A plain-cash valuation · Freehold Royalties Ltd. (TSX: FRU)
How much cash does Freehold really make, and what is a share of it worth?
Freehold Royalties collects royalties on about 6.4 million gross acres of mineral title and royalty lands across western Canada and, since 2020, on drilling acreage in the United States, including the Permian and Eagle Ford. Other companies drill at their own cost and pay Freehold a share of production, which averaged a record 16,294 boe a day in 2025, about two thirds oil and liquids. Freehold pays a monthly dividend that consumes most of its cash. This page counts only the cash that was actually left over each year, after every bill was paid and every well was drilled, then asks the only question that matters to an owner: what is one share worth, and how does that compare with the price? The rules come from the calculations economists and engineers use to decide whether a project is worth building, applied to a whole company.
figures to FY2025 · price C$17.58 (close of 28 August 2026) · all figures Canadian dollarsWhat Freehold really earned, and what you are assuming it will earn
Solid bars are reported history: the real cash left each year after every bill was paid and every well was drilled. Negative years are when the owners put cash in; positive years are when it came back out. Striped bars are your projection.
Table view: every year, C$ millions
| Year | Status | Real cash left | Per share |
|---|---|---|---|
| 2017 | reported | 117.0 | $0.99 |
| 2018 | reported | 132.8 | $1.12 |
| 2019 | reported | 109.8 | $0.93 |
| 2020 | reported | 68.9 | $0.58 |
| 2021 | reported | 165.1 | $1.21 |
| 2022 | reported | 333.1 | $2.21 |
| 2023 | reported | 226.7 | $1.50 |
| 2024 | reported | 238.2 | $1.57 |
| 2025 | reported | 252.6 | $1.54 |
| 2026 | projected | 248.0 | $1.51 |
| 2027 | projected | 253.0 | $1.54 |
| 2028 | projected | 258.0 | $1.57 |
| 2029 | projected | 263.2 | $1.60 |
| 2030 | projected | 268.5 | $1.64 |
| 2031 | projected | 273.8 | $1.67 |
| 2032 | projected | 279.3 | $1.70 |
| 2033 | projected | 284.9 | $1.74 |
| 2034 | projected | 290.6 | $1.77 |
| 2035 | projected | 296.4 | $1.81 |
| 2036 | projected | 296.4 | $1.81 |
| 2037 | projected | 296.4 | $1.81 |
| 2038 | projected | 296.4 | $1.81 |
| 2039 | projected | 296.4 | $1.81 |
| 2040 | projected | 296.4 | $1.81 |
| 2041 | projected | 296.4 | $1.81 |
| 2042 | projected | 296.4 | $1.81 |
| 2043 | projected | 296.4 | $1.81 |
| 2044 | projected | 296.4 | $1.81 |
| 2045 | projected | 296.4 | $1.81 |
| 2046 | projected | 296.4 | $1.81 |
| 2047 | projected | 296.4 | $1.81 |
| 2048 | projected | 296.4 | $1.81 |
| 2049 | projected | 296.4 | $1.81 |
| 2050 | projected | 296.4 | $1.81 |
If you bought one share today
The red bar is what you pay. Yellow years pay you back, including the return you asked for. Green years are pure profit on top. If there is no green, you paid more than the cash is worth.
At these settings you never get C$17.58 back with a 9.0% return within 25 years. Buying at C$17.58 loses you $1.75 a share in today's dollars.
What a share is worth under different assumptions
Your required return down the side, ten-year growth across the top. Your current setting is outlined; the dashed cells are within 10% of today's price. Blue means worth more than C$17.58, red means worth less.
Growth after year 10, the well life, the starting point and the switches above all carry through. Every cell is the same arithmetic as the big number at the top.
Three honest answers from the same cash
Three answers from the same accounts and the same arithmetic, at your required return, long-run growth and well life. The gap between them is the growth you choose to believe in, and nothing else.
