Sitio Royalties Reports Third Quarter 2023 Operational and Financial Results
- Pro forma average quarterly production volume of 36,654 Boe/d (50% oil)
- Record high net line-of-sight wells of 50.9 net wells as of September 30, 2023
- Recapitalized balance sheet with new $600 million 7.875% Senior Notes due 2028
- Declared a definitive agreement to sell Appalachia and Anadarko Basin assets for $117.5 million
- None.
Pro Forma In-Period Average Quarterly Production Volume of 36,654 Boe/d (
Declared
Record High 50.9 Net Line-of-Sight Wells as of September 30, 2023, of Which
Recapitalized Balance Sheet With New
Announces Definitive Agreement to Sell Appalachia and Anadarko Basin Assets for
THIRD QUARTER 2023 OPERATIONAL AND FINANCIAL HIGHLIGHTS
-
Pro forma 3Q 2023 average daily in-period production volume of 36,654 barrels of oil equivalent per day (“Boe/d”) (
50% oil)(1), comparable to pro forma 2Q 2023 average daily in-period production volume of 36,587 Boe/d (52% oil)(2) -
3Q 2023 average daily production volume of 36,900 Boe/d (
48% oil)(3), including total prior period adjustments of positive 546 Boe/d -
Declared 3Q 2023 dividend of
$0.49 $0.09 23% relative to 2Q 2023 -
Net income of
$0.3 million $3.2 million $2.04 -
3Q 2023 Adjusted EBITDA(4) of
$142.4 million 12% sequentially from 2Q 2023 Adjusted EBITDA, primarily due to increased average production volumes and a5% increase in realized hedged prices per Boe -
3Q 2023 Pro forma Adjusted EBITDA(5) of
$143.6 million 11% sequentially from 2Q 2023 Pro forma Adjusted EBITDA(7) - Record high net line-of-sight (“LOS”) wells of 50.9 net wells as of September 30, 2023, comprised of 29.9 net spuds and 21.0 net permits
-
Closed on four previously announced Permian Basin Cash Acquisitions for total aggregate purchase price of
$181.3 million -
On September 26, 2023, priced
$600 million 7.875% per annum, 3.4 percentage points lower than the 4Q 2023 interest rate on the Company's prior senior unsecured notes due 2026 (the “2026 Senior Notes”); Transaction closed on October 3, 2023(8)
3Q 2023 RESULTS RELATIVE TO 2H 2023 GUIDANCE
The table below shows third quarter 2023 results relative to financial and operational guidance for the second half of 2023 that was issued on August 8, 2023.
2H 2023 Guidance Metric |
|
3Q 2023
|
|
|
2H 2023 Guidance
|
|
Average daily production (Boe/d) – Reported / In-period(11) |
|
36,900 / 36,354 |
|
|
35,000 – 37,000 |
|
Oil % – Reported / In-period(11) |
|
|
|
|
|
|
Gathering and transportation ($/Boe) |
|
$ |
1.36 |
|
|
|
Cash G&A ($ in millions) |
|
$ |
7.4 |
|
|
|
Production taxes (% of royalty revenue) |
|
|
7.9 |
% |
|
|
Reported cash tax rate (% of pre-tax income)(12) |
|
|
69.5 |
% |
|
|
Pro forma cash tax rate (% of pro forma pre-tax income)(13) |
|
|
1.5 |
% |
|
|
(1) Pro forma in-period average quarterly production volume includes production from the Cash Acquisitions(6) as if they were owned on July 1, 2023; In-period production represents production that is estimated to have occurred during the period specified and does not include production from prior period adjustments
(2) Pro forma 2Q 2023 average daily in-period production volume represents production that was estimated to have occurred during the three months ended June 30, 2023, including production from the Stock & Cash Acquisitions(9) as if they were owned on April 1, 2023
(3) 3Q 2023 average daily production volume includes both in-period average daily production and prior period adjustments
(4) For definitions of non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures, please see “Non-GAAP financial measures”
