Pro Forma In-Period Average Quarterly
Production Volume of 36,654 Boe/d (50% Oil)(1)
Declared $0.49 Dividend Per Share of Class A
Common Stock for Third Quarter 2023
Record High 50.9 Net Line-of-Sight Wells as
of September 30, 2023, of Which 82% Are in the Permian
Basin
Recapitalized Balance Sheet With New $600
Million 7.875% Senior Notes Due 2028, Lowering Expected Cash
Interest by More Than $11 Million Per Year and Enhancing Liquidity
by More Than $170 Million
Announces Definitive Agreement to Sell
Appalachia and Anadarko Basin Assets for $117.5 Million, Subject to
Customary Closing Adjustments
Sitio Royalties Corp. (NYSE: STR) (“Sitio,” “STR” or the
“Company”) today announced operational and financial results for
the quarter ended September 30, 2023. Unless the context clearly
indicates otherwise, references to “we,” “our,” “us” or similar
terms refer to Sitio and its subsidiaries.
THIRD QUARTER 2023 OPERATIONAL AND FINANCIAL
HIGHLIGHTS
- Pro forma 3Q 2023 average daily in-period production volume of
36,654 barrels of oil equivalent per day (“Boe/d”) (50% oil)(1),
comparable to pro forma 2Q 2023 average daily in-period production
volume of 36,587 Boe/d (52% oil)(2)
- 3Q 2023 average daily production volume of 36,900 Boe/d (48%
oil)(3), including total prior period adjustments of positive 546
Boe/d
- Declared 3Q 2023 dividend of $0.49 per share of Class A Common
Stock, an increase of $0.09 per share, or approximately 23%
relative to 2Q 2023
- Net income of $0.3 million, up $3.2 million relative to 2Q 2023
net loss, primarily driven by a $2.04 per Boe increase in realized
hedged commodity prices
- 3Q 2023 Adjusted EBITDA(4) of $142.4 million, up by 12%
sequentially from 2Q 2023 Adjusted EBITDA, primarily due to
increased average production volumes and a 5% increase in realized
hedged prices per Boe
- 3Q 2023 Pro forma Adjusted EBITDA(5) of $143.6 million,
including contribution from the Cash Acquisitions(6) for the entire
quarter, up by 11% sequentially from 2Q 2023 Pro forma Adjusted
EBITDA(7)
- Record high net line-of-sight (“LOS”) wells of 50.9 net wells
as of September 30, 2023, comprised of 29.9 net spuds and 21.0 net
permits
- Closed on four previously announced Permian Basin Cash
Acquisitions for total aggregate purchase price of $181.3
million
- On September 26, 2023, priced $600 million aggregate principal
amount of senior unsecured notes due 2028 (the “2028 Senior
Notes”), which accrue interest at a rate of 7.875% per annum, 3.4
percentage points lower than the 4Q 2023 interest rate on the
Company's prior senior unsecured notes due 2026 (the “2026 Senior
Notes”); Transaction closed on October 3, 2023(8)
3Q 2023 RESULTS RELATIVE TO 2H 2023 GUIDANCE
The table below shows third quarter 2023 results relative to
financial and operational guidance for the second half of 2023 that
was issued on August 8, 2023.
