               70.65       83.25    -15 %       74.26         76.25    -3 % 
Corporate 
 netback(2) 
 ($/boe)               62.49       74.47    -16 %       65.18         71.30    -9 % 
 
 
 
(1)  Source Rock also benefited from $171,875 for the nine 
      month period ended September 30, 2023, of sales proceeds 
      from royalty production that occurred after the effective 
      date but prior to the closing dates of acquisitions. 
      These sales proceeds were accounted for as a reduction 
      to the purchase price of the acquisitions. 
(2)  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. 
(3)  Source Rock also benefited from 7 boe/d (100% oil 
      & NGLs) for the nine month period ended September 
      30, 2023, of royalty production that occurred after 
      the effective date but prior to the closing dates 
      of acquisitions. 
 

About Source Rock Royalties Ltd.

Source Rock is a pure-play oil and gas royalty company with an existing, oil focused portfolio of 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.

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, 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.

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.

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