(5) 3Q 2023 Pro Forma Adjusted EBITDA represents 3Q 2023 Adjusted EBITDA plus Cash Acquisitions(6) EBITDA, which reflects as if Sitio had owned the Cash Acquisitions since July 1, 2023
(6) Cash Acquisitions, a subset of the Stock & Cash Acquisitions(9), is defined as the four acquisitions that closed in July and August of 2023; Total consideration for the Cash Acquisitions was approximately
(7) 2Q 2023 Pro forma Adjusted EBITDA represents 2Q 2023 Adjusted EBITDA plus Stock Acquisition(10) EBITDA from April 1, 2023 to June 13, 2023
(8) On October 3, 2023, subsidiaries of Sitio issued and sold (the “Notes Offering”)
(9) Stock & Cash Acquisitions is defined as five separate mineral and royalty interest acquisitions that closed between March 31, 2023 and August 7, 2023, containing 13,862 NRAs in aggregate, of which
(10) Stock Acquisition, a subset of the Stock & Cash Acquisitions, is defined as the one acquisition that closed on June 14, 2023
(11) In-period production represents production that is estimated to have occurred during the period specified, excluding production from prior period adjustments; Reported production includes both in-period production and adjustments to production from prior periods
(12) Calculated as cash taxes paid of
(13) Calculated as cash taxes paid of
Chris Conoscenti, Chief Executive Officer of Sitio, commented, “In the third quarter, our assets delivered another steady performance that reflected operator trends in Permian and broader US drilling and completion activity. We continue to pursue multiple consolidation opportunities and are optimistic about improving competitive dynamics heading into 2024. During the third quarter, we completed the four previously announced cash acquisitions of high-quality Permian minerals and royalties totaling approximately
ASSET ACTIVITY UPDATE
The following table summarizes Sitio's net average daily production, net wells online, net line-of-sight wells and net royalty acres by area. All pro forma metrics assume that Sitio owned the Stock & Cash Acquisitions as of June 30, 2023.
|
|
|
|
Midland |
|
|
DJ |
|
|
Eagle
|
|
|
Appalachia |
|
|
Anadarko |
|
|
Williston |
|
|
Total |
|
||||||||
Average Daily Production (Boe/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
As reported |
|
19,050 |
|
|
|
8,363 |
|
|
|
2,998 |
|
|
|
3,730 |
|
|
|
1,099 |
|
|
|
996 |
|
|
|
664 |
|
|
|
36,900 |
|
% Oil |
|
47 |
% |
|
|
61 |
% |
|
|
32 |
% |
|
|
51 |
% |
|
|
3 |
% |
|
|
27 |
% |
|
|
62 |
% |
|
|
48 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net Well Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pro forma net wells online as of
|
|
121.8 |
|
|
|
60.1 |
|
|
|
35.6 |
|
|
|
35.3 |
|
|
|
3.7 |
|
|
|
9.9 |
|
|
|
9.2 |
|
|
|
275.6 |
|
Net wells online as of
|
|
127.1 |
|
|
|
62.2 |
|
|
|
37.1 |
|
|
|
35.7 |
|
|
|
3.8 |
|
|
|
9.9 |
|
|
|
9.4 |
|
|
|
285.2 |
|
Net wells online increase
|
|
5.3 |
|
|
|
2.1 |
|
|
|
1.5 |
|
|
|
0.4 |
|
|
|
0.1 |
|
|
|
- |
|
|
|
0.2 |
|
|
|
9.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net spuds |
|
16.3 |
|
|
|
7.9 |
|
|
|
2.7 |
|
|
|
1.9 |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.6 |
|
|
|
29.9 |
|
Net permits |
|
10.6 |
|
|
|
7.0 |
|
|
|
1.1 |
|
|
|
1.5 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.5 |
|
|
|
21.0 |
|
Net LOS wells as of
|
|
26.9 |
|
|
|
14.9 |
|
|
|
3.8 |
|
|
|
3.4 |
|
|
|
0.5 |
|
|
|
0.3 |
|
|
|
1.1 |
|
|
|
50.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net Royalty Acres
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pro forma June 30, 2023(15) |
|
152,234 |
|