2H 2023 Guidance Metric
3Q 2023 Results
2H 2023 Guidance (August 8,
2023)
Average daily production (Boe/d) –
Reported / In-period(11)
36,900 / 36,354
35,000 – 37,000
Oil % – Reported / In-period(11)
48% / 50%
49% – 51%
Gathering and transportation ($/Boe)
$
1.36
$1.25 – $1.50
Cash G&A ($ in millions)
$
7.4
$25.0–$27.0 (annual)
Production taxes (% of royalty
revenue)
7.9
%
6% – 8%
Reported cash tax rate (% of pre-tax
income)(12)
69.5
%
2% – 4%
Pro forma cash tax rate (% of pro forma
pre-tax income)(13)
1.5
%
2% – 4%
(1) Pro forma in-period average quarterly production volume
includes production from the Cash Acquisitions(6) as if they were
owned on July 1, 2023; In-period production represents production
that is estimated to have occurred during the period specified and
does not include production from prior period adjustments
(2) Pro forma 2Q 2023 average daily in-period production volume
represents production that was estimated to have occurred during
the three months ended June 30, 2023, including production from the
Stock & Cash Acquisitions(9) as if they were owned on April 1,
2023
(3) 3Q 2023 average daily production volume includes both
in-period average daily production and prior period adjustments
(4) For definitions of non-GAAP financial measures and
reconciliations to their most directly comparable GAAP financial
measures, please see “Non-GAAP financial measures”
(5) 3Q 2023 Pro Forma Adjusted EBITDA represents 3Q 2023
Adjusted EBITDA plus Cash Acquisitions(6) EBITDA, which reflects as
if Sitio had owned the Cash Acquisitions since July 1, 2023
(6) Cash Acquisitions, a subset of the Stock & Cash
Acquisitions(9), is defined as the four acquisitions that closed in
July and August of 2023; Total consideration for the Cash
Acquisitions was approximately $181 million funded with a mix of
retained cash and borrowings under Sitio's revolving credit
facility
(7) 2Q 2023 Pro forma Adjusted EBITDA represents 2Q 2023
Adjusted EBITDA plus Stock Acquisition(10) EBITDA from April 1,
2023 to June 13, 2023
(8) On October 3, 2023, subsidiaries of Sitio issued and sold
(the “Notes Offering”) $600.0 million aggregate principal amount of
their 2028 Senior Notes. Net proceeds of the Notes Offering were
used to (i) fund the redemption of all of the outstanding aggregate
principal amount of the Company's 2026 Senior Notes, which occurred
concurrently with the consummation of the Notes Offering and (ii)
repay a portion of the outstanding borrowings under the Company's
revolving credit facility
(9) Stock & Cash Acquisitions is defined as five separate
mineral and royalty interest acquisitions that closed between March
31, 2023 and August 7, 2023, containing 13,862 NRAs in aggregate,
of which 99% are in the Permian Basin
(10) Stock Acquisition, a subset of the Stock & Cash
Acquisitions, is defined as the one acquisition that closed on June
14, 2023
(11) In-period production represents production that is
estimated to have occurred during the period specified, excluding
production from prior period adjustments; Reported production
includes both in-period production and adjustments to production
from prior periods
(12) Calculated as cash taxes paid of $0.5 million divided by
net income before taxes of $0.7 million for the three months ended
September 30, 2023
(13) Calculated as cash taxes paid of $0.5 million divided by
pro forma pre-tax income of $29.9 million; Pro forma pre-tax income
is defined as net income before taxes plus $29.2 million of
unrealized commodity derivative losses
Chris Conoscenti, Chief Executive Officer of Sitio, commented,
“In the third quarter, our assets delivered another steady
performance that reflected operator trends in Permian and broader
US drilling and completion activity. We continue to pursue multiple
consolidation opportunities and are optimistic about improving
competitive dynamics heading into 2024. During the third quarter,
we completed the four previously announced cash acquisitions of
high-quality Permian minerals and royalties totaling approximately
$181 million and on November 3, 2023, we agreed to sell our
lower-margin Appalachia and Anadarko assets for $117.5 million. Our
inaugural senior unsecured notes offering that closed on October 3,
2023, allowed us to refinance our existing unsecured notes and
achieve more than $11 million in expected annual interest expense
savings. Our team continued to innovate by building new customized
automation tools to improve the efficiency with which we manage
such a large amount of new data each month. This streamlines
processing and tracking royalty payments, monitoring ongoing
operator activity on our acreage and positions Sitio to smoothly
integrate additional data from future acquisitions. I'm proud of
our team for executing well on such a broad range of strategic,
financing and operational initiatives throughout the quarter.”
ASSET ACTIVITY UPDATE
The following table summarizes Sitio's 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 Stock & Cash Acquisitions as of June 30, 2023.
