PHX Minerals Inc. Reports Fourth Quarter and Fiscal 2021 Results And Announces Dividend Payment

OKLAHOMA CITY, Dec. 13, 2021 – PHX MINERALS INC. (“PHX” or the “Company”) (NYSE: PHX) today reported financial and operating results for the fourth quarter and fiscal year ended Sept. 30, 2021.

HIGHLIGHTS FOR THE PERIOD ENDED SEPT. 30, 2021, AND SUBSEQUENT EVENTS

  • Total production volumes for the full fiscal year 2021increased 6% to 9,076 Mmcfe from 8,593 Mmcfe in the full fiscal year 2020.
  • Royalty production volumes for the full fiscal year 2021 increased 25% to 4,178 Mmcfe from 3,348 Mmcfe in the full fiscal year 2020.
  • Total production volumes for the fourth fiscal quarter of 2021 decreased 11% to 2,212 Mmcfe from 2,493 Mmcfe in the third fiscal quarter of 2021.
  • Royalty production volumes for the fourth fiscal quarter of 2021 decreased 17% to 998 Mmcfe from 1,205 Mmcfe in the third fiscal quarter of 2021.
  • Announced the quarterly dividend increased to 1.5 cents per share, a 50% increase, payable on March 3, 2022, to shareholders of record on February 17, 2022.
  • Recorded a net loss in fiscal 2021 of $(6.2) million, or $(0.24) per share, as compared to net loss of $(24.0) million, or $(1.41) per share, in fiscal 2020.
  • Recorded a net loss in the fourth quarter 2021 of $(3.8) million, or $(0.14) per share, as compared to a net loss of $(1.4) million, or $(0.05) per share, in the third fiscal quarter of 2021.
  • Adjusted EBITDA(1) increased in the full fiscal year 2021 to $15.0 million from $13.5 million in the full fiscal year 2020.
  • Adjusted EBITDA(1) decreased in the fourth fiscal quarter of 2021 to $4.1 million from $4.7 million in the third fiscal quarter of 2021 and increased from $2.7 million in the fourth fiscal quarter of 2020.
  • Reduced debt 39% from $28.8 million as of Sept. 30, 2020, to $17.5 million, as of Sept. 30, 2021.
  • Total debt to adjusted EBITDA(1) ratio was 1.17x at Sept. 30, 2021.
  • Increased the borrowing base to $32.0 million from $27.5 million.
  • Completed approximately $30.0 million of mineral and royalty interest acquisitions in fiscal 2021 and an additional approximately $10.0 million in fiscal 2022.
  • Completed the divestiture of 708 legacy non operated working interest wellbores for net proceeds of $4.6 million and the removal of approximately $0.7 million of asset retirement obligation from the balance sheet since Sept. 30, 2021
  1. This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

 

Chad L. Stephens, President and CEO, commented, “Throughout the last several quarters, we have repeatedly expressed our stated strategy to focus on growing our asset base through the acquisition of minerals in core areas with active development under reputable operators, high grade the asset base by divesting of lower margin working interest wells and strengthen the balance sheet.  As we close out an excellent fiscal year 2021, we can proudly report that we have achieved stellar results at the high end of expectations in all of these areas.

“An important barometer of the success of our strategy is produced royalty volumes, which increased year over year almost 25%, while our non-operated working interest volumes continue to decline and become a lower percent of our total company volumes.  Also, our adjusted EBITDA  for the full fiscal year 2021 increased 11% year over year, we reduced our debt by 39% year over year and, since our fiscal year-end 2021, increased our bank borrowing base by 16%, which improves our liquidity. This increase is a direct reflection of high grading the asset base and our improving collateral profile. Most importantly, while paying down our debt by $11.3 million, we closed on the acquisition of minerals totaling approximately $30.0 million in fiscal year 2021. Since fiscal year-end, we have announced the close of an additional $10.0 million of mineral acquisitions with $5.8 million more to close mid-December. Given these significant accomplishments and our confidence in continuing to execute our strategy, we are increasing our quarterly dividend by 50% to $.015 per share.