|
|
45,339 |
|
|
|
24,978 |
|
|
|
21,752 |
|
|
|
12,669 |
|
|
|
9,872 |
|
|
|
8,203 |
|
|
|
275,047 |
|
September 30, 2023 |
|
152,268 |
|
|
|
45,366 |
|
|
|
24,973 |
|
|
|
21,783 |
|
|
|
12,676 |
|
|
|
9,872 |
|
|
|
8,202 |
|
|
|
275,140 |
|
NRA increase (decrease) since
|
|
34 |
|
|
|
27 |
|
|
|
(5 |
) |
|
|
31 |
|
|
|
7 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
93 |
|
(14) Includes net wells from the Stock & Cash Acquisitions
(15) Includes NRAs from the Stock & Cash Acquisitions
FINANCIAL UPDATE
Sitio's third quarter 2023 average unhedged realized prices including all expected quality, transportation and demand adjustments were
Consolidated net income for the third quarter of 2023 was
As of September 30, 2023, the Company had
2H 2023 FINANCIAL AND OPERATIONAL GUIDANCE
Sitio is revising its guidance for Cash G&A for the full year 2023 to a range of
2H 2023 Guidance |
|
Low |
|
|
High |
|
||
Average daily production (Boe/d) |
|
|
35,000 |
|
|
|
37,000 |
|
Oil % |
|
|
49 |
% |
|
|
51 |
% |
|
|
|
|
|
|
|
||
Revenue Deductions, Expenses and Taxes |
|
|
|
|
|
|
||
Gathering and transportation ($/Boe) |
|
$ |
1.25 |
|
|
$ |
1.50 |
|
Full Year 2023 Cash G&A ($ in millions) |
|
$ |
27.0 |
|
|
$ |
28.0 |
|
Production taxes (% of royalty revenue) |
|
|
6 |
% |
|
|
8 |
% |
Cash tax rate (% of pre-tax income) |
|
|
2 |
% |
|
|
4 |
% |
SENIOR UNSECURED NOTES REFINANCING
On October 3, 2023, the Company issued and sold
DIVESTITURE OF APPALACHIA AND ANADARKO ASSETS
On November 3, 2023, the Company entered into a definitive purchase and sale agreement to sell all of its mineral and royalty interests in the Appalachia and Anadarko Basins to an undisclosed third party for
Sitio did not add to or extinguish any of its commodity swaps or collars during the third quarter of 2023. A summary of the Company's existing commodity derivative contracts as of September 30, 2023 is included in the table below.
|
|
Oil (NYMEX WTI) |
|
|||||||||
|
|
2023 |
|
|
2024 |
|
|
1H25 |
|
|||
Swaps |
|
|
|
|
|
|
|
|
|
|||
Bbl per day |
|
|
3,050 |
|
|
|
3,300 |
|
|
|
1,100 |
|
Average price ($/Bbl) |
|
$ |
93.71 |
|
|
$ |
82.66 |
|
|
$ |
74.65 |
|
Collars |
|
|
|
|
|
|
|
|
|
|||
Bbl per day |
|
|
— |
|
|
|
— |
|
|
|
2,000 |
|
Average call ($/Bbl) |
|
|
— |
|
|
|
— |
|
|
$ |
93.20 |
|
Average put ($/Bbl) |
|
|
— |
|
|
|
— |
|
|
$ |
60.00 |
|
|
|
Gas (NYMEX Henry Hub) |
|
|||||||||
|
|
2023 |
|
|
2024 |
|
|
1H25 |
|
|||
Swaps |
|
|
|
|
|
|
|
|
|
|||
MMBtu per day |
|
|
500 |
|
|
|
500 |
|
|
|
— |
|
Average price ($/MMBtu) |
|
$ |
3.83 |
|
|
$ |
3.41 |
|
|
|
— |
|
Collars |
|
|
|
|
|
|
|
|
|
|||
MMBtu per day |
|
|
8,500 |
|
|
|
11,400 |
|
|
|
11,600 |
|
Average call ($/MMBtu) |
|
$ |
7.93 |
|
|
$ |
7.24 |
|
|
$ |
10.34 |
|
Average put ($/MMBtu) |
|
$ |
4.82 |
|
|
$ |
4.00 |
|
|
$ |
3.31 |
|
THIRD QUARTER 2023 CASH DIVIDEND
The Company's Board of Directors declared a cash dividend of
THIRD QUARTER 2023 EARNINGS CONFERENCE CALL
Sitio will host a conference call at 8:30 a.m. Eastern on Thursday, November 9, 2023, to discuss its third quarter 2023 operating and financial results. Participants can access the call by dialing 1-833-470-1428 in
UPCOMING INVESTOR CONFERENCES
Members of Sitio's management team will be attending the Stephens Annual Investment Conference on November 14, 2023; BofA Securities Global Energy Conference on November 14, 2023; and BofA Securities Leveraged Finance Conference from November 27-29, 2023. Presentation materials associated with these events will be accessible through the Investor Relations section of Sitio's website at www.sitio.com.