Delaware
Midland
DJ
Eagle Ford
Appalachia
Anadarko
Williston
Total
Average Daily Production (Boe/d) for
the three months ended September 30, 2023
As reported
19,050
8,363
2,998
3,730
1,099
996
664
36,900
% Oil
47
%
61
%
32
%
51
%
3
%
27
%
62
%
48
%
Net Well Activity (normalized to 5,000'
laterals)
Pro forma net wells online as of June 30,
2023(14)
121.8
60.1
35.6
35.3
3.7
9.9
9.2
275.6
Net wells online as of September 30,
2023
127.1
62.2
37.1
35.7
3.8
9.9
9.4
285.2
Net wells online increase since June 30,
2023
5.3
2.1
1.5
0.4
0.1
-
0.2
9.6
Net spuds
16.3
7.9
2.7
1.9
0.3
0.2
0.6
29.9
Net permits
10.6
7.0
1.1
1.5
0.2
0.1
0.5
21.0
Net LOS wells as of September 30, 2023
26.9
14.9
3.8
3.4
0.5
0.3
1.1
50.9
Net Royalty Acres (normalized to 1/8th
royalty equivalent)
Pro forma June 30, 2023(15)
152,234
45,339
24,978
21,752
12,669
9,872
8,203
275,047
September 30, 2023
152,268
45,366
24,973
21,783
12,676
9,872
8,202
275,140
NRA increase (decrease) since June 30,
2023
34
27
(5
)
31
7
—
(1
)
93
(14) Includes net wells from the Stock & Cash
Acquisitions
(15) Includes NRAs from the Stock & Cash Acquisitions
FINANCIAL UPDATE
Sitio's third quarter 2023 average unhedged realized prices
including all expected quality, transportation and demand
adjustments were $80.21 per barrel of oil, $1.54 per Mcf of natural
gas and $18.14 per barrel of natural gas liquids, for a total
equivalent price of $45.00 per barrel of oil equivalent. During the
third quarter of 2023, the Company received $5.1 million in net
cash settlements for commodity derivative contracts and as a
result, average hedged realized prices were $82.21 per barrel of
oil, $1.84 per Mcf of natural gas and $18.14 per barrel of natural
gas liquids, for a total equivalent price of $46.49 per barrel of
oil equivalent. This represents a $2.04 per barrel of oil
equivalent, or a 5% increase relative to hedged realized prices for
the three months ended June 30, 2023.
Consolidated net income for the third quarter of 2023 was $0.3
million, which is $3.2 million more than consolidated net income in
the second quarter of 2023. This increase was driven primarily by
increased commodity prices and offset by net commodity derivatives
losses of $24.1 million, which was comprised of a $29.2 million
non-cash unrealized loss and a $5.1 million realized gain. For the
three months ended September 30, 2023, Adjusted EBITDA was $142.4
million, up 12% sequentially from second quarter 2023 Adjusted
EBITDA, primarily due to increased production volumes and commodity
prices.
As of September 30, 2023, the Company had $1,006.0 million
principal value of total debt outstanding (comprised of $601.0
million drawn on Sitio's revolving credit facility and $405.0
million of senior unsecured notes) and liquidity of $250.3 million,
including $1.3 million of cash and $249.0 million of remaining
availability under its $850.0 million credit facility. In September
2023, Sitio made its fourth consecutive quarterly amortization
payment of $11.3 million at par value on its senior unsecured
notes, reducing the principal from $416.3 million to $405.0 million
as of the end of the third quarter 2023.
2H 2023 FINANCIAL AND OPERATIONAL GUIDANCE
Sitio is revising its guidance for Cash G&A for the full
year 2023 to a range of $27.0 million to $28.0 million based on
results to date and expectations for 4Q 2023, which includes
incremental G&A for expected new employees. The midpoint of
Sitio's new Cash G&A guidance range for full year 2023 is $27.5
million, an approximate 6% increase from the midpoint of prior
guidance. There are no other changes to prior 2H 2023 guidance, but
for convenience all guidance metrics are shown in the table
below.
