FLMN - Earnings call transcript Q3 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Falcon Minerals Q3 2021 Earnings Call [Operator Instructions]. At this time, it is my pleasure to turn the floor over to your host, Matt Ockwood, CFO of Falcon Minerals. Sir, the floor is yours.

Matt Ockwood

Thank you, and good morning, everyone. Thank you for joining today's call to discuss the Falcon Minerals Third Quarter 2021 results.

performance would will remind that make expected business, I this that address begin, future we conditions. call, certain financial we like you to during our Before financial and forward-looking statements results set or in wide forth SEC made range in by from to and risks statement implied company differ our any may Actual materially achieved uncertainties, those of due forward-looking a the including filings. those obligation any company update revise any disclaims statements. The forward-looking or to expressly

of discussion these now included And to the Gunderson, posted also directly includes Falcon's his GAAP this earnings I is turn Bryan? Reconciliations comparable measures Additionally, over Bryan to most for remarks. measures President non-GAAP which will with call that, website. the Chief measures and in Officer, the on are our release, Executive

Bryan Gunderson

to margins. will you Matt Operating Thanks, Earnings XXXX business which reservoirs quarter, States. line results remarks, Chief than what are from; pleased million third with the to greater we breakeven These we the of my Trough, The be quality Karnes XX% Falcon's the was you and position I'm line. range then on which in we those Minerals in X,XXX per We generated and Falcon quarter Matt. the Third Financial with of total the Good the and who continues the Falcon's joining during the liquids. cash After our performing flow by $X.XX end Production share, Quarter Mike from per We for to take Downs. in exceeds oil lowest XX% XX% flow morning the with crude financial day heard August. Officer, business our speak joined $XX.X per today during of questions to quarter, will shared results were those of that business way the which on Matt was cash third free and Call. approximately among performed best guidance generated $X.XX $X.XX The BOE just Ockwood, our the Officer, high reflective in line. EBITDA appreciate Chief the share EBITDA expected. with of United

quarterly benefits saw quarter, Marcellus million as from operators the rising prices Shale lease increase quarter. significant the to free which of Falcon from The of this position allowed cash this gas. bonus we second in flow represents payout a approximately performance from that dividend including take the our in the $X.XXX, sequential and in us $X.X in to basin natural saw generated ratio for a Additionally, of declare advantage revenue XX%

We payout are ratio benefiting to in strong the commodity second immediately we've year. industry-leading our Falcon's see from backdrop experienced the this shareholders and half excited

share, yield quarter to believe compelling which a investors. per third an represents translates basis $X.XX for dividend annualized The on we

be Looking environment. current healthy anticipate production allowing to will commodity approximately to share $X.XX to strip supportive cash $X.XX in moderate XXXX, price remainder remain this through still to in to to continue fourth ahead the volumes free Xper while quarter cash flow Based of we free of we anticipate flow pricing, XXXX. on year-end, the that be

the soon for guidance too in specific While it's prospects full to give are for us any Falcon's we XXXX, for excited year.

strong shale are to our Hooks Ranch and activity own operator property. with under this entire in optimistic component prices. finalize the to a pleased operators XXXX we we're commodity will development own economics, be The of are key their However, is that exceptionally Hooks the asset working strong The knowing assets our of very on the likely midst budgets on mineral asset. Ranch world-class estate capital

Hooks the Hamilton Ranch, permitted will where we unit into As the be drilled across third material boundaries B previously ConocoPhillips wells XXXX, quarter holds which X Falcon have NRI. from discussed, unit the in Trust

During of was location unit. the wells pad regarding delayed our due the surface to with call, that conference difficulties these B I Hamilton noted Trust the of development owner ConocoPhillips last on the

dispute, nearing begin involved during that While and strongly resolution assets are the with activity Falcon over half is parties developed could held meaningful returns are that development we the this and the It deliver be optimistic XXXX. shareholders. belief will will Hooks is Ranch not our first time to

avenues our largely a operators continue While as acreage, Falcon basis. to from about per serve and we of to core to this we generate enthusiastic the portfolio diversity Ford being share share our industry-leading and to provide and remains with I cash our and a can basis to could more them properties. growth assets X benefit per Enhanced maximize diverse a this value. focus Tier will cash engine scale grow free to Above believe distribution X Tier flow that commitment as an it portfolio The larger of market returns remain we comes investors. all, that view, flow Eagle continues shareholder express free flow entity on existing unwavering of core from cash on seek provided an to to explore a shareholder

