DENVER, May 8, 2024 (BUSINESS WIRE) --
--FIRST QUARTER 2024 RETURN OF CAPITAL OF $0.49 PER SHARE, COMPRISED OF $0.41 DIVIDEND PER SHARE OF CLASS A COMMON STOCK AND $0.08 PER SHARE OF STOCK REPURCHASES
--52.9 PRO FORMA NET LINE-OF-SIGHT WELLS AS OF MARCH 31, 2024, OF WHICH 77% AND 14% ARE IN THE PERMIAN AND DJ BASINS, RESPECTIVELY(2)
--CLOSED PREVIOUSLY ANNOUNCED ACQUISITION OF DJ BASIN ASSETS IN APRIL 2024(3)
Sitio Royalties Corp. (NYSE: STR) ("Sitio", "STR" or the "Company") today announced operational and financial results for the quarter ended March 31, 2024. Unless the context clearly indicates otherwise, references to "we," "our," "us" or similar terms refer to Sitio and its subsidiaries.
FIRST QUARTER 2024 OPERATIONAL AND FINANCIAL HIGHLIGHTS
Pro forma 1Q 2024 average daily production volume of 37,970 barrels of oil equivalent per day ("Boe/d") (51% oil)(1), up 3.7% relative to pro forma 4Q 2023 average daily production volume of 36,623 Boe/d (49% oil); estimated 14.3 pro forma net wells turned-in-line ("TIL") during the quarter(2)
1Q 2024 average daily production volume of 35,349 Boe/d (52% oil), with a record high 13.1 estimated net wells TIL during the quarter
1Q 2024 return of capital of $0.49 per share of Class A Common Stock, comprised of a $0.41 per share dividend and $0.08 per share of stock repurchases
1Q 2024 share repurchases of 545,527 shares of Class A Common Stock at an average price of $23.77 per share
Pro forma net line-of-sight ("LOS") wells of 52.9 net wells as of March 31, 2024, comprised of 33.0 net spuds and 19.9 net permits(2)
1Q 2024 Net income of $18.7 million, compared to net loss of $91.7 million in 4Q 2023, primarily driven by $137.6 million lower operating expenses as a result of no loss on sale of assets, no loss on extinguishment of debt, offset partially by $28.5 million of incremental commodity derivative losses and $24.0 million of higher income tax expense
1Q 2024 Adjusted EBITDA(4) of $135.1 million, comparable to 4Q 2023 Adjusted EBITDA of $134.9 million
1Q 2024 Pro Forma Adjusted EBITDA(5) of $143.7 million, including contribution from the DJ Basin Acquisition(3) for the entire quarter, comparable to 4Q 2023 Pro Forma Adjusted EBITDA of $143.6 million
RECENT DEVELOPMENTS
On April 4, 2024, Sitio closed on the acquisition of 13,062 NRAs in the DJ Basin (the "DJ Basin Acquisition") for $126.6 million, net of an initial deposit and closing adjustments; the acquired assets produced an average of approximately 2,621 Boe/d (36% oil) and generated approximately $8.5 million of asset level cash flow for the three months ended March 31, 2024
On April 8, 2024, the Company repurchased approximately 2.0 million shares from two of our largest non-sponsor Class C Shareholders in a privately negotiated block trade
1Q 2024 RESULTS RELATIVE TO 2024 GUIDANCE
The table below shows first quarter 2024 results and pro forma results relative to financial and operational guidance for 2024 that was issued on February 28, 2024.