2H 2023 Guidance
Low
High
Average daily production (Boe/d)
35,000
37,000
Oil %
49
%
51
%
Revenue Deductions, Expenses and
Taxes
Gathering and transportation ($/Boe)
$
1.25
$
1.50
Full Year 2023 Cash G&A ($ in
millions)
$
27.0
$
28.0
Production taxes (% of royalty
revenue)
6
%
8
%
Cash tax rate (% of pre-tax income)
2
%
4
%
SENIOR UNSECURED NOTES REFINANCING
On October 3, 2023, the Company issued and sold $600.0 million
aggregate principal amount of its 2028 Senior Notes. The net
proceeds of the Notes Offering were used to (i) fund the redemption
of all of the outstanding aggregate principal amount of the 2026
Senior Notes, which occurred concurrently with the consummation of
the Notes Offering and (ii) repay a portion of the outstanding
borrowings under the Company's revolving credit facility. As of
November 3, 2023, the Company had $981.0 million principal value of
total debt outstanding (comprised of $381.0 million drawn on
Sitio's revolving credit facility and $600.0 million of senior
unsecured notes due 2028) and liquidity of $470.9 million,
including $1.9 million of cash and $469.0 million of remaining
availability under its $850.0 million credit facility.
DIVESTITURE OF APPALACHIA AND ANADARKO ASSETS
On November 3, 2023, the Company entered into a definitive
purchase and sale agreement to sell all of its mineral and royalty
interests in the Appalachia and Anadarko Basins to an undisclosed
third party for $117.5 million of cash consideration, subject to
customary closing adjustments. In aggregate for the three months
ended September 30, 2023, production associated with these assets
was 2,095 Boe/d (14% oil) and revenues were $3.8 million from oil,
natural gas and natural gas liquids. As of September 30, 2023,
there were approximately 0.7 net LOS wells underlying these assets,
comprised of approximately 0.5 net spuds and 0.3 net permits. Sitio
plans to use the net proceeds to repay borrowings on its revolving
credit facility and build additional liquidity to pursue
acquisitions of assets that are more comparable to the growth and
returns profile of Sitio’s recent Permian Basin acquisitions. The
transaction has an effective date of September 1, 2023 and is
expected to close in the fourth quarter of 2023.
Sitio did not add to or extinguish any of its commodity swaps or
collars during the third quarter of 2023. A summary of the
Company's existing commodity derivative contracts as of September
30, 2023 is included in the table below.
Oil (NYMEX WTI)
2023
2024
1H25
Swaps
Bbl per day
3,050
3,300
1,100
Average price ($/Bbl)
$
93.71
$
82.66
$
74.65
Collars
Bbl per day
—
—
2,000
Average call ($/Bbl)
—
—
$
93.20
Average put ($/Bbl)
—
—
$
60.00
Gas (NYMEX Henry Hub)
2023
2024
1H25
Swaps
MMBtu per day
500
500
—
Average price ($/MMBtu)
$
3.83
$
3.41
—
Collars
MMBtu per day
8,500
11,400
11,600
Average call ($/MMBtu)
$
7.93
$
7.24
$
10.34
Average put ($/MMBtu)
$
4.82
$
4.00
$
3.31
THIRD QUARTER 2023 CASH DIVIDEND
The Company's Board of Directors declared a cash dividend of
$0.49 per share of Class A Common Stock with respect to the third
quarter of 2023. The dividend is payable on November 30, 2023 to
the stockholders of record at the close of business on November 21,
2023. Based on a 65% payout ratio of third quarter 2023
Discretionary Cash Flow and not including the pro forma impacts
from the Cash Acquisitions, Sitio's quarterly dividend would have
been approximately $0.48 per Class A common share; however, the
Company's Board of Directors approved a third quarter 2023 dividend
of $0.49 per Class A common share, which equates to a 65% payout
ratio including pro forma Discretionary Cash Flow for the full
three months ended September 30, 2023 for the Cash Acquisitions
that closed during the third quarter 2023.
THIRD QUARTER 2023 EARNINGS CONFERENCE CALL
Sitio will host a conference call at 8:30 a.m. Eastern on
Thursday, November 9, 2023, to discuss its third quarter 2023
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 971184 or via webcast at
https://events.q4inc.com/attendee/965924226. Participants can also
pre-register for the event by going to the following link:
https://www.netroadshow.com/events/login?show=ca67bd6c&confId=56269.
