EX-99.1 2 phx-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

img202703845_0.jpg 

 

FOR IMMEDIATE RELEASE

 

PHX Minerals Reports Record Royalty Volumes for the Quarter Ended June 30, 2024;

Increases Fixed Quarterly Dividend Payment 33%

 

FORT WORTH, Texas, Aug. 7, 2024 – PHX MINERALS INC., “PHX” or the “Company” (NYSE: PHX), today reported financial and operating results for the quarter ended June 30, 2024.

 

Summary of Results for the Quarter Ended June 30, 2024

 

•
Net income was $1.3 million, or $0.04 per diluted share, compared to net loss of ($0.2) million, or ($0.01) per diluted share, for the quarter ended March 31, 2024.
•
Adjusted EBITDA(1) was $6.4 million, compared to $4.6 million for the quarter ended March 31, 2024.
•
Royalty production volumes increased 46%, to a quarterly record 2,709 Mmcfe, compared to the quarter ended March 31, 2024, as a result of high interest high impact wells coming online in the Haynesville.
•
Total production volumes increased 40% compared to the quarter ended March 31, 2024 to 2,968 Mmcfe, the highest quarterly production for PHX since the quarter ended June 30, 2018.
•
Converted 55 gross (0.40 net) wells to producing status, compared to a conversion of 85 gross (0.32 net) wells to producing status during the quarter ended March 31, 2024.
•
Inventory of 241 gross (0.927 net) wells in progress and permits as of June 30, 2024, compared to 230 gross (1.099 net) wells in progress and permits as of March 31, 2024.
•
Total debt was $28.8 million, down $4.0 million since December 31, 2023, and the debt-to-adjusted EBITDA (TTM) (1) ratio was 1.32x at June 30, 2024.

 

Subsequent Events

 

•
PHX announced a 33% increase in its fixed quarterly dividend to $0.04 per share, payable on Sep. 6, 2024, to stockholders of record on Aug. 23, 2024.
(1)
This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

Chad L. Stephens, President and CEO, commented, “The operational and financial results for the second quarter again provide compelling evidence about the quality of our asset base. Royalty production reached record levels during the quarter, and we had a strong conversion of high interest high impact wells driving robust quarter-over-quarter production growth. As we have explained in prior quarters, our royalty volumes can be lumpy depending on the timing of these high interest high impact wells. Our wells in progress metric remains strong, including several other high interest high impact wells. This demonstrates the continued operator activity on our minerals, despite the dramatic year over year decrease in the rig count impacted by the current commodity price environment. We do not control pace of development or well completion timing, thus, we expect continued quarterly lumpiness in our volumes.”

“Our strong cash generation enabled us to reduce our debt by another $2 million, lowering our debt-to-adjusted EBITDA ratio from 1.58x to 1.32x further strengthening our balance sheet,” continued Mr. Stephens. “Our financial performance enabled us to again increase our quarterly cash dividend, which has now risen 400% since early 2020. Our financial strength also provides the necessary liquidity to further explore the acquisition of premium mineral assets.”

 

 

 

 

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– 1 –

 

 

 

 

 

 

 

 

 

Financial Highlights

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Royalty Interest Sales

 

$

8,818,964

 

 

$

6,217,663

 

 

$

14,995,239

 

 

$

16,341,404

 

Working Interest Sales

 

$

1,007,042

 

 

$

1,013,501

 

 

$

1,920,975

 

 

$

2,747,007

 

Natural Gas, Oil and NGL Sales

 

$

9,826,006

 

 

$

7,231,164

 

 

$

16,916,214

 

 

$

19,088,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) on Derivative Contracts

 

$

(418,997

)

 

$

183,006

 

 

$

208,495

 

 

$

3,985,826

 

Lease Bonuses and Rental Income

 

$

134,226

 

 

$

111,991

 

 

$

285,944

 

 

$

425,141

 

Total Revenue

 

$

9,541,235

 

 

$

7,526,161

 

 

$

17,410,653

 

 

$

23,499,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Operating Expense

 

 

 

 

 

 

 

 

 

 

 

 

per Working Interest Mcfe

 

$

1.14

 

 

$

1.16

 

 

$

1.21

 

 

$

1.34

 

Transportation, Gathering and

 

 

 

 

 

 

 

 

 

 

 

 

Marketing per Mcfe

 

$

0.52

 

 

$

0.39

 

 

$

0.47

 

 

$

0.43

 

Production and Ad Valorem Tax

 

 

 

 

 

 

 

 

 

 

 

 

per Mcfe

 

$

0.20

 

 

$

0.19

 

 

$

0.19

 

 

$

0.21

 

G&A Expense per Mcfe

 

$

0.92

 

 

$

1.38

 

 

$

1.20

 

 

$

1.29

 

Cash G&A Expense per Mcfe (1)

 

$

0.69

 

 

$

1.07

 

 

$

0.92

 

 

$

1.01

 

Interest Expense per Mcfe

 

