FORT
WORTH, Texas, May 9, 2023
/PRNewswire/ -- PHX MINERALS INC., "PHX" or the "Company" (NYSE:
PHX), today reported financial and operating results for the
quarter ended March 31, 2023.
Summary of Results for the Quarter Ended March 31, 2023
- Net income was $9.6 million, or
$0.27 per share, compared to net
income of $3.3 million, or
$0.09 per share, for the quarter
ended Dec. 31, 2022, and net loss of
($4.0) million, or $(0.12) per share, for the quarter ended
March 31, 2022.
- Adjusted pretax net income(1) was $4.7 million, or $0.13 per share, compared to $2.3 million, or $0.07 per share, for the quarter ended
Dec. 31, 2022, and $3.0 million, or $0.09 per share, for the quarter ended
March 31, 2022.
- Adjusted EBITDA(1) was $7.7
million, compared to $5.3
million for the quarter ended Dec.
31, 2022, and $5.8 million for
the quarter ended March 31,
2022.
- Royalty production volumes increased 29% to a record 2,094
Mmcfe compared to the quarter ended Dec. 31,
2022, and increased 35% compared to the quarter ended
March 31, 2022.
- Total production volumes increased 12% to 2,482 Mmcfe compared
to the quarter ended Dec. 31, 2022,
and increased 1% compared to the quarter ended March 31, 2022.
- Converted 117 gross (0.46 net) wells to producing status,
compared to 60 gross (0.27 net) during the quarter ended
Dec. 31, 2022 and 108 gross (0.48
net) during the quarter ended March 31,
2022.
- Inventory of 198 gross (0.65 net) wells in progress as of
March 31, 2023, compared to 203 gross
(0.83 net) as of Dec. 31, 2022.
- Total debt was $26.0 million and
the debt to adjusted EBITDA (TTM) (1) ratio was 0.91x at
March 31, 2023.
- PHX closed on acquisitions totaling 913 net royalty acres
located in the SCOOP and the Haynesville plays for approximately
$10.8 million.
- PHX announced a $0.0225 per share
quarterly dividend, payable on June 6,
2023, to stockholders of record on May 22, 2023.
Subsequent Events
- Subsequent to March 31, 2023, PHX
entered into the fourth amendment to its credit agreement on
May 5, 2023 pursuant to which, among
other changes, the borrowing base under PHX's credit facility will
decrease from $50.0 million to
$45.0 million in connection with its
regularly scheduled semi-annual redetermination. This reduction in
the borrowing base constitutes the periodic redetermination of the
borrowing base scheduled for June 1,
2023 under the terms of the Credit Agreement.
(1) This is a non-GAAP measure. Refer to the Non-GAAP
Reconciliation section.
Chad L. Stephens, President and
CEO, commented, "PHX delivered record royalty volumes and solid
profitability, despite the macro headwinds facing natural gas,
demonstrating the benefits of our risk-mitigated minerals-only
model. The strong sequential improvement compared to the December
quarter underscores what I mentioned on the last earnings release
regarding quarter-to-quarter lumpiness in our results. This is more
reflective of the royalty volume growth potential of our Company.
We have built a portfolio of high-quality mineral assets, and
believe our Haynesville and SCOOP inventory in the core of the
plays will pay dividends in the short and long term across various
natural gas pricing environments. Our inventory of wells in
progress, including permits and wells being drilled or waiting on
completion, continues to be strong, which will translate into
future royalty volumes growth. We remain bullish on a recovery in
natural gas prices into the winter of 2023, as the current
supply-demand imbalances dissipate. As part of our strategy,
we continue to focus on balance sheet management and maintaining
appropriate leverage and ample liquidity. Our minerals-only
strategy, without any significant capital commitments, enables us
to quickly pivot in how we allocate capital, as shown by our lower
debt balance as of March 31 compared
to the prior December 31 quarter.
Lastly, our borrowing base was reduced by $5
million to $45 million. This
is a reflection of lower natural gas prices and not the quality of
our reserves. The decrease in the borrowing base in no way affects
our acquisition strategy or our ability to execute."
