First quarter net loss for PHX Minerals blamed on fewer natural gas sales

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The first quarter for PHX Minerals Inc. brought about a net loss of $0.2 million or a penny a diluted share, according to the financial and operating results released by the Fort Worth-based company. The company experienced a 40% drop in revenue from natural gas,oil and NGL, but primarily, it was hurt by slumping natural gas prices.

It compared to $2.5 million in net income or 7 cents a share for the quarter that ended Dec. 31, 2023 and to net income of $9.6 million, or $0.27 per diluted share, for the quarter ended March 31, 2023. The firm reported adjusted EBITDA of $4.6 milion compared to $4.5 million in the prevous quarter.

The change in net income was principally the result of decreased natural gas, oil and NGL sales, decreased gains associated with our derivative contracts and decreased gains on asset sales, partially offset by decreased income tax provision.

Natural gas, oil and NGL revenue decreased $4.8 million, or 40%, for the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023, due to decreases in natural gas and NGL prices of 41% and 15%, respectively, and decreases in natural gas, oil and NGL volumes of 13%, 31% and 3%, respectively.

The decrease in royalty production volumes during the quarter ended March 31, 2024, as compared to the quarter ended March 31, 2023, resulted from fewer new wells being brought online in the Haynesville Shale due to low gas prices. The production decrease in working interest volumes during the quarter ended March 31, 2024, as compared to the quarter ended March 31, 2023, resulted from the divestiture of working interest properties.

PHX saw a 5% decrease of royalty production volumes, down to 1,857 Mmcfe and its total prodution volumes fell as well, dropping 6% to 2,117 Mmcfe compared to the previous quarter.

Still, during the quarter, PHX converted 85 gross wells to producing status compaed to 46 wells in the previous quarter. The company said it had an inventory of 230 gross wells in progress and permits as of the end of the first quarter, down from the 263 wells in progress and permits at the end of 2023.

“PHX Minerals continues to deliver positive Adjusted EBITDA and cash flow, servicing our dividend and lowering our debt by $2.0 million from last quarter, despite the significant commodity headwinds,” said Chad L. Stephens, President and CEO.

“The number of rigs operating on the Company’s acreage and its surrounding area increased since our last update, even during the current challenging pricing environment with reduced drilling activities industry-wide, further validates our methodical strategy of acquiring acreage ahead of the drill-bits.”

The Company had a net gain on derivative contracts of $0.6 million for the quarter ended March 31, 2024, comprised of a $1.7 million gain on settled derivatives and a ($1.0) million non-cash loss on derivatives, as compared to a net gain of $3.8 million for the quarter ended March 31, 2023. The change in net gain on derivative contracts was due to the Company’s settlements of natural gas and oil collars and fixed price swaps and the change in valuation caused by the difference in March 31, 2024 pricing relative to the strike price on open derivative contracts.

Operations Update

During the quarter ended March 31, 2024, the Company converted 85 gross (0.32 net) wells to producing status, including 29 gross (0.10 net) wells in the Haynesville and 27 gross (0.13 net) wells in the SCOOP, compared to 117 gross (0.46 net) wells in the quarter ended March 31, 2023.

At March 31, 2024, the Company had a total of 230 gross (1.099 net) wells in progress and permits across its mineral positions, compared to 263 gross (1.295 net) wells in progress and permits at Dec. 31, 2023. As of April 30, 2024, 15 rigs were operating on the Company’s acreage and 62 rigs operating within 2.5 miles of its acreage.

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