2024 Guidance Metric 1Q 2024 1Q 2024 2024 Full Year
Reported Results Pro Forma(1) Guidance(6)
Results
--------------------------------------- ------------------------------ ------------------------------ -----------------------------------
Average daily production (Boe/d) 35,349 37,970 35,000 - 38,000
Oil % 52 % 51 % 49% - 51%
Cash G&A ($ in millions) $ 7.7 $ 7.7 $31.5 - $33.5 (annual)
Production taxes (% of royalty revenue) 8.1 % 8.0 % 7.5% - 9.5%
Chris Conoscenti, Chief Executive Officer of Sitio, commented, "In the first quarter of 2024, production from our assets pro forma for the DJ Basin Acquisition reached an all-time company high of 37,970 boe/d, up by 3.7% relative to pro forma fourth quarter of 2023, primarily due to activity in the Delaware Basin and Eagle Ford. In aggregate, pro forma average daily production volume in these two areas was up by approximately 8%, or approximately 1,750 boe/d, primarily as a result of the approximate 9.0 net wells turned-in-line during the quarter. We estimate that nearly 40% of the pro forma net wells TIL in the first quarter of 2024 came online during March, so we expect to see a more pronounced impact on second quarter production from these new wells. In March, we bought back 545,527 shares at an average price of $23.77, and in April, we capitalized on a unique opportunity to repurchase approximately 2.0 million shares from two of our largest Class C non-sponsor holders in a block trade. As expected, we closed the DJ Basin Acquisition on April 4th and we continue to have a strong pipeline of minerals acquisition opportunities to evaluate."
(1) Includes production from the DJ Basin Acquisition(3) as if it was owned on January 1, 2024 Includes production from the DJ Basin Acquisition(3) as if it was owned on January 1, 2024
(2) Includes net wells from the DJ Basin Acquisition(3) as of March 31, 2024 Includes net wells from the DJ Basin Acquisition(3) as of March 31, 2024
(3) The DJ Basin Acquisition is defined as the all-cash acquisition of 13,062 NRAs in the DJ Basin from an undisclosed third party that closed on April 4, 2024 The DJ Basin Acquisition is defined as the all-cash acquisition of 13,062 NRAs in the DJ Basin from an undisclosed third party that closed on April 4, 2024
(4) For definitions of non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures, please see "Non-GAAP financial measures" For definitions of non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures, please see "Non-GAAP financial measures"
(5) 1Q 2024 Pro Forma Adjusted EBITDA represents 1Q 2024 Adjusted EBITDA plus DJ Basin Acquisition EBITDA, which reflects as if Sitio had owned the DJ Basin Acquisition on January 1, 2024 1Q 2024 Pro Forma Adjusted EBITDA represents 1Q 2024 Adjusted EBITDA plus DJ Basin Acquisition EBITDA, which reflects as if Sitio had owned the DJ Basin Acquisition on January 1, 2024
OPERATOR ACTIVITY
The following table summarizes Sitio's reported and pro forma net average daily production, net wells online, net line-of-sight wells and net royalty acres by area. All pro forma metrics assume that Sitio owned the DJ Basin Acquisition assets for the entire first quarter of 2024.
Delaware Midland DJ Eagle Williston/Other Total
Ford
------------------------------ ---------------------------------------------- ------------------------------ ------------------------------ ------------------------------ ------------------------------
Average Daily Production (Boe/d)
for the three months ended
March 31, 2024
As reported 20,000 8,259 3,256 3,139 695 35,349
% Oil 50 % 58 % 37 % 59 % 61 % 52 %
Pro forma(1) 20,000 8,259 5,877 3,139 695 37,970
% Oil(1) 50 % 58 % 36 % 59 % 61 % 51 %
Net Well Activity
(normalized to 5,000' laterals)
As reported net wells online as of 131.8 65.4 38.9 36.0 9.5 281.6
December 31, 2023(7)
As reported net wells online as of 135.4 67.3 39.5 36.3 9.7 288.2
March 31, 2024(8)
Pro forma net wells online as of December 31, 2023(7) 131.8 65.4 57.4 36.0 9.5 300.1
Pro forma net wells online as of 135.4 67.3 58.3 36.3 9.7 307.0
March 31, 2024(8)
-------------------- ---------- -------------------- ------ -------------------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ----------