“With a stronger balance sheet, improved liquidity and allocating 100% of our free cash flow to our mineral acquisition strategy, we are excited about PHX’s ability to build shareholder value.”

OPERATING HIGHLIGHTS

 

Fourth Quarter Ended

 

 

Fourth Quarter Ended

 

 

Year Ended

 

 

Year Ended

 

 

Sept. 30, 2021

 

 

Sept. 30, 2020

 

 

Sept. 30, 2021

 

 

Sept. 30, 2020

 

Mcfe Sold

 

2,211,570

 

 

 

2,037,779

 

 

 

9,075,519

 

 

 

8,593,153

 

Average Sales Price per Mcfe

$

5.46

 

 

$

2.47

 

 

$

4.16

 

 

$

2.72

 

Gas Mcf Sold

 

1,609,101

 

 

 

1,423,602

 

 

 

6,699,720

 

 

 

5,962,705

 

Average Sales Price per Mcf

$

4.27

 

 

$

1.68

 

 

$

3.13

 

 

$

1.72

 

Oil Barrels Sold

 

54,043

 

 

 

55,626

 

 

 

224,479

 

 

 

269,785

 

Average Sales Price per Barrel

$

68.02

 

 

$

37.80

 

 

$

56.58

 

 

$

41.47

 

NGL Barrels Sold

 

46,369

 

 

 

46,737

 

 

 

171,488

 

 

 

168,623

 

Average Sales Price per Barrel

$

32.91

 

 

$

11.84

 

 

$

23.80

 

 

$

11.42

 

Total Production for the last four quarters was as follows:

Quarter ended

 

Mcf Sold

 

 

Oil Bbls Sold

 

 

NGL Bbls Sold

 

 

Mcfe Sold

 

9/30/2021

 

 

1,609,101

 

 

 

54,043

 

 

 

46,369

 

 

 

2,211,570

 

6/30/2021

 

 

1,879,343

 

 

 

55,492

 

 

 

46,753

 

 

 

2,492,813

 

3/31/2021

 

 

1,735,820

 

 

 

56,269

 

 

 

37,228

 

 

 

2,296,802

 

12/31/2020

 

 

1,475,456

 

 

 

58,675

 

 

 

41,138

 

 

 

2,074,334

 

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

Quarter ended

 

Mcf Sold

 

 

Oil Bbls Sold

 

 

NGL Bbls Sold

 

 

Mcfe Sold

 

9/30/2021

 

 

705,397

 

 

 

29,442

 

 

 

19,364

 

 

 

998,230

 

6/30/2021

 

 

908,471

 

 

 

31,095

 

 

 

18,255

 

 

 

1,204,571

 

3/31/2021

 

 

924,969

 

 

 

31,768

 

 

 

19,088

 

 

 

1,230,105

 

12/31/2020

 

 

487,925

 

 

 

27,840

 

 

 

14,948

 

 

 

744,653

 

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

Quarter ended

 

Mcf Sold

 

 

Oil Bbls Sold

 

 

NGL Bbls Sold

 

 

Mcfe Sold

 

9/30/2021

 

 

903,704

 

 

 

24,601

 

 

 

27,005

 

 

 

1,213,340

 

6/30/2021

 

 

970,872

 

 

 

24,397

 

 

 

28,498

 

 

 

1,288,242

 

3/31/2021

 

 

810,851

 

 

 

24,501

 

 

 

18,140

 

 

 

1,066,697

 

12/31/2020

 

 

987,531

 

 

 

30,835

 

 

 

26,190

 

 

 

1,329,681

 

FINANCIAL HIGHLIGHTS

 

 

Fourth Quarter Ended

 

 

Fourth Quarter Ended

 

 

Year Ended

 

 

Year Ended

 

 

 

Sept. 30, 2021

 

 

Sept. 30, 2020

 

 

Sept. 30, 2021

 

 

Sept. 30, 2020

 

    Working Interest Sales

 

$

6,071,031

 

 

$

2,937,807

 

 

$

19,317,009

 

 

$

12,914,080

 

    Royalty Interest Sales

 

$

6,007,389

 

 

