Tom Mullane – President and Chief Executive Officer Darren Gunderson – Chief Financial Officer

Shailender Randhawa – RBC Capital Markets Nick Lupick – AltaCorp Capital Jeremy McCrea – Raymond James Dennis Fong – Canaccord Genuity

Good morning. And thank you for joining Freehold Royalties’ Q1 2017 conference call.

On the call from Freehold are Darren Gunderson, our CFO and myself Tom Mullane, the President and CEO. We will summarize first quarter results and then we will be happy to answer questions.

We ended 2016 with a strong quarter and we have entered 2017 maintaining much of this momentum. Three things I want to highlight for Q1.

Firstly, we set another production record in Q1 with volumes averaging 12,753 boe/d. Secondly, we had a first strong quarter on the activities side with 150 gross, 8.6 net locations drilled in our lands.

Just followed a near equal Q4 where 125 wells were drilled. Thirdly, subsequent to the quarter end we were able to monetize a portion of our working interest assets.

By disposing of these assets, we've improved our royalty focus, enhanced our netback and lowered our risk profile. Q1 marked the 13th consecutive quarter of volume growth for Freehold, and the third consecutive quarter of production growth per share.

Specific to our royalty portfolio production was up 13% when compared to the same period last year, versus the previous quarter royalty production was up 3% on a per share measure with volumes aided by third-party drilling in our lands, and acquisition we completed during the quarter and continued strength in our audit function. Royalty interest accounted for 84% of our total production and 91% of our operating income, again reinforcing our royalty focus.

We also highlight that we created a new royalty leasing team earlier in the year. This team issued 25 new lease agreements with 11 different companies over the quarter, which compares to nine leases issued in Q4 2016.

In Q1 2017 we saw continued strength in activity on our lands, in total 150 gross, 8.6 net locations were drilled in our royalty acreage over the quarter. This compares to 85 gross, 3.4 net during the same period last year.

Activity through the period was focused with Viking development and drilling in southeast Saskatchewan. Combined, this was 70% of our total activity.

Based on this recent activity levels we increased the number of locations to be drilled in our 2017 guidance to 19 net drilling locations. This would be one of the most active drilling years on our lands.

We have a quality royalty portfolio that will attract capital for many years. In line with our continued emphasis on royalties, subsequent to quarter end, Freehold sold all of its working interest assets in southeast Saskatchewan for $29 million.

Total production operating income associated with these assets in 2016 was approximately 750 boe/d and $4.3 million. Related decommissioning liabilities removed as a result of this sale amounted to $4.8 million.

We will continue to evaluate our royalty interest portfolio with our goal of having less than $5 a barrel in total cash costs, in less than 18 months. Despite the disposition we are maintaining our corporate production guidance range of 11,300 to 11,800 boe/d with royalties making up 87% of total volumes.

Now I'll pass the call to Darren to walk through our financials.

Thanks Tom. Good morning everyone.

During the first quarter Freehold generated funds from operations of $32.1 million or $0.27 per share. Better than expected production and pricing through Q1 helped actuals to outpace our forecast.

Q1 revenue totaled $41.1 million. Revenue from oil and NGL production represented 81% of our corporate total.

Revenue from royalties was 71% higher when compared to the same period last year. Total cash cost for the quarter fell 11% from $8.65 per boe to $7.66 per boe.

This was driven by a combination of reduced operating expenses reflecting increased focus on royalties and lower interest charges as a result of paying down our debt with free cash flow. With a subsequent disposition of our working interest production we have revised our operating cost assumption for 2017 from $3.25 per boe to $2.50 per boe which should be the largest driver on near-term cash cost reductions.

Freehold declared dividend of $15.3 million or $0.13 per share in the first quarter implying a 48% basic payout ratio. As part of our Q4 2016 results we announced a 25% increase to our monthly dividend from $0.04 to $0.05 per share.

Based on 2017 funds from operations estimate, we forecasted adjusted payout of 62% of new dividend level. This remained at the low end of our target payout range of 60% to 80%.

Of our $32 million funds from operations for the quarter, we generated $17 million in free cash flow over and above our dividend and capital expenditures which we apply to our debt. Freehold closed the quarter with year-end net debt of $76 million, representing 0.7 times net debt-to-funds from operations and within our guidance threshold of 0.5 to 1.5 times.

With a closing of our working interest disposition we forecast 0.3 times net debt-to-funds from operations at year-end, reinforcing our conservative strategy. Now back to Tom for his final remarks.

Thanks Darren. In closing, Q1 was another strong quarter of operations for Freehold.

We achieved record production once again. We had strong third-party drilling in our lands.

We increased our dividend and we completed the disposition of some of our noncore working interest assets. Overall, Freehold continues to offer a low risk investment in oil and gas.

Now I’ll pass over to the moderator for questions.

Hi good morning, thanks. Tom two questions from me.

So one, could you comment on the new leasing activity and then maybe just provide some more color in terms of what you look for in terms of royalty rates or drilling commitments or what have you? And then secondly, we've seen one of your peers enter the U.S.

in a meaningful way in terms of the Energy Royalty space there. So just the thoughts on the U.S.

marketplace are there in terms of mineral title or for gross overriding as a potential business to enter? Thanks.