Pro forma net wells online increase 3.6 1.9 0.9 0.3 0.2 6.9
since December 31, 2023(8)
==================== ========== ==================== ====== ==================== ==================== ========== ==================== ========== ==================== ========== ==================== ==========
Net LOS Wells
as of March 31, 2024
As reported net LOS wells 26.1 14.4 2.4 4.4 0.7 48.0
Pro forma net spuds(2) 15.1 10.3 4.6 2.6 0.4 33.0
Pro forma net permits(2) 11.0 4.1 2.7 1.8 0.3 19.9
-------------------- ---------- -------------------- ------ -------------------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ----------
Pro forma net LOS wells(2) 26.1 14.4 7.3 4.4 0.7 52.9
==================== ========== ==================== ====== ==================== ==================== ========== ==================== ========== ==================== ========== ==================== ==========
Net Royalty Acres
(normalized to 1/8th royalty equivalent)
As reported December 31, 2023 152,664 45,380 24,973 21,077 8,203 252,297
As reported March 31, 2024 152,761 45,366 24,973 21,077 8,206 252,383
Pro forma December 31, 2023(9) 152,664 45,380 38,035 21,077 8,203 265,359
Pro forma March 31, 2024(9) 152,761 45,366 38,042 21,077 8,206 265,452
-------------------- ---------- -------------------- ------ -------------------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ----------
(7) Wells currently online and producing, based on well designations in public data as of December 31, 2023. Pro forma metrics include net wells from the DJ Basin Acquisition Wells currently online and producing, based on well designations in public data as of December 31, 2023. Pro forma metrics include net wells from the DJ Basin Acquisition
(8) Wells currently online and producing, based on well designations in public data as of March 31, 2024. Pro forma metrics include net wells from the DJ Basin Acquisition Wells currently online and producing, based on well designations in public data as of March 31, 2024. Pro forma metrics include net wells from the DJ Basin Acquisition
FINANCIAL UPDATE
Sitio's first quarter 2024 average unhedged realized prices including all expected quality, transportation and demand adjustments were $76.60 per barrel of oil, $1.15 per Mcf of natural gas and $20.71 per barrel of natural gas liquids, for a total equivalent price of $46.00 per barrel of oil equivalent. During the first quarter of 2024, the Company received $3.6 million in net cash settlements for commodity derivative contracts and as a result, average hedged realized prices were $77.62 per barrel of oil, $1.53 per Mcf of natural gas and $20.71 per barrel of natural gas liquids, for a total equivalent price of $47.12 per barrel of oil equivalent. This represents a $1.69 per barrel of oil equivalent, or a 3.7% increase relative to hedged realized prices for the three months ended December 31, 2023.
Consolidated net income for the first quarter of 2024 was $18.7 million, which is $110.4 million higher than consolidated net loss in the fourth quarter of 2023. This increase was primarily driven by $137.6 million lower operating expenses as a result of no loss on sale of assets, no loss on extinguishment of debt, offset partially by $28.5 million of incremental commodity derivative losses and $24.0 million of higher income tax expense. For the three months ended March 31, 2024, Adjusted EBITDA was $135.1 million, comparable to fourth quarter 2023 Adjusted EBITDA of $134.9 million.
As of March 31, 2024, the Company had $860.0 million principal value of total debt outstanding (comprised of $260.0 million drawn on Sitio's revolving credit facility and $600.0 million of senior unsecured notes) and liquidity of $601.7 million, including $11.7 million of cash and $590.0 million of remaining availability under its $850.0 million credit facility.
Sitio did not add to or extinguish any of its commodity swaps or collars during the first quarter of 2024. A summary of the Company's existing commodity derivative contracts as of March 31, 2024 is included in the table below.
