PHX Minerals Reports Record Royalty Volumes for The Quarter Ended March 31, 2023; Announces Dividend Payment
FORT WORTH, Texas, May 9, 2023 – PHX MINERALS INC., “PHX” or the “Company” (NYSE: PHX), today reported financial and operating results for the quarter ended March 31, 2023.
Summary of Results for the Quarter Ended March 31, 2023
- Net income was $9.6 million, or $0.27 per share, compared to net income of $3.3 million, or $0.09 per share, for the quarter ended Dec. 31, 2022, and net loss of ($4.0) million, or $(0.12) per share, for the quarter ended March 31, 2022.
- Adjusted pretax net income(1) was $4.7 million, or $0.13 per share, compared to $2.3 million, or $0.07 per share, for the quarter ended Dec. 31, 2022, and $3.0 million, or $0.09 per share, for the quarter ended March 31, 2022.
- Adjusted EBITDA(1) was $7.7 million, compared to $5.3 million for the quarter ended Dec. 31, 2022, and $5.8 million for the quarter ended March 31, 2022.
- Royalty production volumes increased 29% to a record 2,094 Mmcfe compared to the quarter ended Dec. 31, 2022, and increased 35% compared to the quarter ended March 31, 2022.
- Total production volumes increased 12% to 2,482 Mmcfe compared to the quarter ended Dec. 31, 2022, and increased 1% compared to the quarter ended March 31, 2022.
- Converted 117 gross (0.46 net) wells to producing status, compared to 60 gross (0.27 net) during the quarter ended Dec. 31, 2022 and 108 gross (0.48 net) during the quarter ended March 31, 2022.
- Inventory of 198 gross (0.65 net) wells in progress as of March 31, 2023, compared to 203 gross (0.83 net) as of Dec. 31, 2022.
- Total debt was $26.0 million and the debt to adjusted EBITDA (TTM) (1) ratio was 0.91x at March 31, 2023.
- PHX closed on acquisitions totaling 913 net royalty acres located in the SCOOP and the Haynesville plays for approximately $10.8 million.
- PHX announced a $0.0225 per share quarterly dividend, payable on June 6, 2023, to stockholders of record on May 22, 2023.
Subsequent Events
- Subsequent to March 31, 2023, PHX entered into the fourth amendment to its credit agreement on May 5, 2023 pursuant to which, among other changes, the borrowing base under PHX’s credit facility will decrease from $50.0 million to $45.0 million in connection with its regularly scheduled semi-annual redetermination. This reduction in the borrowing base constitutes the periodic redetermination of the borrowing base scheduled for June 1, 2023 under the terms of the Credit Agreement.
- This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.
Chad L. Stephens, President and CEO, commented, “PHX delivered record royalty volumes and solid profitability, despite the macro headwinds facing natural gas, demonstrating the benefits of our risk-mitigated minerals-only model. The strong sequential improvement compared to the December quarter underscores what I mentioned on the last earnings release regarding quarter-to-quarter lumpiness in our results. This is more reflective of the royalty volume growth potential of our Company. We have built a portfolio of high-quality mineral assets, and believe our Haynesville and SCOOP inventory in the core of the plays will pay dividends in the short and long term across various natural gas pricing environments. Our inventory of wells in progress, including permits and wells being drilled or waiting on completion, continues to be strong, which will translate into future royalty volumes growth. We remain bullish on a recovery in natural gas prices into the winter of 2023, as the current supply-demand imbalances dissipate. As part of our strategy, we continue to focus on balance sheet management and maintaining appropriate leverage and ample liquidity. Our minerals-only strategy, without any significant capital commitments, enables us to quickly pivot in how we allocate capital, as shown by our lower debt balance as of March 31 compared to the prior December 31 quarter. Lastly, our borrowing base was reduced by $5 million to $45 million. This is a reflection of lower natural gas prices and not the quality of our reserves. The decrease in the borrowing base in no way affects our acquisition strategy or our ability to execute.”