$

0.22

 

 

$

0.23

 

 

$

0.27

 

 

$

0.23

 

DD&A per Mcfe

 

$

0.76

 

 

$

0.96

 

 

$

0.91

 

 

$

0.86

 

Total Expense per Mcfe

 

$

2.72

 

 

$

3.30

 

 

$

3.16

 

 

$

3.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

1,295,771

 

 

$

(41,291

)

 

$

1,112,156

 

 

$

9,511,953

 

Adjusted EBITDA (2)

 

$

6,426,167

 

 

$

4,086,707

 

 

$

11,033,201

 

 

$

11,826,947

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow from Operations (3)

 

$

4,176,704

 

 

$

4,915,788

 

 

$

9,423,355

 

 

$

13,849,265

 

CapEx (4)

 

$

28,286

 

 

$

84,593

 

 

$

35,726

 

 

$

275,419

 

CapEx - Mineral Acquisitions

 

$

871,930

 

 

$

1,677,388

 

 

$

2,278,178

 

 

$

11,914,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowing Base

 

 

 

 

 

 

 

$

50,000,000

 

 

$

45,000,000

 

Debt

 

 

 

 

 

 

 

$

28,750,000

 

 

$

23,750,000

 

Debt-to-Adjusted EBITDA (TTM) (2)

 

 

 

 

 

 

 

 

1.32

 

 

 

0.93

 

 

(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.

 

 

 

 

– 2 –

 

 

 

Operating Highlights

 

 

Three Months Ended

 

 

Three Months Ended

 

 

Six Months Ended

 

 

Six Months Ended

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Gas Mcf Sold

 

2,464,846

 

 

 

1,854,485

 

 

 

4,164,955

 

 

 

3,813,496

 

Average Sales Price per Mcf before the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

2.05

 

 

$

1.92

 

 

$

2.07

 

 

$

2.75

 

Average Sales Price per Mcf after the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

2.57

 

 

$

2.49

 

 

$

2.78

 

 

$

3.18

 

% of sales subject to hedges

 

38

%

 

 

45

%

 

 

48

%

 

 

47

%

Oil Barrels Sold

 

51,828

 

 

 

41,009

 

 

 

89,088

 

 

 

95,116

 

Average Sales Price per Bbl before the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

77.38

 

 

$

73.87

 

 

$

76.81

 

 

$

75.09

 

Average Sales Price per Bbl after the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

75.38

 

 

$

73.80

 

 

$

75.72

 

 

$

71.58

 

% of sales subject to hedges

 

25

%

 

 

53

%

 

 

30

%

 

 

49

%

NGL Barrels Sold

 

31,994

 

 

 

33,929

 

 

 

64,179

 

 

 

67,033

 

Average Sales Price per Bbl(1)

$

23.75

 

 

$

18.93

 

 

$

22.63

 

 

$

22.02

 

 

 

 

 

 

 

 

 

 

 

 

 

Mcfe Sold

 

2,967,779

 

 

 

2,304,113

 

 

 

5,084,557

 

 

 

4,786,390

 

Natural gas, oil and NGL sales before the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

9,826,006

 

 

$

7,231,164

 

 

$

16,916,214

 

 

$

19,088,411

 

Natural gas, oil and NGL sales after the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

11,010,613

 

 

$

8,280,104

 

 

$

19,770,130

 

 

$

20,394,028

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

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

 

9/30/2023

 

 

1,868,012

 

 

 

48,032

 

 

 

32,029

 

 

 

2,348,378

 

 

The percentage of total production volumes attributable to natural gas was 83% for the quarter ended June 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

 

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

 

9/30/2023

 

 

1,689,396

 

 

 

43,575

 

 

 

20,416

 

 

 

2,073,342

 

 

The percentage of royalty production volumes attributable to natural gas was 85% for the quarter ended June 30, 2024.

 

 

 

 

 

– 3 –

 

 

Working Interest Production for the last four quarters was as follows:

 

Quarter ended

 

Mcf Sold

 

 

Oil Bbls Sold

 

 

NGL Bbls Sold

 

 

Mcfe Sold

 

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

 

9/30/2023

 

 

178,616

 

 

 

4,457

 

 

 

11,613

 

 

 

275,036

 

 

Outlook

 

PHX is providing an updated operational outlook for 2024 as follows:

 

 

2023 Actual

 

YTD 2024 Actual

2024 Outlook

Mineral & Royalty Production (Mmcfe)

 

8,123

 

4,566

8,700 - 9,100

Working Interest Production (Mmcfe)

 

1,256

 

518

1,000 - 1,200

Total Production (Mmcfe)

 

9,379

 

5,084

9,700 - 10,300

Percentage Natural Gas

 

80%

 

82%

79% - 82%

 

 

 

 

 

 

Transportation, Gathering &

 

 

 

 

 

Marketing (per Mcfe)

 

$0.39

 

$0.47

$0.40 - $0.50

Production Tax (as % of pre-hedge

 

