PHX Minerals Inc.

Good morning, and thank you for attending today's PHX Minerals March 31st, 2024 quarter and earnings conference call. At this time, all lines will be muted during the presentation of the call with an opportunity for a Q&A session at the end. As a reminder, this call is being recorded. I would now like to turn the call over to Stephen Lee with FNKIR. Please go ahead, sir.

Thank you, operator, and thank you for joining us today to discuss PHX Minerals March 31st, 2024 quarterly 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 Mezzo, Vice President of Engineering. The earning 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 want 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 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 quality reports on Form 10-Q or other reports filed with the Securities and Exchange Commission. The statement made during this call are based upon information known to PHX as of today, May 9th, 2024, 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 that, I'd like to 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 March 31, 2024 quarter-end earnings conference call. We appreciate your interest in the company. In spite of a 40% drop in natural gas prices from a year ago, PHX reported steady, positive, adjusted EBITDA and cash flow while operators are curtailing their existing production and deferring bringing new wells to sales due to low gas prices. PHXs year over year and sequential quarter royalty volumes were down slightly. With prices and volumes lower, our year over year EBITDA was down materially. However, our EBITDA compared to the prior sequential quarter was up slightly and reflects our solid hedging program built to protect our financial plan. This allowed us to service our dividend, reduce debt, and close on a modest amount of acquisitions. approximately 1.1 million, 2 million, and 1.5 million, respectively. Ralph will discuss leverage in a moment, but I would like to point out that our banks recently reaffirmed our borrowing base at the same 50 million and extended the maturity. This does highlight the quality of our assets. As our existing production depletes our existing PDP reserve base, we backfill that bucket through our well conversions which is our undeveloped drilling locations that includes a reserve category of probable and possible. Danielle will walk you through these conversions in a moment. Looking to the future, the significant positive macro events in play are, one, the operator activity in our core areas continues to maintain a consistent number of conversions of these undrilled locations to producing at actual PHX historical levels. And two, the natural gas supply-demand macro is improving. The U.S. domestic natural gas supply is down from a December 2023 high of approximately 102 BCF per day to current volumes of around 96 BCF per day and dropping. Also, the natural gas demand narrative continues to build positive sentiment from a anticipated completion of U.S. domestic LNG export facilities beginning in 2025, which we have discussed on prior calls, B, new LNG export facilities under construction or nearing FID on the Pacific Coast of Mexico that anticipates an additional 7 BCF of natural gas demand by 2027 and 2028, C, increase in power demand of approximately 30% by the year 2030, from AI and growing data centers that should increase natural gas demand materially. And D, Freeport LNG facility is back up and 100% in service after several months of being down. Each of these items standalone should be adequate to balance the current oversupply macro and bring our current natural gas storage inventory number to equilibrium. Collectively, these could create an undersupply and move normalized prices up dramatically from their current lows. Under most of these projections, a more stabilized and higher price environment is needed to encourage more drilling to deliver increased volumes to serve the increased demand. Under any conservative increase in demand I lay out, the old paradigm feast or famine commodity price cycle could disappear. The need for a less volatile, more predictable price forecast will help provide for the supply necessary to meet the robust growing demand. I believe this is setting PHX up for solid increases in royalty volumes and cash flow in 2025 and beyond. 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.