PHX said it agreed to sell 257 non-operated legacy working interest wellbores in the Arkoma Basin and Eagle Ford. (Source: Duda Vasilii/ Shutterstock.com)
PHX Minerals Inc. said Dec. 27 that it will sell 257 non-operated legacy working interest wellbores in the Arkoma Basin and the Eagle Ford for total cash consideration of approximately $10.7 million.
PHX, based in Fort Worth, Texas, said it has entered into two agreements with separate buyers to sell the assets. The buyers will also assume approximately $879,000 of aggregate asset retirement obligations from the company. Both transactions are expected to close by the end of January 2023 and are subject to customary closing conditions and adjustments.
The divestiture comes roughly two weeks after PHX reported that since July the company has acquired about 1,853 royalty acres for $23.8 million to replenish its inventory.
The Arkoma Basin sale consists of 151 non-operated legacy working interest wellbores with a purchase price of approximately $5.1 million and $235,000 of assumed asset retirement obligations.
The Eagle Ford sale consists of 106 non-operated legacy working interest wellbores with a purchase price of approximately $5.6 million and $644,000 of assumed asset retirement obligations.
PHX intends to use the proceeds from these divestitures to acquire additional minerals with existing production and line-of-sight development and repay borrowings under the company's credit facility.
On a pro forma basis, PHX will have 564 remaining legacy working interest wellbores.
President and CEO Chad Stephens said the transactions are a continuation of the company’s strategy to high-grade PHX's asset base by divesting legacy working interest wellbores while reinvesting the proceeds in higher-margin minerals in the company’s core areas of focus.
“Once these transactions are completed, we will have divested approximately 75% of the wellbores in which PHX owned a working interest when I became CEO in late 2019,” Stephens said. “While the remaining working interest position will represent less than 10% of our production volumes and reserves, we will continue to strive to divest them at a fair price in 2023. The mineral acquisitions funded with the proceeds from these transactions will continue to drive increased royalty volumes and cash flow in the upcoming quarters.”
PHX is a natural gas focused mineral company with assets principally located in Oklahoma, Texas, Louisiana, North Dakota and Arkansas.
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