Earnings call transcript Q1 2023

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Operator

Good morning and thank you for attending today's PHX Minerals December 31st 2022 Quarter 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.

As a reminder, this call is being recorded.

I would now like to turn the call over to Rob Fink with FNK IR. Please go ahead, sir.

Rob Fink

thank Minerals' for end December and to us results. operator, PHX discuss XXst you, you joining everyone today Thank XXXX quarter

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

Chad, to session, I'd to I forward-looking turn expectation over Before company. call, future Q&A call that of everyone the statements earnings, today's other management like during opportunities, revenue, the remind make and plans, the regarding including expected may

cause expressed and different statements These other actual implied unknown or involve to forward-looking risks be the from and materially call. that those estimates known results on may and uncertainties

XX-Q most These annual reports be or risks supplemented recent by such with report on Form other PHX detailed quarterly may in XX-K as the SEC. amended or are subsequent reports filed Minerals Form on

The are or of by as statements as does forward-looking result information whether intend XXXX, future Xth, information, to upon call required the not and statements based this today, February company update of a to otherwise, these known unless new events, during made law. company

I the that, over call like call would Chad, With to is Chad. to the turn yours.

Chad Stephens

your in Thanks Rob, appreciate and the December in XXst, PHX's this participating quarter thanks you XXXX conference for of to We interest all company. call end call. on

gas XX This then, front have quarter in into quarterly results largest sequential January a financial month The of realized month drop XX% drop the ago. decline prices PHX's one gas prices. further year. dropped years XXXX, natural and in the reflect since new the Since natural XX%. prices month impacted natural continued being gas the alone, that a December in

to X.X been burn, BCF delay. less export precipitous drop represents weather to natural of gas XXX This in of terminals a important continued BCF service by of since the out LNG $X We summer, power this was $X between current the reduced natural driven and impact service being LNG due with the explosion somewhere terminal terminal market. and to due estimate last demand. represents along of negative an This has event and total demand demand warmer from alone gas removed gas This day market. Freeport represents over export

begin rigs XXXX. This during cash Bcf industry US and operators, that drop especially their flow, the total will in will X are will capital which indications gas laying in supply reduce remained natural flat reduce roughly per budgets, last has gas expenditures. building thus crews, by Though count down the year should day additionally reducing domestic basins, and reduce frac which recent industry relatively over US of the prices rig months,

Under and price back appears announced a gas of conservative during the the officially Freeport that weather, in XXXX year, a and for set Xst it half natural reach the stage XXXX February service, into of equilibrium, macro rebound. should supply/demand timeframe, assumption of this second

maintained and balance our liquidity built headwinds ample book withstand THX has be face. to by current sheet to purposely we a strong hedge able supported the

access latest deck website. our in slide on can schedule, You our Relations that heads Investor our corporate is

our Over we three legacy asset the assets. enhanced years, last by mature have base selling

the commodity in have basins of actively the the a acquired under price lower and drilling. of two These these economically developed core are the reputable non-op mineral position and high to proceeds operators operators we be credit-worthy margin any business. we minerals can core from cost, working active who by exited are environment. areas almost quality higher interest build these relatively our use Specifically, divestitures most We in

to will growth. steady royalty us this volume continue report allow year-over-year believe to We

over growth current our as royalty volume this in underscores XXXX. quarter recent quarter most reflects XX% the Our same quarter a

for we end, approximately quarter or $XX.X we binding the have closed During agreements $X mineral quarter, owned million. the signed million of since and additional an on acquisitions closed

and Our confident am can deal opportunity flow shareholder we to continue remains robust build value. and place remains approach evaluating our I disciplined each in

Danielle to this and like to point, operational turn Ralph At the discuss financials. would call I a over provide to the to to then quick overview

Danielle Mezo

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

sequential XXst, X,XXX to production from quarter, For total December XX% our ended quarter XXXX decreased Mmcfe. the prior

However, program XX%. is been for three of by years. we This have growth a royalty volume acquisition our successful volumes executing the on year-over-year, increased last result our which mineral

then frac wells two in and we production four interests few being that wells also pad high fracked. that decreased were royalty first where four shut volumes factors, are to Haynesville This we reflected next the Quarterly sequentially. offsetting will being XX% have the in primarily temporarily all of in wells. own the in be result a interest quarters. a was mineral decrease Note offsetting These online the back was that royalty

sales. to turned wells new of timing the Secondly,

timing give to lumpy within quarter with new are quarters the wells to by wells I sequential wells when be timing what comparing can of color new of each is partial When volumes production Let new additional to Thus, quarters, me mean culprit. some sales. the due turn introduced.

