PHX - Earnings call transcript Q2 2022

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Operator

Good day, everyone and welcome to the PHX Minerals 2022 Second Fiscal Quarter Earnings Conference Call. Today’s conference is being recorded. I would now like to turn the call over to Ralph D’Amico. PHX’s Vice President and Chief Financial Officer. Please go ahead.

Ralph D’Amico

us discuss joining fiscal XXXX for results. quarter you today our to second Thank the for Danielle call Chad on me With today and of Executive President Stephens, prepared Chief Officer Vice and Mezo, Engineering. President are remarks, prepared to Q&A call session. up a we open After remarks, the will on The earnings posted was Relations website. yesterday is issued press Investor earlier release also that the

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

turn information the Officer. over As call Executive the call. time in presented assumes PHX’s like the update of Stephens. date to today’s to and that, no of this call to obligation PHX Chief With Chad I’d

Chad Stephens

your your interest the Thanks sincerely quarter participating call. in and Ralph. for PHX’s continued line appreciate second on company. conference And the to XXXX We in everyone thanks time

two pursue focus acquisition since September progress in core of the to our of XXXX. XX remarkable strategy implementing made transactions years have areas in over almost minerals our the closed million having last We proactively

the referenced closed of proceeds marginal by working As focused redeploying this hydrating mineral margin have scoop acquisition scheduled minerals and million interest in we in close the wells undeveloped of transactions, and Louisiana. part valued These the divesting our asset of fiscal we areas Haynesville non-operated XX.X strategy, in concentration, southern lower XXXX million a and million our and end efforts. by Oklahoma X.X May. our Included just with in the on of of on are of to total base all have East mineral year-to-date, higher mature, XX Texas in another

drillers All mineral of are under operators. our rock in of active quality, areas acquisitions high with reputable

in is and coming as payable most mineral our in return increase and growing announced quarterly royalty as to this by continuing dividend capital recent volumes flow. feed As acquisition our which will the in This growing cash dividends. of follows provide continue free the recently quarters, quarters via highlighted XXXX increasing has evidenced to in well the future XX% will increase drive steadily two shareholders in program increasing stream a cash the our XX% to This December board’s June XXXX. flow

return on to note of improving recently we recently capital will driving are employed. part You acquired sales minerals the turned that new also that wells an were

in volumes return moment, a more improve We less our detail discuss will increases and to become expect employed impactful on Ralph in in legacy quarters. continue to roll which our hedges, next as COVID capital off few and the

on focus return. rates new will our her Danielle areas and to add We of our drilling ability steady are in and for areas Haynesville mineral the of acquisition flow over of mineral position confident are excited and turn see to the I call core attractive now scoop opportunities core to in the growing activity. our update focus to

Danielle Mezo

everyone to the on participating morning call. good and Chad, Thanks

converted wells to party majority the quarter-over-quarter in our X.XX or net to X.XX new to or well the on producing PDP the converted third quarter compared width in active quarter, increase minerals of width XX% which second is a located progress nearly gross place. gross scoop on the with Haynesville the During operators XXX first or XX and

result wells The the Additionally, our gross a X.X quarter This the net executing located the and at call. compared paired with growth acquisition wells majority and gross these prior in activity XXX of doubled on XX our growth pX.XX to in or commodity inventory in earnings as are of end the prices. is mineral scoop to also Haynesville progress net of our gross second wells reported strategy place. successfully direct in well of

well of in producing have the what we progress. increasing to Additionally, inventory able drive free coming replenishment new will This by net net in converted and flow well is our measured quarters. royalty with drilling to been cash continued the volume replace all width

well In in to addition regularly PHX rigs monitor X.X rigs activity on indicate we X.X miles observed present party we third of in as first operator XX active on quarter. inventory, areas. to activity compared focus inventory We our March, continue consistent ownership XX to acreage and minerals XX as PHX and within our rigs XX that will we XX within our is well as converted see and rig to on and miles minerals width reported that strong near encouraging The present rig the PDP. and a rigs

