PHX - Earnings call transcript Q2 2024

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Operator

Good morning, and thank you for attending today's PHX Minerals June 30, 2024 Quarter End Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Stephen Lee with FNK IR. Please go ahead, sir.

Stephen Lee

Thank you, operator. you XX, us XXXX, thank PHX to and June Minerals quarterly morning, for today joining discuss Good results.

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

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

Chad Stephens

Quarter environment rig in down, which natural the you your operating to we The of macro continues XX to Call. Earnings June in participating the PHX's Commodity this thanks in prices XX, patients. especially company. and appreciate activity interest total Lower Stephen, Thanks, in suppressed, the for be End gas challenging. call XXXX in Conference on all We are remain is

supply-demand and appear equilibrium. gas both nearing fundamentals the While to for oil be

of new demand optimism in natural natural higher as demand facilities natural gas reflected royalty. clearly volatility for challenging XX% reserve X uncertainty, that the near-term to mix the the working for pending PHX's results as near-term rather AI-generated strip onset power is market includes longer-dated increased export like to rate results. put was and volume production meet non-op prices and ago, years well To PHX I in LNG sudden is in interest on achieving in increase interest environment, This price contango, prices. you the horizon. For provides demand noticeable growing XX% remind reported gas, which obviously Even gas context, would almost and today's NYMEX demand forecasted than the

interest stated have of regularly royalty years, last the which about Over reserves, flipped transition representing with working XX%. and XX% the volumes market. company to portion that X strategy approximately Today, and focus, has has divested mix only of consistent non-op material its working a to a with communicated non-op This been mineral we has our to interest. the

working core focus non-op As we proceeds our divested in areas. sale of redeployed the in the minerals interest, we the

of growth period by Royalty royalty total this remained reported volume But volumes, achieving X-year almost royalty during of CAGR divestiture, this flat. During transition, growing volumes quarter basically significant offset our working interest XX%. interest a divestiture. working volumes for we were

interest highlights strong volume anomalous have undeveloped in and Two, part we highest the I wells, of this high-margin our development a XX% quality the of with leverage Haynesville undeveloped location our explains flexibility wells challenging of under and and that both interest quality volumes contributing interest are actively are year-end debt of locations is royalty quarterly and growth. volume a XX deep that volumes portfolio, company of XXXX, X.X. that royalty volumes IR The to deck more sequential the environment growth out. XX Absent XX% reducing compelling X high-quality, our reporting The million, of sales most developed focus inventory still demonstrates quarter quarter For our development business has XX, priority our metric reflects inventory out just about growth mentioned. these QX stand which recent I of annual slide just in quickly would strong working have undeveloped the of being double-digit spoke, a to allocate this we somewhat of June quarter-over-quarter we includes I quarter, high our to reflecting Total this things of that that minerals percent to providing balance million replacement XX debt. capital a volumes. over reported the turn call $XX.XX Maintaining the our high-impact due successful really is for $XX.XX divested continued deep from ability since reduced the the quarter Slides XXXX, steady model volume across impressive us. quarter sheet toward to acquired from SCOOP Since annual in Oklahoma. volume are growth inventory. the

hedges focus program we stock reduction active the costs Given debt reflected on detail fixed is our execute price, assets an that and direct budget. dollar every the protect hedging will demonstrable in provide includes sheet more to in of benefit of ability to annual value. moment. not equity to our Ralph be value a balance our should feel our a This

SCOOP opportunities mineral year-to-date have Haynesville evaluated. $X.X closed being We with several the approximately on other and also million of in currently both acquisitions

conviction This on management per dividend execute in of share. the of is the XXX%. now Board's a Since environment. $X.XX quarter macro our share regardless to to ability this quarter March increase assets have strategy to our the or by XXXX, the and existing of the our highlight quality decision increase the we dividend annual and Board's by XX% demonstrates Another an the increased $X.XX

As activity continue in Danielle drive steady discuss to growth. a on year-over-year moment, around minerals on volume will and

