UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
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of incorporation) |
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(Address of principal executive offices) |
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(Registrant’s telephone number including area code)
Not Applicable
(Former name or former address if changed since last report)
Securities registered pursuant in Section 12(b) of the Act:
Title of each class |
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Name of each exchange on which registered |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 |
Results of Operations and Financial Condition. |
On February 14, 2022, PHX Minerals Inc. (the “Company”) issued a press release providing information regarding the Company’s first quarter 2022 financial and operating results. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Item 7.01 |
Regulation FD Disclosure.
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The information set forth under Item 2.02 of this Current Report on Form 8-K is hereby incorporated in this Item 7.01 by reference.
On February 14, 2022, the Company posted an updated investor presentation to its website. A copy of the presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information in Item 2.02 and Item 7.01 of this Current Report on Form 8-K, including the attached Exhibit 99.1 and 99.2, is being furnished pursuant to Item 2.02 and Item 7.01 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
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Item 9.01 |
Financial Statements and Exhibits |
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(d) |
Exhibits. |
Exhibit No. |
Title of Document |
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99.1 99.2 |
104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PHX MINERALS INC.
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By: |
/s/ Chad L. Stephens |
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Chad L. Stephens |
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Chief Executive Officer |
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DATE: |
February 14, 2022 |
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Exhibit 99.1
FOR IMMEDIATE RELEASE |
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PLEASE CONTACT: |
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Chad L. Stephens
405.948.1560
Website: www.phxmin.com
REPORTS FIRST QUARTER 2022 RESULTS
OKLAHOMA CITY, Feb. 14, 2022 – PHX MINERALS INC., “PHX” or the “Company” (NYSE: PHX), today reported financial and operating results for the first quarter ended Dec. 31, 2021.
SUMMARY OF RESULTS FOR THE PERIOD ENDED DEC. 31, 2021, AND SUBSEQUENT EVENTS
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• |
Net income in the first fiscal quarter of 2022 was $6.7 million, or $0.20 per share, as compared to net loss of ($0.6) million, or ($0.03) per share, in the first fiscal quarter of 2021 and net loss of ($3.8) million, or ($0.14) per share, in the fourth fiscal quarter of 2021. |
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• |
Adjusted EBITDA(1) for the first quarter of 2022 increased to $4.4 million from $2.9 million in the first fiscal quarter of 2021 and increased from $4.2 million in the fourth fiscal quarter of 2021. |
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• |
Total debt was increased to $20.0 million as of Dec. 31, 2021, in order to fund an acquisition of developed minerals targeting the Haynesville, a 14% increase from $17.5 million as of Sept. 30, 2021. The borrowing base increased to $32.0 million as of Dec. 31, 2021, a 16% increase from $27.5 million as of Sept. 30, 2021. |
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• |
Total debt to adjusted EBITDA (TTM) (1) ratio was 1.16x at Dec. 31, 2021. |
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For the first quarter of fiscal year 2022 through Jan. 31, 2022, closed on the acquisition of 2,151 net royalty acres in the SCOOP play of Oklahoma and the Haynesville play of East Texas and Louisiana for approximately $13.8 million in cash and 1.5 million shares of PHX common stock. |
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(1) |
This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section. |
Chad L. Stephens, President and CEO, commented, “As we move into PHX’s fiscal year 2022, you will note our first quarter 2022 results clearly demonstrate the traction we continue to gain from our mineral acquisition strategy, with royalty volumes increasing and working interest volumes declining. This is a direct result of our previously announced mineral acquisitions and the sale of legacy working interest properties, on which we closed last October and November. This is a methodical process that involves divesting mature non-operated working interest properties and redeploying the cash proceeds into acquiring minerals in our core basins, the SCOOP and Haynesville, with high rock quality attributes and active drilling under reputable and credit worthy operators. These mineral acquisitions provide immediate royalty volumes and cash flow along with an inventory of drilling locations that, as these locations are developed in the near future, will contribute additional growing royalty volumes and cash flow. I would also like to point out that the non-producing locations we have purchased over the last two years are being converted to producing wells at a faster pace than we expected during our underwriting process, which validates our strategy.
“This buy and sell high grading process generates a dynamic of declining working interest volumes, with no capital allocated to the working interest assets to increase production and slowly divesting of lower valued mature working interest properties, while materially growing our royalty volumes through the acquisition process. This dynamic is dramatically highlighted when you consider year-over-year royalty volumes have grown by over 60% and non-operated working interest volumes have declined year-over-year by 33%. We project that royalty volumes will represent more than 75% of overall corporate volumes by the end of fiscal year 2024 as our inventory of undrilled locations are developed. This will drive better margins, decrease lease operating expense, grow cash flow and generate an attractive return on capital employed.
– 1 –
PHX Minerals Inc.
Reports First Quarter 2022 Results …cont.
“You see this materializing in the first quarter 2022 with impressive reported net income and earnings per share. You will see our financial results only improve from here as our low value hedges roll off and royalty volumes continue to increase in the coming quarters.
“We have a great partner in Independent Bank, who understands our strategy and has demonstrated their willingness to grow with us, a strong balance sheet and more than ample deal flow in which to allocate our free cash flow. We are confident that the almost $50.0 million of mineral acquisitions we have closed over the last two years will continue to bear fruit in the coming quarters, which will help achieve our ultimate goal of building shareholder value.”