As to moment, new wells or completed other and WIP quarters sales more volumes I turned we'll than will and quarters. WIP progress in of are a well our the have active in discuss some source

lumpiness is annual compare the smoothed out result, volumes. when you a As

rests do we owner, mineral each not control a timing of well As with operator. development, which

volatility such, basis. a reported volume As can be quarter-to-quarter there on some

interest legacy the XXX,XXX side, declined XXXX production late volumes Fayetteville in decline of the natural On Mmcfe of as working quarter the the to to reserves. in working XXXX of a result XXst, December and sequentially wells XX% interest September sale our

volumes on working our we is part sale as legacy working stated decrease on will to Ford exit the with interest next this business. interest closed quarter of in the consistent of Arkoma that January also This the XXXX. Note and XXst, Eagle strategy our our assets

XX% in and current the post Arkoma Ford exceed represented total the XXst, should divestitures. Royalty XX% XXXX of volumes during Eagle December our production quarter quarter and

XX% XXXX, only were year As of volumes recently volume. total our as calendar royalty

have margins. is improving our interests, our our and we volumes grown As divested with of asset working enhanced quality non-op royalty of the base

were our natural of long-term energy gas, natural key XX% gas volumes that is quarterly aligns with future. the sustainable a position Additionally, for our transition fuel which production

During minerals the the producing gross to new compared located XXst, to in net acreage converted December of quarter online Haynesville. operators wells wells on wells to and third-party SCOOP XXXX. majority in the active The gross brought X.XX XX X.XX progress or ended September PDP WIP the the quarter our are net XXth, or WIP converted XXXX, in or ended XX

gross net wells gross time, replenishment same compared of X.XX strategy. X.XX the in XXXX. wells of our our progress the or at well net track XXX and shows of XXth, the in to business wells of continued inventory At record XXX WIP the of conversions reported or The of inventory progress as remained wells repeatability consistent or September

under XXXX that we this mineral approximately Additionally, undrilled a inventory continue of interests will feed to deep gross have locations WIP activity.

focus regularly rig of on rigs Minerals addition in monitor observe our our operator third-party and areas to present XX January In we as activities XXth. WIP, PHX acreage

in mineral rigs number rigs consistent PHX despite active stayed XX ownership. active The of had we X.X recent miles acreage quarter-over-quarter natural a has decrease our the within on of prices. gas Additionally,

volume. our and increasing development on to acquired steady which both lead to assets mineral summary, recently should In we legacy royalty see continue annually

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

Ralph D’Amico

for being everyone to on the you today. thank call and Danielle Thanks

reporting are the call, and make our calendar year for a As business us this with easier our peers in be last we reporting quarterly to to shared to of our schedule in evaluated. we it results public transitioning bring year line rest and to

as period to gas, that, XX% I'll to XX% by total lower Danielle realized decrease quarter production quarter oil, is With million. the XX/XX. December be a XX% sequential XXst, sales today's attributable prices XXXX a during on generically XX/XX to ended the and discussed call, volumes NGL basis $XX.X revenues quarter the decreased quarter. referring or and the lower generous This Natural of as on