Financial
Highlights
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
March 31,
2023
|
|
|
March 31,
2022
|
|
Royalty Interest
Sales
|
|
$
|
10,123,741
|
|
|
$
|
8,878,994
|
|
Working Interest
Sales
|
|
$
|
1,733,506
|
|
|
$
|
5,904,871
|
|
Natural Gas, Oil and
NGL Sales
|
|
$
|
11,857,247
|
|
|
$
|
14,783,865
|
|
|
|
|
|
|
|
|
Gains (Losses) on
Derivative Contracts
|
|
$
|
3,802,820
|
|
|
$
|
(12,983,406)
|
|
Lease Bonuses and
Rental Income
|
|
$
|
313,150
|
|
|
$
|
161,908
|
|
Total
Revenue
|
|
$
|
15,973,217
|
|
|
$
|
1,962,367
|
|
|
|
|
|
|
|
|
Lease Operating
Expense
|
|
|
|
|
|
|
per Working Interest
Mcfe
|
|
$
|
1.40
|
|
|
$
|
1.02
|
|
Transportation,
Gathering and Marketing
|
|
|
|
|
|
|
per Mcfe
|
|
$
|
0.45
|
|
|
$
|
0.61
|
|
Production Tax per
Mcfe
|
|
$
|
0.23
|
|
|
$
|
0.28
|
|
G&A Expense per
Mcfe
|
|
$
|
1.20
|
|
|
$
|
1.12
|
|
Cash G&A Expense
per Mcfe (1)
|
|
$
|
0.95
|
|
|
$
|
0.93
|
|
Interest Expense per
Mcfe
|
|
$
|
0.22
|
|
|
$
|
0.09
|
|
DD&A per
Mcfe
|
|
$
|
0.76
|
|
|
$
|
0.86
|
|
Total Expense per
Mcfe
|
|
$
|
3.08
|
|
|
$
|
3.34
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
$
|
9,553,244
|
|
|
$
|
(4,020,455)
|
|
Adjusted EBITDA
(2)
|
|
$
|
7,740,240
|
|
|
$
|
5,819,415
|
|
|
|
|
|
|
|
|
Cash Flow from
Operations (3)
|
|
$
|
8,933,477
|
|
|
$
|
7,296,330
|
|
CapEx
(4)
|
|
$
|
190,826
|
|
|
$
|
86,671
|
|
CapEx - Mineral
Acquisitions
|
|
$
|
10,236,615
|
|
|
$
|
9,274,447
|
|
|
|
|
|
|
|
|
Borrowing
Base
|
|
$
|
50,000,000
|
|
|
$
|
32,000,000
|
|
Debt
|
|
$
|
26,000,000
|
|
|
$
|
24,000,000
|
|
Debt to Adjusted EBITDA
(TTM) (2)
|
|
|
0.91
|
|
|
|
1.23
|
|
(1)
Cash G&A expense is G&A excluding restricted
stock and deferred director's expense from the adjusted EBITDA
table on page 10.
|
(2) This is a non-GAAP
measure. Refer to the Non-GAAP Reconciliation section.
|
(3) GAAP cash flow from
operations. See page 8.
|
(4) Includes legacy
working interest expenditures and fixtures and
equipment.
|
Operating
Highlights
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
March 31,
2023
|
|
|
March 31,
2022
|
|
Gas Mcf Sold
|
|
1,959,010
|
|
|
|
1,908,030
|
|
Average Sales Price per
Mcf before the
|
|
|
|
|
|
effects of settled
derivative contracts
|
$
|
3.53
|
|
|
$
|
4.47
|
|
Average Sales Price per
Mcf after the
|
|
|
|
|
|
effects of settled
derivative contracts
|
$
|
3.83
|
|
|
$
|
3.28
|
|
% of sales subject to
hedges
|
|
48
|
%
|
|
|
61
|
%
|
Oil Barrels
Sold
|
|
54,107
|
|
|
|
51,631
|
|
Average Sales Price per
Bbl before the
|
|
|
|
|
|
effects of settled
derivative contracts
|
$
|
76.01
|
|
|
$
|
91.26
|
|
Average Sales Price per
Bbl after the
|
|
|
|
|
|
effects of settled
derivative contracts
|
$
|
69.90
|
|
|
$
|
63.77
|
|
% of sales subject to
hedges
|
|
45
|
%
|
|
|
73
|
%
|
NGL Barrels
Sold
|
|
33,104
|
|
|
|
40,371
|
|
Average Sales Price per
Bbl(1)
|
$
|
25.18
|
|
|
$
|
38.05
|
|
|
|
|
|
|
|
Mcfe Sold
|
|
2,482,276
|
|
|
|
2,460,042
|
|
Natural gas, oil and
NGL sales before the
|
|
|
|
|
|
effects of settled
derivative contracts
|
$
|
11,857,247
|
|
|
$
|
14,783,865
|
|
Natural gas, oil and
NGL sales after the
|
|
|
|
|
|
effects of settled
derivative contracts
|
$
|
12,113,923
|
|
|
$
|
11,079,618
|
|
|
|
|
|
|
|
|
(1) There were no
NGL settled derivative contracts during the 2023 and 2022
quarters.
|
Total Production for the last four quarters was as follows:
Quarter
ended
|
|
Mcf Sold
|
|
|
Oil Bbls
Sold
|
|
|
NGL Bbls
Sold
|
|
|
Mcfe Sold
|
|
3/31/2023
|
|
|
1,959,010
|
|
|
|
54,107
|
|
|
|
33,104
|
|
|
|
2,482,276
|
|
12/31/2022
|
|
|
1,669,320
|
|
|
|
52,406
|
|
|
|
38,611
|
|
|
|
2,215,419
|
|
9/30/2022
|
|
|
2,047,614
|
|
|
|
49,902
|
|
|
|
40,761
|
|
|
|
2,591,588
|
|
6/30/2022
|
|
|
1,897,799
|
|
|
|
48,928
|
|
|
|
39,732
|
|
|
|
2,429,760
|
|
Total production volumes attributable to natural gas were 79%
for the quarter ended March 31,
2023.
