Source Rock forms Alberta mineral leasing JV

Executive Summary

• Source Rock Royalties Ltd. has established a joint-venture with a private company (JV Co.) to jointly acquire oil sands and petroleum/natural gas (PNG) Crown mineral rights leases in Alberta.
• The joint venture has successfully leased 11 sections (7,040 acres) of Crown mineral rights, comprising 4,480 acres of 15-year oil sands leases and 2,560 acres of four-year PNG leases.
• The strategy focuses on acquiring prospective heavy oil horizons within the Mannville Stack for potential exploitation via multilateral drilling technologies, with the intent to farm out development rights in exchange for royalty interests.

Key Details

• Joint Venture Structure: Source Rock holds a 50% interest in the joint-acquisition agreement. The principal of JV Co. is a professional geologist with 25 years of experience in the Western Canadian sedimentary basin.
• Leased Assets:
  • Total Area: 11 sections (7,040 acres).
  • Oil Sands Leases: 7 sections (4,480 acres) with a 15-year term.
  • PNG Leases: 4 sections (2,560 acres) with a 4-year term.
• Strategic Focus: Acquisition of mineral rights prospective for heavy oil horizons in the Mannville Stack, targeting multilateral drilling technologies.
• Future Plans: The parties will continue to evaluate, post for leasing, and bid on additional Crown mineral leases to establish an undeveloped land base with near-term drilling potential and longer-term upside optionality.
• Financial Position: Source Rock's current working capital is approximately $4.5 million (equivalent to 10 cents per share).

Notable Quotes

• "We are excited to establish the leasing JV and for the prospects that we have gained exposure to through the initial 11 sections of leased mineral rights. Although we continue to be focused on scaling and diversifying our portfolio of producing oil royalties, we believe that it is an opportune time to increase early stage upside exposure and expand the potential to organically grow our royalty portfolio through the leasing JV and subsequent farm-out transactions." — Brad Docherty, President and CEO