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PHX Minerals Reports Results for the Quarter and Fiscal Year Ended Dec. 31, 2023; Announces Dividend and Provides 2024 Operational Outlook

PHX Minerals Reports Results for the Quarter and Fiscal Year Ended Dec. 31, 2023; Announces Dividend and Provides 2024 Operational Outlook

FORT WORTH, Texas, Mar. 12, 2024 – PHX MINERALS INC., “PHX” or the “Company” (NYSE: PHX), today reported financial and operating results for the quarter and fiscal year ended Dec. 31, 2023.

Summary of Results for the Period Ended Dec. 31, 2023

  • Net income in the fiscal fourth quarter and full fiscal year 2023 was $2.5 million, or $0.07 per diluted share, and $13.9 million, or $0.39 per diluted share, respectively, compared to net income of $1.9 million, or $0.05 per diluted share, for the quarter ended Sept. 30, 2023, and net income of $17.1 million, or $0.48 per diluted share, for the year ended Dec. 31, 2022.
  • Adjusted EBITDA(1) in the fiscal fourth quarter and full fiscal year was $4.5 million and $22.7 million, respectively, compared to $6.3 million for the quarter ended Sept. 30, 2023, and $26.7 million for the year ended Dec. 31, 2022.
  • Royalty production volumes for the fiscal fourth quarter decreased 6% to 1,946 Mmcfe compared to the quarter ended Sept. 30, 2023, and increased 23% to 8,123 Mmcfe for the full fiscal year 2023 compared to the year ended Dec. 31, 2022.
  • Total production volumes for the fiscal fourth quarter decreased 4% to 2,245 Mmcfe compared to the quarter ended Sept. 30, 2023, and decreased 3% to 9,379 Mmcfe for the full fiscal year 2023 compared to the year ended Dec. 31, 2022.
  • Net proved royalty interest reserves increased 9% to 57.8 Bcfe at Dec. 31, 2023 from 53.1 Bcfe at Dec. 31, 2022.
  • Converted 46 gross (0.098 net) and 314 gross (1.03 net) wells to producing status in the fiscal fourth quarter and full fiscal year 2023, compared to 71 gross (0.155 net) during the quarter ended Sept. 30, 2023, and 313 gross (1.15 net) during the year ended Dec. 31, 2022.
  • Inventory of 168 gross (0.851 net) wells in progress and 95 gross (0.444 net) permits as of Dec. 31, 2023, compared to 185 gross (0.81 net) wells in progress and 93 gross (0.28 net) permits as of Sept. 30, 2023.
  • Total debt was $32.8 million and the debt to adjusted EBITDA (TTM) (1) ratio was 1.45x as of Dec. 31, 2023.

Subsequent Events

  • PHX announced a $0.03 per share quarterly dividend, payable on March 29, 2024, to stockholders of record on March 18, 2024.
  1. This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

Chad L. Stephens, President and CEO, commented, “In 2023, PHX delivered year-over-year royalty volume growth of 23%, expanding 2P royalty reserves by 12%, generating significant operating cash flow and net income. These results enabled us to raise our quarterly dividend by 33% despite another challenging year in the natural gas pricing environment. Our strong balance sheet and strategy of modest leverage enabled us to deliver consistent results despite a historic drop in gas prices and rising interest rates validating our business strategy, which positions us for success in both up and down markets.”

 “Looking forward, we are optimistic that reduced drilling activity, announced production curtailments, and the expansion of LNG export facilities should balance the market and improve commodity prices,” continued Mr. Stephens. “During the past year, PHX deployed more than $30 million to acquire almost 2,400 net royalty acres in the Haynesville and SCOOP plays. The acquisition of these high-quality minerals will further drive our royalty volumes, margin expansion and cash flow over the course of the next two to three years. With our strong financial position and a highly focused acquisition strategy we are poised to unlock value for our shareholders as the commodity pricing environment improves.”

 

Financial Highlights

 

 

Three Months Ended

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

Twelve Months Ended

 

 

 

Dec. 31, 2023

 

 

Dec. 31, 2022

 

 

Dec. 31, 2023

 

 

Dec. 31, 2022

 

Royalty Interest Sales

 

$

7,378,650

 

 

$

10,571,704

 

 

$

31,593,351

 

 

$

47,335,656

 

Working Interest Sales

 

$

1,170,133

 

 

$

4,316,970

 

 

$

4,942,934

 

 

$

23,726,485

 

Natural Gas, Oil and NGL Sales

 

$

8,548,783

 

 

$

14,888,674

 

 

$

36,536,285

 

 

$

71,062,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) on Derivative Contracts

 

$

3,211,410

 

 

$

3,347,002

 

 

