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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 13, 2022 |
PHX MINERALS INC.
(Exact name of Registrant as Specified in Its Charter)
Delaware |
001-31759 |
73-1055775 |
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(State or Other Jurisdiction |
(Commission File Number) |
(IRS Employer |
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1320 South University Drive Suite 720 |
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Fort Worth, Texas |
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76107 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
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Registrant’s Telephone Number, Including Area Code: (405) 948-1560 |
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(Former Name or Former Address, if Changed Since Last Report)
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:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Common Stock, $0.01666 par value |
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PHX |
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New York Stock Exchange |
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 December 13, 2022, PHX Minerals Inc. (the “Company”) issued a press release providing information regarding the Company’s fourth quarter and fiscal 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. |
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 December 13, 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.
Item 9.01 |
Financial Statements and Exhibits |
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(d) |
Exhibits. |
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Exhibit No. |
Title of Document |
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99.1 |
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99.2 |
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104 |
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: |
December 13, 2022 |
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Exhibit 99.1
FOR IMMEDIATE RELEASE
PLEASE CONTACT:
Chad L. Stephens
405.948.1560
Website: www.phxmin.com
PHX MINERALS
REPORTS FISCAL FOURTH QUARTER 2022 AND FISCAL YEAR 2022 RESULTS AND
ANNOUNCES INCREASE IN DIVIDEND PAYMENT
FORT WORTH, Texas, Dec. 13, 2022 – PHX MINERALS INC., “PHX” or the “Company” (NYSE: PHX), today reported financial and operating results for the fiscal fourth quarter and fiscal year ended Sept. 30, 2022.
SUMMARY OF RESULTS FOR THE PERIOD ENDED SEPT. 30, 2022
SUBSEQUENT EVENTS
Chad L. Stephens, President and CEO, commented, “In fiscal 2022, we made significant progress in the strategic transition that we began in late 2019. This strategy, to exit legacy assets and transition to a low fixed-cost royalty production model, is coming into sharp focus as demonstrated by the significant improvements in our financial results. We are executing according to our stated plan, growing our royalty reserves, high grading our asset base and generating meaningful profitability and cash flow.
– 1 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
In response, both royalty production and royalty reserves reached all-time high levels in the fourth fiscal quarter. Looking ahead, 2023 should prove to be the final year of this transformative transition as we plan to divest a material portion of our remaining legacy non-operated working interest assets. Following these planned divestitures, royalty volumes will represent greater than 90% of total corporate volumes, leaving working interest volumes virtually immaterial.”
“Our strategy to allocate capital to existing and near-term potential royalty production acquisitions is working, delivering returns ahead of our expectations,” continued Mr. Stephens. “Importantly, our pipeline for acquisitions in our targeted regions remains robust. Also, supply and demand for natural gas remains favorable, which supports strong commodity pricing and gives us the environment to continue to improve profitability and cashflow. Our plan remains steadfast: to utilize the majority of our free cash flow to acquire additional mineral and royalty assets in our core focus areas with the expectation that these acquisitions will quickly convert to additional royalty production volumes. Simultaneously, as we work to continue to scale and expand profitability, we should be positioned to continue to increase our cash dividend which has risen 125% over the last 6 quarters.”
FINANCIAL HIGHLIGHTS
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Fourth Quarter Ended |
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Fourth Quarter Ended |
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Year Ended |
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Year Ended |
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Sept. 30, 2022 |
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Sept. 30, 2021 |
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Sept. 30, 2022 |
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Sept. 30, 2021 |
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Royalty Interest Sales |
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$ |
15,411,544 |
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$ |
6,007,389 |
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$ |
44,484,472 |
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$ |
18,432,035 |
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Working Interest Sales |
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$ |
6,416,490 |
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$ |
6,071,031 |
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$ |
25,376,159 |
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$ |
19,317,009 |
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Natural Gas, Oil and NGL Sales |
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$ |
21,828,034 |
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$ |
12,078,420 |
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$ |
69,860,631 |
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$ |
37,749,044 |
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Gains (Losses) on Derivative Contracts |
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$ |
(4,298,614 |
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$ |
(8,112,827 |
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$ |
(16,833,078 |
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$ |
(16,202,489 |
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Lease Bonuses and Rental Income |
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$ |
17,350 |
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$ |
105,974 |
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$ |
467,502 |
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$ |
425,113 |
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Total Revenue |
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$ |
17,546,770 |
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$ |
4,071,567 |
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$ |
53,495,055 |
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$ |
21,971,668 |
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Lease Operating Expense |
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per Working Interest Mcfe |
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$ |
1.28 |
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$ |
0.93 |
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$ |
1.19 |
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$ |
0.86 |
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Transportation, Gathering and Marketing |
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per Mcfe |
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$ |
0.68 |
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$ |
0.74 |
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$ |
0.61 |
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$ |
0.64 |
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Production Tax per Mcfe |
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$ |
0.36 |
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$ |
0.28 |
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$ |
0.34 |
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$ |
0.21 |
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Cash G&A Expense per Mcfe (1) |
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$ |
1.06 |
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$ |
0.82 |
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$ |
0.95 |
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$ |
0.79 |
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G&A Expense per Mcfe |
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$ |
1.46 |
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$ |
0.97 |
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$ |
1.20 |
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$ |
0.90 |
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Interest Expense per Mcfe |
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$ |
0.18 |
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$ |
0.09 |
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$ |
0.12 |
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$ |
0.11 |
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DD&A per Mcfe |
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$ |
0.60 |
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$ |
0.71 |
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$ |
0.76 |
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$ |
0.85 |
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Total Expense per Mcfe |
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$ |
3.65 |
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$ |
3.30 |
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$ |
3.45 |
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$ |
3.18 |
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Net Income (Loss) |
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$ |
9,158,468 |
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$ |
(3,764,200 |
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$ |
20,409,272 |
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$ |
(6,217,237 |
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Adjusted EBITDA (2) |
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$ |
8,395,965 |
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$ |
4,219,914 |
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$ |
25,825,548 |
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$ |
15,726,260 |
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Cash Flow from Operations |
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$ |
13,192,676 |
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$ |
(6,298,246 |
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$ |
37,531,650 |
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$ |
3,942,087 |
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CapEx |
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$ |
201,114 |
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$ |
36,413 |
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$ |
552,638 |
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$ |
733,172 |
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CapEx - Mineral Acquisitions |
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$ |
13,652,829 |
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$ |
1,287,082 |
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$ |
43,525,236 |
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$ |
20,624,347 |
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Borrowing Base |
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$ |
50,000,000 |
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$ |
27,500,000 |
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Debt |
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$ |
28,300,000 |
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$ |
17,500,000 |
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Debt to Adjusted EBITDA (TTM) (2) |
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1.10 |
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1.11 |
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*****MORE*****
– 2 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
OPERATING HIGHLIGHTS
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Fourth Quarter Ended |
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Fourth Quarter Ended |
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Year Ended |
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Year Ended |
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Sept. 30, 2022 |
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Sept. 30, 2021 |
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Sept. 30, 2022 |
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Sept. 30, 2021 |
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Gas Mcf Sold |
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2,047,614 |
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1,609,101 |
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7,427,708 |
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6,699,720 |
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Average Sales Price per Mcf before the |
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effects of settled derivative contracts |
$ |
7.61 |
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$ |
4.27 |
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$ |
6.16 |
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$ |
3.13 |
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Average Sales Price per Mcf after the |
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effects of settled derivative contracts |
$ |
5.08 |
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$ |
3.54 |
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$ |
4.09 |
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$ |
2.95 |
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% of sales subject to hedges |
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58 |
% |
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72 |
% |
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62 |
% |
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62 |
% |
Oil Barrels Sold |
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49,902 |
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54,043 |
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198,535 |
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224,479 |
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Average Sales Price per Bbl before the |
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effects of settled derivative contracts |
$ |
94.07 |
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$ |
68.02 |
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$ |
91.32 |
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$ |
56.58 |
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Average Sales Price per Bbl after the |
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effects of settled derivative contracts |
$ |
57.80 |
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$ |
45.09 |
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$ |
57.67 |
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$ |
48.17 |
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% of sales subject to hedges |
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62 |
% |
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77 |
% |
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72 |
% |
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75 |
% |
NGL Barrels Sold |
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40,761 |
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46,369 |
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165,120 |
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171,488 |
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Average Sales Price per Bbl(1) |
$ |
37.89 |
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$ |
32.91 |
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$ |
36.11 |
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$ |
23.80 |
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Mcfe Sold |
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2,591,588 |
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2,211,570 |
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9,609,638 |
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9,075,519 |
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Natural gas, oil and NGL sales before the |
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effects of settled derivative contracts |
$ |
21,828,034 |
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$ |
12,078,420 |
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$ |
69,860,631 |
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$ |
37,749,044 |
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Natural gas, oil and NGL sales after the |
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effects of settled derivative contracts |
$ |
14,832,521 |
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$ |
9,652,336 |
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$ |
47,804,278 |
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$ |
34,634,153 |
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(1) There were no NGL settled derivative contracts during the 2022 and 2021 periods. |
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Total Production for the last four 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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9/30/2022 |
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2,047,614 |
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49,902 |
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40,761 |
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2,591,588 |
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6/30/2022 |
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1,897,799 |
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48,928 |
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39,732 |
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2,429,760 |
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3/31/2022 |
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1,908,030 |
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51,631 |
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40,371 |
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2,460,042 |
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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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Total production volumes attributable to natural gas were 79% and 78%, respectively, for the fiscal fourth quarter of 2022 and fiscal year 2022.
