Sign in

You're signed outSign in or to get full access.

PM

PHX MINERALS INC. (PHX)·Q1 2025 Earnings Summary

Executive Summary

  • PHX delivered a profitable quarter: net income $4.38m and diluted EPS $0.12; adjusted EBITDA rose to $6.16m, up sequentially and year over year .
  • Volumes dipped sequentially (Mcfe 2.16m vs 2.38m in Q4), but higher gas/NGL prices and strong royalty sales drove improved profitability; non‑cash hedge marks weighed on reported revenue and derivatives line .
  • Balance sheet strengthened: total debt fell to $19.75m and Debt/Adj. EBITDA (TTM) dropped to 0.86x; quarterly dividend affirmed at $0.04/share .
  • Strategic catalyst: WhiteHawk to acquire PHX for $4.35/share cash (21.8% premium to prior close); Q1 call was canceled due to the pending transaction .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA improved to $6.16m (vs. $5.39m Q4 and $4.61m YoY), reflecting stronger commodity pricing and royalty sales mix .
  • Debt reduction and leverage: debt fell ~$9.75m QoQ to $19.75m; Debt/Adj. EBITDA (TTM) declined to 0.86x; management emphasized maintaining a “strong and flexible balance sheet” .
  • Activity pipeline strengthening: wells in progress and permits rose to 247 gross (1.017 net), with 18 rigs on acreage and 70 nearby—supporting expected 2025–2026 volume growth; CEO: “natural gas environment showed meaningful improvement…” .

Quotes:

  • “PHX had a strong start to 2025, delivering solid cash flow and adjusted EBITDA… A strong and flexible balance sheet continues to be an important part of our strategy.” — Chad L. Stephens, CEO .
  • “The natural gas environment showed meaningful improvement… translating into heightened operator activity… We expect this trend to continue throughout 2025 and into 2026.” — Chad L. Stephens .

What Went Wrong

  • Reported revenue declined vs. Q4 on hedge marks: total revenue $7.60m (vs. $8.02m Q4), driven by a ($3.16m) net loss on derivatives (including a $2.94m non‑cash loss) .
  • Sequential volume drop: Mcfe sold fell to 2.16m from 2.38m in Q4 2024; wells converted slowed to 65 gross (0.113 net) vs. 71 (0.22 net) in Q4 .
  • Costs per unit mixed: G&A per Mcfe rose to $1.74 (vs. $1.22 Q4), while total expense per Mcfe increased to $3.92 (vs. $3.24 Q4) .

Analyst concerns:

  • No guidance and canceled Q1 call amid the transaction; CFO reiterated no guidance during strategic review; visibility relies on operator activity and macro .

Financial Results

MetricQ1 2024 (oldest)Q4 2024Q1 2025 (latest)
Natural Gas, Oil & NGL Sales ($)$7,090,208 $8,885,922 $10,433,287
Total Revenue ($)$7,869,418 $8,023,382 $7,598,312
Net Income ($)($183,615) $109,400 $4,383,882
Diluted EPS ($)($0.01) $0.00 $0.12
Adjusted EBITDA ($)$4,607,034 $5,385,515 $6,161,219
Cash Flow from Operations ($)$5,246,651 $2,870,001 $4,276,440
Total Debt ($)$30,750,000 $29,500,000 $19,750,000
Debt / Adjusted EBITDA (TTM) (x)1.58 1.38 0.86

Segment revenue breakdown:

SegmentQ1 2024 (oldest)Q4 2024Q1 2025 (latest)
Royalty Interest Sales ($)$6,176,274 $7,874,377 $9,288,424
Working Interest Sales ($)$913,934 $1,011,545 $1,144,863

Per‑Mcfe cost metrics:

Metric ($/Mcfe)Q1 2024 (oldest)Q4 2024Q1 2025 (latest)
LOE per WI Mcfe$1.28 $1.09 $1.10
Transportation/Gathering/Marketing$0.40 $0.43 $0.51
Production & Ad Valorem Tax$0.19 $0.12 $0.20
G&A Expense per Mcfe$1.58 $1.22 $1.74
Cash G&A per Mcfe$1.25 $0.99 $1.15
Interest Expense per Mcfe$0.34 $0.24 $0.21
DD&A per Mcfe$1.11 $1.10 $1.13
Total Expense per Mcfe$3.78 $3.24 $3.92

KPIs

Production and pricing:

KPIQ1 2024 (oldest)Q4 2024Q1 2025 (latest)
Gas Mcf Sold1,700,108 1,906,552 1,729,256
Oil Barrels Sold37,260 43,571 42,355
NGL Barrels Sold32,184 35,099 29,316
Mcfe Sold2,116,776 2,378,569 2,159,284
Avg Gas Price (pre‑hedge) ($/Mcf)$2.10 $2.64 $3.85
Avg Gas Price (post‑hedge) ($/Mcf)$3.08 $2.92 $3.75
Gas Sales Hedged (%)62% 46% 75%
Avg Oil Price (pre‑hedge) ($/Bbl)$76.01 $69.82 $70.52
Avg Oil Price (post‑hedge) ($/Bbl)$76.19 $69.50 $69.25
Avg NGL Price ($/Bbl)$21.51 $23.01 $27.18

