PHX MINERALS INC. REPORTS SECOND FISCAL QUARTER 2022 RESULTS, RECORD ROYALTY VOLUMES AND A QUARTERLY DIVIDEND INCREASE OF 33%

Published: May. 9, 2022 at 4:15 PM EDT

OKLAHOMA CITY, May 9, 2022 /PRNewswire/ -- PHX MINERALS INC., "PHX" or the "Company" (NYSE: PHX), today reported financial and operating results for the second fiscal quarter ended March 31, 2022.

SUMMARY OF RESULTS FOR THE PERIOD ENDED MARCH 31, 2022, AND SUBSEQUENT EVENTS

  • Royalty production volumes for the second fiscal quarter of 2022 increased 26% to a record 1,548 Mmcfe, and total production volumes for the second fiscal quarter of 2022 increased 16% to 2,460 Mmcfe compared to the first fiscal quarter of 2022.
  • 82% of royalty production volumes and 78% of total production volumes in the second fiscal quarter of 2022 were attributable to natural gas.
  • 108 gross (0.48 net) wells converted to PDP, including 35 gross (0.04 net) in the SCOOP and 31 gross (0.33 net) in the Haynesville, during the second fiscal quarter of 2022.
  • 134 gross (0.60 net) wells in progress as of March 31, 2022.
  • Net loss in the second fiscal quarter of 2022 was ($4.0) million, or ($0.12) per share, compared to net income of $6.7 million, or $0.20 per share, in the first fiscal quarter of 2022.
  • Pretax net income excluding non-cash derivative gains (losses) (1) in the second fiscal quarter of 2022 was $7.8 million, or $0.23 per share, compared to $2.9 million, or $0.09 per share, in the first fiscal quarter of 2022.
  • Adjusted EBITDA(1) of $5.8 million for the second fiscal quarter of 2022, increased from $3.6 million in the second fiscal quarter of 2021 and from $4.4 million in the first fiscal quarter of 2022.
  • Total debt as of March 31, 2022, equaled $24.0 million and debt to adjusted EBITDA (TTM) (1) ratio was 1.23x at March 31, 2022.
  • During the second quarter of fiscal year 2022, PHX closed on an acquisition of 825 net royalty acres located in the SCOOP play of Oklahoma and the Haynesville play of East Texas and Louisiana for approximately $9.3 million in cash.
  • Since March 31, 2022, PHX has closed on an additional acquisition of 185 net royalty acres located in the SCOOP play of Oklahoma and the Haynesville play of Louisiana for approximately $1.5 million in cash. PHX has an additional 983 net royalty acres pending acquisition and under purchase and sale agreements, which the Company expects to close by the end of May 2022 for approximately $9.4 million in cash.
  • PHX announced that the quarterly dividend increased to $0.02 per share, a 33% increase, payable on June 3, 2022, to stockholders of record on May 19, 2022.

(1)

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

Chad L. Stephens, President and CEO, commented, "We are very pleased to report excellent financial results for our second quarter. First, I would like to recognize our employees for their dedication and hard work, for they are our greatest resource. None of our accomplishments would have been achieved without them.

"Royalty volumes increased by over 20% on a quarter over quarter basis for the second consecutive quarter to a record 1.55 Bcfe, and non-operated working interest volumes continue to decline as a percentage of total volumes to 37% and will continue to become less material going forward.  Higher sales volumes along with the serendipitous commodity price environment provided a 32% increase quarter over sequential quarter in adjusted EBITDA.

"Our active mineral acquisition program has closed a year-to-date total of $25.6 million in transactions with another $9.4 million scheduled to close by the end of May – all in our core focus areas in the SCOOP of southern Oklahoma and the Haynesville. These recent acquisitions are in areas of active drilling and will drive our increasing royalty volumes and cash flow over the coming quarters. Additionally, the Board approved a 33% increase in our quarterly dividend payable in June 2022, which highlights our confidence in our financial strength and earnings power of our growing asset base. PHX remains committed to increasing our return of capital to stockholders via future dividends as we grow our asset base."

