PHX Minerals Inc.

Good morning and thank you for attending PHX Minerals June 30th, 2023 quarter end earning conference call. At this time, all lines will be muted during the presentation of the call with an opportunity for a question and answer session at the end. As a reminder, this call is being recorded. I would now like to turn the call over to Rob Fink with FNK IR. Please go ahead, sir.

Thank you for joining us today to discuss PHX Minerals June 30th, 2023 quarter end results. Hosting the call today are Chad Stephens, President and Chief Executive Officer, Ralph D'Amico, Senior Vice President and Chief Financial Officer, Danielle Mezzo, Vice President of Engineering. The earnings press release that was issued yesterday after the close was also posted on PHX's investor relations websites. Before I turn the call over to Chad, I'd like to remind everyone that during today's call, including the Q&A session, management may make forward-looking statements regarding expected revenue earnings, future plans, opportunities, and other expectations of the company. These estimates and forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those expressed or implied on the call. These risks are detailed in PHX Minerals' most recent annual report on Form 10-K. As such, may be amended or supplemented by subsequent quarterly reports on Form 10-Q or other reports filed with the SEC. The statements made during the call are based upon information known to PHX as of today, August 9, 2023, and the company does not intend to update these forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. With all that said, I'd like to turn the call over to Chad. Chad, the call is yours.

Thanks, Rob, and thanks to all of you on this call for participating in PHX's June 30, 2023 quarter end conference call. We appreciate your interest in the company. As you may have seen a few moments ago, White Hawk Energy issued a public letter indicating its interest in merging with PHX Minerals. The Board will be reviewing the White Hawk letter and evaluating the proposal carefully. At this time, we have nothing further to say about this matter, and we will not be taking questions regarding White Hawk's expression of interest. For the second quarter, I am pleased with our performance despite historically low natural gas prices, and I'm encouraged about future quarters given the significant improvement in the macro dynamics. During the second quarter, we continued to experience robust activities across the acreage. Despite weak commodity prices, there was a notable improvement in our market share of operating rigs within our focus areas. Based on the activities in our inventory of wells, permitting and well conversions to production, we are confident in meeting the production forecast we communicated earlier in the year. As a matter of fact, we are raising the lower end of our guidance slightly higher based on improving conditions, progress to date, and enhanced visibility. Ralph will discuss more on this later. As I have previously stated, it is more accurate to measure our royalty volume growth on a year-over-year basis instead of a sequential quarter. This eliminates the lumpiness created by operator timing. In fact, we are on track to achieve annual year-over-year royalty volume growth approximately 25 percent in calendar 2023. We believe the second quarter appears to be the bottom of natural gas prices as supply and demand imbalances continue to improve. As we look forward toward 2024 and 2025, demand from LNG export will be a significant demand driver to the natural gas market. During the quarter, several natural gas operators have signed heads of agreements, or HOAs, with LNG operators. As we draw closer to the commissioning of these additional LNG facilities, we believe it will drive improvement in sentiment as well as prices. The Hainesville will be the primary source to feed these LNG facilities. Even though natural gas prices were at historical low levels this quarter, PHX continued to generate cash flow fund acquisitions, and maintain ample liquidity, demonstrating the advantage of our mineral business model. At this point, I'd like to turn the call over to Danielle to provide a quick operational overview and then to Ralph to discuss the financials.