OPERATING HIGHLIGHTS
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First Quarter Ended |
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First Quarter Ended |
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Dec. 31, 2021 |
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Dec. 31, 2020 |
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Mcfe Sold |
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2,128,248 |
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2,074,334 |
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Average Sales Price per Mcfe |
$ |
6.43 |
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$ |
3.10 |
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Gas Mcf Sold |
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1,574,265 |
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1,475,456 |
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Average Sales Price per Mcf |
$ |
5.52 |
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$ |
2.34 |
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Oil Barrels Sold |
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48,074 |
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58,675 |
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Average Sales Price per Barrel |
$ |
74.39 |
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$ |
39.90 |
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NGL Barrels Sold |
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44,256 |
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41,138 |
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Average Sales Price per Barrel |
$ |
32.11 |
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$ |
15.20 |
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Total Production for the last five quarters was as follows:
Quarter ended |
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Mcf Sold |
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Oil Bbls Sold |
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NGL Bbls Sold |
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Mcfe Sold |
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12/31/2021 |
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1,574,265 |
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48,074 |
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44,256 |
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2,128,248 |
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9/30/2021 |
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1,609,101 |
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54,043 |
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46,369 |
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2,211,570 |
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6/30/2021 |
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1,879,343 |
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55,492 |
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46,753 |
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2,492,813 |
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3/31/2021 |
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1,735,820 |
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56,269 |
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37,228 |
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2,296,802 |
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12/31/2020 |
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1,475,456 |
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58,675 |
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41,138 |
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2,074,334 |
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Royalty Interest Production for the last five quarters was as follows:
Quarter ended |
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Mcf Sold |
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Oil Bbls Sold |
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NGL Bbls Sold |
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Mcfe Sold |
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12/31/2021 |
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949,523 |
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25,996 |
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19,953 |
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1,225,220 |
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9/30/2021 |
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705,397 |
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29,442 |
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19,364 |
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998,230 |
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6/30/2021 |
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908,471 |
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31,095 |
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18,255 |
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1,204,571 |
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3/31/2021 |
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924,969 |
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31,768 |
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19,088 |
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1,230,105 |
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12/31/2020 |
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487,925 |
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27,840 |
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14,948 |
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744,653 |
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Working Interest Production for the last five quarters was as follows:
Quarter ended |
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Mcf Sold |
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Oil Bbls Sold |
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NGL Bbls Sold |
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Mcfe Sold |
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12/31/2021 |
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624,742 |
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22,078 |
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24,303 |
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903,028 |
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9/30/2021 |
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903,704 |
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24,601 |
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27,005 |
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1,213,340 |
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6/30/2021 |
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970,872 |
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24,397 |
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28,498 |
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1,288,242 |
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3/31/2021 |
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810,851 |
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24,501 |
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18,140 |
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1,066,697 |
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12/31/2020 |
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987,531 |
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30,835 |
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26,190 |
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1,329,681 |
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*****MORE*****
– 2 –
PHX Minerals Inc.
Reports First Quarter 2022 Results …cont.
FINANCIAL HIGHLIGHTS
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First Quarter Ended |
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First Quarter Ended |
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Dec. 31, 2021 |
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Dec. 31, 2020 |
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Working Interest Sales |
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$ |
5,966,645 |
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$ |
3,907,524 |
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Royalty Interest Sales |
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$ |
7,720,519 |
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$ |
2,517,455 |
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Natural Gas, Oil and NGL Sales |
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$ |
13,687,164 |
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$ |
6,424,979 |
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Lease Bonuses and Rental Income |
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$ |
78,915 |
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$ |
1,433 |
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Total Revenue |
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$ |
16,602,247 |
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$ |
6,172,376 |
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LOE per Mcfe |
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$ |
0.59 |
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$ |
0.48 |
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Transportation, Gathering and Marketing per Mcfe |
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$ |
0.57 |
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$ |
0.62 |
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Production Tax per Mcfe |
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$ |
0.32 |
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$ |
0.13 |
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G&A Expense per Mcfe |
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$ |
0.98 |
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$ |
0.83 |
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Interest Expense per Mcfe |
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$ |
0.08 |
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$ |
0.15 |
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DD&A per Mcfe |
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$ |
0.74 |
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$ |
1.09 |
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Total Expense per Mcfe |
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$ |
3.28 |
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$ |
3.30 |
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Net Income (Loss) |
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$ |
6,682,249 |
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$ |
(596,720 |
) |
Adjusted EBITDA (1) |
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$ |
4,416,105 |
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$ |
2,915,206 |
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Cash Flow from Operations |
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$ |
8,637,990 |
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$ |
471,381 |
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CapEx - Drilling & Completing |
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$ |
192,677 |
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$ |
128,083 |
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CapEx - Mineral Acquisitions |
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$ |
11,643,827 |
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$ |
7,869,746 |
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Borrowing Base |
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$ |
32,000,000 |
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$ |
30,000,000 |
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Debt |
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$ |
20,000,000 |
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$ |
27,000,000 |
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Debt/Adjusted EBITDA (TTM) (1) |
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1.16 |
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2.93 |
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(1) |
This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section. |
FIRST QUARTER 2022 RESULTS
The Company recorded first quarter 2022 net income of $6,682,249, or $0.20 per share, as compared to a net loss of ($596,720), or ($0.03) per share, in the first quarter 2021. The change in net income was principally the result of increased natural gas, oil and NGL sales and an increase in non-cash gain on derivative contracts, partially offset by a loss on asset sales.
Natural gas, oil and NGL revenue increased $7,262,185, or 113%, for the first quarter 2022, compared to the corresponding 2021 quarter due to increases in natural gas, oil and NGL prices of 136%, 86% and 111%, respectively, and an increase in natural gas and NGL volumes of 7% and 8%, respectively, partially offset by a decrease in oil volumes of 18%.
The royalty production volumes increase during the three months ended Dec. 31, 2021, as compared to the three months ended Dec. 31, 2020, resulted from acquisition wells in the Haynesville Shale and SCOOP plays coming online. The decrease in working interest volumes resulted from naturally declining production in high-interest wells in the Eagle Ford Shale and divestiture of low-value legacy working interest in Oklahoma.
The Company had a net gain on derivative contracts of $2,836,168 in the first fiscal 2022 quarter, as compared to a net loss of ($254,036) in the first fiscal 2021 quarter. Net gain on derivative contracts excludes $2,688,091 of cash paid to settle off-market derivative contracts. The change in net gain on derivative contracts was principally due to the natural gas and oil collars and fixed price swaps being more beneficial in the quarter ended Dec. 31, 2021, in relation to their respective contracted volumes and prices.
