Sitio Royalties Corp.

Hello everyone and a warm welcome to the CTO Royalty's second quarter 2024 earnings call. My name is Emily and I'll be coordinating your call today. After the presentation, you will have the opportunity to ask any questions, which you can do so by pressing start, followed by the number one on your telephone keypad. I will now turn the call over to our host, Ross Wong, Vice President of Investor Relations and Finance. Please go ahead.

Thanks, operator, and good morning, everyone. Welcome to the CIDO Royalty second quarter 2024 earnings call. If you don't already have a copy of our recent press release and updated investor presentation, please visit our website at www.cidio.com or you will find them in our investment relations section. With me today to discuss second quarter 2024 financial and operating results is Chris Conocenti, our chief executive officer, Kerry Orsica, our chief financial officer, and other members of our executive leadership team. Before we start, I'd like to remind you that our discussion today may contain forward-looking statements and non-GAAP measures. Please refer to our earnings press release, investor presentation, and publicly filed documents for additional information regarding such forward-looking statements and non-GAAP measures. And with that, I'll turn the call over to Chris.

Thanks, Ross. Good morning, and thank you for joining CTO's second quarter 2024 earnings call. The momentum from our strong start to the year continued in the second quarter as the company set several operational and financial records, closed on acquisitions of approximately 15,000 net royalty acres, and announced return of capital of 71 cents per share, a 45% increase relative to the first quarter. In the second quarter, production from our mineral and royalty interests reached record high volumes of 39,231 BOEs per day, up 3% compared to pro forma first quarter volumes, which included a full quarter of production from the previously announced DJ Basin acquisition. Several other production milestones were also achieved, with an all-time oil production high of 19,747 barrels per day and record Delaware Basin and Eagleford production of 20,991 BOEs per day and 4,061 BOEs per day, respectively. These impressive operational results benefited from the flush production from 14.3 proforma net wells turn in line in the first quarter and 8.5 net wells that commence production in the second quarter, which was 6% above our 2023 quarterly average. The majority of second quarter operator activity came from the Permian and DJ basins, which accounted for approximately 94% of all net turn in line wells. As of June 30th, we had 44.1 net line of site wells on our acreage, which included 25 net spuds and 19.1 net permits. During the second quarter, we evaluated dozens of acquisition opportunities, totaling more than 150,000 NRAs in aggregate. The minerals AMD market remains competitive, and we're still seeing many minerals deals of all sizes transact at prices that don't meet our underwriting criteria. Despite that market dynamic, we continue to identify and successfully close multiple transactions each quarter, which demonstrates the benefit of our ability to invest capital in assets that are in different basins and are operated by a diverse set of E&P companies. After closing the previously announced DJ Basin acquisition in early April, we closed another six acquisitions during the quarter for an aggregate purchase price of $38.5 million. These six acquisitions added over 2,100 NRAs to our portfolio, of which approximately 61% are in the Permian Basin and the remainder are in the DJ Basin. As you can see from the maps in our earnings presentation, the acquisitions we closed in the second quarter materially enhanced our position in the DJ Basin and expanded our footprint on the New Mexico side of the Delaware Basin, an area that has seen robust operator activity in recent years. While we have generally focused on larger acquisition opportunities since becoming publicly traded in June of 2022, ultimately our M&A decisions are driven by risk-adjusted returns regardless of deal size. In addition to our strong production volumes and continued success on the acquisitions front, we are raising our full year 2024 pro forma average daily production guidance range to 36,000 to 38,000 BOEs per day, which represents an increase of 500 BOEs per day at the midpoint. Approximately 200 BOEs per day of this increase is from the six small acquisitions we completed in 2Q, and the remaining 300 BOE per day is due to an increase in organic activity relative to our previous guidance. Now, I'll turn the call over to Kerry to provide an update on quarterly financial results, return of capital, and cash tax guidance.