Financial Highlights
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||
|
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
||
|
Royalty Interest Sales |
|
$ |
10,123,741 |
|
|
$ |
8,878,994 |
|
|
Working Interest Sales |
|
$ |
1,733,506 |
|
|
$ |
5,904,871 |
|
|
Natural Gas, Oil and NGL Sales |
|
$ |
11,857,247 |
|
|
$ |
14,783,865 |
|
|
|
|
|
|
|
|
|
||
|
Gains (Losses) on Derivative Contracts |
|
$ |
3,802,820 |
|
|
$ |
(12,983,406 |
) |
|
Lease Bonuses and Rental Income |
|
$ |
313,150 |
|
|
$ |
161,908 |
|
|
Total Revenue |
|
$ |
15,973,217 |
|
|
$ |
1,962,367 |
|
|
|
|
|
|
|
|
|
||
|
Lease Operating Expense |
|
|
|
|
|
|
||
|
per Working Interest Mcfe |
|
$ |
1.40 |
|
|
$ |
1.02 |
|
|
Transportation, Gathering and Marketing |
|
|
|
|
|
|
||
|
per Mcfe |
|
$ |
0.45 |
|
|
$ |
0.61 |
|
|
Production Tax per Mcfe |
|
$ |
0.23 |
|
|
$ |
0.28 |
|
|
G&A Expense per Mcfe |
|
$ |
1.20 |
|
|
$ |
1.12 |
|
|
Cash G&A Expense per Mcfe (1) |
|
$ |
0.95 |
|
|
$ |
0.93 |
|
|
Interest Expense per Mcfe |
|
$ |
0.22 |
|
|
$ |
0.09 |
|
|
DD&A per Mcfe |
|
$ |
0.76 |
|
|
$ |
0.86 |
|
|
Total Expense per Mcfe |
|
$ |
3.08 |
|
|
$ |
3.34 |
|
|
|
|
|
|
|
|
|
||
|
Net Income (Loss) |
|
$ |
9,553,244 |
|
|
$ |
(4,020,455 |
) |
|
Adjusted EBITDA (2) |
|
$ |
7,740,240 |
|
|
$ |
5,819,415 |
|
|
|
|
|
|
|
|
|
||
|
Cash Flow from Operations (3) |
|
$ |
8,933,477 |
|
|
$ |
7,296,330 |
|
|
CapEx (4) |
|
$ |
190,826 |
|
|
$ |
86,671 |
|
|
CapEx - Mineral Acquisitions |
|
$ |
10,236,615 |
|
|
$ |
9,274,447 |
|
|
|
|
|
|
|
|
|
||
|
Borrowing Base |
|
$ |
50,000,000 |
|
|
$ |
32,000,000 |
|
|
Debt |
|
$ |
26,000,000 |
|
|
$ |
24,000,000 |
|
|
Debt to Adjusted EBITDA (TTM) (2) |
|
|
0.91 |
|
|
|
1.23 |
|
- Cash G&A expense is G&A excluding restricted stock and deferred director’s expense from the adjusted EBITDA table on page 10.
- This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.
- GAAP cash flow from operations. See page 8.
- Includes legacy working interest expenditures and fixtures and equipment.
Operating Highlights
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
||
|
Gas Mcf Sold |
|
1,959,010 |
|
|
|
1,908,030 |
|
|
Average Sales Price per Mcf before the |
|
|
|
|
|
||
|
effects of settled derivative contracts |
$ |
3.53 |
|
|
$ |
4.47 |
|
|
Average Sales Price per Mcf after the |
|
|
|
|
|
||
|
effects of settled derivative contracts |
$ |
3.83 |
|
|
$ |
3.28 |
|
|
% of sales subject to hedges |
|
48 |
% |
|
|
61 |
% |
|
Oil Barrels Sold |
|
54,107 |
|
|
|
51,631 |
|
|
Average Sales Price per Bbl before the |
|
|
|
|
|
||
|
effects of settled derivative contracts |
$ |
76.01 |
|
|
$ |
91.26 |
|
|
Average Sales Price per Bbl after the |
|
|
|
|
|
||
|
effects of settled derivative contracts |
$ |
69.90 |
|
|
$ |
63.77 |
|
|
% of sales subject to hedges |
|
45 |
% |
|
|
73 |
% |
|
NGL Barrels Sold |
|
33,104 |
|
|
|
40,371 |
|
|
Average Sales Price per Bbl(1) |
$ |
25.18 |
|
|
$ |
38.05 |
|
|
|
|
|
|
|
|
||
|
Mcfe Sold |
|
2,482,276 |
|
|
|
2,460,042 |
|
|
Natural gas, oil and NGL sales before the |
|
|
|
|
|
||
|
effects of settled derivative contracts |
$ |
11,857,247 |
|
|
$ |
14,783,865 |
|
|
Natural gas, oil and NGL sales after the |
|
|
|
|
|
||
|
effects of settled derivative contracts |
$ |
12,113,923 |
|
|
$ |
11,079,618 |
|
|
|
|
|
|
|
|
||
|
(1) There were no NGL settled derivative contracts during the 2023 and 2022 quarters. |
|
||||||
Total Production for the last four quarters was as follows:
|
Quarter ended |
|
Mcf Sold |
|
|
Oil Bbls Sold |
|
|
NGL Bbls Sold |
|
|
Mcfe Sold |
|
||||
|
3/31/2023 |
|
|
1,959,010 |
|
|
|
54,107 |
|
|
|
33,104 |
|
|
|
2,482,276 |
|
|
12/31/2022 |
|
|
1,669,320 |
|
|
|
52,406 |
|
|
|
38,611 |
|
|
|
2,215,419 |
|
|
9/30/2022 |
|
|
2,047,614 |
|
|
|
49,902 |
|
|
|
40,761 |
|
|
|
2,591,588 |
|
|
6/30/2022 |
|
|
1,897,799 |
|
|
|
48,928 |
|
|
|
39,732 |
|
|
|
2,429,760 |
|
Total production volumes attributable to natural gas were 79% for the quarter ended March 31, 2023.