OPERATING HIGHLIGHTS



Second Quarter Ended



Second Quarter Ended



Six Months Ended



Six Months Ended



March 31, 2022



March 31, 2021



March 31, 2022



March 31, 2021


Mcfe Sold


2,460,042




2,296,802




4,588,290




4,371,139


Average Sales Price per Mcfe

$

6.01



$

3.63



$

6.21



$

3.38


Gas Mcf Sold


1,908,030




1,735,820




3,482,295




3,211,276


Average Sales Price per Mcf

$

4.47



$

2.52



$

4.95



$

2.44


Oil Barrels Sold


51,631




56,269




99,705




114,945


Average Sales Price per Barrel

$

91.26



$

55.89



$

83.12



$

47.73


NGL Barrels Sold


40,371




37,228




84,627




78,365


Average Sales Price per Barrel

$

38.05



$

22.24



$

34.94



$

18.54


Total Production for the last five quarters was as follows:

Quarter ended


Mcf Sold



Oil Bbls Sold



NGL Bbls Sold



Mcfe Sold


3/31/2022



1,908,030




51,631




40,371




2,460,042


12/31/2021



1,574,265




48,074




44,256




2,128,248


9/30/2021



1,609,101




54,043




46,369




2,211,570


6/30/2021



1,879,343




55,492




46,753




2,492,813


3/31/2021



1,735,820




56,269




37,228




2,296,802


Royalty Interest Production for the last five quarters was as follows:

Quarter ended


Mcf Sold



Oil Bbls Sold



NGL Bbls Sold



Mcfe Sold


3/31/2022



1,261,949




28,758




18,852




1,547,609


12/31/2021



949,523




25,996




19,953




1,225,220


9/30/2021



705,397




29,442




19,364




998,230


6/30/2021



908,471




31,095




18,255




1,204,571


3/31/2021



924,969




31,768




19,088




1,230,105


Working Interest Production for the last five quarters was as follows:

Quarter ended


Mcf Sold



Oil Bbls Sold



NGL Bbls Sold



Mcfe Sold


3/31/2022



646,081




22,873




21,519




912,433


12/31/2021



624,742




22,078




24,303




903,028


9/30/2021



903,704




24,601




27,005




1,213,340


6/30/2021



970,872




24,397




28,498




1,288,242


3/31/2021



810,851




24,501




18,140




1,066,697


FINANCIAL HIGHLIGHTS




Second Quarter Ended



Second Quarter Ended



Six Months Ended



Six Months Ended




March 31, 2022



March 31, 2021



March 31, 2022



March 31, 2021


Working Interest Sales


$

5,904,871



$

3,851,478



$

11,871,518



$

7,759,002


Royalty Interest Sales


$

8,878,994



$

4,494,347



$

16,599,511



$

7,011,802


Natural Gas, Oil and NGL Sales


$

14,783,865



$

8,345,825



$

28,471,029



$

14,770,804



















Lease Bonuses and Rental Income


$

161,908



$

58,554



$

240,823



$

59,987


Total Revenue


$

1,962,367



$

6,056,236



$

18,564,614



$

12,228,612



















LOE per Working Interest Mcfe


$

1.02



$

0.97



$

1.20



$

0.85


LOE per total Mcfe


$

0.38



$

0.45



$

0.48



$

0.47


Transportation, Gathering and Marketing

















     per Mcfe


$

0.61



$

0.57



$

0.59



$

0.59


Production Tax per Mcfe


$

0.28



$

0.19



$

0.30



$

0.16


Cash G&A Expense per Mcfe (1)


$

0.93



$

0.80



$

0.88



$

0.78


G&A Expense per Mcfe


$

1.12



$

0.90



$

1.05



$

0.87


Interest Expense per Mcfe


$

0.09



$

0.12



$

0.09



$

0.13


DD&A per Mcfe


$

0.86



$

0.77



$

0.81



$

0.92


Total Expense per Mcfe


$

3.34



$

3.00



$

3.32



$

3.14



















Net Income (Loss)


$

(4,020,455)



$

(499,723)



$

2,661,794



$

(1,096,443)


