PHX - Earnings call transcript Q3 2019

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Operator

Greetings and welcome to the Panhandle Oil and Gas Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Three Relations, Investor Hooser, Part Advisors. Stephen ahead. go Please

Stephen Hooser

Blanchard, discuss Thank fiscal quarter the Officer. today are to Chief Robb With you joining us call Paul remarks prepared for our for Executive year Financial on Officer, Winfield, third me today Chief XXXX results. financial

session. remarks, prepared Q&A open call to up After the will a we

that webcasting During the of also website. and and earlier call D'Amico, Ralph will the Relations. Operations, on at investor Business Investor by relations Development investor also was also is joined press panhandleoilandgas.com. Q&A be session, we Please our on The relations posted note issued VP this release we VP Freda are of website Webb, that earnings

cause today's and materially forward-looking on call involve we the to and uncertainties to turn of forward-looking call, other regarding this expectations statements I'd may results These and statements the the company. I Before unknown Q&A other revenue opportunities, or implied may risks and plans over plans, session, those expressed earnings, that and future actual make management, to like including expected during known remind call. estimates that from differ everyone

detailed call. are time this based Form known and to presented information or most the with of upon such Panhandle information today's assumes The recent Commission. in are annual to call. the XX-K Form amended quarterly this report made statements date supplemented other of call Exchange in no update and conference during may on be reports as subsequent obligation filed Panhandle reports our as by on risks or These XX-Q Securities and

Panhandle's the Paul? Executive turn like Blanchard, I'd that, call Chief over to Officer. to and With President Paul

Paul Blanchard

executing in and and Panhandle's XXXX generated company. quarter thanks significant flow I for very interest net participating and cash managing with by call. sincerely time pleased strategy year-to-date am continued and our third of mineral the We've our actively XXXX line We Stephen third to on income your portfolio. appreciate Panhandle's Thanks, the quarter your conference everyone in performance.

royalty production proactive We are the production, Our lease shareholder is which believe through leasing supplemented receive. of we lower effort oil and those material a geologic from mineral generating and both toward bias to value acreage of also growth, to meaningful into proceeds yield tax-deferred divestitures by deemed we continues largely redeployment our we mineral risk perspective. timing bonuses a acreage targeted have a development

liquidity in eight In XXX,XXX materially addition, down We while $X.X but XX,XXX we've different leased improved and our XXX,XXX out acres of stock and and own are are producing, open. million not yet ten plays. ample states our resource acres Of debt are acres producing, mineral paid net have our XX,XXX year-to-date. the already repurchasing XXX,XXX acres,

manage create our to to In understand management our with to for strategy. portfolio our fully company, our as multiple order assets revenue value is strategy levers a Our and important generate portfolio it's shareholders. understand to

three, bringing are lease five have to working mineral risked number and mineral from leverage, value, and by two, forward risked we bonus five, producing acreage believe There additional value, above as four, number royalty cash priced selling number participating from revenue our mineral -- their present number number acreage, our portfolio generating manage priced are its is a believe below buying owner. rights we mineral non-operating present interest one, optimize our primary generating revenue unleased we levers

company pure as mineral look forward, we from we a the away strategically portfolio of back royalty company. the original toward our shifting and interest participation value moving of playing the risks maximize are As and to working moving

non-mineral to This rights, working value related interest and own process take working will intend participation currently we assets. of time some material, as the and maximize we those interest production,

through lease divestitures. thoughtful bonuses, to moving maximum mineral holdings royalty revenue, is focus optimizing extracting acquisitions create through forward and generating our value our However, and

been We've progress is the date and expect to relative it strategy our of working has revenue shift as XXXX made highest continue. interest trend royalty revenue to on significant since to this mix we this

quick provide assess I the operational and overview to point, like over Rob a to the then this call At turn financials. I'll would to

we It's non-operator drilling control important to and our business understand of it's that are to not on quarter-by-quarter timing basis. model our since the a do properties, a difficult on

when new wells of end of our of Average began XXXX the daily the this producing that The from of at production majority pre-drilling expectations. in quarter. increase these to be for to seven wells the continues production is with third line compared from XXXX. Eagle quarter Ford increased quarter second oil the second The X% the

Oklahoma, interest ten There on Panhandle are two drilling Bakken. with and mineral two acreage in wells one There and rigs are in STACK, two half others wells the additional within of currently our XX acreage. royalty in and six miles SCOOP drilling

any Also, in interest XXXX. in three we've not of working wells participate elected to the quarters first

does as increase that to compared the fully our Our period. of period versus and year royalty revenues during interest recent increased acquisition period XX% XX% This year decreased nine-month impact the ago the during period. sales Bakken not working our nine-month reflect revenues that ago

and to With remarks go financials outlook. the over over close the then and turn Robb comments our that, prepared on the to strategy, with I'll I'll call progress,

Robb Winfield

Thanks, Paul.