 

 

 

 

sales volumes)

 

5.20%

 

5.90%

5.25% - 6.25%

LOE Expenses (on an absolute basis in 000’s)

 

$1,599

 

$627

$1,100 - $1,300

Cash G&A (on an absolute basis in 000’s)

 

$9,500

 

$4,683

$9,500 - $9,900

 

Quarter Ended June 30, 2024 Results

 

The Company recorded net income of $1.3 million, or $0.04 per diluted share, for the quarter ended June 30, 2024, as compared to net loss of ($0.04) million, or $0.00 per diluted share, for the quarter ended June 30, 2023. The change in net income was principally the result of increased natural gas, oil and NGL sales, decreased general and administrative expenses, and increased gains on asset sales, partially offset by increased losses associated with our derivative contracts and increased income tax provision.

 

Natural gas, oil and NGL revenue increased $2.6 million, or 36%, for the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023, due to increases in natural gas and oil volumes of 33% and 26%, respectively, and increases in natural gas, oil, and NGL prices of 7%, 5%, and 25%, respectively, partially offset by a decrease in NGL volumes of 6%.

The increase in royalty production volumes during the quarter ended June 30, 2024, as compared to the quarter ended June 30, 2023, resulted primarily from new wells being brought online in the Haynesville Shale. The production decrease in working interest volumes during the quarter ended June 30, 2024, as compared to the quarter ended June 30, 2023, resulted from natural production decline.

The Company had a net loss on derivative contracts of ($0.4) million for the quarter ended June 30, 2024, comprised of a $1.2 million gain on settled derivatives and a ($1.6) million non-cash loss on derivatives, as compared to a net gain of $0.2 million for the quarter ended June 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 June 30, 2024 pricing relative to the strike price on open derivative contracts.

Six Months Ended June 30, 2024 Results

The Company recorded net income of $1.1 million, or $0.03 per share, for the six months ended June 30, 2024, as compared to a net income of $9.5 million, or $0.26 per share, for the six months ended June 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, and a decrease in gains on asset sales, partially offset by a decrease in income tax provision.

Natural gas, oil and NGL revenue decreased $2.2 million, or 11%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, due to decreases in oil and NGL volumes of 6% and 4%, respectively, and a decrease in gas prices of 25%, partially offset by an increase in gas volumes of 9% and increases in oil and NGL prices of 2% and 3%, respectively.

 

 

 

– 4 –

 

 

The production increase in royalty volumes during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, resulted primarily from new wells in the Haynesville Shale coming online. The production decrease in working interest volumes during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, resulted from natural production decline and divestitures of working interest properties.

The Company had a net gain on derivative contracts of $0.2 million for the six months ended June 30, 2024, compromised of a $2.9 million gain on settled derivatives and a $2.6 million non-cash loss on derivatives, as compared to a net gain of $4.0 million for the six months ended June 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 June 30, 2024 pricing relative to the strike price on open derivative contracts.

Operations Update

 

During the quarter ended June 30, 2024, the Company converted 55 gross (0.40 net) wells to producing status, including 28 gross (0.30 net) wells in the Haynesville and 14 gross (0.07 net) wells in the SCOOP, compared to 81 gross (0.30 net) wells converted in the quarter ended June 30, 2023.

At June 30, 2024, the Company had a total of 241 gross (0.927 net) wells in progress and permits across its mineral positions, compared to 230 gross (1.099 net) wells in progress and permits at March 31, 2024. As of July 8, 2024, 15 rigs were operating on the Company’s acreage and 60 rigs were operating within 2.5 miles of its acreage.

 

 

 

 

 

 

 

Bakken/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three

 

 

Arkoma

 

 

 

 

 

 

 

 

 

 

 

SCOOP

 

 

STACK

 

 

Forks

 

 

Stack

 

 

Haynesville

 

 

Other

 

 

Total

 

As of June 30, 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Wells in Progress on PHX Acreage (1)

 

74

 

 

 

7

 

 

 

2

 

 

 

3

 

 

 

58

 

 

 

3

 

 

 

147

 

Net Wells in Progress on PHX Acreage (1)

 

0.252

 

 

 

0.009

 

 

 

0.001

 

 

 

0.015

 

 

 

0.296

 

 

 

0.016

 

 

 

0.589

 

Gross Active Permits on PHX Acreage

 

35

 

 

 

6

 

 

 

3

 

 

 

7

 

 

 

35

 

 

 

8

 

 

 

94

 

Net Active Permits on PHX Acreage

 

0.151

 

 

 

0.007

 

 

 

0.003

 

 

 

0.030

 

 

 

0.112

 

 

 

0.035

 

 

 

0.338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of July 8, 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rigs Present on PHX Acreage

 

7

 

 

 

3

 

 

 

-

 

 

 

1

 

 

 

4

 

 

 

-

 

 

 

15

 

Rigs Within 2.5 Miles of PHX Acreage

 

10

 

 

 

11

 

 

 

6

 

 

 

1

 

 

 

23

 

 

 

9

 

 

 

60

 

(1) Wells in progress includes drilling wells and drilled but uncompleted wells, or DUCs.

