PHX Minerals Reports Results for the Quarter Ended Sept. 30, 2023; Increases Fixed Quarterly Dividend 33% and Expands Borrowing Base
FORT WORTH, Texas, Nov. 8, 2023 – PHX MINERALS INC., “PHX” or the “Company” (NYSE: PHX), today reported financial and operating results for the quarter ended Sept. 30, 2023.
Summary of Results for the Quarter Ended Sept. 30, 2023
- Net income was $1.9 million, or $0.05 per diluted share, compared to net loss of ($0.04) million, or $0.00 per diluted share, for the quarter ended June 30, 2023, and net income of $9.2 million, or $0.25 per diluted share, for the quarter ended Sept. 30, 2022.
- Adjusted pretax net income(1) was $3.2 million, or $0.09 per diluted share, compared to $0.6 million, or $0.02 per diluted share, for the quarter ended June 30, 2023, and $5.3 million, or $0.15 per diluted share, for the quarter ended Sept. 30, 2022.
- Adjusted EBITDA(1) was $6.3 million, compared to $4.1 million for the quarter ended June 30, 2023, and $8.4 million for the quarter ended Sept. 30, 2022.
- Royalty production volumes increased 3% to 2,073 Mmcfe compared to the quarter ended June 30, 2023, and increased 13% compared to the quarter ended Sept. 30, 2022.
- Total production volumes increased 2% to 2,348 Mmcfe compared to the quarter ended June 30, 2023, and decreased 9% compared to the quarter ended Sept. 30, 2022.
- Converted 71 gross (0.155 net) wells to producing status, compared to 81 gross (0.30 net) during the quarter ended June 30, 2023 and 49 gross (0.22 net) during the quarter ended Sept. 30, 2022.
- Inventory of 185 gross (0.81 net) wells in progress and 93 gross (0.28 net) permits as of Sept. 30, 2023, compared to 186 gross (0.51 net) wells in progress and 86 gross (0.40 net) permits as of June 30, 2023.
- Total debt was $30.8 million and the debt to adjusted EBITDA (TTM) (1) ratio was 1.31x at Sept. 30, 2023.
Subsequent Events
- PHX announced a 33% increase in its fixed quarterly dividend to $0.03 per share, payable on Dec. 7, 2023, to stockholders of record on Nov. 23, 2023.
- PHX entered into the fifth amendment to its credit agreement on Nov. 6, 2023 pursuant to which, among other changes, the borrowing base under PHX’s credit facility is increased from $45.0 million to $50.0 million in connection with its regularly scheduled semi-annual redetermination.
- This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.
Chad L. Stephens, President and CEO, commented, “We are pleased with this quarter’s financial results as they highlight the company’s progress. There continues to be robust drilling activity on our minerals reflecting the high-quality nature of our assets. Royalty volume growth remains on trend to increase approximately 20% year over year. Royalty volumes now represent over 90% of cash flow as the nonop working interest portion of our business has steadily become less material to our financial performance. We continue to see active deal flow, having completed roughly $13 million of mineral acquisitions during the quarter and in excess of $40 million over the trailing 12-month period.”
“The Board of Directors approved an increase in our quarterly dividend from $0.0225 to $0.03, a 33% increase, which reflects their belief in the continued sustainability of our business model. Additionally, our bank group increased our borrowing base from $45.0 million to $50.0 million, which also reflects on the high quality of our asset base and our ability to execute on our strategy.”
Financial Highlights
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Nine Months Ended |
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|
|
|
Sept. 30, 2023 |
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|
Sept. 30, 2022 |
|
|
Sept. 30, 2023 |
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|
Sept. 30, 2022 |
|
||||
|
Royalty Interest Sales |
|
$ |
7,873,297 |
|
|
$ |
15,411,544 |
|
|
$ |
24,214,701 |
|
|
$ |
36,763,953 |
|
|
Working Interest Sales |
|
$ |
1,025,794 |
|
|
$ |
6,416,490 |
|
|
$ |
3,772,801 |
|
|
$ |
19,409,514 |
|
|
Natural Gas, Oil and NGL Sales |
|
$ |
8,899,091 |
|
|
$ |
21,828,034 |
|
|
$ |
27,987,502 |
|
|
$ |
56,173,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Gains (Losses) on Derivative Contracts |
|
$ |
(337,647 |
) |
|
$ |
(4,298,614 |
) |
|
$ |
3,648,179 |
|
|
$ |
(19,669,246 |
) |
|
Lease Bonuses and Rental Income |
|
$ |
620,101 |
|
|
$ |
17,350 |
|
|
$ |
1,045,242 |
|
|
$ |
388,587 |
|
|
Total Revenue |
|
$ |
9,181,545 |
|
|
$ |
17,546,770 |
|
|
$ |
32,680,923 |
|
|
$ |
36,892,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Lease Operating Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
per Working Interest Mcfe |
|
$ |
1.50 |
|
|
$ |
1.28 |
|
|
$ |
1.33 |
|
|
$ |
1.12 |
|
|
Transportation, Gathering and Marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
per Mcfe |
|
$ |
0.30 |
|
|
$ |
0.68 |
|
|
$ |
0.38 |
|
|
$ |
0.63 |
|
|
Production Tax per Mcfe |
|
$ |
0.17 |
|
|
$ |
0.36 |
|
|
$ |
0.20 |
|
|
$ |
0.34 |
|
|
G&A Expense per Mcfe |
|
$ |
1.18 |
|
|
$ |
1.46 |
|
|
$ |
1.25 |
|
|
$ |
1.26 |
|
|
Cash G&A Expense per Mcfe (1) |
|
$ |
0.95 |
|
|
$ |
1.06 |
|
|
$ |
0.99 |
|
|
$ |
0.98 |
|
|
Interest Expense per Mcfe |
|
$ |
0.24 |
|
|
$ |
0.18 |
|
|
$ |
0.23 |
|
|
$ |
0.13 |
|
|
DD&A per Mcfe |
|
$ |
0.86 |
|
|
$ |
0.60 |
|
|
$ |
0.86 |
|
|
$ |
0.76 |
|
|
Total Expense per Mcfe |
|
$ |
2.93 |
|
|
$ |
3.65 |
|
|
$ |
3.10 |
|
|
$ |
3.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net Income (Loss) |
|
$ |
1,895,403 |
|
|
$ |
9,158,468 |
|
|
$ |
11,407,356 |
|
|
$ |
13,727,023 |
|
|
Adjusted EBITDA (2) |
|
$ |
6,321,029 |
|
|
$ |
8,395,965 |
|
|
$ |
18,147,976 |
|
|
$ |
21,409,483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash Flow from Operations (3) |
|
$ |
6,960,419 |
|
|
$ |
13,192,676 |
|
|
$ |
20,809,684 |
|
|
$ |
28,893,660 |
|
|
CapEx (4) |
|
$ |
45,977 |
|
|
$ |
201,114 |
|
|
$ |
321,396 |
|
|
$ |
359,961 |
|
|
CapEx - Mineral Acquisitions |
|
$ |
13,469,756 |
|
|
$ |
13,652,829 |
|
|
$ |
25,383,759 |
|
|
$ |
31,881,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Borrowing Base |
|
|
|
|
|
|
|
$ |
45,000,000 |
|
|
$ |
50,000,000 |
|
||
|
Debt |
|
|
|
|
|
|
|
$ |
30,750,000 |
|
|
$ |
28,300,000 |
|
||
|
Debt to Adjusted EBITDA (TTM) (2) |
|
|
|
|
|
|
|
|
1.31 |
|
|
|
1.10 |
|
||
- Cash G&A expense is G&A excluding restricted stock and deferred director’s expense from the adjusted EBITDA table in the non-GAAP Reconciliation section.