Oil (NYMEX WTI)
------------------------------------------------------------------------------------------------------------
2024 1H25
---------------------------------- ----------------------------------
Swaps
3,300 1,100
Bbl per day
$ 82.66 $ 74.65
Average price ($/Bbl)
Collars
-- 2,000
Bbl per day
-- $ 93.20
Average call ($/Bbl)
-- $ 60.00
Average put ($/Bbl)
Gas (NYMEX Henry Hub)
------------------------------------------------------------------------------------------------------------
2024 1H25
---------------------------------- ----------------------------------
Swaps
500 --
MMBtu per day
$ 3.41 --
Average price ($/MMBtu)
Collars
11,400 11,600
MMBtu per day
$ 7.24 $ 10.34
Average call ($/MMBtu)
RETURN OF CAPITAL
The Company's Board of Directors declared a cash dividend of $0.41 per share of Class A Common Stock with respect to the first quarter of 2024. The dividend is payable on May 31, 2024 to the stockholders of record at the close of business on May 21, 2024. During the first quarter of 2024, the Company repurchased 545,527 shares of Class A Common Stock at an average price of $23.77 per share, representing 11% of Pro Forma Discretionary Cash Flow, or $0.08 per share used for stock repurchases. In total, Sitio's return of capital for the first quarter of 2024 is $0.49 cents per share of Class A Common Stock based on a payout ratio of 65% of Pro Forma Discretionary Cash Flow, which includes Discretionary Cash Flow for the three months ended March 31, 2024 for the DJ Basin Acquisition.
In April of 2024, the Company repurchased approximately 2.0 million shares, comprised of approximately 60% Class A Common Stock and 40% OpCo Units (associated Class C Common Stock was retired) from two of the largest non-sponsor Class C holders (the "April 2024 Negotiated Share Repurchase"). This transaction impacts the number of shares receiving a dividend with respect to the first quarter of 2024 since this repurchase occurred prior to the May 21, 2024 record date of the dividend declared for the first quarter of 2024.
FIRST QUARTER 2024 EARNINGS CONFERENCE CALL
Sitio will host a conference call at 8:30 a.m. Eastern on Thursday, May 9, 2024 to discuss its first quarter 2024 operating and financial results. Participants can access the call by dialing 1-833-470-1428 in the United States, or 1-404-975-4839 in other locations, with access code 994633, or by webcast at https://events.q4inc.com/attendee/623060425. Participants may also pre-register for the event via the following link: https://www.netroadshow.com/events/login?show=f9a4bca4&confId=62882. The conference call, live webcast and replay can also be accessed through the Investor Relations section of Sitio's website at www.sitio.com.
UPCOMING INVESTOR CONFERENCES
Members of Sitio's management team will be attending the Citi 2024 Energy & Climate Technology Conference on May 14, 2024, RBC Global Energy, Power and Infrastructure Conference on June 4, 2024, Stifel 2024 Cross Sector Insight Conference on June 5, 2024, BofA Energy Credit Conference on June 5, 2024, and the JP Morgan Energy, Power and Renewables Conference on June 17 -18, 2024. Presentation materials associated with these events will be accessible through the Investor Relations section of Sitio's website at www.sitio.com.