The 1% decrease in total cost per Mcfe in the first fiscal 2022 quarter, relative to the first fiscal 2021 quarter, was primarily driven by a decrease in DD&A. DD&A decreased $676,889, or 30%, in the first fiscal 2022 quarter to $0.74 per Mcfe, as compared to $1.09 per
*****MORE*****
– 3 –
PHX Minerals Inc.
Reports First Quarter 2022 Results …cont.
Mcfe in the first fiscal 2021 quarter. Of the DD&A decrease, $735,649 was a result of a $0.35 decrease in the DD&A rate per Mcfe, partially offset by an increase of $58,760 resulting from production increasing 3% in the first fiscal 2022 quarter. The rate decrease was mainly due to an increase in reserves during the first fiscal 2022 quarter, as compared to the first fiscal 2021 quarter.
OPERATIONS UPDATE
During the first fiscal quarter of 2022, the Company converted 68 gross (0.19 net) wells to producing status and had 54 gross (0.25 net) wells in progress added across its mineral position.
At Jan. 31, 2022, the Company had a total of 65 gross wells (0.42 net wells) in progress across its mineral positions and 18 gross active permitted wells. As of Jan. 31, 2022, there were 20 rigs operating on the Company’s acreage and 92 rigs operating within 2.5 miles of its acreage.
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Bakken/ |
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Three |
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Arkoma |
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SCOOP |
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STACK |
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Forks |
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Stack |
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Fayetteville |
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Haynesville |
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Other |
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Total |
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As of 1/31/22: |
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Gross Wells in Progress on PHX Acreage |
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30 |
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7 |
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1 |
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3 |
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- |
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23 |
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1 |
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65 |
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Net Wells in Progress on PHX Acreage |
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0.02 |
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0.04 |
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0.00 |
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0.03 |
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- |
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0.33 |
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- |
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0.42 |
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Gross Active Permits on PHX Acreage: |
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10 |
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3 |
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2 |
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2 |
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- |
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- |
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1 |
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18 |
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As of 1/31/22: |
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Rigs Present on PHX Acreage |
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9 |
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4 |
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- |
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1 |
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- |
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4 |
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2 |
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20 |
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Rigs Within 2.5 Miles of PHX Acreage |
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20 |
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20 |
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11 |
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1 |
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|
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- |
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27 |
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|
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13 |
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|
|
92 |
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Leasing Activity
During the first quarter of fiscal 2022, the Company leased 175 net mineral acres for an average bonus payment of $546 and an average royalty of 22%.
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Bakken/ |
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Three |
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Arkoma |
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SCOOP |
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STACK |
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Forks |
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Stack |
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Fayetteville |
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Haynesville |
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Other |
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Total |
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During Three Months Ended 12/31/21: |
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Net Mineral Acres Leased |
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80 |
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1 |
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- |
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- |
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- |
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- |
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94 |
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|
175 |
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Average Bonus per Net Mineral Acre |
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$ |
1,046 |
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$ |
2,500 |
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- |
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- |
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- |
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- |
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$ |
333 |
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$ |
546 |
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Average Royalty per Net Mineral Acre |
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24% |
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20% |
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- |
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- |
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- |
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- |
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20% |
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22% |
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*****MORE*****
– 4 –
PHX Minerals Inc.
Reports First Quarter 2022 Results …cont.
ACQUISITION AND DIVESTITURE UPDATE
During the first quarter of fiscal year 2022 through Jan. 31, 2022, the Company purchased 2,151 net royalty acres for $13,788,632 and 1,519,481 shares of PHX common stock and sold 7,201 of predominantly undeveloped and unleased net mineral acres for $2,088,856.
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Bakken/ |
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Three |
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Arkoma |
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SCOOP |
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STACK |
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Forks |
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Stack |
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Fayetteville |
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Haynesville |
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Other |
|
|
Total |
|
||||||||
For the period ended 1/31/22:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Mineral Acres Purchased |
|
|
451 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
966 |
|
|
|
- |
|
|
|
1,417 |
|
Net Royalty Acres Purchased |
|
|
558 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,593 |
|
|
|
- |
|
|
|
2,151 |
|
Price per Net Royalty Acre |
|
$ |
7,031 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
9,129 |
|
|
|
- |
|
|
$ |
8,585 |
|
Net Mineral Acres Sold |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,201 |
|
|
|
7,201 |
|
Net Royalty Acres Sold |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,701 |
|
|
|
7,701 |
|
Price per Net Royalty Acre |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
271 |
|
|
$ |
271 |
|
(1) |
First quarter 2022 through Jan. 31 2022. |
During the first quarter of fiscal year 2022, the Company sold 708 gross working interest wells (17.27 net wells).
For the Period Ended |
|
Proceeds ($) |
|
|
P&A Liability (Net Value $) |
|
|
Gross Wells |
|
|
Net Wells |
|
||||
Dec. 31, 2021 |
|
$ |
4,625,000 |
|
|
$ |
691,225 |
|
|
|
708 |
|
|
|
17.27 |
|
FIRST QUARTER EARNINGS CALL
PHX will host a conference call to discuss first quarter results at 11:00 a.m. EST on Feb. 15, 2022. 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 (domestic) or 201-389-0927 (international). 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 13726336.
*****MORE*****
– 5 –
PHX Minerals Inc.
Reports First Quarter 2022 Results …cont.