- This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.
- GAAP cash flow from operations.
- Includes legacy working interest expenditures and fixtures and equipment.
Operating Highlights
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
||||
|
|
Sept. 30, 2023 |
|
|
Sept. 30, 2022 |
|
|
Sept. 30, 2023 |
|
|
Sept. 30, 2022 |
|
||||
|
Gas Mcf Sold |
|
1,868,012 |
|
|
|
2,047,614 |
|
|
|
5,681,508 |
|
|
|
5,853,443 |
|
|
Average Sales Price per Mcf before the |
|
|
|
|
|
|
|
|
|
|
|
||||
|
effects of settled derivative contracts |
$ |
2.40 |
|
|
$ |
7.61 |
|
|
$ |
2.63 |
|
|
$ |
6.33 |
|
|
Average Sales Price per Mcf after the |
|
|
|
|
|
|
|
|
|
|
|
||||
|
effects of settled derivative contracts |
$ |
2.72 |
|
|
$ |
5.08 |
|
|
$ |
3.03 |
|
|
$ |
4.25 |
|
|
% of sales subject to hedges |
|
46 |
% |
|
|
58 |
% |
|
|
46 |
% |
|
|
60 |
% |
|
Oil Barrels Sold |
|
48,032 |
|
|
|
49,902 |
|
|
|
143,148 |
|
|
|
150,461 |
|
|
Average Sales Price per Bbl before the |
|
|
|
|
|
|
|
|
|
|
|
||||
|
effects of settled derivative contracts |
$ |
78.48 |
|
|
$ |
94.07 |
|
|
$ |
76.23 |
|
|
$ |
96.73 |
|
|
Average Sales Price per Bbl after the |
|
|
|
|
|
|
|
|
|
|
|
||||
|
effects of settled derivative contracts |
$ |
78.44 |
|
|
$ |
57.80 |
|
|
$ |
73.88 |
|
|
$ |
60.62 |
|
|
% of sales subject to hedges |
|
35 |
% |
|
|
62 |
% |
|
|
44 |
% |
|
|
69 |
% |
|
NGL Barrels Sold |
|
32,029 |
|
|
|
40,761 |
|
|
|
99,063 |
|
|
|
120,864 |
|
|
Average Sales Price per Bbl(1) |
$ |
20.35 |
|
|
$ |
37.89 |
|
|
$ |
21.48 |
|
|
$ |
37.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Mcfe Sold |
|
2,348,378 |
|
|
|
2,591,588 |
|
|
|
7,134,770 |
|
|
|
7,481,390 |
|
|
Natural gas, oil and NGL sales before the |
|
|
|
|
|
|
|
|
|
|
|
||||
|
effects of settled derivative contracts |
$ |
8,899,091 |
|
|
$ |
21,828,034 |
|
|
$ |
27,987,502 |
|
|
$ |
56,173,467 |
|
|
Natural gas, oil and NGL sales after the |
|
|
|
|
|
|
|
|
|
|
|
||||
|
effects of settled derivative contracts |
$ |
9,502,036 |
|
|
$ |
14,832,521 |
|
|
$ |
29,896,064 |
|
|
$ |
38,519,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
(1) There were no NGL settled derivative contracts during the 2023 and 2022 quarters. |
|
||||||||||||||
Total Production for the last four quarters was as follows:
|
Quarter ended |
|
Mcf Sold |
|
|
Oil Bbls Sold |
|
|
NGL Bbls Sold |
|
|
Mcfe Sold |
|
||||
|
9/30/2023 |
|
|
1,868,012 |
|
|
|
48,032 |
|
|
|
32,029 |
|
|
|
2,348,378 |
|
|
6/30/2023 |
|
|
1,854,485 |
|
|
|
41,009 |
|
|
|
33,929 |
|
|
|
2,304,113 |
|
|
3/31/2023 |
|
|
1,959,010 |
|
|
|
54,107 |
|
|
|
33,104 |
|
|
|
2,482,276 |
|
|
12/31/2022 |
|
|
1,669,320 |
|
|
|
52,406 |
|
|
|
38,611 |
|
|
|
2,215,419 |
|
Total production volumes attributable to natural gas were 80% for the quarter ended Sept. 30, 2023.
Royalty Interest Production for the last four quarters was as follows:
|
Quarter ended |
|
Mcf Sold |
|
|
Oil Bbls Sold |
|
|
NGL Bbls Sold |
|
|
Mcfe Sold |
|
||||
|
9/30/2023 |
|
|
1,689,396 |
|
|
|
43,575 |
|
|
|
20,416 |
|
|
|
2,073,342 |
|
|
6/30/2023 |
|
|
1,673,346 |
|
|
|
35,599 |
|
|
|
20,516 |
|
|
|
2,010,036 |
|
|
3/31/2023 |
|
|
1,700,974 |
|
|
|
45,395 |
|
|
|
20,063 |
|
|
|
2,093,722 |
|
|
12/31/2022 |
|
|
1,303,825 |
|
|
|
33,691 |
|
|
|
20,353 |
|
|
|
1,628,089 |
|
Royalty production volumes attributable to natural gas were 81% for the quarter ended Sept. 30, 2023.