$

6,859,589

 

 

$

(16,322,244

)

Lease Bonuses and Rental Income

 

$

22,780

 

 

$

34,482

 

 

$

1,068,022

 

 

$

423,069

 

Total Revenue

 

$

11,782,973

 

 

$

18,270,158

 

 

$

44,463,896

 

 

$

55,162,966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Operating Expense

 

 

 

 

 

 

 

 

 

 

 

 

per Working Interest Mcfe

 

$

1.07

 

 

$

1.66

 

 

$

1.27

 

 

$

1.21

 

Transportation, Gathering and Marketing

 

 

 

 

 

 

 

 

 

 

 

 

per Mcfe

 

$

0.42

 

 

$

0.66

 

 

$

0.39

 

 

$

0.63

 

Production and Ad Valorem Tax per Mcfe

 

$

0.20

 

 

$

0.30

 

 

$

0.20

 

 

$

0.34

 

G&A Expense per Mcfe

 

$

1.36

 

 

$

1.42

 

 

$

1.28

 

 

$

1.29

 

Cash G&A Expense per Mcfe (1)

 

$

1.10

 

 

$

1.16

 

 

$

1.02

 

 

$

1.02

 

Interest Expense per Mcfe

 

$

0.32

 

 

$

0.29

 

 

$

0.25

 

 

$

0.17

 

DD&A per Mcfe

 

$

1.09

 

 

$

0.81

 

 

$

0.91

 

 

$

0.77

 

Total Expense per Mcfe

 

$

3.53

 

 

$

3.92

 

 

$

3.20

 

 

$

3.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

2,513,444

 

 

$

3,346,133

 

 

$

13,920,800

 

 

$

17,073,156

 

Adjusted EBITDA (2)

 

$

4,504,288

 

 

$

5,334,016

 

 

$

22,652,263

 

 

$

26,743,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow from Operations (3)

 

$

3,361,455

 

 

$

10,141,814

 

 

$

24,171,139

 

 

$

39,035,474

 

CapEx (4)

 

$

4,587

 

 

$

87,104

 

 

$

325,983

 

 

$

447,065

 

CapEx - Mineral Acquisitions

 

$

4,351,757

 

 

$

14,499,014

 

 

$

29,735,516

 

 

$

46,380,423

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowing Base

 

 

 

 

 

 

 

$

50,000,000

 

 

$

50,000,000

 

Debt

 

 

 

 

 

 

 

$

32,750,000

 

 

$

33,300,000

 

Debt to Adjusted EBITDA (TTM) (2)

 

 

 

 

 

 

 

 

1.45

 

 

 

1.25

 

  1. Cash G&A expense is G&A excluding restricted stock and deferred director’s expense from the adjusted EBITDA table in the non-GAAP Reconciliation section.
  2. This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.
  3. GAAP cash flow from operations.
  4. Includes legacy working interest expenditures and fixtures and equipment.

 

Operating Highlights

 

Three Months Ended

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

Twelve Months Ended

 

 

Dec. 31, 2023

 

 

Dec. 31, 2022

 

 

Dec. 31, 2023

 

 

Dec. 31, 2022

 

Gas Mcf Sold

 

1,775,577

 

 

 

1,669,320

 

 

 

7,457,084

 

 

 

7,522,763

 

Average Sales Price per Mcf before the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

2.53

 

 

$

5.66

 

 

$

2.61

 

 

$

6.19

 

Average Sales Price per Mcf after the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

2.76

 

 

$

4.02

 

 

$

2.96

 

 

$

4.20

 

% of sales subject to hedges

 

44

%

 

 

65

%

 

 

46

%

 

 

61

%

Oil Barrels Sold

 

39,768

 

 

 

52,406

 

 

 

182,916

 

 

 

202,867

 

Average Sales Price per Bbl before the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

78.66

 

 

$

82.52

 

 

$

76.76

 

 

$

93.06

 

Average Sales Price per Bbl after the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

75.37

 

 

$

62.03

 

 

$

74.21

 

 

$

60.98

 

% of sales subject to hedges

 

36

%

 

 

57

%

 

 

42

%

 

 

66

%

NGL Barrels Sold

 

38,422

 

 

 

38,611

 

 

 

137,484

 

 

 

159,475

 

Average Sales Price per Bbl(1)

$

24.00

 

 

$

28.77

 

 

$

22.18

 

 

$

35.44

 

 

 

 

 

 

 

 

 

 

 

 

 

Mcfe Sold

 

2,244,717

 

 

 

2,215,419

 

 

 

9,379,484

 

 

 

9,696,809

 

Natural gas, oil and NGL sales before the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

8,548,783

 

 

$

14,888,674

 

 

$

36,536,285

 

 

$

71,062,141

 

Natural gas, oil and NGL sales after the

 

 

 

 

 

 

 

 

 

 

 

effects of settled derivative contracts

$

8,823,534

 

 

$

11,067,174

 

 

$

38,719,598

 

 

$

49,586,709

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) There were no NGL settled derivative contracts during the 2023 and 2022 periods.