XXth, to for to will our plan. our ended more the Paul want everyone with results final on I on to quarter Then call the back turn regarding some make today. of our details financial some progress share I strategic thank the comments over XXXX. call June third I'll First, you being for

third $X XXth, change in The million in for from quarter June XXXX. XXXX XXXX. second sold and a any by the million, company our on ended mineral total of third of quarter asset assets the sale caused XXX% the increase million gain $X.X did quarter have following one, the was of of revenues XXXX, a not were quarter in $XX.X For which the we the second -- sales is

in XXXX second and third of quarter turned that a that $X.X of XXXX. of $X.X loss had quarter we derivative million in our we contracts of Two, gain on from the experienced the million

and all offset possibly oil, gas prices increased quarter. NGL, by XXXX production the decrease the a during revenues slight third product products, X.X of million quarter our in natural increases on third the due to Three, from

Total partially XXXX higher quarter expenses compared expenses. compensation in third by which second by second of offset production, of to was some the driven XXXX, of $XXX,XXX non-recurring decreased increased quarter the had most G&A quarter as

Adjusted quarter XXXX the EBITDA was of the million $X $X.X of third quarter compared in million in as second to XXXX.

ability year-to-date revenues when experience performance asset we Therefore, comparing large the useful the company's operation to assessing more of business of and quarterly nature year. our we can in information. be any strategic leasing given our when can significant sales, statement during through Given and generate our comparisons believe that changes

$XX from gain Year Eddy generated increase XXXX. date in the $XX million New year-to- to in Lea This in This $XX.X minerals Texas prior during Mexico Counties million for date XXXX. Martin in in XXXX, was revenue. XX% of due and County, and to Panhandle minerals the to primarily sale compared a million the is a

program the XXXX. and were due year-to-date, interest drilling online down declines NGL gas XXXX to working early from XXXX in natural $X.X revenues mainly million properties parts Royal came our natural production of during on that gas significant

of derivative production rates. gain these in XXXX since million properties million a on in contracts year-to-date loss high The company of $X XXXX. their has from had versus also derivative $X from Production initial fallen contracts a on

The saw cost million $XX.X XX% the in MCFE XXXX. $XX.X decreased from in company million prior year-to-date XXXX expenses the X.X% an Total in increase relative per to year-to-date to year. total

Oklahoma respectively, higher increase production This production the during working by taxes as also tax were by in lower Interest bank expense was influenced, and primarily production rates and driven interest the period. noted increase XXXX previously. rate interest

also restricted expenses stock due increased expenses. compensation G&A other to mainly non-recurring and

Adjusted increased pre-tax in $X XXX% $XX XXXX to XXXX. from net in income million year-to-date million

EBITDA $XX.X XXXX, an million which in increase XXXX. year-to-date adjusted was in to million was $XX.X Our compared

sale $XX.X For and XXXX, on pre-tax both of EBITDA gain a include adjusted net assets. adjusted the million the the income

flow, enabling from $X.X The company excess to XXXX dividend through end. also our year million while to shareholders of paying stock million $X.X free generated debt payment return and down repurchases, us cash

for and million. Subsequent in the XXX an $X to June mineral sold XXXX, net acres XXth, the company royalty Permian additional

of net June Our debt and our cash $XX.X at is XXXX approximately million XXth, $XX was net million. of debt cash approximately currently,

Currently, which of of approximately XXXX. $XX barrels We calendar calendar to price approximately XXXX hedging through a barrel hedged out continue XXX,XXX the to of price and program $XX for oil deploy barrel an for at calendar active per extends have we oil $XXX,XXX commodity per of barrels XXXX.

at We XXXX may natural prices. note a for current had meaningful two at price of XXXX, gas bcf price gas $X.XX I of hedge a of bcf which natural for natural gas per calendar MCF of hedged and per above $X.XX $X.X MCF is calendar

strategically various we that given produce We flow ways. in generate to revenue continue are our good to sustainable pleased cash ability