From the reported figures to the cash in the bank, FY2025
Reported profit is an accountant's number, and the "cash flow" companies quote usually leaves the drilling out. Here the reported figures are worked down to the cash that was actually left after every bill and every well. Figures in C$ millions.
| FY2025, C$ millions | |
|---|---|
| Profit, as reported (the headline number) | 91.8 |
| Cash generated by operations, as reported | 235.4 |
| + Interest paid, put back | 17.5 |
| − Rent on leases | −0.3 |
| − Every dollar spent on wells and plants | 0.0 |
| = Real cash left for owners | 252.6 |
| Per share (164M diluted) | $1.54 |
| For comparison: dividends paid in 2025 | 177.1 |
| For comparison: assets bought and sold, net | 41.8 |
What we take out, and why
- Depreciation, depletion and every other paper charge: accountants spread the cost of past drilling over years. We ignore that and count the cash actually spent on wells and plants in the year it went out, so nothing is counted twice.
- Interest paid: put back. Interest is the price of borrowed money, and your required return already charges for the price of money, so every company is judged the same way whether it borrows or not.
- Rent on leases: small and short leases are treated as a cost of producing, like fuel.
- Every dollar spent on wells and plants: taken out in full, including the drilling that grows production. That spending buys the future cash the dials project, so it is counted where it happens.
What 9 years of accounts say
Every line the model uses, every year, with the latest year highlighted. Dividends and buybacks are shown as money leaving for owners.
Every year, C$ millions
| C$ millions | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|
| Profit, as reported | 12.2 | 14.0 | 5.2 | −13.9 | 72.1 | 209.2 | 131.9 | 149.4 | 91.8 |
| Cash generated by operations, as reported | 119.3 | 133.1 | 105.8 | 65.8 | 162.0 | 327.3 | 216.9 | 223.3 | 235.4 |
| + Interest paid, put back | 2.6 | 3.7 | 4.0 | 3.2 | 3.3 | 5.9 | 10.0 | 15.1 | 17.5 |
| − Rent on leases | 0.0 | 0.0 | 0.0 | −0.0 | −0.2 | −0.2 | −0.2 | −0.2 | −0.3 |
| − Spent on wells and plants | −4.9 | −4.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| = Real cash left for owners | 117.0 | 132.8 | 109.8 | 68.9 | 165.1 | 333.1 | 226.7 | 238.2 | 252.6 |
| Real cash per share, C$ | $0.99 | $1.12 | $0.93 | $0.58 | $1.21 | $2.21 | $1.50 | $1.57 | $1.54 |
| Assets bought and sold, net | 54.3 | 53.0 | 49.8 | 10.7 | 377.0 | 190.8 | 10.6 | 411.7 | 41.8 |
| Dividends paid | −67.3 | −73.7 | −74.7 | −39.2 | −62.0 | −141.6 | −162.7 | −162.7 | −177.1 |
| Debt after cash, year end | 68.6 | 89.4 | 94.6 | 65.8 | 101.2 | 127.9 | 100.9 | 282.3 | 268.3 |
| Shares, millions (diluted average) | 118.2 | 118.4 | 118.7 | 118.7 | 136.9 | 150.8 | 151.2 | 152.0 | 164.0 |
How the maths works, and what to be careful about
The words on this page
- Real cash (true cash)
- What was left in the bank each year after every bill, every tax payment and every well drilled. Not profit, and not "cash flow" as companies usually quote it, which leaves the drilling out. The strictest number there is.
- Required return
- The yearly return you insist on for taking the risk. A dollar promised in ten years is worth less than a dollar today; this rate says how much less. 9% is a common professional figure for a large Canadian producer; the reserve engineers use 10%.
- Well life (reserve life)
- How long the wells keep producing. After the life you choose, nothing is counted.
- What a share is worth
- Every future year's cash, shrunk back to today's dollars at your required return, added up, less the debt, divided by the number of shares. Pay less than this and you earn more than your required return; pay more and you earn less.
- Where the default growth comes from
- Freehold's 2026 guidance of 15,500 to 16,300 boe a day sits at or below 2025's record 16,294, with new US wells expected to help only from late 2026, so the growth dial starts at a modest 2 per cent.
The arithmetic, step by step
- Count the real cash each past year: cash generated by operations as reported, plus interest paid put back, minus rent on leases, minus every dollar spent on wells and plants. Buying and selling assets is shown separately.
- Project it. The starting cash you choose (an average of the history, or the latest year) grows at your growth dial for ten years, then at the long-run rate for as long as the wells keep producing. Nothing is counted after the well life ends.