We a corporate by increase $X are increased Ralph witnessing XX%, volume development activity our we Springboard this the Danielle to to increase in the discuss million XX%, increase quarter's then XX% about material operational III overview, and represents are excited especially quarter-over-quarter Oklahoma. the reduced highest turn of b, a XXXX. in I'd recap To to in XXXX; provide highlights: debt SCOOP a, financials. March and over the like of dividend royalty volumes of since which by point, since At call this XXX% Danielle? or quick to area

Danielle Mezo

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

highest to in wells sequential several that online quarter, we primarily For quarter's for record Mcfe. June XXXX, during associated ended that which during the near quarter This high-impact to XX, quarter is represents the Royalty total figure to quarter an term. for call March to interest corporate X,XXX our increase XX, XXXX. all-time with volume since the quarter mentioned XXXX, production compared last prior expecting production quarter ended wells XX, XX% the ended X,XXX increased online. XX% come production quarter increased the Haynesville Recall coming the PHX. we are quarterly these high quarterly the from is June The

we interest other as in to number note is not first a a to being mineral have that of we control quarter. do any important It the While it developed, on currently development. high estimate is of production holder, timing well wells process specific to challenging

represented on quarter-to-quarter model of up June production for production quarter. natural So there can with during volumes quarter's XX% basis evaluated are which NGL a our rolling natural XX% key long-term our sustainable be basis. of a volumes down Oil transition total future. our associated represented XX-month gas, is volumes that XX, volatility, XXXX energy aligns some of with production on Royalty volumes fuel and represented X%. our and both a better and gas the position XX% were business

progress X.X reflects to net number the high our the Haynesville production. WIP compared wells higher mentioned wells in to net gross converting XX producing During earlier, gross to QX The operators acreage sequential converted mineral compared to on in XXXX, net X.XX interest gross active quarter. third-party or and lower prior or number XX wells

macro We with progress permits of the our remained sustainable pleased which portfolio until online are The or being includes gas strong minerals, steady, conversion or wells operators inventory and growth, our DUCs, of At X.XXX on of or wells bringing X.XXX wells very filed record in March gas of in and wells of environment, gross replenishment assets in same conversions some of growth. well deferring the an natural which natural assembled the compared wells rate, improvement given to time, our the with we high-quality drilled prices. is XXX at includes WIP end challenging the particularly provide net to well have reflects XXXX. future net continued track gross XX, progress inventory there XXX

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

In lead in both royalty active recently rigs acquired legacy within to PHX of our assets, increasing which miles had steady we annually summary, continue Additionally, should to ownership. X.X mineral XX development see and volumes. we

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

Raphael D'Amico

for the call everybody Thanks, Danielle, being and for thanks today. on

from to QX XXXX XXXX, XXXX. XX, gas, per of oil an to about up hedge Mcf Realized $X.XX our gas $X.XX decrease and of June XX% NGL due for oil and to of QX For X% sequential $X.X $X.XX to 'XX, $XX.XX, these QX hedge volumes were production barrel. primarily in from the contracts prices million, quarter XXXX. XX% our months. realized 'XX. per QX XX% volumes approximately and NGL were hedged a quarter $X.XX natural of added revenues per the XX% for prices natural the averaged gas, on last in compared of in increased averaged of in an basis oil compared XX prior Realized Realized $X.XX NGL of quarter $X.XX second the of And Mcf ended were $XX.XX XX% sales $XX.XX X% the up Mcfe to our million course average averaged natural at prices prices and over from were gains Most and production X% QX prices increase

believe gas be hedge and of us $X.XX. We the downside. XXXX midpoint with natural program XX% approximately on what do, has to continue is to it our protection year anticipated is doing guidance our at meant at full downside Approximately consistent production protect the it our of

have is our natural our upside structure exposure costless approximately gas at or the oil also guidance collars, the On while approximately $X and $XX anticipated means still side, volumes midpoint using the barrel. certain $XX maintaining hedges XX% production of range, swaps We the to floors on per at that above protection downside of our which XX we both range. in

