PHX Minerals Inc.

Greetings and welcome to the PHX Minerals, Inc. Third Quarter Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Stephen Lee, Investor Relations for PHX Minerals. Please go ahead, Stephen.

Thank you, Operator. And thank you, everyone, for joining us today to discuss PHX Minerals September 30th, 2024 quality results. Joining us on the call today are Chad Stephens, President and Chief Executive Officer, Ralph D'Amico, Executive Vice President and Chief Financial Officer, and Danielle Meadow, Vice President of Engineering. The earnings press release that was issued yesterday after the close is also posted on PHX Investor Relations' website. 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 four looking statements regarding expected revenue, earnings, future plans, opportunities, and other expectations of the company. These estimates and other four looking statements involve known and unknown risk and uncertainties that may cause actual results to mature 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 quality reports on Form 10-Q or other reports filed with the Securities and Exchange Commission. The statements made during this call are based upon information known to PHX as of today, November 7, 2024, And the company does not intend to update these forelooking statements, whether as a result of new information, future events, or otherwise, unless required by law. With that, I'll turn the call over to Chad Stephens, PHX Chief Executive Officer. Chad?

Thanks, Stephen, and thanks to all of you on this call for participating in PHX's September 30, 2024 quarter-end earnings call. We appreciate your interest. A continuing theme which we have highlighted over the last several quarters is the challenging macro environment in which we operate. This quarter is no different. We are largely a natural gas-focused company. The weather-adjusted natural gas supply-demand macro during the quarter remained bearish. As a result, realized natural gas prices were down. This impacted cash flows and overall industry activity. The natural gas macro over the past 24 months has produced various headwinds, with most recent weather a disappointment, second warmest October and November since 1950. This removed about 150 to 200 BCF of total natural gas demand since the end of September. The silver lining to this is the 78 BCF of storage injection reported this past week suggests a 2 to 3 BCF undersupplied domestic natural gas market. Also, total year-to-date storage injection is at the low end of the five-year average and has reduced the large natural gas inventory surplus from a high of almost 700 BCF seen in March of this year to approximately 325 BCF surplus currently versus the five-year average. Thus, we remain optimistic for the outlook for natural gas prices as new LNG export facilities begin service. It is projected that U.S. LNG export volume should double to almost 25 BCF per day by 2028, with the advent of seven new facilities currently in various stages of construction. This is an incremental increase of roughly 13 BCF a day from current. Additionally, base case estimates of increased power demand to meet the growing needs of AI and data centers creates a critical call for gas of about seven BCF per day by 2030. That is a total increase in natural gas demand from both LNG and power of around 20 BCF per day over the next five years. This doesn't even include the need to replace the annual average natural gas decline rate of US gas production of around 15% or 15 BCF per day annually. When you look at the current natural gas forward strip price, We don't believe it reflects these bullish macro dynamics that will begin to lift forward prices over the next 12 to 24 months. Also, the recent election results should introduce a positive catalyst to U.S. GDP growth, government deregulation, a favorable federal tax regime, and reduced market volatility. This should have a positive influence on demand for commodities and the energy sector at large. With this backdrop, and in spite of reduced pace of development in natural gas basins due to the suppressed prices, we are pleased with our quarterly results and would like to highlight a few notable items. One, the current quarter's royalty volumes represents the second highest in the history of the company, despite the negative natural gas macro I just mentioned. Sequential quarter volumes were down 20%, and we indicated to you last quarter that This was coming and is due to the positive impact in the last quarter of reporting several new high-interest wells in the Haynesville. Over the past 12 months, we're excited about what we're witnessing as dramatic increase in drilling in the Springboard 3 area of Oklahoma, mainly by Continental. This time last year, there in the Springboard, there were around 20 gross wells in some phase of permitting, drilling, or turning to sales. And today we see that number double to around 40 gross wells in some stage of progress. Also since the same period last year, there have been 30 gross wells converted to producing in the springboard three. This increased activity is a big counter to the industry narrative I just laid out because the production in springboard three is two thirds liquids and one third gas by volume. Additionally, and as Danielle will discuss in a moment, we see an overall steady pace of well development on our minerals. This highlights the quality of our mineral assets. Danielle will detail our steady historical volume growth in a moment. While reducing debt by $5 million year-to-date, or 15%, we have also acquired approximately $6.5 million of minerals, as well as focusing on return of capital to our shareholders through the $0.04 per share quarterly dividend. This all speaks... to the strong financial position of PHX and our resilient, sustainable business model throughout the commodity cycles. Our conservative focus on leverage and proactive hedging programs help support our financial strength. Additionally, we reaffirmed the borrowing base under our existing bank credit facility at $50 million, a direct reflection of the quality of our asset base and maintaining modest leverage. And we continue to see steady deal flow in our focus areas, which emphasizes the sustainability of our strategy. 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.