PHX - Earnings call transcript Q4 2019

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Operator

Good day everyone and welcome to Panhandle Oil and Gas Incorporated 2019 Fiscal Year End Earnings Call. Today's conference is being recorded.

I would like to now turn the call over to Ralph D'Amico, Panhandle's Vice President, Investor Relations. Please go ahead.

Ralph D'Amico

Thank you for joining us today to discuss Panhandle's fiscal fourth quarter and year end 2019 results. call Officer; prepared Officer; Robb the Stephens, are and on Executive Chief Winfield, me today remarks for Chad myself. With Chief Financial

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

Vice the this was session, The we on earnings at also Relations that be Freda Please During the issued our is President also Investor posted will Operations. webcasting Q&A of are panhandleoilandgas.com. that earlier on website. joined today press also Investor by release Webb, call we website note Relations

the differ I known and the such like or by and may most those opportunities, call. reports revenue, Before XX-Q risks other are to and plans unknown Q&A that Exchange detailed call, on to to on expected with remind Securities call statements plans, Commission. subsequent on reports may XX-K estimates uncertainties and and or risks we turn results over including report other other forward-looking the our materially or Chad, the expectations everyone make session, and cause Form supplemented today's regarding implied be future I'd forward-looking of statements that involve annual amended the Form These from during earnings, in These the quarterly actual filed expressed may recent as company.

presented date information statements this the call. call this known no today's are the to conference as made update of of during to Panhandle The based call. upon Panhandle information obligation assumes in

Officer. With that, Chad over to Stephens, Panhandle's I'd to Chief Executive call like turn the

Chad Stephens

continued end on your sincerely conference company. Panhandle's thanks participating fiscal Thanks, time interest year in the appreciate everyone to for We line in and Ralph, and your the call. XXXX

of U.S. strategy. from broad and in Panhandle's strategic longstanding across direction shareholders the Directors of new history to existing Panhandle to this the to its like change change Panhandle's for deep to value its inventory the address First, minerals of leadership decision was harvest I'd implement September in Board and

in participating detail strategy. shifting grow to basis. talk proactively pure and the more will play the a company the later, mineral accretive to is NAV in of a As I includes royalty minerals consolidation strategy on Panhandle This sector

Prior at for preceding a surrendering the Corporate Lead Board assume CEO Development, position. immediately here I two Panhandle there VP retired Resources role was positions. my for Senior my to Panhandle, Interim XX of the Independent of Directors the title leadership Member years, of At to been assuming Director Range current in serving XXXX, having year-end years as corporate as and I various from

team them very am supportive value portfolio. cash forward significant one the to create and actively executing has Panhandle pleased and XXXX of continuing generated work From year managing Panhandle's our strategy. with change performance. been to of new We've day fiscal engaged whole by you. our for shareholder look here, this our strategy with flow of to I I mineral

our mineral perspective. into shareholder and those of have acreage from lower We are we tax to deferred geologic through material a risk believe also timing development targeted largely redeployment over a leasing toward terms, the increased XX% proactive the continues years. growth minerals. to last organic bonuses which yield lease meaningful effort royalty we on production In Our a little by supplemented oil the receive absolute have production, mineral generating we a and proceeds of volumes is acreage four deem value both royalty divestitures over biased

our addition, have paid materially debt. In we down

period. for million shareholders reduction. was fiscal to stock $XX.X yield of debt an through dividends XX.X% XXXX for that Our and equates effective annualized total to return This repurchases,

active deal in and as back sector the pure royalty the a the with shining to we our to continuing working opportunities. play towards a we participation As forward, interest have be from making mineral we moving mineral look value company shifted light portfolio moved of maximize away and energy being space see

maximize Our right as will at and take of assets, working time, intend and producing out. interest participation strategy to production working time rights, value or non-mineral we monetizing related it currently shift the by material own the we interest some those be

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

time, not own Panhandle does this its in anticipate working participation. At investing interest capital

flush As incurring decreased working in total production. new shift, natural a of with result volumes hyperbolic online to wells high of declines XXXX subsequently coming the year-over-year strategy interest due off XXXX initial

associated We to decision Robb working wells, our not interest discuss have impairment also incurred which with a participate will non-cash in later.

to to a forward, opportunity balanced can science mix be quality strive across volumes operators continue high volumes rock with closer working this can and achieved. underneath, currently portfolio are and to time. technical gas we on rigorous, bringing we on we the expect set low-cost hydrocarbon will This mix royalty oil, Based we to continue means in various the our Further, generate environments. internally that areas pricing growing decline. interest marketplace, will to applying confident well-funded over Going focus build XX-XX to see value

to At quick call turn to Ralph this over I operational would overview. provide point, to the like

Ralph D'Amico

Thanks, that like review over an activity acreage our more we Chad. made a I'd on to effort to few of quarters, have granular position. the start prior provide saying by

Panhandle on to goal provide strong and continues continue a our this market. to shift see focused information we mineral its to is the on position. royalty improve activity to we to As mineral how only,