FINANCIAL RESULTS
Production Data
Three Months Ended
March 31,
----------------------------------------------------------------------------------------------------
2024 2023
------------------------------ ------------------------------
Production Data:
1,662 1,589
Crude oil (MBbls)
5,016 5,435
Natural gas (MMcf)
719 605
NGLs (MBbls)
-------------------- ---------- -------------------- ----------
3,217 3,100
Total (MBoe)(6:1)
==================== ========== ==================== ==========
35,349 34,440
Average daily production (Boe/d)(6:1)
Average Realized Prices:
$ 76.60 $ 74.10
Crude oil (per Bbl)
$ 1.15 $ 2.70
Natural gas (per Mcf)
$ 20.71 $ 21.75
NGLs (per Bbl)
$ 46.00 $ 46.96
Combined (per Boe)
Average Realized Prices After Effects of Derivative Settlements:
$ 77.62 $ 77.14
Crude oil (per Bbl)
$ 1.53 $ 2.90
Natural gas (per Mcf)
$ 20.71 $ 21.75
NGLs (per Bbl)
Selected Expense Metrics
Three Months Ended
March 31,
------------------------------------------------------------------------------------------
2024 2023
------------------------- -------------------------
Severance and ad valorem taxes 8.1 % 7.2 %
Depreciation, depletion and amortization ($/Boe) $ 23.72 $ 21.86
General and administrative ($/Boe) $ 4.04 $ 3.77
Cash G&A ($/Boe) $ 2.40 $ 1.97
Pro forma Cash G&A ($/Boe)(10) $ 2.23 $ 1.97
(10) Includes production from the DJ Basin Acquisition as if it was owned on January 1, 2024 Includes production from the DJ Basin Acquisition as if it was owned on January 1, 2024
Condensed Consolidated Balance Sheets
(In thousands except par and share amounts)
March 31, December 31,
2024 2023
------------------------------ ----------------------------------
(Unaudited)
ASSETS
Current assets
$ 11,746 $ 15,195
Cash and cash equivalents
113,575 107,347
Accrued revenue and accounts receivable
5,549 12,362
Prepaid assets
8,080 19,080
Derivative asset
-------------------- ---------- -------------------- --------------
138,950 153,984
Total current assets
-------------------- ---------- -------------------- --------------
Property and equipment
Oil and natural gas properties, successful efforts method:
2,622,570 2,698,991
Unproved properties
2,451,708 2,377,196
Proved properties
Other property and equipment 3,791 3,711
Accumulated depreciation, depletion, amortization, and impairment (574,849 ) (498,531 )
-------------------- ---------- -------------------- --------------
4,503,220 4,581,367
Total property and equipment, net
-------------------- ---------- -------------------- --------------
Long-term assets
15,000 --
Deposits for property acquisitions
797 3,440
Long-term derivative asset
10,419 11,205
Deferred financing costs
5,655 5,970
Operating lease right-of-use asset
2,807 2,835
Other long-term assets
-------------------- ---------- -------------------- --------------
34,678 23,450
Total long-term assets
-------------------- ---------- -------------------- --------------
------------------------------ ----------------------------------
TOTAL ASSETS $ 4,676,848 $ 4,758,801
==================== ========== ==================== ==============
LIABILITIES AND EQUITY
Current liabilities
$ 39,499 $ 30,050
Accounts payable and accrued expenses
1,721 1,725
Operating lease liability
-------------------- ---------- -------------------- --------------
41,220 31,775
Total current liabilities
-------------------- ---------- -------------------- --------------
Long-term liabilities
848,833 865,338
Long-term debt
255,705 259,870
Deferred tax liability
5,090 5,394
Non-current operating lease liability
1,150 1,150
Other long-term liabilities
-------------------- ---------- -------------------- --------------
1,110,778 1,131,752
Total long-term liabilities
-------------------- ---------- -------------------- --------------
------------------------------ ----------------------------------
1,151,998 1,163,527
Total liabilities
-------------------- ---------- -------------------- --------------
Equity
8 8
Class A Common Stock, par value $0.0001 per share; 240,000,000 shares authorized; 82,636,109 and 82,451,397 shares issued and 82,090,582 and 82,451,397 outstanding at March 31, 2024 and December 31, 2023, respectively
8 8
Class C Common Stock, par value $0.0001 per share; 120,000,000 shares authorized; 74,829,822 and 74,965,217 shares issued and 74,803,685 and 74,939,080 outstanding at March 31, 2024 and December 31, 2023, respectively
1,760,949 1,796,147
Additional paid-in capital
(179,270 ) (187,738 )
Accumulated deficit
(13,057 ) --
Class A Treasury Shares, 545,527 and 0 shares at March 31, 2024 and December 31, 2023, respectively
(677 ) (677 )
Class C Treasury Shares, 26,137 and 26,137 shares at March 31, 2024 and December 31, 2023, respectively
1,956,889 1,987,526