Royalty Interest Production for the last four quarters was as
follows:
Quarter
ended
|
|
Mcf Sold
|
|
|
Oil Bbls
Sold
|
|
|
NGL Bbls
Sold
|
|
|
Mcfe Sold
|
|
3/31/2023
|
|
|
1,700,974
|
|
|
|
45,395
|
|
|
|
20,063
|
|
|
|
2,093,722
|
|
12/31/2022
|
|
|
1,303,825
|
|
|
|
33,691
|
|
|
|
20,353
|
|
|
|
1,628,089
|
|
9/30/2022
|
|
|
1,525,363
|
|
|
|
32,202
|
|
|
|
20,488
|
|
|
|
1,841,502
|
|
6/30/2022
|
|
|
1,283,737
|
|
|
|
32,562
|
|
|
|
19,369
|
|
|
|
1,595,323
|
|
Royalty production volumes attributable to natural gas were 81%
for the quarter ended March 31,
2023.
Working Interest Production for the last four quarters was as
follows:
Quarter
ended
|
|
Mcf Sold
|
|
|
Oil Bbls
Sold
|
|
|
NGL Bbls
Sold
|
|
|
Mcfe Sold
|
|
3/31/2023
|
|
|
258,036
|
|
|
|
8,712
|
|
|
|
13,041
|
|
|
|
388,554
|
|
12/31/2022
|
|
|
365,495
|
|
|
|
18,715
|
|
|
|
18,258
|
|
|
|
587,330
|
|
9/30/2022
|
|
|
522,251
|
|
|
|
17,700
|
|
|
|
20,273
|
|
|
|
750,086
|
|
6/30/2022
|
|
|
614,062
|
|
|
|
16,366
|
|
|
|
20,363
|
|
|
|
834,437
|
|
Quarter Ended March 31, 2023,
Results
The Company recorded net income of $9.6
million, or $0.27 per share,
for the quarter ended March 31, 2023,
as compared to a net loss of ($4.0)
million, or ($0.12) per share,
for the quarter ended March 31, 2022.
The change in net income was principally the result of increased
gains associated with our hedge contracts and increased gains on
asset sales, partially offset by decreased natural gas, oil and NGL
sales and increased income tax provision.
Natural gas, oil and NGL revenue decreased $2.9 million, or 20%, for the quarter ended
March 31, 2023, compared to the
quarter ended March 31, 2022, due to
decreases in natural gas, oil and NGL prices of 21%, 17% and 34%,
respectively, and a decrease in NGL volumes of 18%, partially
offset by an increase in natural gas and oil volumes of 3% and 5%,
respectively.
The production increase in royalty volumes during the quarter
ended March 31, 2023, as compared to
the quarter ended March 31, 2022,
resulted from new wells in the Haynesville Shale and Bakken plays
coming online. The decrease in working interest volumes resulted
from the divestiture of low-value legacy working interests in the
Eagle Ford Shale in Texas and the
Arkoma Stack in Oklahoma, and
naturally declining production in high-interest wells in the
STACK.
The Company had a net gain on derivative contracts of
$3.8 million in the quarter ended
March 31, 2023, of which $0.6 million is a gain on settled derivatives and
$3.2 million is a non-cash gain on
derivatives, as compared to a net loss of ($13.0) million in the quarter ended March 31, 2022. Gain on settled derivative
contracts for the quarter ended March 31,
2023, excludes $0.4 million of
cash paid to settle off-market derivative contracts. The total cash
received to settle hedge contracts during the quarter ended
March 31, 2023 was $0.3 million. The change in net gain on
derivative contracts was due to the Company's settlements of
natural gas and oil collars and fixed price swaps and the change in
valuation caused by the difference in March
31, 2023 pricing relative to the strike price on open
derivative contracts.
The Company closed on the previously announced divestitures of
non-operated working interest in the Arkoma Stack and Eagle Ford
plays, which resulted in a net gain on sale of $4.2 million recognized in the quarter ended
March 31, 2023.
The 8% decrease in total cost per Mcfe in the quarter ended
March 31, 2023, relative to the
quarter ended March 31, 2022, was
primarily driven by a decrease in lease operating expense and
transportation, gathering and marketing expense.
Operations Update
During the quarter ended March 31,
2023, the Company converted 117 gross (0.46 net)
wells to producing status, including 45 gross (0.34 net) wells in
the Haynesville, 20 gross (0.03 net) wells in the SCOOP and 4 gross
(0.01 net) in the Bakken, compared to 108 gross (0.48 net) wells in
the quarter ended March 31, 2022.
At March 31, 2023, the Company had
a total of 198 gross (0.65 net) wells in progress across its
mineral positions and 86 gross (0.24 net) active permitted wells,
compared to 203 gross (0.83 net) wells in progress and 76 gross
(0.22 net) active permitted wells at Dec.