Adjusted EBITDA (2)


$

5,819,415



$

3,582,486



$

10,235,479



$

6,494,198



















Cash Flow from Operations


$

7,296,330



$

4,205,726



$

15,934,320



$

4,677,107


CapEx


$

86,671



$

297,015



$

279,348



$

425,098


CapEx - Mineral Acquisitions


$

9,274,447



$

64,758



$

20,918,274



$

7,934,504



















Borrowing Base










$

32,000,000



$

29,400,000


Debt










$

24,000,000



$

23,500,000


Debt to Adjusted EBITDA (TTM) (2)











1.23




2.35




(1)

G&A excluding restricted stock and deferred director's expense.

(2)

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

SECOND FISCAL QUARTER ENDED MARCH 31, 2022, RESULTS

The Company recorded a second fiscal quarter 2022 net loss of ($4,020,455), or ($0.12) per share, as compared to a net loss of ($499,723), or ($0.02) per share, in the second fiscal quarter 2021. The change in net loss was principally the result of unrealized losses associated with the Company's derivative contracts, offset by increased natural gas, oil and NGL sales and gains on asset sales.

Natural gas, oil and NGL revenue increased $6,438,040, or 77%, for the second quarter 2022, compared to the corresponding 2021 quarter due to increases in natural gas, oil and NGL prices of 77%, 63% and 71%, respectively, and an increase in natural gas and NGL volumes of 10% and 8%, respectively, partially offset by an 8% decrease in oil volumes.

The production increase in royalty volumes during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, resulted from acquired wells in the Haynesville Shale and SCOOP plays coming online.  The decrease in working interest volumes resulted from naturally declining production in high-interest wells in the Arkoma Stack and the divestiture of low-value legacy working interests in Oklahoma.

The Company had a net loss on derivative contracts of ($12,983,406) in the second fiscal 2022 quarter, as compared to a net loss of ($2,348,143) in the second fiscal 2021 quarter, of which ($11,772,640) is unrealized with respect to the second fiscal 2022 quarter. Realized net loss on derivative contracts for the second fiscal 2022 quarter excludes $2,493,481 of cash paid to settle off-market derivative contracts. The change in net loss on derivative contracts was principally due to the Company's natural gas and oil collars and fixed price swaps being less beneficial in the quarter ended March 31, 2022, in relation to their respective contracted volumes and prices, as compared to the corresponding 2021 quarter.

The 11% increase in total cost per Mcfe in the second fiscal 2022 quarter, relative to the second fiscal 2021 quarter, was primarily driven by an increase in general and administrative costs, or G&A, and depreciation, depletion and amortization, or DD&A. G&A increased $684,788, or 33%, in the second fiscal 2022 quarter compared to the corresponding 2021 quarter due to legal expenses associated with reincorporating in the state of Delaware, increased transaction activity and restricted stock expense. DD&A increased $343,299, or 19%, in the second fiscal 2022 quarter to $0.86 per Mcfe, as compared to $0.77 per Mcfe in the second fiscal 2021 quarter. Of the DD&A increase, $217,604 was a result of a $0.09 increase in the DD&A rate per Mcfe, and $125,695 of such increase resulted from production increasing 7% in the second fiscal 2022 quarter.

SIX MONTHS ENDED MARCH 31, 2022, RESULTS

The Company recorded net income of $2,661,794, or $0.08 per share, in the fiscal six-month period ended March 31, 2022 (the "fiscal six-month 2022 period"), as compared to a net loss of ($1,096,443), or ($0.05) per share, in the corresponding 2021 period. The change in net income was principally the result of increased natural gas, oil and NGL sales and lease bonuses and rental income, and decreased DD&A and interest expense, partially offset by an increase in losses on derivative contracts, lease operating expense, or LOE, transportation, gathering and marketing expenses, production taxes and a reduction in income tax benefit.

Natural gas, oil and NGL sales increased $13,700,225, or 93%, for the fiscal six-month 2022 period, compared to the corresponding 2021 period, due to increases in natural gas, oil and NGL prices of 103%, 74% and 88%, respectively, and an increase in natural gas and NGL volumes of 8% and 8%, respectively, partially offset by a decrease in oil volumes of 13%.