Royalty Interest Production for the last four quarters was as follows:
|
Quarter ended |
|
Mcf Sold |
|
|
Oil Bbls Sold |
|
|
NGL Bbls Sold |
|
|
Mcfe Sold |
|
||||
|
3/31/2023 |
|
|
1,700,974 |
|
|
|
45,395 |
|
|
|
20,063 |
|
|
|
2,093,722 |
|
|
12/31/2022 |
|
|
1,303,825 |
|
|
|
33,691 |
|
|
|
20,353 |
|
|
|
1,628,089 |
|
|
9/30/2022 |
|
|
1,525,363 |
|
|
|
32,202 |
|
|
|
20,488 |
|
|
|
1,841,502 |
|
|
6/30/2022 |
|
|
1,283,737 |
|
|
|
32,562 |
|
|
|
19,369 |
|
|
|
1,595,323 |
|
Royalty production volumes attributable to natural gas were 81% for the quarter ended March 31, 2023.
Working Interest Production for the last four quarters was as follows:
|
Quarter ended |
|
Mcf Sold |
|
|
Oil Bbls Sold |
|
|
NGL Bbls Sold |
|
|
Mcfe Sold |
|
||||
|
3/31/2023 |
|
|
258,036 |
|
|
|
8,712 |
|
|
|
13,041 |
|
|
|
388,554 |
|
|
12/31/2022 |
|
|
365,495 |
|
|
|
18,715 |
|
|
|
18,258 |
|
|
|
587,330 |
|
|
9/30/2022 |
|
|
522,251 |
|
|
|
17,700 |
|
|
|
20,273 |
|
|
|
750,086 |
|
|
6/30/2022 |
|
|
614,062 |
|
|
|
16,366 |
|
|
|
20,363 |
|
|
|
834,437 |
|
Quarter Ended March 31, 2023, Results
The Company recorded net income of $9.6 million, or $0.27 per share, for the quarter ended March 31, 2023, as compared to a net loss of ($4.0) million, or ($0.12) per share, for the quarter ended March 31, 2022. The change in net income was principally the result of increased gains associated with our hedge contracts and increased gains on asset sales, partially offset by decreased natural gas, oil and NGL sales and increased income tax provision.
Natural gas, oil and NGL revenue decreased $2.9 million, or 20%, for the quarter ended March 31, 2023, compared to the quarter ended March 31, 2022, due to decreases in natural gas, oil and NGL prices of 21%, 17% and 34%, respectively, and a decrease in NGL volumes of 18%, partially offset by an increase in natural gas and oil volumes of 3% and 5%, respectively.
The production increase in royalty volumes during the quarter ended March 31, 2023, as compared to the quarter ended March 31, 2022, resulted from new wells in the Haynesville Shale and Bakken plays coming online. The decrease in working interest volumes resulted from the divestiture of low-value legacy working interests in the Eagle Ford Shale in Texas and the Arkoma Stack in Oklahoma, and naturally declining production in high-interest wells in the STACK.
The Company had a net gain on derivative contracts of $3.8 million in the quarter ended March 31, 2023, of which $0.6 million is a gain on settled derivatives and $3.2 million is a non-cash gain on derivatives, as compared to a net loss of ($13.0) million in the quarter ended March 31, 2022. Gain on settled derivative contracts for the quarter ended March 31, 2023, excludes $0.4 million of cash paid to settle off-market derivative contracts. The total cash received to settle hedge contracts during the quarter ended March 31, 2023 was $0.3 million. The change in net gain on derivative contracts was due to the Company’s settlements of natural gas and oil collars and fixed price swaps and the change in valuation caused by the difference in March 31, 2023 pricing relative to the strike price on open derivative contracts.
The Company closed on the previously announced divestitures of non-operated working interest in the Arkoma Stack and Eagle Ford plays, which resulted in a net gain on sale of $4.2 million recognized in the quarter ended March 31, 2023.
The 8% decrease in total cost per Mcfe in the quarter ended March 31, 2023, relative to the quarter ended March 31, 2022, was primarily driven by a decrease in lease operating expense and transportation, gathering and marketing expense.
Operations Update
During the quarter ended March 31, 2023, the Company converted 117 gross (0.46 net) wells to producing status, including 45 gross (0.34 net) wells in the Haynesville, 20 gross (0.03 net) wells in the SCOOP and 4 gross (0.01 net) in the Bakken, compared to 108 gross (0.48 net) wells in the quarter ended March 31, 2022.
At March 31, 2023, the Company had a total of 198 gross (0.65 net) wells in progress across its mineral positions and 86 gross (0.24 net) active permitted wells, compared to 203 gross (0.83 net) wells in progress and 76 gross (0.22 net) active permitted wells at Dec. 31, 2022. As of April 10, 2023, 26 rigs were operating on the Company’s acreage with 95 rigs operating within 2.5 miles of its acreage.