Thanks, Chad, and good morning to everyone participating on the call. For our June 30th, 2023 ended quarter, total production decreased 7% from the prior sequential quarter to 2,304 MMCFE. Note that last quarter's volumes contained a full month of production from our legacy Eagleford and our Coma assets that were divested on January 31st, 2023. Excluding these divested volumes, total production from our assets decreased just 3% from the prior sequential quarter. Additionally, 80% of our quarterly production volumes were natural gas, which aligns with our long-term position that natural gas is the key transition fuel for a sustainable energy future. Oil represented 11% of production volumes, and NGL represented 9%. Quarterly royalty production decreased 4% sequentially to 2010 MMCFE. While royalty volumes remained relatively flat compared to last quarter, year-over-year volumes have increased by 26%. It is important to note that as a mineral holder, we do not control timing on well development, so there can be some volatility on a quarter-to-quarter basis, and volumes associated with our business model are better evaluated on a rolling 12-month basis. On the working interest side, production volumes declined 24% sequentially to 294 MMCFE in the June 30, 2023 quarter as a result of the sale of our legacy Eagleford and Arcoma working interest wells on January 31, as stated above. The working interest volumes from the March 31st quarter contained a full month of production associated with these divested assets. Excluding these divested volumes, working interest volumes remained flat quarter over quarter. Royalty volumes represented 87% of total production during our June 30th quarter. As recently as calendar 2021, royalty volumes were only 45% of our total volume. Reflecting on our reported volumes over the last several quarters, you will note our total corporate volumes have remained relatively flat. This is due to the loss of volumes associated with the sale of working interest asset offset by the gain in our growing royalty volumes. With the divestiture of our working interest assets virtually complete, we estimate our total corporate volumes will reflect steady growth in the coming quarters. As we have grown our royalty volumes and divested of our non-off working interest, the quality of our asset base is enhanced with improving margins. This growth in royalty volumes is also reflected in our corporate reserves. Our approved reserves as of June 30, 2023, were 68.6 BCSE compared to our fiscal year-end reserves of 81.1 BCSE as of September 30, 2022. This decrease is primarily due to sales of our working interest assets as well as nine months of production volumes rolling off. Over the same time frame, our approved royalty reserves have remained flat as a result of steady conversion of probable reserves to approved over the last three quarters despite significantly lower natural gas prices. During the quarter end of June 30, 2023, third-party operators active on our mineral acreage converted 81 gross or 0.3 net wells in progress or WIPs to producing wells compared to 117 gross or 0.42 net WIPs converted to PVP in the quarter ended March 31, 2023. The majority of the new wells brought online are located in the Hainesville and Scoop. At the same time, our inventory of wells in progress remained consistent at 186 gross or 0.51 net wells compared to the 198 gross or 0.65 net wells reported as of March 31, 2023. The continued track record of well conversions and replenishment of the inventory of wells in progress or WIPs shows the repeatability of our business strategy. Additionally, we have mineral interests under a deep inventory of approximately 2,000 gross undrilled locations that will continue to feed this WIP activity. In addition to our WIPs, we regularly monitor third-party operator rig activities in our focus areas and observed 15 rigs present on PHX Minerals acreage as of July 10th. Additionally, we had 61 rigs active within 2.5 miles of PHX ownership. Despite the recent decrease in natural gas prices, our market share of total active rigs in the Hainesville Plague has doubled. As of July 31st, PHX's share of all active rigs was 18% compared to 9% a year ago. We believe this is a result of owning minerals in the core of the basins in which we focus with competitive economics across various pricing environments. In summary, we continue to see steady development on both our legacy and recently acquired mineral assets, which should lead to annually increasing royalty volumes. Now I will turn the call back to Ralph to discuss financials.

