- Earnings call transcript Q4 2022

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Operator

Good morning and thank you for attending today's PHX Minerals Fiscal 2022 Fourth Quarter and Year End Earnings Conference Call. At this time, all lines will be muted during the presentation of the call with an opportunity for a Q&A session at the end. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Steven Li with FMK IR. Please go ahead, sir.

Steven Li

thank Minerals for and fiscal results. and to us year operator, PHX discuss XXXX you, you joining all today end Thank fourth quarter

us Engineering. and afternoon on Chief Stephens, Officer; and issued are Officer; Joining yesterday Vice is D’Amico, press Financial call PHX’s President release Mezo, website. Chief was of Ralph President posted and earnings Investor Executive Chad Vice Senior Danielle the on The also President Relations today that

Chad, I Q&A Before that those I future not Stephens, Chad? like the to actual different to make I report like Chad information, unless Executive a as are or recent subsequent Officer. events update other information over over With amended would other as to the These today, Exchange reports today's made supplemented earnings, December new intend this be statements XXXX, materially on the or Commission. call by based does turn of everyone expectation to otherwise, that, Securities other quarterly remind including expressed with forward-looking PHX detailed be revenue, company. may or The company by may on during and Form most estimates XX-K and cause these session, are call. Chief would as forward-looking known forward-looking whether that plans, call in and and the statements turn during expected result known statements reports filed to or involve These upon PHX's call XX-Q the to from to required the results law. may XX, opportunities annual of and future Form on of and implied statements the call, unknown regarding Minerals risks PHX uncertainties such risks management

Chad Stephens

new This year Thanks, improvements interest results. for year conference was end in company. and for appreciate in PHX, progress fiscal fiscal call. the for your We year of call in you this and of participating XXXX tangible to on financial XXXX the thanks all poised entered our Steven, PHX's year a we significant

began under XXXX strategy our low to in royalty and exiting legacy strategic new high assets Our fixed leadership. coming to late transition and and expect production we trend cost high by improvements base cost into profitability a reflect transition results This to is asset model significant focus. sharp continue. pure cash generation our grade this The in

royalty represent program. of this to of executing interest royalty royalty production growing be XXXX plan our year and immaterial. volumes all-time prove We than total will to quarter high remaining transition levels the legacy of corporate through in material Both plan, which are reserves working our greater will a mineral royalty our after volumes XXXX. we the reserves final to targeted volumes stated fiscal of divest reached acquisition according XX% working our and formative virtually interest as be portion assets, non-operated will fourth

toward sufficient size and of larger the nimble enough our allocate natural expectations. We term of sweet of but a returns pursue in regions competitors, ahead royalty of pipeline enough gas. potential Our with to capture in to is spot competitors' capital the targeted operational weighting through the interest. material with operate remains not something which strategy robust. expertise strategy in small are a industry and outperform to acquisitions to delivering production existing scale acquisitions, heavy our acquisition stated working, for This is the Encouragingly, near our

and cash flow. demand price addition, natural improve supply In us and gas remains leverage to favorable, commodity for giving the profitability

to which cash utilize assets XXX% more locations, has production and and over then quickly be we which that to positioned mineral contain provide volumes. development of scale our last continue a cash royalty continue as to to quick Danielle? Our expand Danielle convert flow plan overview additional acquire over we to free our remains drilling Simultaneously, royalty weighted to natural At I'd increase Ralph call expect most same, will will we operational the increase the dividend to to profitability, six to to the and to the point, discuss quarters. like risen turn this financials. gas

Danielle Mezo

At the $XXX.X over participating good at on Jeff, morning year SEC million increased XX.X royalty pricing. year by Thanks, XX, with XXXX, and XX% to September reserves PV-XX everyone of the proved development acquisition our successful reserves to million, And the call. primarily XX% increased and XX.X $XXX.X and of a of drilling term in royalty the near probable increased the our Haynesville our strategy execution PV-XX to SCOOP. due to Bcfe activities with Bcfe

our XX.X X% to million a business. we Our our of execute portion continue decreased as pricing, SEC the reserves total this of divestiture working at of with $XXX.X strategy to of non-operated result Bcfe a exit corporate PV-XX to proved interest as legacy assets our primarily

increase Going to our working continue to to royalty reserves to and forward, reserves our expect continue decrease. we interest

the party the net to progress our are gross WIP wells producing online located and or converted to third WIPs Haynesville. quarter, PDP the on quarter. operators the new wells During brought active or converted X.XX compared gross of wells, XX fourth net in The in X.XX majority or in SCOOP third XX the minerals to

or growth or of wells repeatability of the XXXX. of net compared XX, convert year to of to conversions net increase. wells XXXX, in wells gross September XXXX. reported June XXXX, At same XXX the compared had The strategy. XXX inventory as effectively business and wells gross of XX, over increased we year progress net is For year inventory in progress That to XXX% as net of continued well also X.XX the our show gross gross, a to in fiscal X.XX time, X.XX wells as our X.XX or zero wells full producing X,XXX fiscal XXX

present observed PHX acreage to we operator November rig monitor on rigs as In areas Minerals our activities XX inventory, well focus of addition regularly party third XX. in and

