PHX Minerals Inc. reported a decline in revenue and profitability for the three and nine months ended September 30, 2024, compared to the same periods in 2023. Natural gas, oil, and NGL sales totaled $7.9 million for the third quarter of 2024, down 11% from $8.9 million in 2023. For the nine months, sales decreased to $24.8 million from $28.0 million, reflecting a similar 11% decline. The decrease in revenue was attributed to lower natural gas prices, which fell by 22%, alongside a 6% drop in oil volumes and a 1% decrease in NGL volumes, although gas volumes increased by 7%.
Net income for the third quarter of 2024 was $1.1 million, or $0.03 per diluted share, down from $1.9 million, or $0.05 per diluted share, in the prior year. For the nine months, net income plummeted to $2.2 million from $11.4 million in 2023. The effective tax rate increased to 28% from 23% due to decreased net income and other tax-related adjustments.
Total costs and expenses rose to $7.6 million in Q3 2024, compared to $6.7 million in Q3 2023, driven by a 60% increase in transportation, gathering, and marketing costs, which reached $1.1 million. Lease operating expenses decreased by 19% to $290,000, primarily due to reduced workover expenses. Depreciation, depletion, and amortization (DD&A) increased by 17% to $2.4 million, influenced by a rise in the DD&A rate and increased production.
The company reported a net gain on derivative instruments of $1.1 million for Q3 2024, a significant turnaround from a net loss of $337,000 in Q3 2023. The fair value of derivative contracts as of September 30, 2024, was a net asset of $795,000, up 129% from the previous year.
Cash and cash equivalents increased to $2.6 million as of September 30, 2024, from $1.2 million a year earlier. Net cash provided by operating activities decreased to $15.2 million from $20.8 million in the prior year, while net cash used in investing activities improved significantly, reflecting lower acquisition costs.
PHX Minerals continues to manage its capital structure with a credit facility of $100 million, of which $27.8 million was outstanding as of September 30, 2024. The company remains compliant with its financial covenants and is actively pursuing leasing opportunities to enhance its mineral interests.
About PHX MINERALS INC.
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