Noncontrolling interest
-------------------- ---------- -------------------- --------------
3,524,850 3,595,274
Total equity
-------------------- ---------- -------------------- --------------
------------------------------ ----------------------------------
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended
March 31,
--------------------------------------------------------------------------------------------------------
2024 2023
---------------------------------- ------------------------------
Revenues:
$ 147,971 $ 145,554
Oil, natural gas and natural gas liquids revenues
3,420 5,272
Lease bonus and other income
-------------------- -------------- -------------------- ----------
151,391 150,826
Total revenues
-------------------- -------------- -------------------- ----------
Operating expenses:
76,318 67,763
Depreciation, depletion and amortization
13,011 11,676
General and administrative
12,026 10,459
Severance and ad valorem taxes
-------------------- -------------- -------------------- ----------
101,355 89,898
Total operating expenses
-------------------- -------------- -------------------- ----------
Net income from operations 50,036 60,928
Other income (expense):
(18,510 ) (22,203 )
Interest expense, net
-- 2,358
Change in fair value of warrant liability
-- (783 )
Loss on extinguishment of debt
(10,050 ) 14,763
Commodity derivatives gains (losses)
-- (160 )
Interest rate derivatives losses
-------------------- -------------- -------------------- ----------
Net income before taxes 21,476 54,903
-------------------- -------------- -------------------- ----------
(2,784 ) (7,184 )
Income tax expense
-------------------- -------------- -------------------- ----------
Net income 18,692 47,719
(10,224 ) (25,066 )
Net income attributable to noncontrolling interest
-------------------- -------------- -------------------- ----------
Net income attributable to Class A stockholders $ 8,468 $ 22,653
==================== ============== ==================== ==========
Net income per Class A common share
$ 0.10 $ 0.28
Basic
$ 0.10 $ 0.28
Diluted
Weighted average Class A common shares outstanding
82,404 80,178
Basic
Unaudited Condensed Consolidated Statements of Cash Flow
(In thousands)
Three Months Ended March 31,
------------------------------------------------------------------------------------------------------------ --------------------
2024 2023
---------------------------------- -------------------- ---------------------------------- --------------------
Cash flows from operating activities:
$ 18,692 $ 47,719
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
76,318 67,763
Depreciation, depletion and amortization
1,294 1,345
Amortization of deferred financing costs and long-term debt discount
5,104 4,684
Share-based compensation
-- (2,358 )
Change in fair value of warrant liability
-- 783
Loss on extinguishment of debt
10,050 (14,763 )
Commodity derivative (gains) losses
3,593 5,932
Net cash received for commodity derivative settlements
-- 160
Interest rate derivative losses
-- (39 )
Net cash paid for interest rate derivative settlements
(4,238 ) 2,751
Deferred tax (benefit) expense
Change in operating assets and liabilities:
(6,228 ) 14,951
Accrued revenue and accounts receivable
6,813 (772 )
Prepaid assets
343 321
Other long-term assets
9,295 598
Accounts payable and accrued expenses
(296 ) (250 )
Operating lease liabilities and other long-term liabilities
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Net cash provided by operating activities 120,740 128,825
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Cash flows from investing activities:
1,909 1,180
Purchases of oil and gas properties, net of post-close adjustments
(15,000 ) --
Deposits for property acquisitions
(167 ) (19 )
Other, net
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Net cash provided by (used in) investing activities (13,258 ) 1,161
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Cash flows from financing activities:
59,000 323,000
Borrowings on credit facilities
(76,000 ) (346,000 )
Repayments on credit facilities
-- (11,250 )
Repayments on 2026 Senior Notes
(48 ) (7,015 )
Debt issuance costs
(38,157 ) (49,206 )
Distributions to noncontrolling interest
(41,950 ) (48,107 )
Dividends paid to Class A stockholders
(362 ) (25 )
Dividend equivalent rights paid
(12,668 ) --
Repurchases of Class A Common Stock
(746 ) (44 )
Cash paid for taxes related to net settlement of share-based compensation awards
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Net cash used in financing activities (110,931 ) (138,647 )
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Net change in cash and cash equivalents
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