PHX MINERALS INC. Reports Second Quarter 2021 Results

Rhea-AI Summary

PHX Minerals (PHX) reported a net loss of $0.5 million for Q2 2021, significantly reduced from a net loss of $20.5 million in Q2 2020. Production volumes were 2,297 Mmcfe, a slight decline from 2,373 Mmcfe in the same quarter last year, but an increase from Q1 2021's 2,074 Mmcfe. Adjusted EBITDA rose to $3.4 million, up from $2.4 million in Q2 2020. The company reduced total debt by 13% to $23.5 million as of March 31, 2021, aiming for a debt-to-adjusted EBITDA ratio of approximately 1.0x by year-end 2021. PHX also declared a $0.01 per share dividend to be paid on June 4, 2021.

Positive

• Net loss decreased to $0.5 million from $20.5 million in Q2 2020.
• Adjusted EBITDA rose to $3.4 million, up 26% from Q1 2021.
• Production volumes increased 11% sequentially.
• Debt reduced by 13% to $23.5 million as of March 31, 2021.

Negative

• Production volumes decreased from 2,373 Mmcfe in Q2 2020 to 2,297 Mmcfe in Q2 2021.
• Oil production down 40% year-over-year.

OKLAHOMA CITY, May 6, 2021 /PRNewswire/ -- PHX MINERALS INC., "PHX" or the "Company," (NYSE: PHX), today reported financial and operating results for the second quarter ended March 31, 2021.

SUMMARY OF RESULTS FOR THE PERIOD ENDED MARCH 31, 2021, AND SUBSEQUENT EVENTS

• Production volumes for the second fiscal quarter of 2021 were 2,297 Mmcfe, decreased from 2,373 Mmcfe in the second fiscal quarter of 2020 and increased from 2,074 Mmcfe in the first fiscal quarter of 2021.
• Net loss in the second fiscal quarter of 2021 was $0.5 million, or $0.02 per share, as compared to net loss $20.5 million, or $1.24 per share, in the second fiscal quarter of 2020 and net loss of $0.6 million, or $0.03 per share, in the first fiscal quarter of 2021.
• Adjusted EBITDA excluding gain on asset sales⁽¹⁾ for the second quarter of 2021 was $3.4 million, increased from $2.4 million in the second fiscal quarter of 2020 and $2.7 million in the first fiscal quarter of 2021.
• On April 30, 2021, the Company closed on the previously announced acquisition of 2,514 net royalty acres in the SCOOP play of Oklahoma for approximately $8.5 million in cash and 1.2 million shares of PHX stock.
• Reduced total debt 13% from $27.0 million as of Dec. 31, 2020, to $23.5 million as of March 31, 2021. As of April 30, 2021, debt had been further reduced by $1.75 million to $21.75 million.
• Debt to adjusted EBITDA (TTM) ⁽¹⁾ ratio was 2.34x at March 31, 2021.
• Approved the payment of a one cent per share dividend payable on June 4, 2021, to stockholders of record on May 20, 2021.

Chad L. Stephens, President and CEO, commented, "PHX continues to achieve excellent results towards its stated objectives of growing the company through the strategic acquisition of producing minerals with line-of-sight development in our core focus areas, high grading our asset base by divesting of lower margin assets outside of our core focus areas and reducing our debt to strengthen our financial position.

"During the quarter, production volumes increased 11% sequentially. Significantly, for the first-time in the last 10 years, royalty production volumes exceeded working interest production volumes, which illuminates our stated mineral-only growth strategy. The increase in our volumes and the improved realized commodity prices, resulted in adjusted EBITDA⁽¹⁾ excluding gain on asset sales of $3.4 million, which was an increase of approximately 26%, or $0.7 million, over the first quarter of fiscal 2021.  

"With our improved financial performance, we were able to reduce our debt by $3.5 million, or 13%, from the end of the first quarter of fiscal year 2021, which continues to improve our financial strength. Since the end of the second quarter, we paid down debt an additional $1.75 million, bringing our total borrowings to $21.75 million as of April 30, 2021. We now believe that our Debt to adjusted EBITDA (TTM) ⁽¹⁾ will approximate 1.0x by calendar year end 2021. Overall, our credit profile has significantly improved, as compared to one year ago. We believe this puts us in a stronger position to allocate more of our capital to our stated strategy.

