Sitio Royalties Corp. Reports Mixed Q3 Results, Net Income Surges Amid Challenges in Revenue Streams

Sitio Royalties Corp. reported its financial results for the third quarter and the nine months ended September 30, 2024, highlighting a mixed performance in revenue and profitability compared to the previous fiscal period.

For the three months ended September 30, 2024, total revenues decreased to $149.4 million from $156.7 million in the same period of 2023, primarily due to a decline in mineral and royalty revenue, lease bonuses, and other income. Oil revenue increased slightly to $131.4 million, up from $129.7 million, driven by a 9% rise in production volumes, despite a 7% drop in average realized prices. Conversely, natural gas revenue plummeted by 73% to $2.6 million, attributed to a significant decrease in average realized prices and a slight decline in production volumes. Lease bonus revenue also fell by 62% to $1.3 million.

Net income for the third quarter surged to $27.9 million, a substantial increase from $275,000 in the prior year, while net income from operations decreased to $46.7 million from $51.8 million. Net income attributable to Class A stockholders rose dramatically to $12.6 million from $287,000, resulting in a basic and diluted net income per share of $0.15, compared to no income reported in the same quarter of 2023.

For the nine months ended September 30, 2024, total revenues increased to $469.3 million from $444.0 million, reflecting a 6% growth. Oil revenue rose by 12% to $402.2 million, while natural gas revenue fell by 56% to $14.4 million. NGL revenue increased by 16% to $44.8 million. Net income for the nine-month period also saw a significant rise to $75.6 million from $45.0 million, with net income attributable to Class A stockholders increasing to $33.9 million from $22.1 million.

The company’s cash and cash equivalents decreased to $8.5 million as of September 30, 2024, from $15.2 million at the end of 2023. Long-term debt rose to $992.9 million from $865.3 million, reflecting increased borrowings to support acquisition activities. The Sitio Revolving Credit Facility had an outstanding balance of $403.0 million, up from $277.0 million at the end of 2023.

Strategically, Sitio completed acquisitions of oil and gas properties totaling $210.6 million during the nine months ended September 30, 2024, and divested its mineral and royalty interests in the SCOOP and STACK plays for $113.3 million in December 2023. The company also initiated a share repurchase program in February 2024, allowing for the repurchase of up to $200 million in Class A Common Stock and Sitio OpCo Partnership Units, with $104.8 million spent on repurchases in the nine-month period.

Overall, Sitio Royalties Corp. demonstrated resilience in its operational performance, with notable increases in production and net income, despite challenges in certain revenue streams.