FINANCIAL RESULTS
Production Data |
||||||||||||||||
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Production Data: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Crude oil (MBbls) |
|
|
1,617 |
|
|
|
846 |
|
|
|
4,786 |
|
|
|
1,969 |
|
Natural gas (MMcf) |
|
|
6,203 |
|
|
|
2,916 |
|
|
|
17,214 |
|
|
|
6,481 |
|
NGLs (MBbls) |
|
|
744 |
|
|
|
323 |
|
|
|
1,996 |
|
|
|
760 |
|
Total (MBoe)(6:1) |
|
|
3,395 |
|
|
|
1,655 |
|
|
|
9,651 |
|
|
|
3,809 |
|
Average daily production (Boe/d)(6:1) |
|
|
36,900 |
|
|
|
17,990 |
|
|
|
35,349 |
|
|
|
13,950 |
|
Average Realized Prices: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Crude oil (per Bbl) |
|
$ |
80.21 |
|
|
$ |
93.81 |
|
|
$ |
75.11 |
|
|
$ |
98.12 |
|
Natural gas (per Mcf) |
|
$ |
1.54 |
|
|
$ |
6.55 |
|
|
$ |
1.90 |
|
|
$ |
6.05 |
|
NGLs (per Bbl) |
|
$ |
18.14 |
|
|
$ |
31.98 |
|
|
$ |
19.39 |
|
|
$ |
36.68 |
|
Combined (per Boe) |
|
$ |
45.00 |
|
|
$ |
65.71 |
|
|
$ |
44.65 |
|
|
$ |
68.33 |
|
Average Realized Prices After Effects of Derivative Settlements: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Crude oil (per Bbl) |
|
$ |
82.21 |
|
|
$ |
97.32 |
|
|
$ |
77.95 |
|
|
$ |
99.48 |
|
Natural gas (per Mcf) |
|
$ |
1.84 |
|
|
$ |
6.46 |
|
|
$ |
2.20 |
|
|
$ |
5.99 |
|
NGLs (per Bbl) |
|
$ |
18.14 |
|
|
$ |
31.98 |
|
|
$ |
19.39 |
|
|
$ |
36.68 |
|
Combined (per Boe) |
|
$ |
46.49 |
|
|
$ |
67.36 |
|
|
$ |
46.59 |
|
|
$ |
68.93 |
|
Selected Expense Metrics |
||||||||
|
|
Three Months Ended
|
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Severance and ad valorem taxes |
|
|
7.9 |
% |
|
|
6.6 |
% |
Depreciation, depletion and amortization ($/Boe) |
|
$ |
23.78 |
|
|
$ |
19.34 |
|
General and administrative ($/Boe) |
|
$ |
3.55 |
|
|
$ |
8.08 |
|
Cash G&A ($/Boe) |
|
$ |
2.19 |
|
|
$ |
2.80 |
|
Interest expense, net ($/Boe) |
|
$ |
7.77 |
|
|
$ |
9.05 |
|
Condensed Consolidated Balance Sheets (In thousands except par and share amounts) |
||||||||
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
. |
|
(Unaudited) |
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
1,339 |
|
|
$ |
18,818 |
|
Accrued revenue and accounts receivable |
|
|
116,088 |
|
|
|
142,010 |
|
Prepaid assets |
|
|
13,800 |
|
|
|
12,489 |
|
Derivative asset |
|
|
7,521 |
|
|
|
18,874 |
|
Total current assets |
|
|
138,748 |
|
|
|
192,191 |
|
|
|
|
|
|
|
|
||
Property and equipment |
|
|
|
|
|
|
||
Oil and natural gas properties, successful efforts method: |
|
|
|
|
|
|
||
Unproved properties |
|
|
3,009,429 |
|
|
|
3,244,436 |
|
Proved properties |
|
|
2,431,742 |
|
|
|
1,926,214 |
|
Other property and equipment |
|
|
3,440 |
|
|
|
3,421 |
|
Accumulated depreciation, depletion, amortization, and impairment |
|
|
(471,549 |
) |
|
|
(223,214 |
) |
Total property and equipment, net |
|
|
4,973,062 |
|
|
|
4,950,857 |
|
|
|
|
|
|
|
|
||
Long-term assets |
|
|
|
|
|
|
||
Long-term derivative asset |
|
|
2,805 |
|
|
|
13,379 |
|
Deferred financing costs |
|
|
11,849 |
|
|
|
7,082 |
|
Operating lease right-of-use asset |
|
|
4,150 |
|
|
|
5,679 |
|
Other long-term assets |
|
|
504 |
|
|
|
1,714 |
|
Total long-term assets |
|
|
19,308 |
|
|
|
27,854 |
|
TOTAL ASSETS |
|
$ |
5,131,118 |
|
|
$ |
5,170,902 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
$ |
21,939 |
|
|
$ |
21,899 |
|
Warrant liability |
|
|
— |
|
|
|
2,950 |
|
Operating lease liability |
|
|
1,350 |
|
|
|
1,563 |
|
Total current liabilities |
|
|
23,289 |
|
|
|
26,412 |
|
|
|
|
|
|
|
|
||
Long-term liabilities |
|
|
|
|
|
|
||
Long-term debt |
|
|
996,460 |
|
|
|
938,896 |
|
Deferred tax liability |
|
|
333,467 |
|
|
|
313,607 |
|
Non-current operating lease liability |
|
|
3,907 |
|
|
|
5,303 |
|
Other long-term liabilities |