"Further, since quarter end, we completed our second equity offering over the last seven months which allowed us to fund our previously announced SCOOP-focused mineral acquisition in Oklahoma. This acquisition closed on Friday, April 30, 2021. We continue to see good deal flow and look forward to keeping you apprised of our efforts to continue to drive shareholder value."

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

 

OPERATING HIGHLIGHTS
	Second Quarter Ended				Second Quarter Ended				Six Months Ended				Six Months Ended
	March 31, 2021				March 31, 2020				March 31, 2021				March 31, 2020
Mcfe Sold		2,296,802				2,373,135				4,371,139				4,651,622
Average Sales Price per Mcfe	$	3.63			$	3.04			$	3.38			$	3.18
Gas Mcf Sold		1,735,820				1,529,367				3,211,276				3,177,194
Average Sales Price per Mcf	$	2.52			$	1.64			$	2.44			$	1.89
Oil Barrels Sold		56,269				93,141				114,945				159,021
Average Sales Price per Barrel	$	55.89			$	44.99			$	47.73			$	48.14
NGL Barrels Sold		37,228				47,487				78,365				86,717
Average Sales Price per Barrel	$	22.24			$	11.05			$	18.54			$	13.14

 

Total Production for the last four quarters was as follows:
Quarter ended		Mcf Sold				Oil Bbls Sold				NGL Bbls Sold				Mcfe Sold
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
9/30/2020			1,423,602				55,626				46,737				2,037,779
6/30/2020			1,361,909				55,138				35,169				1,903,752

 

Royalty Interest Production for the last four quarters was as follows:
Quarter ended		Mcf Sold				Oil Bbls Sold				NGL Bbls Sold				Mcfe Sold
3/31/2021			924,969				31,768				19,088				1,230,105
12/31/2020			487,925				27,840				14,948				744,653
9/30/2020			491,234				27,326				20,181				776,276
6/30/2020			544,249				28,468				16,574				814,501

 

Working Interest Production for the last four quarters was as follows:
Quarter ended		Mcf Sold				Oil Bbls Sold				NGL Bbls Sold				Mcfe Sold
3/31/2021			810,851				24,501				18,140				1,066,697
12/31/2020			987,531				30,835				26,190				1,329,681
9/30/2020			932,368				28,300				26,556				1,261,503
6/30/2020			817,660				26,670				18,595				1,089,251

 

FINANCIAL HIGHLIGHTS
		Second Quarter Ended				Second Quarter Ended				Six Months Ended				Six Months Ended
		March 31, 2021				March 31, 2020				March 31, 2021				March 31, 2020
Working Interest Sales		$	3,851,478			$	3,415,049			$	7,759,002			$	8,099,785
Royalty Interest Sales		$	4,494,347			$	3,802,569			$	7,011,802			$	6,711,671
Natural Gas, Oil and NGL Sales		$	8,345,825			$	7,217,618			$	14,770,804			$	14,811,456
Lease Bonuses and Rental Income		$	58,554			$	22,092			$	59,987			$	549,791
Total Revenue		$	6,079,493			$	11,311,287			$	12,272,137			$	21,887,818
LOE per Mcfe		$	0.45			$	0.65			$	0.47			$	0.59
Transportation, Gathering and Marketing per Mcfe		$	0.57			$	0.57			$	0.59			$	0.59
Production Tax per Mcfe		$	0.19			$	0.16			$	0.16			$	0.15
G&A Expense per Mcfe		$	0.90			$	0.92			$	0.87			$	0.95
Interest Expense per Mcfe		$	0.12			$	0.15			$	0.13			$	0.15
DD&A per Mcfe		$	0.77			$	1.42			$	0.92			$	1.36
Total Expense per Mcfe		$	3.00			$	3.87			$	3.14			$	3.79
Net Income (Loss)		$	(499,723)			$	(20,454,814)			$	(1,096,443)			$	(18,562,700)
Adj. Pre-Tax Net Income (Loss) (1)		$	1,333,989			$	(1,338,550)			$	1,535,619			$	2,527,231
Adjusted EBITDA (1)		$	3,379,671			$	2,381,541			$	6,143,848			$	9,573,688
Cash Flow from Operations		$	4,205,726			$	4,009,901			$	4,677,107			$	6,108,342
CapEx - Drilling & Completing		$	297,015			$	34,490			$	425,098			$	139,755
CapEx - Mineral Acquisitions		$	64,758			$	81,422			$	7,934,504			$	10,254,016
Borrowing Base										$	29,400,000			$	45,000,000
Debt										$	23,500,000			$	32,000,000
Debt/Adjusted EBITDA (TTM) (1)											2.34				1.14