on available due XX-Q, a amount period. hedge not basis due we $X.XX increased taxes come workover expenses. in of those the the and coming production to the Louisiana, sequential due and which filed XX% where $X,XXX compared are basis a during Cash some current primarily important and and revenues. to their calendar XX% quarterly which holder mineral it's includes quarter-over-quarter And during ad or primarily on that production share slightly on Production is total leases, quarter. decreased gathering in also hedges, primarily which new quarter fees. to to volumes fees legacy prior on with volumes to -- also valorem cost-bearing a gathering of and transportation the interest XX% additional and quarter. higher G&A significant working decreased to the from Our quarter our sequential non-operated $XXX,XXX transportation recently note to approximately position sequential XXXX increased LOE includes for volumes higher marketing the basis lower taxes paying associated prices to on added $XXX,XXX our based million, marketing wells a higher million volumes, during Total to XX% on sequential proportionate

coming XX-K quarters, higher shareholder to increase third and due second in due the EBITDA, typically ad 'XX. in our EBITDA Adjusted in is our up had million per to was December We associated calendar the wells and the $X total $X.X online is the earlier, of items and such during down cost-bearing The the quarter new cash $X.XX million Our of from hedging offset discussed million and successful year million compared QX was XX, with fees first the cash million of that the fees and implementation with associated marketing professional Net gathering compared our volumes, lower G&A strategy, quarters period G&A production $XX.XX $X.X debt our XXXX, and fourth XX, of as share. million the of production income taxes June as higher from as and $XX.XX $X.X to by the to a in are higher QX meeting. XXXX. or leases for expenses as transportation quarter. XXXX quarters diluted

criteria. acquisitions can liquidity, debt EBITDA and would not the our it like underwriting perform them. where shareholders remarks. year, Chad turn XX-month chasing deals that not continue natural our have like we XX, an to required not we last some if quarterly through was return fell, profile, X-year happy that, a locations, do debt remains Also, I capital to X.XXx acquisition down important program grow return inventory that without of high-quality do this we of XXXX. Our And means note that trailing June almost call time, Much adjusted our generate to gas to marketplace for production, final chase to the With at prices We're meet build our to dividend. disciplined. in to over pay the and is drilling as will which

Chad Stephens

you, Thank Ralph.

and achievements material our currently especially macro with pleased impact natural and early the gas E&P's development environment. gas-focused in the very dramatic are lingering on in has The Marcellus. activities, this XXXX in We a despite lows had prices historic Haynesville natural at challenging collapse

by owner, mineral a this will be deferral. As impacted also we

these to is core development with seen the be by strategy This near-term a our in conversions expected our growth well future royalty continued of minerals despite can business steady various area our acquire focus However, supports potential. headwinds. that volume

ago, supported high-quality have inventory gas newly deep prices moment at you XP which PV-XX as IR of $XXX to the next work will ago a by be moment A we this natural and a Slide presentation to the I I price. portfolio built years. our quarter, that that reflect of to by categorized dramatically our which value ] on firm, in as supply I rate, growing with the earlier outside trip over catalyst stated X flow demand stress performed the independent by of I a technical few in of our close [ have that volumes reflected IR over conversion probable in Slide did third-party NYMEX mineral last engineering more created is reflected a and return PVXX a to I reserve years million. demonstrable direct to improved undeveloped value value interest last cycle will current and As higher. by which posted our not prices mid-price referred reserve we This drive normal is driven [indiscernible]. If value would stock continually slide cash margins. assets the has cash well discussed continue conversion increasing presentation, locations, royalty reserves. This our and drilling Daniel X explained X validated and

approaching our I Haynesville. between recognize position spent reserve current million million. IR continually in is stock price, facts our PHX's $XXX We flow. $XXX have the Gulf I these continue into increased natural activity million stress. volumes mineral and $XXX capacity upper XXXX PV-XX we to new the our cash appendix value with and of will around show to the mentioned Once royalty that roughly SCOOP this current when range which this to operator in of in a and the Since Coast, presentation, production date, also emphasize. and export gas and mid-price bring service, which help disconnect earlier our timing We value the enterprise from LNG acquiring increased prices we current of

will searching to We our work reward every best shareholders day for gap. and way the this close

queue open our both for Directors concludes prepared thank Operator, portion and I work. call. of Board up always, and hard please This their the the of As the employees questions. remarks for dedication