|
|
1,189 |
|
|
|
89 |
|
Total long-term liabilities |
|
|
1,335,023 |
|
|
|
1,257,895 |
|
|
|
|
|
|
|
|
||
Total liabilities |
|
|
1,358,312 |
|
|
|
1,284,307 |
|
|
|
|
|
|
|
|
||
Equity |
|
|
|
|
|
|
||
Class A Common Stock, par value |
|
|
8 |
|
|
|
8 |
|
Class C Common Stock, par value |
|
|
8 |
|
|
|
7 |
|
Additional paid-in capital |
|
|
1,790,492 |
|
|
|
1,750,640 |
|
Accumulated deficit |
|
|
(109,596 |
) |
|
|
(9,203 |
) |
Class A Treasury Shares, 0 and 633,005 shares at September 30, 2023 and December 31, 2022, respectively |
|
|
— |
|
|
|
(19,085 |
) |
Class C Treasury Shares, 26,137 and 0 shares at September 30, 2023 and December 31, 2022, respectively |
|
|
(677 |
) |
|
|
— |
|
Noncontrolling interest |
|
|
2,092,571 |
|
|
|
2,164,228 |
|
Total equity |
|
|
3,772,806 |
|
|
|
3,886,595 |
|
|
|
|
|
|
|
|
||
TOTAL LIABILITIES AND EQUITY |
|
$ |
5,131,118 |
|
|
$ |
5,170,902 |
|
Unaudited Condensed Consolidated Statements of Income (In thousands, except per share amounts) |
||||||||||||||||
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil, natural gas and natural gas liquids revenues |
|
$ |
152,766 |
|
|
$ |
108,761 |
|
|
$ |
430,887 |
|
|
$ |
260,219 |
|
Lease bonus and other income |
|
|
3,944 |
|
|
|
6,736 |
|
|
|
13,115 |
|
|
|
9,445 |
|
Total revenues |
|
|
156,710 |
|
|
|
115,497 |
|
|
|
444,002 |
|
|
|
269,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Management fees to affiliates |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,241 |
|
Depreciation, depletion and amortization |
|
|
80,716 |
|
|
|
32,005 |
|
|
|
222,718 |
|
|
|
67,302 |
|
General and administrative |
|
|
12,044 |
|
|
|
13,381 |
|
|
|
37,786 |
|
|
|
24,117 |
|
Severance and ad valorem taxes |
|
|
12,124 |
|
|
|
7,215 |
|
|
|
32,927 |
|
|
|
18,019 |
|
Impairment of oil and natural gas properties |
|
|
— |
|
|
|
— |
|
|
|
25,617 |
|
|
|
— |
|
Total operating expenses |
|
|
104,884 |
|
|
|
52,601 |
|
|
|
319,048 |
|
|
|
112,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income from operations |
|
|
51,826 |
|
|
|
62,896 |
|
|
|
124,954 |
|
|
|
156,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
(26,373 |
) |
|
|
(14,986 |
) |
|
|
(71,735 |
) |
|
|
(18,096 |
) |
Change in fair value of warrant liability |
|
|
8 |
|
|
|
536 |
|
|
|
2,950 |
|
|
|
3,842 |
|
Loss on extinguishment of debt |
|
|
(687 |
) |
|
|
(11,487 |
) |
|
|
(1,470 |
) |
|
|
(11,487 |
) |
Commodity derivatives gains (losses) |
|
|
(24,125 |
) |
|
|
34,613 |
|
|
|
(3,250 |
) |
|
|
53,508 |
|
Interest rate derivatives gains |
|
|
9 |
|
|
|
— |
|
|
|
456 |
|
|
|
— |
|
Net income before taxes |
|
|
658 |
|
|
|
71,572 |
|
|
|
51,905 |
|
|
|
184,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
(383 |
) |
|
|
(2,561 |
) |
|
|
(6,884 |
) |
|
|
(5,206 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
|
275 |
|
|
|
69,011 |
|
|
|
45,021 |
|
|
|
179,546 |
|
Net income attributable to Predecessor |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(78,104 |
) |
Net income attributable to temporary equity |
|
|
— |
|
|
|
(59,872 |
) |
|
|
— |
|
|
|
(86,143 |
) |
Net (income) loss attributable to noncontrolling interest |
|
|
12 |
|
|
|
— |
|
|
|
(22,877 |
) |
|
|
— |
|
Net income attributable to Class A stockholders |
|
$ |
287 |
|
|
$ |
9,139 |
|
|
$ |
22,144 |
|
|
$ |
15,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income per Class A common share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.00 |
|
|
$ |
0.70 |
|
|
$ |
0.26 |
|
|
$ |
1.19 |
|
Diluted |
|
$ |
0.00 |
|
|
$ |
0.70 |
|
|
$ |
0.26 |
|
|
$ |
1.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average Class A common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