 

Total Production for the last four quarters was as follows:

Quarter ended

 

Mcf Sold

 

 

Oil Bbls Sold

 

 

NGL Bbls Sold

 

 

Mcfe Sold

 

12/31/2023

 

 

1,775,577

 

 

 

39,768

 

 

 

38,422

 

 

 

2,244,717

 

9/30/2023

 

 

1,868,012

 

 

 

48,032

 

 

 

32,029

 

 

 

2,348,378

 

6/30/2023

 

 

1,854,485

 

 

 

41,009

 

 

 

33,929

 

 

 

2,304,113

 

3/31/2023

 

 

1,959,010

 

 

 

54,107

 

 

 

33,104

 

 

 

2,482,276

 

 

Natural gas volumes were 79% of total production volumes for the quarter ended Dec. 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

 

12/31/2023

 

 

1,590,301

 

 

 

35,547

 

 

 

23,769

 

 

 

1,946,196

 

9/30/2023

 

 

1,689,396

 

 

 

43,575

 

 

 

20,416

 

 

 

2,073,342

 

6/30/2023

 

 

1,673,346

 

 

 

35,599

 

 

 

20,516

 

 

 

2,010,036

 

3/31/2023

 

 

1,700,974

 

 

 

45,395

 

 

 

20,063

 

 

 

2,093,722

 

 

Natural gas volumes were 82% of total royalty production volumes for the quarter ended Dec. 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

 

12/31/2023

 

 

185,276

 

 

 

4,221

 

 

 

14,653

 

 

 

298,521

 

9/30/2023

 

 

178,616

 

 

 

4,457

 

 

 

11,613

 

 

 

275,036

 

6/30/2023

 

 

181,139

 

 

 

5,410

 

 

 

13,413

 

 

 

294,077

 

3/31/2023

 

 

258,036

 

 

 

8,712

 

 

 

13,041

 

 

 

388,554

 

 

Outlook

PHX is providing an operational outlook for 2024 as follows:

 

 

Calendar Year 2022 Actual

 

Calendar Year 2023 Actual

 

Calendar Year 2024 Outlook

Mineral & Royalty Production (Mmcfe)

 

6,613

 

8,123

 

8,100 - 8,800

Working Interest Production (Mmcfe)

 

3,084

 

1,256

 

1,000 - 1,200

Total Production (Mmcfe)

 

9,697

 

9,379

 

9,100 - 10,000

Percentage Natural Gas

 

78%

 

80%

 

79% - 82%

 

 

 

 

 

 

 

Transportation, Gathering & Marketing (per Mcfe)

 

$0.63

 

$0.39

 

$0.38 - $0.43

Production Tax (as % of pre-hedge sales volumes)

 

4.50%

 

5.20%

 

5.00% - 5.50%

LOE Expenses (on an absolute basis in 000’s)

 

$3,807

 

$1,599

 

$1,100 - $1,300

Cash G&A (on an absolute basis in 000’s)

 

$9,900

 

$9,500

 

$9,700 - $9,900

 

Quarter Ended Dec. 31, 2023 Results

The Company recorded net income of $2.5 million, or $0.07 per diluted share, for the quarter ended Dec. 31, 2023, as compared to net income of $3.3 million, or $0.09 per diluted share, for the quarter ended Dec. 31, 2022. The change in net income was principally the result of a decrease in natural gas, oil and NGL sales, a decrease in gains on asset sales, and an increase in DD&A, partially offset by decreases in impairment, lease operating expenses, and transportation, gathering and marketing expenses.

Natural gas, oil and NGL revenue decreased $6.3 million, or 43%, for the quarter ended Dec. 31, 2023, compared to the quarter ended Dec. 31, 2022, due to decreases in natural gas, oil and NGL prices of 55%, 5% and 17%, respectively, and a decrease in oil volumes of 24%, partially offset by an increase in natural gas volumes of 6%.

The increase in royalty production volumes during the quarter ended Dec. 31, 2023 to 1,946 Mmcfe from 1,628 Mmcfe during the quarter ended Dec. 31, 2022 resulted from new wells in the Haynesville Shale and SCOOP coming online. The production decrease in working interest volumes during the quarter ended Dec. 31, 2023, as compared to the quarter ended Dec. 31, 2022, resulted from the divestiture of working interest properties in the Arkoma Stack and Eagle Ford Shale plays.