Realized lower. natural XX% average averaged Realized sequential prices averaged Mcf, barrel, XX% $X.XX gas XX% per prices oil per barrel, prior and than lower $XX.XX $XX.XX quarter. NGLs lower the per

million. the Realized hedge losses were losses, for quarter $X.X

price natural of of of NGL respectively. gas, our approximately and XX% average $XX.XX quarter, oil, volumes, of and the production For that as XX% our or hedge our none $X.XX

of -- protection at downside height of put our have priced Approximately the place and officially XX% end production expired. lower $X.XX the At during the COVID of Mcf. in per has in XXXX, gas play between put hedge contracts anticipated natural $X.XX January XXXX

downside barrel. On has $XX the oil anticipated side, approximately XX% protection of our and between $XX production approximately per

corporate Our the and presentation. available in XX-Q our book current hedge is both

in decreased decreased quarter-over-quarter transportation prices. $XXX,XXX. primarily are expenses to to to Production gathering basis expenses, are sequential movements production volumes. These a both $X.XXX movements approximately production million. and XX% basis expenses and and quarter marketing tied primarily on XX% on decrease volumes Total These tied sequential commodity to taxes a

increased non-operated quarter to X% with on a wells associated working LOE legacy our million. sequential basis interest $X

for the legacy closed XXXX, associated our significant Eagle quarters. coming our January Note sale Fayetteville LOE in While September sold asset that the experienced the working of LOE decrease LOE assets books, came on oil Eagle the Ford. the increase a interest XXXX in and off with in an we the production Ford from sale in we XXst, expect

XXX have LOE prior on those plus have have months. our sold non-operated the we average, the working remaining legacy wellbores over We fixed wellbores and that portfolio, interest only lower than XX in

we quarter have our at the terminating incurred the been flat costs with ATM and not sequential lower was G&A Cash to $X.X slightly had compared million prior would associated program.

impacted total EBITDA XXst, negative ended down was XXXX drop as prices positively expenses. the in $X.X as the pulled XXXX gas September mainly compared cash by by we by quarter. our The natural million XX%, to December $X.X pointed in Adjusted XX% revenues impacted an decrease XXth, were was out. in negatively quarter in EBITDA million

assets $X.X associated price lead book upcoming accounting that the not on the there of be loss value our lower properties. Note with impairment sales a given the is the associated held non-cash will with for The was asset will quarter. which associated with The for the impairment. impairment, Arkoma and than to sales million sale our

a sales its on the lead upcoming Ford higher had the value, Eagle quarter. hand gain price in other The book will which than a to non-cash

which a basis. for million effectively out, compared Note quarter the net sequential million spoke income that on quarter. prior backing includes would about, income this to for that $X.XX that means flat $X.X non-cash was quarter-over-quarter I sequential Net be a just impairment the

as million and $XX.X debt We to December of EBITDA debt of X.XX. had was XXst, XX-month our trailing total XXXX

interest debt February was million. closing had $X.X we pro of total As of of approximately hand on our and forma cash million, the for XXXX, working $XX sales,

decision effort our calendar to with made Lastly, in the an XXXX. investors, have with improve to and we for asset provide been an strategic and year transparency portfolio improved development operational high-graded visibility to better has communication production outlook time the has royalty outlook range the PHX the history the grow first been calendar XX% annual of at This approximately issued. of to an is compared in XXXX. estimate We midpoint which in XXXX

sales Key and to flat LOE January are corporate unit and expected expected our summary pro found XXst. a the closed working the remain release to be press interest both decline significantly on assets on detailed can forma expense of we A metrics per in presentation. basis is our

like call Chad some I'd remarks. to that, over the for to With turn final

Chad Stephens

Thank you, Ralph.

asset the focus. high mature to areas two repeatedly This I growth. quality As a highlighted volume annual years, us the of of proceeds path wellbores non-core clear past vesting our with by base working in and continue into have reinvesting we our over interest non-op to provides the minerals enhance

of or Haynesville due in to reported, due also of industry by wells, the However, ago. frac lumpiness online production set on few the explained impacted new high practice moment a was as wells quarter interest shutdowns wells a completions accommodate in and a typical offsetting fewer to royalty as volatility common coming Danielle short-term a a by to seasonal temporary Danielle disruption

but However, of lower in balance divestiture prospects. -- us continues by sheet near-term and strong WIPs increase working of our our and to prices, Results were to our continues reported navigate volumes also interest rebound impacted success help long-term in inventory headwinds. commodity near-term

bullish XXXX in XXXX dissipate. gas going short-term second half on prices the of into a as are natural recovery in We impacts

