PHX Minerals Inc. Reports First Quarter 2022 Results
OKLAHOMA CITY, Feb. 14, 2022 – PHX MINERALS INC., “PHX” or the “Company” (NYSE: PHX), today reported financial and operating results for the
SUMMARY OF RESULTS FOR THE PERIOD ENDED
Royalty production volumes for the first fiscal quarter of 2022 increased 23% to 1,225 Mmcfe from 998 Mmcfe in thefourth fiscal quarter of 2021 and total production volumes for thefirst fiscal quarter of 2022 decreased 4% to2,128 Mmcfe from2,212 Mmcfe in thefourth fiscal quarter of 2021.- Net
income in thefirst fiscal quarter of 2022 was$6.7 million , or$0.20 per share, as compared to netloss of($0.6) million , or ($0.03 ) per share, in thefirst fiscal quarter of 2021 and net loss of ($3.8) million, or ($0.14) per share, in thefourth fiscal quarter of 2021. - Adjusted EBITDA(1) for the
first quarter of2022 increased to$4.4 million from$2.9 million in thefirst fiscal quarter of 2021 andincreased from$4.2 million in thefourth fiscal quarter of 2021. - Total debt was increased to $20.0 million as of Dec. 31, 2021, in order to fund an acquisition of developed minerals targeting the Haynesville, a 14% increase from $17.5 million as of Sept. 30, 2021. The borrowing base increased to $32.0 million as of Dec. 31, 2021, a 16% increase from $27.5 million as of Sept. 30, 2021.
- Total debt to adjusted EBITDA (TTM) (1) ratio was
1.16 x atDec. 31, 2021 . - For the first quarter of fiscal year 2022 through Jan. 31, 2022, closed on the acquisition of 2,151 net royalty acres in the SCOOP play of Oklahoma and the Haynesville play of East Texas and Louisiana for approximately $13.8 million in cash and 1.5 million shares of PHX common stock.
- This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.
Chad L. Stephens, President and CEO, commented, “As we move into PHX’s fiscal year 2022, you will note our first quarter 2022 results clearly demonstrate the traction we continue to gain from our mineral acquisition strategy, with royalty volumes increasing and working interest volumes declining. This is a direct result of our previously announced mineral acquisitions and the sale of legacy working interest properties, on which we closed last October and November. This is a methodical process that involves divesting mature non-operated working interest properties and redeploying the cash proceeds into acquiring minerals in our core basins, the SCOOP and Haynesville, with high rock quality attributes and active drilling under reputable and credit worthy operators. These mineral acquisitions provide immediate royalty volumes and cash flow along with an inventory of drilling locations that, as these locations are developed in the near future, will contribute additional growing royalty volumes and cash flow. I would also like to point out that the non-producing locations we have purchased over the last two years are being converted to producing wells at a faster pace than we expected during our underwriting process, which validates our strategy.
“This buy and sell high grading process generates a dynamic of declining working interest volumes, with no capital allocated to the working interest assets to increase production and slowly divesting of lower valued mature working interest properties, while materially growing our royalty volumes through the acquisition process. This dynamic is dramatically highlighted when you consider year-over-year royalty volumes have grown by over 60% and non-operated working interest volumes have declined year-over-year by 33%. We project that royalty volumes will represent more than 75% of overall corporate volumes by the end of fiscal year 2024 as our inventory of undrilled locations are developed. This will drive better margins, decrease lease operating expense, grow cash flow and generate an attractive return on capital employed.
“You see this materializing in the first quarter 2022 with impressive reported net income and earnings per share. You will see our financial results only improve from here as our low value hedges roll off and royalty volumes continue to increase in the coming quarters.
“We have a great partner in Independent Bank, who understands our strategy and has demonstrated their willingness to grow with us, a strong balance sheet and more than ample deal flow in which to allocate our free cash flow. We are confident that the almost $50.0 million of mineral acquisitions we have closed over the last two years will continue to bear fruit in the coming quarters, which will help achieve our ultimate goal of building shareholder value.”
