David Spyker - Chief Executive Officer Dave Hendry - Chief Financial Officer Rob King - Vice President, Business Development Matt Donohue - Manager of Investor Relations and Capital Markets

Good morning everyone and thank you for joining us. On the call with me today are David Hendry, our CFO; Rob King, our Vice President, Business Development; and Matt Donohue, our Manager of Investor Relations and Capital Markets.

The first quarter marked a period of rebound for Freehold as the company restored production levels, generated significant improvements in funds from operations, increased its dividend and completed its first transformational U.S. royalty transaction, all while reducing leverage.

To start this morning, I would like to talk about the dividend increase and then we will focus on the excellent operational performance we have had. In conjunction with projecting 10% to 15% production growth over 2020, we will be increasing our dividend for the third time this year, increasing our monthly payout by 33% from $0.03 per share to $0.04 per share, starting in June to shareholders of record on May 31, 2021.

This healthy dividend increase represents a measured approach in moving the dividend upward toward our long-term 60% to 80% payout ratio objective. This step-wide approach takes into consideration that despite the improvement in the commodity price outlook, there still remains considerable risk, with uncertainty on the ultimate pace and sustainability of demand recovery as COVID-19 vaccination initiatives are well underway.

We also see this as an opportunity to deleverage our balance sheet with free cash flow after dividends being directed to further reduce our debt, retaining financial flexibility to do further high quality acquisition work. The key highlight for the quarter was the completion of our acquisition of our diverse U.S.

royalty package, reinforcing our identity as a publicly traded North American focused oil and gas royalty company. The $74 million acquisition closed in early January and has provided free hold with exposure to 450,000 gross drilling unit acres of mineral title lands and overriding royalty interests across 12 basins in eight states, predominantly weighted towards the activity-rich Permian and Eagle Ford basins.

Our team has worked hard to incorporate these assets into our portfolio over the quarter, with early indications suggesting performance exceeding expectations. Additionally over the quarter, we were able to complete three tuck-in acquisitions, adding exposure to the Bakken and Permian basins.

These deals totaled $4.9 million and closed this quarter. They are estimated to add 85 BOE a day of production in 2021 and will provide additional growth into next year.

We've been extremely encouraged with the level and quality of acquisitions we have seen to date with the initial transaction providing us a strong suite of assets to expand on through further deals. In the near term we expect to be busy on both sides of the border with a focus on enhancing the quality of our royalty portfolio and providing strong returns to our shareholders.

We see the growth of Freehold’s U.S. portfolio as further diversifying our royalty lands, enabling participation in some of the most attractive plays in North America.

Moving forward, we believe our U.S. royalty lands will provide a key growth wedge to our production profile, increasing option value to provide returns to our shareholders.

On the operations front, production for the quarter averaged 10,944 BOE a day, representing a 13% improvement over Q4, 2020 and a 3% gain on a per share measure. We had a small period of weakness associated with our U.S.

portfolio with the cold weather in Texas over the quarter, but this has since rebounded. Production from Freeholds U.S.

royalty assets averaged 1,285 BOE a day in Q1, 2021 a 400% increase from 257 BOE a day in Q4, 2020 and 414% increase versus the same period last year. Based on our first quarter result and our outlook for activity on our royalty lands, both within the U.S.

and Canada, we are maintaining our 2021 production guidance range of 10,500 BOE to 11,000 BOE a day. At current commodity price levels, we see third party activity offsetting natural declines, which enables free cash flow for growth of the dividend, value enhancing transactions or to pay down leverage.

On the drilling front, 111 gross, 3.9 net wells were drilled on our royalty land in Q1, a 37% decline on a gross measure versus the same period in 2020, but flat when compared to Q4, 2020. With the upward move in crude oil prices, we're seeing activity increase on our Freehold’s royalty lands with approximately 10 rigs, six in Canada, four in the U.S., running on our royalty lands during the quarter.

In Q1, 2021 approximately 75% of all locations drilled in Canada targeted gross overriding royalty prospects with 25% focused on prospects on Freeholds mineral title lands. 50% of all locations drilled targeted prospects in Saskatchewan, with the remainder focused in Alberta.

The vast majority of wells drilled, more than 90% were focused on oil or liquids prospects. The Clearwater oil play in central Alberta represents Freehold holds most active area over the quarter.

The increase in activity reflected a change in operator late last year and subsequent ramp-up in that operator’s spending on the lands. We expect this to represent a key growth area for Freehold in the near to medium term with the play offering strong economics at current commodity price levels.

In the U.S., activity levels on Freehold’s mineral title lands have met expectations, with the majority of the focus on light oil prospects targeting the Permian and Eagle Ford basins. Overall, 18 gross wells were drilled on our U.S.

royalty lands over the quarter with between four to five rigs continuing to drill on our lands. The acquisition of additional U.S royalty production and royalty lands in Q1, 2021 has further diversified and enhanced Freehold’s asset base, bringing added sustainability to its portfolio and dividend.

