Source Rock Royalties – A New Royalty Transaction In Saskatchewan And Record Q3 Financial Numbers
Brad Dochery, Founder, President and CEO of Source Rock Royalties (TSX.V:SRR) joins us to discuss a new acquisition and to recap Q3 financial numbers in this newer small cap pure play oil and nat gas royalty company focused in Alberta and Saskatchewan. We start off the specific details around the closing of the acquisition of a 2% gross overriding royalty (GORR) in approximately 6,400 net acres (10 sections) of land in S.E. Saskatchewan, operated by Anova Resources Inc., and Elevation Oil & Gas Limited. 8 horizontal wells were recently drilled on the GORR Lands, and 4 of these wells began producing over the month.
As part of the purchase of the GORR, Source Rock has received a drill commitment for 15 additional net horizontal wells to be drilled on Source Rock’s royalty lands prior to December 31, 2024. Source Rock is entitled to $125,000 in damages for each Drill Commitment Well not drilled before the Drill Commitment Deadline. This brings up a larger discussion with Brad, of how Source Rock Royalties structures it’s partner royalty deals, and how they are positioned in the overall energy royalties space.
The Company just released record third quarter numbers on Nov 29th, as highlighted below:
- Quarterly royalty revenue of $1,554,910, an increase of 34% compared to Q3 2021.
- Quarterly Adjusted EBITDA of $1,219,346 ($0.027 per share), an increase of 21% compared to Q3 2021.
- Quarterly funds from operations 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 netback of $82.84 per boe and a corporate netback 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.
If you have any further questions regarding Source Rock Royalties, or want more information on any aspect of the Company, then please email us at Fleck@kereport.com and Shad@kereport.com.