The conference call, live webcast and archive of the call 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
Stephens Annual Investment Conference on November 14, 2023; BofA
Securities Global Energy Conference on November 14, 2023; and BofA
Securities Leveraged Finance Conference from November 27-29, 2023.
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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Production Data:
Crude oil (MBbls)
1,617
846
4,786
1,969
Natural gas (MMcf)
6,203
2,916
17,214
6,481
NGLs (MBbls)
744
323
1,996
760
Total (MBoe)(6:1)
3,395
1,655
9,651
3,809
Average daily production (Boe/d)(6:1)
36,900
17,990
35,349
13,950
Average Realized Prices:
Crude oil (per Bbl)
$
80.21
$
93.81
$
75.11
$
98.12
Natural gas (per Mcf)
$
1.54
$
6.55
$
1.90
$
6.05
NGLs (per Bbl)
$
18.14
$
31.98
$
19.39
$
36.68
Combined (per Boe)
$
45.00
$
65.71
$
44.65
$
68.33
Average Realized Prices After Effects
of Derivative Settlements:
Crude oil (per Bbl)
$
82.21
$
97.32
$
77.95
$
99.48
Natural gas (per Mcf)
$
1.84
$
6.46
$
2.20
$
5.99
NGLs (per Bbl)
$
18.14
$
31.98
$
19.39
$
36.68
Combined (per Boe)
$
46.49
$
67.36
$
46.59
$
68.93
Selected Expense Metrics
Three Months Ended September
30,
2023
2022
Severance and ad valorem taxes
7.9
%
6.6
%
Depreciation, depletion and amortization
($/Boe)
$
23.78
$
19.34
General and administrative ($/Boe)
$
3.55
$
8.08
Cash G&A ($/Boe)
$
2.19
$
2.80
Interest expense, net ($/Boe)
$
7.77
$
9.05
Condensed Consolidated Balance
Sheets
(In thousands except par and share
amounts)
September 30,
December 31,
2023
2022
.
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents
$
1,339
$
18,818
Accrued revenue and accounts
receivable
116,088
142,010
Prepaid assets
13,800
12,489
Derivative asset
7,521
18,874
Total current assets
138,748
192,191
Property and equipment
Oil and natural gas properties, successful
efforts method:
Unproved properties
3,009,429
3,244,436
Proved properties
2,431,742
1,926,214
Other property and equipment
3,440
3,421
Accumulated depreciation, depletion,
amortization, and impairment
(471,549
)
(223,214
)
Total property and equipment, net
4,973,062
4,950,857
Long-term assets
Long-term derivative asset
2,805
13,379
Deferred financing costs
11,849
7,082
Operating lease right-of-use asset
4,150
5,679
Other long-term assets
504
1,714
Total long-term assets
19,308
27,854
TOTAL ASSETS
$
5,131,118
$
5,170,902
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses
$
21,939
$
21,899
Warrant liability
—
2,950
Operating lease liability
1,350
1,563
Total current liabilities
23,289
26,412
Long-term liabilities
Long-term debt
996,460
938,896
Deferred tax liability
333,467
313,607
Non-current operating lease liability
3,907
5,303
Other long-term liabilities
1,189
89
Total long-term liabilities
1,335,023
1,257,895
Total liabilities
1,358,312
1,284,307
Equity
Class A Common Stock, par value $0.0001
per share; 240,000,000 shares authorized; 81,763,078 and 80,804,956
shares issued and 81,763,078 and 80,171,951 outstanding at
September 30, 2023 and December 31, 2022, respectively
8
8
Class C Common Stock, par value $0.0001
per share; 120,000,000 shares authorized; 75,440,851 and 74,347,005
shares issued and 75,414,714 and 74,347,005 outstanding at
September 30, 2023 and December 31, 2022, respectively
8
7
Additional paid-in capital
1,790,492
1,750,640
Accumulated deficit
(109,596
)
(9,203
)
Class A Treasury Shares, 0 and 633,005
shares at September 30, 2023 and December 31, 2022,
respectively
—
(19,085
)
Class C Treasury Shares, 26,137 and 0
shares at September 30, 2023 and December 31, 2022,
respectively
(677
)
—
Noncontrolling interest
2,092,571
2,164,228
Total equity
3,772,806
3,886,595
TOTAL LIABILITIES AND EQUITY
$
5,131,118
$
5,170,902
Unaudited Condensed Consolidated
Statements of Income
(In thousands, except per share
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenues:
