PHX Minerals Reports Record Royalty Volumes for the Quarter Ended June 30, 2024; Increases Fixed Quarterly Dividend Payment 33%

⁽¹⁾

This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

Financial Highlights

Three Months
Ended

Three Months
Ended

Six Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Royalty Interest Sales

$

8,818,964

$

6,217,663

$

14,995,239

$

16,341,404

Working Interest Sales

$

1,007,042

$

1,013,501

$

1,920,975

$

2,747,007

Natural Gas, Oil and NGL Sales

$

9,826,006

$

7,231,164

$

16,916,214

$

19,088,411

Gains (Losses) on Derivative Contracts

$

(418,997)

$

183,006

$

208,495

$

3,985,826

Lease Bonuses and Rental Income

$

134,226

$

111,991

$

285,944

$

425,141

Total Revenue

$

9,541,235

$

7,526,161

$

17,410,653

$

23,499,378

Lease Operating Expense

per Working Interest Mcfe

$

1.14

$

1.16

$

1.21

$

1.34

Transportation, Gathering and

Marketing per Mcfe

$

0.52

$

0.39

$

0.47

$

0.43

Production and Ad Valorem Tax

per Mcfe

$

0.20

$

0.19

$

0.19

$

0.21

G&A Expense per Mcfe

$

0.92

$

1.38

$

1.20

$

1.29

Cash G&A Expense per Mcfe ⁽¹⁾

$

0.69

$

1.07

$

0.92

$

1.01

Interest Expense per Mcfe

$

0.22

$

0.23

$

0.27

$

0.23

DD&A per Mcfe

$

0.76

$

0.96

$

0.91

$

0.86

Total Expense per Mcfe

$

2.72

$

3.30

$

3.16

$

3.21

Net Income (Loss)

$

1,295,771

$

(41,291)

$

1,112,156

$

9,511,953

Adjusted EBITDA ⁽²⁾

$

6,426,167

$

4,086,707

$

11,033,201

$

11,826,947

Cash Flow from Operations ⁽³⁾

$

4,176,704

$

4,915,788

$

9,423,355

$

13,849,265

CapEx ⁽⁴⁾

$

28,286

$

84,593

$

35,726

$

275,419

CapEx - Mineral Acquisitions

$

871,930

$

1,677,388

$

2,278,178

$

11,914,003

Borrowing Base

$

50,000,000

$

45,000,000

Debt

$

28,750,000

$

23,750,000

Debt-to-Adjusted EBITDA (TTM) ⁽²⁾

1.32

0.93

(1)

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.

(2)

This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

(3)

GAAP cash flow from operations.

(4)

Includes legacy working interest expenditures and fixtures and equipment.

Operating Highlights

Three Months
Ended

Three Months
Ended

Six Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Gas Mcf Sold

2,464,846

1,854,485

4,164,955

3,813,496

Average Sales Price per Mcf before the

effects of settled derivative contracts

$

2.05

$

1.92

$

2.07

$

2.75

Average Sales Price per Mcf after the

effects of settled derivative contracts

$

2.57

$

2.49

$

2.78

$

3.18

% of sales subject to hedges

38

%

45

%

48

%

47

%

Oil Barrels Sold

51,828

41,009

89,088

95,116

Average Sales Price per Bbl before the

effects of settled derivative contracts

$

77.38

$

73.87

$

76.81

$

75.09

Average Sales Price per Bbl after the

effects of settled derivative contracts

$

75.38

$

73.80

$

75.72

$

71.58

% of sales subject to hedges

25

%

53

%

30

%

49

%

NGL Barrels Sold

31,994

33,929

64,179

67,033

Average Sales Price per Bbl⁽¹⁾

$

23.75

$

18.93

$

22.63

$

22.02

Mcfe Sold

2,967,779

2,304,113

5,084,557

4,786,390

Natural gas, oil and NGL sales before the

effects of settled derivative contracts

$

9,826,006

$

7,231,164

$

16,916,214

$

19,088,411

Natural gas, oil and NGL sales after the

effects of settled derivative contracts

$

11,010,613

$

8,280,104

$

19,770,130

$

20,394,028

(1) There were no NGL settled derivative contracts during the 2024 and 2023 periods.