Royalty Interest Production for the last four 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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9/30/2022 |
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1,525,363 |
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32,202 |
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20,488 |
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1,841,502 |
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6/30/2022 |
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1,283,737 |
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32,562 |
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19,369 |
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1,595,323 |
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3/31/2022 |
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1,261,949 |
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28,758 |
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18,852 |
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1,547,609 |
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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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Royalty production volumes attributable to natural gas were 83% and 81%, respectively, for the fiscal fourth quarter and fiscal year of 2022.
*****MORE*****
– 3 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
Working Interest Production for the last four 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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9/30/2022 |
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522,251 |
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17,700 |
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20,273 |
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750,086 |
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6/30/2022 |
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614,062 |
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16,366 |
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20,363 |
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834,437 |
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3/31/2022 |
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646,081 |
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22,873 |
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21,519 |
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912,433 |
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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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FISCAL FOURTH QUARTER ENDED SEPT. 30, 2022 RESULTS
The Company recorded fiscal fourth quarter 2022 net income of $9,158,468, or $0.26 per share, as compared to a net loss of ($3,764,200), or ($0.12) per share, in the fiscal fourth quarter 2021. The change in net income was principally the result of increased natural gas, oil and NGL sales, decreased losses associated with our hedge contracts and increased gains on asset sales, partially offset by an increase in general and administrative costs, or G&A, and income tax expense.
Natural gas, oil and NGL revenue increased $9,749,614, or 81%, for the fiscal fourth quarter 2022, compared to the corresponding fiscal 2021 quarter, due to increases in natural gas, oil and NGL prices of 78%, 38% and 15%, respectively, and an increase in natural gas volumes of 27%, partially offset by a decrease in oil and NGL volumes of 8% and 12%, respectively.
The production increase in royalty volumes during the fiscal quarter ended Sept. 30, 2022, as compared to the fiscal quarter ended Sept. 30, 2021, was primarily due to acquisitions and new drilling in the Haynesville and SCOOP plays. The decrease in working interest volumes resulted from the divestiture of low-value legacy working interests in Oklahoma and the Fayetteville Shale in Arkansas, naturally declining production in high-interest wells in the Arkoma Stack and STACK plays, and shut-in legacy wells in the Eagle Ford play while the operator completes new offset wells.
The Company had a net loss on derivative contracts of ($4,298,614) in the fiscal fourth quarter 2022, as compared to a net loss of ($8,112,827) in the fiscal fourth quarter 2021, of which ($5,938,317) is a loss on settled derivatives and $1,639,703 is a non-cash gain on derivatives with respect to the fiscal fourth quarter 2022. Loss on settled derivative contracts for the fiscal fourth quarter 2022 excludes $1,057,197 of cash paid to settle off-market derivative contracts. The change in net loss on derivative contracts was due to the Company’s settlements of natural gas and oil collars and fixed price swaps and the change in valuation caused by the difference in Sept. 30, 2022 pricing relative to the strike price on open derivative contracts.
The 11% increase in total cost per Mcfe in the fiscal fourth quarter 2022, relative to the fiscal fourth quarter 2021, was primarily driven by an increase in G&A and production taxes. G&A increased $1,640,954, or 77%, in the fiscal fourth quarter 2022, compared to the corresponding fiscal 2021 quarter due to increased legal and accounting expenses associated with higher transaction activity and restricted stock expense. Production taxes increased $307,064, or 49%, due to an increase in natural gas, oil and NGL revenue, but decreased as a percent of natural gas, oil and NGL revenue in the fiscal fourth quarter 2022, compared to the corresponding fiscal 2021 quarter, from 5.2% to 4.3%.
Income tax expense increased in the fiscal fourth quarter 2022 due to net income of $9,158,468, compared to the ($3,764,200) net loss recorded in the fiscal fourth quarter 2021.
FISCAL YEAR 2022 RESULTS
The Company recorded net income of $20,409,272, or $0.59 per share, in the fiscal year ended Sept. 30, 2022 (“fiscal year 2022”), as compared to a net loss of $(6,217,237), or $(0.24) per share, in the fiscal year ended Sept. 30, 2021 (“fiscal year 2021”). The change in net income was principally the result of increased natural gas, oil and NGL sales and gains on asset sales, and decreased depreciation, depletion and amortization, or DD&A, partially offset by an increase in income tax expense, losses on derivative contracts, production taxes, and G&A.
Natural gas, oil and NGL sales increased $32,111,587, or 85%, for fiscal year 2022, compared to fiscal year 2021, due to increases in natural gas, oil and NGL prices of 97%, 61% and 52%, respectively, and an increase in natural gas volumes of 11%, partially offset by a decrease in oil and NGL volumes of 12% and 4%, respectively.
*****MORE*****
– 4 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
The increase in natural gas production was primarily due to acquisitions and new drilling in the Haynesville play, and slightly offset by divestiture of working interest assets in the Fayetteville Shale and naturally declining production in the Arkoma STACK. The decrease in oil production was a result of naturally declining production in high interest wells in the Eagle Ford and Bakken plays, wells shut in for workovers in the Eagle Ford, our strategy of no longer participating with working interest in new drilling in the Eagle Ford and the natural decline of wells brought online in fiscal year 2021 in the STACK play. These decreases were partially offset by new drilling and acquisitions in the SCOOP. The decrease in NGL production is primarily attributable to the natural decline in high interest, liquids rich wells in the STACK. This was partially offset by new wells in the SCOOP.
The Company had a net loss on derivative contracts of ($16,833,078) in fiscal year 2022, as compared to a net loss of ($16,202,489) in fiscal year 2021, of which ($14,533,560) is a loss on settled derivatives and ($2,299,518) is a non-cash loss on derivatives with respect to fiscal year 2022. Loss on settled derivative contracts for fiscal year 2022 excludes $7,522,794 of cash paid to settle off-market derivative contracts. The change in net loss on derivative contracts was due to the Company’s settlements of natural gas and oil collars and fixed price swaps and the change in valuation caused by the difference in Sept. 30, 2022, pricing relative to the strike price on open derivative contracts.
The 8% increase in total cost per Mcfe in fiscal year 2022, relative to fiscal year 2021, was primarily driven by an increase in G&A and production taxes, partially offset by a decrease in DD&A. G&A increased $3,292,712, or 40%, in fiscal year 2022 compared to the fiscal year 2021 due to legal and accounting expenses associated with reincorporating in the state of Delaware and increased transaction activity, increased wage inflation and increased restricted stock expense. Production taxes increased $1,292,563, or 67%, due to increase in natural gas, oil and NGL revenue, but decreased as a percentage of natural gas, oil and NGL revenue in fiscal year 2022, compared to the fiscal year 2021 from 5.1% to 4.6%. DD&A decreased $467,686, or 6%, in fiscal year 2022 to $0.76 per Mcfe, as compared to $0.85 per Mcfe in fiscal year 2021. Of the DD&A decrease, $921,685 was a result of a $0.09 decrease in the DD&A rate per Mcfe, partially offset by an increase of $453,999 resulting from production increasing 6% in fiscal year 2022, compared to fiscal year 2021. The DD&A rate per Mcfe decrease was due to working interest divestitures, partially offset by royalty interest acquisitions during fiscal year 2022.
Income tax expense increased in fiscal year 2022 due to net income of $20,409,272, compared to the $(6,217,237) net loss in fiscal year 2021.
OPERATIONS UPDATE
During the fiscal fourth quarter of 2022, the Company converted 49 gross (0.22 net) wells to producing status, including 18 gross (0.057 net) in the SCOOP and 8 gross (0.057 net) in the Haynesville, compared to 96 gross (0.25 net) wells, including 39 gross (0.19 net) in the SCOOP and 12 gross (0.03 net) in the Haynesville, during the fiscal third quarter of 2022.
During fiscal year 2022, the Company converted 318 gross (1.07 net) wells to producing status, including 108 gross (0.22 net) in the SCOOP and 84 gross (0.57 net) in the Haynesville, compared to 147 gross (0.56 net) wells in fiscal year 2021.
*****MORE*****
– 5 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
At Sept. 30, 2022, the Company had a total of 172 gross (0.85 net) wells in progress across its mineral positions and 64 gross (0.21 net) active permitted wells, compared to 155 gross (0.79 net) wells in progress and 65 gross (0.21 net) active permitted wells at June 30, 2022. As of Nov. 28, 2022, 26 rigs were operating on the Company’s acreage with 99 rigs operating within 2.5 miles of its acreage, compared to 25 rigs operating on the Company’s acreage with 96 rigs operating within 2.5 miles of its acreage as of June 30, 2022.
|
|
|
|
|
|
|
Bakken/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
Three |
|
|
Arkoma |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
SCOOP |
|
|
STACK |
|
|
Forks |
|
|
Stack |
|
|
Fayetteville |
|
|
Haynesville |
|
|
Other |
|
|
Total |
|
||||||||
As of Sept. 30, 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross Wells in Progress on PHX Acreage |
|
42 |
|
|
|
27 |
|
|
|
10 |
|
|
|
5 |
|
|
|
- |
|
|
|
80 |
|
|
|
8 |
|
|
|
172 |
|
Net Wells in Progress on PHX Acreage |
|
0.15 |
|
|
|
0.05 |
|
|
|
0.07 |
|
|
|
0.003 |
|
|
|
- |
|
|
|
0.56 |
|
|
|
0.02 |
|
|
|
0.85 |
|
Gross Active Permits on PHX Acreage |
|
22 |
|
|
|
6 |
|
|
|
7 |
|
|
|
- |
|
|
|
- |
|
|
|
23 |
|
|
|
6 |
|
|
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
As of Nov. 28, 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Rigs Present on PHX Acreage |
|
11 |
|
|
|
3 |
|
|
|
1 |
|
|
|
2 |
|
|
|
- |
|
|
|
9 |
|
|
|
- |
|
|
|
26 |
|
Rigs Within 2.5 Miles of PHX Acreage |
|
25 |
|
|
|
18 |
|
|
|
4 |
|
|
|
2 |
|
|
|
- |
|
|
|
39 |
|
|
|
11 |
|
|
|
99 |
|
Leasing Activity
During the fiscal fourth quarter of 2022, the Company leased 266 net mineral acres for an average bonus payment of $450 per net mineral acre and an average royalty of 22%.