$

2,103,179

 

 

$

18,432,035

 

 

$

10,455,923

 

Natural Gas, Oil and NGL Sales

 

$

12,078,420

 

 

$

5,040,986

 

 

$

37,749,044

 

 

$

23,370,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Bonuses and Rental Income

 

$

105,974

 

 

$

118,174

 

 

$

425,113

 

 

$

690,961

 

Total Revenue

 

$

4,071,567

 

 

$

3,651,178

 

 

$

21,971,668

 

 

$

24,968,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOE per Mcfe

 

$

0.51

 

 

$

0.48

 

 

$

0.47

 

 

$

0.56

 

Transportation, Gathering and Marketing per Mcfe

 

$

0.74

 

 

$

0.55

 

 

$

0.64

 

 

$

0.56

 

Production Tax per Mcfe

 

$

0.28

 

 

$

0.09

 

 

$

0.21

 

 

$

0.12

 

G&A Expense per Mcfe

 

$

0.97

 

 

$

0.84

 

 

$

0.90

 

 

$

0.93

 

Interest Expense per Mcfe

 

$

0.09

 

 

$

0.16

 

 

$

0.11

 

 

$

0.15

 

DD&A per Mcfe

 

$

0.71

 

 

$

1.24

 

 

$

0.85

 

 

$

1.32

 

Total Expense per Mcfe

 

$

3.30

 

 

$

3.36

 

 

$

3.18

 

 

$

3.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

(3,764,200

)

 

$

(1,834,122

)

 

$

(6,217,237

)

 

$

(23,952,037

)

Adjusted EBITDA(1)

 

$

4,141,890

 

 

$

2,723,331

 

 

$

14,999,938

 

 

$

13,465,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow from Operations

 

$

(6,298,246

)

 

$

1,280,555

 

 

$

3,942,087

 

 

$

11,106,295

 

CapEx - Drilling & Completing

 

$

36,413

 

 

$

206,968

 

 

$

733,172

 

 

$

403,136

 

CapEx - Mineral Acquisitions

 

$

1,287,082

 

 

$

15,766

 

 

$

20,624,347

 

 

$

10,288,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowing Base

 

 

 

 

 

 

 

 

 

$

27,500,000

 

 

$

31,000,000

 

Debt

 

 

 

 

 

 

 

 

 

$

17,500,000

 

 

$

28,750,000

 

Debt/Adjusted EBITDA (1)

 

 

 

 

 

 

 

 

 

 

1.17

 

 

 

2.14

 

  1. This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

RESULTS OF FOURTH QUARTER 2021 COMPARED TO THE FOURTH QUARTER 2020

Natural gas, oil and NGL revenue increased 140% in the 2021 quarter as total production increased 9% and product prices increased 121%, relative to the 2020 quarter. Royalty revenue increased 186% in the 2021 quarter as total production increased 29% and product prices increased 122%, relative to the 2020 quarter. Total production increased due to the recent mineral and royalty interest acquisitions in the Haynesville play, in Texas and Louisiana, and SCOOP. These increases were offset by naturally declining production in the Eagle Ford and Arkoma Stack. 

The 2% decrease in total cost per Mcfe in the 2021 quarter, relative to the 2020 quarter, was primarily driven by a decrease in DD&A. DD&A decreased $950,365, or 38%, in the 2021 quarter to $0.71 per Mcfe, as compared to $1.24 per Mcfe in the 2020 quarter. Of the decrease, $1,165,857 was a result of a $0.53 decrease in the DD&A rate per Mcfe, partially offset by an increase of $215,492 resulting from total production increasing 9% in the 2021 quarter. The rate decrease was partially due to higher natural gas, oil and NGL prices utilized in the reserve calculations during the 2021 period, as compared to 2020 period, lengthening the economic life of wells. This resulted in higher projected remaining reserves on a significant number of wells causing decreased units of production DD&A, despite the increase in projection.

No material impairment charge was recorded during the 2021 and 2020 quarters.

No significant divestitures of minerals occurred in the fourth quarter of 2021. In the fourth quarter of 2020, the Company sold open and non-producing net mineral acres in northwest Oklahoma for a gain of $717,640.