Well thank you Shailender. Against your first question regarding leasing activity most of our time lease mineral title land is in southeast of Saskatchewan and in Saskatchewan in general.

So most of that activity that occurred in the first quarter is in that area. As far as our lease rate, we typically are growing our lease rates for very valuable oil prospects in the high-single digits or high-double digit kind of lease rates.

And these vary depending on the particular lease itself and what kind of prospectively is. But southeast Saskatchewan still has high netbacks a very good area to invest in and it's also regarded as very high royalty rates.

And then as far as the U.S., we don't have any immediate plans. We have reviewed several royalty products in the U.S.

but there's nothing short term here.

Okay thanks.

Hi, thank you. Good morning.

Two quick questions from me. The first one Tom is just on where, I mean, drilling activity was strong in Q1 at 150 gross wells.

I was wondering if you could us some color as to maybe kind of where the top handful of plays were and how many wells were drilled in each play, just to sense of which areas are attracting the most capital, I would assume Saskatchewan like you said is probably the best.

Yes, thank you Nick. In the first quarter about 40% of our drilling activities was in the Viking play.

Most of that in the Dodsland area but some in Alberta as well. About 30% of the activities on our land in the first quarter was in southeast Saskatchewan, in the Mississippi and Bakken plays.

The remaining 30% we had 10% deep basin, 10% in southwest Saskatchewan in the Shaunavon Play and 10%, I guess rest of the world.

Great. And I guess the next question I had for me was just on the M&A activity and what your plans are there obviously you got off some production during the quarter you got another package out there I think in central Alberta of 400 boe/d, I think, I've seen it as.

And I heard you mention yesterday at the AGM a couple times about being a pure play royalty company. Can you just touch on that and if the plan is to eventually get off of all of your working interest production?

Thank you Nick. Our goal is to become a pure play, I guess a pure play royalty company.

And so we are deemphasizing working interest. We set ourselves 18 months to divest, or deemphasize our working interest.

We would like to monetize all of our working interest. Some of it we may just retain but a very, very small portion of it but be very, very de minimis, but it’s out ultimate goal to become a pure royalty play.

Great thank you Tom.

Hi guys. Just going back to the number of wells that were drilled in the quarter, I’m curious if you think why you've started to see a really big pickup in amount of activity in the land as just related to is it just a general pick up in activity, is it just related to more so the different land acquisitions that you've bought and is there just more activity on your land or is it your new ventures group that is just really getting a lot more activity?

And just to follow-up with that, your royalty rates that you’ve been getting now for your wells has steadily started to increase or quarter, after quarter, after quarter, do you think that is sustainable as well? Thanks guys.

Okay, I guess the pickup activity, I think, it's a general industry pick up coming off a very poor first half of 2016. We are finding the oil plays, southeast Saskatchewan and the Viking which has the highest netbacks, continue to attract capital.

We believe that our lease out team activity, recent pickup in activity will result in more drilling but that will come in the back half or back half of this year, just that there is some consolidation on lands when they lease out, et cetera. As far as terms we've been maintaining a pretty good lease out rate as far as terms go and it's been fairly consistent over the last number of years.

Now as far as the royalty percentage there's just a little more activity on mineral title land and also there's a big pickup in activity on our Dodsland Viking play, which garners an 8.5% of loyalty.

Right, okay. Okay thanks Tom.

Thank you.

Hi, good morning gentlemen. Just two quick questions from me.

Just as a follow-up there to leasing arrangements and so forth, how much in terms of drilling commitments do you guys have with some of those 25 new leases that you guys signed up for in this quarter? And how should that potentially translate into royalty production growth in the latter half of this year, especially given that you have not changed your overall guidance despite selling 750 boes/day.

When we look at the leasing that we did in Q1, we try to get a drilling commitments where we can if not we do get a bonus. Lease terms aren’t for very long, so it will – we believe that we'll get some drilling activity on those lands.

And with resulting volumes back half of this year maybe at the end of the year or into Q1 2018. So as far as our production guidance numbers our lease out team activities aren't reflected in those numbers as of yet, because we don't think that will be meaningful for the year.

The pickup in activity in general is what caused us to increase our guidance and adjust for this, so we're seeing disposition.

Okay perfect. And then my second question here is just on the payout ratio there, it seems like you guys are kind of towards the lower end of your range.

How should we think about the use of funds and either inorganic opportunities or returning some of that to shareholders and what avenues are you guys currently looking at outside of, obviously the dividend?

As far as at the lower end of our adjusted payout target we're forecasting, as you mentioned, 62% adjusted payout. This is based on an overall $52 price for WTI.

We’re continuing to monitor our pricing here. With the current softness in oil prices, we're going to wait and see approach about adjusting our dividend as we go forward.

Okay. Perfect.

Thank you.

Well thank you very much. Thank you for the questions.

We are just really happy with our Q1 and as we go through the year we believe we continue to offer a low risk investment in oil and gas. Thank you.