PHX Minerals Inc. said Dec. 27 that it will sell 257 non-operated legacy working interest wellbores in the Arkoma Basin and the Eagle Ford for total cash consideration of approximately $10.7 million.
PHX, based in Fort Worth, Texas, said it has entered into two agreements with separate buyers to sell the assets. The buyers will also assume approximately $879,000 of aggregate asset retirement obligations from the company. Both transactions are expected to close by the end of January 2023 and are subject to customary closing conditions and adjustments.
The divestiture comes roughly two weeks after PHX reported that since July the company has acquired about 1,853 royalty acres for $23.8 million to replenish its inventory.
The Arkoma Basin sale consists of 151 non-operated legacy working interest wellbores with a purchase price of approximately $5.1 million and $235,000 of assumed asset retirement obligations.
The Eagle Ford sale consists of 106 non-operated legacy working interest wellbores with a purchase price of approximately $5.6 million and $644,000 of assumed asset retirement obligations.
PHX intends to use the proceeds from these divestitures to acquire additional minerals with existing production and line-of-sight development and repay borrowings under the company's credit facility.
On a pro forma basis, PHX will have 564 remaining legacy working interest wellbores.
President and CEO Chad Stephens said the transactions are a continuation of the company’s strategy to high-grade PHX's asset base by divesting legacy working interest wellbores while reinvesting the proceeds in higher-margin minerals in the company’s core areas of focus.
“Once these transactions are completed, we will have divested approximately 75% of the wellbores in which PHX owned a working interest when I became CEO in late 2019,” Stephens said. “While the remaining working interest position will represent less than 10% of our production volumes and reserves, we will continue to strive to divest them at a fair price in 2023. The mineral acquisitions funded with the proceeds from these transactions will continue to drive increased royalty volumes and cash flow in the upcoming quarters.”
PHX is a natural gas focused mineral company with assets principally located in Oklahoma, Texas, Louisiana, North Dakota and Arkansas.
Recommended Reading
Exxon Signals Potential Counter Offer for Hess’ Guyana Assets
2024-03-07 - Exxon Mobil has filed a contract arbitration claim related to Chevron’s proposed purchase of Hess Corp.’s interests in the Stabroek Block offshore Guyana.
Chevron CEO Talks Guyana M&A, Exxon Dispute
2024-03-19 - Chevron Corp. CEO Mike Wirth said during CERAWeek by S&P Global that California’s company’s plan to acquire Hess Corporation, and specifically its 30% interest in the Guyana offshore Stabroek Block, was an important deal as well as good one.
EIA: E&P Dealmaking Activity Soars to $234 Billion in ‘23
2024-03-19 - Oil and gas E&Ps spent a collective $234 billion on corporate M&A and asset acquisitions in 2023, the most in more than a decade, the U.S. Energy Information Administration reported.
Chevron, Exxon in Dispute Over Hess Stake in Guyana Oil Block
2024-02-27 - Chevron’s $53 billion deal to buy Hess’ interests in the Stabroek Block offshore Guyana could be derailed as Exxon, CNOOC say they have first rights of refusal on the block’s interests.
CERAWeek: Exxon Mobil CEO Says Not Trying to Acquire Hess
2024-03-18 - CEO Darren Woods said Exxon Mobil is trying to secure preemption rights over Hess Corp.'s Guyana assets in its dispute with Chevron, not buy the company itself.