ACQUISITION AND DIVESTITURE UPDATE
During the fiscal fourth quarter of 2022, the Company purchased 923 net royalty acres for approximately $13.5 million and sold 112 net mineral acres, which were outside our core focus areas and predominantly undeveloped and unleased, for approximately $0.1 million. The Company also sold 243 gross non-operated working interest wellbores for approximately $5.3 million.
|
|
Fiscal Fourth Quarter 2022 Acquisitions |
|
|||||||||||||
|
|
SCOOP |
|
|
Haynesville |
|
|
Other |
|
|
Total |
|
||||
Net Mineral Acres Purchased |
|
|
114 |
|
|
|
450 |
|
|
|
- |
|
|
|
564 |
|
Net Royalty Acres Purchased |
|
|
157 |
|
|
|
766 |
|
|
|
- |
|
|
|
923 |
|
During fiscal year 2022, the Company purchased 4,570 net royalty acres for approximately $48.0 million and sold 9,707 net mineral acres, which were outside our core focus areas and predominantly undeveloped and unleased, for approximately $2.7 million. The Company also sold 1,001 gross non-operated working interest wellbores for approximately $10.5 million.
|
|
Fiscal Year 2022 Acquisitions |
|
|||||||||||||
|
|
SCOOP |
|
|
Haynesville |
|
|
Other |
|
|
Total |
|
||||
Net Mineral Acres Purchased |
|
|
823 |
|
|
|
2,204 |
|
|
|
- |
|
|
|
3,027 |
|
Net Royalty Acres Purchased |
|
|
989 |
|
|
|
3,581 |
|
|
|
- |
|
|
|
4,570 |
|
ROYALTY RESERVES UPDATE
At Sept. 30, 2022, proved royalty reserves increased 45% to 52.8 Bcfe compared to 36.4 Bcfe at Sept. 30, 2021. Proved developed reserves increased by 8.7 Bcfe and proved undeveloped reserves increased by 7.7 Bcfe, primarily due to execution of our acquisition strategy and increased activity in the Haynesville and SCOOP plays.
*****MORE*****
– 6 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
|
Proved Royalty Interest |
|
|||||
|
Reserves SEC Pricing |
|
|||||
|
Sept. 30, 2022 |
|
|
Sept. 30, 2021 |
|
||
Proved Developed Reserves: |
|
|
|||||
Mcf of Gas |
|
32,055,133 |
|
|
|
23,978,345 |
|
Barrels of Oil |
|
607,727 |
|
|
|
667,457 |
|
Barrels of NGL |
|
685,166 |
|
|
|
527,142 |
|
Mcfe (1) |
|
39,812,491 |
|
|
|
31,145,939 |
|
Proved Undeveloped Reserves: |
|
|
|
|
|
||
Mcf of Gas |
|
11,933,021 |
|
|
|
4,664,782 |
|
Barrels of Oil |
|
106,924 |
|
|
|
64,979 |
|
Barrels of NGL |
|
64,637 |
|
|
|
34,762 |
|
Mcfe (1) |
|
12,962,387 |
|
|
|
5,263,228 |
|
Total Proved Reserves: |
|
|
|
|
|
||
Mcf of Gas |
|
43,988,154 |
|
|
|
28,643,127 |
|
Barrels of Oil |
|
714,651 |
|
|
|
732,436 |
|
Barrels of NGL |
|
749,803 |
|
|
|
561,904 |
|
Mcfe (1) |
|
52,774,878 |
|
|
|
36,409,167 |
|
|
|
|
|
|
|
||
10% Discounted Estimated Future |
|
|
|
|
|
||
Net Cash Flows (before income taxes): |
|
|
|
|
|
||
Proved Developed |
$ |
119,710,945 |
|
|
$ |
45,948,690 |
|
Proved Undeveloped |
|
52,978,389 |
|
|
|
9,731,035 |
|
Total |
$ |
172,689,334 |
|
|
$ |
55,679,725 |
|
|
|
|
|
|
|
||
(1) Crude oil and NGL converted to natural gas on a one barrel of crude oil or NGL equals six Mcf of natural gas basis. |
|
||||||
TOTAL RESERVES UPDATE
At Sept. 30, 2022, proved reserves were 81.1 Bcfe, as calculated by Cawley, Gillespie and Associates, Inc., the Company’s independent consulting petroleum engineering firm. This was a 2% decrease, compared to the 83.0 Bcfe of proved reserves at Sept. 30, 2021. Total proved developed reserves decreased 12% to 68.1 Bcfe, as compared to Sept. 30, 2021, reserve volumes, mainly due to sales of working interest properties in the Fayetteville Shale, Arkoma Stack and Western Anadarko Basin. SEC prices used for the Sept. 30, 2022, report averaged $6.41 per Mcf for natural gas, $90.33 per barrel for oil and $38.09 per barrel for NGL, compared to $2.79 per Mcf for natural gas, $56.51 per barrel for oil and $20.58 per barrel for NGL for the Sept. 30, 2021, report. These prices reflect net prices received at the wellhead.
*****MORE*****
– 7 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
|
Proved Reserves SEC Pricing |
|
|||||
|
Sept. 30, 2022 |
|
|
Sept. 30, 2021 |
|
||
Proved Developed Reserves: |
|
|
|||||
Mcf of Gas |
|
50,304,185 |
|
|
|
60,287,881 |
|
Barrels of Oil |
|
1,275,853 |
|
|
|
1,439,860 |
|
Barrels of NGL |
|
1,698,046 |
|
|
|
1,467,092 |
|
Mcfe (1) |
|
68,147,579 |
|
|
|
77,729,593 |
|
Proved Undeveloped Reserves: |
|
|
|
|
|
||
Mcf of Gas |
|
11,933,021 |
|
|
|
4,664,787 |
|
Barrels of Oil |
|
106,924 |
|
|
|
64,980 |
|
Barrels of NGL |
|
64,637 |
|
|
|
34,761 |
|
Mcfe (1) |
|
12,962,387 |
|
|
|
5,263,233 |
|
Total Proved Reserves: |
|
|
|
|
|
||
Mcf of Gas |
|
62,237,206 |
|
|
|
64,952,668 |
|
Barrels of Oil |
|
1,382,777 |
|
|
|
1,504,840 |
|
Barrels of NGL |
|
1,762,683 |
|
|
|
1,501,853 |
|
Mcfe (1) |
|
81,109,966 |
|
|
|
82,992,826 |
|
|
|
|
|
|
|
||
10% Discounted Estimated Future |
|
|
|
|
|
||
Net Cash Flows (before income taxes): |
|
|
|
|
|
||
Proved Developed |
$ |
184,948,239 |
|
|
$ |
86,793,303 |
|
Proved Undeveloped |
|
52,978,389 |
|
|
|
9,731,036 |
|
Total |
$ |
237,926,628 |
|
|
$ |
96,524,339 |
|
SEC Pricing |
|
|
|
|
|
||
Gas/Mcf |
$ |
6.41 |
|
|
$ |
2.79 |
|
Oil/Barrel |
$ |
90.33 |
|
|
$ |
56.51 |
|
NGL/Barrel |
$ |
38.09 |
|
|
$ |
20.58 |
|
|
|
|
|
|
|
||
Proved Reserves - Projected Future Pricing (2) |
|
||||||
|
|
|
|
|
|
||
10% Discounted Estimated Future |
Proved Reserves |
|
|||||
Net Cash Flows (before income taxes): |
Sept. 30, 2022 |
|
|
Sept. 30, 2021 |
|
||
Proved Developed |
$ |
128,718,584 |
|
|
$ |
111,007,369 |
|
Proved Undeveloped |
|
39,770,031 |
|
|
|
11,989,928 |
|
Total |
$ |
168,488,615 |
|
|
$ |
122,997,297 |
|
|
|
|
|
|
|
||
(1) Crude oil and NGL converted to natural gas on a one barrel of crude oil or NGL equals six Mcf of natural gas basis. |
|
||||||
(2) Projected futures pricing as of Sept. 30, 2022, and Sept. 30, 2021, basis adjusted to Company wellhead price. |
|
||||||
FOURTH QUARTER EARNINGS CALL
PHX will host a conference call to discuss the Company’s fiscal fourth quarter 2022 results at 11:00 a.m. EST tomorrow, Dec. 14, 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 13734289. A webcast will be available at https://event.choruscall.com/mediaframe/webcast.html?webcastid=pL7VYYvq.