in presentation steady have we confidence Relations also the corporate which conversion pleased the I'm WIPs, and you access of can an annual that outlook to the Investor began our or website. announce providing strategy, our inventory, our from the visibility on given Additionally, our

is increasing volumes despite natural we our and XXXX. you can in strategy As headwinds, gas see, the expect current royalty price sound

same robust, to Our be have maintain downturn economic we pipeline prices, to we but will the natural acquisitions for the technical last be used and during continues over in three of the sure, years. discipline gas level

work thank shareholders. XXXX like congratulate to and dedicated our employees, their achievements believe PHX, to-date. will I tremendous year employees for be a for hard and our its them I would its on

provide like strategy. and insightful of they would for an our to Board support their wisdom I Additionally, thank executing our corporate Directors

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

Operator

will [Operator Thank session. you. our we question-and-answer conduct And this at time, Instructions]

Donovan Our state first Northland question your comes question Capital Schafer Please from Markets. with

Donovan Schafer

Hey, thanks for guys, questions. taking the

was I'll logic the was just this you this X% thesis my my acreage own companies I'll admit okay, on personally hitting say errors kind inflection had clusters X% and you quarter. And decline. we're quarter-over-quarter of of, forecasting of key own then locations for I XX% a So, in the with quarter-over-quarter increase point that that increase the zeroing And this guys have. in guys here, the

activity the on talked know, and to before sort And up. this we about where embedded as see should start then so laid this. from you picks pickup chips We've growth, you've a table the of

that's And turned But the broader do that? even high the WIPs in explanation check shared with there production we in you money a additional are without basically end, how outlook? then, continue chips of curious you idea spending the grow just necessarily guys I can shows if the through wells, as to and so property Because sort developed. being talk being getting that timing where you table, Haynesville outlook, being was I good this the of line. and growth myself reconcile is the embedded at of the expect kind I this to on the thesis sort flat lumpiness can here of of should production And embedded still of growth, on want the

Ralph D’Amico

think I -- a confusing confusing So, Ralph, think you're Donovan, you're of right. things, it's I couple

is because right. working or deplete, years, So, the growing allowing which right, consist three royalty to total monetizing, stayed of we volumes, to we're corporate interest for production, last at and decreasing going volumes, the interest just working

right. at you those royalty currently midpoint or own already worked of going year-over-year volumes to So, on are volumes already. from look guidance, the -- underneath The are minerals XX% if wells a the we being they're expected right basis, the grow PDP, are actually actually of and to accounted on, be majority that

no degree to there's this of numbers if going high those year, that theoretically, So, spent royalty we right. those right, a certainty on -- hit side, money the we're

is A twice a on keep of the generally margin The royalty to very royalty molecule and important, volumes, other of thing that working half mind, in worth cash right. Because average, this is working has as flow of interest interest molecule volume right? the molecule.

total So, corporate -- -- if held cost you hold prices constant, right, vol even increase. corporate even total volumes not if if if prices do you

in If you because cash generating you're royalty that at flow difference see right, the corporate additional increase level, still in volumes, margin. of the in

Chad Stephens

on the the embedded growth idea the for saying to an on on, Ralph seeing just quick real rephrase outlook. that the set this I'm the growth table and Just and make what you're at looking kind sure move royalty getting, outlook table, the of of like rigs have where been side embedded chips

have that have. that large there's even makes decline then because the interest on where interest to on rig on It's sense phenomena also still actually go out it And we're but also a working you are non-consent of comes playing you some side, those. guys there, and sales you the whatever, working the assets, electing interests similar working

right. actually you're anyway, then not participating those either, even in So,

reflected there. being what's of kind that's So,

Donovan Schafer

and And that Well, an just and consent, we the whenever for on company. so it's monetize interest sale create value to down AFE proposes the also somebody generally natural the try AFE, going the decline working in clear, to speaking, aside. be

go to we their -- put to allow opportunity. giving that non-consent. can we make So, and them money blanket for monetize try get compensated We else I statement you don't somebody that up just that the think that

