PHX Minerals Reports Results for the Quarter Ended Sept. 30, 2024
FORT WORTH, Texas, Nov. 6, 2024 /PRNewswire/ -- PHX MINERALS INC., "PHX" or the "Company" (NYSE:PHX), today reported financial and operating results for the quarter ended Sept. 30, 2024.
Summary of Results for the Quarter Ended Sept. 30, 2024
Net income was $1.1 million, or $0.03 per diluted share, compared to net income of $1.3 million, or $0.04 per diluted share, for the quarter ended June 30, 2024, and net income of $1.9 million, or $0.05 per diluted share, for the quarter ended Sept. 30, 2023.
Adjusted EBITDA(1) was $4.9 million, compared to $6.4 million for the quarter ended June 30, 2024 and $6.3 million for the quarter ended Sept. 30, 2023.
Royalty production volumes decreased 23% to 2,098 Mmcfe compared to the quarter ended June 30, 2024 and increased 1% compared to the quarter ended Sept. 30, 2023.
Total production volumes decreased 20% to 2,379 Mmcfe compared to the quarter ended June 30, 2024, and increased 1% compared to the quarter ended Sept. 30, 2023.
Converted 46 gross (0.18 net) wells to producing status, compared to a conversion of 55 gross (0.40 net) wells to producing status during the quarter ended June 30, 2024 and 71 gross (0.16 net) during the quarter ended Sept. 30, 2023.
Inventory of 278 gross (0.93 net) wells in progress and permits as of Sept. 30, 2024, compared to 241 gross (0.93 net) wells in progress and permits as of June 30, 2024 and 278 gross (1.09 net) wells in progress and permits as of Sept. 30, 2023.
Total debt was $27.8 million, down $5.0 million since Dec. 31, 2023, and the debt-to-adjusted EBITDA (TTM) (1) ratio was 1.36x at Sept. 30, 2024.
Subsequent Events
PHX announced a $0.04 per share quarterly dividend, payable on Dec. 5, 2024, to stockholders of record on Nov. 21, 2024.
PHX's borrowing base under its existing credit facility was reaffirmed at $50.0 million in connection with its regularly scheduled semi-annual redetermination.
(1) This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.
Chad L. Stephens, President and CEO, commented, "PHX generated our second-highest quarter for royalty volumes in our history, validating the quality of our asset base even amidst continued volatility in commodity pricing. We remain positive on natural gas prices as we move into a seasonal stronger period and are seeing sequential increased rig activities on and around our mineral acreage, further bolstering our longer-term outlook.
"During the quarter, we saw a growing pipeline of attractive M&A opportunities," continued Mr. Stephens. "We purchased 325 net royalty acres for $3.0 million and replaced 100% of the wells in progress that converted to production. We also reduced our debt by $1.0 million sequentially with cashflow generated from our production. With a strong balance sheet, and a proven track record of acquiring attractive mineral assets that produce cash flow even during challenging pricing, we are well-positioned for continued success.
"Our risk-mitigated business is built for resilient and sustainable profitability even during challenging pricing environments, and our strategic advantages are evident through commodity price cycles," concluded Mr. Stephens.
Financial Highlights
Three Months Ended
Three Months Ended
Nine Months Ended
Nine Months Ended
Sept. 30, 2024
Sept. 30, 2023
Sept. 30, 2024
Sept. 30, 2023
Royalty Interest Sales
$
6,982,112
$
7,873,297
$
21,977,351
$
24,214,701
Working Interest Sales
$
906,404
$
1,025,794
$
2,827,379
$
3,772,801
Natural Gas, Oil and NGL Sales
$
7,888,516
$
8,899,091
$
24,804,730
$
27,987,502
Gains (Losses) on Derivative Contracts
$
1,089,242
$
(337,647)
$
1,297,737
$
3,648,179
Lease Bonuses and Rental Income
$
159,271
$
620,101
$
445,215
$
1,045,242
Total Revenue
$
9,137,029
$
9,181,545
$
26,547,682
$
32,680,923
Lease Operating Expense
per Working Interest Mcfe
$
1.05
$
1.32
$
1.15
$
1.34
Transportation, Gathering and
Marketing per Mcfe
$
0.47
$
0.30
$
0.47
$
0.38
Production and Ad Valorem Tax
per Mcfe
$
0.18
$
0.19
$
0.19
$
0.20
G&A Expense per Mcfe
$
1.13
$
1.18
$
1.17
$
1.25
Cash G&A Expense per Mcfe (1)
$
0.91
$
0.95
$
0.92
$
0.99
Interest Expense per Mcfe
$
0.26
$
0.24
$
0.27
$
0.23
DD&A per Mcfe
$
1.00
$
0.86
$
0.94
$
0.86
Total Expense per Mcfe
$
3.16
$
2.92
$
3.16
$
3.10
Net Income (Loss)
$
1,100,310
$
1,895,403
$
2,212,466
$
11,407,356
Adjusted EBITDA (2)
$
4,905,335
$
6,321,029
$
15,938,535
$
18,147,976
Cash Flow from Operations (3)
$
5,784,497
$
6,960,419
$
15,207,852
$
20,809,684
CapEx (4)
$
28,902
$
45,977
$
64,628
$
321,396
CapEx - Mineral Acquisitions
$
2,994,669
$
13,469,756
$
5,272,847
$
25,383,759
Borrowing Base
$
50,000,000
$
45,000,000
Debt
$
27,750,000
$
30,750,000
Debt-to-Adjusted EBITDA (TTM) (2)
1.36
1.31
(1)
Cash G&A expense is G&A excluding restricted stock and deferred director's expense from the adjusted EBITDA table in the non-GAAP Reconciliation section.
(2)
This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.