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

SECOND QUARTER 2021 RESULTS

The Company recorded a second quarter 2021 net loss of $499,723, or $0.02 per share, as compared to a net loss of $20,454,814, or $1.24 per share, in the second quarter 2020. This change in net loss was principally the result of increased natural gas, oil and NGL sales and decreased general and administrative expenses (G&A), lease operating expenses (LOE), transportation, gathering and marketing expenses, depreciation, depletion and amortization (DD&A) and impairment expense, partially offset by a decrease in gain (losses) on derivative contracts and income tax benefit.

Natural gas, oil and NGL revenue increased $1,128,207, or 16%, for the second quarter 2021, compared to the corresponding 2020 quarter due to increases in natural gas, oil and NGL prices of 54%, 24% and 101%, respectively, and an increase in natural gas production volumes of 13%, partially offset by decrease in oil and NGL production volumes of 40% and 22%, respectively.

The decrease in oil production was primarily due to naturally declining production in high-interest wells brought online during the first quarter of 2020 in the Bakken play, as well as reduced drilling and completion activity in 2021, compared to 2020 in the Eagle Ford and SCOOP plays due to prevailing economic conditions. The decrease in NGL production was primarily attributable to production downtime and curtailments in high-interest wells in response to market conditions in the SCOOP and STACK plays, as well as naturally declining production in liquid-rich gas areas of the Anadarko Granite Wash play. Natural gas volumes increased as a result of acquisitions in the Haynesville Shale, which were partially offset by naturally declining production in the Fayetteville Shale, production downtime and curtailments in high-interest wells in response to market conditions in the STACK and SCOOP plays.

The Company had a net loss on derivative contracts of $2,348,143 in the 2021 quarter, as compared to a net gain of $4,071,577 in the 2020 quarter. The net loss on derivative contracts in the current period was principally due to the natural gas and oil collars and fixed price swaps being less beneficial in relation to their respective contracted volumes and prices at the beginning of the period, compared to such natural gas and oil collars and fixed price swaps being more beneficial in the comparative period causing a net gain.

The 22% 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 $1,595,701, or 47%, in the 2021 quarter to $0.77 per Mcfe, as compared to $1.42 per Mcfe in the 2020 quarter. $108,393 of the decrease was a result of production decreasing 3% in the 2021 quarter and $1,487,308 of the decrease was as a result of a $0.65 decrease in the DD&A rate per Mcfe. The rate decrease was mainly due to impairments taken at the end of the 2020 second quarter, which lowered the basis of the assets. The rate decrease was partially offset by lower natural gas, oil and NGL prices utilized in the reserve calculations during the 2021 quarter, as compared to prices used for the 2020 quarter, shortening the economic life of wells. This resulted in lower projected remaining reserves on a significant number of wells causing increased units of production DD&A.

SIX MONTHS 2021 RESULTS

The Company recorded a six-month net loss of $1,096,443, or $0.05 per share, in the 2021 period, as compared to a net loss of $18,562,700, or $1.12 per share, in the 2020 period. The change in net loss was principally the result of decreased G&A, LOE, transportation, gathering and marketing expenses, DD&A and impairment expense, partially offset by a decrease in natural gas, oil and NGL sales, gain (losses) on derivative contracts, gain on asset sales and income tax benefit.

Natural gas, oil and NGL sales remained relatively consistent with decreases in oil and NGL volumes of 28% and 10%, respectively, partially offset by increases in natural gas and NGL prices of 29% and 41%, respectively.

The decrease in oil production was primarily due to naturally declining production in high-interest wells brought online during the first quarter of 2020 in the Bakken play, as well as reduced drilling and completion activity in 2021, compared to 2020 in the Eagle Ford and SCOOP plays due to prevailing economic conditions. The decrease in NGL production was primarily attributable to production downtime and curtailments in high-interest wells in response to market conditions in the SCOOP play as well as naturally declining production in liquid-rich gas areas of the Anadarko Granite Wash play. Natural gas volumes increased as a result of acquisitions in the Haynesville Shale, which were partially offset by naturally declining production in the Fayetteville Shale, production downtime and curtailments in high-interest wells in response to market conditions in the STACK and SCOOP plays. 