Working Interest Production for the last four quarters was as follows:
|
Quarter ended |
|
Mcf Sold |
|
|
Oil Bbls Sold |
|
|
NGL Bbls Sold |
|
|
Mcfe Sold |
|
||||
|
9/30/2023 |
|
|
178,616 |
|
|
|
4,457 |
|
|
|
11,613 |
|
|
|
275,036 |
|
|
6/30/2023 |
|
|
181,139 |
|
|
|
5,410 |
|
|
|
13,413 |
|
|
|
294,077 |
|
|
3/31/2023 |
|
|
258,036 |
|
|
|
8,712 |
|
|
|
13,041 |
|
|
|
388,554 |
|
|
12/31/2022 |
|
|
365,495 |
|
|
|
18,715 |
|
|
|
18,258 |
|
|
|
587,330 |
|
Quarter Ended Sept. 30, 2023 Results
The Company recorded net income of $1.9 million, or $0.05 per diluted share, for the quarter ended Sept. 30, 2023, as compared to net income of $9.2 million, or $0.25 per diluted share, for the quarter ended Sept. 30, 2022. The change in net income was principally the result of a decrease in natural gas, oil and NGL sales and a decrease in gains on asset sales, partially offset by a decrease in losses associated with our derivative contracts and a decrease in income tax provision.
Natural gas, oil and NGL revenue decreased $12.9 million, or 59%, for the quarter ended Sept. 30, 2023, compared to the quarter ended Sept. 30, 2022, due to decreases in natural gas, oil and NGL prices of 68%, 17% and 46%, respectively, and decreases in natural gas, oil and NGL volumes of 9%, 4% and 21%, respectively.
The increase in royalty production volumes during the quarter ended Sept. 30, 2023, as compared to the quarter ended Sept. 30, 2022, resulted from new wells in the Haynesville Shale and SCOOP coming online. The production decrease in working interest volumes during the quarter ended Sept. 30, 2023, as compared to the quarter ended Sept. 30, 2022, resulted from the divestiture of working interest properties.
The Company had a net loss on derivative contracts of ($0.3) million for the quarter ended Sept. 30, 2023, comprised of a $0.6 million gain on settled derivatives and a ($0.9) million non-cash loss on derivatives, as compared to a net loss of ($4.3) million for the quarter ended Sept. 30, 2022. The change in net loss on derivative contracts was due to the Company’s settlements of natural gas and oil collars and fixed price swaps and the change in valuation caused by the difference in Sept. 30, 2023 pricing relative to the strike price on open derivative contracts.
Nine Months Ended Sept. 30, 2023 Results
The Company recorded net income of $11.4 million, or $0.31 per diluted share, for the nine months ended Sept. 30, 2023, as compared to net income of $13.7 million, or $0.39 per diluted share, for the nine months ended Sept. 30, 2022. The change in net income was principally the result of a decrease in natural gas, oil and NGL sales and a decrease in gains on asset sales, partially offset by an increase in gains associated with our derivative contracts and decreases in lease operating expenses and transportation, gathering and marketing expenses.
Natural gas, oil and NGL revenue decreased $28.2 million, or 50%, for the nine months ended Sept. 30, 2023, compared to the nine months ended Sept. 30, 2022, due to decreases in natural gas, oil and NGL prices of 58%, 21% and 43%, respectively, and decreases in natural gas, oil and NGL volumes of 3%, 5% and 18%, respectively.
The increase in royalty production volumes during the nine months ended Sept. 30, 2023, as compared to the nine months ended Sept. 30, 2022, resulted from new wells in the Haynesville Shale and SCOOP coming online. The production decrease in working interest volumes during the nine months ended Sept. 30, 2023, as compared to the nine months ended Sept. 30, 2022, resulted from the divestiture of working interest properties.
The Company had a net gain on derivative contracts of $3.6 million for the nine months ended Sept. 30, 2023, comprised of a $2.3 million gain on settled derivatives and a $1.4 million non-cash gain on derivatives, as compared to a net loss of ($19.7) million for the nine months ended Sept. 30, 2022. The gain on settled derivative contracts for the nine months ended Sept. 30, 2023 excludes $0.4 million of cash paid to settle off-market derivative contracts. The total cash received to settle hedge contracts during the nine months ended Sept. 30, 2023 was $1.9 million. The change in net gain on derivative contracts was due to the Company’s settlements of natural gas and oil collars and fixed price swaps and the change in valuation caused by the difference in September 30, 2023 pricing relative to the strike price on open derivative contracts.
Operations Update
During the quarter ended Sept. 30, 2023, the Company converted 71 gross (0.155 net) wells to producing status, including 22 gross (0.08 net) wells in the Haynesville and 32 gross (0.07 net) wells in the SCOOP, compared to 49 gross (0.22 net) wells in the quarter ended Sept. 30, 2022.
At Sept. 30, 2023, the Company had a total of 185 gross (0.81 net) wells in progress across its mineral positions and 93 gross (0.28 net) active permitted wells, compared to 186 gross (0.51 net) wells in progress and 86 gross (0.40 net) active permitted wells at June 30, 2023. As of October 9, 2023, 14 rigs were operating on the Company’s acreage and 56 rigs operating within 2.5 miles of its acreage.
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Bakken/ |
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Three |
|
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Arkoma |
|
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|||||||
|
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SCOOP |
|
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STACK |
|
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Forks |
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|
Stack |
|
|
Haynesville |
|
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Other |
|
|
Total |
|
|||||||
|
As of Sept. 30, 2023: |
|
|
|
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|
|
|
|
|
|
|
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|
|||||||
|
Gross Wells in Progress on PHX Acreage (1) |
|
52 |
|
|
|
13 |
|
|
|
8 |
|
|
|
4 |
|
|
|
97 |
|
|
|
11 |
|
|
|
185 |
|
|
Net Wells in Progress on PHX Acreage (1) |
|
0.159 |
|
|
|
0.034 |
|
|
|
0.043 |
|
|
|
0.003 |
|
|
|
0.538 |
|
|
|
0.031 |
|
|
|
0.808 |
|
|
Gross Active Permits on PHX Acreage |
|
43 |
|
|
|
7 |
|
|
|
5 |
|
|
|
5 |
|
|
|
28 |
|
|
|
5 |
|
|
|
93 |
|
|
Net Active Permits on PHX Acreage |
|
0.128 |
|
|
|
0.031 |
|
|
|
0.006 |
|
|
|
0.002 |
|
|
|
0.095 |
|
|
|
0.021 |
|
|
|
0.283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
As of Oct. 9, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Rigs Present on PHX Acreage |
|
6 |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
5 |
|
|
|
2 |
|
|
|
14 |
|
|
Rigs Within 2.5 Miles of PHX Acreage |
|
11 |
|
|
|
13 |
|
|
|
5 |
|
|
|
- |
|
|
|
19 |
|
|
|
8 |
|
|
|
56 |
|
(1) Wells in progress includes drilling wells and drilled but uncompleted wells, or DUCs.