X.X increased that active rigs our levels miles Additionally, on number is of quarter we acreage had ownership. note we to on the over The legacy these it and in our development rigs recently about indicators both to active And acreage PHX increasing near SCOOP within mineral our of In and are our quarter. in and excited our for summary, important continue have minerals royalty consistent positive stayed has assets Haynesville. areas XX acquired see active core volume. future heightened

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

Ralph D’Amico

being Danielle, both successful an Thanks, call for on We today. financial ‘XX and very had to from you fiscal standpoint. thank the a and everyone operational

to high adjusted and volumes production all-time fiscal EBITDA fiscal XXXX reached XXXX. for royalty an Our XX.X% increased compared

XX, natural gas, and sequential a of million. NGL September basis total ended quarter increased XX% sales oil $XX.X quarter revenues fourth XXXX, fiscal For a on to

represents For basis, to fiscal increased royalty an revenues increase wells XXXX. sequential XXXX primarily were and interest Royalty production decline new converting million, on XX% X% $XX.X the sales -- and fiscal which over due to natural XX% a total production quarter production fiscal year XXXX, wells. on increased working

that an lower key of production for year, in forma volume received natural in sustainable XX% sales over that natural during for during volumes royalty to we production fiscal the future. we legacy total pace quarter a September XX% volumes. X.X full year. total gas, wells and growth these X% our up the fiscal figures with natural as of include volumes drilling sold was the fuel production Fayetteville Bcfe production production Average for year operated to corporate from late term XXXX. aligns total fiscal the Note, full the fourth fiscal year above as $X.XX. XX% oil transition to and of production sale, represent up strategy the our discussed accelerate Pro gas, corporate which non X.X interest primarily rate XXXX quarter attributable of XX% operators quarter of NGL royalty the prior continue were Bcfe. working over Mcfe basis fourth calls core were royalty working The prices Royalty the interest was to production our the is volumes For X% to up sequentially and XX% energy represented to our in long on areas. total growth fiscal is wells. gas would in XX% This

to prices and fiscal for year. $XX the XX% million were the full the an Realized for fiscal $X per million hedge $X.XX quarter of losses year Mcfe. average For increased

the off none quarter, the of time increased approximately absolute cash our The remaining couple our the NGL our that an NGL we on and production prices $XX.XX, For and these during realized late were in XXXX saw XXXX. roll none to respectively. flow prices volumes same will higher full assuming XXXX and associated These mineral million sold in for XX% XX% our will of we entered Recall, $X.X and to to respectively. during transportation, quarter XX% of quarter in approximately average the the an improved a on lenders movements expenses into oil have tied that XX% a basis LOE Total fiscal production $X.XX associated our with primarily have $XXX,XXX, flat of quarters. fiscal over that performance wage volumes Adjusted of request on higher gas, and taxes of full production year component, are average and million increased were to to due months, $X.X the we layered primarily XX% the $X.XX million These $X.X fiscal quarter were as and to in a shift experienced LOE in and XX% over expect legacy our September. inflation, become prices. which G&A hedged at oil commodity $XX.XX, basis quarter million million completely million. in prices interest Delaware. also were of that half to sequential interest should $X.X both to And to wells reincorporation year year the year, a continue of legacy on of $XXX,XXX, the in of year COVID next legacy third of over on working natural quarter commodity Cash basis $X.XX volumes natural our basis. These at gathering working wells primarily million gas, and at recent operated movements our in fiscal non basis. company. hedged time. year mid increase a production at on we of sequential sequential full compared include EBITDA relevant marketing costs in was only lead full activity announced the volumes, to year over approximately and X% strategic expenses sold over XX% the we on our $X a $X.X at of inflation XX% our sequential the at increased company, a majority to basis the for to quarter levels basis in in to hedged assets figures and with the which are the X% an Fayetteville $X.X for of to tied year that Since of less overall end to to Production contracts but increased volumes price quarter. and million an to fourth decreased

million full EBITDA XXXX Net adjusted million fiscal was million the quarter. year. the prior for the sequential the income year For prior $X.X million $XX.X was $X.X compared to for $XX.X compared quarter to

million trailing base September million EBITDA We adjusted debt as year at our to $XX which income to entered $XX.X execute facility loss full total to strategy. XX to continues on our For flat of times discipline credit our compared and $X.X million XX, net our a debt December we remained ago, had an net of at On financial million. was as and a $XX.X was growth we compared month show of into XXXX. in borrowing amendment XXXX, X, to reaffirmed our X.X year