XXX to an of As wells of filed. SCOOP/STACK, September in majority and permits on XX, the A XXXX, focused additional on continues regions. our with activity XX progress the we Bakken the be acreage gross had

acreage on and and X.X present Bakken. As within predominantly the SCOOP/STACK of November XX, on had focused rigs XXXX, miles, again XX we Panhandle’s XX

held minerals our working that back open for participation. including to actively had interest lease continue previously minerals We been

to leased SCOOP/STACK to and also leases up rate acres X,XXX bonus $X,XXX royalty net with an acre and of in average fiscal like XXXX, we seen XX%. of $XXX that of we During average bonus XX%. have the region, an highlight royalty excess I’d for an

New XXX at an over We the Since Permian fiscal the into XXX Consistent with mineral timing acre. in of acres Mexico these additional Eddy were with million. mineral County, price net we per acres divestiture predominantly very risk have development had more net average the acquisition $X.X sold associated we also a On and had $XX,XXX our year, fiscal of strategy, acres them. for fronts, active end and undeveloped XXXX. an sold

$X,XXX On acres the for mineral side, net an XXX mineral an acre of SCOOP/STACK. in net purchased per XXX average acres the buy and we in Bakken $X,XXX net the for of average

of Since fiscal STACK the the also year, signed have purchase net core acres $X.XX million. PSA mineral of to we in the a XXX an additional end the for

that minerals visible purchasing are cash existing for to the we of have development, sight that I'd relative flow more have minerals and divested. again, highlight the Here to we line like opportunities

strong. Chad mentioned, is positioned And that be to Our deal pipeline well we participate in the continues Panhandle as believe consolidation. mineral to sector

focusing and and in plan as SCOOP/STACK Bakken in risk and our adjusted on the active We continue permitting opportunities growth to for sections drilling activity, opinion. returns the see we on with the those provide best

like the will the financials. call I'd Rob, provide who turn to that, over a to With review of

Robb Winfield

Thanks, Ralph.

I for First, being the call today. on thank everyone want to

of fourth over very that I'd like XXXX, into good in the environment I year. industry light of tough year the the company a had share in quarter details, pricing noted the past get fiscal especially and to Before

earlier, impairment regards adjusted net good had to in year non-cash fourth the release. the press and a company the EBITDA income in XXXX alluded noted quarter of Outside pre-tax adjusted to in very Chad our of as that

revenues, a results will was drilling was $XX in Basin This XXXX, I properties $X the gain from gas XXXX. the and a working with generated parts million revenues share were that fiscal Permian financial September XXXX Panhandle of XXXX on due more the natural during and XX, $XX in during undeveloped million this production XXXX. NGL natural Texas some regarding due In Oil, significant the New detail in year million the XXXX. of now came you interest our increase in primarily from online for ended program to XX% million to sale early our decline compared predominantly primarily Mexico to the minerals XXXX. for down $XX

of natural contracts million decline, we rates. company XXXX. a a hyperbolic loss high from their $X.X experienced versus derivatives on has which in had million XXXX properties also these on $X.X expected derivative from The gain of a Production initial in

cease Ford reports. impairment therefore, by the on participating XXXX with the strategic The was acreage of and the interest million prior before impairment our $XX.X XXXX, of million $XX.X X.X% the million Eagle the from proved forward, of the and The to which undeveloped to point leasehold experiment reserves decision expenses working in mineral $XX.X interest to increased in a a quarter working assets. from the removing Ford on Eagle non-cash Total fourth non-cash recorded in year. predominantly the all Shale going company's reserve assets related company caused

for cover undiscounted to flows The expense were Panhandle’s also as $XX removal written down fail at one assets million also The the caused to These GAAP the PUDs value reserves to of of not net undeveloped by book were working as required ownership. approximately interest high of step fair removal impairment to assets their enough the test capital cash its the X/XX/XXXX. of the eliminated the assets. basis proved obligations, market

during recorded XXXX. impairment No was

the the quarter on $X.XX XXXX temporarily we increase, ago. on the DD&A rate strategic lower. the assets, in impact forward Ford be on proved XXXX was noted no year noted versus fourth the to predominantly to Our strategic the reserves DD&A The in leasehold company’s mineral negatively spiked the caused was the be the due DD&A our rate from previous approximate decision This impacted the company's focus to noted positions. to Eagle used reserve per $X.XX fourth quarter undeveloped from in ownership, of as expect moment which was could decision DD&A all significantly DD&A Mcfe company Considering quarter. Based of Eagle Ford, just to calculation end impairment also before, our the million. quarter's XXXX XXXX per those report, a company's I on in fourth on working DD&A interest volumes our removed longer increase $X.X Mcfe of going

Oklahoma total a production increase that excluding relative XX% influenced Mcfe per in XXXX. lower were driven in to cost taxes The interest company interest rate effective working as by respectively the production was also XXXX. increase previously. higher expense DD&A impairment and beginning last quarter The saw XXXX Interest bank primarily and by and rates noted increase of tax was production in

