PHX Minerals Inc. agreed on April 19 to an acquisition targeting the Haynesville play in East Texas and Louisiana, where the company sees an opportunity to build on its growing inventory of natural gas assets. 

“Since January 2020, when I was appointed CEO, we have been pursuing the acquisition of minerals in the Haynesville underneath active reputable operators,” Chad Stephens, president and CEO of PHX Minerals, commented in a company release.

Based in Oklahoma City, PHX currently owns approximately 251,000 net mineral acres principally located in Oklahoma, Texas, Louisiana, North Dakota  and Arkansas. The company, formerly Panhandle Oil and Gas, is targeting to proactively grow its mineral position in core areas of focus as part of the strategy to high-grade the PHX asset base.

The Haynesville has become a key part of PHX Minerals’ strategy as Stephens describes the natural gas resources as the “front door of U.S. LNG export terminals” that will prove to be a vital source in alleviating the energy crisis in Europe. Late last year, the company added about 425 total net royalty acres within Louisiana’s Caddo Parish from two private sellers.

“Including this acquisition [on April 19], we have now acquired approximately 5,000 net royalty acres in the Haynesville deploying an estimated $40 million of capital while maintaining a strong balance sheet,” he said.

PHX Minerals said it agreed to pay a private seller aggregate consideration of $5.1 million in cash for approximately 506 net royalty acres primarily located in Caddo Parish.

The acquisition will add 28 PDP gross wells, 35 gross wells in progress and an estimated 79 gross undrilled locations. Key operators include Trinity Operating, Chesapeake Energy Corp., Blue Dome Operating LLC and Comstock Resources In..

Five drilling rigs are currently running on the acquired assets, according to the company release.

The assets have estimated reserves of 4.1 Bcfe and an estimated next 12-month net production totaling between 550 to 650 Mcf/d, comprised of 100% natural gas.

PHX plans to fund the transaction with a combination of cash on hand and borrowings under our existing credit facility. The company said its board of directors unanimously approved the acquisition, which is subject to certain closing conditions, and is expected to close by May 27.