Ralph D’Amico

to for But of royalty translate That speaking, that sort additional working okay. Sure. it's acreage then interest that's somewhere, generally on the it going when rig not way into working the phenomenon sense. this makes of something, a -- to from and the sense the guys interest owning volumes in -- you situation, comes

Chad Stephens

they characterize. those mature There's And drilling When in high quality that working let fully locations those consistent clear they've me been when the opportunities really say on that assets assets, be -- to no drilling interest, on mature leasehold. we developed. say we -- sense

operators AFEs from wellbores, interest do from wells in a be perspective drill clear, Most wellbores. All the the no workovers. need selling clean upside coming well. refrac worked or our get we on to be of out those growth to true existing do to over, what we're whatever real working But has

real -- no be demonstrate that reasons royalty. volumes we to assets, we we way to can market and able upside, grow these one by were We year-over-year that's of have want the selling a story of growth, growth they to the of

royalty was and a we it, wells particular revenue, practice we're It's shut-in, we of we quarter-over-quarter And wells very own wells. because had so interest, to that success control be shut a royalty clear wells. to of can't speaking this interest volumes, of in growing industry our offset four again, victim to And highlight this frac drop, set into -- an net four it. those high

We offset interest have an in well. as wells the

wells. an on, producing, So, are new wells back are the the in we four have interest those wells

on. So, in of our areas will but own again, buying a our kind we high of be back where success victim volumes we're quality developments up, going

Ralph D’Amico

management interests interest mineral point. Eagle Donovan, to one the to owner teams right, as thing their working through participated and Yes, Ford, from Most kind of prior of finish just just the a working off aside the the ownership.

we that if choose participate the So, case to somebody do, minerals, the still where what well, adjacent actually that we comes flow not cash in from them, the and mineral a drill additional us. it, that well, that to actually we even rare a generates to have in maintain you own gets and still ability you on drilled, to well royalty thus ownership that new -- well, actually

is retaining and we're wellbore royalties right. and literally what minerals So, the the a associated selling leasehold right, with interest, that acreage, and we're all

want to not crystal about and giving be I value value. away this, cognizant are very creating So, clear about we any

that this, a development when effectively we assignment. working from ownership any we're of it is selling developing will So, minerals. legacy sections, new a wellbore through there's benefit that those interest if the And the

Donovan Schafer

to of the the as into and basically I tracks when I interesting from And adjacent and get a Haynesville don't a another Okay. shutting a wells like -- for shut-ins, follow-up, importance so engineer, interference stuff. and there's I magnet was they to then become petroleum really cause them know pressurize all that drawn

But your the impact, fraction between, to when such business percentage of sort tend creates of somewhere sure I having your I'm little small a wells to interests percentage fractional points. having of just myself, be that think, bit model, a disconnect, even a for royalty in of four single large to idea a such Haynesville maybe the mentally a point own, up you two interests,

minds of the interests four there. difference, that needle? factor something around impacting realize X% helped wells talking wells, just it be relative sort adjacencies? a and gross is a so about the is how But really And got a roughly you're fractional wrap us growth many shut I then can gross of one-tenth that sense that -- And move wells, you've in, feels give have of can is four wells you interest like idea can move this you -- being needle, tiny I'm do assuming There's of because the kind of disconnect X%. our how X.X% XX us the how for eight

a royalty just interest high are the higher is another that do then an you have question also Is adjacent And smaller? in, interest? it as wells also those there

Ralph D’Amico

good So, on question. a -- these it's

factors. our we I wells. call if well, is look That's look these had that's But at of X.X% corporate what wells, the on per Big you X.X%. and about the are right? the interest two X.X%, X.X% also wells, you these to we're, Danielle if So, on And think right the the presentation one a factors, I that think and average in Yes. average, NRI try get interest to it's in at Right? to there number four right? actually

The second is. factor

them with example, right, six cannot of state we is for regulation have production wells, a publicly a is report this available, is associated operators made production So until time, set have well months the x revenue, right. a amount there of to And and data. some volume book right, of

online, So where are know instances we production because we wells but that revenue, the cannot no there's there book available. data

Okay.