OPERATING HIGHLIGHTS
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First Quarter Ended |
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First Quarter Ended |
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Dec. 31, 2021 |
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|
Dec. 31, 2020 |
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||
Mcfe Sold |
|
2,128,248 |
|
|
|
2,074,334 |
|
Average Sales Price per Mcfe |
$ |
6.43 |
|
|
$ |
3.10 |
|
Gas Mcf Sold |
|
1,574,265 |
|
|
|
1,475,456 |
|
Average Sales Price per Mcf |
$ |
5.52 |
|
|
$ |
2.34 |
|
Oil Barrels Sold |
|
48,074 |
|
|
|
58,675 |
|
Average Sales Price per Barrel |
$ |
74.39 |
|
|
$ |
39.90 |
|
NGL Barrels Sold |
|
44,256 |
|
|
|
41,138 |
|
Average Sales Price per Barrel |
$ |
32.11 |
|
|
$ |
15.20 |
|
Total Production for the last five quarters was as follows:
Quarter ended |
|
Mcf Sold |
|
|
Oil Bbls Sold |
|
|
NGL Bbls Sold |
|
|
Mcfe Sold |
|
||||
12/31/2021 |
|
|
1,574,265 |
|
|
|
48,074 |
|
|
|
44,256 |
|
|
|
2,128,248 |
|
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 five quarters was as follows:
Quarter ended |
|
Mcf Sold |
|
|
Oil Bbls Sold |
|
|
NGL Bbls Sold |
|
|
Mcfe Sold |
|
||||
12/31/2021 |
|
|
949,523 |
|
|
|
25,996 |
|
|
|
19,953 |
|
|
|
1,225,220 |
|
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 five quarters was as follows:
Quarter ended |
|
Mcf Sold |
|
|
Oil Bbls Sold |
|
|
NGL Bbls Sold |
|
|
Mcfe Sold |
|
||||
12/31/2021 |
|
|
624,742 |
|
|
|
22,078 |
|
|
|
24,303 |
|
|
|
903,028 |
|
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
|
|
First Quarter Ended |
|
|
First Quarter Ended |
|
||
|
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
||
Working Interest Sales |
|
$ |
5,966,645 |
|
|
$ |
3,907,524 |
|
Royalty Interest Sales |
|
$ |
7,720,519 |
|
|
$ |
2,517,455 |
|
Natural Gas, Oil and NGL Sales |
|
$ |
13,687,164 |
|
|
$ |
6,424,979 |
|
|
|
|
|
|
|
|
|
|
Lease Bonuses and Rental Income |
|
$ |
78,915 |
|
|
$ |
1,433 |
|
Total Revenue |
|
$ |
16,602,247 |
|
|
$ |
6,172,376 |
|
|
|
|
|
|
|
|
|
|
LOE per Mcfe |
|
$ |
0.59 |
|
|
$ |
0.48 |
|
Transportation, Gathering and Marketing per Mcfe |
|
$ |
0.57 |
|
|
$ |
0.62 |
|
Production Tax per Mcfe |
|
$ |
0.32 |
|
|
$ |
0.13 |
|
G&A Expense per Mcfe |
|
$ |
0.98 |
|
|
$ |
0.83 |
|
Interest Expense per Mcfe |
|
$ |
0.08 |
|
|
$ |
0.15 |
|
DD&A per Mcfe |
|
$ |
0.74 |
|
|
$ |
1.09 |
|
Total Expense per Mcfe |
|
$ |
3.28 |
|
|
$ |
3.30 |
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
6,682,249 |
|
|
$ |
(596,720 |
) |
Adjusted EBITDA (1) |
|
$ |
4,416,105 |
|
|
$ |
2,915,206 |
|
|
|
|
|
|
|
|
|
|
Cash Flow from Operations |
|
$ |
8,637,990 |
|
|
$ |
471,381 |
|
CapEx - Drilling & Completing |
|
$ |
192,677 |
|
|
$ |
128,083 |
|
CapEx - Mineral Acquisitions |
|
$ |
11,643,827 |
|
|
$ |
7,869,746 |
|
|
|
|
|
|
|
|
|
|
Borrowing Base |
|
$ |
32,000,000 |
|
|
$ |
30,000,000 |
|
Debt |
|
$ |
20,000,000 |
|
|
$ |
27,000,000 |
|
Debt/Adjusted EBITDA (TTM) (1) |
|
|
1.16 |
|
|
|
2.93 |
|
- This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.
The Company recorded
Natural gas, oil and NGL revenue
The royalty production volumes increase during the three months ended Dec. 31, 2021, as compared to the three months ended Dec. 31, 2020, resulted from acquisition wells in the Haynesville Shale and SCOOP plays coming online. The decrease in working interest volumes resulted from naturally declining production in high-interest wells in the Eagle Ford Shale and divestiture of low-value legacy working interest in Oklahoma.
The Company had a net
The
OPERATIONS UPDATE
During the first fiscal quarter of 2022, the Company converted 68 gross (0.19 net) wells to producing status and had 54 gross (0.25 net) wells in progress added across its mineral position.
At
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Bakken/ |
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Three |
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Arkoma |
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SCOOP |
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STACK |
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Forks |
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Stack |
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Fayetteville |
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Haynesville |
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Other |
|
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Total |
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As of 1/31/22: |
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Gross Wells in Progress on PHX Acreage |
|
|
30 |
|
|
|
7 |
|
|
|
1 |
|
|
|
3 |
|
|
|
- |
|
|
|
23 |
|
|
|
1 |
|
|
|
65 |
|
Net Wells in Progress on PHX Acreage |
|
|
0.02 |
|
|
|
0.04 |
|
|
|
0.00 |
|
|
|
0.03 |
|
|
|
- |
|
|
|
0.33 |
|
|
|
- |
|
|
|
0.42 |
|
Gross Active Permits on PHX Acreage: |
|
|
10 |
|
|
|
3 |
|
|
|
2 |
|
|
|
2 |
|
|
|
- |
|
|
|
- |
|
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|
1 |
|
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|
18 |
|
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As of 1/31/22: |
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Rigs Present on PHX Acreage |
|
|
9 |
|
|
|
4 |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
4 |
|
|
|
2 |
|
|
|
20 |
|
Rigs Within 2.5 Miles of PHX Acreage |
|
|
20 |
|
|
|
20 |
|
|
|
11 |
|
|
|
1 |
|
|
|
- |
|
|
|
27 |
|
|
|
13 |
|
|
|
92 |
|
Leasing Activity
During the
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Bakken/ |
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Three |
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Arkoma |
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SCOOP |
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STACK |
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Forks |
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Stack |
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Fayetteville |
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Haynesville |
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Other |
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Total |
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During Three Months Ended 12/31/21: |
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Net Mineral Acres Leased |
|
|
80 |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
94 |
|
|
|
175 |
|
Average Bonus per Net Mineral Acre |
|
$ |
1,046 |
|
|
$ |
2,500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
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|
- |
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