Quarter ended

Mcf Sold

Oil Bbls Sold

NGL Bbls Sold

Mcfe Sold

6/30/2024

2,464,846

51,828

31,994

2,967,779

3/31/2024

1,700,108

37,260

32,184

2,116,776

12/31/2023

1,775,577

39,768

38,422

2,244,717

9/30/2023

1,868,012

48,032

32,029

2,348,378

Quarter ended

Mcf Sold

Oil Bbls Sold

NGL Bbls Sold

Mcfe Sold

6/30/2024

2,304,176

47,024

20,461

2,709,090

3/31/2024

1,533,580

33,083

20,844

1,857,147

12/31/2023

1,590,301

35,547

23,769

1,946,196

9/30/2023

1,689,396

43,575

20,416

2,073,342

Quarter ended

Mcf Sold

Oil Bbls Sold

NGL Bbls Sold

Mcfe Sold

6/30/2024

160,670

4,804

11,533

258,689

3/31/2024

166,528

4,177

11,340

259,629

12/31/2023

185,276

4,221

14,653

298,521

9/30/2023

178,616

4,457

11,613

275,036

2023 Actual

YTD 2024 Actual

2024 Outlook

Mineral & Royalty Production (Mmcfe)

8,123

4,566

8,700 - 9,100

Working Interest Production (Mmcfe)

1,256

518

1,000 - 1,200

Total Production (Mmcfe)

9,379

5,084

9,700 - 10,300

Percentage Natural Gas

80 %

82 %

79% - 82%

Transportation, Gathering &

Marketing (per Mcfe)

$0.39

$0.47

$0.40 - $0.50

Production Tax (as % of pre-hedge

sales volumes)

5.20 %

5.90 %

5.25% - 6.25%

LOE Expenses (on an absolute basis in 000's)

$1,599

$627

$1,100 - $1,300

Cash G&A (on an absolute basis in 000's)

$9,500

$4,683

$9,500 - $9,900

Bakken/

Three

Arkoma

SCOOP

STACK

Forks

Stack

Haynesville

Other

Total

As of June 30, 2024:

  Gross Wells in Progress on PHX Acreage ⁽¹⁾

74

7

2

3

58

3

147

  Net Wells in Progress on PHX Acreage ⁽¹⁾

0.252

0.009

0.001

0.015

0.296

0.016

0.589

  Gross Active Permits on PHX Acreage

35

6

3

7

35

8

94

  Net Active Permits on PHX Acreage

0.151

0.007

0.003

0.030

0.112

0.035

0.338

As of July 8, 2024:

  Rigs Present on PHX Acreage

7

3

-

1

4

-

15

  Rigs Within 2.5 Miles of PHX Acreage

10

11

6

1

23

9

60

(1) Wells in progress includes drilling wells and drilled but uncompleted wells, or DUCs.

Acquisitions

SCOOP

Haynesville

Other

Total

During Three Months Ended June 30, 2024:

  Net Mineral Acres Purchased

35

21

-

56

  Net Royalty Acres Purchased

58

38

-

96

FINANCIAL RESULTS

Statements of Income

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Revenues:

Natural gas, oil and NGL sales

$

9,826,006

$

7,231,164

$

16,916,214

$

19,088,411

Lease bonuses and rental income

134,226

111,991

285,944

425,141

Gains (losses) on derivative contracts

(418,997)

183,006

208,495

3,985,826

9,541,235

7,526,161

17,410,653

23,499,378

Costs and expenses:

Lease operating expenses

294,354

341,463

626,763

916,405

Transportation, gathering and marketing

1,540,396

906,373

2,383,900

2,035,129

Production and ad valorem taxes

597,995

434,580

990,322

986,838

Depreciation, depletion and amortization

2,268,284

2,210,332

4,624,610

4,100,322

Provision for impairment

-

-

-

2,073

Interest expense

651,982

524,294

1,366,868

1,081,767

General and administrative

2,734,628

3,177,103

6,081,665

6,159,012

Losses (gains) on asset sales and other

(197,326)

139,307

(173,114)

(4,195,121)

Total costs and expenses

7,890,313

7,733,452

15,901,014

11,086,425

Income (loss) before provision for income taxes

1,650,922

(207,291)