*****MORE*****
– 8 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
FINANCIAL RESULTS
Statements of Operations
|
Three Months Ended Sept. 30, |
|
|
Year Ended Sept. 30, |
|
||||||||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Revenues: |
|
|
|
|
|
||||||||||
Natural gas, oil and NGL sales |
$ |
21,828,034 |
|
|
$ |
12,078,420 |
|
|
$ |
69,860,631 |
|
|
$ |
37,749,044 |
|
Lease bonuses and rental income |
|
17,350 |
|
|
|
105,974 |
|
|
|
467,502 |
|
|
|
425,113 |
|
Gains (losses) on derivative contracts |
|
(4,298,614 |
) |
|
|
(8,112,827 |
) |
|
|
(16,833,078 |
) |
|
|
(16,202,489 |
) |
|
|
17,546,770 |
|
|
|
4,071,567 |
|
|
|
53,495,055 |
|
|
|
21,971,668 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||
Lease operating expenses |
|
961,148 |
|
|
|
1,130,916 |
|
|
|
4,047,420 |
|
|
|
4,230,968 |
|
Transportation, gathering and marketing |
|
1,758,132 |
|
|
|
1,628,634 |
|
|
|
5,890,390 |
|
|
|
5,767,287 |
|
Production taxes |
|
929,330 |
|
|
|
622,266 |
|
|
|
3,230,867 |
|
|
|
1,938,304 |
|
Depreciation, depletion and amortization |
|
1,550,410 |
|
|
|
1,569,631 |
|
|
|
7,278,118 |
|
|
|
7,745,804 |
|
Provision for impairment |
|
2,703 |
|
|
|
4,620 |
|
|
|
14,565 |
|
|
|
50,475 |
|
Interest expense |
|
471,716 |
|
|
|
204,925 |
|
|
|
1,164,992 |
|
|
|
995,127 |
|
General and administrative |
|
3,783,159 |
|
|
|
2,142,205 |
|
|
|
11,500,594 |
|
|
|
8,207,882 |
|
Loss on debt extinguishment |
|
- |
|
|
|
260,236 |
|
|
|
- |
|
|
|
260,236 |
|
Losses (gains) on asset sales and other |
|
(3,499,296 |
) |
|
|
(178,615 |
) |
|
|
(4,243,163 |
) |
|
|
(356,127 |
) |
Total costs and expenses |
|
5,957,302 |
|
|
|
7,384,818 |
|
|
|
28,883,783 |
|
|
|
28,839,956 |
|
Income (loss) before provision (benefit) for income taxes |
|
11,589,468 |
|
|
|
(3,313,251 |
) |
|
|
24,611,272 |
|
|
|
(6,868,288 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision (benefit) for income taxes |
|
2,431,000 |
|
|
|
450,949 |
|
|
|
4,202,000 |
|
|
|
(651,051 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
$ |
9,158,468 |
|
|
$ |
(3,764,200 |
) |
|
$ |
20,409,272 |
|
|
$ |
(6,217,237 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted earnings (loss) per common share |
$ |
0.26 |
|
|
$ |
(0.12 |
) |
|
$ |
0.59 |
|
|
$ |
(0.24 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
35,573,813 |
|
|
|
30,207,492 |
|
|
|
34,403,498 |
|
|
|
25,925,536 |
|
Diluted |
|
35,916,878 |
|
|
|
30,207,492 |
|
|
|
34,560,310 |
|
|
|
25,925,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dividends per share of |
|
|
|
|
|
|
|
|
|
|
|
||||
common stock paid in period |
$ |
0.02 |
|
|
$ |
0.01 |
|
|
$ |
0.065 |
|
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
*****MORE*****
– 9 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
Balance Sheets
|
Sept. 30, 2022 |
|
|
Sept. 30, 2021 |
|
||
Assets |
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
3,396,809 |
|
|
$ |
2,438,511 |
|
Natural gas, oil, and NGL sales receivables (net of $0 |
|
13,152,274 |
|
|
|
6,428,982 |
|
allowance for uncollectable accounts) |
|
|
|
|
|
||
Refundable income taxes |
|
- |
|
|
|
2,413,942 |
|
Other |
|
1,372,847 |
|
|
|
942,082 |
|
Total current assets |
|
17,921,930 |
|
|
|
12,223,517 |
|
|
|
|
|
|
|
||
Properties and equipment at cost, based on |
|
|
|
|
|
||
successful efforts accounting: |
|
|
|
|
|
||
Producing natural gas and oil properties |
|
248,978,928 |
|
|
|
319,984,874 |
|
Non-producing natural gas and oil properties |
|
51,779,336 |
|
|
|
40,466,098 |
|
Other |
|
1,085,056 |
|
|
|
794,179 |
|
|
|
301,843,320 |
|
|
|
361,245,151 |
|
Less accumulated depreciation, depletion and amortization |
|
(168,759,385 |
) |
|
|
(257,643,661 |
) |
Net properties and equipment |
|
133,083,935 |
|
|
|
103,601,490 |
|
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
739,131 |
|
|
|
607,414 |
|
Other, net |
|
757,116 |
|
|
|
578,593 |
|
Total assets |
$ |
152,502,112 |
|
|
$ |
117,011,014 |
|
|
|
|
|
|
|
||
Liabilities and Stockholders' Equity |
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
||
Accounts payable |
$ |
647,217 |
|
|
$ |
772,717 |
|
Derivative contracts, net |
|
7,873,979 |
|
|
|
12,087,988 |
|
Income taxes payable |
|
495,858 |
|
|
|
334,050 |
|
Current portion of operating lease liability |
|
213,355 |
|
|
|
132,287 |
|
Accrued liabilities and other |
|
2,032,275 |
|
|
|
1,809,337 |
|
Total current liabilities |
|
11,262,684 |
|
|
|
15,136,379 |
|
|
|
|
|
|
|
||
Long-term debt |
|
28,300,000 |
|
|
|
17,500,000 |
|
Deferred income taxes, net |
|
1,585,906 |
|
|
|
343,906 |
|
Asset retirement obligations |
|
1,901,904 |
|
|
|
2,836,172 |
|
Derivative contracts, net |
|
687,212 |
|
|
|
1,696,479 |
|
Operating lease liability, net of current portion |
|
985,887 |
|
|
|
789,339 |
|
|
|
|
|
|
|
||
Total liabilities |
|
44,723,593 |
|
|
|
38,302,275 |
|
|
|
|
|
|
|
||
Stockholders' equity: |
|
|
|
|
|
||
Voting common stock, par value $0.01666 per share: 54,000,500 shares |
|
|
|
|
|
||
authorized and 35,776,752 shares issued and outstanding at Sept. 30, 2022; |
|
|
|
|
|
||
36,000,500 shares authorized and 32,770,433 shares issued and |
|
596,041 |
|
|
|
545,956 |
|
outstanding at Sept. 30, 2021 |
|
|
|
|
|
||
Capital in excess of par value |
|
44,177,051 |
|
|
|
33,213,645 |
|
Deferred directors' compensation |
|
1,496,243 |
|
|
|
1,768,151 |
|
Retained earnings |
|
67,117,791 |
|
|
|
48,966,420 |
|
|
|
113,387,126 |
|
|
|
84,494,172 |
|
Less treasury stock, at cost; 377,232 shares at Sept. 30, |
|
|
|
|
|
||
2022, and 388,545 shares at Sept. 30, 2021 |
|
(5,608,607 |
) |
|
|
(5,785,433 |
) |
Total stockholders' equity |
|
107,778,519 |
|
|
|
78,708,739 |
|
Total liabilities and stockholders' equity |
$ |
152,502,112 |
|
|
$ |
117,011,014 |
|
*****MORE*****
– 10 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
Condensed Statements of Cash Flows
|
Year Ended Sept. 30, |
|
|||||
|
2022 |
|
|
2021 |
|
||
Operating Activities |
|
|
|||||
Net income (loss) |
$ |
20,409,272 |
|
|
$ |
(6,217,237 |
) |
Adjustments to reconcile net income (loss) to net cash provided |
|
|
|
|
|
||
by operating activities: |
|
|
|
|
|
||
Depreciation, depletion and amortization |
|
7,278,118 |
|
|
|
7,745,804 |
|
Impairment of producing properties |
|
14,565 |
|
|
|
50,475 |
|
Provision for deferred income taxes |
|
1,242,000 |
|
|
|
(985,101 |
) |
Gain from leasing fee mineral acreage |
|
(466,341 |
) |
|
|
(421,915 |
) |
Proceeds from leasing fee mineral acreage |
|
688,207 |
|
|
|
441,653 |
|
Net (gain) loss on sales of assets |
|
(4,423,646 |
) |
|
|
(309,348 |
) |
Directors' deferred compensation expense |
|
191,852 |
|
|
|
234,466 |
|
Total (gain) loss on derivative contracts |
|
16,833,078 |
|
|
|
16,202,489 |
|
Cash receipts (payments) on settled derivative contracts |
|
(2,796,250 |
) |
|
|
(11,925,669 |
) |
Restricted stock awards |
|
2,211,673 |
|
|
|
801,200 |
|
Loss on debt extinguishment |
|
- |
|
|
|
260,236 |
|
Other |
|
87,353 |
|
|
|
(11,099 |
) |
Cash provided (used) by changes in assets and liabilities: |
|
|
|
|
|
||
Natural gas, oil and NGL sales receivables |
|
(6,723,292 |
) |
|
|
(3,485,762 |
) |
Refundable (payable) income taxes |
|
2,413,942 |
|
|
|
1,391,285 |
|
Other current assets |
|
250,568 |
|
|
|
(436,401 |
) |
Accounts payable |
|
(10,305 |
) |
|
|
(151,875 |
) |
Other non-current assets |
|
(380,964 |
) |
|
|
(86,282 |
) |
Income taxes payable |
|
161,808 |
|
|
|
- |
|
Accrued liabilities |
|
550,012 |
|
|
|
845,168 |
|
Total adjustments |
|
17,122,378 |
|
|
|
10,159,324 |
|
Net cash provided by operating activities |
|
37,531,650 |
|
|
|
3,942,087 |
|
|
|
|
|
|
|
||
Investing Activities |
|
|
|
|
|
||
Capital expenditures |
|
(552,638 |
) |
|
|