basis, quarter-to-quarter data. to there here's in today, online, production there's were And some And quarter, what Within that right, forward So it some on that right, up this of those right? this no that happens, or fast couple but are days is, happening which of happened reporting wells a what about. production so we you last literally wells, started last the lumpiness were talked right? week, is data ends of have

been in volumes the have reported So that XXX reported quarter. this last quarter should will be

three to use And right. or low. on production, are compared couldn't the it's so book a there rolling quarters but because use, were period, performance why them, be quarters were a consistently just over right, you wells whether XX situation, to we to are in that on four going to this quarter-to-quarter year-over-year going have have last basis, of quarters month the some they high, really we've a And kind be said years some that's

data, are booked. that will now there there's they now and and be And production

what that are our that to So be that's sequential volatility, and in some going quarter creates favor.

trued up over a XX this So but I'm period. they we're right, to be will month going against be

Chad Stephens

I were add completed And that. relatively X% to net new last we the wells four plus have wells Chad. where interest, Donovan, fall. that The we're in, would revenue this shut

they're decline their are very up still So their high curve, and volumes on high.

the events outputting. storm well as on that next flow as the we're lumpiness back that through perfect online, reduction. volumes whips caused will a Those this are those was quarter-over-quarter these So wells it of quarter,

Ralph D’Amico

wells the or the years. And wells these with of best high have by last these, assets in we the the four interest have three way, best purchased been that some

Donovan Schafer

the pad, had these wells this that, were see to and in wells, allow you that adjacent The case where, a adjacent I this those. can interest and interest wells be in is is yes, into just, was two all it -- to was only were that be X.X%? But That maybe being in. also three it to drilled three was new these the well, it well, wells, wells, how are shut said shut had are you you, being one was many an there's and it shut ins? a four completed that ones maybe one led so had wells And And like completed? you if

Chad Stephens

so there in there four wells top in, are new of speaking, don't I But we what it wells our is. Generally four what honestly, that than my it's and were new it's, remember coming don't four is off have the head those less interest X.X%. wells

Donovan Schafer

Okay.

All queue. back jump right. you. the take in I'd Thank I'll -- Okay.

Operator

[Operator you. with Stifel. Thank Please Whitfield next Derrick question question. Our Instructions] state from your comes

Derrick Whitfield

your With for activity Good trajectory year could expected broadly? morning, and regard for all. more Haynesville to for your you assumptions production outlook the to XXXX the the speak

Chad Stephens

rock of as We where so rigs the areas, Haynesville in Again, my any is the I count core the in in comments, at We try We've bit to we alluded in not around more to buy front kind reduction. can haven't been dropped best. the areas for is today XX Haynesville. of and broadly. out steady seen drill the the rig these

rig they're yet. rigs on they're running. those operators They're counts. reduced have. that of under the haven't rig Some They Chesapeake the with the they counts the And were eighth ones highest

in know the that We is, the it'll outlook some but we guidance, We're Investor don't and provided what reduction. deck. of don't we've our queue impact in that in the sort our anticipating Relations slide think

the because acquired we're quality confident so speak. of we're minerals bit, in we've out front the of of to So the we're, confident, drill

Ralph D’Amico

right. Yes, of I maybe we're, while shown in go we're Haynesville as I year mean, mean, to reporting a a XX%. I count. quarter having think think Drop mean, I recipients numbers of it, we're, Obviously, this we're regular a Derrick, anticipating, the rig right. the end, haven't fiscal we're and broadly seen, first, lucky right, sort speaking, I haven't not the because

with haven't of So modeled yet their terms a right, the activity, guys we've Chad's in being the we of and we're all is But coming. lot slowdown plans. as out our, public point believe of that come conservative pace, but XXXX

majority right, But in are the XXXX wells are for to Chad's of progress, right. the volumes by which point, spoken

So that's started. already been

drilling drilling rig So even a of if they're well it in stop you not it today, the you to right. middle lay assume lay the to down, down going

confident those pretty about we're So numbers

Chad Stephens

And XXXX, assuming -- to constant, half those going into within XX count a proximity rig the are XX rigs PHX and mile, current two Minerals. almost a half remains

feel of market again, for rig pretty good volumes So the Haynesville. look the we XXXX of terms the outlook our in in share overall count

