Sitio Royalties Reports Third Quarter 2023 Operational and Financial Results

Pro Forma In-Period Average Quarterly Production Volume of 36,654 Boe/d (50% Oil)(1)

Declared $0.49 Dividend Per Share of Class A Common Stock for Third Quarter 2023

Record High 50.9 Net Line-of-Sight Wells as of September 30, 2023, of Which 82% Are in the Permian Basin

Recapitalized Balance Sheet With New $600 Million 7.875% Senior Notes Due 2028, Lowering Expected Cash Interest by More Than $11 Million Per Year and Enhancing Liquidity by More Than $170 Million

Announces Definitive Agreement to Sell Appalachia and Anadarko Basin Assets for $117.5 Million, Subject to Customary Closing Adjustments

DENVER–(BUSINESS WIRE)–Sitio Royalties Corp. (NYSE: STR) (“Sitio,” “STR” or the “Company”) today announced operational and financial results for the quarter ended September 30, 2023. Unless the context clearly indicates otherwise, references to “we,” “our,” “us” or similar terms refer to Sitio and its subsidiaries.


THIRD QUARTER 2023 OPERATIONAL AND FINANCIAL HIGHLIGHTS

  • Pro forma 3Q 2023 average daily in-period production volume of 36,654 barrels of oil equivalent per day (“Boe/d”) (50% oil)(1), comparable to pro forma 2Q 2023 average daily in-period production volume of 36,587 Boe/d (52% oil)(2)
  • 3Q 2023 average daily production volume of 36,900 Boe/d (48% oil)(3), including total prior period adjustments of positive 546 Boe/d
  • Declared 3Q 2023 dividend of $0.49 per share of Class A Common Stock, an increase of $0.09 per share, or approximately 23% relative to 2Q 2023
  • Net income of $0.3 million, up $3.2 million relative to 2Q 2023 net loss, primarily driven by a $2.04 per Boe increase in realized hedged commodity prices
  • 3Q 2023 Adjusted EBITDA(4) of $142.4 million, up by 12% sequentially from 2Q 2023 Adjusted EBITDA, primarily due to increased average production volumes and a 5% increase in realized hedged prices per Boe
  • 3Q 2023 Pro forma Adjusted EBITDA(5) of $143.6 million, including contribution from the Cash Acquisitions(6) for the entire quarter, up by 11% sequentially from 2Q 2023 Pro forma Adjusted EBITDA(7)
  • Record high net line-of-sight (“LOS”) wells of 50.9 net wells as of September 30, 2023, comprised of 29.9 net spuds and 21.0 net permits
  • Closed on four previously announced Permian Basin Cash Acquisitions for total aggregate purchase price of $181.3 million
  • On September 26, 2023, priced $600 million aggregate principal amount of senior unsecured notes due 2028 (the “2028 Senior Notes”), which accrue interest at a rate of 7.875% per annum, 3.4 percentage points lower than the 4Q 2023 interest rate on the Company’s prior senior unsecured notes due 2026 (the “2026 Senior Notes”); Transaction closed on October 3, 2023(8)

3Q 2023 RESULTS RELATIVE TO 2H 2023 GUIDANCE

The table below shows third quarter 2023 results relative to financial and operational guidance for the second half of 2023 that was issued on August 8, 2023.

2H 2023 Guidance Metric

 

3Q 2023

Results

 

 

2H 2023 Guidance

(August 8, 2023)

Average daily production (Boe/d) – Reported / In-period(11)

 

36,900 / 36,354

 

 

35,000 – 37,000

Oil % – Reported / In-period(11)

 

48% / 50%

 

 

49% – 51%

Gathering and transportation ($/Boe)

 

$

1.36

 

 

$1.25 – $1.50

Cash G&A ($ in millions)

 

$

7.4

 

 

$25.0–$27.0 (annual)

Production taxes (% of royalty revenue)

 

 

7.9

%

 

6% – 8%

Reported cash tax rate (% of pre-tax income)(12)