Financial welcome We in group into bank UMB first. Bank our Independent joining also mid

to us calendar year the the our of effort, September enhance in XXXX our from streamline earnings it to financial to filed. XX. next end XX investors will business four the for of release and four companies traded key earnings prior standpoint, performance and our with This of As Investor reporting and release the effort and to file our the within make to fiscal we industry line XX-Qs times and migrate reporting being our and From to will metrics change group. easier are going reporting bring annual year rest report Relations part company December an publicly minerals a the evaluate SEC in schedule

we calendar Our will report December XXXX mid-February. year our calendar Form and next forward filed in XX, be annual year period when We fiscal the plan XXXX guidance the XX-K for report XXXX ended year looking ended on fiscal results to December provide XXXX. in XX, for for

place, market associated the at made program program. the it. determination to we justify how costs in no at keeping the little our terminate The offering longer marketing used -- actually have the given the Finally, have with program we

significantly liquidity until corporate growth a addition, strategy. has our facilitate it like to remain the represents registration good to ago over call the program execution from position In some the when implemented I'd expires year for the remarks. final improved little of turn place that a to practice. Note we this in shelf our With that, as over Chad will

Chad Stephens

Thanks, Ralph.

platform. is cash you turning profitability into mineral As additional our and and expand financially to cash sound, strategy generation that increasingly growth, can to we leading further assets our see, are

development core great be to that and is year acquisitions Our for our our further its and employees repeatable PHX, I of targets shareholders. advancing believe we pipeline fiscal have a areas XXXX growth. with tremendous operators a active sight is its will and growing and team robust under for line

our we them like would outstanding in on year As end, achieving close and XXXX. results thank work employees out their our to congratulate hard fiscal for I dedicated

our Directors strategy. for the corporate their provide open up remarks of insightful This concludes for the executing Board support would wisdom queue prepared the like to our I of please they Additionally, and portion Operator, call. questions. in thank

Operator

you. Thank

[Operator conducting proceed We Whitfield the be will your Instructions] question-and-answer. come with questions. with Stifel. first question a has line now Derrick of Our from Please

Derrick Whitfield

A&D all quarter congrats morning progress. your and and Good on recent

Chad Stephens

Thanks, Derrick.

Derrick Whitfield

to that XX, focus you the have well Can III certainly to wave expected over on activity. question line sizable in any I and you trajectory on? the come understanding royalty looking it months? packages you next trajectory you're your on sight production my guidance activity and based pages And at expecting a six With February, appears XX that's of on at provide Springboard the wanted XXXX formal -- of comment will

Ralph D’Amico

Yes. Derrick, Hey Ralph. it's

as it start me well. is going Danielle Let then and chime to in

in at it's think the look if of in that number 'XX, gross that XXX fiscal right? look upwards important but the wells, right, really a change, converted The X.XX grew XX% year important basis. is you And we volumes converted at. by I what over net on is we to net well year

into go an we inventory wells we As progress. have of in XXXX,

these change that to of have right, right. year, being been wells which total to filed Approximately and we that been and being worked on have number of the permits X.XX pretty So number in currently net spud our saw are asset are X.XX, PDP that same in convert already have worked on. last wells another base brings much the we

right, worked currently Obviously, if may our trend that on see base new X.XX filed, than We right. the a double see you conservative a year permits year, probable So starting did pretty as very over we're higher even a or being digit X.XX, activity progresses, that's think right, that what base. which beyond from year you last I royalty should encouraged But assumption. additional the asset is year healthy follows, being even increase. you're any locations volumes without pretty

Danielle Mezo

we continue now. our the strong will wells in Haynesville, royalty see course of WIPs DUCs there in to activity over progress and the help really year. And of next the lots right That support to out growth very

six last are for converted consistently the wells an in of side seen Continental six East permits, being activity, activity play. for on we've But in drilling out there completion Springboard seen months, so. acceleration quarter quarters the the We five, recent increase of a the particularly more the We've also and III. an seeing or

expect XXXX. our that in start here as supporting to coming So do growth we late and in well

activity strong both fronts. on So

Chad Stephens

our starts in IR direct website. probable that have. sense most tangible deck is recent can Chad. growth this our can the the see out on Also really number you royalty of investment -- our gross putting And slide there, we're community to locations Derrick, probable of we that with the volume we

from our conversions, it's Haynesville which it this are over have year of about of last that some coming the last our time. Danielle legacy and of talking -- are it are you was X time probable and activity We gross that and the SCOOP that's this approaching and was the year see in to of been And now that's category in couple this And about. gross XXX years STACK. the X.X, the all can X,XXX Ralph source

we actual we that, -- last And So royalty from doubled we X. this the about inventory the time, in year this net to speaks the interest, at acquiring and year last interest Haynesville locations, year, the to net today core which these we're wells we're inventory double are were drilling in about X.X interest. that

again, this drilling, and the their maps, growth have probable So we the area have are to there's in is have volume we want operators engineering, tight locations the we develop we of obviously those geology, they all source curves, real royalty have leasehold.

it's growth feed to real, royalty it's tangible So to inquiring about. continue and trend that and it's you're that our going overall volume

