How much cash does Freehold really make, and what is a share of it worth?

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

1. 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.
2. 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.
3. 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.
4. Turn it into a share value. Add up the shrunk cash; take off net debt of C$251M; divide by 164M shares.
5. 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.