PHX Minerals Reports Results for the Quarter and Fiscal Year Ended Dec. 31, 2023; Announces Dividend and Provides 2024 Operational Outlook
- Strong financial performance with net income of $13.9 million for the fiscal year 2023.
- Adjusted EBITDA of $22.7 million for the full fiscal year.
- 23% increase in royalty production volumes for the fiscal year 2023.
- Total production volumes decreased by 3% for the full fiscal year.
- Quarterly dividend increased by 33% despite challenges in natural gas pricing.
- Decrease in total production volumes by 3% for the full fiscal year.
- Net income of $2.5 million for the fiscal fourth quarter.
- Adjusted EBITDA of $4.5 million for the fiscal fourth quarter.
Insights
PHX Minerals Inc. reported a year-over-year increase in net income for the fiscal fourth quarter, while experiencing a decrease for the full fiscal year. The company's successful expansion in royalty volumes by 23% and reserve growth of 9% indicates a strategic focus on high-quality mineral acquisitions, particularly in the Haynesville and SCOOP plays. The increase in net proved royalty interest reserves is a positive indicator of the company's asset quality and future production potential.
The company's declaration of a higher quarterly dividend despite a challenging natural gas pricing environment showcases a strong balance sheet and a strategy of modest leverage. This financial prudence is crucial in an industry characterized by price volatility. The debt to adjusted EBITDA ratio of 1.45x is within a reasonable range, suggesting that the company maintains a manageable level of debt relative to its earnings.
However, the decrease in total revenue and natural gas, oil and NGL sales raises concerns about the impact of commodity price fluctuations on the company's top-line growth. The reduction in working interest sales also reflects a strategic shift away from direct operational involvement towards a royalty-based income model which may reduce exposure to operational risks and capital expenditure requirements.
The reported decrease in natural gas, oil and NGL prices, coupled with a decrease in oil volumes sold, indicates broader market challenges that could affect investor sentiment towards the energy sector. The company's hedging strategy, which resulted in a net gain on derivative contracts, demonstrates an effective risk management approach that can protect against price volatility. The hedging percentages suggest a balanced approach, shielding a portion of the revenue from price swings while still allowing for upside potential.
PHX Minerals' focus on acquiring high-quality minerals aligns with industry trends emphasizing the importance of asset quality over quantity. The strategic shift towards royalty interests, as opposed to working interests, may attract investors seeking lower risk profiles. The company's operational outlook for 2024, with projected stable mineral and royalty production, provides a clear expectation for investors and could be seen as a stabilizing factor for the stock.
The increase in royalty production volumes and the conversion of wells to producing status reflect PHX Minerals' operational efficiency and effective capital deployment. The company's optimism about the balance of the market and improvement in commodity prices due to reduced drilling activity and the expansion of LNG export facilities is shared by other industry players who anticipate a tightening of supply-demand dynamics.
The company's investment of over $30 million in mineral acquisitions and the subsequent increase in royalty interest reserves underscore a strategic growth focus. This is particularly relevant in the context of the energy transition where natural gas plays a critical role as a bridge fuel. PHX Minerals' positioning in plays like the Haynesville Shale, which is known for its high-quality assets and proximity to growing LNG export markets, could provide a competitive advantage as global energy dynamics evolve.
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 $0.07 $13.9 million $0.39 $1.9 million $0.05 $17.1 million $0.48 - Adjusted EBITDA(1) in the fiscal fourth quarter and full fiscal year was
$4.5 million $22.7 million $6.3 million $26.7 million - Royalty production volumes for the fiscal fourth quarter decreased
6% to 1,946 Mmcfe compared to the quarter ended Sept. 30, 2023, and increased23% 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 decreased3% 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
Subsequent Events
- PHX announced a
$0.03
(1) This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section. |
Chad L.
"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.