Ralph D’Amico

within location think that it's say operator are says note probable, we when the we definition, from it's have per paper probable SEC don't to on down I written would that, the we as that SEC to because going something an important drill probable And of it on deem undeveloped to those books. timeframe locations approved that locations develop proved are the a it significant location. would actually the say I portion operators' venture the and

and these are a Chad it's these So on semantics very the folks, are as bit -- high of little referenced. definition, oil locations for gas but quality

Derrick Whitfield

material or could for minerals well? as the pending the you mineral non-core focus guys. your for interest of in color light speak And environment would you there to And terrific basins your working in you That's separately, and Ralph, broader perhaps pursue Chad, pipeline are divestitures? divestitures A&D

Chad Stephens

Yes.

went call notes just somewhat address to the -- that we in that we notes attempted just I through. So that

given sweet and think, in we're we're the the there we growing. way larger down food deals a in material $XX the XXXX. -- are have the million larger in deal the on to to companies of XXXX, we the in million early million and us, there's And the that on to spot our $X which that moves size out chain need focusing been range. a late $XXX $X this been we focused since $XXX million is and started We've we and as needle. And of range, larger some total to about on packages, we over somewhat are closed, in closed we mineral included our worth are look worth acquisitions food asset the focusing talked packages to deal and size, deals $XX grow XXXX different in $XX we press chain accumulate acquisitions. we're million small XX million at million company, But release of I XXXX So that that to

deal areas money to the spending, basis a So reserve terms kind acquisitions -- growth $XX as which all deal to continue steady, relatively well. deal allocating now. lot see million see doing move quarterly quarterly the the that range, but royalty in of we're important which see we the royalty at kind $X see focused. the and optimistic, steady closings, deals. $X of of those a in all collectively We all day, They're we'll we're flow. small, continue in flow, us million where volume for the we're needle continue We $XX -- of of is of move we're a in million they And the quarter to capital to it range, million the us we can robust the is growth, we're we to confident very continue we're to the end on

about we're So excited very that.

dividend volumes grow because and Board us increase, approved dividend to to too, which for I continue the cash most is ability they royalty to think ultimately overall flow. EBITDA our recent and the speaks increase, our this that of confident

Ralph D’Amico

there working to competition. basically of in Yes, the of a don't term, and put bigger have together the smaller we very We've these sale interest a much go have efficiently the proceeds redeploy good news is, of chase, deals the from to few and better hunting about we assets. aggregate deals is we bigger quickly Chad for terms talked lack don't where system we of elephant can quite a where can that

Chad Stephens

So have royalty trend growth we're that to we last, really that or really the ability now or three royalty excited over volume grow say, demonstrated the four volumes. have and trend quarters about the

minerals, and They any So Gas us. minerals, was and which to Panhandle or question, not activity no the basins Oil never they're to the old value address real strategic your the had us. legacy, unleashed to other of margins the open, legacy have on on non-core them these

technology term. cash never they commodity it's developed. very these any price environment, doubtful near may flow return But drilled or will Someday, under be any the or there's of current in to -- somehow minerals that

companies we're various XXX,XXX These there, about So there U.S. all those XXX and we about we're out steadily -- have And the mineral their non-core business, strategy. off what their attempting to with small areas. non-core sell discussions to all that's net them continuing today from mineral acres Ralph, piecemealing that's assets are which own, over private minerals,

focus to on sales -- it into can sales continuing we're nonmineral those we're acquisitions non-core we So take mineral redeploy me, immediately. proceeds and excuse that cash focused these into that. those turn flow and turning And on

improving base -- us. grading are the So overall and to asset a of flowing asset just way referring cash the asset keep and base, I again, interest high that quality just as for the

Derrick Whitfield

again for That's great. update. Thanks the

Operator

you. Thank

question come with proceed next Capital Our Markets. from the of Donovan Please Schafer questions. Northland line has your with

Donovan Schafer

through off. serves by wanted of to of kind hedging kind lower -- of just you for as philosophy. lenders but rolling around say, first you year driven place ourselves But great Hi, a was last a sort much versus, about of questions. that have environment today looks and prices going pricing burden for and have burden I current commodity year, it's as next and the the under commentary your a of kind in taking reminder and reorient COVID it's It's the hedges that guys. like rolling your much a the kind It off. are lower you largely vehicle Thank investors What's strategy philosophy be so commodity of or Or way want that of you do where overall a a you want are your above you stability you of XX% below of flow downward. turned Do help to you review? of to there Do to your that and there to more kind more going? have manage want something? on guys to are Do have sort view for overall want hedged? kind prices adapt? exposed just strategically cash forward? you really who thinking XX% come stay kind XX% to or What kind how going hedged approach