On Sept. 2, 2021, the Company settled all of its derivative contracts with Bank of Oklahoma (“BOKF”) by paying $8.8 million.  On Sept. 3, 2021, the Company entered into new derivative contracts with BP Energy Company (“BP”) that had similar terms to the contracts settled with BOK and received a payment of $8.8 million from BP.  The new derivative contracts consisted of all fixed swap contracts and are secured under the Company’s credit facility with Independent Bank. The $8.8 million paid to BOK to settle the derivatives is included as a loss on derivatives. The $8.8 million received from BP was considered a cash flow from financing activities and had no effect on the statement of operations. The derivative activity was associated with entering into a new credit agreement with Independent Bank and ending the relationship with BOKF. The 2021 quarter included an $8.1 million loss on derivative contracts as compared to a $1.5 million loss for the 2020 quarter.

The Company’s net income (loss) changed from net loss of $(1.8) million in the 2020 quarter to a net loss of $(3.8) million in the 2021 quarter. The change was primarily due to the increase in loss on derivative contracts (as noted above) in 2021, partially offset by an increase in natural gas, oil and NGL revenue.

RESULTS OF FISCAL YEAR 2021 AS COMPARED TO FISCAL YEAR 2020

Natural gas, oil and NGL revenue increased 62% in 2021 as production increased 6% and product prices increased 53%, relative to 2020. Royalty revenue increased 76% in 2021 as total production increased 25% and product prices increased 41%, relative to 2020. Total production increased due to an increase in natural gas production from the recent mineral and royalty acquisitions in the Haynesville play of Texas and Louisiana, and slightly offset by naturally declining production in the Fayetteville, SCOOP and Arkoma STACK. The decrease in oil production was a result of naturally declining production in working interest wells in the Eagle Ford play and royalty wells in the Bakken play, due to the company strategy of no longer participating with working interest in new drilling in the Eagle Ford, and reduced drilling activity in the Bakken. These decreases were partially offset by new drilling in the STACK. The increase in NGL production is primarily attributable to high interest wells coming back online after being shut-in for part of fiscal year 2020, as well as new wells being brought online in the STACK. This was partially offset by naturally declining production in the SCOOP.

Given our strategic decision to cease participating with working interests, we plan to offset the natural decline of our existing production base by the development of our current inventory of mineral acreage and through acquisitions of additional mineral interests.

Expenses decreased in 2021, primarily the result of a decrease in the provision for impairment, DD&A, LOE and interest expense, offset by an increase in transportation, gathering and marketing expenses, production taxes and loss on debt extinguishment.  The reduction in DD&A expense is discussed above and the reduction in interest expense is due to the Company paying down $11.3 million of debt in 2021.  The increase in transportation, gathering and marketing expense and production taxes is due to the increase in production and related revenue.

An impairment expense of $50,475 was recorded during 2021 compared to $29,904,528 in 2020.  In 2020, an impairment of expense of $19.3 million and $7.3 million was recorded on the Fayetteville Shale and Eagle Ford fields, respectively. The remaining $2.7 million of impairment was taken on other producing assets.  

In 2021, the Company sold 2,857 net mineral acres in the Central Basin Platform, TX, for a gain on sales of $0.2 million. In 2020, the Company sold 530 net mineral acres in Eddy County, N.M., for a gain on sales of $3.3 million and 5,925 open and non-producing net mineral acres in northwest Oklahoma for a net gain on sales of $0.7 million.

The Company’s net income (loss) changed from a net loss of $(24.0) million in 2020 to a net loss of $(6.2) million in 2021. The change in net (loss) was due to the increase in revenue mentioned above and decrease in expenses, partially offset by an increase in loss on derivative contracts and a decrease on net gain on sale of assets. Fiscal 2021 total revenues included a $16.2 million loss on derivative contracts, as compared to a $0.9 million gain on derivative contracts for 2020.