Thanks, Danielle, and thank you to everyone for being on the call today. Natural gas, oil, and NGL sales revenues decreased 39% on a sequential quarter basis to a total of $7.2 million. Breaking down this number further, Royalty sales revenues decreased 39% to $6.2 million because of a 4% decline in royalty production volumes and 36% lower realized commodity prices. Working interest sales revenues decreased 42% to $1 million as a result of lower production volumes associated with the divestiture of the Eagleford and Arcoma assets and which you recall that the March 31st quarter still had one full month of production from these areas, as Danielle talked about, and the working interest revenues for the June 30th quarter also had a 23% lower realized commodity price affecting them. Realized natural gas prices averaged $1.92 per MCF, 46% lower than the prior sequential quarter. Realized oil prices averaged $73.87 per barrel, 3% lower, and NGLs averaged $18.93 per barrel, 25% lower. Realized hedge gains for the quarter were $1 million. For the quarter, approximately 45% of our natural gas, 53% of our oil, and 0% of our NGL production volumes were hedged at average prices of $3.37 per barrel, and $74.68, respectively. Approximately 39% of our anticipated remaining calendar 2023 natural gas production has downside protection at approximately $3.27 per MCF. On the oil side, approximately 39% of our anticipated production has downside protection at approximately $72.98 per barrel. Most of our natural gas hedges are structured as costless collars, which means that we also have upside on these volumes up to the $6 range. Our current hedge position is available in our recently filed 10Q. Total transportation, gathering, and marketing decreased 20% on a sequential quarter basis to $906,000 and decreased 13% on a per MCFE basis to to $0.39 primarily because of higher Haynesville volumes as a percentage of total volumes, which have lower associated transportation costs and where we have a meaningful number of cost-free leases. Production taxes decreased 21% on a sequential quarter basis to approximately $462,000 due to lower sales revenues offset by higher production in Louisiana, which applies its tax rate to production volumes and not to revenues. LOE associated with our legacy non-operated working interest wells decreased 42% on a sequential quarter basis to $314,000. This is the first clean quarter without the impact of the Eagleford and Arcoma working interests, which we sold in late January. CAST GNA was up 5% to $2,470,000 compared to the prior sequential quarter. primarily due to additional costs associated with legal work and tax work during the quarter. Adjusted EBITDA was approximately $4,100,000 in our quarter end of June 30th, compared to $7.7 million in the March 31st quarter. DDNA was up 17% to $2.2 million compared to the prior sequential quarter, due to new and significant overriding royalty production that is depreciated on a unit of production basis and conversion of non-producing minerals to producing minerals, which have a shorter depreciable life as these new royalty wells come online. Net loss for the quarter was $41,000, or effectively zero cents per share, compared to net income of $9.6 million, or 27 cents per share for the prior sequential quarter. Adjusting for the unrealized mark-to-market on our hedges and the gain on sales in the June quarter, pre-tax net income decreased approximately 87% to $468,000, or 2 cents per share. We had total debt of $23.75 million as of June 30, 2023, compared to $26 million as of March 31, as we have continued to focus on maintaining a strong balance sheet and enhancing liquidity for potential future acquisition opportunities. Our debt-to-trailing 12-month EBITDA was 0.93 times at June 30, 2023. Lastly, we updated our company outlook for calendar 2023 to reflect higher confidence in forecasted volumes. The estimated royalty production range is now 7.6 to 8.6 BCFE compared to the prior outlook of 7.4 to 8.6 BCFE. We also reduced the estimated per unit transportation gathering and marketing costs to a 45 cents to 50 cent range compared to a 53 cent to 58 cent range to reflect a higher percentage of sales volumes coming from the Haynesville, which as I talked about has lower associated costs and where we have a significant number of cost-free leases. Production tax is a percentage of our pre-hedge sales volumes is being increased to 5.5% to 6% from 475% to 5.25%, again, as a result of higher production volumes in the Hainesville, and Louisiana tax being applied to volumes and not revenues. On the G&A side, we've reduced the high end of our per unit production metric from $1.07 to $1.06 to reflect the higher production volumes production volumes, estimates, and a stable cash GNA on an absolute basis. With that, I'd like to turn the call over back to Chad for some final remarks.

Thank you, Ralph. In conclusion, we have made remarkable progress in transforming PHX over the last three years and have achieved on specific plans we originally established back then. We are now positioned to grow even further using the free cash flow from our quality assets and strong financial position, and look forward to keeping you updated. Before we close, I would like to highlight a couple of important points. First, with our non-upworking interest divestitures largely complete, we expect to resume growth at a corporate level for our corporate volumes, which will be primarily driven by our increasing royalty volumes. Two, in spite of record low natural gas prices, FBHX continues to see robust activity on its minerals, which will drive royalty volume growth in the coming quarters. As the natural gas market macro dynamics improve, we are seeing additional consolidation opportunities in our core areas in the Hainesville and Scoop. We are excited about these prospects, and we use the same rigorous approach to evaluate these opportunities in order to drive shareholder value. As always, I would like to recognize and thank our dedicated employees for their hard work and our board of directors for their support and the insightful wisdom they provide. This concludes the prepared remarks portion of the call. Operator, please open up the queue for questions.