Financial Highlights | ||||||||||||||||
Three Months | Three Months | Twelve Months | Twelve Months | |||||||||||||
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 | Three Months | Twelve Months | Twelve Months | ||||||||||||
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
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
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 | Calendar Year 2023 | Calendar Year 2024 | ||||
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 % | ||||
Transportation, Gathering & Marketing (per Mcfe) | ||||||
Production Tax (as % of pre-hedge sales volumes) | 4.50 % | 5.20 % | ||||
LOE Expenses (on an absolute basis in 000's) | ||||||
Cash G&A (on an absolute basis in 000's) | ||||||
Quarter Ended Dec. 31, 2023 Results
The Company recorded net income of
Natural gas, oil and NGL revenue decreased
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
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
Natural gas, oil and NGL revenue decreased
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
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
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
Acquisition and Divestiture Update
During the quarter ended Dec. 31, 2023, the Company purchased 325 net royalty acres for approximately
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
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 | |||||
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,
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 | |||||
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) | |||||||
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 | Twelve Months | Twelve Months | |||||||||||||
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 | 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, | |||||||
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 | Contract price | |||
Natural gas costless collars | ||||||
January - March 2024 | 30,000 Mmbtu | NYMEX Henry Hub | ||||
January - September 2024 | 30,000 Mmbtu | NYMEX Henry Hub | ||||
January 2024 | 135,000 Mmbtu | NYMEX Henry Hub | ||||
February 2024 | 125,000 Mmbtu | NYMEX Henry Hub | ||||
March 2024 | 130,000 Mmbtu | NYMEX Henry Hub | ||||
April 2024 | 90,000 Mmbtu | NYMEX Henry Hub | ||||
May 2024 | 95,000 Mmbtu | NYMEX Henry Hub | ||||
June 2024 | 90,000 Mmbtu | NYMEX Henry Hub | ||||
January - March 2024 | 30,000 Mmbtu | NYMEX Henry Hub | ||||
October 2024 - June 2025 | 30,000 Mmbtu | NYMEX Henry Hub | ||||
November 2024 - March 2025 | 90,000 Mmbtu | NYMEX Henry Hub | ||||
November - December 2024 | 35,000 Mmbtu | NYMEX Henry Hub | ||||
January - March 2025 | 30,000 Mmbtu | NYMEX Henry Hub | ||||
April 2025 - September 2025 | 55,000 Mmbtu | NYMEX Henry Hub | ||||
November 2025 - March 2026 | 100,000 Mmbtu | NYMEX Henry Hub | ||||
Natural gas fixed price swaps | ||||||
Janurary - February 2024 | 135,000 Mmbtu | NYMEX Henry Hub | ||||
March 2024 | 127,500 Mmbtu | NYMEX Henry Hub | ||||
April - June 2024 | 10,000 Mmbtu | NYMEX Henry Hub | ||||
April - October 2024 | 50,000 Mmbtu | NYMEX Henry Hub | ||||
April - July 2024 | 127,500 Mmbtu | NYMEX Henry Hub | ||||
July - October 2024 | 75,000 Mmbtu | NYMEX Henry Hub | ||||
July - October 2024 | 25,000 Mmbtu | NYMEX Henry Hub | ||||
August - September 2024 | 120,000 Mmbtu | NYMEX Henry Hub | ||||
October 2024 | 105,000 Mmbtu | NYMEX Henry Hub | ||||
November - December 2024 | 70,000 Mmbtu | NYMEX Henry Hub | ||||
January - March 2025 | 60,000 Mmbtu | NYMEX Henry Hub | ||||
January - March 2025 | 50,000 Mmbtu | NYMEX Henry Hub | ||||
April - October 2025 | 100,000 Mmbtu | NYMEX Henry Hub | ||||
Oil costless collars | ||||||
January 2024 | 1,850 Bbls | NYMEX WTI | ||||
February 2024 | 1,700 Bbls | NYMEX WTI | ||||
March 2024 | 1,750 Bbls | NYMEX WTI | ||||
April 2024 | 1,700 Bbls | NYMEX WTI | ||||
May 2024 | 1,750 Bbls | NYMEX WTI | ||||
June 2024 | 1,650 Bbls | NYMEX WTI | ||||
January - March 2024 | 1,650 Bbls | NYMEX WTI | ||||
April - June 2024 | 500 Bbls | NYMEX WTI | ||||
June - September 2024 | 500 Bbls | NYMEX WTI | ||||
July - October 2024 | 1,650 Bbls | NYMEX WTI | ||||
October - December 2024 | 500 Bbls | NYMEX WTI | ||||
Oil fixed price swaps | ||||||
January - March 2024 | 750 Bbls | NYMEX WTI | ||||
April - October 2024 | 1,000 Bbls | NYMEX WTI | ||||
April - June 2024 | 1,300 Bbls | NYMEX WTI | ||||
July - October 2024 | 1,500 Bbls | NYMEX WTI | ||||
November - December 2024 | 2,000 Bbls | NYMEX WTI | ||||
November 2024 - March 2025 | 1,600 Bbls | NYMEX WTI | ||||
January - March 2025 | 500 Bbls | NYMEX WTI | ||||
January - June 2025 | 2,000 Bbls | NYMEX WTI | ||||
April - June 2025 | 750 Bbls | NYMEX WTI | ||||
April - June 2025 | 1,000 Bbls | NYMEX WTI | ||||
July - September 2025 | 500 Bbls | NYMEX WTI | ||||
July - December 2025 | 1,500 Bbls | NYMEX WTI | ||||
Non-GAAP Reconciliation
This press release includes certain "non-GAAP financial measures" as defined under the rules and regulations of the
Adjusted EBITDA Reconciliation
The Company defines "adjusted EBITDA" as earnings before interest, taxes, depreciation and amortization, or EBITDA, excluding non-cash gains (losses) on derivatives and gains (losses) on asset sales and including cash receipts from (payments on) off-market derivatives and restricted stock and deferred directors' expense. The Company has included a presentation of adjusted EBITDA because it recognizes that certain investors consider this amount to be a useful means of measuring the Company's ability to meet its debt service obligations and evaluating its financial performance. Adjusted EBITDA has limitations and should not be considered in isolation or as a substitute for net income, operating income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with GAAP. Because not all companies use identical calculations, this presentation of adjusted EBITDA may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to adjusted EBITDA for the quarters indicated:
