PHX Minerals (PHX)

Management Discussion

• Revenues decreased in 2021 primarily due to an increase in losses on derivative contracts, partially offset by higher natural gas, oil and NGL sales. We recorded a net loss of $6,217,237, or $0.24 per share, in 2021, compared to net loss of $23,952,037, or $1.41 per share, in 2020. Expenses decreased in 2021, primarily the result of decreases in provision for impairment (non-cash), DD&A, LOE and interest expense, partially offset by an increase in transportation, gathering and marketing expenses, production taxes and loss on debt extinguishment.
• The increase was due to increased natural gas, oil and NGL prices of 82%, 36% and 108%, respectively, combined with higher natural gas and NGL volumes of 12% and 2%, respectively, partially offset by lower oil volumes of 17%.
• The increase in natural gas production was primarily due to acquisitions in the Haynesville Shale play of Texas and Louisiana, and slightly offset by naturally declining production in the SCOOP and Arkoma STACK. The decrease in oil production was a result of naturally declining production in high interest wells in the Eagle Ford and Bakken plays, our strategy of no longer participating with working interest in new drilling in the Eagle Ford, and reduced drilling activity in the Bakken.  These decreases were slightly offset by acquisitions and new drilling in the STACK. The increase in NGL production is primarily attributable to high interest wells coming back online after being shut-in for part of fiscal year 2020, as well as new wells being brought online in the STACK. This was slightly offset by naturally declining production in the SCOOP.