Derrick Whitfield

gas, wanted months Terrific. the sell next And spread bid to shifting curve. for post you follow-up you speak over if off? call if to natural of the I it environment the the And narrowing since XX maybe ask the M&A could for the in light is particularly broader environment, guys to minerals. In ask the of selloff the

Chad Stephens

the last money Haynesville in seeing into our in some December, going precipitous moving we're discussions were minerals partners out this we Louisiana characterized these Thanksgiving this, little the increase equity, competition, in acquire few comments, over prices, And side. of on the are natural now into prices. kind a our drop ground, speak. who in especially my on rise to days, boots seeing Well, us as gas And with private so I with our money helping on and ground moving both Texas we a and of through as the moved lot in, the

paid Obviously, were couple a being the have who a And of are expecting come down mineral same months our prices little valuations owners bit. that selling the ago. are still

little period time to probably a a therapy, to market there's speak. And so be there's going here where a so

deal but seeing able acquiring But analysis. closings We're are our we overall the speak. right at, some some with still to economic deal in stuff to now to on, able disruption we're transact again, so of we're

Ralph D’Amico

Yes.

actually we you what right? at see by saw look XX the kind that even deal the And, of started rates size the If return meet it's requirements. as doing return, a when increased you into last that we to stay think deals, capital, a right. of large to because quarter, know, of I deals what got have competition. the were deploy phenomenon, we a smaller, same right? And to number doing smaller in of volume we to was maintain more Chad were any, reported quarter, And interesting, to amount you the right our of it's true good lot the question, said, September a

February sticking of what to, said, think as market you're we're therapy, time I stuff, its work to to think I takes and have it seeing is You through. here, that same for again, Chad the kind because, right? way January And smaller the thing,

the the are the, be less, require it? mom of They, -- how do so sort guys who And are put able shorter to and periods the they of therapy pops market of who, are smaller I to sort transact.

achieve reasonably million range package beginning that in to size smaller becomes on, we $X to that, that our So, right to the the of going we $X asks deal year, size of and in bid and get as right, we a sort forward last of priced million targets. you're can average spread see move XXX average then quarter, at I return more the think as saw kind back we normal

Ralph D’Amico

deals And are looking The of private lot on Derrick, to little our for deals, material million little to firms bread $XX a success. And below bit equity $X our and $XX spot, kind and company. deals much and are the smaller to to $X larger were and we're results to tiny deals. the million money radar. the $X million, sweet deals a are the And those follow butter, bigger a our million $XX million million that, really of

where that's and we've that we success So been having having. why same are

Derrick Whitfield

just expectation you would build you which question now to And that deals that it Or suggest is maybe response, for the on the ago, have Chad the that two maybe was environment than the be? good smaller could it ago? quarter a quarters further do better

Chad Stephens

up it a Ralph’s market but may, point or more it optimistic probably time, of therapy take open Again, that Yes. are not value little expectation. may will we some opportunities, because to may

Derrick Whitfield

your for Thanks Very helpful. time.

Ralph D’Amico

Derrick. Thank you,

Operator

you. Thank

Capital Northland ahead. with Markets. Please comes go question Our Schafer next from Donovan

Chad Stephens

Don. Hi,

Donovan Schafer

Hi, guys, okay.

I'm So to get glad in able couple here. another ones

outlook more widespread more as air and conditioning important gas a of becomes have I'm And US. you So the middle has if factored and in climate that your you of and actually air a natural idea end you can I of become get if this or hotter people's temperatures, more in part more adoption demand have take take equilibrium, you and summer. lives as -- an natural views curious change one gas increase prices in, expecting have the kind the question, in then conditioning there's near of for on XXXX.

for And I'm natural of wondering, have not like the year? middle potential recovery, are considering is -- not price some the bit in something if a wondering you considered that we you XXXX. when you I'm saw -- why gas or you that more why or not, of towards

power the course, burn I complicated invasion think we if the saw to we of you hot very some XXXX. through summer? a of potential say increased But But Russia so in for forth. were that see get summer, by the do it's in and