|
|
|
|
|
|
|
|
Bakken/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
Three |
|
|
Arkoma |
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
SCOOP |
|
|
STACK |
|
|
Forks |
|
|
Stack |
|
|
Haynesville |
|
|
Other |
|
|
Total |
|
|||||||
|
As of March 31, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Gross Wells in Progress on PHX Acreage (1) |
|
68 |
|
|
|
21 |
|
|
|
9 |
|
|
|
5 |
|
|
|
90 |
|
|
|
5 |
|
|
|
198 |
|
|
Net Wells in Progress on PHX Acreage (1) |
|
0.205 |
|
|
|
0.028 |
|
|
|
0.001 |
|
|
|
0.004 |
|
|
|
0.398 |
|
|
|
0.012 |
|
|
|
0.648 |
|
|
Gross Active Permits on PHX Acreage |
|
27 |
|
|
|
12 |
|
|
|
3 |
|
|
|
5 |
|
|
|
31 |
|
|
|
8 |
|
|
|
86 |
|
|
Net Active Permits on PHX Acreage |
|
0.025 |
|
|
|
0.053 |
|
|
|
0.001 |
|
|
|
0.002 |
|
|
|
0.130 |
|
|
|
0.030 |
|
|
|
0.241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
As of April 10, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Rigs Present on PHX Acreage |
|
8 |
|
|
|
2 |
|
|
|
- |
|
|
|
- |
|
|
|
15 |
|
|
|
1 |
|
|
|
26 |
|
|
Rigs Within 2.5 Miles of PHX Acreage |
|
18 |
|
|
|
18 |
|
|
|
5 |
|
|
|
1 |
|
|
|
40 |
|
|
|
13 |
|
|
|
95 |
|
(1) Wells in progress includes drilling wells and drilled but uncompleted wells, or DUCs.
Leasing Activity
During the quarter ended March 31, 2023, the Company leased 512 net mineral acres for an average bonus payment of $978 per net mineral acre and an average royalty of 24%.
Acquisition and Divestiture Update
During the quarter ended March 31, 2023, the Company purchased 913 net royalty acres for approximately $10.8 million and sold 757 net mineral acres, which were outside the Company's core focus areas and predominantly undeveloped and unleased, for approximately $0.3 million. The Company also sold 268 gross non-operated working interest wellbores for approximately $10.7 million.
|
|
|
Acquisitions |
|
|||||||||||||
|
Three Months Ended March 31, 2023 |
|
SCOOP |
|
|
Haynesville |
|
|
Other |
|
|
Total |
|
||||
|
Net Mineral Acres Purchased |
|
|
240 |
|
|
|
361 |
|
|
|
- |
|
|
|
601 |
|
|
Net Royalty Acres Purchased |
|
|
345 |
|
|
|
568 |
|
|
|
- |
|
|
|
913 |
|
Quarterly Conference Call
PHX will host a conference call to discuss the Company’s results for the quarter ended March 31, 2023, at 11 a.m. EDT tomorrow, May 10, 2023. Management’s discussion will be followed by a question-and-answer session with investors.
To participate on the conference call, please dial 877-407-3088 (toll-free domestic) or 201-389-0927. A replay of the call will be available for 14 days after the call. The number to access the replay of the conference call is 877-660-6853 and the PIN for the replay is 13738368.
A live audio webcast of the conference call will be accessible from the “Investors” section of PHX’s website at https://phxmin.com/events. The webcast will be archived for at least 90 days.
FINANCIAL RESULTS
Statements of Operations
|
|
Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
Revenues: |
|
|
|||||
|
Natural gas, oil and NGL sales |
$ |
11,857,247 |
|
|
$ |
14,783,865 |
|
|
Lease bonuses and rental income |
|
313,150 |
|
|
|
161,908 |
|
|
Gains (losses) on derivative contracts |
|
3,802,820 |
|
|
|
(12,983,406 |
) |
|
|
|
15,973,217 |
|
|
|
1,962,367 |
|
|
Costs and expenses: |
|
|
|
|
|
||
|
Lease operating expenses |
|
545,767 |
|
|
|
929,454 |
|
|
Transportation, gathering and marketing |
|
1,128,756 |
|
|
|
1,488,518 |
|
|
Production taxes |
|
581,433 |
|
|
|
697,393 |
|
|
Depreciation, depletion and amortization |
|
1,889,990 |
|
|
|
2,121,116 |
|
|
Provision for impairment |
|
2,073 |
|
|
|
- |
|
|
Interest expense |
|
557,473 |
|
|
|
230,212 |
|
|
General and administrative |
|
2,981,909 |
|
|
|
2,744,264 |
|
|
Losses (gains) on asset sales and other |
|
(4,334,428 |
) |
|
|
(2,261,135 |
) |
|
Total costs and expenses |
|
3,352,973 |
|
|
|
5,949,822 |
|
|
Income (loss) before provision (benefit) for income taxes |
|
12,620,244 |
|
|
|
(3,987,455 |
) |
|
|
|
|
|
|
|
||
|
Provision (benefit) for income taxes |
|
3,067,000 |
|
|
|
33,000 |
|
|
|
|
|
|
|
|
||
|
Net income (loss) |
$ |
9,553,244 |
|
|
$ |
(4,020,455 |