81,712 |
|
|
|
12,703 |
|
|
|
80,984 |
|
|
|
12,665 |
|
Diluted |
|
|
157,260 |
|
|
|
12,703 |
|
|
|
80,984 |
|
|
|
12,665 |
|
Unaudited Condensed Consolidated Statements of Cash Flow (In thousands) |
||||||||
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
45,021 |
|
|
$ |
179,546 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation, depletion and amortization |
|
|
222,718 |
|
|
|
67,302 |
|
Amortization of deferred financing costs and long-term debt discount |
|
|
4,275 |
|
|
|
5,419 |
|
Share-based compensation |
|
|
14,474 |
|
|
|
4,947 |
|
Change in fair value of warrant liability |
|
|
(2,950 |
) |
|
|
(3,842 |
) |
Loss on extinguishment of debt |
|
|
1,470 |
|
|
|
11,487 |
|
Impairment of oil and natural gas properties |
|
|
25,617 |
|
|
|
— |
|
Commodity derivative (gains) losses |
|
|
3,250 |
|
|
|
(53,508 |
) |
Net cash received for commodity derivative settlements |
|
|
18,730 |
|
|
|
2,239 |
|
Interest rate derivative gains |
|
|
(456 |
) |
|
|
— |
|
Net cash received for interest rate derivative settlements |
|
|
403 |
|
|
|
— |
|
Deferred tax expense (benefit) |
|
|
(15,107 |
) |
|
|
2,645 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
||
Accrued revenue and accounts receivable |
|
|
26,188 |
|
|
|
(29,785 |
) |
Prepaid assets |
|
|
13,187 |
|
|
|
(1,903 |
) |
Other long-term assets |
|
|
1,866 |
|
|
|
(115 |
) |
Accounts payable and accrued expenses |
|
|
(3,131 |
) |
|
|
(12,986 |
) |
Due to affiliates |
|
|
— |
|
|
|
(380 |
) |
Operating lease liabilities and other long-term liabilities |
|
|
(737 |
) |
|
|
9 |
|
Net cash provided by operating activities |
|
|
354,818 |
|
|
|
171,075 |
|
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Acquisition of Falcon, net of cash |
|
|
— |
|
|
|
4,484 |
|
Predecessor cash not contributed in the Falcon Merger |
|
|
— |
|
|
|
(15,229 |
) |
Purchases of oil and gas properties, net of post-close adjustments |
|
|
(172,070 |
) |
|
|
(558,062 |
) |
Purchases of other property and equipment |
|
|
(19 |
) |
|
|
(819 |
) |
Net cash used in investing activities |
|
|
(172,089 |
) |
|
|
(569,626 |
) |
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Borrowings on credit facilities |
|
|
588,500 |
|
|
|
196,895 |
|
Repayments on credit facilities |
|
|
(497,500 |
) |
|
|
(147,000 |
) |
Borrowings on Bridge Loan Facility |
|
|
— |
|
|
|
425,000 |
|
Repayments on Bridge Loan Facility |
|
|
— |
|
|
|
(425,000 |
) |
Bridge Loan Facility issuance costs |
|
|
— |
|
|
|
(14,909 |
) |
Borrowings on 2026 Senior Notes |
|
|
— |
|
|
|
444,500 |
|
Repayments on 2026 Senior Notes |
|
|
(33,750 |
) |
|
|
— |
|
2026 Senior Notes issuance costs |
|
|
(351 |
) |
|
|
(4,169 |
) |
Distribution paid to Temporary Equity |
|
|
— |
|
|
|
(50,510 |
) |
Distributions to noncontrolling interest |
|
|
(121,924 |
) |
|
|
(13,318 |
) |
Dividends paid to Class A stockholders |
|
|
(121,555 |
) |
|
|
(9,017 |
) |
Dividend equivalent rights paid |
|
|
(982 |
) |
|
|
(283 |
) |
Cash paid for taxes related to net settlement of share-based compensation awards |
|
|
(3,432 |
) |
|
|
— |
|
Payments of deferred financing costs |
|
|
(9,214 |
) |
|
|
(3,964 |
) |
Other |
|
|
— |
|
|
|
(1,241 |
) |
Net cash (used in) provided by financing activities |
|
|
(200,208 |
) |
|
|
396,984 |
|
|
|
|
|
|
|
|
||
Net change in cash and cash equivalents |
|
|
(17,479 |
) |
|
|
(1,567 |
) |
Cash and cash equivalents, beginning of period |
|
|
18,818 |
|
|
|
12,379 |
|
Cash and cash equivalents, end of period |
|
$ |
1,339 |
|
|
$ |
10,812 |
|
Non-GAAP financial measures