Natural gas volumes increased during the fiscal six-month 2022 period, as compared to the corresponding 2021 period, primarily as a result of new wells associated with recent acquisitions in the Haynesville Shale and SCOOP plays coming online. These gas volumes were partially offset by naturally declining production in high-interest wells in the Arkoma Stack and divestitures in the Fayetteville.  NGL production also increased as a result of new wells brought online in the SCOOP, as well as increased production from liquids-rich gas wells in the Anadarko Granite Wash. The decrease in oil production was a result of naturally declining production in working interest wells in the Eagle Ford play and royalty wells in the Bakken play, due to the Company's strategy of no longer participating with working interests in new drilling in the Eagle Ford, and reduced drilling activity in the Bakken, as well as naturally declining production in high-interest wells brought online in the STACK during fiscal year 2021. Oil production decreases were partially offset by new wells in the SCOOP.

The Company had a net loss on derivative contracts of ($10,147,238) in the fiscal six-month 2022 period, as compared to a net loss of ($2,602,179) in the corresponding 2021 period, of which ($7,222,140) is unrealized with respect to the fiscal six-month 2022 period. Realized net loss on derivative contracts for the fiscal six-month 2022 period excludes $5,181,572 of cash paid to settle off-market derivative contracts. The change in net loss on derivative contracts was principally due to the Company's natural gas and oil collars and fixed price swaps being less beneficial in the fiscal six-month 2022 period in relation to their respective contracted volumes and prices, as compared to the corresponding 2021 period.

The 6% increase in total cost per Mcfe in the fiscal six-month 2022 period, relative to the corresponding 2021 period, was primarily driven by an increase in G&A and production tax, partially offset by a decrease in DD&A. G&A increased $1,049,248, or 28%, in the fiscal six-month 2022 period compared to the corresponding 2021 period due to legal expenses associated with reincorporating in the state of Delaware, increased transaction activity and restricted stock expense. DD&A decreased $333,590, or 8%, in the fiscal six-month 2022 period to $0.81 per Mcfe, as compared to $0.92 per Mcfe in the corresponding 2021 period. Of the DD&A decrease, $533,366 was a result of an $0.11 decrease in the DD&A rate per Mcfe, partially offset by an increase of $199,776 resulting from production increasing 5% in the fiscal six-month 2022 period compared to the corresponding 2021 period. The DD&A rate per Mcfe decrease was mainly due an increase in reserves during the fiscal six-month 2022 period, as compared to the corresponding 2021 period.

OPERATIONS UPDATE

During the second fiscal quarter of 2022, the Company converted 108 gross (0.48 net) wells to producing status, including 35 gross (0.04 net) in the SCOOP and 31 gross (0.33 net) in the Haynesville.

At March 31, 2022, the Company had a total of 134 gross wells (0.60 net wells) in progress across its mineral positions and 52 gross (0.23 net) active permitted wells. As of March 31, 2022, 18 rigs were operating on the Company's acreage with 86 rigs operating within 2.5 miles of its acreage.











Bakken/
































Three



Arkoma




















SCOOP



STACK



Forks



Stack



Fayetteville



Haynesville



Other



Total


As of March 31, 2022:

































  Gross Wells in Progress on PHX Acreage



61




14




6




6




-




40




7




134


  Net Wells in Progress on PHX Acreage



0.17




0.07




0.01




0.00




-




0.33




0.02




0.60


  Gross Active Permits on PHX Acreage



10




11




11




4




-




12




4




52



































As of March 31, 2022:

































  Rigs Present on PHX Acreage



7




1




1




1




-




7




1




18


  Rigs Within 2.5 Miles of PHX Acreage



19




13




10




2




-




29




13




86


Leasing Activity

During the second quarter of fiscal 2022, the Company leased 385 net mineral acres for an average bonus payment of $942 per net mineral acre and an average royalty of 22%.