Ralph D’Amico

certainly and refresher, One, XX% have put credit covenants right? our place, existing we as in just in should that hedges each and agreement PDP. require natural oil And it's a for gas

which to then that to the where sort use So sort we you have right, drop So in through forward right, us were sort like put PDP we the We've which that's got downside after a to swaps. really XXXX, any on obligations of the We tend hedges cash right? which months flow way through months collars, right? but XX for using to -- don't see think XX% XX, goes, of we one protect the of abnormal terms to collars, any from keep in producing of and have to right? in prices, is be portion, or can the it's really minimum, in exposed capital been XX in upside. through XX months So today because

into XXXX, upside, right, up speaking existing well. We summer, per obviously, to we're exposed calendar Generally all the to have right? as almost on right? mean, I right? at $X And close In collars, way exposure Mcf. protect So the this the downside, we our $XX if winter, on look you

debt is the standpoint, I cash believers of anything I one an still mean, price debt, us we're don't So a from conservative. very you because can And used fairly if flow capital we now that's being and But right? swan have we're any reduce EBITDA black lower even while easily to pay we're we we collars to quickly right, some program, times further. provide -- environment, very going can protection. giving which for pivot commodity that some sustainable acquisition if instrument think and that pivot obligations, the the happens, right downside have down upside,

to in quarters, that future, You right? end pricing, we'll up right? exposed good much pretty seeing and collars a into swan. new and come I right? we you is think production, look It's protecting that volumes, on as out, not a the And kind that -- probably exposed or as production have, you think near may total on that investors right? until but on volumes of unhedged, all gauge, to of better that on, it that I shakes rate you cannot when currently layer the remember don't will prices, standpoint, additional you becomes rate. All hedge higher hedge So we're ourselves that royalty it's right? XX% while we keep see any production growth showing that the should Because of a black

to happens that which So again. early I Chad happen in mid-XXXX never and would inherited

Donovan Schafer

they the math they changes one just pretty so of covenant maybe And underwrite But is -- have swaps, much to for and Okay. be of sort how that – versus things it on to it from there sort just collars clear, the standpoint? one They're formulas.

Ralph D’Amico

sort formulas. are of all Yes, they

Chad Stephens

done the Yes, it on one. requirement. same deck number meets price we careful pretty above mean, our cost the collars, the are floors two, they happy transparent are very want uses, we've forward. think our with the bank I going bank right? group very right? that what with I And less and number So we're be of like how the to plan collars, structure they And all has counterparties, our we

Donovan Schafer

lot sense. Okay. of That makes

Chad Stephens

real to add that Donovan, let quick. me

at our we grow attractive us to, as acquisitions strategy We macro, really said agreement requires Ralph been hedging we'll overall those bank us with to they've an found as real need from minimum, they've and some and helped grow fund partner growth. they lifeline to great the the Just continue to a and credit are but acquisitions.

will is we economic, volumes about -- we -- with pretty certain the the and in are to prices any almost scenario, sheet sensitivities to grow our volumes debt economics black their event decent. will a continue with natural operators and pretty So want at royalty drill to gas commodity even our our even Haynesville $X because at price feel if Haynesville protect swan good continue that the wellhead at balance

royalty our we think, continue grow. will So volumes, to

our black thing drop. some gas So swan hurt sort of if that the sheet only prices balance would be event could

So debt protect good it hedge Ralph our to to protect credit in want if and bank we pretty manage to commodity as times shape continue drop, EBITDA to and do we grow. to sheet we we're even said, facility prices And still – continue balance X as at that

Donovan Schafer

lower to is, we more you're if occurred the you point, it's key what to you place wanted sort sort no, for are your so for to the to commodity It no, wanted driver see a be -- opportunistic But saying action of no, as commitment banks of providing you in that could say, want can keep lower be the that take growth hedge, we valuable to we as you me more to and that revolver. if appropriate.

but it you ability -- to be so, a the you access off with, That's that logic. minimum trade trade-off than and you is gives the And hedging gives get more opportunistic. bit could the of that away that amount the to like that

Chad Stephens

upside the exposure. And good a us collars Exactly. give

Donovan Schafer

Yes, okay. just a I want question. housekeeping kind ask as to of

and you've guess, bit I from For $XX transaction next calendar last bit this with year there. a what million there. now we're acquisitions already There's like current of the I I know -- then -- in, elevated think And the a runway right that for G&A expense? fourth then quarter jump transactions two are in a should how know a done quarter, we a quarters activity but might of also quarter we expect,

of you know you we I forward, just down, So we kind mergers just see move could recent strips and if acquisition, way you bearings without of down, have to out the again, also that? but the depreciation, them stripped to or kind going acquisitions of we around but ongoing for -- to for then the things like DD&A, if as call kind G&A just And what plan just the like as some should that's and normalized going it do -- acquisitions. as for things get with divestiture, Fayetteville but a expenses legal

of forward? just going that kind to how So think about

Chad Stephens

Yes.