$XXX,XXX expenses. to in also of the expense well other as increased compensation a one-time Approximately resignation personnel. $XXX,XXX to primarily and G&A restricted retirements and stock increased non-recurring the changes attributable are CEO, as due former to non-recurring severance the expenses due G&A Our of of increases company's upon expense

net in million pre-tax $X.X increased XXXX from adjusted in $XX.X XXXX. million income Our XXX% to

XXXX. $XX.X adjusted Our XX% increase was was EBITDA million XXXX, to which in a $XX the in compared million

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

company shareholders generated us free cash and million debt to $XX.X repurchases through The dividend excess stock enabling flow, to return reduction. payments,

through deploy and hedging XXXX. an which We XXXX program, active continue to extends commodity into out early

Currently, barrel price XXXX. we have hedged of at of a barrels XXX,XXX for approximately calendar $XX per oil

We a at $X.XX XXXX, X.X of price which meaningfully hedge for also above Mcf the price. gas calendar natural natural of is have gas Bcf per current

been in We have program to hedging this lock to able through and returns favorable continue. shareholders continually plan for our

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

to turn Now, to Chad back call I will the conclude.

Chad Stephens

contributing in company and success. have coming new year. Panhandle how I'm with the of look you opportunity employees results the like for to to Thank like their XXXX in this and the our set pleased strategic about apprised to tireless this we I keeping efforts to would take forward direction reiterate progress our Robb. for we the all thank are excited would of you, to

prepared portion the Operator, please concludes for questions. open the up the This remarks of let's queue call.

Operator

our [Operator question ahead. Capital. first go John from with White Instructions]. And Please ROTH comes

John White

interest on will change marketing direction the be I the to properties? understand I actual reserve you associated the of your -- volumes. write-down with the sell undertaking will to to you understand be impairment that. the clarify, seeking be the So related PUDs working just in -- will effort But you strategic

Robb Winfield

Yes, John.

a that's of We’ve particularly interest in interested couple are non-op opportunities. working currently different We company development found working one on opportunities.

yes, that. So we're on working

John White

that so could back in. money come Yes,

Robb Winfield

Well.

John White

A portion could of that in. money come back

Robb Winfield

is not drilling market A The small valuing locations. robustly really portion.

we robust what we to get try just have drilling the we cash real It's much can will as but So flow to locations. a not take get. from as market can we

Ralph D'Amico

different a whether like binary it, those Yes. There's an I or to undeveloped lots don't And spud override options it from value mean we're we an mean from of a Ralph. right? exploring AFE. getting that, that somebody not it's variety for I create John, take sell or locations. I it's I fee -- over could creating there's it think think other just sell options

John White

on I'm all to top do. on sure you've Well, you forward of staying story. the to done work the But more congratulations on have transition. look the

Operator

And Rich Point Boiling our next comes from with Resources. Howard question

Rich Howard

there has realization need we wonder, been have do as effect on Or tax follow And I there with I charge? a a couple -- of is other impairment the ups well. transactions? that

Robb Winfield

over a Yes, time with cost there's going be depletion. realization to our

to a tax since available If cost depleted there sale, sale would But are all tax over it'll going been that been advantage. it. that right we some get would benefit of have a time. loss, But So away. be just and there there no was impairment, would that a get have been will have

Rich Howard

not that And have non-consent on a option? we gone wells or is any

Robb Winfield

recently the major asset and of non-consent, working looking associated obligations. and drilling with gone for we're we while the sent more have the someone operator wells those is on has The impact Yes. Eagle impairment on which assets, take the to AFEs drilling Ford on of

Rich Howard

And say what XXX%, are non-consent? the pays mean I considerations if out that on will

then us? it not become valuable would to

Robb Winfield

The XXX%. non-consent penalty is

Rich Howard

XXX%. was XXX%, That not

Robb Winfield

in. come would it never Virtually, back Yes.

Rich Howard

well. but would We Yes, hope it no. would

very more sounds Chad. question, reasonable. That Okay. One

to guess current begin when continue to when $XX too, we we the of EBITDA, taxes? of is Robb impact would I -- for if million generate So feel we would this

Robb Winfield

pay say would realistically Rich. with time before tax. to cash of significantly, we probably be that be going with our rough commodity a to or unless going It's three carry That's estimate AMT pay forward. tax. to going cost depletion up prices a I have and bit to come little But four we be years it's it's our a a cash before

Chad Stephens

still IDCs. did will question cease that the working can we a the the that’s of end Rich NAV day, we At create benefit realize of tax lose the we good we going think And we interest in because as direction. more participating this wells

Operator

questions there I'll management from to be to no remarks. back for further turn And appear Instructions] over [Operator it any closing the phones.

Chad Stephens

said to participating We we on I like keeping before, appreciate the everyone look again. Thanks through year. And move as the call. you up-to-date forward

Operator

And today's participation. teleconference. that We your conclude does appreciate

You your lines and day. have great disconnect a may

PHX Minerals (PHX) 12 Dec 192019 Q4 Earnings call transcript