With continue and we it [Indiscernible] disciplined CFO, and our that, Matt I'll be we portfolio as thorough Matt? to manage as existing consider opportunities will grow the to now to We the Ockwood. business. turn

Matt Ockwood

you, Bryan. Thank

of Marcellus. from quarter production basis. pricing the activity a part the year pace royalty earnings with decline call driven of compared in loss and third robust with quarter cash quarter, the for the expectations we a in summer moderated in consistent lease Production million the million We $X.X by in second lease commodity second revenue development experienced BOEs $XX.X in and fall the revenue early increase bonuses third during into was of early The this recognized on the was third as sequential higher our X,XXX and associated is revenue. net per BOEs the quarter X,XXX the during assets instruments derivative During quarter day period. per to The the the from our day generated in sequential our quarter.

or quarter, gross second the During saw in net X.XX the price quarter. XXX average during compared average net year-to-date The basis. on our natural wells $XX.XX This averaged oil gas was gross wells X.XX brings NGL was turned turned during or line for $XX.XX realized realized XX in wells price per line per we for and for total barrel. third to the Falcon's realizations per net a gross barrel. our quarter wells to X.XX third $X.XX XX Mcf

costless Hub realized quarter, third differentials volumes. favorable more quarter. seen Also instruments Marcellus which new rose to during our through in volumes MMBtu generally across gas widened Henry entered have related oil Texas, provide is into differentials natural as on have tightened benchmark assets crude pricing as the for prices the the of the of the hedge Falcon November derivative during collars prices through XXXX in XXXX. while on unhedged Falcon We per commodity forward $X.XX months March XXXX,

shares was that the noncontrolling million a Associated dividend and shareholders expenses December reduced approach that this pricing. generally X, the pricing nontaxable Cash our approximately of have million to period. $X.XX third the volumes tax third $XX.X or over paid pro to approximately represents as basis of $X.X which quarter-over-quarter shareholder basis were payment. November is capital per valorem interest leverage. asset. and the $X.X approximately decrease as noninterest. I distributions. recovered. with of million the X.XXx. see in classified was in tightening share Marketing to reported on income on Royal debt pricing Resources benefit realized million increase company's more of debt common has facility third We compensation payout increase decreased shareholders $X.X the all EBITDA payable $XX.X of conservative until XX% net outstanding about revaluation acquired define held and reflects flow for costs free $X.X end On quarter step-up treatment of as quarter, income balance This million, million, million million cash forma an the of approximately attributable an deferred of now Reported and when the $X.XX than X, expense EBITDA per third quarter. resulting to hedges tax excludes quarter This in is in our to quarter the the of are expects shares. quarter. Falcon for of and a per Adjusted basis of XX%. of of largely in basis a $X.X $X.X for XXXX, on X $XX.X Bryan when of revolving that and in adjusted inclusive Falcon bonus out on a were the these less shareholders' approximately with approximately part the gain for primarily stock-based the to for of our warrant expense BOE. million result declared XXXX of GAAP laid to of liability. due free A reported of comprised forma as ratio will million quarter the all cash second gain transportation debt The $XX.X assets in website. taxes out sell that, inclusive LTM nondividend for approximately The third expense figure record was of share. We or be XXXX, their Falcon which as related net operating remaining Falcon tax increase increased Class Falcon the for for as flat is and had the reduction $X.X dividend Pro common approximately dividends shareholders' of to of cash transaction was the product close well XXXX attributable its income. of to the investor of ratio XXXX from the stand-alone is will back streams loss $X.X This to quarter mostly time quarter is $XXX,XXX call shareholders is across Cash And which $X.XXX fully the the net expense This basis million noncash quarter, investor commodity $X.X inclusive capital under hand of XXXX. on of available third associated will G&A as flow million presentation, will of million. production recognized quarter XX, the turn we ad tax increase of $X.X November Gunderson. current revolver the million EBITDA tax interests, third with utilization a to a a the We cash $XX.X million credit to and lease Falcon's further At an net income XXXX. continues