The Company had a net loss on derivative contracts of $2,602,179 in the 2021 period, as compared to a net gain of $3,253,683 in the 2020 period. The net loss on derivative contracts in the current period was principally due to the natural gas and oil collars and fixed price swaps being less beneficial in relation to their respective contracted volumes and prices at the beginning of the period, compared to such natural gas and oil collars and fixed price swaps being more beneficial in the 2020 period causing a net gain.

The 17% decrease in total cost per Mcfe in the 2021 period, relative to the 2020 period, was primarily driven by a decrease in DD&A. DD&A decreased $2,290,753, or 36%, in the 2021 period to $0.92 per Mcfe, as compared to $1.36 per Mcfe in the 2020 period. $381,457 of the decrease was a result of production decreasing 6% in the 2021 period and $1,909,296 of the decrease was as a result of a $0.44 decrease in the DD&A rate per Mcfe. The rate decrease was mainly due to impairments taken at the end of the 2020 second quarter, which lowered the basis of the assets. The rate decrease was partially offset by lower natural gas, oil and NGL prices utilized in the reserve calculations during the 2021 period, as compared to prices used for the 2020 period, shortening the economic life of wells. This resulted in lower projected remaining reserves on a significant number of wells causing increased units of production DD&A.

OPERATIONS UPDATE

During the quarter ended March 31, 2021, we converted 37 gross and 0.16 net wells in progress to producing wells. Our inventory of wells in progress decreased to 80 gross wells and 0.44 net wells.

										Bakken/
										Three				Arkoma
		SCOOP				STACK				Forks				Stack				Permian				Fayetteville				Haynesville				Other				Total
Gross Wells in Progress on PHX Acreage:
As of 12/31/20			45				32				5				2				4				-				25				7				120
Net Change			-3				-19				-2				-				-1				-				-12				-3				-40
As of 3/31/21			42				13				3				2				3				-				13				4				80
Net Wells in Progress on PHX Acreage:
As of 12/31/20			0.09				0.16				-				-				0.14				-				0.16				0.07				0.62
Net Change			-0.01				-0.13				-				-				-				-				-0.03				-0.01				-0.18
As of 3/31/21			0.08				0.03				-				-				0.14				-				0.13				0.06				0.44
Gross Active Permits on PHX Acreage:
As of 12/31/20			29				15				10				7				-				-				-				13				74
Net Change			-15				-4				-4				-4				-				-				-				-7				-34
As of 3/31/21			14				11				6				3				-				-				-				6				40
As of 3/31/21:
Rigs Present on PHX Acreage			1				1				-				-				2				-				1				-				5
Rigs Within 2.5 Miles of PHX Acreage			5				11				1				-				3				-				5				2				27

Leasing Activity

During the second quarter of fiscal 2021, the Company leased 368 net mineral acres for $63,815.

										Bakken/
										Three				Arkoma
		SCOOP				STACK				Forks				Stack				Permian				Fayetteville				Haynesville				Other				Total
During Three Months Ended 3/31/21:
Net Mineral Acres Leased			-				1				-				-				41				-				-				326				368
Average Bonus per Net Mineral Acre			-			$	1,100				-				-			$	483				-				-			$	148			$	173
Average Royalty per Net Mineral Acre		-				13%					-			-				25%					-				-			18%				18%

 

ACQUISITION AND DIVESTITURE UPDATE

During the second quarter of fiscal 2021, the Company purchased 18 net royalty acres for $362,486.

										Bakken/
										Three				Arkoma
		SCOOP				STACK				Forks				Stack				Permian				Fayetteville				Haynesville				Other				Total
During Three Months Ended 3/31/21:
Net Mineral Acres Purchased			-				-				-				-				-				-				11				-				11
Net Royalty Acres Purchased			-				-				-				-				-				-				18				-				18
Price per Net Royalty Acre			-				-				-				-				-				-			$	19,772				-			$	19,772
Net Mineral Acres Sold			-				-				-				-				-				-				-				-				-
Net Royalty Acres Sold			-				-				-				-				-				-				-				-				-
Price per Net Royalty Acre			-				-				-				-				-				-				-				-				-

 

SECOND QUARTER EARNINGS CALL

PHX will host a conference call to discuss second quarter results at 5:00 p.m. EDT on May 6, 2021. Management's discussion will be followed by a question and answer session with investors. To participate on the conference call, please dial 888-506-0062 (domestic) or 973-528-0011 (international). A replay of the call will be available for seven days after the call. The number to access the replay of the conference call is 877-481-4010 and the PIN for the replay is 40717.