 

Leasing Activity

During the quarter ended June 30, 2024, the Company leased 313 net mineral acres to third-party exploration and production companies for an average bonus payment of $550 per net mineral acre and an average royalty of 24%.

 

Acquisition and Divestiture Update

 

During the quarter ended June 30, 2024, the Company purchased 96 net royalty acres for approximately $0.9 million and sold 1,005 acres, which were outside the Company's core focus areas and predominately undeveloped and unleased, for approximately $0.5 million.

 

 

 

Acquisitions

 

 

 

SCOOP

 

 

Haynesville

 

 

Other

 

 

Total

 

During Three Months Ended June 30, 2024:

 

 

 

 

 

 

 

 

 

 

 

 

Net Mineral Acres Purchased

 

 

35

 

 

 

21

 

 

 

-

 

 

 

56

 

Net Royalty Acres Purchased

 

 

58

 

 

 

38

 

 

 

-

 

 

 

96

 

 

 

 

 

– 5 –

 

 

Quarterly Conference Call

PHX will host a conference call to discuss the Company’s results for the quarter ended June 30, 2024, at 11 a.m. EDT on Aug. 8, 2024. Management’s discussion will be followed by a question-and-answer session with investors.

To participate on the conference call, please dial 877-407-3088 (toll-free domestic) or 201-389-0927. A replay of the call will be available for 14 days after the call. The number to access the replay of the conference call is 877-660-6853 and the PIN for the replay is 13748051.

A live audio webcast of the conference call will be accessible from the “Investors” section of PHX’s website at https://phxmin.com/events. The webcast will be archived for at least 90 days.

 

 

FINANCIAL RESULTS

Statements of Income

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

Revenues:

 

 

 

 

 

 

 

Natural gas, oil and NGL sales

$

9,826,006

 

 

$

7,231,164

 

 

$

16,916,214

 

 

$

19,088,411

 

 

Lease bonuses and rental income

 

134,226

 

 

 

111,991

 

 

 

285,944

 

 

 

425,141

 

 

Gains (losses) on derivative contracts

 

(418,997

)

 

 

183,006

 

 

 

208,495

 

 

 

3,985,826

 

 

 

 

9,541,235

 

 

 

7,526,161

 

 

 

17,410,653

 

 

 

23,499,378

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

294,354

 

 

 

341,463

 

 

 

626,763

 

 

 

916,405

 

 

Transportation, gathering and marketing

 

1,540,396

 

 

 

906,373

 

 

 

2,383,900

 

 

 

2,035,129

 

 

Production and ad valorem taxes

 

597,995

 

 

 

434,580

 

 

 

990,322

 

 

 

986,838

 

 

Depreciation, depletion and amortization

 

2,268,284

 

 

 

2,210,332

 

 

 

4,624,610

 

 

 

4,100,322

 

 

Provision for impairment

 

-

 

 

 

-

 

 

 

-

 

 

 

2,073

 

 

Interest expense

 

651,982

 

 

 

524,294

 

 

 

1,366,868

 

 

 

1,081,767

 

 

General and administrative

 

2,734,628

 

 

 

3,177,103

 

 

 

6,081,665

 

 

 

6,159,012

 

 

Losses (gains) on asset sales and other

 

(197,326

)

 

 

139,307

 

 

 

(173,114

)

 

 

(4,195,121

)

 

Total costs and expenses

 

7,890,313

 

 

 

7,733,452

 

 

 

15,901,014

 

 

 

11,086,425

 

 

Income (loss) before provision for income taxes

 

1,650,922

 

 

 

(207,291

)

 

 

1,509,639

 

 

 

12,412,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

355,151

 

 

 

(166,000

)

 

 

397,483

 

 

 

2,901,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

1,295,771

 

 

$

(41,291

)

 

$

1,112,156

 

 

$

9,511,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per common share

$

0.04

 

 

$

(0.00

)

 

$

0.03

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

36,308,224

 

 

 

35,965,281

 

 

 

36,301,540

 

 

 

35,950,615

 

 

Diluted

 

36,379,653

 

 

 

35,965,281

 

 

 

36,301,540

 

 

 

36,034,438

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per share of

 

 

 

 

 

 

 

 

 

 

 

 

common stock paid in period

$

0.0300

 

 

$

0.0225

 

 

$

0.0600

 

 

$

0.0450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

– 6 –

 

 

Balance Sheets

 

 

June 30, 2024

 

 

Dec. 31, 2023

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

2,271,544

 

 

$

806,254

 

Natural gas, oil, and NGL sales receivables (net of $0

 

5,071,590

 

 

 

4,900,126

 

allowance for uncollectable accounts)

 

 

 

 

 

Refundable income taxes

 

372,963

 

 

 

455,931

 