(733,172 |
) |
Acquisition of minerals and overriding royalty interests |
|
(43,525,236 |
) |
|
|
(20,624,347 |
) |
Net proceeds from sales of assets |
|
13,217,844 |
|
|
|
988,600 |
|
Net cash provided (used) by investing activities |
|
(30,860,030 |
) |
|
|
(20,368,919 |
) |
|
|
|
|
|
|
||
Financing Activities |
|
|
|
|
|
||
Borrowings under credit facility |
|
21,300,000 |
|
|
|
26,300,000 |
|
Payments of loan principal |
|
(10,500,000 |
) |
|
|
(37,550,000 |
) |
Net proceeds from equity issuance |
|
5,006,538 |
|
|
|
11,688,137 |
|
Cash receipts from (payments on) off-market derivative contracts |
|
(19,260,104 |
) |
|
|
8,800,000 |
|
Purchases of treasury stock |
|
(1,855 |
) |
|
|
(2,741 |
) |
Payments of dividends |
|
(2,257,901 |
) |
|
|
(1,060,448 |
) |
Net cash provided (used) by financing activities |
|
(5,713,322 |
) |
|
|
8,174,948 |
|
|
|
|
|
|
|
||
Increase (decrease) in cash and cash equivalents |
|
958,298 |
|
|
|
(8,251,884 |
) |
Cash and cash equivalents at beginning of year |
|
2,438,511 |
|
|
|
10,690,395 |
|
Cash and cash equivalents at end of year |
$ |
3,396,809 |
|
|
$ |
2,438,511 |
|
|
|
|
|
|
|
||
Supplemental Disclosures of Cash Flow Information |
|
|
|
|
|
||
|
|
|
|
|
|
||
Interest paid (net of capitalized interest) |
$ |
997,085 |
|
|
$ |
1,021,142 |
|
Income taxes paid (net of refunds received) |
$ |
384,249 |
|
|
$ |
(1,391,225 |
) |
|
|
|
|
|
|
||
Gross additions to properties and equipment |
$ |
46,791,346 |
|
|
$ |
31,485,015 |
|
Value of shares used for acquisitions |
|
(3,510,001 |
) |
|
|
(10,272,288 |
) |
Net (increase) decrease in accounts payable for properties |
|
|
|
|
|
||
and equipment additions |
|
796,529 |
|
|
|
144,792 |
|
Capital expenditures and acquisitions |
$ |
44,077,874 |
|
|
$ |
21,357,519 |
|
*****MORE*****
– 11 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
Derivative Contracts as of Sept. 30, 2022
|
|
|
|
|
|
|
|
|
|
Collar Average |
|
|
Collar Average |
|
||||
Fiscal Period |
|
Product |
|
Volume Mcf/Bbl |
|
|
Swap Price |
|
|
Floor Price |
|
|
Ceiling Price |
|
||||
2023 |
|
Natural Gas |
|
|
1,415,000 |
|
|
|
|
|
$ |
4.13 |
|
|
$ |
7.69 |
|
|
2023 |
|
Natural Gas |
|
|
2,100,000 |
|
|
$ |
3.24 |
|
|
|
|
|
|
|
||
2024 |
|
Natural Gas |
|
|
135,000 |
|
|
|
|
|
$ |
3.28 |
|
|
$ |
5.98 |
|
|
2024 |
|
Natural Gas |
|
|
380,000 |
|
|
$ |
3.41 |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
2023 |
|
Crude Oil |
|
|
15,000 |
|
|
|
|
|
$ |
75.00 |
|
|
$ |
96.00 |
|
|
2023 |
|
Crude Oil |
|
|
72,750 |
|
|
$ |
63.65 |
|
|
|
|
|
|
|
||
2024 |
|
Crude Oil |
|
|
14,250 |
|
|
$ |
74.91 |
|
|
|
|
|
|
|
||
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
We define “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. We have included a presentation of adjusted EBITDA because we recognize that certain investors consider this amount to be 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 presentation of adjusted EBITDA may not be comparable to a similarly titled measure of other companies.
*****MORE*****
– 12 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
The following table provides a reconciliation of net income (loss) to adjusted EBITDA for the periods indicated:
|
Fourth Quarter Ended |
|
|
Fourth Quarter Ended |
|
|
Year Ended |
|
|
Year Ended |
|
|
Third Quarter Ended |
|
|||||
|
Sept. 30, 2022 |
|
|
Sept. 30, 2021 |
|
|
Sept. 30, 2022 |
|
|
Sept. 30, 2021 |
|
|
June 30, 2022 |
|
|||||
Net Income (Loss) |
$ |
9,158,468 |
|
|
$ |
(3,764,200 |
) |
|
$ |
20,409,272 |
|
|
$ |
(6,217,237 |
) |
|
$ |
8,589,010 |
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
(benefit) |
|
2,431,000 |
|
|
|
450,949 |
|
|
|
4,202,000 |
|
|
|
(651,051 |
) |
|
|
976,000 |
|
Interest expense |
|
471,716 |
|
|
|
204,925 |
|
|
|
1,164,992 |
|
|
|
995,127 |
|
|
|
286,345 |
|
DD&A |
|
1,550,410 |
|
|
|
1,569,631 |
|
|
|
7,278,118 |
|
|
|
7,745,804 |
|
|
|
2,022,832 |
|
Impairment |
|
2,703 |
|
|
|
4,620 |
|
|
|
14,565 |
|
|
|
50,475 |
|
|
|
6,277 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Non-cash gains (losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
on derivatives |
|
1,639,703 |
|
|
|
3,124,035 |
|
|
|
(2,299,518 |
) |
|
|
(4,276,820 |
) |
|
|
3,282,921 |
|
Gains (losses) on asset sales |
|
3,558,611 |
|
|
|
247,543 |
|
|
|
4,423,648 |
|
|
|
309,344 |
|
|
|
693,750 |
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash receipts from (payments on) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
off-market derivative contracts(1) |
|
(1,057,197 |
) |
|
|
8,800,000 |
|
|
|
(7,522,794 |
) |
|
|
8,800,000 |
|
|
|
(1,284,024 |
) |
Restricted stock and deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
director's expense |
|
1,037,179 |
|
|
|
325,567 |
|
|
|
2,403,525 |
|
|
|
1,035,666 |
|
|
|
574,333 |
|
Adjusted EBITDA |
$ |
8,395,965 |
|
|
$ |
4,219,914 |
|
|
$ |
25,825,548 |
|
|
$ |
15,726,260 |
|
|
$ |
7,194,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
(1) The initial receipt of $8.8 million of cash from BP Energy Company, or BP, for entering into the off-market derivative contracts had no effect on the Company’s statement of operations and was considered cash flow from financing activities. A portion of subsequent settlements with BP had no effect on the Company’s statement of operations. |
|
||||||||||||||||||
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. We have included a presentation of debt to adjusted EBITDA (TTM) because we recognize that certain investors consider such ratios to be a useful means of measuring our ability to meet our debt service obligations and for evaluating our 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:
*****MORE*****
– 13 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
|
TTM Ended |
|
|
TTM Ended |
|
||
|
Sept. 30, 2022 |
|
|
Sept. 30, 2021 |
|
||
Net Income (Loss) |
$ |
20,409,272 |
|
|
$ |
(6,217,237 |
) |
Plus: |
|
|
|
|
|
||
Income tax expense (benefit) |
|
4,202,000 |
|
|
|
(651,051 |
) |
Interest expense |
|
1,164,992 |
|
|
|
995,127 |
|
DD&A |
|
7,278,118 |
|
|
|
7,745,804 |
|
Impairment |
|
14,565 |
|
|
|
50,475 |
|
Less: |
|
|
|
|
|
||
Non-cash gains (losses) |
|
|
|
|
|
||
on derivatives |
|
(2,299,518 |
) |
|
|
(4,276,820 |
) |
Gains (losses) on asset sales |
|
4,423,648 |
|
|
|
309,344 |
|
Plus: |
|
|
|
|
|
||
Cash receipts from (payments on) |
|
|
|
|
|
||
off-market derivative contracts(1) |
|
(7,522,794 |
) |
|
|
8,800,000 |
|
Restricted stock and deferred |
|
|
|
|
|
||
director's expense |
|
2,403,525 |
|
|
|
1,035,666 |
|
Adjusted EBITDA |
$ |
25,825,548 |
|
|
$ |
15,726,260 |
|
|
|
|
|
|
|
||
Debt |
$ |
28,300,000 |
|
|
$ |
17,500,000 |
|
Debt to Adjusted EBITDA (TTM) |
|
1.10 |
|
|
|
1.11 |
|
|
|
|
|
|
|
||
(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 Company’s statement of operations and was considered cash flow from financing activities. A portion of subsequent settlements with BP has no effect on the Company’s statement of operations. |
|
||||||
Pretax Net Income (Loss) Excluding Non-cash Derivative Gains (Losses) Reconciliation
“Pretax net income (loss) excluding non-cash derivative gains (losses)” is defined as earnings before taxes, excluding non-cash gains (losses) on derivatives. We have included a presentation of pretax net income (loss) excluding non-cash derivative gains (losses) because we recognize that certain investors consider this amount to be a useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. Pretax net income (loss) excluding non-cash derivative gains (losses) 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 pretax net income (loss) excluding non-cash derivative gains (losses) may not be comparable to a similarly titled measure of other companies.