31, 2022. As of April 10, 2023, 26 rigs were operating
on the Company's acreage with 95 rigs operating within 2.5 miles of
its acreage.
|
|
|
|
|
|
|
Bakken/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
|
Arkoma
|
|
|
|
|
|
|
|
|
|
|
|
SCOOP
|
|
|
STACK
|
|
|
Forks
|
|
|
Stack
|
|
|
Haynesville
|
|
|
Other
|
|
|
Total
|
|
As of March 31,
2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Wells in Progress
on PHX Acreage (1)
|
|
68
|
|
|
|
21
|
|
|
|
9
|
|
|
|
5
|
|
|
|
90
|
|
|
|
5
|
|
|
|
198
|
|
Net Wells in Progress
on PHX Acreage (1)
|
|
0.205
|
|
|
|
0.028
|
|
|
|
0.001
|
|
|
|
0.004
|
|
|
|
0.398
|
|
|
|
0.012
|
|
|
|
0.648
|
|
Gross Active Permits on
PHX Acreage
|
|
27
|
|
|
|
12
|
|
|
|
3
|
|
|
|
5
|
|
|
|
31
|
|
|
|
8
|
|
|
|
86
|
|
Net Active Permits on
PHX Acreage
|
|
0.025
|
|
|
|
0.053
|
|
|
|
0.001
|
|
|
|
0.002
|
|
|
|
0.130
|
|
|
|
0.030
|
|
|
|
0.241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 10,
2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rigs Present on PHX
Acreage
|
|
8
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15
|
|
|
|
1
|
|
|
|
26
|
|
Rigs Within 2.5 Miles
of PHX Acreage
|
|
18
|
|
|
|
18
|
|
|
|
5
|
|
|
|
1
|
|
|
|
40
|
|
|
|
13
|
|
|
|
95
|
|
|
(1) Wells in
progress includes drilling wells and drilled but uncompleted wells,
or DUCs.
|
Leasing Activity
During the quarter ended March 31,
2023, the Company leased 512 net mineral acres for an
average bonus payment of $978 per net
mineral acre and an average royalty of 24%.
Acquisition and Divestiture Update
During the quarter ended March 31,
2023, the Company purchased 913 net royalty acres for
approximately $10.8 million and sold
757 net mineral acres, which were outside the Company's core focus
areas and predominantly undeveloped and unleased, for approximately
$0.3 million. The Company also sold
268 gross non-operated working interest wellbores for approximately
$10.7 million.
|
|
Acquisitions
|
|
Three Months Ended
March 31, 2023
|
|
SCOOP
|
|
|
Haynesville
|
|
|
Other
|
|
|
Total
|
|
Net Mineral Acres
Purchased
|
|
|
240
|
|
|
|
361
|
|
|
|
-
|
|
|
|
601
|
|
Net Royalty Acres
Purchased
|
|
|
345
|
|
|
|
568
|
|
|
|
-
|
|
|
|
913
|
|
Quarterly Conference Call
PHX will host a conference call to discuss the Company's results
for the quarter ended March 31,
2023, at 11 a.m. EDT tomorrow,
May 10, 2023. 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 13738368.
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
Operations
|
|
|
Three Months Ended
March 31,
|
|
|
2023
|
|
|
2022
|
|
Revenues:
|
|
|
Natural gas, oil and
NGL sales
|
$
|
11,857,247
|
|
|
$
|
14,783,865
|
|
Lease bonuses and
rental income
|
|
313,150
|
|
|
|
161,908
|
|
Gains (losses) on
derivative contracts
|
|
3,802,820
|
|
|
|
(12,983,406)
|
|
|
|
15,973,217
|
|
|
|
1,962,367
|
|
Costs and
expenses:
|
|
|
|
|
|
Lease operating
expenses
|
|
545,767
|
|
|
|
929,454
|
|
Transportation,
gathering and marketing
|
|
1,128,756
|
|
|
|
1,488,518
|
|
Production
taxes
|
|
581,433
|
|
|
|
697,393
|
|
Depreciation,
depletion and amortization
|
|
1,889,990
|
|
|
|
2,121,116
|
|
Provision for
impairment
|
|
2,073
|
|
|
|
-
|
|
Interest
expense
|
|
557,473
|
|
|
|
230,212
|
|
General and
administrative
|
|
2,981,909
|
|
|
|
2,744,264
|
|
Losses (gains) on
asset sales and other
|
|
(4,334,428)
|
|
|
|
(2,261,135)
|
|
Total costs and
expenses
|
|
3,352,973
|
|
|
|
5,949,822
|
|
Income (loss) before
provision (benefit) for income taxes
|
|
12,620,244
|
|
|
|
(3,987,455)
|
|
|
|
|
|
|
|
Provision (benefit) for
income taxes
|
|
3,067,000
|
|
|
|
33,000
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
9,553,244
|
|
|
$
|
(4,020,455)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per common share
|
$
|
0.27
|
|
|
$
|
(0.12)
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
Basic
|
|
35,935,791
|
|
|
|
34,292,455
|
|
Diluted
|
|
35,935,791
|