Oil, natural gas and natural gas liquids
revenues
$
152,766
$
108,761
$
430,887
$
260,219
Lease bonus and other income
3,944
6,736
13,115
9,445
Total revenues
156,710
115,497
444,002
269,664
Operating expenses:
Management fees to affiliates
—
—
—
3,241
Depreciation, depletion and
amortization
80,716
32,005
222,718
67,302
General and administrative
12,044
13,381
37,786
24,117
Severance and ad valorem taxes
12,124
7,215
32,927
18,019
Impairment of oil and natural gas
properties
—
—
25,617
—
Total operating expenses
104,884
52,601
319,048
112,679
Net income from operations
51,826
62,896
124,954
156,985
Other income (expense):
Interest expense, net
(26,373
)
(14,986
)
(71,735
)
(18,096
)
Change in fair value of warrant
liability
8
536
2,950
3,842
Loss on extinguishment of debt
(687
)
(11,487
)
(1,470
)
(11,487
)
Commodity derivatives gains (losses)
(24,125
)
34,613
(3,250
)
53,508
Interest rate derivatives gains
9
—
456
—
Net income before taxes
658
71,572
51,905
184,752
Income tax expense
(383
)
(2,561
)
(6,884
)
(5,206
)
Net income
275
69,011
45,021
179,546
Net income attributable to Predecessor
—
—
—
(78,104
)
Net income attributable to temporary
equity
—
(59,872
)
—
(86,143
)
Net (income) loss attributable to
noncontrolling interest
12
—
(22,877
)
—
Net income attributable to Class A
stockholders
$
287
$
9,139
$
22,144
$
15,299
Net income per Class A common
share
Basic
$
0.00
$
0.70
$
0.26
$
1.19
Diluted
$
0.00
$
0.70
$
0.26
$
1.19
Weighted average Class A common shares
outstanding
Basic
81,712
12,703
80,984
12,665
Diluted
157,260
12,703
80,984
12,665
Unaudited Condensed Consolidated
Statements of Cash Flow
(In thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net income
$
45,021
$
179,546
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and
amortization
222,718
67,302
Amortization of deferred financing costs
and long-term debt discount
4,275
5,419
Share-based compensation
14,474
4,947
Change in fair value of warrant
liability
(2,950
)
(3,842
)
Loss on extinguishment of debt
1,470
11,487
Impairment of oil and natural gas
properties
25,617
—
Commodity derivative (gains) losses
3,250
(53,508
)
Net cash received for commodity derivative
settlements
18,730
2,239
Interest rate derivative gains
(456
)
—
Net cash received for interest rate
derivative settlements
403
—
Deferred tax expense (benefit)
(15,107
)
2,645
Change in operating assets and
liabilities:
Accrued revenue and accounts
receivable
26,188
(29,785
)
Prepaid assets
13,187
(1,903
)
Other long-term assets
1,866
(115
)
Accounts payable and accrued expenses
(3,131
)
(12,986
)
Due to affiliates
—
(380
)
Operating lease liabilities and other
long-term liabilities
(737
)
9
Net cash provided by operating
activities
354,818
171,075
Cash flows from investing
activities:
Acquisition of Falcon, net of cash
—
4,484
Predecessor cash not contributed in the
Falcon Merger
—
(15,229
)
Purchases of oil and gas properties, net
of post-close adjustments
(172,070
)
(558,062
)
Purchases of other property and
equipment
(19
)
(819
)
Net cash used in investing
activities
(172,089
)
(569,626
)
Cash flows from financing
activities:
Borrowings on credit facilities
588,500
196,895
Repayments on credit facilities
(497,500
)
(147,000
)
Borrowings on Bridge Loan Facility
—
425,000
Repayments on Bridge Loan Facility
—
(425,000
)
Bridge Loan Facility issuance costs
—
(14,909
)
Borrowings on 2026 Senior Notes
—
444,500
Repayments on 2026 Senior Notes
(33,750
)
—
2026 Senior Notes issuance costs
(351
)
(4,169
)
Distribution paid to Temporary Equity
—
(50,510
)
Distributions to noncontrolling
interest
(121,924
)
(13,318
)
Dividends paid to Class A stockholders
(121,555
)
(9,017
)
Dividend equivalent rights paid
(982
)
(283
)
Cash paid for taxes related to net
settlement of share-based compensation awards
(3,432
)
—
Payments of deferred financing costs
(9,214
)
(3,964
)
Other
—
(1,241
)
Net cash (used in) provided by