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue and for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Derek Whitfield with Stevo. Please proceed.

Good morning, all, and thanks for your time.

Hi, Derek.

For my first question, I wanted to focus on your growth outlook. While we are seeing a reduction in your WIP, your relative market share in the Hainesville is increasing, and you are raising the lower growth. and of your minerals guidance. Could you perhaps speak to your expected trajectory for the second half and your views on how the macro environment is shaping up for 2024 activity across your assets?

Ralph, you want to address that, and I'll follow up with a closing comment.

Sure. Hey, Derek. Look, I mean, I think, again, you know, the – What we like about our model is this focus, as we focus on natural gas, the Hainesville is the key basin in which, you know, to be, you know, if you're playing an improvement in natural gas commodity price cycle and LNG exports, right? And I think the basin, even at these prices, are highly economic. And the fact that we're focused on the core of the core, right, is really what's enabled us to increase the market share of the operating rigs, right? So what that means is, to us is that even in a down cycle, our acreage is so economic to operators that it would be the last rig that they lay down as opposed to the first rig. So we're not around the margins. We're in the core of the core. The operators that we are under are focused also on growing production, which helps us. They're not focused on purely just maintaining production steady. It's highly fragmented. There's lots of good operators. And so that visibility, you know, enables us to kind of look at the world and say, you know, we have a high level of confidence that the wells being worked on are going to convert, right? And we continue to see active permitting on our acreage every day. So we're encouraged about the future as it pertains to the Haynesville. And then if you look at the springboard three play, if you look at our corporate presentation, it's just a map, right? And you look at the amount of permitting that that you're seeing coming out of Continental, it certainly seems like they are picking up the pace there, as we always thought and predicted that they would. So I think all of that gives us conviction that the inventory that we built should continue to be converted and drive up revenue production volumes on the royalty side, revenues and cash flow.

Thanks, Ralph. And we can really look back to the strategy we recently put forth in being in the best rock quality under the best operators. And you look at rig counts in our two core areas, the Haynesville and the Springboard 3, six months ago and today, and are virtually unchanged on our minerals. Same rig count. So that really speaks to the quality of the assets and the quality of the operators. And as Ralph said, we weekly watch... permitting and the wells that are being drilled on our acreage and the ducts, the wells that have been drilled and are waiting on completion, and that continues on a week-over-week and a month-over-month, remains relatively flat as these wells are being converted. Again, there's a bit of lumpiness to it, as we allude to, but we're very confident, as you asked, we're very confident in the trajectory of our growth going into next year. We think Springboard 3, given what we see continental doing, we think springboard three next year should really be driving a lot of our royalty volume growth. That's our expectation. So we're pretty excited about that. Great asset, great operator.

That's great, Keller. And then for my follow-up, could you speak to what you're seeing in the market from an M&A perspective at present, given the firming of commodity prices, and perhaps also speak to your preference at present for capital allocation between the Anadarko and Hainesville general opportunities?

Well, we continue to focus on those two areas. We have great technical knowledge and have had great success in both those areas. So we're pretty opportunistic in both those areas, whichever comes first. Best economics, best returns, we'll evaluate an asset in whichever one, if we're competing, whichever one provides the best economics, we'll try to close on. Six months ago or three months ago, when gas prices were at the bottom, there was a really wide spread and a bid-ask between sellers and buyers, and we couldn't. We were having a hard time transacting in the Hainesville. We've had a little bit of success acquiring over the last couple of months in the Supreme Court III area, but not so much in the Hainesville. But then recently... We've had a lot of inbound opportunities in the Hainesville as well. And we're really excited about a couple opportunities we're looking at right now. So we think that the sellers have gotten a little bit of market therapy and have realized that they're not going to be able to transact at what was $6 gas six months ago. And this trip today is $3.50, $4. They've got to come down to be able to transact. So we're seeing... that spread on the bid-ask narrow or come our way. So we're excited about the opportunities we're looking at right now.