to the financial. Now Ralph call discuss back to turn I will

Ralph D’Amico

for Danielle. today. being And for on everyone the Thanks, thanks call

in XX% in coming sales as quarters received for natural sales from of acquired oil Royalty million. X% Bcfe newly XX, attributable XX.X% developed Bcfe. natural gas in for legacy to X.XX NGL increase March production the total January attributable hydrocarbon second mature the total and place to down interest record accounted to our early gas, drilled volumes royalty of volumes, lower million. in Royalty working our volumes declined. by prior in prior or XXXX, total prices increased our Haynesville Average comprised represented increase We X% a driven Mcfe XX.X% the in sequential and and of hydrocarbon minerals a interest and of for stream. volumes production Natural X% basis to corporate on basis percent and a pricing gas, was realized is gas ended to from a were the This this our increased $X.XX, the XX% XX% in the newly the Realized market, a For [Indiscernible]. sales. sequential the total primarily quarter sales hedge increasing oil primarily are revenues X.X primarily quarter in quarter non-working which February. wells quarter anticipate our Scoop sequential of a and completed quarter were natural of were fiscal NGL X.XX volumes quarter on the total losses and XX.X total

about into of majority over of approximately $X.XX majority remaining XX% entered For our XX% gas, production hedged of future average quarters. changes to $X.XX XXXX in oil gas the XX.X roll place hedges XXXX. of contracts the next less a volumes our quarter quarter totaled natural to cash These these as the impactful to of of are to XX, March during from and volumes from couple losses of price The and million contracts our layered XX, time the $X.XX losses of of and at market mark hedge $XXX.XX $XX.XX become NGL and respectively and prices December will were the present Unrealized result value during in COVID respectively. to $X.XX the not X% off settlements. increasing that during were mark-to-market and oil

to our based XX% As Mcfe for across The quarter’s caused the $X.XX overs in that the on the to inflation LOE for XX, production per we volumes the will XXXX, company’s The see sequential on hedge these value That relatively to Ford the or $XXX,XXX Eagle XXX,XXX XXX,XXX to said, ended attributable offset decreased call on this period basis. receive decrease Note only. working flat that quarter of contracts be in we the quarter. end bigger, in the range work on December higher interest future expenses that between working on price last will properties. service LOE and higher is our prevailing fewer quarter of the mentioned which higher enabled work interest remain a settle to over quarterly contracts. the revenues our I industry which the prices of properties continue

X.X and of Delaware reincorporation to divestiture and Going margin The reduce increased quarter. first million lower net included generated book. due such regions, legal would an increased of prior second certain a loss was volumes, of gathering with Cash, expect quarter the in expenses. absolute volumes million items, relative sequential onetime realized the to basis X.X the The expenses. prioritize quarter million to basis fiscal X.X the taxes to in XX% a to book. the from associated the prior Backing primarily XX.X costs quarter XXXX Total quarter. to our on sequential was quarter the continue X.X XXXX gain hedge higher basis million, transportation during gas as hedge XX% higher million of compared these forward, net which loss X.X sales producing our will fiscal quarter compared due future quarter EBITDA transportation, in wells, higher our timing our out income this a X.XX which X shale a the during quarter. on income Production have Pre-tax the play, G&A quarter million commodity prices. to million we LOE on to Adjusted primarily million lower offset sequential to X% prior by the the has this our million X.XX unrealized on million included and pre-tax loss audit on unrealized sequential for mark-to-market we other marketing company to Haynesville. we of Fayetteville to compared X.X due expenses increased X.X

debt XX associated in the prior line is previously XX, increase with Our as of development million mineral sight with XXXX Haynesville. to increase XX quarter, from of million acquisitions the March the announced total the

borrowing our is very one from Our X.XX comfortable independent Also with, we’ve XX EBITDA through us on talked enables execute debt currently number range borrowing low a successfully. update the redetermination we’re our and strategy times, the are that to financial base in trailing lenders we going that more X. before base with an we May to which is about month a think

at borrowing next like or out put Chad to With a this And next in expect release finalized. finalized two and to that step point, the the that expect out I’d weeks so. to We’ll we base final once increase. that to announced turn some press our over remarks. is We call have over the for