1,509,639

12,412,953

Provision for income taxes

355,151

(166,000)

397,483

2,901,000

Net income (loss)

$

1,295,771

$

(41,291)

$

1,112,156

$

9,511,953

Basic and diluted earnings per common share

$

0.04

$

(0.00)

$

0.03

$

0.26

Weighted average shares outstanding:

Basic

36,308,224

35,965,281

36,301,540

35,950,615

Diluted

36,379,653

35,965,281

36,301,540

36,034,438

Dividends per share of

common stock paid in period

$

0.0300

$

0.0225

$

0.0600

$

0.0450

Balance Sheets

June 30, 2024

Dec. 31, 2023

Assets

Current assets:

Cash and cash equivalents

$

2,271,544

$

806,254

Natural gas, oil, and NGL sales receivables (net of $0

5,071,590

4,900,126

allowance for uncollectable accounts)

Refundable income taxes

372,963

455,931

Derivative contracts, net

877,538

3,120,607

Other

703,210

878,659

Total current assets

9,296,845

10,161,577

Properties and equipment at cost, based on

   successful efforts accounting:

Producing natural gas and oil properties

216,696,381

209,082,847

Non-producing natural gas and oil properties

52,997,639

58,820,445

Other

1,361,064

1,360,614

271,055,084

269,263,906

Less accumulated depreciation, depletion and amortization

(118,186,569)

(114,139,423)

Net properties and equipment

152,868,515

155,124,483

Derivative contracts, net

-

162,980

Operating lease right-of-use assets

502,194

572,610

Other, net

640,573

486,630

Total assets

$

163,308,127

$

166,508,280

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

636,327

$

562,607

Current portion of operating lease liability

239,571

233,390

Accrued liabilities and other

1,457,285

1,215,275

Total current liabilities

2,333,183

2,011,272

Long-term debt

28,750,000

32,750,000

Deferred income taxes, net

6,829,023

6,757,637

Asset retirement obligations

1,083,947

1,062,139

Derivative contracts, net

239,372

-

Operating lease liability, net of current portion

574,598

695,818

Total liabilities

39,810,123

43,276,866

Stockholders' equity:

Common Stock, $0.01666 par value; 75,000,000 shares authorized and

36,121,723 issued at June 30, 2024; 54,000,500 shares authorized

and 36,121,723 issued at Dec. 31, 2023

601,788

601,788

Capital in excess of par value

43,054,447

41,676,417

Deferred directors' compensation

1,471,052

1,487,590

Retained earnings

78,891,082

80,022,839

124,018,369

123,788,634

Less treasury stock, at cost; 122,785 shares at June 30,

2024, and 131,477 shares at Dec. 31, 2023

(520,365)

(557,220)

Total stockholders' equity

123,498,004

123,231,414

Total liabilities and stockholders' equity

$

163,308,127

$

166,508,280

Condensed Statements of Cash Flows

Six Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

Operating Activities

Net income (loss)

$

1,112,156

$

9,511,953

Adjustments to reconcile net income (loss) to net cash provided

  by operating activities:

Depreciation, depletion and amortization

4,624,610

4,100,322

Impairment of producing properties

-

2,073

Provision for deferred income taxes

71,386

2,679,000

Gain from leasing fee mineral acreage

(285,944)

(425,141)

Proceeds from leasing fee mineral acreage

292,350

488,173

Net (gain) loss on sales of assets

(511,684)

(4,428,212)

Directors' deferred compensation expense

90,661

109,383

Total (gain) loss on derivative contracts

(208,495)

(3,985,826)

Cash receipts (payments) on settled derivative contracts

2,853,916

1,865,779

Restricted stock award expense

1,307,686

1,228,871

Other

55,059

70,526

Cash provided (used) by changes in assets and liabilities:

Natural gas, oil and NGL sales receivables

(171,464)

3,944,092

Income taxes receivable

82,968

(675,268)

Other current assets

131,854

405,055

Accounts payable

73,810

(228,305)

Other non-current assets

(138,508)

95,283

Income taxes payable

-

(576,427)

Accrued liabilities

42,994

(332,066)