*****MORE*****
– 14 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
The following table provides a reconciliation of net income (loss) to pretax net income (loss) excluding non-cash derivative gains (losses) for the periods indicated:
|
Fourth Quarter Ended |
|
|
Fourth Quarter Ended |
|
||
|
Sept. 30, 2022 |
|
|
Sept. 30, 2021 |
|
||
Net Income (Loss) |
$ |
9,158,468 |
|
|
$ |
(3,764,200 |
) |
Plus: |
|
|
|
|
|
||
Income tax expense (benefit) |
|
2,431,000 |
|
|
|
450,949 |
|
Less: |
|
|
|
|
|
||
Non-cash gains (losses) |
|
|
|
|
|
||
on derivatives |
|
1,639,703 |
|
|
|
3,124,035 |
|
Pretax Net Income (Loss) excluding |
|
|
|
|
|
||
Non-cash Derivative Gains (Losses) |
$ |
9,949,765 |
|
|
$ |
(6,437,286 |
) |
|
|
|
|
|
|
||
Weighted average shares outstanding |
|
|
|
|
|
||
Basic |
|
35,573,813 |
|
|
|
30,207,492 |
|
Diluted |
|
35,916,878 |
|
|
|
30,207,492 |
|
|
|
|
|
|
|
||
Pretax Net Income (Loss) excluding Non-cash |
|
|
|
|
|
||
Derivative Gains (Losses) per basic and diluted share |
$ |
0.28 |
|
|
$ |
(0.21 |
) |
|
|
|
|
|
|
||
PHX Minerals Inc. (NYSE: PHX) Fort Worth-based, PHX Minerals Inc. is a natural gas and oil focused 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 on the Company 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, 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 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.
*****MORE*****
– 15 –
PHX Minerals Inc.
Reports Fourth Fiscal Quarter 2022 Results …cont.
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 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*****
– 16 –
Investor Presentation December 2022 NYSE: PHX 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 earnings before interest, taxes, depreciation and amortization, or 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. 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.
Source: Company information and Enverus 1 Based on $3.40 per share on 12/9/2022 and 35.77M shares outstanding as of 9/30/2022 2 Debt of $28.3m minus cash on hand of $3.4m 3 Calculated as working capital (current assets less current liabilities excluding current derivatives) plus availability on the borrowing base as of 90/30/2022 4 Based on $0.09 Dividend per share 5 Debt / TTM Adjusted EBITDA 6 See slide 28 for Non-GAAP reconciliation 7 See slide 5 for ROCE definition Investment Considerations Seasoned management and technical team Management team and Board with significant experience and deep relationships throughout PHX’s core areas Strong track record of delivering on stated strategy Management and board have significant common equity stake Attractive valuation relative to mineral focused peer group Trading at a discount relative to reserve value and based on peer group TEV/ EBITDA multiple Strong free cash flow yield in excess of 20% Current dividend yield of 2.64%4 Clean capital structure and low leverage and ample liquidity Proven track record of acquiring undervalued assets PHX is a growth oriented mineral rights company focused on natural gas Actively pursue high-quality positions in targeted regions Highly fragmented minerals space provide ample supply of private minerals assets seeking monetization Limited capital market options for sellers seeking an exit PHX’s average acquisition size targets underserved segment of the market Minimal incremental G&A required to meaningfully scale No further capital requirements once minerals are owned Key Statistics NYSE PHX Market Cap1 $121.6 Enterprise Value2 $146.5 Liquidity3 $36.2 Dividend Yield4 2.64% Leverage5 1.1x Fiscal 2022 Adjusted EBITDA6 $25.8 2022 ROCE7 ~22% 3
Strategy Execution Goals Set in early 2020 Achievements Through 2022 High Grade Asset Base Grow royalty production (higher margin/lower cost) Improve line of sight development opportunities Exit working interest assets (higher cost/lower margin) Divest unleased non-producing minerals lacking scale and line of sight development Annual royalty volume growth since 2020: ~85% Mineral acquisitions completed: ~$102 million3 Built a 10+ year inventory of line of sight development locations Working interest wellbores sold: ~1,100 Unleased non-producing mineral acres sold: 19,133 Build a strong and sustainable balance sheet Reduced leverage: ~2.5x to ~1.1x (Debt / TTM Adjusted EBITDA1) Improved commercial bank lending terms and relationships Enhanced liquidity profile as a result of superior asset performance and more predictable development timing Become a consolidator in the mineral space Mineral acquisition transactions completed: 513 Focus on smaller acquisition: ~$1.9 million average (generates higher returns with less competition) Acquisitions to date have generated returns far in excess of cost of capital ~90% of free cash flow to be redeployed into high quality line of sight minerals Generate return on capital employed (ROCE) Generated ~22% ROCE2 in 2022 up from ~0% in 2019 and 2020 1 See slide 5 for Adjusted EBITDA definition 2 See slide 5 for ROCE definition 3 Includes acquisitions completed and under PSA through December 1, 2022
Royalty Cash Flow Driving Shareholder Value Source: Company filings ; PHX’s fiscal year is October 1st through September 30th 1 Calculated as net income excluding non-cash gain/loss on derivatives, income tax expense, interest expense, DD&A, non-cash impairments, non-cash G&A, gain(losses) on asset sales and cash receipts from/payments on off-market derivatives 2 Pre-tax net income adjusted to exclude unrealized gain on derivatives, non-cash impairments, cash receipts from/payments on off-market derivatives and gains(losses) on asset sales 3 Annualized EBIT excluding non-cash gain/loss on derivatives, non-cash impairments, non-cash G&A, cash receipts from/payments on off-market derivatives and gain(losses) on asset sales divided by average debt and equity during the quarter
Stable Balance Sheet & Ample Liquidity Source: Company filings; PHX’s fiscal year is October 1st through September 30th 1 Total debt less cash 2 Total Debt / Adjusted EBITDA (as defined on page 5) 3 Calculated as working capital (current assets less current liabilities excluding current derivatives) plus availability on the borrowing base
PHX – Long Term Outlook Note: PHX’s fiscal year is October 1st through September 30th 1 Working Interest does not assume any future sales of additional WI wellbores 2 Calculated as operating income plus Depreciation less taxes and plus change in working capital 3 NYMEX Strip prices as of 11/14/2022 PHX’s growth strategy has the potential to significantly increase its operating cash flow to over $40 million annually by Fiscal Year 2024; representing an almost 100% increase from the current run rate • Majority of projected volumes from development wells already identified by operators • Hedged volumes protect downside of commodity prices • No significant associated cost commitments aside from G&A as a mineral owner Key Assumptions ~275 gross / ~1.075 net wells converted to PDP in each of Fiscal 2023 and 2024 Leverage remains constant at ~1.00x Debt/ EBITDA $35 - $40 million of additional mineral acquisitions through 2024 with similar profiles to transactions completed over last 24 months (by reserve value: approximately 1/3 PDP, 1/3 WIP, and 1/3 Probable) 2024 & 2025 Annual Operating Cash Flow Sensitivity NYMEX Natural Gas ($/mcf) $4.00 $6.00 ~$30 Million ~$50 Million ~$40 Million ~$60 Million $65 $100 WTI ($/bbl)
Focused in SCOOP and Haynesville Top Operators of PHX Minerals1 Top Operators of PHX Minerals1 1 As of 9/30/2022, as determined by Wells in Progress & Permits
Reserves Value Summary SEC Pricing1 Strip Pricing2 $100/$7.00 Flat Pricing3 Reserve Category PV-10 Value ($mm) Reserve Category SEC1 Strip2 $100 / $7.003 PDP $184.9 130.5 $202.3 Wells in Progress4 53.0 41.4 57.1 Total Proved Reserves $237.9 $171.9 $259.4 Near Term Locations4,5 247.7 172.4 267.5 Other Locations5 50.3 35.7 54.3 Total 3P Reserves $535.9 $380.0 $581.2 Proved PV-10 Per Share6 $5.83 $4.02 $6.42 2P PV-10 Per Share6 $12.61 $8.74 $13.74 3P PV-10 Per Share6 $13.99 $9.72 $15.23 PDP PUD Probable Possible $536 $380 $581 1 3P Reserves per 9/30/2022 CGA YE22 report using a 9/30/2022 effective date and 9/30/2022 SEC price deck of $90.33 per bbl of oil, $38.09 per bbl of NGL, $6.41 per mcf of gas (proved volume weighted average price) 2 3P Reserves per 9/30/2022 CGA YE22 report using a 9/30/2022 effective date and 11/25/2022 STRIP price of WTI/HH 2022: $87.55/$6.36, 2023: $75.77/$5.77, 2024: $72.09/$4.77, 2025: $69.12/$4.56, 2026: $66.68/$4.51, 2027: $64.41/$4.47, 2028: $62.28/$4.48, 2029: $60.36/$4.63, 2030: $58.55/$4.91, 2031: $57.15/$5.13, 2032: $56.09/$5.3, 2033: $55.12/$5.46, 2034+: $54.53/$5.61. 3 3P Reserves per 9/30/2022 CGA YE22 report using a 9/30/2022 effective date and 9/30/2022 and flat price deck of $100.00 WTI /$7.00 HH 4 Wells in Progress are PUDs, Near Tern Locations are Probables and Other Locations are Possibles in the PHX reserve report. PUDs are Permits, WIPs or DUCs. Probables share all technical merits of PUDs but development timing is uncertain. PHX Probables may be PUDs in their respective operator’s reserve report 5 Scheduled out approximately 10 years for Near Term Locations and 15 years for Other Locations 6 PV-10 less net debt of $24.9 MM as of 9/30/2022 divided by total shares outstanding as of 10/31/2022