FINANCIAL RESULTS
Statements of Operations
|
Three Months Ended Dec. 31, |
|
|||||
|
2021 |
|
|
2020 |
|
||
Revenues: |
|
|
|||||
Natural gas, oil and NGL sales |
$ |
13,687,164 |
|
|
$ |
6,424,979 |
|
Lease bonuses and rental income |
|
78,915 |
|
|
|
1,433 |
|
Gains (losses) on derivative contracts |
|
2,836,168 |
|
|
|
(254,036 |
) |
|
|
16,602,247 |
|
|
|
6,172,376 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Lease operating expenses |
|
1,256,011 |
|
|
|
1,004,412 |
|
Transportation, gathering and marketing |
|
1,213,604 |
|
|
|
1,280,965 |
|
Production taxes |
|
678,947 |
|
|
|
276,026 |
|
Depreciation, depletion and amortization |
|
1,583,760 |
|
|
|
2,260,649 |
|
Provision for impairment |
|
5,585 |
|
|
|
- |
|
Interest expense |
|
176,719 |
|
|
|
301,898 |
|
General and administrative |
|
2,095,557 |
|
|
|
1,731,097 |
|
Losses (gains) on asset sales and other |
|
2,147,815 |
|
|
|
(16,951 |
) |
Total costs and expenses |
|
9,157,998 |
|
|
|
6,838,096 |
|
Income (loss) before provision (benefit) for income taxes |
|
7,444,249 |
|
|
|
(665,720 |
) |
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes |
|
762,000 |
|
|
|
(69,000 |
) |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
6,682,249 |
|
|
$ |
(596,720 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per common share |
$ |
0.20 |
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding: |
|
|
|
|
|
|
|
Common shares |
|
32,895,631 |
|
|
|
22,378,146 |
|
Unissued, directors' deferred compensation shares |
|
232,091 |
|
|
|
178,090 |
|
|
|
33,127,722 |
|
|
|
22,556,236 |
|
|
|
|
|
|
|
|
|
Dividends declared per share of |
|
|
|
|
|
|
|
common stock and paid in period |
$ |
0.01 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
Dividends declared per share of |
|
|
|
|
|
|
|
common stock and to be paid in quarter ended March 31 |
$ |
0.015 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
*****MORE*****
– 6 –
PHX Minerals Inc.
Reports First Quarter 2022 Results …cont.
Balance Sheets
|
Dec. 31, 2021 |
|
|
Sept. 30, 2021 |
|
||
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
1,559,350 |
|
|
$ |
2,438,511 |
|
Natural gas, oil, and NGL sales receivables (net of $0 |
|
8,020,067 |
|
|
|
6,428,982 |
|
allowance for uncollectable accounts) |
|
|
|
|
|
|
|
Refundable income taxes |
|
- |
|
|
|
2,413,942 |
|
Other |
|
1,333,279 |
|
|
|
942,082 |
|
Total current assets |
|
10,912,696 |
|
|
|
12,223,517 |
|
|
|
|
|
|
|
|
|
Properties and equipment at cost, based on |
|
|
|
|
|
|
|
successful efforts accounting: |
|
|
|
|
|
|
|
Producing natural gas and oil properties |
|
249,861,777 |
|
|
|
319,984,874 |
|
Non-producing natural gas and oil properties |
|
54,960,073 |
|
|
|
40,466,098 |
|
Other |
|
883,310 |
|
|
|
794,179 |
|
|
|
305,705,160 |
|
|
|
361,245,151 |
|
Less accumulated depreciation, depletion and amortization |
|
(195,971,382 |
) |
|
|
(257,643,661 |
) |
Net properties and equipment |
|
109,733,778 |
|
|
|
103,601,490 |
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets |
|
585,888 |
|
|
|
607,414 |
|
Other, net |
|
570,072 |
|
|
|
578,593 |
|
Total assets |
$ |
121,802,434 |
|
|
$ |
117,011,014 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
612,387 |
|
|
$ |
772,717 |
|
Derivative contracts, net |
|
6,413,308 |
|
|
|
12,087,988 |
|
Income taxes payable |
|
499,939 |
|
|
|
334,050 |
|
Current portion of operating lease liability |
|
133,614 |
|
|
|
132,287 |
|
Accrued liabilities and other |
|
2,047,437 |
|
|
|
1,809,337 |
|
Total current liabilities |
|
9,706,685 |
|
|
|
15,136,379 |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
20,000,000 |
|
|
|
17,500,000 |
|
Deferred income taxes, net |
|
709,906 |
|
|
|
343,906 |
|
Asset retirement obligations |
|
2,157,289 |
|
|
|
2,836,172 |
|
Derivative contracts, net |
|
132,569 |
|
|
|
1,696,479 |
|
Operating lease liability, net of current portion |
|
755,433 |
|
|
|
789,339 |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
33,461,882 |
|
|
|
38,302,275 |
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
Class A voting common stock, $0.01666 par value; 54,000,500 |
|
|
|
|
|
|
|
shares authorized and 34,405,287 issued at Dec. 31, 2021; |
|
|
|
|
|
|
|
36,000,500 shares authorized and 32,770,433 issued at Sept. 30, 2021 |
|
573,192 |
|
|
|
545,956 |
|
Capital in excess of par value |
|
36,741,266 |
|
|
|
33,213,645 |
|
Deferred directors' compensation |
|
1,835,721 |
|
|
|
1,768,151 |
|
Retained earnings |
|
54,798,980 |
|
|
|
48,966,420 |
|
|
|
93,949,159 |
|
|
|
84,494,172 |
|
Less treasury stock, at cost; 377,232 shares at Dec. 31, |
|
|
|
|
|
|
|
2021, and 388,545 shares at Sept. 30, 2021 |
|
(5,608,607 |
) |
|
|
(5,785,433 |
) |
Total stockholders' equity |
|
88,340,552 |
|
|
|
78,708,739 |
|
Total liabilities and stockholders' equity |
$ |
121,802,434 |
|
|
$ |
117,011,014 |
|
*****MORE*****
– 7 –
PHX Minerals Inc.
Reports First Quarter 2022 Results …cont.