 

 

69.5

%

 

2% – 4%

Pro forma cash tax rate (% of pro forma pre-tax income)(13)

 

 

1.5

%

 

2% – 4%

(1) Pro forma in-period average quarterly production volume includes production from the Cash Acquisitions(6) as if they were owned on July 1, 2023; In-period production represents production that is estimated to have occurred during the period specified and does not include production from prior period adjustments

(2) Pro forma 2Q 2023 average daily in-period production volume represents production that was estimated to have occurred during the three months ended June 30, 2023, including production from the Stock & Cash Acquisitions(9) as if they were owned on April 1, 2023

(3) 3Q 2023 average daily production volume includes both in-period average daily production and prior period adjustments

(4) For definitions of non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures, please see “Non-GAAP financial measures”

(5) 3Q 2023 Pro Forma Adjusted EBITDA represents 3Q 2023 Adjusted EBITDA plus Cash Acquisitions(6) EBITDA, which reflects as if Sitio had owned the Cash Acquisitions since July 1, 2023

(6) Cash Acquisitions, a subset of the Stock & Cash Acquisitions(9), is defined as the four acquisitions that closed in July and August of 2023; Total consideration for the Cash Acquisitions was approximately $181 million funded with a mix of retained cash and borrowings under Sitio’s revolving credit facility

(7) 2Q 2023 Pro forma Adjusted EBITDA represents 2Q 2023 Adjusted EBITDA plus Stock Acquisition(10) EBITDA from April 1, 2023 to June 13, 2023

(8) On October 3, 2023, subsidiaries of Sitio issued and sold (the “Notes Offering”) $600.0 million aggregate principal amount of their 2028 Senior Notes. Net proceeds of the Notes Offering were used to (i) fund the redemption of all of the outstanding aggregate principal amount of the Company’s 2026 Senior Notes, which occurred concurrently with the consummation of the Notes Offering and (ii) repay a portion of the outstanding borrowings under the Company’s revolving credit facility

(9) Stock & Cash Acquisitions is defined as five separate mineral and royalty interest acquisitions that closed between March 31, 2023 and August 7, 2023, containing 13,862 NRAs in aggregate, of which 99% are in the Permian Basin

(10) Stock Acquisition, a subset of the Stock & Cash Acquisitions, is defined as the one acquisition that closed on June 14, 2023

(11) In-period production represents production that is estimated to have occurred during the period specified, excluding production from prior period adjustments; Reported production includes both in-period production and adjustments to production from prior periods

(12) Calculated as cash taxes paid of $0.5 million divided by net income before taxes of $0.7 million for the three months ended September 30, 2023

(13) Calculated as cash taxes paid of $0.5 million divided by pro forma pre-tax income of $29.9 million; Pro forma pre-tax income is defined as net income before taxes plus $29.2 million of unrealized commodity derivative losses

Chris Conoscenti, Chief Executive Officer of Sitio, commented, “In the third quarter, our assets delivered another steady performance that reflected operator trends in Permian and broader US drilling and completion activity. We continue to pursue multiple consolidation opportunities and are optimistic about improving competitive dynamics heading into 2024. During the third quarter, we completed the four previously announced cash acquisitions of high-quality Permian minerals and royalties totaling approximately $181 million and on November 3, 2023, we agreed to sell our lower-margin Appalachia and Anadarko assets for $117.5 million. Our inaugural senior unsecured notes offering that closed on October 3, 2023, allowed us to refinance our existing unsecured notes and achieve more than $11 million in expected annual interest expense savings. Our team continued to innovate by building new customized automation tools to improve the efficiency with which we manage such a large amount of new data each month. This streamlines processing and tracking royalty payments, monitoring ongoing operator activity on our acreage and positions Sitio to smoothly integrate additional data from future acquisitions. I’m proud of our team for executing well on such a broad range of strategic, financing and operational initiatives throughout the quarter.”