The Company had a net gain on derivative contracts of $3.2 million for the quarter ended Dec. 31, 2023, comprised of a $2.9 million non-cash gain on derivatives and a $0.3 million gain on settled derivatives, as compared to a net gain of $3.3 million for the quarter ended Dec. 31, 2022. 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 Dec. 31, 2023 pricing relative to the strike price on open derivative contracts.

The Company recorded no impairment and made immaterial divestitures during the quarter ended Dec. 31, 2023. Lease operating expenses and transportation, gathering and marketing expenses were lower due to the divestiture of working interest properties in the Arkoma Stack and Eagle Ford Shale plays.

Twelve Months Ended Dec. 31, 2023 Results

The Company recorded net income of $13.9 million, or $0.39 per diluted share, for the twelve months ended Dec. 31, 2023, as compared to net income of $17.1 million, or $0.48 per diluted share, for the twelve months ended Dec. 31, 2022. The change in net income was principally the result of a decrease in natural gas, oil and NGL sales and a decrease in gains on asset sales, partially offset by an increase in gains associated with our derivative contracts and decreases in impairment, lease operating expenses, production and ad valorem taxes, and transportation, gathering and marketing expenses.

Natural gas, oil and NGL revenue decreased $34.5 million, or 49%, for the twelve months ended Dec. 31, 2023, compared to the twelve months ended Dec. 31, 2022, due to decreases in natural gas, oil and NGL prices of 58%, 18% and 37%, respectively, and decreases in natural gas, oil and NGL volumes of 1%, 10% and 14%, respectively.

The increase in royalty production volumes during the twelve months ended Dec. 31, 2023 to 8,123 Mmcfe from 6,613 Mmcfe during the twelve months ended Dec. 31, 2022 resulted from new wells in the Haynesville Shale and SCOOP coming online. The production decrease in working interest volumes during the twelve months ended Dec. 31, 2023, as compared to the twelve months ended Dec. 31, 2022, resulted from the divestiture of working interest properties in the Fayetteville Shale, Arkoma Stack, and Eagle Ford Shale plays.

The Company had a net gain on derivative contracts of $6.9 million for the twelve months ended Dec. 31, 2023, comprised of a a $4.3 million non-cash gain on derivatives and a $2.6 million gain on settled derivatives, as compared to a net loss of ($16.3) million for the twelve months ended Dec. 31, 2022. The gain on settled derivative contracts for the twelve months ended Dec. 31, 2023 excludes $0.4 million of cash paid to settle off-market derivative contracts. The total net cash received to settle hedge contracts during the twelve months ended Dec. 31, 2023 was $2.2 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 Dec. 31, 2023 pricing relative to the strike price on open derivative contracts.

Lease operating expenses and transportation, gathering and marketing expenses were lower due to the divestiture of working interest properties in the Fayetteville Shale, Arkoma Stack, and Eagle Ford Shale plays. Production and ad valorem taxes decreased due to a 49% decrease in natural gas, oil and NGL sales. 

Operations Update

During the quarter ended Dec. 31, 2023, the Company converted 46 gross (0.098 net) wells to producing status, including 21 gross (0.044 net) wells in the Haynesville and 14 gross (0.024 net) wells in the SCOOP, compared to 60 gross (0.27 net) wells in the quarter ended Dec. 31, 2022.

At Dec. 31, 2023, the Company had a total of 168 gross (0.851 net) wells in progress across its mineral positions and 95 gross (0.444 net) active permitted wells, compared to 185 gross (0.81 net) wells in progress and 93 gross (0.28 net) active permitted wells at Sept. 30, 2023. As of Feb. 12, 2024, 14 rigs were operating on the Company’s acreage and 57 rigs operating within 2.5 miles of its acreage.

 

 

 

 

 

 

 

Bakken/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three

 

 

Arkoma

 

 

 

 

 

 

 

 

 

 

 

SCOOP

 

 

STACK

 

 

Forks

 

 

Stack

 

 

Haynesville

 

 

Other

 

 

Total

 

As of Dec. 31, 2023:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Wells in Progress on PHX Acreage (1)

 

57

 

 

 

5

 

 

 

8

 

 

 

2

 

 

 

87

 

 

 

9

 

 

 

168

 

Net Wells in Progress on PHX Acreage (1)

 

0.227

 

 

 

0.023

 

 

 

0.043

 

 

 

0.001

 

 

 

0.537

 

 

 

0.020

 

 

 

0.851

 

Gross Active Permits on PHX Acreage

 

35

 

 

 

5

 

 

-

 

 

 

5

 

 

 

44

 

 

 

6

 

 

 

95

 

Net Active Permits on PHX Acreage

 

0.151

 

 

 

0.011

 

 

-

 

 

 

0.002

 

 

 

0.246

 

 

 

0.034

 

 

 

0.444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of Feb. 12, 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rigs Present on PHX Acreage

 

6

 

 

 

-

 

 

 

1

 

 

 

-

 

 

 

4

 

 

 

3

 

 

 

14

 

Rigs Within 2.5 Miles of PHX Acreage

 

14

 

 

 

9

 

 

 

2

 

 

 

1

 

 

 

23

 

 

 

8

 

 

 

57

 

(1) Wells in progress includes drilling wells and drilled but uncompleted wells, or DUCs.