Total adjustments

8,311,199

4,337,312

Net cash provided by operating activities

9,423,355

13,849,265

Investing Activities

Capital expenditures

(35,726)

(275,419)

Acquisition of minerals and overriding royalty interests

(2,278,178)

(11,914,003)

Net proceeds from sales of assets

515,775

9,223,405

Net cash provided by (used in) investing activities

(1,798,129)

(2,966,017)

Financing Activities

Borrowings under credit facility

1,000,000

6,000,000

Payments of loan principal

(5,000,000)

(15,550,000)

Payments on off-market derivative contracts

-

(560,162)

Purchases of treasury stock

-

(669)

Payments of dividends

(2,159,936)

(1,620,442)

Net cash provided by (used in) financing activities

(6,159,936)

(11,731,273)

Increase (decrease) in cash and cash equivalents

1,465,290

(848,025)

Cash and cash equivalents at beginning of period

806,254

2,115,652

Cash and cash equivalents at end of period

$

2,271,544

$

1,267,627

Supplemental Disclosures of Cash Flow Information:

Interest paid (net of capitalized interest)

$

1,409,711

$

1,155,637

Income taxes paid (net of refunds received)

$

243,130

$

1,473,696

Supplemental Schedule of Noncash Investing and Financing Activities:

Dividends declared and unpaid

$

83,977

$

72,460

Gross additions to properties and equipment

$

2,357,409

$

12,952,046

Net increase (decrease) in accounts receivable for properties

and equipment additions

(43,505)

(762,624)

Capital expenditures and acquisitions

$

2,313,904

$

12,189,422

Derivative Contracts as of June 30, 2024

Production volume

Contract period

covered per month

Index

Contract price

Natural gas costless collars

July - September 2024

30,000 Mmbtu

NYMEX Henry Hub

$3.00 floor / $3.60 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

January 2025

55,000 Mmbtu

NYMEX Henry Hub

$3.50 floor / $4.40 ceiling

February 2025

25,000 Mmbtu

NYMEX Henry Hub

$3.50 floor / $4.40 ceiling

March 2025

35,000 Mmbtu

NYMEX Henry Hub

$3.50 floor / $4.40 ceiling

April 2025 - September 2025

55,000 Mmbtu

NYMEX Henry Hub

$3.00 floor / $3.75 ceiling

November 2025 - March 2026

100,000 Mmbtu

NYMEX Henry Hub

$3.50 floor / $4.85 ceiling

November 2025 - March 2026

75,000 Mmbtu

NYMEX Henry Hub

$3.50 floor / $4.72 ceiling

November 2025 - March 2026

15,000 Mmbtu

NYMEX Henry Hub

$3.50 floor / $5.15 ceiling

Natural gas fixed price swaps

July - October 2024

50,000 Mmbtu

NYMEX Henry Hub

$3.17

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

December 2024

50,000 Mmbtu

NYMEX Henry Hub

$3.39

January - March 2025

60,000 Mmbtu

NYMEX Henry Hub

$4.16

January - March 2025

50,000 Mmbtu

NYMEX Henry Hub

$3.51

April - October 2025

100,000 Mmbtu

NYMEX Henry Hub

$3.28

Oil costless collars

June 2024

1,650 Bbls

NYMEX WTI

$63.00 floor / $76.00 ceiling

June 2024

500 Bbls

NYMEX WTI

$65.00 floor / $76.50 ceiling

June - September 2024

500 Bbls

NYMEX WTI

$70.00 floor / $78.10 ceiling

July - October 2024

1,650 Bbls

NYMEX WTI

$65.00 floor / $76.50 ceiling

October - December 2024

500 Bbls

NYMEX WTI

$67.00 floor / $77.00 ceiling

Oil fixed price swaps

June - October 2024

1,000 Bbls

NYMEX WTI

$66.10

June 2024

1,300 Bbls

NYMEX WTI

$70.59

July - October 2024

1,500 Bbls

NYMEX WTI

$69.50

September 2024

500 Bbls

NYMEX WTI

$76.46

October 2024

500 Bbls

NYMEX WTI

$76.12

November 2024

500 Bbls

NYMEX WTI

$75.49

November - December 2024

2,000 Bbls

NYMEX WTI