|
|
|
34,292,455
|
|
|
|
|
|
|
|
Dividends per share
of
|
|
|
|
|
|
common stock paid in
period
|
$
|
0.0225
|
|
|
$
|
0.015
|
|
|
|
|
|
|
|
Balance
Sheets
|
|
|
March 31,
2023
|
|
|
Dec. 31,
2022
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,161,460
|
|
|
$
|
2,115,652
|
|
Natural gas, oil, and
NGL sales receivables (net of $0
|
|
7,455,323
|
|
|
|
9,783,996
|
|
allowance for
uncollectable accounts)
|
|
|
|
|
|
Refundable income
taxes
|
|
776,077
|
|
|
|
-
|
|
Derivative contracts,
net
|
|
2,040,999
|
|
|
|
-
|
|
Held for sale
assets
|
|
-
|
|
|
|
6,420,051
|
|
Other
|
|
829,818
|
|
|
|
1,543,956
|
|
Total current
assets
|
|
12,263,677
|
|
|
|
19,863,655
|
|
|
|
|
|
|
|
Properties and
equipment at cost, based on
|
|
|
|
|
|
successful
efforts accounting:
|
|
|
|
|
|
Producing natural gas
and oil properties
|
|
187,426,879
|
|
|
|
181,431,139
|
|
Non-producing natural
gas and oil properties
|
|
61,931,041
|
|
|
|
57,781,644
|
|
Other
|
|
1,245,782
|
|
|
|
1,122,436
|
|
|
|
250,603,702
|
|
|
|
240,335,219
|
|
Less accumulated
depreciation, depletion and amortization
|
|
(108,382,522)
|
|
|
|
(107,085,212)
|
|
Net properties and
equipment
|
|
142,221,180
|
|
|
|
133,250,007
|
|
|
|
|
|
|
|
Derivative contracts,
net
|
|
112,456
|
|
|
|
141,345
|
|
Operating lease
right-of-use assets
|
|
674,095
|
|
|
|
706,871
|
|
Other, net
|
|
652,966
|
|
|
|
695,399
|
|
Total assets
|
$
|
155,924,374
|
|
|
$
|
154,657,277
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
308,508
|
|
|
$
|
504,466
|
|
Derivative contracts,
net
|
|
-
|
|
|
|
1,534,034
|
|
Income taxes
payable
|
|
-
|
|
|
|
576,427
|
|
Current portion of
operating lease liability
|
|
222,001
|
|
|
|
217,656
|
|
Held for sale
liabilities
|
|
-
|
|
|
|
889,155
|
|
Accrued liabilities
and other
|
|
1,860,808
|
|
|
|
3,121,522
|
|
Total current
liabilities
|
|
2,391,317
|
|
|
|
6,843,260
|
|
|
|
|
|
|
|
Long-term
debt
|
|
26,000,000
|
|
|
|
33,300,000
|
|
Deferred income taxes,
net
|
|
5,387,906
|
|
|
|
2,453,906
|
|
Asset retirement
obligations
|
|
1,032,257
|
|
|
|
1,027,777
|
|
Operating lease
liability, net of current portion
|
|
871,971
|
|
|
|
929,208
|
|
|
|
|
|
|
|
Total
liabilities
|
|
35,683,451
|
|
|
|
44,554,151
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common Stock, $0.01666
par value; 54,000,500 shares authorized and
|
|
|
|
|
|
35,938,206 issued at
March 31, 2023; 54,000,500 shares authorized
|
|
|
|
|
|
and 35,938,206 issued
at Dec. 31, 2022
|
|
598,731
|
|
|
|
598,731
|
|
Capital in excess of
par value
|
|
43,134,738
|
|
|
|
43,344,916
|
|
Deferred directors'
compensation
|
|
1,313,162
|
|
|
|
1,541,070
|
|
Retained
earnings
|
|
78,428,984
|
|
|
|
68,925,774
|
|
|
|
123,475,615
|
|
|
|
114,410,491
|
|
Less treasury stock,
at cost; 225,484 shares at March 31,
|
|
|
|
|
|
2023, and 300,272
shares at Dec. 31, 2022
|
|
(3,234,692)
|
|
|
|
(4,307,365)
|
|
Total stockholders'
equity
|
|
120,240,923
|
|
|
|
110,103,126
|
|
Total liabilities and
stockholders' equity
|
$
|
155,924,374
|
|
|
$
|
154,657,277
|
|
Condensed Statements of
Cash Flows
|
|
|
Three Months Ended
March 31,
|
|
|
2023
|
|
|
2022
|
|
Operating
Activities
|
|
|
Net income
(loss)
|
$
|
9,553,244
|
|
|
$
|
(4,020,455)
|
|
Adjustments to
reconcile net income (loss) to net cash provided
|
|
|
|
|
|
by operating
activities:
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
1,889,990
|
|
|
|
2,121,116
|
|
Impairment of
producing properties
|
|
2,073
|
|
|
|
-
|
|
Provision for deferred
income taxes
|
|
2,934,000
|
|
|
|
(339,000)
|
|
Gain from leasing fee
mineral acreage
|
|
(313,150)
|
|
|
|
(160,829)
|
|
Proceeds from leasing
fee mineral acreage
|
|
373,878
|
|
|
|
233,744
|
|
Net (gain) loss on
sales of assets
|
|
(4,417,983)
|
|
|
|
(2,334,644)
|
|
Directors' deferred
compensation expense
|
|
53,589
|
|
|
|
35,461
|
|
Total (gain) loss on
derivative contracts
|
|
(3,802,820)