(3)
GAAP cash flow from operations.
(4)
Includes legacy working interest expenditures and fixtures and equipment.
Operating Highlights
Three Months Ended
Three Months Ended
Nine Months Ended
Nine Months Ended
Sept. 30, 2024
Sept. 30, 2023
Sept. 30, 2024
Sept. 30, 2023
Gas Mcf Sold
1,898,442
1,868,012
6,063,397
5,681,508
Average Sales Price per Mcf before the
effects of settled derivative contracts
$
2.00
$
2.40
$
2.05
$
2.63
Average Sales Price per Mcf after the
effects of settled derivative contracts
$
2.54
$
2.72
$
2.70
$
3.03
% of sales subject to hedges
48
%
46
%
48
%
46
%
Oil Barrels Sold
45,698
48,032
134,786
143,148
Average Sales Price per Bbl before the
effects of settled derivative contracts
$
74.83
$
78.48
$
76.14
$
76.23
Average Sales Price per Bbl after the
effects of settled derivative contracts
$
72.95
$
78.44
$
74.78
$
73.88
% of sales subject to hedges
31
%
35
%
31
%
44
%
NGL Barrels Sold
34,332
32,029
98,511
99,063
Average Sales Price per Bbl(1)
$
19.60
$
20.35
$
21.57
$
21.48
Mcfe Sold
2,378,622
2,348,378
7,463,177
7,134,770
Natural gas, oil and NGL sales before the
effects of settled derivative contracts
$
7,888,516
$
8,899,091
$
24,804,730
$
27,987,502
Natural gas, oil and NGL sales after the
effects of settled derivative contracts
$
8,820,672
$
9,502,036
$
28,590,801
$
29,896,064
(1) There were no NGL settled derivative contracts during the 2024 and 2023 periods.
Total Production for the last four quarters was as follows:
Quarter ended
Mcf Sold
Oil Bbls Sold
NGL Bbls Sold
Mcfe Sold
9/30/2024
1,898,442
45,698
34,332
2,378,622
6/30/2024
2,464,846
51,828
31,994
2,967,779
3/31/2024
1,700,108
37,260
32,184
2,116,776
12/31/2023
1,775,577
39,768
38,422
2,244,717
The percentage of total production volumes attributable to natural gas was 80% for the quarter ended Sept. 30, 2024.
Royalty Interest Production for the last four quarters was as follows:
Quarter ended
Mcf Sold
Oil Bbls Sold
NGL Bbls Sold
Mcfe Sold
9/30/2024
1,724,635
41,170
21,011
2,097,722
6/30/2024
2,304,176
47,024
20,461
2,709,090
3/31/2024
1,533,580
33,083
20,844
1,857,147
12/31/2023
1,590,301
35,547
23,769
1,946,196
The percentage of royalty production volumes attributable to natural gas was 82% for the quarter ended Sept. 30, 2024.
Working Interest Production for the last four quarters was as follows:
Quarter ended
Mcf Sold
Oil Bbls Sold
NGL Bbls Sold
Mcfe Sold
9/30/2024
173,807
4,528
13,321
280,900
6/30/2024
160,670
4,804
11,533
258,689
3/31/2024
166,528
4,177
11,340
259,629
12/31/2023
185,276
4,221
14,653
298,521
Quarter Ended Sept. 30, 2024 Results
The Company recorded net income of $1.1 million, or $0.03 per diluted share, for the quarter ended Sept. 30, 2024, as compared to net income of $1.90 million, or $0.05 per diluted share, for the quarter ended Sept. 30, 2023. The change in net income was principally the result of a decrease in natural gas, oil and NGL sales, a decrease in lease bonuses, an increase in transportation, gathering and marketing expenses and an increase in depreciation, depletion and amortization expenses, partially offset by an increase in gains associated with our derivative contracts.
Natural gas, oil and NGL revenue decreased $1.0 million, or 11%, for the quarter ended Sept. 30, 2024, compared to the quarter ended Sept. 30, 2023, due to decreases in natural gas, oil, and NGL prices of 17%, 5%, and 4%, respectively, and a decrease in oil volumes of 5%, partially offset by increases in natural gas and NGL volumes of 2% and 7%, respectively.
The increase in royalty production volumes during the quarter ended Sept. 30, 2024, as compared to the quarter ended Sept. 30, 2023, resulted primarily from new wells being brought online in the Haynesville Shale and SCOOP plays.
The Company had a net gain on derivative contracts of $1.1 million for the quarter ended Sept. 30, 2024, comprised of a $0.9 million gain on settled derivatives and a $0.2 million non-cash gain on derivatives, as compared to a net loss of ($0.3) million for the quarter ended Sept. 30, 2023. The change in net gain on derivative contracts was due to the Company's settlements of natural gas and oil collars and fixed price swaps and the change in valuation caused by the difference in Sept. 30, 2024 pricing relative to the strike price on open derivative contracts.
Nine Months Ended Sept. 30, 2024 Results
The Company recorded net income of $2.2 million, or $0.06 per diluted share, for the nine months ended Sept. 30, 2024, as compared to a net income of $11.4 million, or $0.31 per diluted share, for the nine months ended Sept. 30, 2023. The change in net income was principally the result of a decrease in natural gas, oil and NGL sales, a decrease in gains associated with our hedge contracts, a decrease in gains on asset sales, an increase in transportation, gathering and marketing expenses and an increase in depreciation, depletion and amortization expenses, partially offset by a decrease in income tax provision.
Natural gas, oil and NGL revenue decreased $3.2 million, or 11%, for the nine months ended Sept. 30, 2024, compared to the nine months ended Sept. 30, 2023, due to a decrease in natural gas prices of 22% and decreases in oil and NGL volumes of 6% and ...