Condensed Statements of Cash Flows
|
Three Months Ended Dec. 31, |
|
|||||
|
2021 |
|
|
2020 |
|
||
Operating Activities |
|
|
|||||
Net income (loss) |
$ |
6,682,249 |
|
|
$ |
(596,720 |
) |
Adjustments to reconcile net income (loss) to net cash provided |
|
|
|
|
|
|
|
by operating activities: |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
1,583,760 |
|
|
|
2,260,649 |
|
Impairment of producing properties |
|
5,585 |
|
|
|
- |
|
Provision for deferred income taxes |
|
366,000 |
|
|
|
(69,000 |
) |
Gain from leasing fee mineral acreage |
|
(78,922 |
) |
|
|
(232 |
) |
Proceeds from leasing fee mineral acreage |
|
95,039 |
|
|
|
232 |
|
Net (gain) loss on sales of assets |
|
2,163,359 |
|
|
|
(30,862 |
) |
Directors' deferred compensation expense |
|
67,570 |
|
|
|
44,527 |
|
Total (gain) loss on derivative contracts |
|
(2,836,168 |
) |
|
|
254,036 |
|
Cash receipts (payments) on settled derivative contracts |
|
- |
|
|
|
613,314 |
|
Restricted stock awards |
|
255,844 |
|
|
|
122,978 |
|
Other |
|
37,138 |
|
|
|
14,387 |
|
Cash provided (used) by changes in assets and liabilities: |
|
|
|
|
|
|
|
Natural gas, oil and NGL sales receivables |
|
(1,591,085 |
) |
|
|
(813,167 |
) |
Other current assets |
|
(325,780 |
) |
|
|
(676,620 |
) |
Accounts payable |
|
(95,649 |
) |
|
|
(398,556 |
) |
Income taxes receivable |
|
2,413,942 |
|
|
|
(12,545 |
) |
Other non-current assets |
|
10,253 |
|
|
|
30,958 |
|
Income taxes payable |
|
165,889 |
|
|
|
- |
|
Accrued liabilities |
|
(281,034 |
) |
|
|
(271,998 |
) |
Total adjustments |
|
1,955,741 |
|
|
|
1,068,101 |
|
Net cash provided by operating activities |
|
8,637,990 |
|
|
|
471,381 |
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
Capital expenditures |
|
(192,677 |
) |
|
|
(128,083 |
) |
Acquisition of minerals and overriding royalty interests |
|
(11,643,827 |
) |
|
|
(7,869,746 |
) |
Net proceeds from sales of assets |
|
4,586,492 |
|
|
|
- |
|
Net cash provided (used) by investing activities |
|
(7,250,012 |
) |
|
|
(7,997,829 |
) |
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
Borrowings under credit facility |
|
4,000,000 |
|
|
|
- |
|
Payments of loan principal |
|
(1,500,000 |
) |
|
|
(1,750,000 |
) |
Net proceeds from equity issuance |
|
(32,507 |
) |
|
|
(24,242 |
) |
Cash receipts from (payments on) off-market derivative contracts |
|
(4,402,422 |
) |
|
|
- |
|
Payments of dividends |
|
(332,210 |
) |
|
|
(225,887 |
) |
Net cash provided (used) by financing activities |
|
(2,267,139 |
) |
|
|
(2,000,129 |
) |
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
(879,161 |
) |
|
|
(9,526,577 |
) |
Cash and cash equivalents at beginning of period |
|
2,438,511 |
|
|
|
10,690,395 |
|
Cash and cash equivalents at end of period |
$ |
1,559,350 |
|
|
$ |
1,163,818 |
|
|
|
|
|
|
|
|
|
Supplemental Schedule of Noncash Investing and Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared and unpaid |
$ |
517,479 |
|
|
$ |
229,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross additions to properties and equipment |
$ |
15,183,829 |
|
|
$ |
7,986,350 |
|
Equity offering used for acquisitions |
|
(3,510,001 |
) |
|
|
(250,000 |
) |
Net (increase) decrease in accounts payable for properties |
|
|
|
|
|
|
|
and equipment additions |
|
162,676 |
|
|
|
261,479 |
|
Capital expenditures and acquisitions |
$ |
11,836,504 |
|
|
$ |
7,997,829 |
|
*****MORE*****
– 8 –
PHX Minerals Inc.
Reports First Quarter 2022 Results …cont.
Derivative Contracts as of Jan. 31, 2022
|
|
|
|
|
|
|
|
|
|
|
Collar Average |
|
|
Collar Average |
|
|||
Fiscal Period |
|
Product |
|
Volume Mcf/Bbl |
|
|
Swap Price |
|
|
Floor Price |
|
|
Ceiling Price |
|
||||
Remaining 2022 |
|
Natural Gas |
|
|
610,000 |
|
|
|
|
|
|
$ |
3.50 |
|
|
$ |
4.19 |
|
Remaining 2022 |
|
Natural Gas |
|
|
2,818,000 |
|
|
$ |
2.94 |
|
|
|
|
|
|
|
|
|
2023 |
|
Natural Gas |
|
|
500,000 |
|
|
|
|
|
|
$ |
3.32 |
|
|
$ |
4.54 |
|
2023 |
|
Natural Gas |
|
|
1,980,000 |
|
|
$ |
3.22 |
|
|
|
|
|
|
|
|
|
2024 |
|
Natural Gas |
|
|
60,000 |
|
|
|
|
|
|
$ |
3.00 |
|
|
$ |
4.70 |
|
2024 |
|
Natural Gas |
|
|
360,000 |
|
|
$ |
3.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining 2022 |
|
Crude Oil |
|
|
113,000 |
|
|
$ |
44.25 |
|
|
|
|
|
|
|
|
|
2023 |
|
Crude Oil |
|
|
50,390 |
|
|
$ |
55.20 |
|
|
|
|
|
|
|
|
|
2024 |
|
Crude Oil |
|
|
6,890 |
|
|
$ |
68.42 |
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation
This news release includes certain “non-GAAP financial measures” under the rules of the Securities and Exchange Commission, including Regulation G. These non-GAAP measures are calculated using GAAP amounts in our 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 our financial statements prepared in accordance with GAAP (including the notes), included in our SEC filings and posted on our website.
Adjusted EBITDA Reconciliation
EBITDA excluding unrealized 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 is defined as adjusted EBITDA. We have included a presentation of adjusted EBITDA because we recognize that certain investors consider this amount a useful means of measuring our ability to meet our debt service obligations and evaluating our 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
*****MORE*****
– 9 –
PHX Minerals Inc.