 

Leasing Activity

During the quarter ended Dec. 31, 2023, the Company leased 108 net mineral acres to third-party exploration and production companies for an average bonus payment of $968 per net mineral acre and an average royalty of 24%.

 

Acquisition and Divestiture Update

During the quarter ended Dec. 31, 2023, the Company purchased 325 net royalty acres for approximately $4.3 million and had no significant divestitures.

 

 

Acquisitions

 

 

 

SCOOP

 

 

Haynesville

 

 

Other

 

Total

 

During Three Months Ended Dec. 31, 2023:

 

 

 

 

 

 

 

 

 

 

 

Net Mineral Acres Purchased

 

 

96

 

 

 

142

 

 

-

 

 

238

 

Net Royalty Acres Purchased

 

 

112

 

 

 

213

 

 

-

 

 

325

 

 

Royalty Reserves Update

At Dec. 31, 2023, proved royalty reserves increased 9% to 57.8 Bcfe compared to 53.1 Bcfe at Dec. 31, 2022. Proved developed reserves increased by 5.3 Bcfe and proved undeveloped reserves decreased by 0.7 Bcfe, primarily due to execution of our acquisition strategy and consistent development in the Haynesville and SCOOP plays resulting in conversion of undeveloped reserves to producing.

 

Proved Royalty Interest

 

 

Reserves SEC Pricing

 

 

Dec. 31, 2023

 

 

Dec. 31, 2022

 

Proved Developed Reserves:

 

 

Mcf of Gas

 

36,156,363

 

 

 

31,467,785

 

Barrels of Oil

 

731,527

 

 

 

628,289

 

Barrels of NGL

 

715,683

 

 

 

712,342

 

Mcfe (1)

 

44,839,623

 

 

 

39,511,571

 

Proved Undeveloped Reserves:

 

 

 

 

 

Mcf of Gas

 

11,508,969

 

 

 

12,608,549

 

Barrels of Oil

 

134,497

 

 

 

118,168

 

Barrels of NGL

 

99,712

 

 

 

48,136

 

Mcfe (1)

 

12,914,223

 

 

 

13,606,373

 

Total Proved Reserves:

 

 

 

 

 

Mcf of Gas

 

47,665,332

 

 

 

44,076,334

 

Barrels of Oil

 

866,024

 

 

 

746,457

 

Barrels of NGL

 

815,395

 

 

 

760,478

 

Mcfe (1)

 

57,753,846

 

 

 

53,117,944

 

 

 

 

 

 

 

10% Discounted Estimated Future

 

 

 

 

 

Net Cash Flows (before income taxes):

 

 

 

 

 

Proved Developed

$

73,448,070

 

 

$

122,723,015

 

Proved Undeveloped

 

23,525,572

 

 

 

56,306,773

 

Total

$

96,973,642

 

 

$

179,029,788

 

 

 

 

 

 

 

(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 Dec. 31, 2023, proved reserves were 71.2 Bcfe, as calculated by Cawley, Gillespie and Associates, Inc., the Company’s independent consulting petroleum engineering firm. This was an 11% decrease, compared to the 79.7 Bcfe of proved reserves at Dec. 31, 2022. Total proved developed reserves decreased 12% to 58.3 Bcfe, as compared to Dec. 31, 2022 reserve volumes, mainly due to sales of working interest properties in the Arkoma Stack and Eagle Ford Shale.  SEC prices used for the Dec. 31, 2023 report averaged $2.67 per Mcf for natural gas, $76.85 per barrel for oil and $21.98 per barrel for NGL, compared to $6.52 per Mcf for natural gas, $92.74 per barrel for oil and $39.18 per barrel for NGL for the Dec. 31, 2022 report. These prices reflect net prices received at the wellhead.