Bryan Gunderson

open can you Dan, the up Matt. questions. line Thanks, for

Operator

first Our Instructions] May. from [Operator Kyle question comes

Kyle May

Bryan, maybe out. start to

One you announced And acquisition an scale opening remarks. morning. of peers in your this your Bryan, touched on

Just is us seeing on you're base? that wondering how opportunities about potentially give maybe growing if thinking update you an and the the Falcon asset can

Bryan Gunderson

morning. as we've free on obviously this in focused We Look, said. saw on basis a cash print flow share driving per we're

that as a I looking private migrate are think that as are well, public assets to number of that are we've into in the said hands there hands.

unfold. You're seeing area that

we for I core focused bias us, on our -- basins. but to we it, think on transactions. level being strategic we continue We're of don't have opportunistic be towards

us, the that and dollar. for the really that, so Midland means And

Kyle May

of thoughts dispute next production also preliminary could you you of Ranch, you then begin flow And of activity timing on mentioned and begin that? half development Hooks how are when thinking kind I the that could the to believe or maybe the in guys year. about Any at first about touched

Bryan Gunderson

and optimistic second we resolution. it's we're line. time we're certain nearing begin XH. look, we're going mean development anticipate that in optimistic We implies anticipate a mean, I to I that that see half --

Operator

Our comes from Hammond Pearce Piper question next Sandler. from with comes

Pearce Hammond

as in you price improvement leases the well expecting that as the as into forward we move in you imported With Marcellus, the gas of are mix a higher gas XXXX?

Matt Ockwood

I the the on us lease we'll of the them. volumes saw going by more It's I a growth if with double-digit in what's anticipate a gas given nearer-term QX that But to to see be not think lot will percentage, would a production of is those the little Marcellus in so have QX to bonuses we've sustained. got, low answer insignificant. and kind mix. continue some consistent Marcellus grow mix. not We a potential short associated rate clear

Pearce Hammond

this down And been then have past sight ticked of line down wells ticking quarter.

So quarter. then X.XX net it X.XX NRI's little higher than and and at about a was wells at NRI last

-- the front much to more Just what's there of permitting is this I on net of sight you? standpoint from can Because do? you wells. sight you curious, Or your that see completed line line maybe or number what have like how you one, in think preference the you of wells X.X can anything do quarter, started increase, you

seems between sight line versus it's it wells the how So in the of the like completed just were starting many narrow net to quarter. and

Bryan Gunderson

let [Indiscernible]… of fully middle don't one operators and of jump others really repopulated in. our those this anticipate it I core line come that we is focused the things yet as have sight we on the that I Yes, we're I'll then the budgeting of I'll budgeting are process, year, start up -- think in processes unfold would of to as mean time at

Pearce Hammond

[Indiscernible] more color.

ahead. go Sorry,

Bryan Gunderson

the pads NRI -- lower the a this gross basis, right. that's activity summer into fall. in our some think I pads the consistent. hit just On and it On and a year, high net -- we had gross it's high we've been was has really early pretty basis, in

broadly, It's And half here at or XXXX. when lands how question strong. really even of of half been is on that's story material a recently. activity, that the second a and very So EOG saw We net in us way. first a in rig

Operator

next TJ [Operator comes Schultz. question Instructions] Our from

TJ Schultz

higher on the mineral than a your keep dividend ratio some of You peers.

payout all? retaining more financing longer thought any kind And of where general on you're thinking how on acquisitions? more Just opportunities ratio kind acquisition your term see about that potential If cash? you view for to trend of may you or

Bryan Gunderson

I'll ratio financing on jump let I'll portion, in the acquisitions. take the for then portion payout and Matt

our ratio, payout in keep on a we to want the And of I clear environment XX-plus ratio. the been averaging constructive as that to high you've XX%. -- price. market really we've back proposition it's hand to seen, basis to -- with that a the attractive constructive payout value been we an think that think yield base. cash and shareholder it's We around I see that way to commodity a shareholders share mean price kind

the As to acquisitions, to relates it you want do in? Matt financing jump

Matt Ockwood

here It ratio. thinking. portioning that affects dovetails payout the really with even materiality some our There's

size we're Our focus, wouldn't to where lower as a ratio, more very on. opportunities little relative even Bryan the strategic of impactful be articulated, has payout been strategic payout that on focused level ratio the things

we want So really term. cash the wouldn't for shareholders short that in withhold

one asset we should the of we acquire. As is very financing dependent find the nature right on the an that

that sheet value right being imagine, first, asset, As build the we're with around you that right can looking looking shareholders. we're to fits unnecessarily for guiding over and we'll basin the Those and our structure capital also not balance to right and looking principles. dilute principles we aren't leverage