FINANCIAL RESULTS
Statements of Operations
	Three Months Ended March 31,								Six Months Ended March 31,
	2021				2020				2021				2020
Revenues:
Natural gas, oil and NGL sales	$	8,345,825			$	7,217,618			$	14,770,804			$	14,811,456
Lease bonuses and rental income		58,554				22,092				59,987				549,791
Gains (losses) on derivative contracts		(2,348,143)				4,071,577				(2,602,179)				3,253,683
Gain on asset sales		23,257				-				43,525				3,272,888
		6,079,493				11,311,287				12,272,137				21,887,818
Costs and expenses:
Lease operating expenses		1,030,651				1,542,199				2,035,063				2,723,870
Transportation, gathering and marketing		1,319,514				1,356,628				2,600,479				2,739,629
Production taxes		443,154				373,754				719,180				701,035
Depreciation, depletion and amortization		1,777,817				3,373,518				4,038,466				6,329,219
Provision for impairment		-				29,545,702				-				29,545,702
Interest expense		267,865				346,573				569,763				717,238
General and administrative		2,059,476				2,174,661				3,790,573				4,397,689
Other expense (income)		(102,261)				40,066				(98,944)				29,136
		6,796,216				38,753,101				13,654,580				47,183,518
Income (loss) before provision (benefit) for income taxes		(716,723)				(27,441,814)				(1,382,443)				(25,295,700)
Provision (benefit) for income taxes		(217,000)				(6,987,000)				(286,000)				(6,733,000)
Net income (loss)	$	(499,723)			$	(20,454,814)			$	(1,096,443)			$	(18,562,700)
Basic and diluted earnings (loss) per common share	$	(0.02)			$	(1.24)			$	(0.05)			$	(1.12)
Basic and diluted weighted average shares outstanding:
Common shares		22,429,777				16,384,687				22,403,678				16,362,057
Unissued, directors' deferred compensation shares		178,597				139,390				177,923				186,443
		22,608,374				16,524,077				22,581,601				16,548,500
Dividends declared per share of
common stock and paid in period	$	0.01			$	0.04			$	0.02			$	0.08
Dividends declared per share of
common stock and to be paid in quarter ended June 30	$	0.01			$	-

 

Balance Sheets
	March 31, 2021				Sept. 30, 2020
Assets
Current assets:
Cash and cash equivalents	$	1,270,482			$	10,690,395
Natural gas, oil, and NGL sales receivables (net of $0		4,712,793				2,943,220
allowance for uncollectable accounts)
Refundable income taxes		2,448,871				3,805,227
Other		752,248				351,088
Total current assets		9,184,394				17,789,930
Properties and equipment at cost, based on
successful efforts accounting:
Producing natural gas and oil properties		329,708,071				324,886,491
Non-producing natural gas and oil properties		21,012,897				18,993,814
Other		582,444				582,444
		351,303,412				344,462,749
Less accumulated depreciation, depletion and amortization		(265,863,136)				(263,590,801)
Net properties and equipment		85,440,276				80,871,948
Operating lease right-of-use assets		649,500				690,316
Other, net		593,150				669,641
Total assets	$	95,867,320			$	100,021,835
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	672,507			$	997,637
Derivative contracts, net		3,000,530				281,942
Current portion of operating lease liability		129,672				127,108
Accrued liabilities and other		1,382,066				1,297,363
Short-term debt		-				1,750,000
Total current liabilities		5,184,775				4,454,050
Long-term debt		23,500,000				27,000,000
Deferred income taxes, net		1,041,007				1,329,007
Asset retirement obligations		2,927,662				2,897,522
Derivative contracts, net		625,179				425,705
Operating lease liability, net of current portion		856,142				921,625
Stockholders' equity:
Class A voting common stock, $0.01666 par value; 36,000,500
shares authorized; 22,825,226 issued at March 31, 2021, and
Class A voting common stock, $0.01666 par value;
24,000,500 shares authorized; 22,647,306 issued at September 30, 2020		380,268				377,304
Capital in excess of par value		11,150,749				10,649,611
Deferred directors' compensation		1,633,939				1,874,007
Retained earnings		54,402,724				56,244,100
		67,567,680				69,145,022
Less treasury stock, at cost; 390,267 shares at March 31,
2021, and 411,487 shares at Sept. 30, 2020		(5,835,125)				(6,151,096)
Total stockholders' equity		61,732,555				62,993,926
Total liabilities and stockholders' equity	$	95,867,320			$	100,021,835