We have considerable optimism heading into 2021, and will continue to focus on positioning Freehold to be a premier North American royalty company, with a strong balance sheet, a sustainable dividend and prospects for growth in top tier oil and gas operating areas. I will now pass the call to Dave Hendry to walk through some of the financial highlights.

Thanks Dave and good morning everyone. Financially, as commodity prices improved over the quarter, Freehold continue to deliver on the core aspects of its return proposition, providing a meaningful dividend while also providing investors with a lower risk investment, differentiating itself from traditional oil and gas E&P companies.

Royalty and other revenue totaled $36.8 million for Q1, 2021, up 42% from the fourth quarter of 2020. Funds flow from operations for Q1, 2021 totaled $32.4 million or $0.25 per share, up 47% versus the previous quarter.

The increase of both reflects strong upward momentum in crude oil prices and the positive contribution from our U.S. acquisitions.

Freehold’s dividend payout totaled 24% for Q1, 2021 consistent with Q4, 2020 and down from 92% during the same period in 2020. As previously mentioned, we increased our monthly dividend for 2021 from $0.03 per share to $0.04 per share reflecting a measured response to an improved commodity price outlook and an expected increase in third party spending on our royalty lands in 2021.

For Q1, 2021 cash costs totaled $4.37 per BOE, slightly up from $4.11 per BOE in Q4, 2020 with annual short term incentive plan paid in the first quarter of each year, but down 24% versus the same period last year. This strong result reflected reduced G&A financing and operating cost charges.

Over the year we executed upon a number of cost saving measures, which have improved our net back and profitability. Our 2021 U.S.

acquisitions are expected to only add a marginal amount of G&A, which should continue to improve our corporate cost base and net back. Net debt totaled $64.8 million at March 31, 2021 representing 0.8x net debt to funds flow from operations, relatively consistent with Q4, 2020 as free cash flow was applied to our recent acquisitions, about a $37 million reduction from Q1, 2020.

The decrease in the net debt year-over-year reflected strong funds flow from operations alongside a lower dividend payout. Freehold’s prudent strategy of maintaining long term debt to funds flow from operation below zero and are between zero and 1.5x alongside a longer term dividend payout target range of 60% to 80% of funds flow from operations.

It provides cushion for potential volatility in commodities. In conjunction with the recent U.S.

acquisition, Freehold exchange $12.6 million subscription receipts for an equivalent number of Freehold common shares, raising gross proceeds of $60.7 million. This represented one of the first successful Canadian E&P financing in a number of years, and we would like to thank all of our shareholders and the syndicate of banks that helped Freehold to complete the transaction.

In March 2021 Freehold also amended its credit facility with a syndicate of four Canadian banks, maintaining the committed revolving facility at $165 million and the operating facility at $15 million. The amended credit facility agreement includes a permitted increase in the revolving facility to $215 million subject to lenders consent.

Both the committed revolving and operating facilities mature March 31, 2024. At the end of Q1, 2021 $96 million was drawn on these facilities versus $93 million at year end.

The slight increase is due to the recent acquisition of U.S. royalty properties.

The credit facilities are secured with a $400 million first charge demand debentures over all of Freehold’s Canadian royalty income assets, and fixed charge mortgage securities on certain U.S. royalty income assets.

Now, back to Dave for his final remarks.

Thanks Dave. So looking forward, we remain enthusiastic about the next 12 months of operations.

We have seen a steady training up of capital and production volumes on our lands, both in Canada and the U.S. and at current commodity price levels, our high royalty margins offers significant option value to provide returns to our shareholders.

With today's increase to our 2021 monthly dividend, we highlighted this is the third time in the past six months that we have revised our 2021 payout upwards. The groundwork is in place for an exciting 2021 and beyond.

The improved economic conditions are very positive for our industry and highlight the strength of the royalty model. Through execution of our strategy in the coming quarters, we expect to be able to showcase the strong return proposition and investment that Freehold provides, with the ultimate commitment to maximize value to our shareholders.

Thank you. So we’ll now turn the meeting over to questions.

So if anyone has any questions please feel free to bring them forward at this time and we’ll answer those.

Good morning and thanks for taking my call. I’ve got a couple of questions.

First one is, if you could comment on the top line of potential acquisitions in both Canada and the U.S. just maybe flipping back to six months ago and today, do you see that trough line is greater or equal to or less than, very broad, could be numbers or size.

And really what I want to drive to is the potential increase in the capital gains tax rate driving some of that potential upside.

Rob King speaking, I'll take this question Elias. So maybe I'll just give you a couple of data point numbers in terms of the opportunities that we’ve sort of looked at in the first four months of the year and sort of what we're seeing on our plates right now.

In the first four months, you know between the U.S. and Canada, we look at about 35 opportunities in depth.

