PHX Minerals Inc. has agreed to acquire approximately 988 net royalty acres targeting the Haynesville Shale in Louisiana and Texas and Oklahoma’s SCOOP play from five separate sellers for total consideration of $13.6 million cash.
PHX estimates total reserves associated with the acquisitions to be the equivalent of approximately 6.9 Bcf (94% natural gas, 6% oil). The assets are concentrated in the core of the Haynesville and SCOOP under active operators including Aethon Energy Operating LLC and Chesapeake Energy, PHX said in an Aug. 24 press release.
The deals are expected to add approximately 31 gross (0.27 net) wells in progress, which will increase the company’s net inventory by approximately 31%. Pro forma leverage will remain below 1.5x following closing, PHX said.
PHX already owns interests in 50 of the 108 total locations being acquired, increasing its net revenue interests per well. The company estimated next 12-month production, as of Sept. 1, 2023, is between 1.2 Bcfe and 1.4 Bcfe. At Aug. 9 Nymex strip prices, the production will generate approximately $4 million to $4.3 million in cash flow.
PHX President and CEO Chad Stephens said the acquisitions demonstrate the company’s ability to source and execute on accretive transactions in the core areas of the Haynesville and SCOOP.
“As I have previously stated, PHX has always been keenly focused on maintaining financial discipline while evaluating acquisition opportunities,” he said. “This discipline allowed us to build liquidity during the downturn in commodity prices we saw in the first half of 2023, which we can now deploy to fund these attractive acquisitions.”
Stephens said similar opportunities will continue to be accessible to PHX.
“Additionally, as these acquisitions demonstrate, our focus on internally aggregating transactions allows us to achieve significantly better risk adjusted returns compared to broadly marketed asset packages while still scaling up the business," he said.
The acquisitions are subject to certain closing conditions and adjustments and will be funded using a combination of cash on hand and borrowings under the company's existing credit facility. The deals are expected to close in mid-September.
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