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Franco-Nevada Q2 earnings up YOY on higher oil, gas revenues

Franco-Nevada Corp. on Aug. 8 reported net income of US$53.6 million in the second quarter, up from US$45.6 million in the year-ago period, driven in part by higher revenues from its oil and gas assets.

Oil and gas revenues surged 136.5% on a yearly basis to US$22.7 million, reflecting additional contributions from the SCOOP/STACK, Midland, Delaware and Orion royalties, higher prices and increased payments from the Weyburn operation.

In total, Franco-Nevada generated revenues of US$161.3 million from the sale of 107,333 gold equivalent ounces. This compares to revenues of US$163.6 million reported a year earlier from the sale of 122,541 gold equivalent ounces.

Adjusted EBITDA stood at US$126.3 million, compared to US$125.5 million last year.

Franco-Nevada had US$158.4 million in working capital at the end of the three-month period and no debt. It declared a dividend of 24 cents per share, payable Sept. 27 to shareholders on record as of Sept. 13.

The company raised its full-year guidance for oil and gas revenue to between US$65 million and US$75 million, from the earlier range of US$50 million to US$60 million, due to better than expected contribution from its previously acquired U.S. assets and higher oil prices.

The positive outlook, however, will be offset by a downward revision to Franco-Nevada's attributable royalty and stream production guidance, which is now projected to range from 440,000 to 470,000 gold equivalent ounces, from the previous estimate of between 460,000 and 490,000 gold equivalent ounces. It attributed the change to reduced deliveries from the stream at Lundin Mining Corp.'s 80%-owned Candelaria mine in Chile. Production from this stream is expected to recover in 2019.

Franco-Nevada and Continental Resources Inc. recently agreed to jointly acquire mineral rights in the SCOOP and STACK oil plays in Oklahoma.