Activity and inventory:

KPIQ1 2024 (oldest)Q4 2024Q1 2025 (latest)
Wells Converted to Producing (gross/net)85 / 0.32 71 / 0.22 65 / 0.113
Wells in Progress & Permits (gross/net)230 / 1.099 225 / 0.91 247 / 1.017
Rigs on Acreage—16 18
Rigs within 2.5 miles—62 70
Leasing (net acres; avg bonus; avg royalty)—265; $760; 23% 397; $911; 25%
A&D (net royalty acres bought; proceeds from asset sales)—363 bought; no significant sales 50 bought; ~$7.9m sales from 165,326 acres

Hedging and derivatives:

  • Net loss on derivative contracts in Q1 2025: ($3.163m) (settled: ($0.218m); non‑cash: ($2.945m)) .
  • Net loss on derivative contracts in Q4 2024: ($0.998m) (settled gain: $0.5m; non‑cash loss: ($1.5m)) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ4 2024 → Q1 2025$0.04 (announced for Mar 28, 2025) $0.04 (payable Jun 4, 2025; record May 20, 2025) Maintained
Operational outlook2024 (as of Aug 7, 2024)2024 production and cost outlook provided No guidance provided during strategic review; Q1 2025 call canceled Suspended
Strategic actionsDec 2024–Mar 2025Strategic alternatives process ongoing Signed agreement to be acquired by WhiteHawk at $4.35/share; tender offer & merger pending Announced transaction

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current PeriodTrend
Natural gas macro/pricingManagement highlighted “imminent improvement” in gas fundamentals; H2’24 gas strip >$4; reserve PV10 pressured by SEC pricing CEO notes tightening supply/demand, colder winter, rising LNG demand; expects operator activity to continue through 2025–2026 Improving
Operator activity & well conversionsQ4: 71 gross (0.22 net) conversions; strong WIPs despite deferrals; 16 rigs on acreage, 62 nearby Q1: 65 gross (0.113 net) conversions; WIPs+permits up to 247 gross (1.017 net); 18 rigs on acreage, 70 nearby Stable to improving inventories
Hedging programQ4 realized hedge gains $0.51m; non‑cash MTM loss $1.5m Q1 net derivative loss ($3.16m), mostly non‑cash; 75% gas sales hedged Higher protection; larger non‑cash swings
Strategic alternatives / M&AProcess ongoing; no guidance during review Announced sale to WhiteHawk at $4.35/share; directors/officers tender agreements (~10% ownership) Resolved via transaction
Balance sheet & leverageQ4 debt $29.5m; TTM leverage 1.38x; targeted reduction with asset sale proceeds Q1 debt $19.75m; TTM leverage 0.86x; continued debt paydown Improving
Dividends33% increase to $0.04 announced in Aug 2024 $0.04/share declared for Q1; maintained Maintained

Management Commentary

  • “PHX had a strong start to 2025, delivering solid cash flow and adjusted EBITDA… debt-to-adjusted EBITDA (TTM) ratio under 1x.” — Chad L. Stephens, CEO .
  • “The natural gas environment showed meaningful improvement… translating into heightened operator activity… We expect this trend to continue throughout 2025 and into 2026.” — Chad L. Stephens .
  • “Subsequent to the quarter, we reduced our debt to $19,800,000… bringing our pro forma leverage to under one times.” — Ralph D’Amico, CFO (Q4 call) .
  • “We are committed to keeping shareholders informed and will provide an update on the outcomes once the process is complete.” — Chad L. Stephens (Q4 call) .

Q&A Highlights

  • Strategic review: CFO declined to comment while process ongoing, confirming normal operations and no guidance during review .
  • Production outlook: CFO suggested extrapolating recent conversion trends but did not provide formal guidance .
  • Investor engagement: CEO noted continued investor marketing and intent to host next call—later canceled in light of the transaction .

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable for PHX for Q1 2025 due to missing CIQ mapping; as a result, we cannot assess EPS or revenue beats/misses relative to consensus (Values retrieved from S&P Global)*.
  • Given the lack of accessible consensus data, we anchor the recap on reported results and prior‑period comparisons.

Key Takeaways for Investors

  • Profitability inflection with stronger commodity pricing and royalty mix; adjusted EBITDA up sequentially and YoY despite hedge MTM headwinds .
  • Balance sheet strength and deleveraging are notable; leverage now 0.86x TTM, creating optionality (pre‑transaction) .
  • Operational momentum: WIPs and permits increased, rig activity higher; sets up 2025–2026 for volume support if macro remains constructive .
  • Transaction at $4.35/share accelerates value realization; premiums of 21.8% to prior close and ~15–24% to VWAPs/unaffected levels; stock outcome driven by deal closure timelines and tender conditions .
  • Near‑term trading likely keyed to deal milestones and any competing proposals; fundamental updates limited given cancellation of Q1 call and suspended guidance .
  • Hedge coverage dampens price volatility but introduces non‑cash MTM impacts; investors should focus on cash metrics (CFO, adjusted EBITDA) and royalty activity .