There's probably about the same number that we did not look at in terms of something we wanted to allocate our time too, and whether it’s you know the wrong basins or not the right mix of development versus near term production, etc., a bunch of reasons why we might decide not to evaluate those other transactions. I think we are seeing a pickup particularly in the U.S.

as it relates to opportunities that we are seeing coming forward. You know private equity which is, they’ve put north of $15 billion of capital towards the mineral title sector in the last half a dozen years.

You know they haven’t really had an opportunity for an exit in the last 1.5 years and so I think are increasingly looking to test the waters in terms of how this more constructive price environment may play out, and we're looking at, right now close to a dozen opportunities in the U.S. primarily focused on the Permian and on the Eagle Ford.

In terms of the capital gains comments, I think that was something that we saw a bit more activity in late Q4 in terms of the number of sellers wondering that if that wasn't something that – the rumors and the prospects of that and certainly that probably accelerated a little bit in terms of people again suspecting there will be some near term tax changes. I think the commodity price has a bigger impact frankly in terms of encouraging people than the capital gains from what we are seeing.

Okay, alright. I really appreciate that color and I know my questions are a little higher level and macro.

Maybe one last one; you know the dividend payout ratio is relatively low given Q1 and you do have your targeted range. Targeted range is probably based on a number of factors, but over what period of time would you see moving into that targeted range; would that be four-quarters, eight-quarters.

A very broad question, but I thought I'd throw it out there.

Hey, this David Spyker. I could respond to that.

From a target perspective, you know the 60% to 80% range, you know we view that – where we want to be is probably more in the lower end of that target range right now and so you know going forward at the $55 that we are using in our model, you know we're projecting kind of run rate pay out in a low 50%. So you know we're getting toward that 60% range and so you know a couple of things that are keeping us there is that – you know still a little bit uncertainty on the commodity price.

You know we like where it's at right now, but we recognize you know given what's supporting it that it can still be a little fragile, and also this was the opportunity set that rob referenced that we see in front of us. You know we think that there is opportunity to continue to add you know meaningful high quality assets to the portfolio.

One of our advantages is that you know with the recent reconstruct of our portfolio in the U.S. acquisition work and some of the work we've done in Canada, is that we see really a low to no decline forecast for the next few years.

So we can be much more patient in finding you know the right opportunity that we want to add. So we've got a certain recipe that we have to build the portfolio and so we wanted to just keep some capacity available to do that.

So in our view, we'll keep at that low end of the pay-out range. We may be slightly below that for the next year or so, but you know inch your way back up into that range as we have confidence in the commodity price outlook.

Great! I really appreciate that answer with the calibration points and what you're thinking of.

I got lots more questions, but I'll turn the call over to others in the queue. Thanks very much.

Yeah, good morning. Thanks for taking my question here.

You guys highlighted in your press release, you had 10 rigs running, six in Canada and four in the U.S. on your royalty lands.

Can you maybe frame or remind us, I guess what level of rig activity would drive growth on your asset base in Canada and what level would probably be needed to remain flat – I’m sorry, both in Canada and the U.S. on that question.

Yeah, so in terms of rig activity, when we when came to the forecast for our 2021, the 10,500 to 11,000 barrels a day, that sort of baked in about 15, 1-5 net wells on our U.S. and Canadian lands over the course of 2021 and so as of first quarter end we're at just under four.

So we’re sort of on path to – you know that effectively is maintaining out that flat production year-over-year, so about the level that we sort of saw in Q1 and some of the run rate that we're seeing right now.

And Jamie, I don't think it's just necessarily – Its Matt here, sorry, but I don't think it's just a rig number, because we've had producer in the Viking go to longer reach wells that had the productivity. We've seen some more deep basin drilling at higher volumes and we’re still kind of triangulating on the U.S.

and what it actual – you know when a rig translates to a well, translates to a net well and adds production, so… But you know I think we’ve done a pretty good job of trying to figure out what the profile looks like and it looks you know on a much more constructive level than it has in the past. You know I think inching up to the back half of the year as the U.S.

grows and maybe Canada declined slightly.

Yeah, good comment there on the net wells Matt. I mean it’s one where you know we’re still calibrating these numbers, but you know when we look at what a net well in Canada brings on relative to one net well in the U.S., you know it’s quite a different story.

You know one net well in Canada for us would bring on about, call it 70 BOE’S a day of incremental production. You know one net well in the U.S.

brings 700 barrels a day of incremental production. Obviously our royalty rate in the U.S.

is much smaller than it is in Canada; you know 4% or 5% in Canada; 0.5% in the U.S., but sort of shows you know our ability to expand the U.S. portfolio and can certainly bring a lot more incremental production gains.

Okay, that's good color you guys. Thank you.

That's it for me.

Okay, thanks to everyone for attending today and I’d say we’re really excited about go-forward in 2021 and we’ve got a lot of good initiatives underway and I look forward to catching up with everybody at the next quarter conference call. Thank you.