address me weeds little then bit. to going get let the a perspective real first, it macro from a I'm into Let Ralph

tiny, over moved team we So really -- took new it a were when whole I we management the at in to Panhandle was with I through issues. at -- in and were environment what old salaries some work of in, new and We was was was compensation were whole as brought XXXX as set CEO and comp had the a overall team bottom. that the regime we a the XXXX, technical kind and we

from COVID so speak, moved of by And kind there we building out of at XXXX, a teams. success. trying lot success up into scale, half teams for industry that, private the then management competition company everybody out The of so, of are pay the groups were their the groups private that fill their great to size. to bottom was equity doing these we're second was our was a overall management of we're well, prices out and and there positions fund XXXX, commodity equity And that we're the and moving having

I wage company to it you and can just for and a didn't anybody natural we liked together a a was cost somebody there than And and wage. put So just competition them want more really lose to lose pay a employees. industry had the lot an if I team fair inflation

were ‘XX, year this and the of market them team good kind of for sure up don't and lose our we them they've ‘XX make that work was what kind reward been between doing. bringing to to So we

ownership, of to four, three, percentage -- value years. five, what don't paying see build I and have they're to in in shareholder you the be increases will have I to thing the So six they're you're going worthy the There believe G&A. the people. I of want as ones the and and to have legacy build this ownership as want the doing, success that we guys. this and here next we're high the a quality strategy bringing dramatic. employees them be some employees to real -- model in led the over and some I more adding them we're it seeing not and We're retain but existing that natural, of don't keep

year it way But But year just the we see over So can want over them to it's quarters. I -- the few don't and has increasing market. last it reward Ralph

Ralph D’Amico

but debt statistics agree. has think much last graded mean etcetera, same. the about We've I our year would year that too. gone I it about we maintained asset I our see up, debt, in to like high And I base to No, right? think also encourage actually from you leverage So slightly way our have can the a think etcetera. this different you

that everybody future? happen from, year we're what And G&A So right, even operating going like a right? look susceptible that losing continues cash an to but very point, inflation mean, over personnel outcome. to the right? example, relative at together -- possibly right? scalable. in the into seen if else that worse same is So as this a improve we everybody I at suffering relational year, year, future, said, the as is Chad's the key metric, It's right, wage you that to time, flow, what's to metric is Chad question. you've mean, But put to I

years between on a straight working On depletion XX would Whereas bit a the non-producing. depending usually that percent on line DD&A, it's minerals that it's depreciation I interest a basis, DD&A or run say right? has producing XX and little is varies whether run differently,

grow it along working the relative the business, XXX% flat the side as how we right? hold interest rate many should that you relatively base on on working interest should may the company. close off should come of So make, the So a asset you basis, down only future with DD&A mineral But of as see business. we or come And then our it total acquisitions acquisitions DD&A of a growth we depending rolls to down grow to right? into see become it exit and

Donovan Schafer

it to does if think trying sequential royalty of a excuse but can interest -- think a versus royalty fast year squeeze find barrel as a ways where you'll growth royalty, just get I years, Okay. understand I unique -- turnover lot part also year so X% it's in things, in. because total like poses growth like interest royalty or versus guess a working of me, challenges working more you kind it's the one the I in dynamic, question, then concealed whole it I underneath of those there's almost interest they're it increase last about just than but in are a of it in terms And some for then upside anything, Because particularly on a this production barrel, think over I think I value provides create XX% and there's barrel the if or -- the the different. of full

course, and -- this of then way So on this the how reporting. in is with comes reserve technicality

say you like PUDs XXX like, of ones XXX here that interest. divestiture. to a to same or if quasi, reports kind kind difference wonder books, say, the for how data logic were this instead hypothetical, at allowed are it's auditor booked, those able on reserve this don't working look one this I your PUDs that almost now almost hey, of back like to have had net way of, they're on XXX PUDs, it’s at But someone would interest, net working have wonder If be into that from you the currently of be hold or kind past assay like the So we the part, maybe able sort or the the interest Fayetteville those that kind would to experiment, able royalty approximate just working of look PUDs get we a reserve sort exact be I took if the of reporting -- as to we like by working net go you PUDs thought same but to of same interest of were and this XXX be idea I but mean, interest. I may to comparing had book to like able effectively XXX would net a you interest, as I exact books, working of Would PUDs well, like same you because and back these operator. would

there? back through do could XXX permits you that, Does how we through we go numbers? drop that XX Is Now have that from Like, it that one, experiment? historical or able then into [indiscernible] guess, my to does might have from how of that because I even would to kind be something you filed. SEC? And is hold had XX flow that that logic don't like only is

Chad Stephens

deal off out is complicated what all our discussing that in you're no new matter we the of the books. -- and an owner Donovan, as I wrote will mandate do when reserve a well drilling accounting we that ‘XX not because is a accounting on non that longer kind a January did the interest we working first were reserve fortunately perspective, participate and CEO, over of Well, op was PUDs thing have PUDs, of the as locations subject -- took in to in with locations I

we of I locations since that a op So locations. working locations. PUD excuse now locations interest mentioned -- on all now all Those we've interest. since to those non since are mineral added since that drilling -- are the interest, earlier we None approaching the I books, X,XXX on as our when took participants working and ‘XX, have -- royalty over. op are XXXX interest those And we've XXXX here non royalty me, Derrick's had call I directed the the questions, in zero the have, all call

the don't we accounting volumes whether a we interest rules have don't a minerals. with of to working reserve -- or accounting or have So deal royalty it's