financing activities
(200,208
)
396,984
Net change in cash and cash
equivalents
(17,479
)
(1,567
)
Cash and cash equivalents, beginning of
period
18,818
12,379
Cash and cash equivalents, end of
period
$
1,339
$
10,812
Non-GAAP financial measures
Adjusted EBITDA, Pro Forma Adjusted EBITDA, Discretionary Cash
Flow, Pro Forma Discretionary Cash Flow and Cash G&A are
non-GAAP supplemental financial measures used by our management and
by external users of our financial statements such as investors,
research analysts and others to assess the financial performance of
our assets and their ability to sustain dividends over the long
term without regard to financing methods, capital structure or
historical cost basis. Sitio believes that these non-GAAP financial
measures provide useful information to Sitio's management and
external users because they allow for a comparison of operating
performance on a consistent basis across periods.
We define Adjusted EBITDA as net income plus (a) interest
expense, (b) provisions for taxes, (c) depreciation, depletion and
amortization, (d) non-cash share-based compensation expense, (e)
impairment of oil and natural gas properties, (f) gains or losses
on unsettled derivative instruments, (g) change in fair value of
the warrant liability, (h) management fee to affiliates, (i) loss
on debt extinguishment, (j) merger-related transaction costs and
(k) write off of financing costs.
We define Pro Forma Adjusted EBITDA as Adjusted EBITDA plus Cash
Acquisitions EBITDA from July 1, 2023 to September 30, 2023 that is
not included in Adjusted EBITDA for the three months ended
September 30, 2023.
We define Discretionary Cash Flow as Adjusted EBITDA, less cash
interest expense and cash taxes.
We define Pro Forma Discretionary Cash Flow as Discretionary
Cash Flow plus Cash Acquisitions Discretionary Cash Flow from July
1, 2023 to September 30, 2023 that is not included in Discretionary
Cash Flow for the three months ended September 30, 2023.
We define Cash G&A as general and administrative expense
less (a) non-cash share-based compensation expense, (b)
merger-related transaction costs and (c) rental income.
These non-GAAP financial measures do not represent and should
not be considered an alternative to, or more meaningful than, their
most directly comparable GAAP financial measures or any other
measure of financial performance presented in accordance with GAAP
as measures of our financial performance. Non-GAAP financial
measures have important limitations as analytical tools because
they exclude some but not all items that affect the most directly
comparable GAAP financial measure. Our computations of Adjusted
EBITDA, Pro Forma Adjusted EBITDA, Discretionary Cash Flow, Pro
Forma Discretionary Cash Flow and Cash G&A may differ from
computations of similarly titled measures of other companies.
The following table presents a reconciliation of Adjusted EBITDA
and Pro Forma Adjusted EBITDA to the most directly comparable GAAP
financial measure for the period indicated (in thousands).
Three Months Ended September
30,
2023
2022
Net income
$
275
$
69,011
Interest expense, net
26,373
14,986
Income tax expense
383
2,561
Depreciation, depletion and
amortization
80,716
32,005
EBITDA
$
107,747
$
118,563
Non-cash share-based compensation
expense
4,368
3,969
Losses (gains) on unsettled derivative
instruments
29,497
(31,954
)
Change in fair value of warrant
liability
(8
)
(536
)
Loss on debt extinguishment
687
11,487
Merger-related transaction costs
123
3,599
Write off of financing costs
—
1,180
Adjusted EBITDA
$
142,414
$
106,308
Cash Acquisitions EBITDA
1,144
—
Pro Forma Adjusted EBITDA
$
143,558
$
106,308
The following table presents a reconciliation of Discretionary
Cash Flow and Pro Forma Discretionary Cash Flow to the most
directly comparable GAAP financial measure for the period indicated
(in thousands).