|
|
|
|
12,983,406
|
|
Cash receipts
(payments) on settled derivative contracts
|
|
816,838
|
|
|
|
(176,510)
|
|
Restricted stock award
expense
|
|
580,998
|
|
|
|
433,137
|
|
Other
|
|
35,904
|
|
|
|
(8,655)
|
|
Cash provided (used)
by changes in assets and liabilities:
|
|
|
|
|
|
Natural gas, oil and
NGL sales receivables
|
|
2,328,673
|
|
|
|
(1,431,299)
|
|
Other current
assets
|
|
123,948
|
|
|
|
120,291
|
|
Accounts
payable
|
|
(175,207)
|
|
|
|
4,062
|
|
Income taxes
receivable
|
|
(776,077)
|
|
|
|
-
|
|
Other non-current
assets
|
|
40,576
|
|
|
|
54,722
|
|
Income taxes
payable
|
|
(576,427)
|
|
|
|
(246,206)
|
|
Accrued
liabilities
|
|
261,430
|
|
|
|
27,989
|
|
Total
adjustments
|
|
(619,767)
|
|
|
|
11,316,785
|
|
Net cash provided by
operating activities
|
|
8,933,477
|
|
|
|
7,296,330
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
Capital
expenditures
|
|
(190,826)
|
|
|
|
(86,671)
|
|
Acquisition of
minerals and overriding royalty interests
|
|
(10,236,615)
|
|
|
|
(9,274,447)
|
|
Net proceeds from
sales of assets
|
|
9,210,005
|
|
|
|
2,294,480
|
|
Net cash provided
(used) by investing activities
|
|
(1,217,436)
|
|
|
|
(7,066,638)
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
Borrowings under
credit facility
|
|
6,000,000
|
|
|
|
6,000,000
|
|
Payments of loan
principal
|
|
(13,300,000)
|
|
|
|
(2,000,000)
|
|
Net proceeds from
equity issuance
|
|
-
|
|
|
|
(40,150)
|
|
Cash receipts from
(payments on) off-market derivative contracts
|
|
(560,162)
|
|
|
|
(3,527,738)
|
|
Payments of
dividends
|
|
(810,071)
|
|
|
|
(517,479)
|
|
Net cash provided
(used) by financing activities
|
|
(8,670,233)
|
|
|
|
(85,367)
|
|
|
|
|
|
|
|
Increase (decrease) in
cash and cash equivalents
|
|
(954,192)
|
|
|
|
144,325
|
|
Cash and cash
equivalents at beginning of period
|
|
2,115,652
|
|
|
|
1,559,350
|
|
Cash and cash
equivalents at end of period
|
$
|
1,161,460
|
|
|
$
|
1,703,675
|
|
|
|
|
|
|
|
Supplemental
Disclosures of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid (net of
capitalized interest)
|
$
|
611,922
|
|
|
$
|
208,000
|
|
Income taxes paid (net
of refunds received)
|
$
|
1,485,505
|
|
|
$
|
618,206
|
|
|
|
|
|
|
|
Supplemental
Schedule of Noncash Investing and Financing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared and
unpaid
|
$
|
50,034
|
|
|
$
|
-
|
|
|
|
|
|
|
|
Gross additions to
properties and equipment
|
$
|
10,996,880
|
|
|
$
|
9,338,855
|
|
Net (increase)
decrease in accounts payable for properties
|
|
|
|
|
|
and equipment
additions
|
|
(569,439)
|
|
|
|
22,263
|
|
Capital expenditures
and acquisitions
|
$
|
10,427,441
|
|
|
$
|
9,361,118
|
|
Derivative Contracts as
of March 31, 2023
|
|
|
|
Production
volume
|
|
|
|
|
Contract
period
|
|
covered per
month
|
|
Index
|
|
Contract
price
|
Natural gas costless
collars
|
|
|
|
|
|
|
April - December
2023
|
|
20,000 Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.00 floor / $4.70
ceiling
|
April - June
2023
|
|
100,000
Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.50 floor / $7.00
ceiling
|
July - September
2023
|
|
75,000 Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.50 floor / $7.00
ceiling
|
October - December
2023
|
|
25,000 Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.50 floor / $7.00
ceiling
|
January 2024
|
|
135,000
Mmbtu
|
|
NYMEX Henry
Hub
|
|
$4.50 floor / $7.90
ceiling
|
February
2024
|
|
125,000
Mmbtu
|
|
NYMEX Henry
Hub
|
|
$4.50 floor / $7.90
ceiling
|
March 2024
|
|
130,000
Mmbtu
|
|
NYMEX Henry
Hub
|
|
$4.50 floor / $7.90
ceiling
|
April 2024
|
|
90,000 Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.50 floor / $4.70
ceiling
|
May 2024
|
|
95,000 Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.50 floor / $4.70
ceiling
|
June 2024
|
|
90,000 Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.50 floor / $4.70
ceiling
|
January - March
2024
|
|
