PHX Minerals (PHX) Q2 2024 earnings summary

Executive summary

• Achieved record royalty production volumes of 2,709 MMcfe, up 46% sequentially, driven by high-impact Haynesville wells and a royalty-focused strategy, resulting in a 278% increase in royalty volumes and 151% growth in 2P reserves since 2020.

• Net income for Q2 2024 was $1.3 million ($0.04 per diluted share), up from a net loss in the prior year, with adjusted EBITDA rising to $6.4 million.

• Transitioned portfolio to 90% royalty and 10% non-operating interest, divesting working interest wellbores and supporting a 30% CAGR in royalty volumes.

• Reduced debt by $4 million since year-end 2023, now at $28.75 million, and increased the quarterly dividend by 33% to $0.04 per share.

• Built a 10+ year inventory of mineral locations, providing long-term cash flow visibility.

Financial highlights

• Natural gas, oil, and NGL sales revenues rose 39% sequentially to $9.8 million, with total Q2 revenue at $9.5 million, up 36% year-over-year.

• Adjusted EBITDA increased to $6.4 million from $4.6 million in Q1 2024 and $4.1 million year-over-year.

• Net income for the quarter was $1.3 million, or $0.04 per diluted share.

• Debt to trailing twelve-month Adjusted EBITDA was 1.32x as of June 30, 2024.

• Market cap of $123.2 million and enterprise value of $145–$149.7 million as of June 30, 2024.

Outlook and guidance

• 2024 total production forecasted at 9,700–10,300 MMcfe, with 79–82% natural gas mix; management expects continued royalty volume growth, though future quarters may normalize.

• Operating cash flow projected to exceed $40 million annually by FY2026, with cash flow prioritized for debt paydown and shareholder returns.

• Guidance incorporates conservatism to smooth out quarter-to-quarter volatility from well timing and decline rates.