Reports First Quarter 2022 Results …cont.
presentation of adjusted EBITDA may not be comparable to a similarly titled measure of other companies. The following table provides a presentation of net income (loss) to adjusted EBITDA for the periods indicated:
|
First Quarter Ended |
|
|
First Quarter Ended |
|
|
Fourth Quarter Ended |
|
|||
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
|
Sept. 30, 2021 |
|
|||
Net Income (Loss) |
$ |
6,682,249 |
|
|
$ |
(596,720 |
) |
|
$ |
(3,764,200 |
) |
Plus: |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
(benefit) |
|
762,000 |
|
|
|
(69,000 |
) |
|
|
450,949 |
|
Interest expense |
|
176,719 |
|
|
|
301,898 |
|
|
|
204,925 |
|
DD&A |
|
1,583,760 |
|
|
|
2,260,649 |
|
|
|
1,569,631 |
|
Impairment |
|
5,585 |
|
|
|
- |
|
|
|
4,620 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) |
|
|
|
|
|
|
|
|
|
|
|
on derivatives |
|
4,550,459 |
|
|
|
(867,350 |
) |
|
|
3,124,035 |
|
Gains (losses) on asset sales |
|
(2,120,927 |
) |
|
|
16,476 |
|
|
|
247,543 |
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
Cash receipts from (payments on) |
|
|
|
|
|
|
|
|
|
|
|
off-market derivative contracts(1) |
|
(2,688,091 |
) |
|
|
- |
|
|
|
8,800,000 |
|
Restricted stock and deferred |
|
|
|
|
|
|
|
|
|
|
|
director's expense |
|
323,415 |
|
|
|
167,505 |
|
|
|
325,567 |
|
Adjusted EBITDA |
$ |
4,416,105 |
|
|
$ |
2,915,206 |
|
|
$ |
4,219,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The initial receipt of $8.8 million of cash from BP for entering into the off-market derivative contracts had no effect on the statement of operations and was considered cash flow from financing activities. A portion of subsequent settlements with BP have no effect on the statement of operations. |
|
Debt/Adjusted EBITDA (TTM) Reconciliation
Debt/adjusted EBITDA (TTM) is defined as the ratio of long-term debt to adjusted EBITDA on a trailing 12-month (TTM) basis. We have included a presentation of debt/adjusted EBITDA (TTM) because we recognize that certain investors consider such ratios a useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. The debt/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/adjusted EBITDA (TTM) may not be comparable to a similarly titled measure of other companies. The following table provides a presentation of net income (loss) to adjusted EBITDA on a TTM basis, and of the resulting debt/adjusted EBITDA (TTM) ratio:
*****MORE*****
– 10 –
TTM Ended |
|
|
TTM Ended |
|
|||
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
||
Net Income (Loss) |
$ |
1,061,732 |
|
|
$ |
(26,440,871 |
) |
Plus: |
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
179,949 |
|
|
|
(8,612,000 |
) |
Interest expense |
|
869,948 |
|
|
|
1,218,021 |
|
DD&A |
|
7,068,915 |
|
|
|
10,618,731 |
|
Impairment |
|
56,060 |
|
|
|
29,904,528 |
|
Less: |
|
|
|
|
|
|
|
Unrealized gains (losses) |
|
|
|
|
|
|
|
on derivatives |
|
1,141,029 |
|
|
|
(2,349,474 |
) |
Gains (losses) on asset sales |
|
(1,824,556 |
) |
|
|
716,910 |
|
Plus: |
|
|
|
|
|
|
|
Cash receipts from (payments on) |
|
|
|
|
|
|
|
off-market derivative contracts(1) |
|
6,111,909 |
|
|
|
- |
|
Restricted stock and deferred |
|
|
|
|
|
|
|
director's expense |
|
1,191,576 |
|
|
|
902,248 |
|
Adjusted EBITDA |
$ |
17,223,616 |
|
|
$ |
9,223,221 |
|
|
|
|
|
|
|
|
|
Debt |
$ |
20,000,000 |
|
|
$ |
27,000,000 |
|
Debt/Adjusted EBITDA |
|
1.16 |
|
|
|
2.93 |
|
|
|
|
|
|
|
|
|
(1) The initial receipt of $8.8 million of cash from BP for entering into the off-market derivative contracts had no effect on the statement of operations and was considered cash flow from financing activities. A portion of subsequent settlements with BP have no effect on the statement of operations. |
|
PHX Minerals Inc. (NYSE: PHX) Oklahoma City-based, PHX Minerals Inc. is a natural gas and oil mineral company with a strategy to proactively grow its mineral position in its core areas of focus. PHX owns approximately 251,000 net mineral acres principally located in Oklahoma, Texas, Louisiana, North Dakota, and Arkansas. Additional information on PHX can be found at www.phxmin.com.
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 and Section 21E of the Securities Exchange Act of 1934. 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 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, we can give no assurance they will prove to be correct. Such forward-looking
*****END*****
– 11 –
PHX Minerals Inc.
Reports Fourth Quarter and Fiscal 2021 Results …cont.
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 the 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 Securities and Exchange Commission, 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 statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements. 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.
