Having peaked at more than USD$2.80 just an hour before market close on April 15th, PHX Minerals Inc. (PHX) stock prices slumped to USD$2.64 at the end of the trading day. Despite being by a smaller margin, PHX stock prices were still up 1.15%.
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PHX Acquisition
PHX announced on April 16th, 2021 that it had acquired roughly 2,698 net royalty acres in the Southern SCOOP play, granting the company certain mineral and royalty interests. With a strategy of accretion-based growth, the CEO is confident that this acquisition of mineral assets and promising geology will help in accordance with this strategy. The acquired assets have great potential to be highly lucrative, with high quality and well-capitalized operators conducting active drilling programs in the core area.
Details of the Acquisition
The acquisition cost USD$11.947 million in cash and stock, with USD$9.547 million in cash and the remainder in PHX common shares. The capital for the cash portion of the purchase price is to be raised in a public offering of PHX common stock. News of both the acquisition and of the public offering were disclosed concurrently. As for the public offering, PHX is offering 5 million shares of its common stock, with a 30-day option for underwriters to purchase up to another 750,000 shares in case of an over-allotment.
Comparative Financial Reports
Compared with the release of financial reports for the year ending December 31st, 2020, PHX reported a Q1 2021 that outperformed Q4 2020 in most areas. Production volumes were up 2,074 Mmcfe, up from 2,038 Mmcfe in Q4 2020. Adjusted EBITDA (excluding gain on asset sales) for Q1 2021 was USD$2.7 million compared to the USD$2 million reported in Q4 2020. Total debt was also reduced by 6% as of December 31st, 2020, totaling USD$27 million. As of February 1st, 2021, total debt was further reduced to USD$26 million.
Which Way are PHX Stock Prices Headed?
Despite the dilution from the public offering, the capital generated is funding what could be a very lucrative long-term investment for PHX. In conjunction with promising financials for the start of 2021, PHX stock prices seem poised to continue trending upwards.