 

Condensed Statements of Cash Flows
	Six Months Ended March 31,
	2021				2020
Operating Activities
Net income (loss)	$	(1,096,443)			$	(18,562,700)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation, depletion and amortization		4,038,466				6,329,219
Impairment of producing properties		-				29,545,702
Provision for deferred income taxes		(288,000)				(4,711,000)
Gain from leasing fee mineral acreage		(57,493)				(544,979)
Proceeds from leasing fee mineral acreage		64,047				559,462
Net (gain) loss on sales of assets		(62,097)				(3,265,449)
Directors' deferred compensation expense		100,254				140,130
Total (gain) loss on derivative contracts		2,602,179				(3,253,683)
Cash receipts (payments) on settled derivative contracts		315,883				1,530,912
Restricted stock awards		284,148				491,616
Other		31,544				7,225
Cash provided (used) by changes in assets and liabilities:
Natural gas, oil and NGL sales receivables		(1,732,801)				1,168,943
Other current assets		(388,864)				(232,349)
Accounts payable		(340,404)				117,561
Income taxes receivable		1,356,356				(2,072,428)
Other non-current assets		56,545				50,010
Accrued liabilities		(206,213)				(1,189,850)
Total adjustments		5,773,550				24,671,042
Net cash provided by operating activities		4,677,107				6,108,342
Investing Activities
Capital expenditures		(425,098)				(139,755)
Acquisition of minerals and overrides		(7,934,504)				(10,254,016)
Proceeds from sales of assets		21,000				3,376,049
Net cash provided (used) by investing activities		(8,338,602)				(7,017,722)
Financing Activities
Borrowings under Credit Facility		-				5,561,725
Payments of loan principal		(5,250,000)				(8,986,725)
Net proceeds from equity issuance		(53,482)				-
Purchases of treasury stock		-				(7,635)
Payments of dividends		(454,936)				(1,319,899)
Net cash provided (used) by financing activities		(5,758,418)				(4,752,534)
Increase (decrease) in cash and cash equivalents		(9,419,913)				(5,661,914)
Cash and cash equivalents at beginning of period		10,690,395				6,160,691
Cash and cash equivalents at end of period	$	1,270,482			$	498,777
Supplemental Schedule of Noncash Investing and Financing Activities
Dividends declared and unpaid	$	289,997			$	-
Additions to asset retirement obligations	$	-			$	4
Gross additions to properties and equipment	$	8,759,616			$	10,229,121
Equity offering used for acquisitions		(250,000)				-
Net (increase) decrease in accounts payable for properties
and equipment additions		(150,014)				164,650
Capital expenditures and acquisitions	$	8,359,602			$	10,393,771

 

Proved Reserves
	Proved Reserves SEC Pricing
	March 31, 2021				Sept. 30, 2020
Proved Developed Reserves:
Mcf of Gas		47,482,766				40,924,083
Barrels of Oil		1,096,654				1,148,989
Barrels of NGL		1,170,146				1,135,864
Mcfe (2)		61,083,566				54,633,201
Proved Undeveloped Reserves:
Mcf of Gas		2,403,400				1,448,690
Barrels of Oil		91,910				184,668
Barrels of NGL		27,920				83,993
Mcfe (2)		3,122,380				3,060,656
Total Proved Reserves:
Mcf of Gas		49,886,166				42,372,773
Barrels of Oil		1,188,564				1,333,657
Barrels of NGL		1,198,066				1,219,857
Mcfe (2)		64,205,946				57,693,857
10% Discounted Estimated Future
Net Cash Flows (before income taxes):
Proved Developed	$	40,765,559			$	33,270,804
Proved Undeveloped		3,913,169				5,659,479
Total	$	44,678,728			$	38,930,283
SEC Pricing
Gas/Mcf	$	1.96			$	1.62
Oil/Barrel	$	37.52			$	40.18
NGL/Barrel	$	10.95			$	9.95
Proved Reserves - Projected Future Pricing (3)
10% Discounted Estimated Future	Proved Reserves
Net Cash Flows (before income taxes):	March 31, 2021				Sept. 30, 2020
Proved Developed	$	73,345,570			$	63,648,347
Proved Undeveloped		5,830,561				7,197,350
Total	$	79,176,131			$	70,845,697
(2) Crude oil and NGL converted to natural gas on a one barrel of crude oil or NGL equals six Mcf of natural gas basis
(3) Projected futures pricing as of March 31, 2021 and Sept. 30, 2020 basis adjusted to Company wellhead price