Operator

and Thank we from question-and-answer Meade [Operator a The Instructions] session. first with gentlemen, is be now Johnson you. conducting Ladies question Rice. will Charles

Charles Meade

QX especially You are production mentioned the out, with since justifiably it's I you've that think, 'XX. XQ way turned pleased guys, record

just way so XX workable a you interpretation And once any just could outlier went not result. quarter. you if this you that of great quarter about role way it, your is an I kind could quarter X Or in And kind curious every if quarterly what about is our once you in I want, -- this every know is of you this guide but result, frame quarter there, I'm of precise this the a certainly But result? how much might put that's be metaphor. mean really of in of this is up? maybe way one of but thinking

Chad Stephens

that Yes. I annual that that to feeding locations rate the development can from over growth rate that that coming that our years year-over-year. pace of say, in -- to and undeveloped of are quarter-over-quarter close growth growth looking last X Charles, is growth royalty compounded that's developed inventory speaks being of XX% and

going want comments. volume see opening excited, to continue and to of But pace forward, this in about that? we'll quarter-over-quarter and similar to So this outlying seen the my past do a not that we'll growth, quarter-over-quarter with pleased not the royalty and in to particular it's happen what's future, are the to see in to maybe the volume will But corporate continue on you we've magnitude quarter, past royalty necessarily this focused it add development in quarter. tried year-over-year, growth. the Ralph, X to the see steady was continue and we we we're to obviously, continue happened but between differentiate the this year-over-year

Raphael D'Amico

Yes.

high-interest came And I don't believe would obviously, were when there of but that high-impact mean, timing. to developed. mean in they that during think, is come these we as the have that's mentioned, Obviously, mentioned, wells, Danielle on. high we quarter, I I that add abnormal. of only that, control matter well I the other are that's process thing don't I several interest similar being have, we wells It's a some as wells, look, on we think the said. I

what similar to wells the these their it's we there's no So our here doubt we operators money quarter. where hard on on well as own pinpoint speak spending of similar But specific percentages that minerals today. to

about, to in talked point particular have a as So of of quarters, at kind matter at time. it's not several it just just one we and time you over look

Charles Meade

of I my if go stepping And Western Haynesville the it then Shale. understanding, I then Slide further uptick been made play. private And or to to maybe Anadarko from at Shale. lot from exposure could in public there's look recently, there's more of the X, might looks the that question, feel in And like company your some My a Cherokee me with Cherokee a second acquisition operators target an when the the away an SCOOP. in activity have you

or So could you you kind seeing kind be hold you of might of quantify anything around out characterize there? maybe what activity that

Chad Stephens

do as speak, matured, a some the kind our in so to water, meet And so out it's there. that. the minerals just of gotten play there little the doesn't to that economics. out so our waters already it it toe we've frothy meet as watched it's and We've acquire doesn't to test kind and Yes. have minerals derisked, done some legacy We has become of get matured

some out perspective, it, pretty not frothy. it validity a it's already but minerals mineral success I the speaks a real able of gotten had yes. acquire, already think credibility to from but there, And acquisition to in So is it's play, any has we've consolidate the -- and real that being

watch going on we're back sidelines. to the just and step of So kind

Raphael D'Amico

Yes.