OPERATIONS UPDATE

At Nov. 15, 2021, the Company had a total of 86 gross wells (0.46 net wells) in progress across its mineral positions and 33 gross active permitted wells. As of Nov. 15, 2021, there were 15 rigs operating on the Company’s acreage and 73 rigs operating within 2.5 miles of its acreage.

 

 

 

 

 

 

 

 

 

 

Bakken/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three

 

 

Arkoma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCOOP

 

 

STACK

 

 

Forks

 

 

Stack

 

 

Permian

 

 

Fayetteville

 

 

Haynesville

 

 

Other

 

 

Total

 

As of 11/15/21:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Wells in Progress on PHX Acreage

 

 

41

 

 

 

8

 

 

 

2

 

 

 

3

 

 

 

3

 

 

 

-

 

 

 

26

 

 

 

3

 

 

 

86

 

Net Wells in Progress on PHX Acreage

 

 

0.04

 

 

 

0.04

 

 

 

-

 

 

 

0.03

 

 

 

0.14

 

 

 

-

 

 

 

0.20

 

 

 

0.01

 

 

 

0.46

 

Gross Active Permits on PHX Acreage

 

 

13

 

 

 

6

 

 

 

5

 

 

 

4

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

 

 

33

 

As of 11/15/21:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rigs Present on PHX Acreage

 

 

7

 

 

 

1

 

 

 

-

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

6

 

 

 

-

 

 

 

15

 

Rigs Within 2.5 Miles of PHX Acreage

 

 

19

 

 

 

14

 

 

 

9

 

 

 

2

 

 

 

3

 

 

 

-

 

 

 

16

 

 

 

10

 

 

 

73

 

Leasing Activity

During the fourth quarter of fiscal year 2021, the Company leased 265 net mineral acres for an average bonus payment of $402 and an average royalty of 20%.

 

 

 

 

 

 

 

 

 

 

Bakken/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three

 

 

Arkoma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCOOP

 

 

STACK

 

 

Forks

 

 

Stack

 

 

Permian

 

 

Fayetteville

 

 

Haynesville

 

 

Other

 

 

Total

 

During Three Months Ended 9/30/21:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Mineral Acres Leased

 

 

184

 

 

 

37

 

 

 

-

 

 

 

-

 

 

 

30

 

 

 

-

 

 

 

-

 

 

 

14

 

 

 

265

 

Average Bonus per Net Mineral Acre

 

 

225

 

 

 

1,450

 

 

 

-

 

 

 

-

 

 

 

488

 

 

 

-

 

 

 

-

 

 

 

325

 

 

 

402

 

Average Royalty per Net Mineral Acre

 

20%

 

 

19%

 

 

 

-

 

 

-

 

 

25%

 

 

 

-

 

 

 

-

 

 

20%

 

 

20%

 

ACQUISITION AND DIVESTITURE UPDATE

During the fourth quarter of fiscal year 2021 through Nov. 15, 2021, the Company purchased 1,311 net royalty acres for $11,129,413.

 

 

 

 

 

 

 

 

 

 

Bakken/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three

 

 

Arkoma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCOOP

 

 

STACK

 

 

Forks

 

 

Stack

 

 

Permian

 

 

Fayetteville

 

 

Haynesville

 

 

Other

 

 

Total

 

For the period ended 11/15/21: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Mineral Acres Purchased

 

 

208

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

698

 

 

 

-

 

 

 

906

 

Net Royalty Acres Purchased

 

 

241

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,070

 

 

 

-

 

 

 

1,311

 

Price per Net Royalty Acre

 

$

5,747

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

$

9,107

 

 

 

-

 

 

$

8,489

 

Net Mineral Acres Sold

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

Net Royalty Acres Sold

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Price per Net Royalty Acre

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

  1. Fourth quarter 2021 through Nov. 15,2021.

During the fourth quarter of fiscal year 2021 through Nov. 15, 2021, the Company sold 731 gross working interest wells (20.21 net wells).