Leasing Activity
During the quarter ended Sept. 30, 2023, the Company leased 357 net mineral acres to third-party exploration and production companies for an average bonus payment of $2,075 per net mineral acre and an average royalty of 24%.
Acquisition and Divestiture Update
During the quarter ended Sept. 30, 2023, the Company purchased 974 net royalty acres for approximately $13.4 million and had no significant divestitures.
|
|
|
Acquisitions |
|
|||||||||||||
|
|
|
SCOOP |
|
|
Haynesville |
|
|
Other |
|
|
Total |
|
||||
|
During Three Months Ended Sept. 30, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net Mineral Acres Purchased |
|
|
102 |
|
|
|
459 |
|
|
|
- |
|
|
|
561 |
|
|
Net Royalty Acres Purchased |
|
|
159 |
|
|
|
815 |
|
|
- |
|
|
|
974 |
|
|
Outlook
PHX is providing an updated operational outlook for 2023 as follows:
|
|
|
Calendar Year 2022 Actual |
|
Calendar Year 2023 YTD Actual |
|
Calendar Year 2023 Outlook |
|
Mineral & Royalty Production (Mmcfe) |
|
6,613 |
|
6,177 |
|
8,000 - 8,400 |
|
Working Interest Production (Mmcfe) |
|
3,084 |
|
958 |
|
1,200 - 1,400(1) |
|
Total Production (Mmcfe) |
|
9,697 |
|
7,135 |
|
9,200 - 9,800 |
|
Percentage Natural Gas |
|
78% |
|
80% |
|
79% - 81% |
|
|
|
|
|
|
|
|
|
Transportation, Gathering & Marketing (per Mcfe) |
|
$0.63 |
|
$0.38 |
|
$0.37 - $0.42 |
|
Production Tax (as % of pre-hedge sales volumes) |
|
4.50% |
|
5.10% |
|
5.00% - 5.50% |
|
LOE Expenses (on an absolute basis in 000’s) |
|
$3,807 |
|
$1,274 |
|
$1,500 - $1,700 |
|
Cash G&A (per Mcfe) |
|
$1.01 |
|
$0.99 |
|
$0.99 - $1.02 |
(1) Pro-forma divestitures of Eagle Ford and Arkoma working interest assets, excludes potential future sales of additional working interest assets.
Quarterly Conference Call
PHX will host a conference call to discuss the Company’s results for the quarter ended Sept. 30, 2023, at 11 a.m. EST tomorrow, Nov. 9, 2023. Management’s discussion will be followed by a question-and-answer session with investors.
To participate on the conference call, please dial 877-407-3088 (toll-free domestic) or 201-389-0927. A replay of the call will be available for 14 days after the call. The number to access the replay of the conference call is 877-660-6853 and the PIN for the replay is 13742254.
A live audio webcast of the conference call will be accessible from the “Investors” section of PHX’s website at https://phxmin.com/events. The webcast will be archived for at least 90 days.
FINANCIAL RESULTS
Statements of Operations
|
|
Three Months Ended Sept. 30, |
|
|
Nine Months Ended Sept. 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
|
Revenues: |
|
|
|
|
|
||||||||||
|
Natural gas, oil and NGL sales |
$ |
8,899,091 |
|
|
$ |
21,828,034 |
|
|
$ |
27,987,502 |
|
|
$ |
56,173,467 |
|
|
Lease bonuses and rental income |
|
620,101 |
|
|
|
17,350 |
|
|
|
1,045,242 |
|
|
|
388,587 |
|
|
Gains (losses) on derivative contracts |
|
(337,647 |
) |
|
|
(4,298,614 |
) |
|
|
3,648,179 |
|
|
|
(19,669,246 |
) |
|
|
|
9,181,545 |
|
|
|
17,546,770 |
|
|
|
32,680,923 |
|
|
|
36,892,808 |
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Lease operating expenses |
|
413,643 |
|
|
|
961,148 |
|
|
|
1,273,560 |
|
|
|
2,791,409 |
|
|
Transportation, gathering and marketing |
|
693,915 |
|
|
|
1,758,132 |
|
|
|
2,729,044 |
|
|
|
4,676,786 |
|
|
Production taxes |
|
387,624 |
|
|
|
929,330 |
|
|
|
1,430,950 |
|
|
|
2,551,920 |
|
|
Depreciation, depletion and amortization |
|
2,022,709 |
|
|
|
1,550,410 |
|
|
|
6,123,031 |
|
|
|
5,694,358 |
|
|
Provision for impairment |
|
36,460 |
|
|
|
2,703 |
|
|
|
38,533 |
|
|
|
8,980 |
|
|
Interest expense |
|
556,941 |
|
|
|
471,716 |
|
|
|
1,638,708 |
|
|
|
988,273 |
|
|
General and administrative |
|
2,760,342 |
|
|
|
3,783,159 |
|
|
|
8,919,354 |
|
|
|
9,405,037 |
|
|
Losses (gains) on asset sales and other |
|
(174,492 |
) |
|
|
(3,499,296 |
) |
|
|
(4,369,613 |
) |
|
|
(6,390,978 |
) |
|
Total costs and expenses |
|
6,697,142 |
|
|
|
5,957,302 |
|
|
|
17,783,567 |
|
|
|
19,725,785 |
|
|
Income (loss) before provision (benefit) for income taxes |
|
2,484,403 |
|
|
|
11,589,468 |
|
|
|
14,897,356 |
|
|
|
17,167,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Provision (benefit) for income taxes |
|
589,000 |
|
|
|
2,431,000 |
|
|
|
3,490,000 |
|
|
|
3,440,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income (loss) |
$ |
1,895,403 |
|
|
$ |
9,158,468 |
|
|
$ |
11,407,356 |
|
|
$ |
13,727,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic earnings (loss) per common share |
$ |
0.05 |
|
|
$ |
0.26 |
|
|
$ |
0.32 |
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Diluted earnings (loss) per common share |
$ |
0.05 |
|
|
$ |
0.25 |
|
|
$ |
0.31 |
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
35,983,116 |
|
|
|
35,573,813 |
|
|
|
35,961,570 |
|
|
|
34,833,427 |
|
|
Diluted |
|
36,656,272 |
|
|
|
35,916,878 |
|
|
|
36,670,494 |
|
|
|
35,204,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Dividends per share of |
|
|
|
|
|
|
|
|
|
|
|
||||
|
common stock paid in period |
$ |
0.0225 |
|
|
$ |
0.02 |
|
|
$ |
0.0675 |
|
|
$ |
0.055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance Sheets
|
|
Sept. 30, 2023 |
|
|
Dec. 31, 2022 |
|
||
|
Assets |
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
||
|
Cash and cash equivalents |
$ |
1,235,193 |
|
|
$ |
2,115,652 |
|
|
Natural gas, oil, and NGL sales receivables (net of $0 |
|
5,414,075 |
|
|
|
9,783,996 |
|
|
allowance for uncollectable accounts) |
|
|
|
|
|
||
|
Refundable income taxes |
|
712,475 |
|
|
|
- |
|
|
Derivative contracts, net |
|
577,381 |
|
|
|
- |
|
|
Held for sale assets |