Bakken/
































Three



Arkoma




















SCOOP



STACK



Forks



Stack



Fayetteville



Haynesville



Other



Total


During Three Months Ended March 31, 2022:

































Net Mineral Acres Leased



41




67




-




125




9




-




143




385


Average Bonus per Net Mineral Acre


$

1,679



$

1,000




-



$

185



$

100




-



$

467



$

942


Average Royalty per Net Mineral Acre


25%



25%




-



19%



$

17




-



19%



22%


ACQUISITION AND DIVESTITURE UPDATE

During the second quarter of fiscal year 2022, the Company purchased 825 net royalty acres for approximately $9.3 million and sold 7,208 net mineral acres, which were predominantly undeveloped and unleased, for approximately $2.1 million.











Bakken/
































Three



Arkoma




















SCOOP



STACK



Forks



Stack



Fayetteville



Haynesville



Other



Total


During Three Months Ended March 31, 2022:

































     Net Mineral Acres Purchased



184




-




-




-




-




421




-




605


     Net Royalty Acres Purchased



224




-




-




-




-




601




-




825


          Price per Net Royalty Acre


$

8,027




-




-




-




-



$

12,511




-



$

11,294


     Net Mineral Acres Sold



-




-




-




-




-




-




7,208




7,208


     Net Royalty Acres Sold



-




-




-




-




-




-




7,708




7,708


          Price per Net Royalty Acre



-




-




-




-




-




-



$

272



$

272


SECOND QUARTER EARNINGS CALL

PHX will host a conference call to discuss the Company's second fiscal quarter results at 11:00 a.m. EST tomorrow May 10, 2022. 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 (domestic) or 201-389-0927 (international). 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 13729283.

FINANCIAL RESULTS

 


Statements of Operations





Three Months Ended March 31,



Six Months Ended March 31,



2022



2021



2022



2021


Revenues:






     Natural gas, oil and NGL sales

$

14,783,865



$

8,345,825



$

28,471,029



$

14,770,804


     Lease bonuses and rental income


161,908




58,554




240,823




59,987


     Gains (losses) on derivative contracts


(12,983,406)




(2,348,143)




(10,147,238)




(2,602,179)




1,962,367




6,056,236




18,564,614




12,228,612


Costs and expenses:
















     Lease operating expenses


929,454




1,030,651




2,185,465




2,035,063


     Transportation, gathering and marketing


1,488,518




1,319,514




2,702,122




2,600,479


     Production taxes


697,393




443,154




1,376,340




719,180


     Depreciation, depletion and amortization


2,121,116




1,777,817




3,704,876




4,038,466


     Provision for impairment


-




-




5,585




-


     Interest expense


230,212




267,865




406,931




569,763


     General and administrative


2,744,264




2,059,476




4,839,821




3,790,573


     Losses (gains) on asset sales and other


(2,261,135)




(125,518)




(113,320)




(142,469)


Total costs and expenses


5,949,822




6,772,959




15,107,820




13,611,055


Income (loss) before provision (benefit) for income taxes


(3,987,455)




(716,723)




3,456,794




(1,382,443)


















Provision (benefit) for income taxes


33,000




(217,000)




795,000




(286,000)


















Net income (loss)

$

(4,020,455)



$

(499,723)



$

2,661,794



$

(1,096,443)


















































Basic and diluted earnings (loss) per common share

$

(0.12)



$

(0.02)



$

0.08



$

(0.05)


















Basic and diluted weighted average shares outstanding:
















     Common shares


34,056,316




22,429,777




33,449,594




22,403,678


     Unissued, directors' deferred compensation shares


236,139




178,597




234,091




177,923




34,292,455




22,608,374




33,683,685




22,581,601


















Dividends per share of
















     common stock paid in period

$

0.015



$

0.01



$

0.025



$

0.02


















Dividends declared per share of
















     common stock and to be paid in quarter ended June 30

$

-



$

0.01


























Balance Sheets



March 31, 2022



Sept. 30, 2021


Assets








Current assets:








     Cash and cash equivalents

$

1,703,675



$

2,438,511


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


9,451,366




6,428,982


          allowance for uncollectable accounts)