 

Proved Reserves SEC Pricing

 

 

Dec. 31, 2023

 

 

Dec. 31, 2022

 

Proved Developed Reserves:

 

 

Mcf of Gas

 

44,479,988

 

 

 

48,596,944

 

Barrels of Oil

 

937,465

 

 

 

1,253,838

 

Barrels of NGL

 

1,362,944

 

 

 

1,660,439

 

Mcfe (1)

 

58,282,442

 

 

 

66,082,606

 

Proved Undeveloped Reserves:

 

 

 

 

 

Mcf of Gas

 

11,508,969

 

 

 

12,608,549

 

Barrels of Oil

 

134,497

 

 

 

118,168

 

Barrels of NGL

 

99,712

 

 

 

48,136

 

Mcfe (1)

 

12,914,223

 

 

 

13,606,373

 

Total Proved Reserves:

 

 

 

 

 

Mcf of Gas

 

55,988,957

 

 

 

61,205,493

 

Barrels of Oil

 

1,071,962

 

 

 

1,372,006

 

Barrels of NGL

 

1,462,656

 

 

 

1,708,575

 

Mcfe (1)

 

71,196,665

 

 

 

79,688,979

 

 

 

 

 

 

 

10% Discounted Estimated Future

 

 

 

 

 

Net Cash Flows (before income taxes):

 

 

 

 

 

Proved Developed

$

86,694,012

 

 

$

185,018,066

 

Proved Undeveloped

 

23,325,572

 

 

 

56,306,773

 

Total

$

110,019,584

 

 

$

241,324,839

 

SEC Pricing

 

 

 

 

 

Gas/Mcf

$

2.67

 

 

$

6.52

 

Oil/Barrel

$

76.85

 

 

$

92.74

 

NGL/Barrel

$

21.98

 

 

$

39.18

 

 

 

 

 

 

 

Proved Reserves - Projected Future Pricing (2)

 

 

 

 

 

 

 

10% Discounted Estimated Future

Proved Reserves

 

Net Cash Flows (before income taxes):

Dec. 31, 2023

 

 

Dec. 31, 2022

 

Proved Developed

$

107,635,503

 

 

$

126,605,850

 

Proved Undeveloped

 

29,439,523

 

 

 

38,748,236

 

Total

$

137,075,026

 

 

$

165,354,086

 

 

 

 

 

 

 

(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 Dec. 31, 2023 and Dec. 31, 2022 basis adjusted to Company wellhead price.

 

Quarterly Conference Call

PHX will host a conference call to discuss the Company’s results for the quarter ended Dec. 31, 2023 at 11 a.m. EDT tomorrow, March 13, 2024. 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 13744298.

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 Income

 

Three Months Ended Dec. 31,

 

 

Twelve Months Ended

 

 

Twelve Months Ended

 

 

2023

 

 

2022

 

 

Dec. 31, 2023

 

 

Sept. 30, 2022

 

Revenues:

 

 

 

 

 

 

 

 

Natural gas, oil and NGL sales

$

8,548,783

 

 

$

14,888,674

 

 

$

36,536,285

 

 

$

69,860,631

 

Lease bonuses and rental income

 

22,780

 

 

 

34,482

 

 

 

1,068,022

 

 

 

467,502

 

Gains (losses) on derivative contracts

 

3,211,410

 

 

 

3,347,002

 

 

 

6,859,589

 

 

 

(16,833,078

)

 

 

11,782,973

 

 

 

18,270,158

 

 

 

44,463,896

 

 

 

53,495,055

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

319,113

 

 

 

977,165

 

 

 

1,598,944

 

 

 

3,945,706

 

Transportation, gathering and marketing

 

945,788

 

 

 

1,455,260

 

 

 

3,674,832

 

 

 

5,890,390

 

Production and ad valorem taxes

 

457,058

 

 

 

656,764

 

 

 

1,881,737

 

 

 

3,332,581

 

Depreciation, depletion and amortization

 

2,443,154

 

 

 

1,802,114

 

 

 

8,566,185

 

 

 

7,278,118

 

Provision for impairment

 

-

 

 

 

6,100,696

 

 

 

38,533

 

 

 

14,565

 

Interest expense

 

723,685

 

 

 

637,698

 

 

 

2,362,393

 

 

 

1,164,992

 

General and administrative

 

3,050,828

 

 

 

3,137,401

 

 

 

11,970,182

 

 

 

11,500,594

 

Losses (gains) on asset sales and other

 

84,443

 

 

 

(824,073

)

 

 

(4,285,170

)

 

 

(4,243,163

)

Total costs and expenses

 

8,024,069

 

 

 

13,943,025

 

 

 

25,807,636

 

 

 

28,883,783

 

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

 

3,758,904

 

 

 

4,327,133

 

 

 

18,656,260

 

 

 

24,611,272

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

1,245,460

 

 

 

981,000

 

 

 

4,735,460

 

 

 

