CALGARY, AB, June 1, 2026 /CNW/ - Source Rock Royalties Ltd. ("Source Rock") (TSXV:SRR), a pure-play oil and gas royalty company with an established portfolio of oil royalties and Crown mineral leases, announces results for the three-month period ended March 31, 2026 ("Q1 2026").
President's Message - Corporate Update
During Q1 2026, we experienced two very different market environments. Oil prices were below $60.00 USD per barrel in January and remained very weak for almost all of February; which followed extended oil price weakness throughout the second half of 2025. These prolonged lower oil prices resulted in less new drilling activity on our royalty lands and reduced new production to offset natural declines from consistent drilling activity in 2024 and the first half of 2025. In addition, our production volume royalty had a scheduled decline from 70 bbl/d to 39 bbl/d that went into effect on January 1, 2026.
This weakness reversed quickly when oil prices spiked in March, which changed the dynamic across our royalty lands for the first quarter and improved our outlook for the remainder of 2026. March royalty production rebounded from earlier in Q1 2026 to average 204 boe/d and royalty revenue for the month was approximately $623,000. Seven new horizontal wells began producing in March on our central Alberta (4) and S.E. Saskatchewan (3) royalty lands.
The higher oil price environment not only increases the royalty revenue from our existing production due to our ~90% oil royalty production ratio, but it also positively changes our expectations for new drilling on our royalty lands. In particular, the operator of our Clearwater royalty lands recently disclosed that they have added a second rig to the property and anticipate an increase in the number of Clearwater horizontal wells to be drilled on our royalty lands over the remainder of the year. The operator also disclosed enhanced oil recovery activities on our royalty lands through multiple waterflood pilot operations and early evaluation of polymer injection.
We are actively seeking to acquire additional producing oil royalties and increase exposure to undeveloped royalty lands through deploying our working capital(2) of approximately $4.6 million ($0.10 per share) as at March 31, 2026. We are well positioned to benefit from either continued strength in oil prices through higher royalty revenue and increased drilling activity, or renewed weakness as this will provide a more attractive environment for pursuing new royalty acquisitions.
During Q1 2026 we acquired a 50% interest in an additional 15 gross sections (9,600 acres) of Crown oil sands and PNG mineral leases in Alberta. We also completed the first transaction on our leases, which resulted in receiving two times our investment in 6 months, while also retaining a royalty in these lands. We continue to pursue the acquisition of Crown mineral leases and are strategically looking to complete additional transactions on our remaining 32 gross sections (20,480 acres - 50% interest) of leases.
Brad Docherty, President & CEO
First Quarter Highlights:
Quarterly royalty revenue of $1,305,407, a decrease of 2% from Q4 2025 and 22% lower than Q1 2025.
Quarterly royalty production of 185 boe/d (92% oil and NGLs), a decrease of 18% from Q4 2025 and 20% lower than Q1 2025.
Quarterly adjusted EBITDA(1) of $1,019,611 ($0.022 per share), a decrease of 13% from Q4 2025 and 30% lower than Q1 2025.
Quarterly funds from operations(1) of $932,259 ($0.02 per share), a decrease of 15% from Q4 2025 and 28% lower than Q1 2025.
Declared three dividends of $0.0065 per share, resulting in a payout ratio(1) of 95%.
Achieved an operating netback(1) of $61.24 per boe and a corporate netback(1) of $55.99 per boe.
11 gross new horizontal wells began producing on royalty lands in central Alberta (7) and S.E. Saskatchewan (4), with 7 of these new wells commencing production during March.
Acquired a 50% interest in 15 sections (9,600 acres) of Crown oil sands and PNG mineral leases in Alberta for proceeds of $296,548.
Sold a 50% interest in 2 sections (1,280 acres) of Crown oil sands leases for $225,000 ($110,000 lease cost) and retained a 1.75% gross overriding royalty in the lands.
Working capital(2) of $4,567,435 ($0.10 per share) as at March 31, 2026.
Financial and Operational Results
Three Months Ended March 31,
FINANCIAL ($, except as noted)
2026
2025