*****END*****
– 12 –
February 2022 Investor Presentation Exhibit 99.2
Cautionary Statement Regarding Forward-Looking Statements This presentation does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any security of PHX Minerals Inc. (“PHX” or the “Company”). No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, or an exemption therefrom. Cautionary Statement Regarding Forward-Looking Statements This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included in this presentation that address activities, events or developments that PHX Minerals Inc. (“PHX” or the “Company”) expects, believes or anticipates will or may occur in the future are forward looking statements. The words “anticipates”, “plans”, “estimates”, “believes”, “expects”, “intends”, “will”, “should”, “may” and similar expressions may be used to identify forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to: our ability to execute our business strategies; the volatility of realized natural gas and oil prices; the level of production on our 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; our 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 we invest; and other economic, competitive, governmental, regulatory or technical factors affecting our properties, operations or prices. Although the Company believes the expectations reflected in these and other forward-looking statements are reasonable, the Company can give no assurance such statements 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 the 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 Securities and Exchange Commission, 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. Readers are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this presentation 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. Use of Non-GAAP Financial Information This presentation includes certain non-GAAP financial measures. Adjusted EBITDA and discretionary cash flow are supplemental non-GAAP measures that are used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. PHX defines “Adjusted EBITDA” as net income (loss) plus interest expense, provision for impairment, depreciation, depletion and amortization of properties and equipment, including amortization of other assets, provision (benefit) for income taxes and unrealized (gains) losses on derivative contracts. PHX defines “discretionary cash flow” as Adjusted EBITDA minus interest expense plus gain on sale. PHX references Adjusted EBITDA and discretionary cash flow in this presentation because it recognizes that certain investors consider Adjusted EBITDA and discretionary cash flow useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. Adjusted EBITDA and discretionary cash flow have 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, the Company’s calculations of Adjusted EBITDA or discretionary cash flow may not be comparable to similarly titled measures of other companies. Oil and Gas Reserves The SEC generally permits oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are reserve estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, and certain probable and possible reserves that meet the SEC’s definitions for such terms. The Company discloses only estimated proved reserves in its filings with the SEC. The Company’s estimated proved reserves as of September 30, 2020, referenced in this presentation were prepared by DeGolyer and MacNaughton, an independent engineering firm, and comply with definitions promulgated by the SEC. Additional information on the Company’s estimated proved reserves is contained in the Company’s filings with the SEC.
Investment Considerations
Company Overview By Volume By PV-10 Key Statistics 1Q22 Production (MMcfe/d)2 Net Mineral Acres (000s)1 73.2 Proved Reserve Split 6 23.13 246 23.13 Source: Company information and Enverus 1 As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 2 Quarter ended 12/31/2021 3 See Slide 19 for non-GAAP reconciliation 4 PROB and POSS inventory based on D&M prepared reserve report as of fiscal YE2021 pro forma for acquisitions and divestitures completed through 11/23/2021 5 Provided by Enverus as of 1/31/2022 6 Proved Reserves per 9/30/21 D&M YE21 report, using 12/31/21 effective date, proforma acquisitions and divestitures completed through 1/31/2022, 1/31/22 strip price of WTI/HH 2022: $82.59/$4.76, 2023: $74.34/$3.81, 2024: $69.48/$3.29, 2025: $66.49/$3.14, 2026: $64.51/$3.08, 2027: $63.40/$3.10, 2028: $63.07/$3.18, 2029: $62.93/$3.25, 2030: $63.09/$3.31, 2031: $63.43/$3.42, 2032: $63.86/$3.55, 2033+: $64.15/$3.83. 11% 17% 11% 18% 5% 17%
Diversified Mineral Position Over 70%1 of PHX’s net mineral position is currently unleased Provides opportunity to generate additional cash flow from lease bonus payments and royalties without spending additional capital PHX has an active program in place to lease available acres A diversified portfolio of minerals acts as a call option on several prospective plays & zones Source: Company information As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 As determined by Wells in Progress & Permits Top Operators of PHX Minerals2
Reserves Value Summary SEC Pricing 1 $80/$5.00 Flat Pricing3 Strip Pricing2 $250 $261 $360 1 Proved, Probable, and Possible Reserves per 9/30/21 D&M YE21 report, using 12/31/21 effective date; 12/31/21 SEC price deck of $64.81 per bbl of oil, $25.82 per bbl of NGL, $3.63 per mcf of gas (proved volume weighted average price) 2 Proved, Probable, and Possible Reserves per 9/30/21 D&M YE21 report, using 12/31/21 effective date, proforma acquisitions and divestitures completed through 1/31/2022, 1/31/22 strip price of WTI/HH 2022: $82.59/$4.76, 2023: $74.34/$3.81, 2024: $69.48/$3.29, 2025: $66.49/$3.14, 2026: $64.51/$3.08, 2027: $63.40/$3.10, 2028: $63.07/$3.18, 2029: $62.93/$3.25, 2030: $63.09/$3.31, 2031: $63.43/$3.42, 2032: $63.86/$3.55, 2033+: $64.15/$3.83. 3 Proved, Probable, and Possible Reserves per 9/30/21 D&M YE21 report, using 12/31/21 effective date, proforma acquisitions and divestitures completed through 1/31/2022, flat price deck of $80.00 WTI /$5.00 HH 4 Probable and Possible locations scheduled out approximately 15 years 5 PV-10 less net debt of $18.4 MM as of 12/31/21 divided by total shares outstanding as of 12/31/21
Inventory by Basin Gross Undeveloped Locations Note: Inventory based on D&M prepared reserve report as of fiscal YE2021 pro forma for acquisitions and divestitures completed through 1/31/2022 1 Average net interest on producing royalty wells 2 Wells in progress & permits are as of 12/31/2021 proforma for acquisitions and divestitures completed through 1/31/2022 3 PROB categorization is due to unknown development timing and not related to expected well performance or incremental risk 4 Other undeveloped inventory is largely comprised of Western Anadarko Assets & Permian Basin 3,522 13%