) |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Basic and diluted earnings (loss) per common share |
$ |
0.27 |
|
|
$ |
(0.12 |
) |
|
|
|
|
|
|
|
||
|
Weighted average shares outstanding: |
|
|
|
|
|
||
|
Basic |
|
35,935,791 |
|
|
|
34,292,455 |
|
|
Diluted |
|
35,935,791 |
|
|
|
34,292,455 |
|
|
|
|
|
|
|
|
||
|
Dividends per share of |
|
|
|
|
|
||
|
common stock paid in period |
$ |
0.0225 |
|
|
$ |
0.015 |
|
|
|
|
|
|
|
|
||
Balance Sheets
|
|
March 31, 2023 |
|
|
Dec. 31, 2022 |
|
||
|
Assets |
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
||
|
Cash and cash equivalents |
$ |
1,161,460 |
|
|
$ |
2,115,652 |
|
|
Natural gas, oil, and NGL sales receivables (net of $0 |
|
7,455,323 |
|
|
|
9,783,996 |
|
|
allowance for uncollectable accounts) |
|
|
|
|
|
||
|
Refundable income taxes |
|
776,077 |
|
|
|
- |
|
|
Derivative contracts, net |
|
2,040,999 |
|
|
|
- |
|
|
Held for sale assets |
|
- |
|
|
|
6,420,051 |
|
|
Other |
|
829,818 |
|
|
|
1,543,956 |
|
|
Total current assets |
|
12,263,677 |
|
|
|
19,863,655 |
|
|
|
|
|
|
|
|
||
|
Properties and equipment at cost, based on |
|
|
|
|
|
||
|
successful efforts accounting: |
|
|
|
|
|
||
|
Producing natural gas and oil properties |
|
187,426,879 |
|
|
|
181,431,139 |
|
|
Non-producing natural gas and oil properties |
|
61,931,041 |
|
|
|
57,781,644 |
|
|
Other |
|
1,245,782 |
|
|
|
1,122,436 |
|
|
|
|
250,603,702 |
|
|
|
240,335,219 |
|
|
Less accumulated depreciation, depletion and amortization |
|
(108,382,522 |
) |
|
|
(107,085,212 |
) |
|
Net properties and equipment |
|
142,221,180 |
|
|
|
133,250,007 |
|
|
|
|
|
|
|
|
||
|
Derivative contracts, net |
|
112,456 |
|
|
|
141,345 |
|
|
Operating lease right-of-use assets |
|
674,095 |
|
|
|
706,871 |
|
|
Other, net |
|
652,966 |
|
|
|
695,399 |
|
|
Total assets |
$ |
155,924,374 |
|
|
$ |
154,657,277 |
|
|
|
|
|
|
|
|
||
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
||
|
Accounts payable |
$ |
308,508 |
|
|
$ |
504,466 |
|
|
Derivative contracts, net |
|
- |
|
|
|
1,534,034 |
|
|
Income taxes payable |
|
- |
|
|
|
576,427 |
|
|
Current portion of operating lease liability |
|
222,001 |
|
|
|
217,656 |
|
|
Held for sale liabilities |
|
- |
|
|
|
889,155 |
|
|
Accrued liabilities and other |
|
1,860,808 |
|
|
|
3,121,522 |
|
|
Total current liabilities |
|
2,391,317 |
|
|
|
6,843,260 |
|
|
|
|
|
|
|
|
||
|
Long-term debt |
|
26,000,000 |
|
|
|
33,300,000 |
|
|
Deferred income taxes, net |
|
5,387,906 |
|
|
|
2,453,906 |
|
|
Asset retirement obligations |
|
1,032,257 |
|
|
|
1,027,777 |
|
|
Operating lease liability, net of current portion |
|
871,971 |
|
|
|
929,208 |
|
|
|
|
|
|
|
|
||
|
Total liabilities |
|
35,683,451 |
|
|
|
44,554,151 |
|
|
|
|
|
|
|
|
||
|
Stockholders' equity: |
|
|
|
|
|
||
|
Common Stock, $0.01666 par value; 54,000,500 shares authorized and |
|
|
|
|
|
||
|
35,938,206 issued at March 31, 2023; 54,000,500 shares authorized |
|
|
|
|
|
||
|
and 35,938,206 issued at Dec. 31, 2022 |
|
598,731 |
|
|
|
598,731 |
|
|
Capital in excess of par value |
|
43,134,738 |
|
|
|
43,344,916 |
|
|
Deferred directors' compensation |
|
1,313,162 |
|
|
|
1,541,070 |
|
|
Retained earnings |
|
78,428,984 |
|
|
|
68,925,774 |
|
|
|
|
123,475,615 |
|
|
|
114,410,491 |
|
|
Less treasury stock, at cost; 225,484 shares at March 31, |
|
|
|
|
|
||
|
2023, and 300,272 shares at Dec. 31, 2022 |
|
(3,234,692 |
) |
|
|
(4,307,365 |
) |
|
Total stockholders' equity |
|
120,240,923 |
|
|
|
110,103,126 |
|
|
Total liabilities and stockholders' equity |
$ |
155,924,374 |
|
|
$ |
154,657,277 |
|
Condensed Statements of Cash Flows
|
|
Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
Operating Activities |
|
|
|||||
|
Net income (loss) |
$ |
9,553,244 |
|
|
$ |
(4,020,455 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided |
|
|
|
|
|
||
|
by operating activities: |
|
|
|
|
|
||
|
Depreciation, depletion and amortization |
|
1,889,990 |
|
|
|
2,121,116 |
|
|
Impairment of producing properties |
|
2,073 |
|
|
|
- |
|
|
Provision for deferred income taxes |
|
2,934,000 |
|
|
|
(339,000 |
) |
|
Gain from leasing fee mineral acreage |
|
