PHX Minerals (PHX) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $1.1 million ($0.03 per share), down from $1.3 million in Q2 2024 and $1.9 million in Q3 2023, mainly due to lower commodity sales, lease bonuses, and higher expenses, partially offset by higher derivative gains.

• Transitioned to a royalty-only strategy, growing royalty production volumes by ~278% and 2P royalty reserves by ~151% since early 2020.

• Maintained a strong financial position, reducing debt by $5 million year-to-date to $27.75 million, and reaffirmed a $50 million borrowing base.

• Increased quarterly dividend by 33% to $0.16 per share annually, reflecting confidence in future growth.

• Built a 10+ year inventory of mineral locations, focusing on SCOOP and Haynesville core areas.

Financial highlights

• Q3 2024 sales revenues were $7.9 million, down 20% sequentially and 11% year-over-year, mainly due to a 20% drop in production volumes and lower prices.

• Adjusted EBITDA fell to $4.9 million from $6.4 million in Q2 2024 and $6.3 million in Q3 2023.

• Net income for the nine months ended September 30, 2024, was $2.2 million ($0.06 per share), compared to $11.4 million ($0.31 per share) in the prior year period.

• Realized natural gas prices averaged $2/MCF, oil $74.83/bbl, and NGL $19.60/bbl.

• Cash and cash equivalents were $2.6 million at September 30, 2024, with $22.3 million available under the credit facility.

Outlook and guidance

• 2024 total production outlook: 9,700–10,300 MMcfe, with 79–82% natural gas mix.

• Management expects to fund overhead, acquisitions, and dividends from operating cash flow, cash on hand, and credit facility borrowings.

• Optimistic about natural gas price recovery as LNG export capacity is expected to double by 2028 and power demand from AI/data centers is set to rise.

• Expects annual royalty volume growth driven by a robust inventory of undeveloped well locations.

• No significant capital expenditures for new wells are planned, as the company has ceased participating in new working interest wells.