Royalty Interest Inventory by Basin Sub-region Gross PDP Wells Net PDP Wells1 Undeveloped Locations Sub-region PDP Wells Average NRI1 Gross Wells In Progress1 Net Wells in Progress2 Gross Permits1 Net Permits2 Gross PROB3 Net PROB5 Gross POSS3 Net POSS5 SCOOP 985 3.97 42 0.15 22 0.04 983 2.66 367 1.26 Haynesville 278 1.73 80 0.56 23 0.13 355 1.29 0 0 STACK 354 1.63 27 0.05 6 0.02 253 1.49 60 0.58 Bakken 605 1.69 10 0.07 7 0.00 208 1.09 9 0.15 Arkoma Stack 440 3.34 5 0.00 0 0.00 99 1.75 83 0.92 Fayetteville 1,058 6.36 0 0.00 0 0.00 0 0 0 0 Other4 1,994 17.11 8 0.02 6 0.02 0 0 0 0 Total 5,714 35.83 172 0.86 64 0.21 1,898 8.28 519 2.91 Gross Undeveloped Locations 2,653 2,653 Note: 1 As of 9/30/2022 2 Net interest on Wells in Progress and Permits are internal estimates and subject to confirmation from operator 3 PROB in POSS Inventory based on CGA prepared reserve report as of fiscal YE2022 4 Other undeveloped inventory is largely comprised of Western Anadarko Assets & Permian Basin 5 Well counts assume 10,000 ft. laterals
Yearly Conversions To Producing Wells Strong drilling activity on our mineral assets post Covid has driven increase in royalty production volumes Gross Conversions Net Conversions Note: PHX’s fiscal year is October 1st through September 30th
Quarterly Near Term Drilling Inventory Continuous replacement of wells in progress inventory will drive future royalty volume growth Gross Inventory Net Inventory Note: WIPs includes wells that are Drilling and DUCs; PHX’s fiscal year is October 1st through September 30th
Acquisition Summary Acquisitions by Basin by Year 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 $23.4M in acquisitions in SCOOP and $61.3M in Haynesville since Q1 of 2021 Positioned For Growth Through Acquisitions Total domestic US mineral market estimated at ~$0.5 - 1 trillion1 Highly fragmented Predominantly owned by private individuals PHX well positioned to be one of the premier consolidators in our core areas Focus on smaller deals increases opportunity set and potential returns Market Opportunity Midpoint (1) : 97% Note: PHX’s fiscal year is October 1st through September 30th; 2023 YTD through 10/31/2022 1 Midpoint of market size estimate range. Based on production data from EIA and spot price as of 10/12/2022. Assumes 20% of royalties are on Federal lands and there is an average royalty burden of 18.75%. Assumes a 10x multiple on cash flows to derive total market size. Excludes NGL value and overriding royalty interests 2 Enterprise values of PHX, DMCP, KRP, BSM, STR, MNRL and VNOM as of 11/28/2022
Acquisition History - Haynesville Source: Company information and Enverus; Map of active rigs as of 11/28/2022; 2023 YTD through 10/31/2022 1 At time of respective acquisition Haynesville Acquisitions – Since Q1 2021 DATE PRICE, $M NRA NET PROD (MCFE/d) 1 GROSS UNDEV/WIPs1 2021 15,382 1,978 1,073 218 / 59 2022 39,740 3,581 1,535 273 / 89 2023-YTD 6,266 575 58 91 / 36 Total 61,349 6,135 2,666 582 / 184 PHX did not own any minerals in the Haynesville prior to current management team identifying this play as an area of interest
North Haynesville Update PHX New High NRI Units TRINITY OPERATING | BLOUNT 23‐26‐35 UNIT | 3 WELLS 1st Prod 11/2021 (11mo) PHX NRI 0.35% AVG IP 21,429 MMCF/d AVG CUM 4.17 BCF AVG LL 10,061’ AVG CUM/FT 414 MMCF BLUE DOME | PINEHILLS DSU | 4 WELLS 1st Prod 12/20212 (11mo) PHX NRI 4.61% AVG IP24 21.5 MMCF/d AVG CUM 3.6 BCF AVG LL 9,902’ AVG CUM/FT 364 MMCF PALOMA | BAREMORE EST 11H 001 & 002‐ALT | 2 WELLS 1st Prod 6/2021 (16mo) PHX NRI 3.40% AVG IP24 26.5 MMCF/d AVG CUM 4.6 BCF AVG LL 4,577’ AVG CUM/FT 1,005 MMCF TRINITY OPERATING | SL HEROLD 23‐14H 003‐ALT 1st Prod 3/2022 (7mo) PHX NRI5 0.41% AVG IP24 30.6 MMCF/d AVG CUM 2.3 BCF AVG LL 9,859’ AVG CUM/FT 233 MMCF Source: Company info and Enverus 1 As of 11/28/2022 2 WIPs includes wells that are Drilling and DUCs 3 Active natural gas and oil horizontal permits filed 4 Data from Enverus as of 11/28/2022 5 NRIs are internal estimates and subject to confirmation from operator Operators are drilling 3-5 wells per unit, and a positive indication of near term volumes and cashflows Since 2019, core development areas have been extended as new completion designs have lowered breakevens Key Operators: Blue Dome, Trinity, Rockcliff, Aethon, Comstock, Paloma and Chesapeake PHX North Haynesville Ownership1: 3,996 NRA Gross Wells In Progress2: 51 Gross Active Permits3: 20 Gross Active Rigs4: 34 1 2 3 4 1 2 3 4
Acquisition History – SCOOP SCOOP Acquisitions – Since Q1 2021 DATE PRICE, $M NRA NET PROD (MCFE/d) 1 GROSS UNDEV/WIPs1 2021 13,458 2,832 585 745 / 38 2022 8,266 988 73 515 / 13 2023-YTD 1,715 148 17 293 / 9 Total 23,439 3,968 675 1,553 / 60 Predominately all acreage currently owned in Springboard III area was acquired by current management team Source: Company information and Enverus; Map of active rigs as of 11/28/2022; 2023 YTD through 10/31/2022 1 At time of respective acquisition
Springboard III Update Highest resource in-place per DSU in the midcontinent, co-developing the Mississippian Sycamore & the Woodford Shale Key operators shifting into development mode and drilling multiple wells per DSU PHX Springboard III Ownership1: 2,907 NRA Gross Wells In Progress2: 19 Gross Active Permits3: 10 Gross Active Rigs4: 7 Recent Well Results Source: Company info and Enverus 1 As of 11/28/2022 2 WIPs includes wells that are Drilling and DUCs 3 Active natural gas and oil horizontal permits filed 4 Data from Enverus as of 11/28/2022 WOODFORD DENSITY UNIT 8 WELLS/DSU SYCAMORE DENSITY UNIT(S) 4 WELLS/DSU CAMINO | SUNDANCE KID 0104 26-35MXH | SYCAMORE 1st Prod 11/2021 (14mo) PHX NRI 0.29% LL 10,097’ CUM 547 MBOE6 NRM PROP 2,761’ CUM/1000’ 54.1 MBOE6 CONTINENTAL | EMPIRE 1-17-20XHW | WOODFORD 1st Prod 11/2021 (10mo) PHX NRI 1.18% LL 9,477’ CUM 308 MBOE6 NRM PROP 2’507 #/FT CUM/1000’ 32.5 MCF/FT CONTINENTAL | BOWERY 1-16-21 MH | SYCAMORE 1st Prod 11/2021 (10mo) PHX NRI 0.42% LL 10,217’ CUM 643 MBOE6 NRM PROP 2,511 #/FT CUM/1000’ 62.9 MBOE6 CAMINO | BILLY THE KID 0103 29-20-1MXH | SYCAMORE 1st Prod 11/2022 (11mo) PHX NRI 0.06% LL 10,154’ CUM 660 MBOE6 NRM PROP 2,267 #/FT CUM/1000’ 64.9 MBOE6 1 2 3 4 1 2 3 4
SCOOP Springboard Plays 50 Woodford Gross Thickness 400 MERGE SCOOP SpringBoard I, II SpringBoard III SpringBoard IV Springboard III, just like Springboard IV (Core SCOOP), has >3X the hydrocarbons in-place compared to the MERGE Sycamore & Woodford produces super-rich gas (~1,350 BTU) with minimal produced water SCOOP SpringBoard IV 515’ Thick MERGE 277’ Thick SCOOP SpringBoard III 755’ Thick SYCAMORE WOODFORD SHALE 4 wells / unit 6 wells / unit PHX SpringBoard III Base Case1 Winerack ~3x reservoir volume Note: 1 PHX internally created a base case development plan using internal expertise to select undrilled inventory on a section by section basis
