Q: Happy New Year!
What drives FRU share price? Is it tied to the price of oil and gas or is it more like a utility such as ENB, PPL, etc.? Or perhaps a combination of both?
What do their royalties look like? Percentage of barrels of produced or sold?
What drives FRU share price? Is it tied to the price of oil and gas or is it more like a utility such as ENB, PPL, etc.? Or perhaps a combination of both?
What do their royalties look like? Percentage of barrels of produced or sold?
5i Research Answer:
Royalties are typically tied to volumes, but price can influence volumes also. If prices are too low some producers will shut in production. But we would see FRU as riskier than utilities. But royalties do not incur other risks (environment, costs) so royalty companies are typically less risky than pure producers (and thus get a higher valuation). 65% of production is crude and NGL liquids. Typical contracts are on sold production.