30,000 Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.00 floor / $6.00
ceiling
|
Natural gas fixed price
swaps
|
|
|
|
|
|
|
April - December
2023
|
|
100,000
Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.37
|
April - December
2023
|
|
20,000 Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.57
|
April - October
2023
|
|
20,000 Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.58
|
July - October
2024
|
|
75,000 Mmbtu
|
|
NYMEX Henry
Hub
|
|
$3.47
|
Oil costless
collars
|
|
|
|
|
|
|
March - June
2023
|
|
2,500 Bbls
|
|
NYMEX WTI
|
|
$75.00 floor / $96.00
ceiling
|
January 2024
|
|
1,850 Bbls
|
|
NYMEX WTI
|
|
$63.00 floor / $76.00
ceiling
|
February
2024
|
|
1,700 Bbls
|
|
NYMEX WTI
|
|
$63.00 floor / $76.00
ceiling
|
March 2024
|
|
1,750 Bbls
|
|
NYMEX WTI
|
|
$63.00 floor / $76.00
ceiling
|
April 2024
|
|
1,700 Bbls
|
|
NYMEX WTI
|
|
$63.00 floor / $76.00
ceiling
|
May 2024
|
|
1,750 Bbls
|
|
NYMEX WTI
|
|
$63.00 floor / $76.00
ceiling
|
June 2024
|
|
1,650 Bbls
|
|
NYMEX WTI
|
|
$63.00 floor / $76.00
ceiling
|
January - March
2024
|
|
1,650 Bbls
|
|
NYMEX WTI
|
|
$65.00 floor / $76.50
ceiling
|
April - June
2024
|
|
500 Bbls
|
|
NYMEX WTI
|
|
$65.00 floor / $76.50
ceiling
|
July - October
2024
|
|
1,650 Bbls
|
|
NYMEX WTI
|
|
$65.00 floor / $76.50
ceiling
|
Oil fixed price
swaps
|
|
|
|
|
|
|
March 2023
|
|
1,000 Bbls
|
|
NYMEX WTI
|
|
$64.00
|
March - December
2023
|
|
1,500 Bbls
|
|
NYMEX WTI
|
|
$67.55
|
March - December
2023
|
|
750 Bbls
|
|
NYMEX WTI
|
|
$70.05
|
March - December
2023
|
|
1,500 Bbls
|
|
NYMEX WTI
|
|
$80.80
|
April - December
2023
|
|
1,000 Bbls
|
|
NYMEX WTI
|
|
$80.74
|
Non-GAAP Reconciliation
This press release includes certain "non-GAAP financial
measures" as defined under the rules and regulations of the U.S.
Securities and Exchange Commission, or the SEC, including
Regulation G. These non-GAAP financial measures are calculated
using GAAP amounts in the Company's 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 the Company's financial statements
prepared in accordance with GAAP (including the notes thereto),
included in the Company's SEC filings and posted on its
website.
Adjusted EBITDA Reconciliation
We define "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. We have
included a presentation of adjusted EBITDA because we recognize
that certain investors consider this amount to be 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 quarters indicated:
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
March 31,
2023
|
|
|
March 31,
2022
|
|
|
Dec. 31,
2022
|
|
Net Income
(Loss)
|
$
|
9,553,244
|
|
|
$
|
(4,020,455)
|
|
|
$
|
3,346,133
|
|
Plus:
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
(benefit)
|
|
3,067,000
|
|
|
|
33,000
|
|
|
|
981,000
|
|
Interest
expense
|
|
557,473
|
|
|
|
230,212
|
|
|
|
637,698
|
|
DD&A
|
|
1,889,990
|
|
|
|
2,121,116
|
|
|
|
1,802,114
|
|
Impairment
expense
|
|
2,073
|
|
|
|
-
|
|
|
|
6,100,696
|
|
Less:
|
|
|
|
|
|
|
|
|
Non-cash gains
(losses)
|
|
|
|
|
|
|
|
|
on
derivatives
|
|
3,172,399
|
|
|
|
(11,772,640)
|
|
|
|
6,265,041
|
|
Gains (losses) on asset
sales
|
|
4,417,983
|
|
|
|
2,292,215
|
|
|
|
934,207
|
|
Plus:
|
|
|
|
|
|
|
|
|
Cash receipts from
(payments on)
|
|
|
|
|
|
|
|
|
off-market derivative
contracts(1)
|
|
(373,745)
|
|
|
|
(2,493,481)
|
|
|
|
(903,461)
|
|
Restricted stock and
deferred
|
|
|
|
|
|
|
|
|
director's
expense
|
|
634,587
|
|
|
|
468,598
|
|
|
|
569,084
|
|
Adjusted
EBITDA
|
$
|
7,740,240
|
|
|
$
|
5,819,415
|
|
|
$
|
5,334,016
|
|
|
|
|
|
|
|
|
|
|
(1) The initial receipt
of $8.8 million of cash from BP Energy Company, or BP, for entering
into the off-market derivative contracts had no effect
on the Company's
statement of operations and was considered cash flow from financing
activities. A portion of subsequent settlements with BP
had
no effect on the
Company's statement of operations.