Company Leadership Management Team Title Years with Company Experience Chad Stephens President, CEO and Board Director 5 CEO for PHX since 2019 SVP –Corporate Development of Range Resources for 20 years until retiring in 2018 B.A. in Finance and Land Management from University of Texas Ralph D’Amico Senior Vice President, CFO 4 CFO for PHX since 2020 20 years of investment banking experience Bachelor’s in Finance from University of Maryland; MBA from George Washington University Chad True V.P. of Accounting 3 13 years of accounting experience Audit and accounting positions with Grant Thornton LP, Tiptop Oil & Gas and Wexford Capital LP B.S. and Masters in Accounting from Oklahoma State University Danielle Mezo V.P. of Engineering 2 >10 years reservoir engineer experience Reservoir engineer, acquisitions, and corporate planning positions at SandRidge Energy B.S. in Petroleum Engineering from University of Oklahoma and licensed Professional Engineer Carl Vandervoort V.P. of Geology 2 >14 years experience, recently managed a buy-side consulting company for private equity groups and portfolio companies Exploration Manager for Zenergy, Inc., an Apollo Management portfolio company B.S. in Chemistry from University of Texas; M.S. in Geophysics at University of Oklahoma Kenna Clapp V.P. of Land 2 >10 years of land experience Various land positions with Chesapeake Energy in Haynesville, Eagleford, Mid-Continent and Barnett shales B.S. in Accounting and Finance from Oklahoma State University; JD from Oklahoma City University Board of Directors Title Years with Company Experience Mark T. Behrman Lead Independent Director 5 CEO of LSB Industries, Inc. since 2018 Managing Director and Head of Investment Banking of the Industrial and Energy Practices of Sterne Agee from 2007 to 2014 MBA in Finance from Hofstra University and B.S. in Accounting, Minor in Finance from Binghamton University Glen A. Brown Director 1 SVP – Exploration for Continental Resources from 2015 through 2017 Exploration manager for EOG Resources Midcontinent from 1991 through 2003 Bachelor’s in Geology from State University of New York; Master’s in Geology from New Mexico State University in Las Cruces Lee M. Canaan Director 7 Founder and portfolio manager of Braeburn Capital Partners, LLC Board member for EQT Corporation and Aethon Energy, LLC Bachelor’s in Geological Sciences from USC, Master’s in Geophysics from UT-Austin, and MBA in Finance from Wharton Peter B. Delaney Director 4 Principal with Tequesta Capital Partners since 2016 Chairman and CEO of OGE Energy Corporation from 2007 through 2015 Steven L. Packenbush Director 1 Founder and partner in Elevar Partners, LLC President of Koch Ag & Energy Solutions upon his retirement in 2018 after 30 years with the company Bachelor’s in agricultural economics from Kansas State John H. Pinkerton Director 1 CEO of Range Resources Corporation from 1992 through 2012 Executive Chairman and Chairman of Board of Directors for Encino Energy from 2017 through 2022 B.A. in Business Administration from Texas Christian University; Master’s from the University of Texas at Arlington
Analyst Coverage Note: Per NYSE Firm Analyst Contact Stifel Nicolaus Derrick Whitfield whitfieldd@stifel.com Northland Securities Donovan Schafer dschafer@northlandcapitalmarkets.com Seaport Global Securities Nicholas Pope npope@seaportrp.com
Why Invest in PHX? Strategy of growth via accretive mineral acquisitions Growth underpinned by complete technical evaluation Attractive valuation relative to mineral focused peer group Highly fragmented mineral ownership generates ample acquisition opportunity Seasoned management and technical team
Appendix
Current Hedging Analysis Note: Data as of 9/30/2022 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 Gas Swaps Gas Collars Total Gas Protection Volume Price Volume Floor Ceiling Volume 1Q'23 700,000 $ 3.02 380,000 $ 4.19 $ 6.69 1,080,000 2Q'23 560,000 $ 3.25 390,000 $ 5.29 $ 10.69 950,000 3Q'23 420,000 $ 3.43 360,000 $ 3.42 $ 6.62 780,000 4Q'23 420,000 $ 3.43 285,000 $ 3.39 $ 6.52 705,000 Fiscal'23 2,100,000 $ 3.24 1,415,000 $ 4.13 $ 7.69 3,515,000 1Q’24 380,000 $ 3.41 135,000 $ 3.28 $ 5.98 515,000 Fiscal’24 380,000 $ 3.41 135,000 $ 3.28 $ 5.98 515,000 Oil Swaps Oil Collars Total Oil Protection Volume Price Volume Floor Ceiling Volume 1Q'23 30,000 $ 49.27 - $ - $ - 30,000 2Q'23 14,250 $ 71.38 7,500 $ 75.00 $ 96.00 21,750 3Q'23 14,250 $ 74.91 7,500 $ 75.00 $ 96.00 21,750 4Q'23 14,250 $ 74.91 - $ - $ - 14,250 Fiscal'23 72,750 $ 63.65 15,000 $ 75.00 $ 96.00 87,750 1Q’24 14,250 $ 74.91 - $ - $ - 14,250 Fiscal’24 14,250 $ 74.91 - $ - $ - 14,250
Natural Gas – Demand Natural Gas Electrical Generation1 Monthly Electrical Generation by Fuel Type1 Natural Gas Consumption1 U.S. natural gas demand is expected to increase by over 10 Bcf/d by 2025 U.S. LNG exports expected to reach 12.7 Bcf/d in 2023 2023 expected U.S. production to average 100 Bcf/d Industrial demand has been strong, up roughly 1.5 bcf/d year over year Long-term natural gas price support from continued capital discipline in the sector, increased demand from power generation and industrial demand Source: 1 EIA
Natural Gas – LNG Forecasted U.S. Export Annual Volume Growth1 Premium Natural Gas Pricing2 Surging LNG Demand Current LNG export capacity is fully utilized Additional capacity of 4.4 Bcf/d is currently under construction and is expected to come online by 2025 LNG provides producers the opportunity to supply gas to premium markets across the globe Due to strong power generation demand Natural Gas has made a significant recovery from the 6/30 low despite losing ~2 bcf/d of feed gas demand in the Freeport LNG outage Source: 1 Williams Company Presentation; 11/1/2022 2 EIA
Note: 1 As of Quarter ended 9/30/2022; Includes both royalty and working interest production 2 Provided by Enverus as of 11/28/2022 3 As of 9/30/2022, as determined by Wells in Progress and Permits 4 As of 9/30/2022, as determined by Wells in Production Portfolio Overview by Basin Scoop Haynesville Bakken Stack Arkoma Fayetteville Total Production Mix Net Production (MMcfe/d)1 2.92 9.99 1.13 4.00 2.92 3.12 24.08 Net Royalty Acres1 10,099 5,701 4,298 7,128 13,074 10,812 51,112 Permits on File 22 23 7 6 - - 58 Rigs Running on PHX Acreage2 11 9 1 3 2 - 26 Rigs Running Within 2.5 miles of PHX Acreage2 25 39 4 18 2 - 88 Top Operators PABLO ENERGY II LLC 3 3 3 3 3 4 3 4
Mineral Interests - Primer Mineral and royalty interests are generally considered by law to be real property interests and are thus afforded additional protections under bankruptcy law Working Interest owner entitled to ~75-85% of production revenue based on royalty rate and bears 100% of development cost and lease operating expense Senior Debt Senior Secured Debt Equity Subordinated Debt Mineral Interest owner entitled to ~15-25% of production revenue based on royalty rate
Mineral Interests - Primer Illustrative Mineral Revenue Generation Unleased Minerals 100% owned by PHX PHX Issues a Lease PHX receives an upfront cash bonus payment and customarily a 20-25% royalty on production revenues In return, PHX delivers the right to explore and develop with the operator bearing 100% of costs for a specified lease term Leased Minerals Revenue Share PHX: 20-25% Operator: 75-80% Cost Share PHX: 0% Operator: 100% Lease Termination Upon termination of a lease, all future development rights revert to PHX to explore or lease again Process starts again from step 1 Minerals Perpetual real-property interests that grant hydrocarbon ownership under a tract of land Surface and mineral ownership have been negotiated in most cases over the decades Surface owners cannot legally prevent the development of minerals under most circumstances Represent the right to drill, and produce hydrocarbon or lease that right to third parties for an upfront payment and a negotiated percentage of production revenues ORRIs Overriding royalty interests Royalty interests that burden the working interests of a lease Right to receive a fixed, cost-free percentage of production revenue (term limited to life of leasehold estate) 1 2 3 4
Reconciliation of Non-GAAP Financial Measures ($ in millions) Year Ended Sept. 30, 2018 Year Ended Sept. 30, 2019 Year Ended Sept 30, 2020 Year Ended Sept. 30, 2021 Year Ended Sept. 30, 2022 Net Income $14.6 ($40.7) ($24.0) ($6.2) $20.4 (+) Unrealized Gain on Derivatives 3.9 (5.9) 3.2 4.3 2.3 (+) Income Tax Expense (12.7) (13.5) (8.3) (0.7) 4.2 (+) Interest Expense 1.7 2.0 1.3 1.0 1.2 (+) DD&A 18.4 18.2 11.3 7.7 7.3 (+) Impairment 0.0 76.8 29.9 0.1 0.0 (+) Cash Receipts from/Payments on Off-Market Derivatives 0.0 0.0 0.0 8.8 (7.5) (+) Restricted Stock and Deferred Director's Exp 1.0 1.0 1.0 1.0 2.4 (-) Gains (Losses) on Asset Sales (0.7) 18.7 4.0 0.3 4.4 Adjusted EBITDA $27.6 $19.2 $10.4 $15.7 $25.8 (-) Interest Expense 1.7 2.0 1.3 1.0 1.2 Discretionary Cash Flow $25.9 $17.2 $9.1 $14.7 $24.7 3 Months Ended 3 Months Ended ($ in millions) Sept. 30, 2021 Dec. 31, 2021 Mar.31, 2022 Jun.30, 2022 Sep.30, 2022 Net Income ($3.8) $6.7 ($4.0) $8.6 $9.2 (+) Unrealized Gain on Derivatives (3.1) (4.6) 11.8 (3.3) (1.6) (+) Income Tax Expense 0.4 0.8 0.0 1.0 2.4 (+) Interest Expense 0.2 0.2 0.2 0.3 0.5 (+) DD&A 1.6 1.6 2.1 2.0 1.6 (+) Impairment 0.0 0.0 0.0 0.0 0.0 (+) Cash Receipts from/Payments on Off-Market Derivatives 8.8 (2.7) (2.5) (1.3) (1.1) (+) Restricted Stock and Deferred Director's Exp 0.3 0.3 0.5 0.6 1.0 (-) Gains (Losses) on Asset Sales 0.2 (2.1) 2.3 0.7 3.6 Adjusted EBITDA $4.2 $4.4 $5.8 $7.2 $8.4 (-) Interest Expense 0.2 0.2 0.2 0.3 0.5 Discretionary Cash Flow $4.0 $4.2 $5.6 $6.9 $7.9 Source: Company Filings