Derivative contracts, net

 

877,538

 

 

 

3,120,607

 

Other

 

703,210

 

 

 

878,659

 

Total current assets

 

9,296,845

 

 

 

10,161,577

 

 

 

 

 

 

 

Properties and equipment at cost, based on

 

 

 

 

 

   successful efforts accounting:

 

 

 

 

 

Producing natural gas and oil properties

 

216,696,381

 

 

 

209,082,847

 

Non-producing natural gas and oil properties

 

52,997,639

 

 

 

58,820,445

 

Other

 

1,361,064

 

 

 

1,360,614

 

 

 

271,055,084

 

 

 

269,263,906

 

Less accumulated depreciation, depletion and amortization

 

(118,186,569

)

 

 

(114,139,423

)

Net properties and equipment

 

152,868,515

 

 

 

155,124,483

 

 

 

 

 

 

 

Derivative contracts, net

 

-

 

 

 

162,980

 

Operating lease right-of-use assets

 

502,194

 

 

 

572,610

 

Other, net

 

640,573

 

 

 

486,630

 

Total assets

$

163,308,127

 

 

$

166,508,280

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

636,327

 

 

$

562,607

 

Current portion of operating lease liability

 

239,571

 

 

 

233,390

 

Accrued liabilities and other

 

1,457,285

 

 

 

1,215,275

 

Total current liabilities

 

2,333,183

 

 

 

2,011,272

 

 

 

 

 

 

 

Long-term debt

 

28,750,000

 

 

 

32,750,000

 

Deferred income taxes, net

 

6,829,023

 

 

 

6,757,637

 

Asset retirement obligations

 

1,083,947

 

 

 

1,062,139

 

Derivative contracts, net

 

239,372

 

 

 

-

 

Operating lease liability, net of current portion

 

574,598

 

 

 

695,818

 

Total liabilities

 

39,810,123

 

 

 

43,276,866

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

Common Stock, $0.01666 par value; 75,000,000 shares authorized and

 

 

 

 

 

36,121,723 issued at June 30, 2024; 54,000,500 shares authorized

 

 

 

 

 

and 36,121,723 issued at Dec. 31, 2023

 

601,788

 

 

 

601,788

 

Capital in excess of par value

 

43,054,447

 

 

 

41,676,417

 

Deferred directors' compensation

 

1,471,052

 

 

 

1,487,590

 

Retained earnings

 

78,891,082

 

 

 

80,022,839

 

 

 

124,018,369

 

 

 

123,788,634

 

Less treasury stock, at cost; 122,785 shares at June 30,

 

 

 

 

 

2024, and 131,477 shares at Dec. 31, 2023

 

(520,365

)

 

 

(557,220

)

Total stockholders' equity

 

123,498,004

 

 

 

123,231,414

 

Total liabilities and stockholders' equity

$

163,308,127

 

 

$

166,508,280

 

 

 

 

 

– 7 –

 

 

Condensed Statements of Cash Flows

 

 

Six Months Ended

 

 

Six Months Ended

 

 

June 30, 2024

 

 

June 30, 2023

 

Operating Activities

 

 

 

 

 

Net income (loss)

$

1,112,156

 

 

$

9,511,953

 

Adjustments to reconcile net income (loss) to net cash provided

 

 

 

 

 

  by operating activities:

 

 

 

 

 

Depreciation, depletion and amortization

 

4,624,610

 

 

 

4,100,322

 

Impairment of producing properties

 

-

 

 

 

2,073

 

Provision for deferred income taxes

 

71,386

 

 

 

2,679,000

 

Gain from leasing fee mineral acreage

 

(285,944

)

 

 

(425,141

)

Proceeds from leasing fee mineral acreage

 

292,350

 

 

 

488,173

 

Net (gain) loss on sales of assets

 

(511,684

)

 

 

(4,428,212

)

Directors' deferred compensation expense

 

90,661

 

 

 

109,383

 

Total (gain) loss on derivative contracts

 

(208,495

)

 

 

(3,985,826

)

Cash receipts (payments) on settled derivative contracts

 

2,853,916

 

 

 

1,865,779

 

Restricted stock award expense

 

1,307,686

 

 

 

1,228,871

 

Other

 

55,059

 

 

 

70,526

 

Cash provided (used) by changes in assets and liabilities:

 

 

 

 

 

Natural gas, oil and NGL sales receivables

 

(171,464

)

 

 

3,944,092

 

Income taxes receivable

 

82,968

 

 

 

(675,268

)

Other current assets

 

131,854

 

 

 

405,055

 

Accounts payable

 

73,810

 

 

 

(228,305

)

Other non-current assets

 

(138,508

)

 

 

95,283

 

Income taxes payable

 

-

 

 

 

(576,427

)

Accrued liabilities

 

42,994

 

 

 

(332,066

)

Total adjustments

 

8,311,199

 

 

 

4,337,312

 

Net cash provided by operating activities

 

9,423,355

 

 