4,202,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

2,513,444

 

 

$

3,346,133

 

 

$

13,920,800

 

 

$

20,409,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.07

 

 

$

0.09

 

 

$

0.39

 

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.07

 

 

$

0.09

 

 

$

0.39

 

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

36,036,270

 

 

 

35,679,740

 

 

 

35,980,309

 

 

 

34,403,498

 

Diluted

 

36,083,449

 

 

 

36,489,353

 

 

 

35,980,309

 

 

 

34,560,310

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per share of

 

 

 

 

 

 

 

 

 

 

 

common stock paid in period

$

0.0300

 

 

$

0.0200

 

 

$

0.0975

 

 

$

0.0650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheets

 

 

Dec. 31, 2023

 

 

Sept. 30, 2022

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

806,254

 

 

$

3,396,809

 

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

 

4,900,126

 

 

 

13,152,274

 

allowance for uncollectable accounts)

 

 

 

 

 

Refundable income taxes

 

455,931

 

 

 

-

 

Derivative contracts, net

 

3,120,607

 

 

 

-

 

Other

 

878,659

 

 

 

1,372,847

 

Total current assets

 

10,161,577

 

 

 

17,921,930

 

 

 

 

 

 

 

Properties and equipment at cost, based on

 

 

 

 

 

   successful efforts accounting:

 

 

 

 

 

Producing natural gas and oil properties

 

209,082,847

 

 

 

248,978,928

 

Non-producing natural gas and oil properties

 

58,820,445

 

 

 

51,779,336

 

Other

 

1,360,614

 

 

 

1,085,056

 

 

 

269,263,906

 

 

 

301,843,320

 

Less accumulated depreciation, depletion and amortization

 

(114,139,423

)

 

 

(168,759,385

)

Net properties and equipment

 

155,124,483

 

 

 

133,083,935

 

 

 

 

 

 

 

Derivative contracts, net

 

162,980

 

 

 

-

 

Operating lease right-of-use assets

 

572,610

 

 

 

739,131

 

Other, net

 

486,630

 

 

 

757,116

 

Total assets

$

166,508,280

 

 

$

152,502,112

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

562,607

 

 

$

647,217

 

Derivative contracts, net

 

-

 

 

 

7,873,979

 

Income taxes payable

 

-

 

 

 

495,858

 

Current portion of operating lease liability

 

233,390

 

 

 

213,355

 

Accrued liabilities and other

 

1,215,275

 

 

 

2,032,275

 

Total current liabilities

 

2,011,272

 

 

 

11,262,684

 

 

 

 

 

 

 

Long-term debt

 

32,750,000

 

 

 

28,300,000

 

Deferred income taxes, net

 

6,757,637

 

 

 

1,585,906

 

Asset retirement obligations

 

1,062,139

 

 

 

1,901,904

 

Derivative contracts, net

 

-

 

 

 

687,212

 

Operating lease liability, net of current portion

 

695,818

 

 

 

985,887

 

Total liabilities

 

43,276,866

 

 

 

44,723,593

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

Common Stock, $0.01666 par value; 54,000,500 shares authorized and

 

 

 

 

 

36,121,723 issued at Dec. 31, 2023; 54,000,500 shares authorized

 

 

 

 

 

and 35,776,752 issued at Sep. 30, 2022

 

601,788

 

 

 

596,041

 

Capital in excess of par value

 

41,676,417

 

 

 

44,177,051

 

Deferred directors' compensation

 

1,487,590

 

 

 

1,496,243

 

Retained earnings

 

80,022,839

 

 

 

67,117,791

 

 

 

123,788,634

 

 

 

113,387,126

 

Less treasury stock, at cost; 131,477 shares at Dec. 31,

 

 

 

 

 

2023, and 377,232 shares at Sep. 30, 2022

 

(557,220

)

 

 

(5,608,607

)

Total stockholders' equity

 

123,231,414

 

 

 

107,778,519

 

Total liabilities and stockholders' equity

$

166,508,280

 

 

$

152,502,112

 

 

 

Condensed Statements of Cash Flows

 

 

Twelve Months Ended

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

Dec. 31, 2023

 

 

Dec. 31, 2022

 

 

Sept. 30, 2022

 

Operating Activities

 

 

 

 

 

 

 

 

Net income

$

13,920,800

 

 

$

3,346,133

 

 

$

20,409,272

 

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

 

 

 

 

 

 

 

 

  by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

8,566,185

 

 

 

1,802,114

 

 

 

7,278,118

 

Impairment of producing properties

 

38,533

 

 

 

6,100,696

 

 

 

14,565

 

Provision for deferred income taxes

 

4,303,731

 

 

 

868,000

 

 

 