|
- |
|
|
|
6,420,051 |
|
|
Other |
|
438,524 |
|
|
|
1,543,956 |
|
|
Total current assets |
|
8,377,648 |
|
|
|
19,863,655 |
|
|
|
|
|
|
|
|
||
|
Properties and equipment at cost, based on |
|
|
|
|
|
||
|
successful efforts accounting: |
|
|
|
|
|
||
|
Producing natural gas and oil properties |
|
202,915,457 |
|
|
|
181,431,139 |
|
|
Non-producing natural gas and oil properties |
|
61,096,631 |
|
|
|
57,781,644 |
|
|
Other |
|
1,353,686 |
|
|
|
1,122,436 |
|
|
|
|
265,365,774 |
|
|
|
240,335,219 |
|
|
Less accumulated depreciation, depletion and amortization |
|
(112,095,510 |
) |
|
|
(107,085,212 |
) |
|
Net properties and equipment |
|
153,270,264 |
|
|
|
133,250,007 |
|
|
|
|
|
|
|
|
||
|
Derivative contracts, net |
|
- |
|
|
|
141,345 |
|
|
Operating lease right-of-use assets |
|
606,978 |
|
|
|
706,871 |
|
|
Other, net |
|
540,402 |
|
|
|
695,399 |
|
|
Total assets |
$ |
162,795,292 |
|
|
$ |
154,657,277 |
|
|
|
|
|
|
|
|
||
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
||
|
Accounts payable |
$ |
387,460 |
|
|
$ |
504,466 |
|
|
Derivative contracts, net |
|
- |
|
|
|
1,534,034 |
|
|
Income taxes payable |
|
- |
|
|
|
576,427 |
|
|
Current portion of operating lease liability |
|
230,347 |
|
|
|
217,656 |
|
|
Held for sale liabilities |
|
- |
|
|
|
889,155 |
|
|
Accrued liabilities and other |
|
2,024,369 |
|
|
|
3,121,522 |
|
|
Total current liabilities |
|
2,642,176 |
|
|
|
6,843,260 |
|
|
|
|
|
|
|
|
||
|
Long-term debt |
|
30,750,000 |
|
|
|
33,300,000 |
|
|
Deferred income taxes, net |
|
5,709,906 |
|
|
|
2,453,906 |
|
|
Asset retirement obligations |
|
1,051,224 |
|
|
|
1,027,777 |
|
|
Derivative contracts, net |
|
230,453 |
|
|
|
- |
|
|
Operating lease liability, net of current portion |
|
755,541 |
|
|
|
929,208 |
|
|
Total liabilities |
|
41,139,300 |
|
|
|
44,554,151 |
|
|
|
|
|
|
|
|
||
|
Stockholders' equity: |
|
|
|
|
|
||
|
Common Stock, $0.01666 par value; 54,000,500 shares authorized and |
|
|
|
|
|
||
|
35,938,900 issued at Sept. 30, 2023; 54,000,500 shares authorized |
|
|
|
|
|
||
|
and 35,938,206 issued at Dec. 31, 2022 |
|
598,742 |
|
|
|
598,731 |
|
|
Capital in excess of par value |
|
44,249,366 |
|
|
|
43,344,916 |
|
|
Deferred directors' compensation |
|
1,425,155 |
|
|
|
1,541,070 |
|
|
Retained earnings |
|
78,618,090 |
|
|
|
68,925,774 |
|
|
|
|
124,891,353 |
|
|
|
114,410,491 |
|
|
Less treasury stock, at cost; 225,723 shares at Sept. 30, |
|
|
|
|
|
||
|
2023, and 300,272 shares at Dec. 31, 2022 |
|
(3,235,361 |
) |
|
|
(4,307,365 |
) |
|
Total stockholders' equity |
|
121,655,992 |
|
|
|
110,103,126 |
|
|
Total liabilities and stockholders' equity |
$ |
162,795,292 |
|
|
$ |
154,657,277 |
|
Condensed Statements of Cash Flows
|
|
Nine Months Ended Sept. 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
Operating Activities |
|
|
|||||
|
Net income (loss) |
$ |
11,407,356 |
|
|
$ |
13,727,023 |
|
|
Adjustments to reconcile net income (loss) to net cash provided |
|
|
|
|
|
||
|
by operating activities: |
|
|
|
|
|
||
|
Depreciation, depletion and amortization |
|
6,123,031 |
|
|
|
5,694,358 |
|
|
Impairment of producing properties |
|
38,533 |
|
|
|
8,980 |
|
|
Provision for deferred income taxes |
|
3,256,000 |
|
|
|
876,000 |
|
|
Gain from leasing fee mineral acreage |
|
(1,045,242 |
) |
|
|
(387,419 |
) |
|
Proceeds from leasing fee mineral acreage |
|
1,108,909 |
|
|
|
593,168 |
|
|
Net (gain) loss on sales of assets |
|
(4,671,253 |
) |
|
|
(6,587,005 |
) |
|
Directors' deferred compensation expense |
|
165,582 |
|
|
|
124,281 |
|
|
Total (gain) loss on derivative contracts |
|
(3,648,179 |
) |
|
|
19,669,246 |
|
|
Cash receipts (payments) on settled derivative contracts |
|
2,468,724 |
|
|
|
(2,796,250 |
) |
|
Restricted stock award expense |
|
1,695,637 |
|
|
|
1,955,829 |
|
|
Other |
|
105,604 |
|
|
|
50,215 |
|
|
Cash provided (used) by changes in assets and liabilities: |
|
|
|
|
|
||
|
Natural gas, oil and NGL sales receivables |
|
4,369,921 |
|
|
|
(5,132,207 |
) |
|
Other current assets |
|
408,533 |
|
|
|
576,348 |
|
|
Accounts payable |
|
(107,796 |
) |
|
|
85,344 |
|
|
Income taxes receivable |
|
(712,475 |
) |
|
|
- |
|
|
Other non-current assets |
|
150,515 |
|
|
|
(391,217 |
) |
|
Income taxes payable |
|
(576,427 |
) |
|
|
(4,081 |
) |
|
Accrued liabilities |
|
272,711 |
|
|
|
831,047 |
|
|
Total adjustments |
|
9,402,328 |
|
|
|
15,166,637 |
|
|
Net cash provided by operating activities |
|
20,809,684 |
|
|
|
28,893,660 |
|
|
|
|
|
|
|
|
||
|
Investing Activities |
|
|
|
|
|
||
|
Capital expenditures |
|
(321,396 |
) |
|
|
(359,961 |
) |
|
Acquisition of minerals and overriding royalty interests |
|
(25,383,759 |
) |
|
|
(31,881,409 |
) |
|
Net proceeds from sales of assets |
|
9,556,666 |
|
|
|
8,631,352 |
|
|
Net cash provided (used) by investing activities |
|
(16,148,489 |
) |
|
|
(23,610,018 |
) |
|
|
|
|
|
|
|
||
|
Financing Activities |
|
|
|
|
|
||
|
Borrowings under credit facility |
|
16,000,000 |
|
|
|
17,300,000 |
|
|
Payments of loan principal |
|
(18,550,000 |
) |
|
|
(9,000,000 |
) |
|
Net proceeds from equity issuance |
|
- |
|
|
|
5,039,045 |
|
|
Cash receipts from (payments on) off-market derivative contracts |
|
(560,162 |
) |
|
|
(14,857,682 |
) |
|
Purchases of treasury stock |
|
(669 |
) |
|
|
(1,855 |
) |
|
Payments of dividends |
|
(2,430,823 |
) |
|
|
(1,925,691 |
) |
|
Net cash provided (used) by financing activities |
|
(5,541,654 |
) |
|
|
(3,446,183 |
) |
|
|
|
|
|
|
|
||
|
Increase (decrease) in cash and cash equivalents |
|
(880,459 |
) |
|
|
1,837,459 |
|
|
Cash and cash equivalents at beginning of period |
|
2,115,652 |