|
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. We have included a presentation of debt to adjusted EBITDA
(TTM) because we recognize that certain investors consider such
ratios to be a useful means of measuring our ability to meet our
debt service obligations and for evaluating our 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
|
|
|
March 31,
2023
|
|
|
March 31,
2022
|
|
Net Income
(Loss)
|
$
|
30,646,855
|
|
|
$
|
(2,459,000)
|
|
Plus:
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
7,455,000
|
|
|
|
429,949
|
|
Interest
expense
|
|
1,953,232
|
|
|
|
832,295
|
|
DD&A
|
|
7,265,346
|
|
|
|
7,412,214
|
|
Impairment
expense
|
|
6,111,749
|
|
|
|
56,060
|
|
Less:
|
|
|
|
|
|
Non-cash gains
(losses)
|
|
|
|
|
|
on
derivatives
|
|
14,360,063
|
|
|
|
(8,580,898)
|
|
Gains (losses) on asset
sales
|
|
9,604,551
|
|
|
|
450,074
|
|
Plus:
|
|
|
|
|
|
Cash receipts from
(payments on)
|
|
|
|
|
|
off-market derivative
contracts(1)
|
|
(3,618,427)
|
|
|
|
3,618,428
|
|
Restricted stock and
deferred
|
|
|
|
|
|
director's
expense
|
|
2,815,183
|
|
|
|
1,443,276
|
|
Adjusted
EBITDA
|
$
|
28,664,324
|
|
|
$
|
19,464,046
|
|
|
|
|
|
|
|
Debt
|
$
|
26,000,000
|
|
|
$
|
24,000,000
|
|
Debt to Adjusted
EBITDA (TTM)
|
|
0.91
|
|
|
|
1.23
|
|
|
|
|
|
|
|
|
|
(1) The initial receipt
of $8.8 million of cash from BP for entering into the off-market
derivative contracts had no effect on the
Company's statement of
operations and was considered cash flow from financing activities.
A portion of subsequent settlements with
BP has no effect on the
Company's statement of operations.
|
Adjusted Pretax Net Income
(Loss) Reconciliation
"Adjusted pretax net income (loss)" is defined as earnings
before taxes and impairment expense, excluding non-cash gains
(losses) on derivatives and gains (losses) on asset sales and
including cash receipts from (payments on) off-market derivatives.
We have included a presentation of adjusted pretax net income
(loss) because we recognize that certain investors consider this
amount to be a useful means of measuring our ability to meet our
debt service obligations and evaluating our financial performance.
Adjusted pretax 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 pretax 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 pretax
net income (loss) for the periods indicated:
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
March 31,
2023
|
|
|
March 31,
2022
|
|
|
Dec. 31,
2022
|
|
Net Income
(Loss)
|
$
|
9,553,244
|
|
|
$
|
(4,020,455)
|
|
|
$
|
3,346,133
|
|
Plus:
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
3,067,000
|
|
|
|
33,000
|
|
|
|
981,000
|
|
Impairment
expense
|
|
2,073
|
|
|
|
-
|
|
|
|
6,100,696
|
|
Less:
|
|
|
|
|
|
|
|
|
Non-cash gains
(losses)
|
|
|
|
|
|
|
|
|
on
derivatives
|
|
3,172,399
|
|
|
|
(11,772,640)
|
|
|
|
6,265,041
|
|
Gains (losses) on asset
sales
|
|
4,417,983
|
|
|
|
2,292,215
|
|
|
|
934,207
|
|
Plus:
|
|
|
|
|
|
|
|
|
Cash receipts from
(payments on)
|
|
|
|
|
|
|
|
|
off-market derivative
contracts(1)
|
|
(373,745)
|
|
|
|
(2,493,481)
|
|
|
|
(903,461)
|
|
Adjusted Pretax Net
Income (Loss)
|
$
|
4,658,190
|
|
|
$
|
2,999,489
|
|
|
$
|
2,325,120
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
35,935,791
|
|
|
|
34,292,455
|
|
|
|
35,679,740
|
|
Diluted
|
|
35,935,791
|
|
|
|
34,292,455
|
|
|
|
36,489,353
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pretax Net
Income (Loss)
|
|
|
|
|
|
|
|
|
per basic and
diluted share
|
$
|
0.13
|
|
|
$
|
0.09
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
(1) The initial receipt
of $8.8 million of cash from BP for entering into the off-market
derivative contracts had no effect on the Company's
statement of operations
and was considered cash flow from financing activities. A portion
of subsequent settlements with BP had no effect on the
Company's statement of
operations.
|
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 Oklahoma, Texas, Louisiana, North
Dakota and Arkansas. Additional information on the
Company 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, 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 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:https://www.prnewswire.com/news-releases/phx-minerals-reports-record-royalty-volumes-for-the-quarter-ended-march-31-2023--announces-dividend-payment-301820076.html
SOURCE PHX MINERALS INC.