ASSET ACTIVITY UPDATE

The following table summarizes Sitio’s net average daily production, net wells online, net line-of-sight wells and net royalty acres by area. All pro forma metrics assume that Sitio owned the Stock & Cash Acquisitions as of June 30, 2023.

 

Delaware

 

 

Midland

 

 

DJ

 

 

Eagle

Ford

 

 

Appalachia

 

 

Anadarko

 

 

Williston

 

 

Total

 

Average Daily Production (Boe/d)

for the three months ended

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

19,050

 

 

 

8,363

 

 

 

2,998

 

 

 

3,730

 

 

 

1,099

 

 

 

996

 

 

 

664

 

 

 

36,900

 

% Oil

 

47

%

 

 

61

%

 

 

32

%

 

 

51

%

 

 

3

%

 

 

27

%

 

 

62

%

 

 

48

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Well Activity

(normalized to 5,000′ laterals)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma net wells online as of

June 30, 2023(14)

 

121.8

 

 

 

60.1

 

 

 

35.6

 

 

 

35.3

 

 

 

3.7

 

 

 

9.9

 

 

 

9.2

 

 

 

275.6

 

Net wells online as of

September 30, 2023

 

127.1

 

 

 

62.2

 

 

 

37.1

 

 

 

35.7

 

 

 

3.8

 

 

 

9.9

 

 

 

9.4

 

 

 

285.2

 

Net wells online increase

since June 30, 2023

 

5.3

 

 

 

2.1

 

 

 

1.5

 

 

 

0.4

 

 

 

0.1

 

 

 

 

 

 

0.2

 

 

 

9.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net spuds

 

16.3

 

 

 

7.9

 

 

 

2.7

 

 

 

1.9

 

 

 

0.3

 

 

 

0.2

 

 

 

0.6

 

 

 

29.9

 

Net permits

 

10.6

 

 

 

7.0

 

 

 

1.1

 

 

 

1.5

 

 

 

0.2

 

 

 

0.1

 

 

 

0.5

 

 

 

21.0

 

Net LOS wells as of

September 30, 2023

 

26.9

 

 

 

14.9

 

 

 

3.8

 

 

 

3.4

 

 

 

0.5

 

 

 

0.3

 

 

 

1.1

 

 

 

50.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Royalty Acres

(normalized to 1/8th royalty equivalent)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma June 30, 2023(15)

 

152,234

 

 

 

45,339

 

 

 

24,978

 

 

 

21,752

 

 

 

12,669

 

 

 

9,872

 

 

 

8,203

 

 

 

275,047

 

September 30, 2023

 

152,268

 

 

 

45,366

 

 

 

24,973

 

 

 

21,783

 

 

 

12,676

 

 

 

9,872

 

 

 

8,202

 

 

 

275,140

 

NRA increase (decrease) since

June 30, 2023

 

34

 

 

 

27

 

 

 

(5

)

 

 

31

 

 

 

7

 

 

 

 

 

 

(1

)

 

 

93

 

(14) Includes net wells from the Stock & Cash Acquisitions

(15) Includes NRAs from the Stock & Cash Acquisitions

FINANCIAL UPDATE

Sitio’s third quarter 2023 average unhedged realized prices including all expected quality, transportation and demand adjustments were $80.21 per barrel of oil, $1.54 per Mcf of natural gas and $18.14 per barrel of natural gas liquids, for a total equivalent price of $45.00 per barrel of oil equivalent. During the third quarter of 2023, the Company received $5.1 million in net cash settlements for commodity derivative contracts and as a result, average hedged realized prices were $82.21 per barrel of oil, $1.84 per Mcf of natural gas and $18.14 per barrel of natural gas liquids, for a total equivalent price of $46.49 per barrel of oil equivalent. This represents a $2.04 per barrel of oil equivalent, or a 5% increase relative to hedged realized prices for the three months ended June 30, 2023.