|
|
|
1,559,350 |
|
|
Cash and cash equivalents at end of period |
$ |
1,235,193 |
|
|
$ |
3,396,809 |
|
|
|
|
|
|
|
|
||
|
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Interest paid (net of capitalized interest) |
$ |
1,652,872 |
|
|
$ |
888,720 |
|
|
Income taxes paid (net of refunds received) |
$ |
1,522,904 |
|
|
$ |
2,568,081 |
|
|
|
|
|
|
|
|
||
|
Supplemental Schedule of Noncash Investing and Financing Activities: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Dividends declared and unpaid |
$ |
94,587 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
||
|
Gross additions to properties and equipment |
$ |
26,392,844 |
|
|
$ |
31,607,517 |
|
|
Net increase (decrease) in accounts receivable for properties |
|
|
|
|
|
||
|
and equipment additions |
|
(687,689 |
) |
|
|
633,853 |
|
|
Capital expenditures and acquisitions |
$ |
25,705,155 |
|
|
$ |
32,241,370 |
|
Derivative Contracts as of October 31, 2023
|
|
|
Production volume |
|
|
|
|
|
Contract period |
|
covered per month |
|
Index |
|
Contract price |
|
Natural gas costless collars |
|
|
|
|
|
|
|
October - December 2023 |
|
20,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.00 floor / $4.70 ceiling |
|
October - December 2023 |
|
25,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $7.00 ceiling |
|
November 2023 - March 2024 |
|
30,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.25 floor / $5.25 ceiling |
|
December 2023 - September 2024 |
|
30,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.00 floor / $3.60 ceiling |
|
January 2024 |
|
135,000 Mmbtu |
|
NYMEX Henry Hub |
|
$4.50 floor / $7.90 ceiling |
|
February 2024 |
|
125,000 Mmbtu |
|
NYMEX Henry Hub |
|
$4.50 floor / $7.90 ceiling |
|
March 2024 |
|
130,000 Mmbtu |
|
NYMEX Henry Hub |
|
$4.50 floor / $7.90 ceiling |
|
April 2024 |
|
90,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $4.70 ceiling |
|
May 2024 |
|
95,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $4.70 ceiling |
|
June 2024 |
|
90,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $4.70 ceiling |
|
January - March 2024 |
|
30,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.00 floor / $6.00 ceiling |
|
October 2024 - June 2025 |
|
30,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.00 floor / $5.00 ceiling |
|
November 2024 - March 2025 |
|
90,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.25 floor / $5.25 ceiling |
|
November - December 2024 |
|
35,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $5.15 ceiling |
|
January - March 2025 |
|
30,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.50 floor / $5.15 ceiling |
|
Natural gas fixed price swaps |
|
|
|
|
|
|
|
October - December 2023 |
|
100,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.37 |
|
October - December 2023 |
|
20,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.57 |
|
December 2023 - February 2024 |
|
135,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.65 |
|
October 2023 |
|
20,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.58 |
|
October 2023 |
|
50,000 Mmbtu |
|
NYMEX Henry Hub |
|
$2.52 |
|
March 2024 |
|
127,500 Mmbtu |
|
NYMEX Henry Hub |
|
$3.65 |
|
April - June 2024 |
|
10,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.21 |
|
April - October 2024 |
|
50,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.17 |
|
April - July 2024 |
|
127,500 Mmbtu |
|
NYMEX Henry Hub |
|
$3.24 |
|
July - October 2024 |
|
75,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.47 |
|
July - October 2024 |
|
25,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.47 |
|
August - September 2024 |
|
120,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.24 |
|
October 2024 |
|
105,000 Mmbtu |
|
NYMEX Henry Hub |
|
$3.24 |
|
November - December 2024 |
|
70,000 Mmbtu |
|
NYMEX Henry Hub |
|
$4.16 |
|
January - March 2025 |
|
60,000 Mmbtu |
|
NYMEX Henry Hub |
|
$4.16 |
|
Oil costless collars |
|
|
|
|
|
|
|
January 2024 |
|
1,850 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
February 2024 |
|
1,700 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
March 2024 |
|
1,750 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
April 2024 |
|
1,700 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
May 2024 |
|
1,750 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
June 2024 |
|
1,650 Bbls |
|
NYMEX WTI |
|
$63.00 floor / $76.00 ceiling |
|
January - March 2024 |
|
1,650 Bbls |
|
NYMEX WTI |
|
$65.00 floor / $76.50 ceiling |
|
April - June 2024 |
|
500 Bbls |
|
NYMEX WTI |
|
$65.00 floor / $76.50 ceiling |
|
July - October 2024 |
|
1,650 Bbls |
|
NYMEX WTI |
|
$65.00 floor / $76.50 ceiling |
|
Oil fixed price swaps |
|
|
|
|
|
|
|
October - December 2023 |
|
1,500 Bbls |
|
NYMEX WTI |
|
$67.55 |
|
October - December 2023 |
|
750 Bbls |
|
NYMEX WTI |
|
$70.05 |
|
October - December 2023 |
|
1,500 Bbls |
|
NYMEX WTI |
|
$80.80 |
|
October - December 2023 |
|
1,000 Bbls |
|
NYMEX WTI |
|
$80.74 |
|
December 2023 - March 2024 |
|
750 Bbls |
|
NYMEX WTI |
|
$71.75 |
|
April - October 2024 |
|
1,000 Bbls |
|
NYMEX WTI |
|
$66.10 |
|
April - June 2024 |
|
1,300 Bbls |
|
NYMEX WTI |
|
$70.59 |
|
November 2024 - March 2025 |
|
1,600 Bbls |
|
NYMEX WTI |
|
$64.80 |
|
April - June 2025 |
|
1,000 Bbls |
|
NYMEX WTI |
|
$68.00 |
Non-GAAP Reconciliation
This press release includes certain “non-GAAP financial measures” as defined under the rules and regulations of the U.S. Securities and Exchange Commission, or the SEC, including Regulation G. These non-GAAP financial measures are calculated using GAAP amounts in the Company’s financial statements. These measures, detailed below, are provided in addition to, not as an alternative for, and should be read in conjunction with, the information contained in the Company’s financial statements prepared in accordance with GAAP (including the notes thereto), included in the Company’s SEC filings and posted on its website.
