Sitio Royalties Corp.

Good morning and thank you for joining the CTO Royalties second quarter 2023 earnings call. My name is Carla and I will be the operator of today's call. If you wish to ask a question for the Q&A portion of the call, please press star followed by one on your telephone keypad. When asking your question, please ensure your telephone is unmuted locally. To revoke your question, you can press star followed by two. I would now like to pass the conference over to our host,

ross wong vice president of finance and investor relations ross please go ahead when you're ready thanks operator and good morning everyone welcome to the city of royalty's second quarter 2023 earnings call if you don't already have a copy of a recent press release and updated investor presentation please visit our website at www.cityo.com or you will find them in our investor relations section With me today to discuss second quarter 2023 financial and operating results is Chris Conocenti, our chief executive officer, Kerry Osika, our chief financial officer, Jarrett Marcoux, our EVP of engineering and acquisitions, and other members of our executive leadership team. Before we start, I would like to remind you that our discussion today may contain forward-looking statements and non-GAAP measures. Please refer to our earnings release, investor presentation, and publicly filed documents for additional information regarding such forward-looking statements and non-GAAP measures. And with that, I will turn the call over to Chris.

Thanks, Ross. Good morning, everyone, and thank you for joining CTO's second quarter 2023 earnings call. Following a quiet first quarter of this year, we are excited to share some success we have with recent acquisitions. In the past two months, we have closed on five accretive acquisitions in the Permian Basin for aggregate consideration of approximately $248 million. We funded one of these transactions with approximately 2.5 million shares of Citio stock in June. In July and August, we signed and closed the remaining four acquisitions with $181 million in cash, representing 27% equity and 73% cash in total. These transactions were with sellers that we know well and have had relationships with for a number of years, And the stock transaction in June was with a seller that had taken our equity in exchange for assets before. This relationship-based approach to generating and executing on minerals acquisitions is a true differentiator and has been a staple of our growth strategy for many years. We acquired these assets for less than seven times next 12-month cash flow and, in aggregate, expect them to be approximately 6% accretive to our second half 2023 discretionary cash flow per share. at current strip pricing and a payout ratio of 65%. The acquired assets are highly complementary to our existing portfolio, as you can see on page 7 of our earnings presentation, and in total added 13,705 NRAs, or 7%, to our Permian Basin position, with 82% of the NRAs in the Delaware Basin and 18% in the Midland Basin. The acquired assets also had 2.6 net spuds and 1.1 net permits for a total of 3.7 net line-of-sight wells as of June 30th. In aggregate, the acquired assets produced an estimated 1,918 BOEs per day during the second quarter and have a similar mix of existing production and remaining locations as our legacy Permian Basin assets. Although we were successful recently in closing these five deals, we still see the M&A environment as extremely competitive. During the second quarter of 2023, CITIO's assets averaged a record high of 34,681 BOEs per day, which included 17 days of production from the stock acquisition that closed in June. Production from CITIO's mineral and royalty assets has grown each quarter since we became public last June, including a full quarter of production from all of the recently acquired assets CTO's second quarter production would have been 36,462 BOEs per day or 1,781 BOEs per day higher than reported. We estimate that pro forma for these newly acquired assets, there were 8.1 net wells turned in line during the quarter and an all-time company high of 50.8 net line-of-sight wells as of June 30th. From a geographic perspective, our pro forma net line of sight well increase came from 61% in the Delaware Basin, 16% in the Midland Basin, and 23% in the Eagleford, with the rest of our basins relatively flat on a combined basis. I would now like to turn the call over to Jarrett Marcoux to make some comments on the macro backdrop and activity on our assets.