Paul. that, will turn to back it With I

Paul Blanchard

Robb. you, Thank

provide areas would of five are our there earlier, manage three our update an we to execution on first for I the discussed leverage XXXX. I to portfolio. these of optimize have of As quarters primary and like each

one, million royalty in $X.X versus XXXX. from in generated increase prior Number the Number same year XX% period. generated we bonus period revenue, proceeds $XX in two, a million $XXX,XXX lease we in the

leasing minerals be SCOOP. and quarters. We unleased result The are our will upcoming in actively STACK reflected of in effort this

$X generated third net in average net sold an acre. additional $XX.X Since acres and XXX million. $XX,XXX quarter, million we in end have royalty of of mineral the the Permian we sale XXX of for the Basin from at Permian Number the Basin three, the per an acres mineral

the Ford producing wells, end $X.X number of for purchased or in of the Number play drilling And the four, of million participation, in and cores in mineral STACK XXX we interest invested for net year North $X.X the Eagle five, Oklahoma an March. which average seven Bakken at in we Dakota the acre. principally per began $X,XXX working started acres last and play million

remaining moving of Our and initiatives the include but to additional STACK unique undeveloped open key Permian to provide process unleased a in SCOOP mineral with to Basin proactive minerals lease opportunity largely the large Panhandle's generate marketing acreage holdings, significant marketing Current and plays. high including cash least the out in forward. minerals us flow positions of areas and continue mineral value both

and expected cash is bonus to effort from immediate from payments leasing flows This cash royalties. generate future flow

continuing pursue play also oil Oklahoma, Dakota, Eagle in acquisition are the the of Bakken Ford We Texas. in and North in the acreage to and STACK plays SCOOP mineral in the

on up. With that, the questions. me to instruct how listeners to queue open let our Operator, call please

Operator

comes question Baird. first Instructions] Thank ahead. Joe Your go from you. Allman Please [Operator with

JoeAllman

Thank you. everybody. Good afternoon,

Paul Blanchard

Good afternoon, Joe.

Joe Allman

miles your XX, Paul, I royalty said think within think you are acreage. there wells said I you X.X of

that I actually is So wells was clarify rigs? visibility your that to want was question really over acreage? operators getting move -- my your into on Then to is or just what

Paul Blanchard

is it Joe. XX So, rigs,

to operators being royalty our course, locations is owner, visibility a Of of moving the somewhat limited. directly

in months in operators rigs indications generally few is But doing certainly locations. in processes what advance moving to whatever going actually the precisely regulatory specific are the going of within rigs of through to moving to moving have through be locations entire areas. the they're our We a prior

Joe Allman

press your or half-mile of acreage? and marketing market Panhandle talk operators to that that at In Is acreage any welcome you release, mile who drill there anything aware be efforts your about on internally away are going efforts, marketing get Okay. on to when our a got kind acreage? to to you've those you try away you're there to do

Paul Blanchard

STACK Well, of the us. area like XX out acreage the our that acreage we've different in and SCOOP, taken and to from operators for to excess unleased lease instance, in players in mineral

are So, at that. certainly, operators the active looking

doing acreage in with negotiating that gotten In to and the we'd it. operators SCOOP some with active fact, STACK offers in lease are intent and

Joe Allman

That's talk acquisitions And about value? make you recent helpful. your internally the in Okay. of made, to accretive you then, just sure those do analysis are to could you acquisitions that terms

Paul Blanchard

And very engineering, developed times of – at conservative it. at the of looking properties. we're successful, properties existing at looking disciplined comfortable the our those, based analysis in for would return We're that a to those we're return accretive are but We're Sure. and that rate and rate very geologic undeveloped obviously, accretive. take approach we analysis plus feel that all a fairly the these on analyses properties the and be bidding analysis on detailed to of to land

Joe Allman

guess, when operator going the your acreage. some has Got drill about to within be royalty assumption you. analysis And I to there on is that

that honing? what so, on assumptions have do make And and visibility you what do you

Paul Blanchard

risk I with of a acquiring you're and think acquiring have geologic in on that I think -- we're depending don't lot where associated them. places

are the risk the risk. So, think, and drilling I the taking, risks product that primary timing pricing we're

history infrastructure their other look And permits, to activity, at terms relative activity so, we'll the their in permits, operator of suggesting of timing. buildout of any drilling drilling any other

of their we trying of some in Of scheduling from to that of to process deliver those our all we're rates drilling the and help and course, to frankly, estimates at making terms looking timing ensure projecting. based presentations that return projected that that the conservativism apply of we're activity operators on