For the Period Ended

 

Proceeds ($)

 

 

P&A Liability

(Net Value $)

 

 

Gross Wells

 

 

Net Wells

 

September 30, 2021

 

$

419,171

 

 

$

37,242

 

 

 

23

 

 

 

1.28

 

November 23, 2021

 

$

4,625,000

 

 

$

693,235

 

 

 

708

 

 

 

18.93

 

 

 

$

5,044,171

 

 

$

730,477

 

 

 

731

 

 

 

20.21

 

RESERVES UPDATE

At Sept. 30, 2021, proved reserves were 83.0 Bcfe, as calculated by DeGolyer and MacNaughton, the Company’s independent consulting petroleum engineering firm. This was a 44% increase, compared to the 57.7 Bcfe of proved reserves at Sept. 30, 2020. Total proved developed reserves increased 42% to 77.7 Bcfe, as compared to Sept. 30, 2020 reserve volumes, mainly due to 2021 pricing revisions, partially offset by production and performance revisions. The pricing revisions were due to well economic limits extending later than was projected in 2020 as a result of higher gas and oil prices. The performance revisions were principally due to lower performance of high-interest Mississippian and Woodford wells in the STACK play in Oklahoma that were brought online in 2021. Total proved undeveloped reserves increased 2.2 Bcfe, principally due to mineral interest acquisitions in the Haynesville Shale in Texas and Louisiana and Meramec and Woodford SCOOP play in Oklahoma. SEC prices used for the Sept. 30, 2021, report averaged $2.79 per Mcf for natural gas, $56.51 per barrel for oil and $20.58 per barrel for NGL, compared to $1.62 per Mcf for natural gas, $40.18 per barrel for oil and $9.95 per barrel for NGL for the Sept. 30, 2020, report. These prices reflect net prices received at the wellhead.

BORROWING BASE

On Sept. 1, 2021, the Company entered into a new four-year $100 million senior secured credit facility with an initial Borrowing Base of $27.5 million and a maturity date of Sept. 1, 2025 (the “New Credit Facility”). The New Credit Facility is led by Independent Bank and replaced the Company’s prior credit facility. On Dec. 6, 2021 the borrowing base was increased to $32.0 million.

FOURTH QUARTER EARNINGS CALL

PHX will host a conference call to discuss fourth quarter results at 5:00 p.m. EST on Dec. 13, 2021. 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 13725000.

 

 

FINANCIALS

Statements of Operations

 

Three Months Ended Sept. 30,

 

 

Year Ended Sept. 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

Natural gas, oil and NGL sales

$

12,078,420

 

 

$

5,040,986

 

 

$

37,749,044

 

 

$

23,370,003

 

Lease bonuses and rental income

 

105,974

 

 

 

118,174

 

 

 

425,113

 

 

 

690,961

 

Gains (losses) on derivative contracts

 

(8,112,827

)

 

 

(1,507,982

)

 

 

(16,202,489

)

 

 

907,419

 

 

$

4,071,567

 

 

 

3,651,178

 

 

 

21,971,668

 

 

 

24,968,383

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

1,130,916

 

 

 

969,723

 

 

 

4,230,968

 

 

 

4,841,541

 

Transportation, gathering and marketing

 

1,628,634

 

 

 

1,116,587

 

 

 

5,767,287

 

 

 

4,812,869

 

Production taxes

 

622,266

 

 

 

187,628

 

 

 

1,938,304

 

 

 

1,022,912

 

Depreciation, depletion and amortization

 

1,569,631

 

 

 

2,519,996

 

 

 

7,745,804

 

 

 

11,313,783

 

Provision for impairment

 

4,620

 

 

 

-

 

 

 

50,475

 

 

 

29,904,528

 

Interest expense

 

204,925

 

 

 

328,359

 

 

 

995,127

 

 

 

1,286,788

 

General and administrative

 

2,142,205

 

 

 

1,718,422

 

 

 

8,207,882

 

 

 

8,024,901

 

Loss on debt extinguishment

 

260,236

 

 

 

-

 

 

 

260,236

 

 

 

-

 

Losses (gains) on asset sales and other

 

(178,615

)

 

 

(677,355

)

 

 

(356,127

)

 

 

(3,997,902

)

Total costs and expenses

 

7,384,818

 

 

 

6,163,360

 

 

 

28,839,956

 

 