 

13,849,265

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

Capital expenditures

 

(35,726

)

 

 

(275,419

)

Acquisition of minerals and overriding royalty interests

 

(2,278,178

)

 

 

(11,914,003

)

Net proceeds from sales of assets

 

515,775

 

 

 

9,223,405

 

Net cash provided by (used in) investing activities

 

(1,798,129

)

 

 

(2,966,017

)

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

Borrowings under credit facility

 

1,000,000

 

 

 

6,000,000

 

Payments of loan principal

 

(5,000,000

)

 

 

(15,550,000

)

Payments on off-market derivative contracts

 

-

 

 

 

(560,162

)

Purchases of treasury stock

 

-

 

 

 

(669

)

Payments of dividends

 

(2,159,936

)

 

 

(1,620,442

)

Net cash provided by (used in) financing activities

 

(6,159,936

)

 

 

(11,731,273

)

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

1,465,290

 

 

 

(848,025

)

Cash and cash equivalents at beginning of period

 

806,254

 

 

 

2,115,652

 

Cash and cash equivalents at end of period

$

2,271,544

 

 

$

1,267,627

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

 

 

 

Interest paid (net of capitalized interest)

$

1,409,711

 

 

$

1,155,637

 

Income taxes paid (net of refunds received)

$

243,130

 

 

$

1,473,696

 

 

 

 

 

 

 

Supplemental Schedule of Noncash Investing and Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

Dividends declared and unpaid

$

83,977

 

 

$

72,460

 

 

 

 

 

 

 

Gross additions to properties and equipment

$

2,357,409

 

 

$

12,952,046

 

Net increase (decrease) in accounts receivable for properties

 

 

 

 

 

and equipment additions

 

(43,505

)

 

 

(762,624

)

Capital expenditures and acquisitions

$

2,313,904

 

 

$

12,189,422

 

 

 

 

 

– 8 –

 

 

Derivative Contracts as of June 30, 2024

 

 

Production volume

 

 

 

 

Contract period

 

covered per month

 

Index

 

Contract price

Natural gas costless collars

 

 

 

 

 

 

July - September 2024

 

30,000 Mmbtu

 

NYMEX Henry Hub

 

$3.00 floor / $3.60 ceiling

October 2024 - June 2025

 

30,000 Mmbtu

 

NYMEX Henry Hub

 

$3.00 floor / $5.00 ceiling

November 2024 - March 2025

 

90,000 Mmbtu

 

NYMEX Henry Hub

 

$3.25 floor / $5.25 ceiling

November - December 2024

 

35,000 Mmbtu

 

NYMEX Henry Hub

 

$3.50 floor / $5.15 ceiling

January - March 2025

 

30,000 Mmbtu

 

NYMEX Henry Hub

 

$3.50 floor / $5.15 ceiling

January 2025

 

55,000 Mmbtu

 

NYMEX Henry Hub

 

$3.50 floor / $4.40 ceiling

February 2025

 

25,000 Mmbtu

 

NYMEX Henry Hub

 

$3.50 floor / $4.40 ceiling

March 2025

 

35,000 Mmbtu

 

NYMEX Henry Hub

 

$3.50 floor / $4.40 ceiling

April 2025 - September 2025

 

55,000 Mmbtu

 

NYMEX Henry Hub

 

$3.00 floor / $3.75 ceiling

November 2025 - March 2026

 

100,000 Mmbtu

 

NYMEX Henry Hub

 

$3.50 floor / $4.85 ceiling

November 2025 - March 2026

 

75,000 Mmbtu

 

NYMEX Henry Hub

 

$3.50 floor / $4.72 ceiling

November 2025 - March 2026

 

15,000 Mmbtu

 

NYMEX Henry Hub

 

$3.50 floor / $5.15 ceiling

Natural gas fixed price swaps

 

 

 

 

 

 

July - October 2024

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$3.17

July 2024

 

127,500 Mmbtu

 

NYMEX Henry Hub

 

$3.24

July - October 2024

 

75,000 Mmbtu

 

NYMEX Henry Hub

 

$3.47

July - October 2024

 

25,000 Mmbtu

 

NYMEX Henry Hub

 

$3.47

August - September 2024

 

120,000 Mmbtu

 

NYMEX Henry Hub

 

$3.24

October 2024

 

105,000 Mmbtu

 

NYMEX Henry Hub

 

$3.24

November - December 2024

 

70,000 Mmbtu

 

NYMEX Henry Hub

 

$4.16

December 2024

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$3.39

January - March 2025

 

60,000 Mmbtu

 

NYMEX Henry Hub

 

$4.16

January - March 2025

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$3.51

April - October 2025

 

100,000 Mmbtu

 

NYMEX Henry Hub

 

$3.28

Oil costless collars

 

 

 

 

 

 

June 2024

 

1,650 Bbls

 

NYMEX WTI

 

$63.00 floor / $76.00 ceiling

June 2024

 

500 Bbls

 