 

Derivative Contracts as of May 3, 2021
Period												Collar Average				Collar Average
(Calendar Year)		Product		Volume Mcf/Bbl				Swap Price				Floor Price				Ceiling Price
Remaining 2021		Natural Gas			1,961,000							$	2.35			$	3.04
Remaining 2021		Natural Gas			1,025,000			$	2.81
2022		Natural Gas			2,200,500							$	2.40			$	3.12
2022		Natural Gas			377,500			$	2.61
2023		Natural Gas			86,000							$	2.25			$	2.96
2023		Natural Gas			84,000			$	2.56
Remaining 2021		Crude Oil			27,500							$	36.78			$	45.14
Remaining 2021		Crude Oil			79,000			$	39.61
2022		Crude Oil			68,500							$	40.25			$	50.35
2022		Crude Oil			59,000			$	41.51

Non-GAAP Reconciliation

This news release includes certain "non-GAAP financial measures" under the rules of the Securities and Exchange Commission, including Regulation G. These non-GAAP measures are calculated using GAAP amounts in our 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 our financial statements prepared in accordance with GAAP (including the notes), included in our SEC filings and posted on our website.

Adjusted EBITDA Reconciliation 

Adjusted EBITDA is defined as net income (loss) plus interest expense, provision for impairment, depreciation, depletion and amortization of properties and equipment, including amortization of other assets, provision (benefit) for income taxes and unrealized (gains) losses on derivative contracts. Adjusted EBITDA is not a measure of financial performance under GAAP. We have included a presentation of adjusted EBITDA because we recognize that certain investors consider adjusted EBITDA 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 periods indicated:

	Second Quarter Ended				Second Quarter Ended				Six Months Ended				Six Months Ended
	March 31, 2021				March 31, 2020				March 31, 2021				March 31, 2020
Net Income (Loss)	$	(499,723)			$	(20,454,814)			$	(1,096,443)			$	(18,562,700)
Plus:
Unrealized (gains) losses on derivatives		2,050,712				(3,442,438)				2,918,062				(1,722,771)
Income Tax Expense (Benefit)		(217,000)				(6,987,000)				(286,000)				(6,733,000)
Interest Expense		267,865				346,573				569,763				717,238
DD&A		1,777,817				3,373,518				4,038,466				6,329,219
Impairment		-				29,545,702				-				29,545,702
Adjusted EBITDA	$	3,379,671			$	2,381,541			$	6,143,848			$	9,573,688

Adjusted EBITDA Excluding Gain on Asset Sales Reconciliation 

Adjusted EBITDA excluding gain on asset sales is defined as the adjusted EBITDA less gains on asset sales. We have included a presentation of adjusted EBITDA excluding gain on asset sales because we recognize that certain investors consider this amount a useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. The adjusted EBITDA excluding gain on asset sales 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 excluding gain on asset sales may not be comparable to a similarly titled measure of other companies. The following table provides a presentation of net income (loss) to adjusted EBITDA and of the resulting adjusted EBITDA excluding gain on asset sales for the periods indicated:

	Second Quarter Ended				Second Quarter Ended				Six Months Ended				Six Months Ended				First Quarter Ended
	March 31, 2021				March 31, 2020				March 31, 2021				March 31, 2020				Dec. 30, 2020
Net Income (Loss)	$	(499,723)			$	(20,454,814)			$	(1,096,443)			$	(18,562,700)			$	(596,720)
Plus:
Unrealized (gains) losses
on derivatives		2,050,712				(3,442,438)				2,918,062				(1,722,771)				867,350
Income Tax Expense
(Benefit)		(217,000)				(6,987,000)				(286,000)				(6,733,000)				(69,000)
Interest Expense		267,865				346,573				569,763				717,238				301,898
DD&A		1,777,817				3,373,518				4,038,466				6,329,219				2,260,649
Impairment		-				29,545,702				-				29,545,702				-
Adjusted EBITDA	$	3,379,671			$	2,381,541			$	6,143,848			$	9,573,688			$	2,764,177
Gain on asset sales		23,257				-				43,525				3,272,888				20,268
Adjusted EBITDA excluding
Gain on asset sales	$	3,356,414			$	2,381,541			$	6,100,323			$	6,300,800			$	2,743,909