Consolidated net income for the third quarter of 2023 was $0.3 million, which is $3.2 million more than consolidated net income in the second quarter of 2023. This increase was driven primarily by increased commodity prices and offset by net commodity derivatives losses of $24.1 million, which was comprised of a $29.2 million non-cash unrealized loss and a $5.1 million realized gain. For the three months ended September 30, 2023, Adjusted EBITDA was $142.4 million, up 12% sequentially from second quarter 2023 Adjusted EBITDA, primarily due to increased production volumes and commodity prices.

As of September 30, 2023, the Company had $1,006.0 million principal value of total debt outstanding (comprised of $601.0 million drawn on Sitio’s revolving credit facility and $405.0 million of senior unsecured notes) and liquidity of $250.3 million, including $1.3 million of cash and $249.0 million of remaining availability under its $850.0 million credit facility. In September 2023, Sitio made its fourth consecutive quarterly amortization payment of $11.3 million at par value on its senior unsecured notes, reducing the principal from $416.3 million to $405.0 million as of the end of the third quarter 2023.

2H 2023 FINANCIAL AND OPERATIONAL GUIDANCE

Sitio is revising its guidance for Cash G&A for the full year 2023 to a range of $27.0 million to $28.0 million based on results to date and expectations for 4Q 2023, which includes incremental G&A for expected new employees. The midpoint of Sitio’s new Cash G&A guidance range for full year 2023 is $27.5 million, an approximate 6% increase from the midpoint of prior guidance. There are no other changes to prior 2H 2023 guidance, but for convenience all guidance metrics are shown in the table below.

2H 2023 Guidance

 

Low

 

 

High

 

Average daily production (Boe/d)

 

 

35,000

 

 

 

37,000

 

Oil %

 

 

49

%

 

 

51

%

 

 

 

 

 

 

 

Revenue Deductions, Expenses and Taxes

 

 

 

 

 

 

Gathering and transportation ($/Boe)

 

$

1.25

 

 

$

1.50

 

Full Year 2023 Cash G&A ($ in millions)

 

$

27.0

 

 

$

28.0

 

Production taxes (% of royalty revenue)

 

 

6

%

 

 

8

%

Cash tax rate (% of pre-tax income)

 

 

2

%

 

 

4

%

SENIOR UNSECURED NOTES REFINANCING

On October 3, 2023, the Company issued and sold $600.0 million aggregate principal amount of its 2028 Senior Notes. The net proceeds of the Notes Offering were used to (i) fund the redemption of all of the outstanding aggregate principal amount of the 2026 Senior Notes, which occurred concurrently with the consummation of the Notes Offering and (ii) repay a portion of the outstanding borrowings under the Company’s revolving credit facility. As of November 3, 2023, the Company had $981.0 million principal value of total debt outstanding (comprised of $381.0 million drawn on Sitio’s revolving credit facility and $600.0 million of senior unsecured notes due 2028) and liquidity of $470.9 million, including $1.9 million of cash and $469.0 million of remaining availability under its $850.0 million credit facility.

DIVESTITURE OF APPALACHIA AND ANADARKO ASSETS

On November 3, 2023, the Company entered into a definitive purchase and sale agreement to sell all of its mineral and royalty interests in the Appalachia and Anadarko Basins to an undisclosed third party for $117.5 million of cash consideration, subject to customary closing adjustments. In aggregate for the three months ended September 30, 2023, production associated with these assets was 2,095 Boe/d (14% oil) and revenues were $3.8 million from oil, natural gas and natural gas liquids. As of September 30, 2023, there were approximately 0.7 net LOS wells underlying these assets, comprised of approximately 0.5 net spuds and 0.3 net permits. Sitio plans to use the net proceeds to repay borrowings on its revolving credit facility and build additional liquidity to pursue acquisitions of assets that are more comparable to the growth and returns profile of Sitio’s recent Permian Basin acquisitions. The transaction has an effective date of September 1, 2023 and is expected to close in the fourth quarter of 2023.

