CALGARY, AB, March 27, 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 a 5% gross overriding royalty (the “GORR”) in three light oil properties in Central Alberta (the “GORR Lands”). The purchase price was $1.6 million, and the transaction has an effective date of January 1, 2023.
The GORR Lands are operated by a private Calgary-based oil and gas company (the “Royalty Partner”) and include all the Royalty Partner’s mineral interests in which they have rights to produce oil. The Royalty Partner’s oil production from the GORR Lands was 420 bbl/d of low-decline light oil in January 2023 (21 bbl/d of light oil royalty production). Approximately 90% of the current oil production from the GORR Lands is under waterflood.
As part of the purchase of the GORR, Source Rock has received a capital commitment for $3.2 million in operations to be completed on the GORR Lands prior to December 31, 2024 (the “Capital Commitment”). Operations associated with the Capital Commitment will be focused on optimizing and recompleting existing wellbores and additional waterflood initiatives.
We are very pleased to add to our portfolio of light oil royalty lands. We have built a relationship with the Royalty Partner over several years and have aligned views on how royalty capital can support the operational and acquisition goals of Canadian oil and gas companies. We are excited to formally establish a working relationship with the Royalty Partner through this initial transaction.
Following completion of this acquisition Source Rock has approximately $11 million of working capital ($0.25 per share) to pursue additional royalty acquisitions and partnerships with oil producers.
Brad Docherty, President & CEO
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.
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 the Capital Commitment, including the funds expended by the Royalty Partner in connection therewith and the timing and nature of such expenditures, the future operations on the GORR Lands and the effect of such operations on the production from the GORR Lands, expectations regarding the decline rate of the existing production from the GORR Lands, expectations for results from future operations on Source Rock’s royalty lands, expectations regarding commodity prices, Source Rock’s expected working capital, 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.