Yeah. One other thing, Derek, I mean, I think it's important to note that, you know, regardless of the commodity price environment, we use the same very rigorous approach to how we evaluate acquisition opportunities, right? And, you know, and I think being patient works in our favor, right? And that's what we're seeing in the Haynesville today, you know, that being rigorous with our evaluation and not being overly, you know, not doing deals just for the sake of doing deals, which has never been our approach, right, is paying off. And we're seeing a lot of opportunities at prices that are, you know, significantly better than they were a few months ago.

That's great. Thanks again for your time. Nice to hear it. Thank you.

As a reminder, just star one on your telephone keypad if you would like to ask this question. Our next question is from Jeff Gramp with Alliance Global Partners. Please proceed.

Good morning, guys. Good morning. I understand you obviously can't comment directly on the White Hawk letter, but, you know, broadly speaking, as you guys think about larger M&A opportunities, what are the main boxes that you guys want checked off when evaluating those kinds of opportunities? when thinking about whether it makes sense from a PHX and its shareholders' perspectives?

Well, yeah, the board is obviously going to look at any and every opportunity that is in the best interest of the shareholders. We look at all opportunities, all requests, all inbounds with the same rigor and the same serious, sincere efforts. So to protect our shareholders, we want to make sure that any proposal is NAV accretive and is in the best interest of the shareholders from that perspective. So that's always, I guess, the main hurdle is, is it the best deal, the right deal for our shareholders from a value perspective?

Yeah. And Derek, I'm sorry, Jeff. And Jeff, I mean, I think, and again, it always, and Chad has always said this, right, from day one. it always starts with the rock, right? What is the quality of the rock, right? Is it in the core of the core? You know, regardless of the size of the deal, we've always evaluated every deal the exact same way. What is the rock quality? Who are the operators on them? What's the growth, you know, what's the growth rate, you know, at which those assets are going to be developed? And is it accretive? You know, it doesn't, you know, we look at it the same way. And I think that consistency has always been what's led to the success that we've had in terms of growing those royalty volumes over the last three years. We've grown that at over a 20% compounded annual rate. I think that consistency is the key to our success in terms of what we've achieved on the royalty growth side.

Great. I appreciate that. For my follow-up, obviously the natural gas market is pretty dynamic right now. What kind of assumptions as it relates to guidance are you guys making in regards to, you know, operators potentially ducking up wells maybe for early 2024? Do you view that at all as a material risk for hitting the 2023 full year guidance or just kind of any thoughts, understanding that obviously it's out of your control as an enroll holder?

Yeah, most of the, or 100% of the volumes we've forecasted for this year are based on our existing base PDP production in wells that are already drilling or being completed, and we have a pretty good idea of when they're going to be put into sales. You get into 2024, and there's a little bit more risk around those volumes, but again, given the location of those assets, the footprint of where they are in the operator's we risk them and have a pretty good idea of what volumes are going to be coming on and what our volumes look like for 2024.

Yeah, Jeff, I mean, I think that's why it's a range, right? So that's not a number but a range, right? It takes into account the possibility of somebody doing something that they control and that we don't control in terms of ducking up inventory, you know, et cetera, et cetera. So it's all baked into our assumptions.

All right, great. Thanks for the time, guys.

Our next question is from Donathan Schaffer with Northland Capital Markets. Please proceed.