Sitio did not add to or extinguish any of its commodity swaps or collars during the third quarter of 2023. A summary of the Company’s existing commodity derivative contracts as of September 30, 2023 is included in the table below.

 

 

Oil (NYMEX WTI)

 

 

 

2023

 

 

2024

 

 

1H25

 

Swaps

 

 

 

 

 

 

 

 

 

Bbl per day

 

 

3,050

 

 

 

3,300

 

 

 

1,100

 

Average price ($/Bbl)

 

$

93.71

 

 

$

82.66

 

 

$

74.65

 

Collars

 

 

 

 

 

 

 

 

 

Bbl per day

 

 

 

 

 

 

 

 

2,000

 

Average call ($/Bbl)

 

 

 

 

 

 

 

$

93.20

 

Average put ($/Bbl)

 

 

 

 

 

 

 

$

60.00

 

 

 

 

Gas (NYMEX Henry Hub)

 

 

 

2023

 

 

2024

 

 

1H25

 

Swaps

 

 

 

 

 

 

 

 

 

MMBtu per day

 

 

500

 

 

 

500

 

 

 

 

Average price ($/MMBtu)

 

$

3.83

 

 

$

3.41

 

 

 

 

Collars

 

 

 

 

 

 

 

 

 

MMBtu per day

 

 

8,500

 

 

 

11,400

 

 

 

11,600

 

Average call ($/MMBtu)

 

$

7.93

 

 

$

7.24

 

 

$

10.34

 

Average put ($/MMBtu)

 

$

4.82

 

 

$

4.00

 

 

$

3.31

 

THIRD QUARTER 2023 CASH DIVIDEND

The Company’s Board of Directors declared a cash dividend of $0.49 per share of Class A Common Stock with respect to the third quarter of 2023. The dividend is payable on November 30, 2023 to the stockholders of record at the close of business on November 21, 2023. Based on a 65% payout ratio of third quarter 2023 Discretionary Cash Flow and not including the pro forma impacts from the Cash Acquisitions, Sitio’s quarterly dividend would have been approximately $0.48 per Class A common share; however, the Company’s Board of Directors approved a third quarter 2023 dividend of $0.49 per Class A common share, which equates to a 65% payout ratio including pro forma Discretionary Cash Flow for the full three months ended September 30, 2023 for the Cash Acquisitions that closed during the third quarter 2023.

THIRD QUARTER 2023 EARNINGS CONFERENCE CALL

Sitio will host a conference call at 8:30 a.m. Eastern on Thursday, November 9, 2023, to discuss its third quarter 2023 operating and financial results. Participants can access the call by dialing 1-833-470-1428 in the United States or 1-404-975-4839 in other locations with access code 971184 or via webcast at https://events.q4inc.com/attendee/965924226. Participants can also pre-register for the event by going to the following link: https://www.netroadshow.com/events/login?show=ca67bd6c&confId=56269. The conference call, live webcast and archive of the call can also be accessed through the Investor Relations section of Sitio’s website at www.sitio.com.

UPCOMING INVESTOR CONFERENCES

Members of Sitio’s management team will be attending the Stephens Annual Investment Conference on November 14, 2023; BofA Securities Global Energy Conference on November 14, 2023; and BofA Securities Leveraged Finance Conference from November 27-29, 2023. Presentation materials associated with these events will be accessible through the Investor Relations section of Sitio’s website at www.sitio.com.

FINANCIAL RESULTS

Production Data

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Production Data:

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil (MBbls)

 

 

1,617

 

 

 

846

 

 

 

4,786

 

 

 

1,969

 

Natural gas (MMcf)

 

 

6,203

 

 

 

2,916

 

 

 

17,214

 

 

 

6,481

 

NGLs (MBbls)

 

 

744

 

 

 

323

 

 

 

1,996

 

 

 

760

 

Total (MBoe)(6:1)

 

 

3,395

 

 

 

1,655

 

 

 

9,651

 

 

 

3,809

 

Average daily production (Boe/d)(6:1)