     Refundable income taxes


-




2,413,942


     Other


1,188,312




942,082


Total current assets


12,343,353




12,223,517










Properties and equipment at cost, based on








   successful efforts accounting:








     Producing natural gas and oil properties


264,135,242




319,984,874


     Non-producing natural gas and oil properties


48,878,130




40,466,098


     Other


844,582




794,179




313,857,954




361,245,151


     Less accumulated depreciation, depletion and amortization


(196,960,903)




(257,643,661)


Net properties and equipment


116,897,051




103,601,490










Operating lease right-of-use assets


564,034




607,414


Other, net


537,199




578,593


Total assets

$

130,341,637



$

117,011,014










Liabilities and Stockholders' Equity








Current liabilities:








     Accounts payable

$

602,415



$

772,717


     Derivative contracts, net


14,793,396




12,087,988


     Income taxes payable


253,733




334,050


     Current portion of operating lease liability


134,955




132,287


     Accrued liabilities and other


1,506,836




1,809,337


Total current liabilities


17,291,335




15,136,379










Long-term debt


24,000,000




17,500,000


Deferred income taxes, net


370,906




343,906


Asset retirement obligations


2,178,023




2,836,172


Derivative contracts, net


1,031,639




1,696,479


Operating lease liability, net of current portion


721,188




789,339










Total liabilities


45,593,091




38,302,275










Stockholders' equity:








     Common Stock, $0.01666 par value; 54,000,500








       shares authorized and 34,469,449 issued at March 31, 2022;








       36,000,500 shares authorized and 32,770,433 issued at Sept. 30, 2021


574,261




545,956


     Capital in excess of par value


37,596,944




33,213,645


     Deferred directors' compensation


1,407,423




1,768,151


     Retained earnings


50,778,525




48,966,420




90,357,153




84,494,172


     Less treasury stock, at cost; 377,232 shares at March 31,








       2022, and 388,545 shares at Sept. 30, 2021


(5,608,607)




(5,785,433)


Total stockholders' equity


84,748,546




78,708,739


Total liabilities and stockholders' equity

$

130,341,637



$

117,011,014


Condensed Statements of Cash Flows





Six Months Ended March 31,



2022



2021


Operating Activities



     Net income (loss)

$

2,661,794



$

(1,096,443)


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








       by operating activities:








          Depreciation, depletion and amortization


3,704,876




4,038,466


          Impairment of producing properties


5,585




-


          Provision for deferred income taxes


27,000




(288,000)


          Gain from leasing fee mineral acreage


(239,751)




(57,493)


          Proceeds from leasing fee mineral acreage


328,783




64,047


          Net (gain) loss on sales of assets


(171,285)




(62,097)


          Directors' deferred compensation expense


103,031




100,254


          Total (gain) loss on derivative contracts


10,147,238




2,602,179


          Cash receipts (payments) on settled derivative contracts


(176,510)




315,883


          Restricted stock awards


688,981




284,148


          Other


28,483




31,544


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








          Natural gas, oil and NGL sales receivables


(3,022,384)




(1,732,801)


          Other current assets


(205,489)




(388,864)


          Accounts payable


(91,587)




(340,404)


          Income taxes receivable


2,413,942




1,356,356


          Other non-current assets


64,975




56,545


          Income taxes payable


(80,317)




-


          Accrued liabilities


(253,045)




(206,213)


     Total adjustments


13,272,526




5,773,550


     Net cash provided by operating activities


15,934,320




4,677,107










Investing Activities








          Capital expenditures


(279,348)




(425,098)


          Acquisition of minerals and overriding royalty interests


(20,918,274)




(7,934,504)


          Net proceeds from sales of assets


6,880,972




21,000


     Net cash provided (used) by investing activities


(14,316,650)




(8,338,602)










Financing Activities








          Borrowings under credit facility


10,000,000




-


          Payments of loan principal


(3,500,000)




(5,250,000)


          Net cost of equity issuance


(72,657)




(53,482)


          Cash receipts from (payments on) off-market derivative contracts


(7,930,160)




-


          Payments of dividends


(849,689)