few we minerals in certain sections our own including we've have acquiring also on minerals. the sectors So we're in, number in but seen had a there, minerals step-up of some and minerals development area activity seen we've amount we area, high-interest nonproducing where focused do on in the well a that a significant of a not as substantial additional that well. quite we leasing on And

correct, you're adding not Charles. it. But to we're So

from that good additional some industry and we there. have it, exposure to activity certainly We will benefit

Operator

with from is question Jeffrey Partners. next The Grampp Global Alliance

Jeffrey Grampp

back that, half build given could potentially when of activity out you you it here. still can several not Obviously, all you up do level, the mean, potentially you've If kind in of of ball crystal have I the for Or see I here today? see sequential year, but surprising, take quarters on that guys reported some know it which funnel for the that what kind bottoms start guys next of you declines your couple a as been how me guide you can the of of growth? the kind solid guys that a back again? to in But resume down XX quarters. do at best you guys implies QX. at out playing think drawing

Chad Stephens

Ralph, you the start why answer. don't

Raphael D'Amico

Sure.

our to if big a they're even commodity quarters, to going optimistic very higher should little trend. prices maintain we I day, point at permit dependent that it's continuing XX over than volume is that are from we look continue to So But what I convert, the drawn to control, use upward the quarters, yes, locations we pace we're very months, got next in where one it's continuing minerals, don't see activity. So So I the higher, standpoint. we I we which today, time. bit would there's I that that see you as over last right? the right? to say, that the of if at maybe operators XX think wells think mean, it's and Obviously, new right? So right? on already And several that today, I progress in XX% XXX right, decide the what seen as you again, there. things next look inventory better tell what means number down and at several look, mean, on if one a we look to operators the would months, over those a upon were bit, the while it's little to we've same see XX a continue do, you're

Chad Stephens

just Let's what's over answering as you, kind that I just you of is this we're corporate royalty what remind XX%. for on to as was X remind of -- royalty volume question XXXX, I in growth, decline years, thinking excess all word Charles' talk a and of about Jeff, rate around highlight the us of top last of

So of rate to decline our inventory, because quality replace volume highlighting. of kind of that I make we're able and that Does keep royalty grow this reserves the sense?

Jeffrey Grampp

Yes, absolutely. And I follow-up and guidance model understand there's no perfect details answer there, on thoughts. and but the side. more I appreciate My the is

guys the front. Or build take production? given GP&T just that that, I that is outside You on made any as our of -- given that of of quarter. to for makeup the modeling? that we hit really that production kind royalty of just upon something revisions upon any in kind assets that's into like of on there idiosyncratic some way account guidance assets get the us specific this to kind of then Is kind sounded the kind you these the on that that Is are of it quarter up kind structure a something think handle depends or build and driving Ralph, depending of on a

Raphael D'Amico

high coming a the range, of have release It's you online, X way wells, right, I'm shift X perfectly that's other, one we wells can Because interest Yes. give kind wells any number, number of if a the particular or that why X wells. up imperfect instead because -- cost sense quarter, particularly you right? X cost-bearing and making on in if online coming that cost-free they're

on we had the bit they numbers. that's those will impact what of those moving So which driving additional drove of the up expected, and of year number volumes. cost clearly, from online wells some having of pay us a those than little came to bearing more expenses came these have And are sort what because sooner is that that

Operator

is The next question Capital Northland Schafer with Donovan Markets. from

Donovan Schafer

you is shifts. going you the particular to that described this on quarter. I when return not -- first, ask, kidding want your were and for to This congratulations completed transformation, you're as quarter said you've So that the growth you this to now

to were high exceptionally just that there that wells And advance. prolific know of there know And you interest, to well. I you want performed you them would about I being you there. also some that but well fantastically prolific seem was able were say the turn did -- somewhat like to just synonymous quarter was juicy coming this or but in the in said they mean anticipate kind done because they're this So the a of some you a unusually impact attribute be is high interest, Haynesville wells area But that were and in of are you some talk really has were the high online? Or loss? these financials? very just anomalous other like attractive sense you I knew saying, there high high on say, kind wells it going Or mean, of they just interest, that impact? to on... the