 

 

36,900

 

 

 

17,990

 

 

 

35,349

 

 

 

13,950

 

Average Realized Prices:

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil (per Bbl)

 

$

80.21

 

 

$

93.81

 

 

$

75.11

 

 

$

98.12

 

Natural gas (per Mcf)

 

$

1.54

 

 

$

6.55

 

 

$

1.90

 

 

$

6.05

 

NGLs (per Bbl)

 

$

18.14

 

 

$

31.98

 

 

$

19.39

 

 

$

36.68

 

Combined (per Boe)

 

$

45.00

 

 

$

65.71

 

 

$

44.65

 

 

$

68.33

 

Average Realized Prices After Effects of Derivative Settlements:

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil (per Bbl)

 

$

82.21

 

 

$

97.32

 

 

$

77.95

 

 

$

99.48

 

Natural gas (per Mcf)

 

$

1.84

 

 

$

6.46

 

 

$

2.20

 

 

$

5.99

 

NGLs (per Bbl)

 

$

18.14

 

 

$

31.98

 

 

$

19.39

 

 

$

36.68

 

Combined (per Boe)

 

$

46.49

 

 

$

67.36

 

 

$

46.59

 

 

$

68.93

 

 

Selected Expense Metrics

 

 

 

Three Months Ended

September 30,

 

 

 

2023

 

 

2022

 

Severance and ad valorem taxes

 

 

7.9

%

 

 

6.6

%

Depreciation, depletion and amortization ($/Boe)

 

$

23.78

 

 

$

19.34

 

General and administrative ($/Boe)

 

$

3.55

 

 

$

8.08

 

Cash G&A ($/Boe)

 

$

2.19

 

 

$

2.80

 

Interest expense, net ($/Boe)

 

$

7.77

 

 

$

9.05

 

 

Condensed Consolidated Balance Sheets

(In thousands except par and share amounts)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

.

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,339

 

 

$

18,818

 

Accrued revenue and accounts receivable

 

 

116,088

 

 

 

142,010

 

Prepaid assets

 

 

13,800

 

 

 

12,489

 

Derivative asset

 

 

7,521

 

 

 

18,874

 

Total current assets

 

 

138,748

 

 

 

192,191

 

 

 

 

 

 

 

 

Property and equipment

 

 

 

 

 

 

Oil and natural gas properties, successful efforts method:

 

 

 

 

 

 

Unproved properties

 

 

3,009,429

 

 

 

3,244,436

 

Proved properties

 

 

2,431,742

 

 

 

1,926,214

 

Other property and equipment

 

 

3,440

 

 

 

3,421

 

Accumulated depreciation, depletion, amortization, and impairment

 

 

(471,549

)

 

 

(223,214

)

Total property and equipment, net

 

 

4,973,062

 

 

 

4,950,857

 

 

 

 

 

 

 

 

Long-term assets

 

 

 

 

 

 

Long-term derivative asset

 

 

2,805

 

 

 

13,379

 

Deferred financing costs

 

 

11,849

 

 

 

7,082

 

Operating lease right-of-use asset

 

 

4,150

 

 

 

5,679

 

Other long-term assets

 

 

504

 

 

 

1,714

 

Total long-term assets

 

 

19,308

 

 

 

27,854

 

TOTAL ASSETS

 

$

5,131,118

 

 

$

5,170,902

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

21,939

 

 

$

21,899

 

Warrant liability

 

 

 

 

 

2,950

 

Operating lease liability

 

 

1,350

 

 

 

1,563

 

Total current liabilities

 

 

23,289

 

 

 

26,412

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

Long-term debt

 

 

996,460

 

 

 

938,896

 

Deferred tax liability

 

 

333,467

 

 

 

313,607

 

Non-current operating lease liability

 

 

3,907

 

 

 

5,303

 

Other long-term liabilities

 

 

1,189

 

 

 

89

 

Total long-term liabilities

 

 

1,335,023

 

 

 

1,257,895

 