(454,936)


     Net cash provided (used) by financing activities


(2,352,506)




(5,758,418)










     Increase (decrease) in cash and cash equivalents


(734,836)




(9,419,913)


     Cash and cash equivalents at beginning of period


2,438,511




10,690,395


     Cash and cash equivalents at end of period

$

1,703,675



$

1,270,482










Supplemental Schedule of Noncash Investing and Financing Activities
















     Dividends declared and unpaid

$

-



$

289,997


















     Gross additions to properties and equipment

$

24,522,684



$

8,759,616


     Value of shares used for acquisitions


(3,510,001)




(250,000)


     Net (increase) decrease in accounts payable for properties








          and equipment additions


184,939




(150,014)


     Capital expenditures and acquisitions

$

21,197,622



$

8,359,602


Proved Reserves





Proved Reserves SEC Pricing



March 31, 2022



Sept. 30, 2021


Proved Developed Reserves:



     Mcf of Gas


57,105,505




60,287,881


     Barrels of Oil


1,407,747




1,439,860


     Barrels of NGL


1,413,001




1,467,092


     Mcfe (1)


74,029,993




77,729,593


Proved Undeveloped Reserves:








     Mcf of Gas


6,649,529




4,664,787


     Barrels of Oil


49,819




64,980


     Barrels of NGL


39,120




34,761


     Mcfe (1)


7,183,163




5,263,233


Total Proved Reserves:








     Mcf of Gas


63,755,034




64,952,668


     Barrels of Oil


1,457,566




1,504,840


     Barrels of NGL


1,452,121




1,501,853


     Mcfe (1)


81,213,156




82,992,826










10% Discounted Estimated Future








Net Cash Flows (before income taxes):








     Proved Developed

$

136,886,508



$

86,793,303


     Proved Undeveloped


18,800,039




9,731,035


     Total

$

155,686,547



$

96,524,338


SEC Pricing








     Gas/Mcf

$

4.24



$

2.79


     Oil/Barrel

$

75.00



$

56.51


     NGL/Barrel

$

31.44



$

20.58










Proved Reserves - Projected Future Pricing (2)










10% Discounted Estimated Future

Proved Reserves


Net Cash Flows (before income taxes):

March 31, 2022



Sept. 30, 2021


     Proved Developed

$

132,544,462



$

111,007,369


     Proved Undeveloped


18,291,047




11,989,928


     Total

$

150,835,509



$

122,997,297










(1) Crude oil and NGL converted to natural gas on a one barrel of crude oil or NGL equals six Mcf of natural gas basis.


(2) Projected futures pricing as of March 31, 2022, and Sept. 30, 2021, basis adjusted to Company wellhead price.


Derivative Contracts as of May 6, 2022 














Collar Average



Collar Average


Fiscal Period


Product


Volume Mcf/Bbl



Swap Price



Floor Price



Ceiling Price


Remaining 2022


Natural Gas



585,000







$

3.95



$

5.69


Remaining 2022


Natural Gas



1,785,000



$

2.98










2023


Natural Gas



890,000







$

4.49



$

8.10


2023


Natural Gas



2,100,000



$

3.24










2024


Natural Gas



60,000







$

3.00



$

4.70


2024


Natural Gas



380,000



$

3.41





























Remaining 2022


Crude Oil



64,500



$

45.03










2023


Crude Oil



15,000







$

75.00



$

96.00


2023


Crude Oil



66,750



$

62.11










2024


Crude Oil



11,250



$

73.35










Non-GAAP Reconciliation

This news 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

We define "adjusted EBITDA" as earnings before interest, taxes, depreciation and amortization, or EBITDA, excluding unrealized 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. We have included a presentation of adjusted EBITDA because we recognize that certain investors consider this amount to be a useful means of measuring our ability to meet our debt service obligations and evaluating our 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 presentation of net income (loss) to adjusted EBITDA for the periods indicated:


Second Quarter
Ended



Second Quarter
Ended



Six Months
Ended



Six Months
Ended



First Quarter
Ended



March 31, 2022



March 31, 2021



March 31, 2022



March 31, 2021



Dec. 31, 2021


Net Income (Loss)