 

57,209,420

 

Income (loss) before provision (benefit) for income taxes

 

(3,313,251

)

 

 

(2,512,182

)

 

 

(6,868,288

)

 

 

(32,241,037

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

450,949

 

 

 

(678,060

)

 

 

(651,051

)

 

 

(8,289,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(3,764,200

)

 

$

(1,834,122

)

 

$

(6,217,237

)

 

$

(23,952,037

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per common share

$

(0.14

)

 

$

(0.07

)

 

$

(0.24

)

 

$

(1.41

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

29,997,490

 

 

 

18,289,502

 

 

 

25,742,202

 

 

 

16,856,792

 

Unissued, directors' deferred compensation shares

 

210,002

 

 

 

147,341

 

 

 

183,334

 

 

 

154,142

 

 

 

30,207,492

 

 

 

18,436,843

 

 

 

25,925,536

 

 

 

17,010,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

common stock and paid in period

$

0.01

 

 

$

0.01

 

 

$

0.04

 

 

$

0.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheets

 

Sept. 30, 2021

 

 

Sept. 30, 2020

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

2,438,511

 

 

$

10,690,395

 

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

 

6,428,982

 

 

 

2,943,220

 

allowance for uncollectable accounts)

 

 

 

 

 

 

 

Refundable income taxes

 

2,413,942

 

 

 

3,805,227

 

Other

 

942,082

 

 

 

351,088

 

Total current assets

 

12,223,517

 

 

 

17,789,930

 

Properties and equipment at cost, based on

 

 

 

 

 

 

 

   successful efforts accounting:

 

 

 

 

 

 

 

Producing natural gas and oil properties

 

319,984,874

 

 

 

324,886,491

 

Non-producing natural gas and oil properties

 

40,466,098

 

 

 

18,993,814

 

Other

 

794,179

 

 

 

582,444

 

 

 

361,245,151

 

 

 

344,462,749

 

Less accumulated depreciation, depletion and amortization

 

(257,643,661

)

 

 

(263,590,801

)

Net properties and equipment

 

103,601,490

 

 

 

80,871,948

 

 

 

 

 

 

 

 

 

Investments

 

308

 

 

 

79,308

 

Operating lease right-of-use assets

 

607,414

 

 

 

690,316

 

Other, net

 

578,285

 

 

 

590,333

 

Total assets

$

117,011,014

 

 

$

100,021,835

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

772,717

 

 

$

997,637

 

Derivative contracts, net

 

12,087,988

 

 

 

281,942

 

Current portion of operating lease liability

 

132,287

 

 

 

127,108

 

Income taxes payable

 

334,050

 

 

 

-

 

Accrued liabilities and other

 

1,809,337

 

 

 

1,297,363

 

Short-term debt

 

-

 

 

 

1,750,000

 

Total current liabilities

 

15,136,379

 

 

 

4,454,050

 

 

 

 

 

 

 

 

 

Long-term debt

 

17,500,000

 

 

 

27,000,000

 

Deferred income taxes, net

 

343,906

 

 

 

1,329,007

 

Asset retirement obligations

 

2,836,172

 

 

 

2,897,522

 

Derivative contracts, net

 

1,696,479

 

 

 

425,705

 

Operating lease liability, net of current portion

 

789,339

 

 

 

921,625

 

Total liabilities

 

38,302,275

 

 

 

37,027,909

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Class A voting common stock, par value $0.01666 per share: 36,000,500 shares

 

545,956

 

 

 

377,304

 

authorized and 32,770,443 shares issued and outstanding at Sept. 30, 2021; 24,000,500

 

 

 

 

 

 

 

shares authorized and 22,647,306 shares issued and outstanding at Sept. 30, 2020

 

 

 

 

 

 

 

Capital in excess of par value

 

33,213,645

 

 

 

10,649,611

 

Deferred directors' compensation

 

1,768,151

 

 

 

1,874,007

 

Retained earnings

 

48,966,420

 

 

 

56,244,100

 

 

 

84,494,172

 

 

 

69,145,022

 

Treasury stock, at cost: 388,545 shares at Sept. 30,

 