Conversion Activity Note: RI only wells WIPs includes DUCs and Permits As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 Includes Permits, PROBs, POSS and Contingent Includes wells changed to SI, TA or P&A Net WIP Conversions1, 2,3 Gross WIP Conversions1, 2, 3 4 4 Continued royalty volume growth as acquisition wells convert to PDP and new locations replace conversions 5 5
Acquisition Summary Q1 2021 through Q1 2022 Acquisitions total over $45 million1 Acquisitions by Basin by Quarter Focused on highest quality rock in the SCOOP and Haynesville plays Targeting a mix of production, near term development opportunities via wells in progress and additional upside potential under high quality operators % of Net Wells by Type at end of FYE 2021 Q1 ‘22 Acquisition Net Well by Type % of Net Wells by Type at end of Q1 ’22(1) + = Note: As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 To date 2
Acquisition History – SCOOP Acquisitions targeting the highest return inventory, controlled by name brand operators with solvent balance sheets to ensure continuous development Source: Company information At time of respective acquisition Enverus active rigs as of 1/31/2022 To date SCOOP Acquisitions – By Fiscal Quarter
Acquisition History - Haynesville Acquisitions targeting concentrated tracts delivering high NRIs with multiple WIPs for near term growth in cash flow and investor returns Source: Company information At time of respective acquisition Enverus active rigs as of 1/31/2022 To date Haynesville Acquisitions – By Fiscal Quarter
Key Statistics1 Top Operators6 Net Mineral Acres1 7,295 2.5 Core NMA3 Prod.2 Portfolio Contribution PHX SCOOP Position Net Production (MMcfe/d)2 Note: As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 Quarter ended 12/31/2021 Excludes open acreage Undeveloped Locations consists of PROB and POSS locations Provided by Enverus as of 1/31/2022 As determined by Wells in Progress & Permits
Springboard III Area of Interest Source: Company info and Enverus As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 Includes open and unleased minerals (non-op working interest via well participation); the Net Royalty Acres (NRA) for open and unleased minerals are determined by evaluating the fair market value and/or the governing agreement between the mineral owner and Operator/State regulatory commission Wells spud and drilled but not completed over last 24 months Active natural gas and oil active horizontal permits filed in last twelve months with no spud date. Permits are valid for 18 months and extendable by an additional 6 months Data from Enverus as of 1/31/2022 SpringBoard III WOODFORD DENSITY UNIT 8 WELLS/DSU SYCAMORE DENSITY UNIT 4 WELLS/DSU
Key Statistics1 Top Operators6 Net Mineral Acres1 2,323 3.79 Core NMA3 Portfolio Contribution PHX Haynesville Position Net Production (MMcfe/d)2 Prod.2 Note: As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 Quarter Ended 12/31/21 Excludes open acreage Undeveloped Locations consists of PROB and POSS locations Provided by Enverus as of 1/31/2022 As determined by Wells in Progress & Permits Blue Dome Operating LLC R. Lacy Services, LTD.
North Haynesville Area of Interest PHX has focused on acquisitions with near term, high NRI completions Key Operators: Blue Dome, Trinity, Rockcliff, Paloma, Chesapeake and Southwestern Operators are actively drilling 3-5 wells per unit supporting near term growth Source: Company info and Enverus As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 Wells spud and drilled but not completed over last 24 months Active natural gas and oil active horizontal permits filed in last twelve months with no spud date. Permits are valid for 18 months and extendable by an additional 6 months Data from Enverus as of 1/31/2022 Primary Target - Haynesville Shale PHX North HSVL AOI Ownership1: 1,136 Net Mineral Acres 1,911 Net Royalty Acres Gross Wells In Progress2: 29 Gross Active Permits3: 53
Royalty Cash Flow Driving Shareholder Value Oil & Gas Sales and Realized Price Royalty and Working Interest Revenue Breakout Adjusted Pre-tax NI1 Adjusted EBITDA2 Source: Company filings Pre-tax net income adjusted to exclude unrealized gain on derivatives, non-cash impairments and cash receipts from/payments on off-market derivatives. Calculated as net income excluding unrealized gain/loss on derivatives, income tax expense, interest expense, DD&A, non-cash impairments, non-cash G&A and cash receipts from/payments on off-market derivatives. $ in millions and $ / Mcfe $ in millions $ in millions $ / Mcfe
Stable Balance Sheet & Ample Liquidity Source: Company filings Current assets less current liabilities excluding current derivatives. See prior page. Total Debt Debt/Adjusted EBITDA2 (TTM) Liquidity (12/31/21) Borrowing availability $ 12.0 Working capital 1 $ 7.6 $ 19.6 $ in millions $ in millions Liquidity $ in millions
Reconciliation of Non-GAAP Financial Measures Source: Company Filings
Hedge Position as of January 31, 2022 Natural Gas Hedges (Mcf) Crude Oil Hedges (bbl) Swap Price:1 Collar Floor:1 Collar Ceiling:1 Source: Company flings 1 Gas hedge prices are in $/Mcf and Oil hedge prices are in $/bbl Mix of collars and swaps designed to provide upside exposure while protecting downside risk
Why Invest in PHX? 1 2 3 4 5
Appendix
Company Leadership
Key Statistics1 Top Operators6 Net Mineral Acres1 5,814 3.79 Core NMA3 Portfolio Contribution STACK Position Net Production (MMcfe/d)2 Prod. 2 STACK Note: As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 Quarter Ended 12/31/2021 Excludes open acreage Undeveloped Locations consists of PROB and POSS locations Provided by Enverus as of 1/31/2022 As determined by Wells in Progress & Permits
11,576 4.11 Portfolio Contribution Arkoma Stack Position Top Operators6 Core NMA3 Key Statistics1 Net Mineral Acres1 Net Production (MMcfe/d)2 Prod.2 Note: As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 Quarter Ended 12/31/2021 Excludes open acreage Undeveloped Locations consists of PROB and POSS locations Provided by Enverus as of 1/31/2022 As determined by Wells in Progress & Permits
3,106 1.2 Portfolio Contribution Bakken/Three Forks Position Top Producers6 Core NMA3 Key Statistics1 Net Mineral Acres1 Net Production (MMcfe/d)2 Prod.2 Note: As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 Quarter Ended 12/31/2021 Excludes open acreage Undeveloped Locations consists of PROB and POSS locations Provided by Enverus as of 1/31/2022 As determined by Wells in Progress & Permits
9,871 2.55 Portfolio Contribution Fayetteville Position Top Operators6 Core NMA3 Key Statistics1 Net Mineral Acres1 Net Production (MMcfe/d)2 Prod.2 Note: As of 12/31/2021 proforma acquisitions and divestitures completed through 1/31/2022 Quarter Ended 12/31/21 Excludes open acreage Undeveloped Locations consists of PROB and POSS locations Provided by Enverus as of 1/31/2022 As determined by wells on Production