$

(4,020,455)



$

(499,723)



$

2,661,794



$

(1,096,443)



$

6,682,249


Plus:




















    Income tax expense




















     (benefit)


33,000




(217,000)




795,000




(286,000)




762,000


    Interest expense


230,212




267,865




406,931




569,763




176,719


    DD&A


2,121,116




1,777,817




3,704,876




4,038,466




1,583,760


Impairment


-




-




5,585




-




5,585


Less:




















    Unrealized gains (losses)




















        on derivatives


(11,772,640)




(2,050,712)




(7,222,140)




(2,918,062)




4,550,499


Gains (losses) on asset sales


2,292,215




14,082




171,288




30,559




(2,120,927)


Plus:




















Cash receipts from (payments on)




















     off-market derivative contracts(1)


(2,493,481)




-




(5,181,572)




-




(2,688,091)


Restricted stock and deferred




















    director's expense


468,598




216,897




792,013




384,402




323,415


Adjusted EBITDA

$

5,819,415



$

3,582,486



$

10,235,479



$

6,497,691



$

4,416,065






















(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 has 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. We have included a presentation of debt to adjusted EBITDA (TTM) because we recognize that certain investors consider such ratios to be useful means of measuring our ability to meet our debt service obligations and for evaluating our 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 presentation 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



March 31, 2022



March 31, 2021


Net Income (Loss)

$

(2,459,000)



$

(6,485,780)


Plus:








    Income tax expense (benefit)


429,949




(1,842,000)


    Interest expense


832,295




1,139,313


    DD&A


7,412,214




9,023,030


    Impairment


56,060




358,826


Less:








    Unrealized gains (losses)








        on derivatives


(8,580,898)




(7,842,624)


Gains (losses) on asset sales


450,074




738,432


Plus:








Cash receipts from (payments on)








     off-market derivative contracts(1)


3,618,428




-


Restricted stock and deferred








    director's expense


1,443,276




721,944


Adjusted EBITDA

$

19,464,046



$

10,019,525










Debt

$

24,000,000



$

23,500,000


Debt to Adjusted EBITDA (TTM)


1.23




2.35










(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 has no effect on the Company
's statement of operations.


Pretax Net Income (Loss) Excluding Non-cash Derivative Gains (Losses) Reconciliation

"Pretax net income (loss) excluding non-cash derivative gains (losses)" is defined as earnings before taxes, excluding unrealized gains (losses) on derivatives. We have included a presentation of pretax net income (loss) excluding non-cash derivative gains (losses) because we recognize that certain investors consider this amount to be a useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. Pretax net income (loss) excluding non-cash derivative gains (losses) 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 pretax net income (loss) excluding non-cash derivative gains (losses) may not be comparable to a similarly titled measure of other companies. The following table provides a presentation of net income (loss) to pretax net income (loss) excluding non-cash derivative gains (losses) for the periods indicated:


Second Quarter Ended



First Quarter Ended



March 31, 2022



Dec. 31, 2021


Net Income (Loss)

$

(4,020,455)



$

6,682,249


Plus:








    Income tax expense (benefit)


33,000




762,000


Less:








    Unrealized gains (losses)








         on derivatives


(11,772,640)




4,550,499


Pretax Net Income (Loss) excluding








Non-cash Derivative Gains (Losses)

$

7,785,185



$

2,893,750










Basic and diluted weighted average








     shares outstanding


34,292,455




33,127,722










Pretax Net Income (Loss) excluding








     Non-cash Derivative Gains (Losses) per share

$

0.23



$

0.09










PHX Minerals Inc. (NYSE: PHX) Oklahoma City-based, PHX Minerals Inc. is a natural gas and oil mineral company with a strategy to proactively grow its mineral position in its core areas of focus. PHX owns mineral acreage principally located in Oklahoma, Texas, Louisiana, North Dakota, and Arkansas. Additional information on PHX 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 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 the 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 statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements. 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.

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SOURCE PHX MINERALS INC.

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