Three Months Ended September
30,
2023
2022
Cash flow from operations
$
122,141
$
82,644
Interest expense, net
26,373
14,986
Income tax expense
383
2,561
Deferred tax expense
7,686
(2,512
)
Changes in operating assets and
liabilities
(12,810
)
8,692
Amortization of deferred financing costs
and long-term debt discount
(1,482
)
(3,662
)
Merger-related transaction costs
123
3,599
Adjusted EBITDA
$
142,414
$
106,308
Less:
Cash interest expense
24,694
11,516
Cash taxes
457
1,389
Discretionary Cash Flow
$
117,263
$
93,403
Cash Acquisitions Discretionary Cash
Flow
$
1,144
—
Pro Forma Discretionary Cash
Flow
$
118,407
$
93,403
The following table presents a reconciliation of Cash G&A to
the most directly comparable GAAP financial measure for the period
indicated (in thousands).
Three Months Ended September
30,
2023
2022
General and administrative expense
$
12,044
$
13,381
Less:
Non-cash share-based compensation
expense
4,368
3,969
Merger-related transaction costs
123
3,599
Rental income
136
—
Write off of financing costs
—
1,180
Cash G&A
$
7,417
$
4,633
About Sitio Royalties Corp.
Sitio is a shareholder returns-driven company focused on
large-scale consolidation of high-quality oil & gas mineral and
royalty interests across premium basins, with a diversified set of
top-tier operators. With a clear objective of generating cash flow
from operations that can be returned to stockholders and
reinvested, Sitio has accumulated over 270,000 NRAs through the
consummation of over 190 acquisitions to date. More information
about Sitio is available at www.sitio.com.
Forward-Looking Statements
This news release contains statements that may constitute
“forward-looking statements” for purposes of federal securities
laws. Forward-looking statements include, but are not limited to,
statements that refer to projections, forecasts, or other
characterizations of future events or circumstances, including any
underlying assumptions. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intends,” “may,”
“might,” “plan,” “seeks,” “possible,” “potential,” “predict,”
“project,” “prospects,” “guidance,” “outlook,” “should,” “would,”
“will,” and similar expressions may identify forward-looking
statements, but the absence of these words does not mean that a
statement is not forward-looking. These statements include, but are
not limited to, statements about certain future plans, expectations
and objectives for the Company’s operations, including statements
about any share repurchase programs, the implementation thereof and
the intended benefits, financial and operational guidance,
strategy, synergies, certain levels of production, future
operations, financial position, prospects, and plans. While
forward-looking statements are based on assumptions and analyses
made by us that we believe to be reasonable under the
circumstances, whether actual results and developments will meet
our expectations and predictions depend on a number of risks and
uncertainties that could cause our actual results, performance, and
financial condition to differ materially from our expectations and
predictions. Factors that could materially impact such
forward-looking statements include, but are not limited to:
commodity price volatility, the global economic uncertainty related
to the large-scale invasion of Ukraine by Russia, the collapse of
certain financial institutions and associated liquidity risks,
announcements of voluntary production cuts by OPEC+ and others, and
those other factors discussed or referenced in the "Risk Factors"
section of Sitio’s Annual Report on Form 10-K, for the year ended
December 31, 2022 and other publicly filed documents with the SEC.
Any forward-looking statement made in this news release speaks only
as of the date on which it is made. Factors or events that could
cause actual results to differ may emerge from time to time, and it
is not possible to predict all of them. Sitio undertakes no
obligation to publicly update any forward-looking statement,
whether as a result of new information, future development, or
otherwise, except as may be required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108382654/en/
IR contact: Ross Wong (720) 640–7647 IR@sitio.com
Sitio Royalties (NYSE:STR)
Historical Stock Chart
From Nov 2024 to Dec 2024
Sitio Royalties (NYSE:STR)
Historical Stock Chart
From Dec 2023 to Dec 2024