Joe Allman

on helpful. That's to analysis to sell sell very then, royalty you to it's better the of -- lastly, the decision kind sell question, but what side do than And it? similar make when that on hold do internally acreage, you

Paul Blanchard

doing which XXXX sell that and analysis. Really, like and whether haven't much whether a We're it's well, or at working all all or various appropriate. those the geologic we're risk be pretty the whether participating analyses acquisitions, to analysis along for a the the going evaluate in analysis we it's would out minerals same our in with action through of done risks area exact economic the to determine interest same divestitures us, fiscal we said, leasing or in

Joe Allman

very Okay. That's all That's guys. Thank you, great. helpful.

Paul Blanchard

Okay.

Operator

Instructions] question John comes Your from Please with go Thank you. White next ahead. Capital. [Operator Roth

John White

and Good quarter. a on congratulations nice afternoon

Paul Blanchard

John. Thanks,

John White

The while table, wells been Ford in present? came page I they looks you good, finally difference and go growth six, can the the wells, a production on over progress to through. waiting sequential Eagle the real rig rigs referring activity between and again we've

Paul Blanchard

in exactly The within drilling wells acreage right in So, that. actual producing. last that on present two the are PHX began rigs location would yet drilling that or progress They're not years rigs but John, is drilling. on wells are progress be The rig current now. the are rigs

John White

Okay.

wells aren't completed So the in got some we've drills progress. but in

Paul Blanchard

have begun least but that drilling substantial list of yet. produced That's wells right. there fairly not have at a Actually, Yes.

John White

the of the in reference County bunch page on Martin sale Nice the same news six five months. an page That's first of stock on and buybacks And $XX,XXX for quarter during you minerals the on minerals and seven. acre?

Paul Blanchard

figure quarter. of sold in where I'm the sale are, Martin to the and you end minerals County minerals had But subsequent exactly yes, County John. this the quarter trying out some Martin we've after of

Reeves. the two we since Martin and we references and the Reagan the are Upton, sold make the and that's quarter So County quarter, its during Ward, that

quarter since. was So, closed county Martin and during the are those the

John White

Okay. Thanks. per acre on you're lot than so, you're selling looks a news. for basis, on like basis buying a acre more acreage a per good It

Paul Blanchard

Yes.

John White

back All right. to Thanks. it you. I'll turn

Operator

Thank you.

comes Dasho Capital next question Please Management. Pinnacle go Your from John ahead. from

John Dasho

are gains realized or a quick losses or -- to understand or make just on Hi, derivative question contracts, unrealized sure I both? the those

Robb Winfield

both. They're

John Dasho

is it broken is Where Okay. what unrealized? versus out as to realized

Robb Winfield

page So, queue, section real our quick, where let around in the out right we the the find me all detail derivative questions.

John Dasho

Okay.

Robb Winfield

says the So, it the and period. company's Q page XX tells related of fair value to cash paid settled nine-month net contracts derivative the then during

now, year. to right has And then a it $X,XXX,XXX. out we've last paid comparison So

$X position door, So right sell a net $X we're million in of lost. now, out the million

think takes other And to two unrealized the side number. so, your going of That that be that. – is it point I on $X.X to million its

Robb Winfield

Q the Q. don't in in front have I but me, Okay. the its detailed of

Robb Winfield

Q. Page is. the of It Yes. XX

Paul Blanchard

That prices Paul. already months extraordinarily loss. that in was we've bulk jumped bulk gas December out of that's big there receipts paid that net month, XXXX the is mention. been of the last just so the gain have of and This I'll course, when also. unrealized the out We've loss that John, for few that

John Dasho

Thanks. That's helpful.

Operator

Thank turn you. Paul Blanchard call remarks. I today. time to over for the back we for That's closing the would have questions to Mr. all like

Paul Blanchard

would call attending everybody Thank like our your and just very I for much. very at call. you to third next much. attendance quarter Panhandle's conference bye. conference Thank Good to forward you thank look

Stephen Hooser	Investor Relations
Paul Blanchard	Chief Executive Officer
Robb Winfield	Chief Financial Officer.
Freda Webb	VP of Operations
Ralph D'Amico	VP of Business Development and Investor Relations
Joe Allman	Baird
John White	Roth Capital
John Dasho	Pinnacle Capital Management

PHX Minerals (PHX) 11 Aug 192019 Q3 Earnings call transcript