– that pretty and So XXXX We -- but with dealt simple. in it's

Donovan Schafer

was what more working that it's back in to five wells as it to thinking XXX that's It XX or then was is, -- to something. come opposite you means that PUDs could helpful. of one be you and royalty, you that you work use ratio almost then in whatever direction I interest term It's got if reminder. what PUDs helpful book get you've when allowed could progress, could about -- say, would a or that's to well the oh, approximately then more it if

Chad Stephens

working think be because PUD -- same maybe reserve it probable operator. probable interest from of is reality don't a timing may the don't mineral -- the a a possible. because the I have I Yes, that The schedule math probable is in section

don't So mixing a back you're think it's variables to From in I relational standpoint, that that. trying -- so possible into – not just many

Donovan Schafer

you. you good to got rest air, amount Appreciate it. I'll offline. okay. Thank guys. I but the a There's of room take

Chad Stephens

Thanks, Don.

Operator

Thank you.

with from is Alliance next Our Campbell proceed Please Global with the of question. line coming Jeffrey your Partners. question

Jeffrey Campbell

year. and interest press the want Good event. kind questions strong of working the to the XXXX you I divestment shift that to non the op as in the of on congratulations release a major morning referenced

on year? more outline the it of you a cadence thing of you be Do more half front to the First, have pro it sell can sort any loaded I is rata ‘XX over color or of going off? first be the mean, will that?

Ralph D’Amico

it's Ralph. Jeff, Hey,

execute proceeds. going on -- assets out to and agreement release, Oklahoma, of actually we for for a press One assets put sale it's I interest things. after the the sell in we [coma] (ph) we at right? two so So have a working purchase be think to on after end PSA those the our yesterday, day is, did hand

And some rather the price half there. don't than disappointed I the hopefully think So around pieces discussions some there's valuation. can of is later. a size that will January PSA We've if And other reasonable end we already 'XX. the remainder right? at find million a had buyer closing get front second be in sooner some is, then think personally definitely on XX, I I deal there's $X.X we loading under

half happening probably second it's evenly of the here happening then half and with very the XXXX. first split the part towards So, mid quickly

Chad Stephens

the mindful of and deals we were that as we and And selling 'XX were fortune interest -- 'XX trying redeploy importantly working our use those that in redeploy closings proceeds we deal on into -- this same for ready core up, here, is into back deal we dynamic were cash our signed were those the then, and non working to those have Ralph we just quarter assets our into our we volumes this, it's minerals as selling signed going I op pretty optimistic sold interest will been in and volumes [indiscernible] that January we're assets, late late able non good proceeds and play And quickly that to be to we redeploy cash minerals that flow we up and in cash royalty those quarter. to And we we're quickly manage and were flow op were we flow. to areas. actual closed to through

want We interest working So But the play. at once. dynamic non to that's sell all minerals op into didn't cash completely been at everything [indiscernible] producing and flows.

be we've fortunate in So that that's manage at And to what's work been very methodically here able and dynamic. to play. what's

Jeffrey Campbell

of an about acceleration not earlier. Ralph we're ‘XX any beyond far if to And minerals you. will of now. talked more too we said over [indiscernible]. Is get I it production going that or fair mean, -- assuming at have and you've then any don't take drilling this think level, I kind ‘XX. And is assuming that the in year at to ahead is which the that working want what try release somewhat high than the acquired revealed greater to press XX% interest what value, growth to the be face get XXXX. relative Thank year in is of flattish we sold a to But guidance acquisitions production just Okay. of

the what look at it on have right we of me way looks Just to that's based now. to kind

want of [indiscernible]. Just get kind to

Ralph D’Amico

to would of in environment, because From margins the cost, you theoretically in [indiscernible] commodity theoretically, assuming interest, exact right? flattish much you out assume if price have But I corporate of fair, a a higher those same standpoint, same volumes, of the molecule a think have cash But flow same see lower higher margin relative corporate royalties higher if that's So [indiscernible] minerals assumption. has working in the margin production of volumes is big royalties, even volumes than total environment, -- have which you higher mind come price than keep if a you one right? commodity the though difference interest?