 

 

 

 

 

 

 

Total liabilities

 

 

1,358,312

 

 

 

1,284,307

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Class A Common Stock, par value $0.0001 per share; 240,000,000 shares authorized; 81,763,078 and 80,804,956 shares issued and 81,763,078 and 80,171,951 outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

8

 

 

 

8

 

Class C Common Stock, par value $0.0001 per share; 120,000,000 shares authorized; 75,440,851 and 74,347,005 shares issued and 75,414,714 and 74,347,005 outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

8

 

 

 

7

 

Additional paid-in capital

 

 

1,790,492

 

 

 

1,750,640

 

Accumulated deficit

 

 

(109,596

)

 

 

(9,203

)

Class A Treasury Shares, 0 and 633,005 shares at September 30, 2023 and December 31, 2022, respectively

 

 

 

 

 

(19,085

)

Class C Treasury Shares, 26,137 and 0 shares at September 30, 2023 and December 31, 2022, respectively

 

 

(677

)

 

 

 

Noncontrolling interest

 

 

2,092,571

 

 

 

2,164,228

 

Total equity

 

 

3,772,806

 

 

 

3,886,595

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

 

$

5,131,118

 

 

$

5,170,902

 

 

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Oil, natural gas and natural gas liquids revenues

 

$

152,766

 

 

$

108,761

 

 

$

430,887

 

 

$

260,219

 

Lease bonus and other income

 

 

3,944

 

 

 

6,736

 

 

 

13,115

 

 

 

9,445

 

Total revenues

 

 

156,710

 

 

 

115,497

 

 

 

444,002

 

 

 

269,664

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Management fees to affiliates

 

 

 

 

 

 

 

 

 

 

 

3,241

 

Depreciation, depletion and amortization

 

 

80,716

 

 

 

32,005

 

 

 

222,718

 

 

 

67,302

 

General and administrative

 

 

12,044

 

 

 

13,381

 

 

 

37,786

 

 

 

24,117

 

Severance and ad valorem taxes

 

 

12,124

 

 

 

7,215

 

 

 

32,927

 

 

 

18,019

 

Impairment of oil and natural gas properties

 

 

 

 

 

 

 

 

25,617

 

 

 

 

Total operating expenses

 

 

104,884

 

 

 

52,601

 

 

 

319,048

 

 

 

112,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from operations

 

 

51,826

 

 

 

62,896

 

 

 

124,954

 

 

 

156,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(26,373

)

 

 

(14,986

)

 

 

(71,735

)

 

 

(18,096

)

Change in fair value of warrant liability

 

 

8

 

 

 

536

 

 

 

2,950

 

 

 

3,842

 

Loss on extinguishment of debt

 

 

(687

)

 

 

(11,487

)

 

 

(1,470

)

 

 

(11,487

)

Commodity derivatives gains (losses)

 

 

(24,125

)

 

 

34,613

 

 

 

(3,250

)

 

 

53,508

 

Interest rate derivatives gains

 

 

9

 

 

 

 

 

 

456

 

 

 

 

Net income before taxes

 

 

658

 

 

 

71,572

 

 

 

51,905

 

 

 

184,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(383

)

 

 

(2,561

)

 

 

(6,884

)

 

 

(5,206

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

275

 

 

 

69,011

 

 

 

45,021

 

 

 

179,546

 

Net income attributable to Predecessor

 

 

 

 

 

 

 

 

 

 

 

(78,104

)

Net income attributable to temporary equity

 

 

 

 

 

(59,872

)

 

 

 

 

 

(86,143

)

Net (income) loss attributable to noncontrolling interest

 

 

12

 

 

 

 

 

 

(22,877

)

 

 

 

Net income attributable to Class A stockholders

 

$

287

 

 

$

9,139

 

 

$

22,144

 

 

$

15,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per Class A common share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.00

 

 

$

0.70

 

 

$

0.26

 

 

$

1.19

 

Diluted

 

$

0.00

 