Hi, guys. I'm juggling a couple calls, so apologies if any of this has already been asked. But the first question I have is, you know, with the challenging price environments for the quarter, it's actually kind of nice to see how you still end up at like a break-even situation. I think it kind of highlights the business model in a positive way. And kind of looking back at historical performance when you had more working interest wells, it looks like maybe you didn't have as much of that almost like downside protection where you're really just covering overhead. Yeah, I see. Historically, you could have some pretty big gap net income losses So is this kind of representative going forward where, you know, now that you're really, now that you're more mineral and royalty interest, you know, the cost burden really just becomes the overhead. And if you can kind of size that properly and then do some hedging, is it, should we kind of see this as emblematic of a floor, you know, but floor, I guess I mean, You know, in the future, if natural gas prices are really kind of what seems to be a bottom, should you be in this kind of position of still being able to be break-even? Is that kind of the strategy and the thinking? Just looking to validate my perspective here.

Yeah, so I think we started the business in January of 20 and built the business around scale. And we have 20 employees, half are accountants, back office financial people do all of the public filings, SEC, and the other half is technical people, and we evaluate five or six or seven deals a month. We're evaluating 80 to 100 deals a year. We only do a handful of those because, as Ralph said, the rigorous technical focus we apply to any acquisition, whether it's a $100,000 deal or a $10 million deal, we use the same rigorous technical work. So the business is set up for scale, and we're built to grow. So every new deal we acquire and close on and bring the asset in-house, we don't add G&A. The G&A stays the same. So we're built to grow, and yes, as we move forward and as we use our cash flow to acquire more assets, that G&A will become less and less of a burden, and our break-even will lower, really, overall.

Okay, and then shifting gears a little bit, this might sound like a little bit of paranoia on my part, and it's probably from my own experience. My first job out of college was petroleum engineer in the Marcellus Shale in Appalachia. And, you know, the Mountain Valley Pipeline, you know, Congress, the Debt Ceiling Act kind of greenlit that. Now the U.S. Supreme Court has also kind of helped to greenlight that And so, and I haven't looked closely at the interconnections between the different, the various pipelines or anything, but it just makes me think about, you know, are there any risks kind of in the, you know, midterm or longer term kind of time horizon of lots of gas coming out of Appalachia and having, you know, putting some downward pressure on natural gas prices, just trying to think about that and if, if there's a, yeah, like a, it's such a, historically such a prolific gas basin, but you know, you just couldn't get the gas out of it with pipelines. So is there anything for us to kind of be mindful of and watching there? And what are you guys, how are you thinking about it and how are you monitoring that?

Well, really to answer that question, you got to look at the overall one, the U.S., domestic natural gas supply and demand fundamentals. Then in that context of a global natural gas through all the LNG terminals built around the world has become, Ralph and I were talking about this this morning, it's a fungible commodity. For instance, in Australia, there were a couple of LNG terminals that the workers were going to strike. That hurt the possibilities of the LNG imports into Europe. So European prices have spiked. So now natural gas prices in the U.S., Henry Hub's way up this morning. It's up 6% or 7% this morning just because of news around the world that doesn't really have any immediate impact here. But that just shows you the fungible nature of natural gas to today. So I don't think Mountain Valley, to your question, Mountain Valley Pipeline is going to in any way – materially impact the macro dynamics in the U.S. That pipeline goes to North Carolina. It's going to serve kind of the southeastern portion of the United States. I think most of the, in the future, most of the growth in natural gas supply is going to come from the Permian Basin and the Hainesville. And as I alluded to in my comments, as these LNG, they're under construction, these LNG terminals, the new ones, come into service in 2025 at 6.5 BCF a day of additional export capacity, which will mean the U.S. will be exporting about 20 BCF a day by 2025 of LNG. You've got the U.S. natural gas decline is at 18 or 20 percent, so you've got to replace the decline first, and now you've got to add another 6.5 BCF of demand from LNG. So you need more supply to feed just the obvious increase in demand besides what's going to happen industrial-wise if we come out of this, I don't know if it's a recession or nobody can decide whether we're in a recession or not, but if the overall economy in the next couple of years improves, you'll get industrial demand, commercial demand. So I'm not that worried about any sort of too much supply, for the most part, given the LNG export capacity, this can really balance U.S. natural gas macro.

