PHX Minerals Inc. recently completed the acquisition of royalty acreage in the SCOOP play while selling two packages of nonoperated legacy working interest wellbores located primarily in the Arkoma Shale and Western Anadarko Shale plays of Oklahoma.

“These transactions are a continuation of our strategy to high-grade PHX’s asset base by divesting legacy working interest wellbores and reinvesting the proceeds in higher margin minerals in our core areas of focus,” President and CEO Chad Stephens commented in a company release on Dec. 1.

Two undisclosed buyers agreed to acquire the two packages of assets totaling 193 nonoperated legacy working interest wellbores for a total of $2.5 million plus the assumption of approximately $500,000 of asset retirement obligation.

The recent working interest divestitures and royalty acquisitions are expected to have a neutral effect on overall production during 2022, according to the release.

“We have targeted for divestiture our working interest wellbores that represent the lowest percentile of working interest wellbores by dollar value,” Stephens continued. “Therefore, we expect that future divestitures will include fewer gross wellbores but higher net proceeds to PHX.”

The working interest divestitures, along with the Fayetteville wellbores PHX sold last month, generated net proceeds of roughly $4.6 million and represent 692 total gross legacy wellbores divested and approximately $670,000 in aggregate asset retirement obligation removed from the company’s balance sheet. On a pro forma basis, PHX has 1,089 legacy working interest wellbores remaining. 

The new royalty acreage acquisition announced Dec. 1 along with the cash acquisitions disclosed by PHX last month, represent a full redeployment of net proceeds received by the company for the working interest divestitures.

 

Based in Oklahoma City, PHX currently owns approximately 251,000 net mineral acres principally located in Oklahoma, Texas, North Dakota, New Mexico and Arkansas. The company, formerly Panhandle Oil and Gas, is targeting to proactively grow its mineral position in core areas of focus as part of the strategy to high-grade the PHX asset base.

The latest acquisition, completed by PHX for $1.4 million, comprised of approximately 172 net royalty acres located primarily in Oklahoma’s Carter and Stephens counties.

PHX noted in its release that this acquisition is predominately located in the same Springboard III area of the SCOOP play as the company’s previously closed April 2021 royalty acreage acquisition where current drilling activity continues to accelerate. The company also picked up approximately 220 net royalty acres in the area for about $1.2 million last month.

“Also, our core areas of focus in which we are acquiring minerals are being actively developed by reputable, well-capitalized operators,” Stephens added in the release. “As such, we expect royalty volumes to continue to increase as a percentage of total volume from the development of acquired minerals in the upcoming quarters.”

Comments