Adjusted EBITDA Reconciliation
The Company defines “adjusted EBITDA” as earnings before interest, taxes, depreciation and amortization, or EBITDA, excluding non-cash gains (losses) on derivatives and gains (losses) on asset sales and including cash receipts from (payments on) off-market derivatives and restricted stock and deferred directors’ expense. The Company has included a presentation of adjusted EBITDA because it recognizes that certain investors consider this amount to be a useful means of measuring the Company’s ability to meet its debt service obligations and evaluating its financial performance. Adjusted EBITDA has limitations and should not be considered in isolation or as a substitute for net income, operating income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with GAAP. Because not all companies use identical calculations, this presentation of adjusted EBITDA may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to adjusted EBITDA for the quarters indicated:
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
|
Three Months Ended |
|
|||||
|
|
Sept. 30, 2023 |
|
|
Sept. 30, 2022 |
|
|
Sept. 30, 2023 |
|
|
Sept. 30, 2022 |
|
|
June 30, 2023 |
|
|||||
|
Net Income (Loss) |
$ |
1,895,403 |
|
|
$ |
9,158,468 |
|
|
$ |
11,407,356 |
|
|
$ |
13,727,023 |
|
|
$ |
(41,291 |
) |
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
(benefit) |
|
589,000 |
|
|
|
2,431,000 |
|
|
|
3,490,000 |
|
|
|
3,440,000 |
|
|
|
(166,000 |
) |
|
Interest expense |
|
556,941 |
|
|
|
471,716 |
|
|
|
1,638,708 |
|
|
|
988,273 |
|
|
|
524,294 |
|
|
DD&A |
|
2,022,709 |
|
|
|
1,550,410 |
|
|
|
6,123,031 |
|
|
|
5,694,358 |
|
|
|
2,210,332 |
|
|
Impairment expense |
|
36,460 |
|
|
|
2,703 |
|
|
|
38,533 |
|
|
|
8,980 |
|
|
|
- |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Non-cash gains (losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
on derivatives |
|
(940,592 |
) |
|
|
1,639,703 |
|
|
|
1,365,872 |
|
|
|
(6,850,017 |
) |
|
|
(865,935 |
) |
|
Gains (losses) on asset sales |
|
243,041 |
|
|
|
3,558,611 |
|
|
|
4,671,254 |
|
|
|
6,544,575 |
|
|
|
10,230 |
|
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Cash receipts from (payments on) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
off-market derivative contracts(1) |
|
- |
|
|
|
(1,057,197 |
) |
|
|
(373,745 |
) |
|
|
(4,834,703 |
) |
|
|
- |
|
|
Restricted stock and deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
director's expense |
|
522,965 |
|
|
|
1,037,179 |
|
|
|
1,861,219 |
|
|
|
2,080,110 |
|
|
|
703,667 |
|
|
Adjusted EBITDA |
$ |
6,321,029 |
|
|
$ |
8,395,965 |
|
|
$ |
18,147,976 |
|
|
$ |
21,409,483 |
|
|
$ |
4,086,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
(1) The initial receipt of $8.8 million of cash from BP Energy Company, or BP, for entering into the off-market derivative contracts had no effect on the Company’s statement of operations and was considered cash flow from financing activities. A portion of subsequent settlements with BP had no effect on the Company’s statement of operations. |
|
||||||||||||||||||
Debt to Adjusted EBITDA (TTM) Reconciliation
“Debt to adjusted EBITDA (TTM)” is defined as the ratio of long-term debt to adjusted EBITDA on a trailing 12-month (TTM) basis. The Company has included a presentation of debt to adjusted EBITDA (TTM) because it recognizes that certain investors consider such ratios to be a useful means of measuring the Company’s ability to meet its debt service obligations and for evaluating its financial performance. The debt to adjusted EBITDA (TTM) ratio has limitations and should not be considered in isolation or as a substitute for net income, operating income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with GAAP. Because not all companies use identical calculations, this presentation of debt to adjusted EBITDA (TTM) may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to adjusted EBITDA on a TTM basis and of the resulting debt to adjusted EBITDA (TTM) ratio:
|
|
TTM Ended |
|
|
TTM Ended |
|
||
|
|
Sept. 30, 2023 |
|
|
Sept. 30, 2022 |
|
||
|
Net Income (Loss) |
$ |
14,753,489 |
|
|
$ |
20,409,272 |
|
|
Plus: |
|
|
|
|
|
||
|
Income tax expense (benefit) |
|
4,471,000 |
|
|
|
4,202,000 |
|
|
Interest expense |
|
2,276,406 |
|
|
|
1,164,992 |
|
|
DD&A |
|
7,925,145 |
|
|
|
7,278,118 |
|
|
Impairment expense |
|
6,139,229 |
|
|
|
14,565 |
|
|
Less: |
|
|
|
|
|
||
|
Non-cash gains (losses) |
|
|
|
|
|
||
|
on derivatives |
|
7,630,914 |
|
|
|
(2,299,518 |
) |
|
Gains (losses) on asset sales |
|
5,605,461 |
|
|
|
4,423,648 |
|
|
Plus: |
|
|
|
|
|
||
|
Cash receipts from (payments on) |
|
|
|
|
|
||
|
off-market derivative contracts(1) |
|
(1,277,206 |
) |
|
|
(7,522,794 |
) |
|
Restricted stock and deferred |
|
|
|
|
|
||
|
director's expense |
|
2,430,303 |
|
|
|
2,403,525 |
|
|
Adjusted EBITDA |
$ |
23,481,991 |
|
|
$ |
25,825,548 |
|
|
|
|
|
|
|
|
||
|
Debt |
$ |
30,750,000 |
|
|
$ |
28,300,000 |
|
|
Debt to Adjusted EBITDA (TTM) |
|
1.31 |
|
|
|
1.10 |
|
|
|
|
|
|
|
|
||
|
(1) The initial receipt of $8.8 million of cash from BP for entering into the off-market derivative contracts had no effect on the Company’s statement of operations and was considered cash flow from financing activities. A portion of subsequent settlements with BP had no effect on the Company’s statement of operations. |