You know, and one thing to add, too, Donovan, is, I mean, I think, you know, if you think about the, because, again, regardless of that pipeline, right, what is the intent that's been communicated by the operators, right? And I think we talked about there's sort of three key operators there in the Marcellus, right? What is what is their desire to grow versus the pressures that they face to focus on, you know, returning capital, right? I mean, I think that's the other piece of the puzzle that you have to think about, right? And I don't, you know, I don't know if and when that ever changes, right? But I think what we like about the Hainesville is that it's more fragmented, even from an operator standpoint. There's a lot more private folks who are not, you know, as – you know, they don't wake up every day thinking about what does Wall Street think about return of capital, right? So they want to grow production. They want to take advantage of the market, right? And so I think that dynamic provides and the Hanesville provides a lot of opportunity for us, you know, going forward to continue to grow, you know, at a similar pace to what we've done over the last three years from a royalty standpoint.

Okay, that makes sense. That's actually a helpful perspective. And then last question, if I can squeeze one more in, is just, you know, when we look at the other, there's certainly some much larger minerals or royalty-focused companies out there. And, you know, they do, it seems like they get a premium valuation really probably driven by their size and scale. I think they seem to be a little bit more hands-off in approach. So, you know, it seems like you guys could maybe you can make the counter argument that maybe a good multiple should be assigned to you as well because you're doing a more proactive effort to kind of see where the drill bit's going to go. But leaving that aside, are there any – you've made great strides in shifting from working interest to royalty interest. Are there any other kinds of things you can do or that you plan to do or that you think explains that valuation gap that you can – where you can start to close it? Is it just a matter of, you know, growing and trying to get to larger and larger scale over time? You know, I know that would take some time. Or are there sort of other things you think or feel you can do that help kind of reduce that valuation gap?

So that's probably the question of the day. And we, every existing investor, shareholder, or new potential shareholders, it comes down to that question. They like the strategy. They like the execution. They like the results we've achieved over the last three years, as I alluded to in my comments. And it just comes down to, overall, the daily float and the ability to get into the stock and out. We're small. We need to get bigger. We know that. And we're peddling as hard as we can. In all these acquisitions, we've got some interesting things that we're working on to to address, as you say, how can we better address these various issues, and that's, I think, the real issue of the day is just our overall float and ability for larger investors who are interested to get in and get out. So that's, we're working on that.

Yeah, and Donovan, right, I mean, you know, look, I think, you know, look, multiple expansion is always good, right, but I mean, I think, you know, I think it's also important to consider that at the pace that we're going in terms of our growth rate and the expanding margins associated with, you know, all minerals, et cetera, et cetera, right? I mean, there is value creation that we are always working on, right, that is not dependent upon, you know, closing the gap with, you know, where we trade relative to, you know, some of the peer group, you know, some of the other mineral peer group out there. That's the cherry on top, and we do think about it, and we do try to you know, behave in a way that's going to compress that spread. But that's not, you know, that's not at the core of what drives value, right? It's not just multiple expansion. It's executing on the day-to-day, growing royalty volumes, growing cash flow, and you're going to create value that way as well.

Yes, absolutely. You know, that makes sense. Okay, thank you, guys. I'll take the rest of my questions offline.

We have reached the end of our question and answer session. I would like to turn the conference back over to Chad for closing remarks.

Thank you, operator. Again, I'd like to thank our employees and shareholders for their continued support. I'd also like to note that Ralph and I will continue to expand our investor marketing activities over the coming weeks and months through a series of non-deal roadshows and conference presentations aimed at expanding investor awareness. If you'd be interested in meeting, please don't hesitate to reach out to myself, Ralph, or the folks at Think IR. We look forward to hosting our next quarterly call in mid-November. Thank you, and have a good day.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you again for your participation.