NYMEX WTI

 

$65.00 floor / $76.50 ceiling

June - September 2024

 

500 Bbls

 

NYMEX WTI

 

$70.00 floor / $78.10 ceiling

July - October 2024

 

1,650 Bbls

 

NYMEX WTI

 

$65.00 floor / $76.50 ceiling

October - December 2024

 

500 Bbls

 

NYMEX WTI

 

$67.00 floor / $77.00 ceiling

Oil fixed price swaps

 

 

 

 

 

 

June - October 2024

 

1,000 Bbls

 

NYMEX WTI

 

$66.10

June 2024

 

1,300 Bbls

 

NYMEX WTI

 

$70.59

July - October 2024

 

1,500 Bbls

 

NYMEX WTI

 

$69.50

September 2024

 

500 Bbls

 

NYMEX WTI

 

$76.46

October 2024

 

500 Bbls

 

NYMEX WTI

 

$76.12

November 2024

 

500 Bbls

 

NYMEX WTI

 

$75.49

November - December 2024

 

2,000 Bbls

 

NYMEX WTI

 

$69.50

November 2024 - March 2025

 

1,600 Bbls

 

NYMEX WTI

 

$64.80

December 2024

 

500 Bbls

 

NYMEX WTI

 

$74.94

January 2025

 

500 Bbls

 

NYMEX WTI

 

$74.48

January - March 2025

 

500 Bbls

 

NYMEX WTI

 

$69.50

January - June 2025

 

2,000 Bbls

 

NYMEX WTI

 

$70.90

February 2025

 

500 Bbls

 

NYMEX WTI

 

$74.10

March 2025

 

500 Bbls

 

NYMEX WTI

 

$73.71

April 2025

 

500 Bbls

 

NYMEX WTI

 

$73.30

April - June 2025

 

750 Bbls

 

NYMEX WTI

 

$69.50

April - June 2025

 

1,000 Bbls

 

NYMEX WTI

 

$68.00

May 2025

 

500 Bbls

 

NYMEX WTI

 

$72.92

June 2025

 

500 Bbls

 

NYMEX WTI

 

$72.58

July 2025

 

500 Bbls

 

NYMEX WTI

 

$72.24

July - September 2025

 

500 Bbls

 

NYMEX WTI

 

$69.50

July - December 2025

 

1,500 Bbls

 

NYMEX WTI

 

$68.90

 

 

 

 

– 9 –

 

 

 

August 2025

 

500 Bbls

 

NYMEX WTI

 

$71.88

September 2025

 

500 Bbls

 

NYMEX WTI

 

$71.60

October 2025

 

750 Bbls

 

NYMEX WTI

 

$71.12

November 2025

 

750 Bbls

 

NYMEX WTI

 

$70.99

December 2025

 

750 Bbls

 

NYMEX WTI

 

$70.66

January 2026

 

1,500 Bbls

 

NYMEX WTI

 

$70.53

February 2026

 

1,500 Bbls

 

NYMEX WTI

 

$71.28

March 2026

 

1,500 Bbls

 

NYMEX WTI

 

$70.42

Non-GAAP Reconciliation

This press release includes certain “non-GAAP financial measures” as defined under the rules and regulations of the U.S. Securities and Exchange Commission, or the SEC, including Regulation G. These non-GAAP financial measures are calculated using GAAP amounts in the Company’s financial statements. These measures, detailed below, are provided in addition to, not as an alternative for, and should be read in conjunction with, the information contained in the Company’s financial statements prepared in accordance with GAAP (including the notes thereto), included in the Company’s SEC filings and posted on its website.

Adjusted EBITDA Reconciliation

The Company defines “adjusted EBITDA” as earnings before interest, taxes, depreciation and amortization, or EBITDA, excluding non-cash gains (losses) on derivatives and gains (losses) on asset sales and including cash receipts from (payments on) off-market derivatives and restricted stock and deferred directors’ expense. The Company has included a presentation of adjusted EBITDA because it recognizes that certain investors consider this amount to be a useful means of measuring the Company’s ability to meet its debt service obligations and evaluating its financial performance. Adjusted EBITDA has limitations and should not be considered in isolation or as a substitute for net income, operating income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with GAAP. Because not all companies use identical calculations, this presentation of adjusted EBITDA may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to adjusted EBITDA for the quarters indicated:

 

Three Months Ended

 

 

Three Months Ended

 

 

Six Months Ended

 

 

Six Months Ended

 

 

Three Months Ended

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

 

Mar. 31, 2024

 

Net Income

$

1,295,771

 

 

$

(41,291

)

 

$

1,112,156

 

 

$

9,511,953

 

 

$

(183,615

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

355,151

 

 

 

(166,000

)

 

 

397,483

 

 

 

2,901,000

 

 

 

42,332

 

Interest expense

 

651,982

 

 

 

524,294

 

 

 

1,366,868

 

 

 

1,081,767

 

 

 

714,886

 

DD&A

 