(313,150 |
) |
|
|
(160,829 |
) |
|
Proceeds from leasing fee mineral acreage |
|
373,878 |
|
|
|
233,744 |
|
|
Net (gain) loss on sales of assets |
|
(4,417,983 |
) |
|
|
(2,334,644 |
) |
|
Directors' deferred compensation expense |
|
53,589 |
|
|
|
35,461 |
|
|
Total (gain) loss on derivative contracts |
|
(3,802,820 |
) |
|
|
12,983,406 |
|
|
Cash receipts (payments) on settled derivative contracts |
|
816,838 |
|
|
|
(176,510 |
) |
|
Restricted stock award expense |
|
580,998 |
|
|
|
433,137 |
|
|
Other |
|
35,904 |
|
|
|
(8,655 |
) |
|
Cash provided (used) by changes in assets and liabilities: |
|
|
|
|
|
||
|
Natural gas, oil and NGL sales receivables |
|
2,328,673 |
|
|
|
(1,431,299 |
) |
|
Other current assets |
|
123,948 |
|
|
|
120,291 |
|
|
Accounts payable |
|
(175,207 |
) |
|
|
4,062 |
|
|
Income taxes receivable |
|
(776,077 |
) |
|
|
- |
|
|
Other non-current assets |
|
40,576 |
|
|
|
54,722 |
|
|
Income taxes payable |
|
(576,427 |
) |
|
|
(246,206 |
) |
|
Accrued liabilities |
|
261,430 |
|
|
|
27,989 |
|
|
Total adjustments |
|
(619,767 |
) |
|
|
11,316,785 |
|
|
Net cash provided by operating activities |
|
8,933,477 |
|
|
|
7,296,330 |
|
|
|
|
|
|
|
|
||
|
Investing Activities |
|
|
|
|
|
||
|
Capital expenditures |
|
(190,826 |
) |
|
|
(86,671 |
) |
|
Acquisition of minerals and overriding royalty interests |
|
(10,236,615 |
) |
|
|
(9,274,447 |
) |
|
Net proceeds from sales of assets |
|
9,210,005 |
|
|
|
2,294,480 |
|
|
Net cash provided (used) by investing activities |
|
(1,217,436 |
) |
|
|
(7,066,638 |
) |
|
|
|
|
|
|
|
||
|
Financing Activities |
|
|
|
|
|
||
|
Borrowings under credit facility |
|
6,000,000 |
|
|
|
6,000,000 |
|
|
Payments of loan principal |
|
(13,300,000 |
) |
|
|
(2,000,000 |
) |
|
Net proceeds from equity issuance |
|
- |
|
|
|
(40,150 |
) |
|
Cash receipts from (payments on) off-market derivative contracts |
|
(560,162 |
) |
|
|
(3,527,738 |
) |
|
Payments of dividends |
|
(810,071 |
) |
|
|
(517,479 |
) |
|
Net cash provided (used) by financing activities |
|
(8,670,233 |
) |
|
|
(85,367 |
) |
|
|
|
|
|
|
|
||
|
Increase (decrease) in cash and cash equivalents |
|
(954,192 |
) |
|
|
144,325 |
|
|
Cash and cash equivalents at beginning of period |
|
2,115,652 |
|
|
|
1,559,350 |
|
|
Cash and cash equivalents at end of period |
$ |
1,161,460 |
|
|
$ |
1,703,675 |
|
|
|
|
|
|
|
|
||
|
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Interest paid (net of capitalized interest) |
$ |
611,922 |
|
|
$ |
208,000 |
|
|
Income taxes paid (net of refunds received) |
$ |
1,485,505 |
|
|
$ |
618,206 |
|
|
|
|
|
|
|
|
||
|
Supplemental Schedule of Noncash Investing and Financing Activities: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Dividends declared and unpaid |
$ |
50,034 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
||
|
Gross additions to properties and equipment |
$ |
10,996,880 |
|
|
$ |
9,338,855 |
|
|
Net (increase) decrease in accounts payable for properties |
|
|
|
|
|
||
|
and equipment additions |
|
(569,439 |
) |
|
|
22,263 |
|
|
Capital expenditures and acquisitions |
$ |
10,427,441 |
|
|
$ |
9,361,118 |
|
Derivative Contracts as of March 31, 2023
|
|
|
Production volume |
|
|
|
|
|
Contract period |
|
covered per month |
|
Index |
|
Contract price |
|
Natural gas costless collars |
|
|
|
|
|
|
|
April - December 2023 |
|
20,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.00 floor / $4.70 ceiling |
|
April - June 2023 |
|
100,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $7.00 ceiling |
|
July - September 2023 |
|
75,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $7.00 ceiling |
|
October - December 2023 |
|
25,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $7.00 ceiling |
|
January 2024 |
|
135,000 Mmbtu |
|
NYMEX Henry Hub |
|
$4.50 floor / $7.90 ceiling |
|
February 2024 |
|
125,000 Mmbtu |
|
NYMEX Henry Hub |
|
$4.50 floor / $7.90 ceiling |
|
March 2024 |
|
130,000 Mmbtu |
|
NYMEX Henry Hub |
|
$4.50 floor / $7.90 ceiling |
|
April 2024 |
|
90,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $4.70 ceiling |
|
May 2024 |
|
95,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $4.70 ceiling |