Adjusted EBITDA, Pro Forma Adjusted EBITDA, Discretionary Cash Flow, Pro Forma Discretionary Cash Flow and Cash G&A are non-GAAP supplemental financial measures used by our management and by external users of our financial statements such as investors, research analysts and others to assess the financial performance of our assets and their ability to sustain dividends over the long term without regard to financing methods, capital structure or historical cost basis. Sitio believes that these non-GAAP financial measures provide useful information to Sitio's management and external users because they allow for a comparison of operating performance on a consistent basis across periods.
We define Adjusted EBITDA as net income plus (a) interest expense, (b) provisions for taxes, (c) depreciation, depletion and amortization, (d) non-cash share-based compensation expense, (e) impairment of oil and natural gas properties, (f) gains or losses on unsettled derivative instruments, (g) change in fair value of the warrant liability, (h) management fee to affiliates, (i) loss on debt extinguishment, (j) merger-related transaction costs and (k) write off of financing costs.
We define Pro Forma Adjusted EBITDA as Adjusted EBITDA plus Cash Acquisitions EBITDA from July 1, 2023 to September 30, 2023 that is not included in Adjusted EBITDA for the three months ended September 30, 2023.
We define Discretionary Cash Flow as Adjusted EBITDA, less cash interest expense and cash taxes.
We define Pro Forma Discretionary Cash Flow as Discretionary Cash Flow plus Cash Acquisitions Discretionary Cash Flow from July 1, 2023 to September 30, 2023 that is not included in Discretionary Cash Flow for the three months ended September 30, 2023.
We define Cash G&A as general and administrative expense less (a) non-cash share-based compensation expense, (b) merger-related transaction costs and (c) rental income.
These non-GAAP financial measures do not represent and should not be considered an alternative to, or more meaningful than, their most directly comparable GAAP financial measures or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Non-GAAP financial measures have important limitations as analytical tools because they exclude some but not all items that affect the most directly comparable GAAP financial measure. Our computations of Adjusted EBITDA, Pro Forma Adjusted EBITDA, Discretionary Cash Flow, Pro Forma Discretionary Cash Flow and Cash G&A may differ from computations of similarly titled measures of other companies.
The following table presents a reconciliation of Adjusted EBITDA and Pro Forma Adjusted EBITDA to the most directly comparable GAAP financial measure for the period indicated (in thousands).
|
|
Three Months Ended
|
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Net income |
|
$ |
275 |
|
|
$ |
69,011 |
|
Interest expense, net |
|
|
26,373 |
|
|
|
14,986 |
|
Income tax expense |
|
|
383 |
|
|
|
2,561 |
|
Depreciation, depletion and amortization |
|
|
80,716 |
|
|
|
32,005 |
|
EBITDA |
|
$ |
107,747 |
|
|
$ |
118,563 |
|
Non-cash share-based compensation expense |
|
|
4,368 |
|
|
|
3,969 |
|
Losses (gains) on unsettled derivative instruments |
|
|
29,497 |
|
|
|
(31,954 |
) |
Change in fair value of warrant liability |
|
|
(8 |
) |
|
|
(536 |
) |
Loss on debt extinguishment |
|
|
687 |
|
|
|
11,487 |
|
Merger-related transaction costs |
|
|
123 |
|
|
|
3,599 |
|
Write off of financing costs |
|
|
— |
|
|
|
1,180 |
|
Adjusted EBITDA |
|
$ |
142,414 |
|
|
$ |
106,308 |
|
Cash Acquisitions EBITDA |
|
|
1,144 |
|
|
|
— |
|
Pro Forma Adjusted EBITDA |
|
$ |
143,558 |
|
|
$ |
106,308 |
|
The following table presents a reconciliation of Discretionary Cash Flow and Pro Forma Discretionary Cash Flow to the most directly comparable GAAP financial measure for the period indicated (in thousands).