Three Months | Three Months | Twelve Months | Twelve Months | Three Months | |||||||||||||||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Sept. 30, 2023 | |||||||||||||||
Net Income | $ | 2,513,444 | $ | 3,346,133 | $ | 13,920,800 | $ | 17,073,156 | $ | 1,895,403 | |||||||||
Plus: | |||||||||||||||||||
Income tax expense | 1,245,460 | 981,000 | 4,735,460 | 4,421,000 | 589,000 | ||||||||||||||
Interest expense | 723,685 | 637,698 | 2,362,393 | 1,625,971 | 556,941 | ||||||||||||||
DD&A | 2,443,154 | 1,802,114 | 8,566,185 | 7,496,472 | 2,022,709 | ||||||||||||||
Impairment expense | - | 6,100,696 | 38,533 | 6,109,676 | 36,460 | ||||||||||||||
Less: | |||||||||||||||||||
Non-cash gains (losses) | |||||||||||||||||||
on derivatives | 2,936,659 | 6,265,041 | 4,302,531 | (584,976) | (940,592) | ||||||||||||||
Gains (losses) on asset sales | 57,505 | 934,207 | 4,728,759 | 7,478,781 | 243,041 | ||||||||||||||
Plus: | |||||||||||||||||||
Cash receipts from (payments on) | |||||||||||||||||||
off-market derivative contracts(1) | - | (903,461) | (373,745) | (5,738,164) | - | ||||||||||||||
Restricted stock and deferred | |||||||||||||||||||
director's expense | 572,709 | 569,084 | 2,433,927 | 2,649,194 | 522,965 | ||||||||||||||
Adjusted EBITDA | $ | 4,504,288 | $ | 5,334,016 | $ | 22,652,263 | $ | 26,743,500 | $ | 6,321,029 | |||||||||
(1) The initial receipt of | |||||||||||||||||||
Debt to Adjusted EBITDA (TTM) Reconciliation
"Debt to adjusted EBITDA (TTM)" is defined as the ratio of long-term debt to adjusted EBITDA on a trailing 12-month (TTM) basis. The Company has included a presentation of debt to adjusted EBITDA (TTM) because it recognizes that certain investors consider such ratios to be a useful means of measuring the Company's ability to meet its debt service obligations and for evaluating its financial performance. The debt to adjusted EBITDA (TTM) ratio has limitations and should not be considered in isolation or as a substitute for net income, operating income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with GAAP. Because not all companies use identical calculations, this presentation of debt to adjusted EBITDA (TTM) may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to adjusted EBITDA on a TTM basis and of the resulting debt to adjusted EBITDA (TTM) ratio:
TTM Ended | TTM Ended | ||||||
Dec. 31, 2023 | Dec. 31, 2022 | ||||||
Net Income | $ | 13,920,800 | $ | 17,073,156 | |||
Plus: | |||||||
Income tax expense | 4,735,460 | 4,421,000 | |||||
Interest expense | 2,362,393 | 1,625,971 | |||||
DD&A | 8,566,185 | 7,496,472 | |||||
Impairment expense | 38,533 | 6,109,676 | |||||
Less: | |||||||
Non-cash gains (losses) | |||||||
on derivatives | 4,302,531 | (584,976) | |||||
Gains (losses) on asset sales | 4,728,759 | 7,478,781 | |||||
Plus: | |||||||
Cash receipts from (payments on) | |||||||
off-market derivative contracts(1) | (373,745) | (5,738,164) | |||||
Restricted stock and deferred | |||||||
director's expense | 2,433,927 | 2,649,194 | |||||
Adjusted EBITDA | $ | 22,652,263 | $ | 26,743,500 | |||
Debt | $ | 32,750,000 | $ | 33,300,000 | |||
Debt to Adjusted EBITDA (TTM) | 1.45 | 1.25 | |||||
(1) The initial receipt of | |||||||
PHX Minerals Inc. (NYSE: PHX) Fort Worth-based, PHX Minerals Inc. is a natural gas and oil mineral company with a strategy to proactively grow its mineral position in its core focus areas. PHX owns mineral acreage principally located in
Cautionary Statement Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "anticipates," "plans," "estimates," "believes," "expects," "intends," "will," "should," "may" and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect PHX's current views about future events. Forward-looking statements may include, but are not limited to, statements relating to: the Company's operational outlook; the Company's ability to execute its business strategies; the volatility of realized natural gas and oil prices; the level of production on the Company's properties; estimates of quantities of natural gas, oil and NGL reserves and their values; general economic or industry conditions; legislation or regulatory requirements; conditions of the securities markets; the Company's ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; title defects in the properties in which the Company invests; and other economic, competitive, governmental, regulatory or technical factors affecting properties, operations or prices. Although the Company believes expectations reflected in these and other forward-looking statements are reasonable, the Company can give no assurance such expectations will prove to be correct. Such forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. These forward-looking statements involve certain risks and uncertainties that could cause results to differ materially from those expected by the Company's management. Information concerning these risks and other factors can be found in the Company's filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, available on the Company's website or the SEC's website at www.sec.gov.
Investors are cautioned that any such forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected. 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.
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SOURCE PHX MINERALS INC.
FAQ
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