|
June 2024 |
|
90,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $4.70 ceiling |
|
January - March 2024 |
|
30,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.00 floor / $6.00 ceiling |
|
Natural gas fixed price swaps |
|
|
|
|
|
|
|
April - December 2023 |
|
100,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.37 |
|
April - December 2023 |
|
20,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.57 |
|
April - October 2023 |
|
20,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.58 |
|
July - October 2024 |
|
75,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.47 |
|
Oil costless collars |
|
|
|
|
|
|
|
March - June 2023 |
|
2,500 Bbls |
|
NYMEX WTI |
|
$75.00 floor / $96.00 ceiling |
|
January 2024 |
|
1,850 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
February 2024 |
|
1,700 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
March 2024 |
|
1,750 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
April 2024 |
|
1,700 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
May 2024 |
|
1,750 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
June 2024 |
|
1,650 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
January - March 2024 |
|
1,650 Bbls |
|
NYMEX WTI |
|
$65.00 floor / $76.50 ceiling |
|
April - June 2024 |
|
500 Bbls |
|
NYMEX WTI |
|
$65.00 floor / $76.50 ceiling |
|
July - October 2024 |
|
1,650 Bbls |
|
NYMEX WTI |
|
$65.00 floor / $76.50 ceiling |
|
Oil fixed price swaps |
|
|
|
|
|
|
|
March 2023 |
|
1,000 Bbls |
|
NYMEX WTI |
|
$64.00 |
|
March - December 2023 |
|
1,500 Bbls |
|
NYMEX WTI |
|
$67.55 |
|
March - December 2023 |
|
750 Bbls |
|
NYMEX WTI |
|
$70.05 |
|
March - December 2023 |
|
1,500 Bbls |
|
NYMEX WTI |
|
$80.80 |
|
April - December 2023 |
|
1,000 Bbls |
|
NYMEX WTI |
|
$80.74 |
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. The following table provides a reconciliation of net income (loss) to adjusted EBITDA for the quarters indicated:
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|||
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
|
Dec. 31, 2022 |
|
|||
|
Net Income (Loss) |
$ |
9,553,244 |
|
|
$ |
(4,020,455 |
) |
|
$ |
3,346,133 |
|
|
Plus: |
|
|
|
|
|
|
|
|
|||
|
Income tax expense |
|
|
|
|
|
|
|
|
|||
|
(benefit) |
|
3,067,000 |
|
|
|
33,000 |
|
|
|
981,000 |
|
|
Interest expense |
|
557,473 |
|
|
|
230,212 |
|
|
|
637,698 |
|
|
DD&A |
|
1,889,990 |
|
|
|
2,121,116 |
|
|
|
1,802,114 |
|
|
Impairment expense |
|
2,073 |
|
|
|
- |
|
|
|
6,100,696 |
|
|
Less: |
|
|
|
|
|
|
|
|
|||
|
Non-cash gains (losses) |
|
|
|
|
|
|
|
|
|||
|
on derivatives |
|
3,172,399 |
|
|
|
(11,772,640 |
) |
|
|
6,265,041 |
|
|
Gains (losses) on asset sales |
|
4,417,983 |
|
|
|
2,292,215 |
|
|
|
934,207 |
|
|
Plus: |
|
|
|
|
|
|
|
|
|||
|
Cash receipts from (payments on) |
|
|
|
|
|
|
|
|
|||
|
off-market derivative contracts(1) |
|
(373,745 |
) |
|
|
(2,493,481 |
) |
|
|
(903,461 |
) |
|
Restricted stock and deferred |
|
|
|
|
|
|
|
|
|||
|
director's expense |
|
634,587 |
|
|
|
468,598 |
|
|
|
569,084 |
|
|
Adjusted EBITDA |
$ |
7,740,240 |
|
|
$ |
5,819,415 |
|
|
$ |
5,334,016 |
|
|
|
|
|
|
|
|
|
|
|
|||
|
(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:
|
|
TTM Ended |
|
|
TTM Ended |
|
||
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
||
|
Net Income (Loss) |
$ |
30,646,855 |
|
|
$ |
(2,459,000 |
) |
|
Plus: |
|
|
|
|
|
||
|
Income tax expense (benefit) |
|
7,455,000 |
|
|
|
429,949 |
|
|
Interest expense |
|
1,953,232 |
|
|
|
832,295 |
|
|
DD&A |
|
7,265,346 |
|
|
|
7,412,214 |
|
|
Impairment expense |
|
6,111,749 |
|
|
|
56,060 |
|
|
Less: |
|
|
|
|
|
||
|
Non-cash gains (losses) |
|
|
|
|
|
||
|
on derivatives |
|
14,360,063 |
|
|
|
(8,580,898 |
) |
|
Gains (losses) on asset sales |
|
9,604,551 |
|
|
|
450,074 |
|
|
Plus: |
|
|
|
|
|
||
|
Cash receipts from (payments on) |
|
|
|
|
|
||
|
off-market derivative contracts(1) |
|
(3,618,427 |
) |
|
|
3,618,428 |
|
|
Restricted stock and deferred |
|
|
|
|
|
||
|
director's expense |
|
2,815,183 |
|
|
|
1,443,276 |
|
|
Adjusted EBITDA |
$ |
28,664,324 |
|
|
$ |
19,464,046 |