2,268,284

 

 

 

2,210,332

 

 

 

4,624,610

 

 

 

4,100,322

 

 

 

2,356,326

 

Impairment expense

 

-

 

 

 

-

 

 

 

-

 

 

 

2,073

 

 

 

-

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash gains (losses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

on derivatives

 

(1,603,604

)

 

 

(865,935

)

 

 

(2,645,421

)

 

 

2,306,464

 

 

 

(1,041,817

)

Gains (losses) on asset sales

 

445,184

 

 

 

10,230

 

 

 

511,684

 

 

 

4,428,213

 

 

 

66,500

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash payments on off-market derivative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

contracts

 

-

 

 

 

-

 

 

 

-

 

 

 

(373,745

)

 

 

-

 

Restricted stock and deferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

director's expense

 

696,559

 

 

 

703,667

 

 

 

1,398,347

 

 

 

1,338,254

 

 

 

701,788

 

Adjusted EBITDA

$

6,426,167

 

 

$

4,086,707

 

 

$

11,033,201

 

 

$

11,826,947

 

 

$

4,607,034

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

– 10 –

 

 

Debt-to-Adjusted EBITDA (TTM) Reconciliation

 

“Debt-to-adjusted EBITDA (TTM)” is defined as the ratio of long-term debt to adjusted EBITDA on a trailing 12-month (TTM) basis. The Company has included a presentation of debt-to-adjusted EBITDA (TTM) because it recognizes that certain investors consider such ratios to be a useful means of measuring the Company’s ability to meet its debt service obligations and for evaluating its financial performance. The debt-to-adjusted EBITDA (TTM) ratio has limitations and should not be considered in isolation or as a substitute for net income, operating income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with GAAP. Because not all companies use identical calculations, this presentation of debt-to-adjusted EBITDA (TTM) may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to adjusted EBITDA on a TTM basis and of the resulting debt-to-adjusted EBITDA (TTM) ratio:

 

TTM Ended

 

 

TTM Ended

 

 

June 30, 2024

 

 

June 30, 2023

 

Net Income

$

5,521,003

 

 

$

22,016,554

 

Plus:

 

 

 

 

 

Income tax expense

 

2,231,943

 

 

 

6,313,000

 

Interest expense

 

2,647,494

 

 

 

2,191,181

 

DD&A

 

9,090,473

 

 

 

7,452,846

 

Impairment expense

 

36,460

 

 

 

6,105,472

 

Less:

 

 

 

 

 

Non-cash gains (losses)

 

 

 

 

 

on derivatives

 

(649,354

)

 

 

10,211,207

 

Gains (losses) on asset sales

 

812,230

 

 

 

8,921,031

 

Plus:

 

 

 

 

 

Cash payments on off-market derivative

 

 

 

 

 

contracts

 

-

 

 

 

(2,334,403

)

Restricted stock and deferred

 

 

 

 

 

director's expense

 

2,494,021

 

 

 

2,944,517

 

Adjusted EBITDA

$

21,858,518

 

 

$

25,556,929

 

 

 

 

 

 

 

Debt

$

28,750,000

 

 

$

23,750,000

 

Debt-to-Adjusted EBITDA (TTM)

 

1.32

 

 

 

0.93

 

 

 

 

 

 

 

 

PHX Minerals Inc. Fort Worth-based, PHX Minerals Inc. is a natural gas and oil mineral company with a strategy to proactively grow its mineral position in its core focus areas. PHX owns mineral acreage principally located in Oklahoma, Texas, Louisiana, North Dakota and Arkansas. Additional information about the Company can be found at www.phxmin.com.

 

 

 

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Cautionary Statement Regarding Forward-Looking Statements

 

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “anticipates,” “plans,” “estimates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect PHX’s current views about future events. Forward-looking statements may include, but are not limited to, statements relating to: the Company’s operational outlook; the Company’s ability to execute its business strategies; the volatility of realized natural gas and oil prices; the level of production on the Company’s properties; estimates of quantities of natural gas, oil and NGL reserves and their values; general economic or industry conditions; legislation or regulatory requirements; conditions of the securities markets; the Company’s ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; title defects in the properties in which the Company invests; and other economic, competitive, governmental, regulatory or technical factors affecting properties, operations or prices. Although the Company believes expectations reflected in these and other forward-looking statements are reasonable, the Company can give no assurance such expectations will prove to be correct. Such forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. These forward-looking statements involve certain risks and uncertainties that could cause results to differ materially from those expected by the Company’s management. Information concerning these risks and other factors can be found in the Company’s filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, available on the Company’s website or the SEC’s website at www.sec.gov.

Investors are cautioned that any such forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected. The forward-looking statements in this press release are made as of the date hereof, and the Company does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.

 

Investor Contact:

Rob Fink / Stephen Lee

FNK IR

646.809.4048

PHX@fnkir.com

Corporate Contact:

405.948.1560

inquiry@phxmin.com

 

 

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