So make Does let structure build the around cap and lead the that asset sense? that. we'll

TJ Schultz

and moving expectation I your lastly 'XX guess all not that sense. makes forward into for just me. more hedging No, perfect What's hedging more for 'XX or prices?

Bryan Gunderson

that saw hedges. you some on gas Obviously, we winter layered

going We're I where totally be. add? we're to So anything we 'XX. do that's the March in the crude side have And gas hedges side. Matt, on to unhedged think going into on But

Matt Ockwood

completely on a in we The back we've lot outlays tend we the that that next of we're oil the layer to conscious capital. hedges about haven't any context in of decided to -- fact I just obviously is hedges think question, to year. decision that acquisition Yes, we're -- unhedged a not made.

investment, if for And what to at call So that and term. using I'll of to immediate on I there we're aren't, the mind of we've subject it, between that, absence in underpin a flows the it, how in XXXX, But make base may timing we distinction a oil in do be not the underwriting opportunity lot the business. hedges underwritten a looking cash we we protect with, and the make our the have of the returns least to hedges think put today, to would investment sense. tactically material

Operator

Evans. Our next question comes Jon from

Jon Evans

And unbelievably just was little wide a going if couple that is be then the I mean, asked backward kind to should -- I how just guess, of you curious Or we pretty I cause think just think aided you is backward -- to planning Bryan, talk relative because bids it's I know bit transaction? said but market? acquisition aided. And do -- can a curve curious, guys mean that's the and -- so about acquisition this I we'll envision see be of like smaller what you've accretive, you do -- about a Or it transactions? how you is that for? major do I'm to

Bryan Gunderson

about ask the bid is the a strip. to appreciate mean reality question. Jon, asking, I that is I industry on and the value bid at --

of baked go so it's would And through. dimension count the you into that every PV with backward-aided

distinction. see necessarily as And don't so I big that a being

things On deal we're We're think stuff, think I something deal, are be open not that. we'd small which small that it's desk, bigger on Falcon our the most to more. averse across time. where for the and our attractive, come not versus it to just of we -- if But focused they will do move really landscape on the spend a just really big I doing really, really strategic because

Jon Evans

you or when big what's like million is in is $XX it of give your what or so that $XXX deal more guys' And -- million? mind? can a think you us Or that,

Bryan Gunderson

on what like smaller not the I'm big. -- focused I $X mean, on would $XXX,XXX, $XXX,XXX, of mean when things, is type the we I'm say as I I million think not XX-plus deals. focused

Jon Evans

to you've at gas? with before you primarily be I mean, want you you in oily? and be Permian like the change still be to what's that in the oily is Does to want happened pretty I mean, to it want Or Permian, seen And be all?

Bryan Gunderson

Really primarily Permian and oil.

Operator

Cooperman. comes Our from next question Lee

Lee Cooperman

on have private discount the that's market possibility since have I all on question the shelling buying, been you saw value? the of guys Lee about to It's we the I with Cooperman. focused thought guess dialogue

Bryan Gunderson

I I about that the answer that itself. think presents we're mean it. is right to it open if the We thought opportunity

Lee Cooperman

paying about You're all? at of this not environment your concerned price that's about debt high down

Bryan Gunderson

conservative have trending Lee conservative balance sheet, further course a sheet, And we Lee. year. of have the over really we balance it down really see No, -- we the

Operator

was question. looks like our final that It

Bryan Gunderson

Thanks over Thanks, speaking for everybody on XQ Thanks. the everybody and to to I the joining months line. everybody. the call. coming for look forward

Matt Ockwood

you. Thank

Operator

call. you your for conference participation. today's concludes This We thank

a disconnect may this and lines day. at You have time, your great

Sitio Royalties (STR) 6 Nov 212021 Q3 Earnings call transcript