|
|
|
|
|
|
|
|
||
|
Debt |
$ |
26,000,000 |
|
|
$ |
24,000,000 |
|
|
Debt to Adjusted EBITDA (TTM) |
|
0.91 |
|
|
|
1.23 |
|
|
|
|
|
|
|
|
||
|
(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. |
|
||||||
Adjusted Pretax Net Income (Loss) Reconciliation
“Adjusted pretax net income (loss)” is defined as earnings before taxes and impairment expense, excluding non-cash gains (losses) on derivatives and gains (losses) on asset sales and including cash receipts from (payments on) off-market derivatives. We have included a presentation of adjusted pretax net income (loss) 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 pretax net income (loss) 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 pretax net income (loss) may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to adjusted pretax net income (loss) for the periods indicated:
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|||
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
|
Dec. 31, 2022 |
|
|||
|
Net Income (Loss) |
$ |
9,553,244 |
|
|
$ |
(4,020,455 |
) |
|
$ |
3,346,133 |
|
|
Plus: |
|
|
|
|
|
|
|
|
|||
|
Income tax expense (benefit) |
|
3,067,000 |
|
|
|
33,000 |
|
|
|
981,000 |
|
|
Impairment expense |
|
2,073 |
|
|
|
- |
|
|
|
6,100,696 |
|
|
Less: |
|
|
|
|
|
|
|
|
|||
|
Non-cash gains (losses) |
|
|
|
|
|
|
|
|
|||
|
on derivatives |
|
3,172,399 |
|
|
|
(11,772,640 |
) |
|
|
6,265,041 |
|
|
Gains (losses) on asset sales |
|
4,417,983 |
|
|
|
2,292,215 |
|
|
|
934,207 |
|
|
Plus: |
|
|
|
|
|
|
|
|
|||
|
Cash receipts from (payments on) |
|
|
|
|
|
|
|
|
|||
|
off-market derivative contracts(1) |
|
(373,745 |
) |
|
|
(2,493,481 |
) |
|
|
(903,461 |
) |
|
Adjusted Pretax Net Income (Loss) |
$ |
4,658,190 |
|
|
$ |
2,999,489 |
|
|
$ |
2,325,120 |
|
|
|
|
|
|
|
|
|
|
|
|||
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|||
|
Basic |
|
35,935,791 |
|
|
|
34,292,455 |
|
|
|
35,679,740 |
|
|
Diluted |
|
35,935,791 |
|
|
|
34,292,455 |
|
|
|
36,489,353 |
|
|
|
|
|
|
|
|
|
|
|
|||
|
Adjusted Pretax Net Income (Loss) |
|
|
|
|
|
|
|
|
|||
|
per basic and diluted share |
$ |
0.13 |
|
|
$ |
0.09 |
|
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|||
|
(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 had no effect on the Company’s statement of operations. |
|
||||||||||
PHX Minerals Inc. (NYSE: PHX) Fort Worth-based, PHX Minerals Inc. is a natural gas and oil mineral company with a strategy to proactively grow its mineral position in its core focus areas. PHX owns mineral acreage principally located in Oklahoma, Texas, Louisiana, North Dakota and Arkansas. Additional information 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 operational outlook; the Company’s ability to execute its business strategies; the volatility of realized natural gas and oil prices; the level of production on the Company’s properties; estimates of quantities of natural gas, oil and NGL reserves and their values; general economic or industry conditions; legislation or regulatory requirements; conditions of the securities markets; the Company’s ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; title defects in the properties in which the Company invests; and other economic, competitive, governmental, regulatory or technical factors affecting properties, operations or prices. Although the Company believes expectations reflected in these and other forward-looking statements are reasonable, the Company can give no assurance such expectations will prove to be correct. Such forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. These forward-looking statements involve certain risks and uncertainties that could cause results to differ materially from those expected by the Company’s management. Information concerning these risks and other factors can be found in the Company’s filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, available on the Company’s website or the SEC’s website at www.sec.gov.
Investors are cautioned that any such 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.
Investor Contact:
Rob Fink / Stephen Lee
FNK IR
646.809.4048
Corporate Contact:
405.948.1560