Debt/Adjusted EBITDA (TTM) Reconciliation 

Debt/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/adjusted EBITDA (TTM) because we recognize that certain investors consider such ratios a useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. The debt/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/adjusted EBITDA (TTM) may not be comparable to a similarly titled measure of other companies. The following table provides a presentation of net income (loss) to adjusted EBITDA on a TTM basis, and of the resulting debt/adjusted EBITDA (TTM) ratio:

	TTM Ended				TTM Ended
	March 31, 2021				March 31, 2020
Net Income (Loss)	$	(6,485,780)			$	(70,112,244)
Plus:
Unrealized (gains) losses on derivatives		7,842,624				(3,399,709)
Income Tax Expense (Benefit)		(1,842,000)				(23,655,000)
Interest Expense		1,139,313				1,687,873
DD&A		9,023,030				17,088,140
Impairment		358,826				106,370,039
Adjusted EBITDA	$	10,036,013			$	27,979,099
Debt	$	23,500,000			$	32,000,000
Debt/Adjusted EBITDA		2.34				1.14

Adjusted Pre-Tax Net Income (Loss) Reconciliation 

Adjusted pre-tax net income (loss) is defined as net income (loss) plus provision for impairment, provision (benefit) for income taxes and unrealized (gains) losses on derivative contracts. We have included a presentation of adjusted pre-tax net income (loss) because we recognize that certain investors consider adjusted pre-tax net income (loss) a useful means of evaluating our financial performance. Adjusted pre-tax 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 pre-tax 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 pre-tax net income (loss) for the periods indicated:

	Second Quarter Ended				Second Quarter Ended				Six Months Ended				Six Months Ended
	March 31, 2021				March 31, 2020				March 31, 2021				March 31, 2020
Net Income (Loss)	$	(499,723)			$	(20,454,814)			$	(1,096,443)			$	(18,562,700)
Plus:
Impairment		-				29,545,702				-				29,545,702
Unrealized (gains) losses on derivatives		2,050,712				(3,442,438)				2,918,062				(1,722,771)
Income Tax Expense (Benefit)		(217,000)				(6,987,000)				(286,000)				(6,733,000)
Adjusted Pre-Tax Net Income (Loss)	$	1,333,989			$	(1,338,550)			$	1,535,619			$	2,527,231

PHX Minerals Inc. (NYSE: PHX) Oklahoma City-based, PHX Minerals Inc. is a natural gas and oil mineral company with a strategy to proactively grow its mineral position in its core areas of focus. PHX owns approximately 255,000 net mineral acres principally located in Oklahoma, Texas, North Dakota, New Mexico and Arkansas. Additional information on PHX 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 and Section 21E of the Securities Exchange Act of 1934. 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 the Company's current views about future events. Forward-looking statements may include, but are not limited to, statements relating to: our ability to execute our business strategies; the volatility of realized natural gas and oil prices; the level of production on our properties; estimates of quantities of natural gas, oil and NGL reserves and their values; general economic or industry conditions; legislation or regulatory requirements; conditions of the securities markets; our ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; title defects in the properties in which we invest; and other economic, competitive, governmental, regulatory or technical factors affecting our properties, operations or prices. Although the Company believes the expectations reflected in these and other forward-looking statements are reasonable, we can give no assurance they will prove to be correct. Such forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the Company's management. Information concerning these risks and other factors can be found in the Company's filings with the Securities and Exchange Commission, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, available on the Company's website or the SEC's website at www.sec.gov.

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.

 

View original content:http://www.prnewswire.com/news-releases/phx-minerals-inc-reports-second-quarter-2021-results-301285983.html

SOURCE PHX MINERALS INC.

FAQ

What were PHX Minerals' Q2 2021 production volumes?

PHX Minerals reported production volumes of 2,297 Mmcfe for Q2 2021.

How much did PHX Minerals' net loss decrease in Q2 2021?

The net loss decreased to $0.5 million in Q2 2021 from $20.5 million in Q2 2020.

What is PHX Minerals' adjusted EBITDA for Q2 2021?

PHX Minerals reported adjusted EBITDA of $3.4 million for Q2 2021.

When will the PHX Minerals dividend be paid?

The dividend of $0.01 per share will be paid on June 4, 2021.

What is the debt situation of PHX Minerals as of March 31, 2021?

PHX Minerals reduced its total debt by 13% to $23.5 million as of March 31, 2021.