|
||||||
Adjusted Pretax Net Income (Loss) Reconciliation
“Adjusted pretax net income (loss)” is defined as earnings before taxes and impairment expense, excluding non-cash gains (losses) on derivatives and gains (losses) on asset sales and including cash receipts from (payments on) off-market derivatives. The Company has included a presentation of adjusted pretax net income (loss) because it recognizes that certain investors consider this amount to be a useful means of measuring the Company’s ability to meet its debt service obligations and evaluating its financial performance. Adjusted pretax net income (loss) has limitations and should not be considered in isolation or as a substitute for net income, operating income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with GAAP. Because not all companies use identical calculations, this presentation of adjusted pretax net income (loss) may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to adjusted pretax net income (loss) for the periods indicated:
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
|
Three Months Ended |
|
|||||
|
|
Sept. 30, 2023 |
|
|
Sept. 30, 2022 |
|
|
Sept. 30, 2023 |
|
|
Sept. 30, 2022 |
|
|
June 30, 2023 |
|
|||||
|
Net Income (Loss) |
$ |
1,895,403 |
|
|
$ |
9,158,468 |
|
|
$ |
11,407,356 |
|
|
$ |
13,727,023 |
|
|
$ |
(41,291 |
) |
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Income tax expense (benefit) |
|
589,000 |
|
|
|
2,431,000 |
|
|
|
3,490,000 |
|
|
|
3,440,000 |
|
|
|
(166,000 |
) |
|
Impairment expense |
|
36,460 |
|
|
|
2,703 |
|
|
|
38,533 |
|
|
|
8,980 |
|
|
|
- |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Non-cash gains (losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
on derivatives |
|
(940,592 |
) |
|
|
1,639,703 |
|
|
|
1,365,872 |
|
|
|
(6,850,017 |
) |
|
|
(865,935 |
) |
|
Gains (losses) on asset sales |
|
243,041 |
|
|
|
3,558,611 |
|
|
|
4,671,254 |
|
|
|
6,544,575 |
|
|
|
10,230 |
|
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Cash receipts from (payments on) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
off-market derivative contracts(1) |
|
- |
|
|
|
(1,057,197 |
) |
|
|
(373,745 |
) |
|
|
(4,834,703 |
) |
|
|
- |
|
|
Adjusted Pretax Net Income (Loss) |
$ |
3,218,414 |
|
|
$ |
5,336,660 |
|
|
$ |
8,525,018 |
|
|
$ |
12,646,742 |
|
|
$ |
648,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Basic |
|
35,983,116 |
|
|
|
35,573,813 |
|
|
|
35,961,570 |
|
|
|
34,833,427 |
|
|
|
35,965,281 |
|
|
Diluted |
|
36,656,272 |
|
|
|
35,916,878 |
|
|
|
36,670,494 |
|
|
|
35,204,241 |
|
|
|
35,965,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Adjusted Pretax Net Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
per basic share |
$ |
0.09 |
|
|
$ |
0.15 |
|
|
$ |
0.24 |
|
|
$ |
0.36 |
|
|
$ |
0.02 |
|
|
Adjusted Pretax Net Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
per diluted share |
$ |
0.09 |
|
|
$ |
0.15 |
|
|
$ |
0.23 |
|
|
$ |
0.36 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
(1) The initial receipt of $8.8 million of cash from BP for entering into the off-market derivative contracts had no effect on the Company’s statement of operations and was considered cash flow from financing activities. A portion of subsequent settlements with BP had no effect on the Company’s statement of operations. |
|
||||||||||||||||||
PHX Minerals Inc. (NYSE: PHX) Fort Worth-based, PHX Minerals Inc. is a natural gas and oil mineral company with a strategy to proactively grow its mineral position in its core focus areas. PHX owns mineral acreage principally located in Oklahoma, Texas, Louisiana, North Dakota and Arkansas. Additional information on the Company can be found at www.phxmin.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “anticipates,” “plans,” “estimates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect PHX’s current views about future events. Forward-looking statements may include, but are not limited to, statements relating to: the Company’s operational outlook; the Company’s ability to execute its business strategies; the volatility of realized natural gas and oil prices; the level of production on the Company’s properties; estimates of quantities of natural gas, oil and NGL reserves and their values; general economic or industry conditions; legislation or regulatory requirements; conditions of the securities markets; the Company’s ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; title defects in the properties in which the Company invests; and other economic, competitive, governmental, regulatory or technical factors affecting properties, operations or prices. Although the Company believes expectations reflected in these and other forward-looking statements are reasonable, the Company can give no assurance such expectations will prove to be correct. Such forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. These forward-looking statements involve certain risks and uncertainties that could cause results to differ materially from those expected by the Company’s management. Information concerning these risks and other factors can be found in the Company’s filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, available on the Company’s website or the SEC’s website at www.sec.gov.
Investors are cautioned that any such forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected. The forward-looking statements in this press release are made as of the date hereof, and the Company does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.
Investor Contact:
Rob Fink / Stephen Lee
FNK IR
646.809.4048
Corporate Contact:
405.948.1560