Raphael D'Amico

at right, wells rate. so relative to in The Haynesville in is, the a wells, answer much come higher Oklahoma

little and sort right? And normalize in wells in Haynesville to both that, you would the and places had of the So if have it, Haynesville that a if quarter, if have, online wells Chad volume if on more was relative that's growth you been you say, to try would sort more the come an the sort clearly, a the the since So Oklahoma of wells, Haynesville of So lower, substantial wells you make going still was basis. this high-impact right? you point to would have the that still right? come -- you're if it, flip-flop have had interest a high part sequential -- would you impact spread, you XXXX a it be Oklahoma from seen more I versus Oklahoma, volume have a bit trying and right? right, come highest wells earlier to what higher standpoint, But right? online, well, at evenly you quarter than rate of quarter have And combination more so normalize if we much seen of and it have

So areas. we higher of Depending versus can you other by that's it's location, have it. -- what production first mean X on months the

Donovan Schafer

quite then increase a quarter, XX% kind wells of like to got And question And these greater Haynesville quickly. got that's a strong. you've that, little this they decline understand the these the some wells, that you're guidance, related royalty of come maybe also rate of, kind you you've with annual in think, but saying than so ties interest. the strong the and that got guidance, bit -- to on what then but I these Jeff's this on I in of wells decline reflective come you've the Chad, mentioned with

where kind is modeling what -- landing take just almost quarter not together QX in this in this which it quickly looking it this when should you I of of conservatism error some So at even of I carry without the much type allowing like pretty it as pretty did on really darn close and guys I you're of in that's up laws Haynesville conservatism? of spot kind a makes own of seems guidance, what or my is or terms exactly estimates, Could forward. QX, you feel just like Or but model, to playing I raising with aggressively? Or wells midpoint be though guidance? here seem there do revised kind to be certain the end down where come pretty quarter, expecting kind in a putting really of I and for to from amount in of whatever, for my contribution that these had you're the pretty

Raphael D'Amico

normalize a by valleys, definition, the of these get all that so quarters, and peaks out right, to try right? try to to We conservatism that. embedded so And in of there's layer

Donovan Schafer

Yes. And you talk about the lumpiness.

And quality. can through so a have the like [indiscernible], a each the word, a of roll lack better quarter of dice-ish

was quarter, anomalous for theory, or new single anomalously something. anomalously And you on that could like so and in wells then incremental given a lesser coming number some step up see this of

impacted been in shutting wells. by what I so things the -- you're companies doing to then for some doing guys are you're past, you recompletions, offset I in And there where get have you're ask And -- saying. want

on curious offset to to be just heads going of aware producing like for in up be have completions? you to Anything like that in a shut of currently Just visibility on? terms if for any wells as anything potentials

Danielle Mezo

No.

As sorry, I'm is yet -- this of Danielle. and

have really from not seen late. impact a of big We that as

actually the Haynesville. have in positive from We seen particularly some completions the of offset, impact

that far term, as as not we're long So really seeing moment. shut-in at no, the wells

Donovan Schafer

of Congratulations take rest questions I'll the quarter. on the my offline.

Operator

conference further for Chad over this would like time. are There the at you. Thank closing questions to hand now to no comments. I

Chad Stephens

expand And investor months. for also will Thank and to over like continue our shareholders Ralph activities our weeks their you, thank to operator. to employees continued I'd that and I marketing again, and like the note support. I'd coming

to November call XXXX meeting or would one hosting interested myself to at or you at quarter our early [indiscernible]. [indiscernible], please folks day. a to look events you. in in be time, of If Thank forward our those good at hesitate don't the Have reach discuss results. to next any We third out

Operator

Thank you. today's concludes teleconference. This

time. your you disconnect participation. for at You your may lines Thank this

PHX Minerals (PHX) 8 Aug 242024 Q2 Earnings call transcript