Chad Stephens

was over things to reflection increasing see Yes. thinking royalty to we and our quarter, highlighted Ralph. of stress direct a which do just our really was will way to quarter-over-quarter. free really I back volumes flow, press see cash increasing in quarters, pleased the some in material driving its pleased obviously the this want cash In release lower future and the we’re impact we’re really, off Thanks, important a success program COVID acquisition these that next up. which of of financials. on That’s And our flow, rolling hedges have two

we’re see to fundamentals particularly happy that. positive in natural continue energy really gas the sector. we space Generally, macro the So about in

We volumes concludes our the employees are queue I royalty increasing keeping which am remarks provides execute invaluable main strategy my strategy in who cash up coming ultimately portion embraced look confident progress like you of on directors today. who proud and of able obviously. the is our into Operator would board quarters. call. us our questions. joining to have in wisdom that please we dedication. forward which also PHX value I our worked continue the updated enthusiasm We and and will our to quarters shareholder appreciation very alluded be to. the flow express to to to and for as I It associated with on will coming prepared focus will the This hard drive Thanks the of advice. for again open translate

Operator

of conducting comes Please you. we your with This time Instructions] with John And question Stifel. the from be Thank first line question. question and [Operator a proceed [Indiscernible] will our answer session.

Unidentified Analyst

know strong a QX in on volumes can on to seen for With start I Good royalty the you year? couple the hold and not but parts trying trend? to moving acquisitions, closed certainly first And quarter? morning question, your to the expectations to just all pending activity and with you an of you congrats my rest update. the a absolute the and number, speak for general then are there have the recently the based trend

Ralph D’Amico

Ralph. John, Hey, it’s

to at XXXX. So XX% wells I compared remain quite we of what very royalty on over At as XX% the little guided remember just on bit fiscal I we’ve size growth. north looking somewhere when of they numbers. the point, continue those this ‘XX was to between that those last fiscal think the volumes tend percentage those couple we larger make of a compared And would acquisitions that comfortable XX% quarters, in deal and acquisitions, average, frankly, year-over-year we grow On to progress more probably to may PDP. think have we’re with a

So with production. you should have fiscal have material effects year put acquisitions But the as ‘XX complete really ending, those fiscal some more and our are XX ‘XX. in see effect on them fiscal to those going the September in them wells operators

Unidentified Analyst

the appreciate I Great, color.

my for bonuses of and prices the light follow in you XXXX? on up rig the potential commodity For comment can higher count, lease in

Danielle Mezo

Yes, is this Danielle.

of see rest that on this year-over-year as bonus rate side. increase would it to And through now. to sits expect year going continue we lease an the continued same seen have we So

Ralph D’Amico

Totally Anadarko are especially where to of are our around you requests rig lot agree. activity, can of lots in open we of are basin, these lot inbound minerals legacy these active. see rigs the A minerals a the where in lease seeing counts and

yes. So

Chad Stephens

the continue you divested areas, we’re capital quarters in have those, and to to have opportunities. other those keep and development core In minerals John will a more source actually areas our sight acquisitions so thing, that looking about in we future One some in where at of as the core fund open of line outside of strategy in our another it base. of actually asset do of the hydrating part oXX-Q mind of is, can read opportunities

Unidentified Analyst

ask terms with flow prices? on and helpful. squeeze in prepared ask widened and I to remarks one commodity the elaborate Can you spread on of higher could market. whether Very question in you share last AMD your has you’re If bid the deal seeing what

Ralph D’Amico

of for it relatively recently these time Based inclined some closing, where or that this will strip prices are But were year. us we into closed is prices versus are where commodity sellers paying, more acquisition especially bit last a on the news what we’re be are flat. acquisitions this good sell to we appears maybe price

a as steady deals. of So it’s stream with us helping good inbound active just

Unidentified Analyst

thanks for year taking my again update. questions that on congrats sense, and Makes

Operator

end closing And President of it turn and like looks we the I’ll over session. CEO and call Chad have our the Stephens the question now will reached back for remarks. I answer to

Chad Stephens

an call. participating all look appreciate you good in you Have day. and update a quarterly We very today to forward our Thank next much.

Operator

concludes Thank you this This conference your today’s disconnect participation. may and at lines time. you for your

PHX Minerals (PHX) 10 May 222022 Q2 Earnings call transcript