- Bring it back to today. Each year's cash is shrunk by your required return, counted at mid-year because cash arrives through the year rather than on 31 December.
- Turn it into a share value. Add up the shrunk cash; take off net debt of C$251M; divide by 164M shares.
- Work it backwards. "The growth today's price assumes" is the ten-year growth rate at which this start is worth exactly the share price.
Where the numbers come from
- The 2017 annual report could not be retrieved from any public source, so the history is nine years (2017 to 2025) rather than ten, and the five year average is the default starting point.
- A royalty owner has no reserve life of its own: how long the cash keeps flowing depends on other companies drilling Freehold's lands, so the model simply assumes a 25 year life.
- Royalty companies spend almost nothing on capital. Freehold's remaining working interest spending appears as capital in 2017 and 2018 only; from 2019 the statements merge everything into acquisitions, which is where Freehold's real outlay lives, including the large US royalty purchases of 2021 ($377 million) and 2024 ($412 million).
- Interest for 2017 to 2022 is the cash interest and financing fee expense from the MD&A, since cash interest paid was not separately disclosed in those years; 2023 to 2025 use the cash interest paid figure from the statements.
- Net debt is Freehold's own measure, long-term debt net of working capital, taken from each year's report; at 30 June 2026 it was $251.1 million. Plain long-term debt was $282.9 million at year end 2025.
- Dividends are the whole return story and are paid fully in cash: the reinvestment plan has been suspended since 2016. The payout was cut in 2020 and rebuilt to $177.1 million in 2025. Freehold has not bought back shares in this period; it has instead issued them, so the share count grew from 118 million to 164 million, mostly for the US acquisitions.
- The 2024 acquisition spending was funded partly by a $165.5 million share issue, and 2021's by a $233.3 million subscription receipt issue; those inflows sit in financing and are not netted against acquisitions here.
- Weighted average diluted share counts for 2017 to 2020 are rounded to the nearest hundred thousand from the audited statements.
- Analyst targets: average C$18.90 across 10 analysts (stockanalysis.com analyst consensus, 30 August 2026).
For the technically minded
The method is the one used to evaluate capital projects, from Ted Lawrence, The Business Guide to Economic Evaluations: Projects, Leases, Tariffs and Acquisitions (2017). "Real cash" is the book's project cash flow (chapter 3) with depreciation, debt servicing and debt-like leases restructured out (chapters 4, 5 and 19); short operating leases stay in as a cost of producing, a chapter 19 judgment. The value per share follows the share-purchase evaluation of chapter 20: present value of the company's cash flows at the cost of capital (chapter 10), mid-year discounting (chapter 12), plus non-required assets, less net debt and the decommissioning liability. "What you gain or lose" is the bid-curve NPV of chapter 20; "when you get your money back" is the discounted payout of chapter 13; the bars follow the project profile of chapter 6. The reverse solve on growth is a plain reverse DCF.
Discount-rate anchors: 9% is a common cost-of-equity figure for a large Canadian producer and 10% is the reserve-report convention (PV10). The long-run rate defaults to 0% here: a depleting resource should not be assumed to grow forever, so anything above zero is a judgment you make with the dial.
Sources
- Ted Lawrence, The Business Guide to Economic Evaluations: Projects, Leases, Tariffs and Acquisitions (2017). Chapters used: 3, 4, 5, 6, 10, 12, 13, 19 and 20.
- stockanalysis.com, Freehold quote, financials and forecast pages (30 August 2026 (price at 28 August 2026 close))
- Freehold 2025 annual report (audited 2025 and 2024 statements) (11 March 2026)
- Freehold Q2 2026 quarterly report (net debt, shares) (29 July 2026)
- Freehold 2024 annual report (audited 2024 and 2023 statements) (12 March 2025)
- Freehold 2022 annual report (audited 2022 and 2021 statements) (1 March 2023)
- Freehold 2021 annual report (audited 2021 and 2020 statements) (2 March 2022)
- Freehold 2020 annual report (audited 2020 and 2019 statements) (4 March 2021)
- Freehold 2019 annual report (audited 2019 and 2018 statements) (25 March 2020)
- Freehold 2018 annual report (audited 2018 and 2017 statements) (7 March 2019)

