PHX Minerals (PHX) Q2 2024 earnings summary

Executive summary

• Achieved record royalty production volumes, with a 46% sequential increase to 2,968 MMcfe, driven by high-impact Haynesville wells and a royalty-focused strategy.

• Net income for Q2 2024 was $1.3 million ($0.04 per diluted share), up from a net loss in the prior year, supported by higher sales, lower G&A, and asset sales.

• Transitioned portfolio to 90% royalty and 10% non-operating interest, resulting in higher margins and a more sustainable balance sheet.

• Reduced debt by $4 million since year-end 2023 and increased the quarterly dividend by 33%.

• 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, driven by higher production volumes.

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

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

• Cash and cash equivalents were $2.3 million at June 30, 2024, with $21.3 million available under the credit facility.

• Market cap of $123.2 million and enterprise value of $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, supported by a deep inventory and ongoing operator activity.

• Cash flow projected to exceed $40 million annually by FY2026, with debt paydown targeted for full repayment in less than 18 months.

• Guidance incorporates conservatism to normalize quarter-to-quarter volatility, especially given the high initial rates and rapid declines of Haynesville wells.

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