1,242,000

 

Gain from leasing fee mineral acreage

 

(1,067,992

)

 

 

(34,371

)

 

 

(466,341

)

Proceeds from leasing fee mineral acreage

 

1,213,913

 

 

 

67,651

 

 

 

688,207

 

Net (gain) loss on sales of assets

 

(4,728,758

)

 

 

(934,207

)

 

 

(4,423,646

)

Directors' deferred compensation expense

 

228,017

 

 

 

44,827

 

 

 

191,852

 

Total (gain) loss on derivative contracts

 

(6,859,589

)

 

 

(3,347,002

)

 

 

16,833,078

 

Cash receipts (payments) on settled derivative contracts

 

2,743,475

 

 

 

(810,839

)

 

 

(2,796,250

)

Restricted stock award expense

 

2,205,910

 

 

 

524,257

 

 

 

2,211,673

 

Other

 

136,412

 

 

 

30,157

 

 

 

87,353

 

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

 

 

 

 

 

 

 

 

Natural gas, oil and NGL sales receivables

 

4,883,870

 

 

 

3,368,278

 

 

 

(6,723,292

)

Income taxes receivable

 

(455,931

)

 

 

-

 

 

 

2,413,942

 

Other current assets

 

(45,869

)

 

 

(309,051

)

 

 

250,568

 

Accounts payable

 

69,228

 

 

 

(129,304

)

 

 

(10,305

)

Other non-current assets

 

206,292

 

 

 

63,723

 

 

 

(380,964

)

Income taxes payable

 

(576,427

)

 

 

80,569

 

 

 

161,808

 

Accrued liabilities

 

(610,661

)

 

 

(589,817

)

 

 

550,012

 

Total adjustments

 

10,250,339

 

 

 

6,795,681

 

 

 

17,122,378

 

Net cash provided by operating activities

 

24,171,139

 

 

 

10,141,814

 

 

 

37,531,650

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures

 

(325,983

)

 

 

(87,104

)

 

 

(552,638

)

Acquisition of minerals and overriding royalty interests

 

(29,735,516

)

 

 

(14,499,014

)

 

 

(43,525,236

)

Net proceeds from sales of assets

 

9,614,194

 

 

 

1,137,730

 

 

 

13,217,844

 

Deposits received on held for sale assets

 

-

 

 

 

815,000

 

 

 

-

 

Net cash provided (used) by investing activities

 

(20,447,305

)

 

 

(12,633,388

)

 

 

(30,860,030

)

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Borrowings under credit facility

 

19,500,000

 

 

 

10,000,000

 

 

 

21,300,000

 

Payments of loan principal

 

(20,050,000

)

 

 

(5,000,000

)

 

 

(10,500,000

)

Net proceeds from equity issuance

 

-

 

 

 

-

 

 

 

5,006,538

 

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

 

(560,162

)

 

 

(3,010,661

)

 

 

(19,260,104

)

Purchases of treasury stock

 

(402,704

)

 

 

(52,460

)

 

 

(1,855

)

Payments of dividends

 

(3,520,366

)

 

 

(726,462

)

 

 

(2,257,901

)

Net cash provided (used) by financing activities

 

(5,033,232

)

 

 

1,210,417

 

 

 

(5,713,322

)

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(1,309,398

)

 

 

(1,281,157

)

 

 

958,298

 

Cash and cash equivalents at beginning of period

 

2,115,652

 

 

 

3,396,809

 

 

 

2,438,511

 

Cash and cash equivalents at end of period

$

806,254

 

 

$

2,115,652

 

 

$

3,396,809

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid (net of capitalized interest)

$

2,405,361

 

 

$

581,142

 

 

$

997,085

 

Income taxes paid (net of refunds received)

$

1,464,087

 

 

$

32,431

 

 

$

384,249

 

 

 

 

 

 

 

 

 

 

Supplemental Schedule of Noncash Investing and Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared and unpaid

$

113,443

 

 

$

811,688

 

 

$

-

 

 

 

 

 

 

 

 

 

 

Gross additions to properties and equipment

$

30,761,578

 

 

$

14,710,613

 

 

$

46,791,346

 

Value of shares used for acquisitions

 

-

 

 

 

-

 

 

 

(3,510,001

)

Net increase (decrease) in accounts receivable for properties

 

 

 

 

 

 

 

 

and equipment additions

 

(700,079

)

 

 

(124,495

)

 

 

796,529

 

Capital expenditures and acquisitions

$

30,061,499

 

 

$

14,586,118

 

 

$

44,077,874

 

 

 

 

Derivative Contracts as of March 7, 2024

 

 

Production volume

 

 

 

 

Contract period

 

covered per month

 

Index