Chad Stephens

Yes.

increased XX% impacted shorting So prices by contracts have to-date. hedge year-over-year, short current by been funds,

as the started hedging flows Hedges prophecy top as CapEx to have had that hedge cash of negative a financial they protect kind in their E&Ps, impact self-fulfilling prices well the a So gas of more prices, on -- that from that their larger dropping, shorting budgets. on as a huge started perspective

is so back the And suppressed start the those when companies end well. as hedging, of curve

warmer to coal Bcf That oversupplied. still But self-fulfilling service. Bcf X.X to that said, have day if burn, currently as we prophecy. we're natural to, online, switching with of, for alluded a much X.X a cheaper comes once if gas dependent normal X stay a just And than power back probably and weather, where two now. day were more you once back Freeport is dynamics, just than So again that online, once those we in but Bcf a not we're events, they kind are two I as maybe said, much right summer, gas as being is coal prices as upon

will power burn. switching increase to coal natural So gas gas

big will will dropped CapEx then a going So cash that to or be reduced. And flows impact. be budgets drop,

down, less demand. lay So more rigs so supply,

prices is year, cold worried will through the funds going flow squeezed. fourth hedge winter. will It a my guess get through, will quarter being flow third will uplifted this So the and the into about into winter, it start coming

price XXXX the see we'll going XXXX dynamic improve first is quarter guess. So my

Donovan Schafer

Okay, okay.

starting does or hot storage yes, something, impact for an the more maybe summer winter of levels sort head into So driving summertime in much to as pricing you conditions itself. up not and as outcome

Ralph D’Amico

on add good I range, right? important, something even we $X cash one is I having right, here, beauty part the $X think I mean, you've the about touched Okay. in One the interest strategy drop you to to can switching mean, because a flow, free thing right? company in of that's of from prices, generate pretty thing, on think right. I side, pure-play in me minerals interest have think working being working the when that, component of let these this

our it that reported, you service get interest impact right. of cetera, on affect of LOE, side mineral the I working of affects the because margins more squeezed have side right, coming rate our non-op from mean, things, we et That affects even even side, pressures the cetera, than the costs, that way more, et things. inflationary

shows even mineral right. there's returns pretty good company, is that to the And can $X We only strip which generate effectively what today. $X, a

make pretty $X, So look to $X, maybe was we strip a $X realistic, $X, the But $X gas rate at still right? $XX return. gas nice, wasn't if of But igniters you good right. at

not here you want I for to higher hoping to I mean, that. sitting understand sure us that So make prices out. we're bail

Donovan Schafer

Sure. Yes.

Ralph D’Amico

are what super today. to Businesses and which the clean, sheet is $X, $X returns at there the is the even is strip -- shows balance

Donovan Schafer

gathering and then on per that transportation, Okay. with And basis. marketing, coming the you Mcfe XXXX down have for a outlook

driving are the curious, gas built for as what's that compressors lower is of assumptions costs? transportation for used fuel just So degree prices? just what driving is getting what Is -- a or and or what that, expectation what's that's confidence Is in there? it

Ralph D’Amico

geographic lot to production more going in example, right, of the location a closer production a cost in where move to then -- also It's an Arkoma more is gas coming Haynesville. the as the from, to it's right. There's

working interest away into we've going and continued made the right, the with divestitures growth that volumes Haynesville. associated that really from it's So,

Donovan Schafer

take great. Okay, thank Well, of my you rest offline. I'll guys. questions

Chad Stephens

Sounds great. Thanks, Don.

Ralph D’Amico

Thanks.

Operator

reached answer and have the of end to turn Thank remarks. session, I call you. and will And Chad over the now the we question Stevens closing for

Chad Stephens

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

to hesitate If quarterly please you. don't in myself hosting IR. to or We the mid-May. Thank next reach you look to interested our be out who Ralph meeting, would folks forward think call or in

Operator

that Thank you. conference. day. Have parties today's Thank disconnect. a great And concludes All you. may

PHX Minerals (PHX) 9 Feb 232023 Q1 Earnings call transcript