|
|
Three Months Ended
|
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Cash flow from operations |
|
$ |
122,141 |
|
|
$ |
82,644 |
|
Interest expense, net |
|
|
26,373 |
|
|
|
14,986 |
|
Income tax expense |
|
|
383 |
|
|
|
2,561 |
|
Deferred tax expense |
|
|
7,686 |
|
|
|
(2,512 |
) |
Changes in operating assets and liabilities |
|
|
(12,810 |
) |
|
|
8,692 |
|
Amortization of deferred financing costs and long-term debt discount |
|
|
(1,482 |
) |
|
|
(3,662 |
) |
Merger-related transaction costs |
|
|
123 |
|
|
|
3,599 |
|
Adjusted EBITDA |
|
$ |
142,414 |
|
|
$ |
106,308 |
|
Less: |
|
|
|
|
|
|
||
Cash interest expense |
|
|
24,694 |
|
|
|
11,516 |
|
Cash taxes |
|
|
457 |
|
|
|
1,389 |
|
Discretionary Cash Flow |
|
$ |
117,263 |
|
|
$ |
93,403 |
|
Cash Acquisitions Discretionary Cash Flow |
|
$ |
1,144 |
|
|
|
— |
|
Pro Forma Discretionary Cash Flow |
|
$ |
118,407 |
|
|
$ |
93,403 |
|
The following table presents a reconciliation of Cash G&A to the most directly comparable GAAP financial measure for the period indicated (in thousands).
|
|
Three Months Ended
|
|
|||||
|
|
2023 |
|
|
2022 |
|
||
General and administrative expense |
|
$ |
12,044 |
|
|
$ |
13,381 |
|
Less: |
|
|
|
|
|
|
||
Non-cash share-based compensation expense |
|
|
4,368 |
|
|
|
3,969 |
|
Merger-related transaction costs |
|
|
123 |
|
|
|
3,599 |
|
Rental income |
|
|
136 |
|
|
|
— |
|
Write off of financing costs |
|
|
— |
|
|
|
1,180 |
|
Cash G&A |
|
$ |
7,417 |
|
|
$ |
4,633 |
|
About Sitio Royalties Corp.
Sitio is a shareholder returns-driven company focused on large-scale consolidation of high-quality oil & gas mineral and royalty interests across premium basins, with a diversified set of top-tier operators. With a clear objective of generating cash flow from operations that can be returned to stockholders and reinvested, Sitio has accumulated over 270,000 NRAs through the consummation of over 190 acquisitions to date. More information about Sitio is available at www.sitio.com.
Forward-Looking Statements
This news release contains statements that may constitute “forward-looking statements” for purposes of federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “seeks,” “possible,” “potential,” “predict,” “project,” “prospects,” “guidance,” “outlook,” “should,” “would,” “will,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about certain future plans, expectations and objectives for the Company’s operations, including statements about any share repurchase programs, the implementation thereof and the intended benefits, financial and operational guidance, strategy, synergies, certain levels of production, future operations, financial position, prospects, and plans. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties that could cause our actual results, performance, and financial condition to differ materially from our expectations and predictions. Factors that could materially impact such forward-looking statements include, but are not limited to: commodity price volatility, the global economic uncertainty related to the large-scale invasion of
View source version on businesswire.com: https://www.businesswire.com/news/home/20231108382654/en/
IR contact:
Ross Wong
(720) 640–7647
IR@sitio.com
Source: Sitio Royalties Corp.
FAQ
What is the pro forma average quarterly production volume for Q3 2023?
What is the dividend per share of Class A Common Stock for Q3 2023?
What is the total purchase price for the sale of Appalachia and Anadarko Basin assets?
What are the key financial highlights for Q3 2023?
What is the interest rate on the new $600 million 7.875% Senior Notes due 2028?