Jeffrey Campbell

I that's with, begin mean, sort P attractive Swan I argument to Yes. Well, Black also think have very those characteristics an higher and It the E& of has defensive margins. deals it's core we versus minerals one for right? expect of and

release entirety the royalties, The in So that production on expected imply working op be ask interest that's the than doesn't come XXXX. to said the sold XX% to would working volumes that I are which greater a interest from final the wanted press of non I the that one think fair part. point.

going future was like I LOE are therefore, AOR financials So some wondering, numbers and some XXXX? and into we see still to carrying

Ralph D’Amico

right. de be I in wiggle bit it just a 'XX don't by targets you think able XXX% right? possible, mean, certainly, is right? of that'd But some to mean, end to give the great. there we get there's 'XX, completely noise. that, we there room But some in hope But room. a It's I there I be certainty, in can't little I of put If be calendar zero So I going that minimis is exit, for right? I -- noise right? to it's some it's our in’XX. in and there can’t So control, things

Chad Stephens

speak. as door another op be XX% and alluded [indiscernible]. to just the these to packages out But as volumes royalty. one one of Ralph get couple to we're interest our we It’s we want don't non once of -- I And XX% signed working will and we working

material be won't just [Technical the Difficulty]. they're matter [Technical [Technical the other but So to just derogatory, Difficulty] Difficulty]it

Jeffrey Campbell

And you think SCOOP showed net quarter the were the will be acquiring In acquisitions fine. just I Haynesville percentages that SCOOP release. split assuming come? in to continued the afterward, and in the you're events, was XXXX articulated similar the in and That's the question. wanted I Can subsequent that percentage the on these that fourth acquisitions. the press I'm these the Haynesville, you acreage Okay. between And they comment days? one in royalty And in last ask and to

Ralph D’Amico

probably of as the right? area by is -- it's Haynesville, remainder ago, And we're the of not it's finding area, deal a is a it's in activity in Springboard the good quarters as acquisitions closer -- of the much not doing Springboard right? The same becomes three with bigger geographic -- still proposition more is value the Continental to third was all that say it SCOOP. the right, number would that -- much Haynesville But in in a the opportunity are there. and it I is to there. value of acres the in the and or there, got So year smaller So gives rest in right? it footprint, very us And

would about be three would I yes, So [indiscernible] quarters Haynesville say,

Chad Stephens

quickly Just talk Springboard to III. about

area there's largest leasehold the -- in So two position interest. our clearly Continental has of

successfully Hamm did here One, take or an just we've two recently. in were his a to trying kind minerals. have outline boundary We things a of play private, which there And he been acquiring in there. company which Harold was

we plants, and probably just rigs did wells got what didn't and he analysis And the best once scenario testing drill zones line there's grass call or year these they'll bit to they've mow best didn't these I a those want secondly, in marching that into way five advertise there they're so Grady area. before. kind and -- of always that they the been drive what doing asset, you he much of and Springboard in And -- that good drilling what six they're where two the get to different in And gets finish of developing That's price share Springboard to But away. some best this what the or down good I. much did of They can and up they they've it wells zones. to announcing the well see both too develop angles a areas. there the Count that's way then and doing in done want he his results the and too up by was wells, they

as the Springboard them underneath Continental, this we're III wells do minerals acquired we've that. against buys Franklin minerals run we've thing and who up excited got drill. and in area, they'll that they and Nevada same funds the about who's in And So

have ahead to have position of III Continental. gotten we fortunate we're So in Springboard the

Jeffrey Campbell

Got it.

I helpful. very That's it. you. Thank Okay. appreciate

Operator

Thank you.

your has next proceed Nicholas the Our with of questions. line Please question come Polk with Research. from Seaport

Nicholas Pope

good Hey, everyone. morning,

Chad Stephens

Nick. Hey,

Nicholas Pope

regime? the payer. much What looking to at recent curious that tax being over of rate of the How Real you'll be of deferred? a cash in thoughts term? was quarter, that kind to looks kind tax all I like? Now what that quick, switch income just you kind we're near are expect

Chad Stephens

Yes. but is mean, is and we're taxpayer, it's estimate quality a cash much can right? right? our every roughly the that, not a generating of tax is it. is bit we've a I you rate tax itself there low It out cash mineral company The right? drilling as any like now is, And problem, not other your become some high defer -- what rate wells higher, IDCs, it's teens where in

low going is estimate be the to teens. our So in

Nicholas Pope

That's a It's I long been call. all Got had. it.

has been think I else guys. everything asked

Operator

you. Thank

our comments. for over would end the hand the have call of We question to reached Chad like back to closing I answer and Stephens session. now

Chad Stephens

will thank I'd expanding and months to weeks coming and conference over awareness. of and road continued shareholders note to series like shows marketing support. through our presentations I our employees I'd Again, for their at the investor and operator. be Ralph expanding that you, a aimed activities Thank like investor non-deal also

to next If FNK quarterly Thank a in or at please have you We day. to forward hesitate be IR. don't myself, would interested you to in out mid-February. the good folks Ralph and hosting call reach look meeting, our

Operator

participation. appreciate Thank teleconference. We you. This your does conclude today's

lines your your at day. the time. rest may You Enjoy of disconnect this

PHX Minerals (PHX) 14 Dec 222022 Q4 Earnings call transcript