 

$

0.70

 

 

$

0.26

 

 

$

1.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average Class A common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

81,712

 

 

 

12,703

 

 

 

80,984

 

 

 

12,665

 

Diluted

 

 

157,260

 

 

 

12,703

 

 

 

80,984

 

 

 

12,665

 

 

Unaudited Condensed Consolidated Statements of Cash Flow

(In thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

45,021

 

 

$

179,546

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

222,718

 

 

 

67,302

 

Amortization of deferred financing costs and long-term debt discount

 

 

4,275

 

 

 

5,419

 

Share-based compensation

 

 

14,474

 

 

 

4,947

 

Change in fair value of warrant liability

 

 

(2,950

)

 

 

(3,842

)

Loss on extinguishment of debt

 

 

1,470

 

 

 

11,487

 

Impairment of oil and natural gas properties

 

 

25,617

 

 

 

 

Commodity derivative (gains) losses

 

 

3,250

 

 

 

(53,508

)

Net cash received for commodity derivative settlements

 

 

18,730

 

 

 

2,239

 

Interest rate derivative gains

 

 

(456

)

 

 

 

Net cash received for interest rate derivative settlements

 

 

403

 

 

 

 

Deferred tax expense (benefit)

 

 

(15,107

)

 

 

2,645

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Accrued revenue and accounts receivable

 

 

26,188

 

 

 

(29,785

)

Prepaid assets

 

 

13,187

 

 

 

(1,903

)

Other long-term assets

 

 

1,866

 

 

 

(115

)

Accounts payable and accrued expenses

 

 

(3,131

)

 

 

(12,986

)

Due to affiliates

 

 

 

 

 

(380

)

Operating lease liabilities and other long-term liabilities

 

 

(737

)

 

 

9

 

Net cash provided by operating activities

 

 

354,818

 

 

 

171,075

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Acquisition of Falcon, net of cash

 

 

 

 

 

4,484

 

Predecessor cash not contributed in the Falcon Merger

 

 

 

 

 

(15,229

)

Purchases of oil and gas properties, net of post-close adjustments

 

 

(172,070

)

 

 

(558,062

)

Purchases of other property and equipment

 

 

(19

)

 

 

(819

)

Net cash used in investing activities

 

 

(172,089

)

 

 

(569,626

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings on credit facilities

 

 

588,500

 

 

 

196,895

 

Repayments on credit facilities

 

 

(497,500

)

 

 

(147,000

)

Borrowings on Bridge Loan Facility

 

 

 

 

 

425,000

 

Repayments on Bridge Loan Facility

 

 

 

 

 

(425,000

)

Bridge Loan Facility issuance costs

 

 

 

 

 

(14,909

)

Borrowings on 2026 Senior Notes

 

 

 

 

 

444,500

 

Repayments on 2026 Senior Notes

 

 

(33,750

)

 

 

 

2026 Senior Notes issuance costs

 

 

(351

)

 

 

(4,169

)

Distribution paid to Temporary Equity

 

 

 

 

 

(50,510

)

Distributions to noncontrolling interest

 

 

(121,924

)

 

 

(13,318

)

Dividends paid to Class A stockholders

 

 

(121,555

)

 

 

(9,017

)

Dividend equivalent rights paid

 

 

(982

)

 

 

(283

)

Cash paid for taxes related to net settlement of share-based compensation awards

 

 

(3,432

)

 

 

 

Payments of deferred financing costs

 

 

(9,214

)

 

 

(3,964

)

Other

 

 

 

 

 

(1,241

)

Net cash (used in) provided by financing activities

 

 

(200,208

)

 

 

396,984

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(17,479

)

 

 

(1,567

)

Cash and cash equivalents, beginning of period

 

 

18,818

 

 

 

12,379

 

Cash and cash equivalents, end of period

 

$

1,339

 

 

$

10,812

 

Contacts

IR contact:
Ross Wong

(720) 640–7647

IR@sitio.com

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