 

 

 

 

 

 

2021, and 411,487 shares at Sept. 30, 2020

 

(5,785,433

)

 

 

(6,151,096

)

Total stockholders' equity

 

78,708,739

 

 

 

62,993,926

 

Total liabilities and stockholders' equity

$

117,011,014

 

 

$

100,021,835

 

Condensed Statements of Cash Flows

 

Year ended Sept. 30,

 

 

2021

 

 

2020

 

Operating Activities

 

 

Net income (loss)

$

(6,217,237

)

 

$

(23,952,037

)

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

 

 

 

 

 

 

 

  by operating activities:

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

7,745,804

 

 

 

11,313,783

 

Impairment of producing properties

 

50,475

 

 

 

29,904,528

 

Provision for deferred income taxes

 

(985,101

)

 

 

(4,647,000

)

Gain from leasing fee mineral acreage

 

(421,915

)

 

 

(685,927

)

Proceeds from leasing fee mineral acreage

 

441,653

 

 

 

701,948

 

Net (gain) loss on sales of assets

 

(309,348

)

 

 

(3,973,321

)

ESOP contribution expense

 

-

 

 

 

103,104

 

Directors' deferred compensation expense

 

234,466

 

 

 

228,408

 

Total (gain) loss on derivative contracts

 

16,202,489

 

 

 

(907,419

)

Cash receipts (payments) on settled derivative contracts

 

(11,925,669

)

 

 

4,109,210

 

Restricted stock awards

 

801,200

 

 

 

743,897

 

Loss on debt extinguishment

 

260,236

 

 

 

-

 

Other

 

(11,099

)

 

 

(2,611

)

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

 

 

 

 

 

 

 

Natural gas, oil and NGL sales receivables

 

(3,485,762

)

 

 

1,434,426

 

Refundable income taxes

 

1,391,285

 

 

 

(2,299,785

)

Other current assets

 

(436,401

)

 

 

(89,931

)

Accounts payable

 

(151,875

)

 

 

1,308,731

 

Other non-current assets

 

(86,282

)

 

 

(1,044,680

)

Accrued liabilities

 

845,168

 

 

 

(1,139,029

)

Total adjustments

 

10,159,324

 

 

 

35,058,332

 

Net cash provided by operating activities

 

3,942,087

 

 

 

11,106,295

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

Capital expenditures

 

(733,172

)

 

 

(403,136

)

Acquisition of minerals and overriding royalty interests

 

(20,624,347

)

 

 

(10,288,250

)

Proceeds from sales of assets

 

988,600

 

 

 

4,228,868

 

Net cash provided (used) by investing activities

 

(20,368,919

)

 

 

(6,462,518

)

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

Borrowings under Credit Facility

 

26,300,000

 

 

 

6,061,725

 

Payments of loan principal

 

(37,550,000

)

 

 

(12,736,725

)

Net proceeds from equity issuance

 

11,688,137

 

 

 

8,220,726

 

Cash receipts from (payments on) off-market derivative contracts

 

8,800,000

 

 

 

-

 

Purchases of treasury stock

 

(2,741

)

 

 

(7,635

)

Payments of dividends

 

(1,060,448

)

 

 

(1,652,164

)

Net cash provided (used) by financing activities

 

8,174,948

 

 

 

(114,073

)

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(8,251,884

)

 

 

4,529,704

 

Cash and cash equivalents at beginning of year

 

10,690,395

 

 

 

6,160,691

 

Cash and cash equivalents at end of year

$

2,438,511

 

 

$

10,690,395

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow

   Information

 

 

 

 

 

 

 

Interest paid (net of capitalized interest)

$

1,021,142

 

 

$

1,306,967

 

Income taxes paid (net of refunds received)

$

(1,391,225

)

 

$

(1,342,275

)

Supplemental Schedule of Noncash Investing and Financing Activities

 

 

 

 

 

 

 

Additions and revisions, net, to asset retirement obligations

$

-

 

 

$

4

 

 

 

 

 

 

 

 

 

Gross additions to properties and equipment

$

31,485,015