Closed Multiple Accretive Acquisitions Since
March 31, 2023 Adding 13,705 NRAs in the Permian Basin
Record High Average Quarterly Production
Volume of 34,681 Boe/d (50% Oil)
Declared $0.40 Dividend Per Share of Class a
Common Stock for Second Quarter 2023
Issuing 2H 2023 Financial and Operational
Guidance, Including Production Range of 35,000 - 37,000
Boe/d
Sitio Royalties Corp. (NYSE: STR) (“Sitio”, "STR" or the
“Company”) today announced operational and financial results for
the quarter ended June 30, 2023. Unless the context clearly
indicates otherwise, references to "we," "our," "us" or similar
terms refer to Sitio.
SECOND QUARTER 2023 OPERATIONAL AND FINANCIAL
HIGHLIGHTS
- 2Q 2023 average daily production volume of 34,681 barrels of
oil equivalent per day ("Boe/d"), (50% oil) comparable to 1Q 2023
average daily production volume; Pro forma average daily production
volume of 36,462 Boe/d (50% oil), including volumes from the Stock
& Cash Acquisitions(1) for the entire quarter
- Declared 2Q 2023 dividend of $0.40 per share of Class A Common
Stock, of which approximately 1.5 cents per share uplift was from
inclusion of an entire quarter of 2Q 2023 impacts from the Stock
Acquisition(2)
- Net loss of $3.0 million, down $50.7 million relative to 1Q
2023 net income, primarily driven by a $25.6 million non-cash
impairment charge related to Appalachian Basin proved properties
and lower realized commodity prices
- 2Q 2023 Adjusted EBITDA(3) of $127.2 million, down 9%
sequentially from 1Q 2023 Adjusted EBITDA, primarily due to a 9%
reduction in realized hedged prices per Boe
- 2Q 2023 Pro forma Adjusted EBITDA(4) of $129.4 million,
including contribution from the Stock Acquisition for the entire
quarter
- In June 2023, made third consecutive quarterly amortization
payment of $11.3 million at par value on senior unsecured notes,
reducing principal from $427.5 million to $416.3 million
RECENT ACQUISITIONS HIGHLIGHTS
- Closed multiple accretive Permian Basin acquisitions since
March 31, 2023 (the "Stock & Cash Acquisitions")(1) for an
aggregate consideration of $247.9 million, funded with
approximately 27% equity and 73% cash; In aggregate, the Stock
& Cash Acquisitions were purchased for less than 7.0x projected
next twelve months EBITDA at current strip pricing
- Stock & Cash Acquisitions are expected to increase Sitio's
second half 2023 Discretionary Cash Flow by approximately 6% at
current commodity strip pricing
- Pro forma 2Q 2023 production, as if Sitio had owned the Stock
& Cash Acquisitions on April 1, 2023, of 36,462 Boe/d, which
represents a 1,781 Boe/d, or 5% increase relative to reported 2Q
2023 production of 34,681 Boe/d
- Record high pro forma net line-of-sight ("LOS") wells of 50.8
net wells as of June 30, 2023, up by approximately 19% from March
31, 2023; Pro forma net LOS wells comprised of 27.1 net spuds and
23.7 net permits, of which 2.6 net spuds and 1.1 net permits were
from the Stock & Cash Acquisitions(5)
2Q 2023 RESULTS RELATIVE TO FULL YEAR 2023 GUIDANCE ISSUED
PRIOR TO STOCK & CASH ACQUISITIONS
The table below shows second quarter 2023 results relative to
financial and operational guidance for full year 2023 that was
reaffirmed on May 9, 2023.
Full Year 2023 Guidance Metric
2Q 2023 Results
Full Year 2023 Guidance (May
9, 2023)
Average daily production (Boe/d)
34,681
34,000 – 37,000
Oil %
50
%
49% – 51%
Gathering and transportation ($/Boe)
$
1.30
$1.25 – $1.75
Cash G&A ($ in millions)
$
6.7
$25.0–$27.0 (annual)
Production taxes (% of royalty
revenue)
7.8
%
6% – 8%
Reported cash tax rate (% of pre-tax
income)(6)
NM
11% – 13%
(1) Stock & Cash Acquisitions are 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
(2) Stock Acquisition, a subset of the Stock & Cash
Acquisitions, is defined as the one acquisition that closed on June
14, 2023. The Stock Acquisition was funded with approximately 2.5
million shares of Class C common stock and corresponding number of
common units representing limited partner interests in Sitio
Royalties Operating Partnership, LP
(3) For definitions of non-GAAP financial measures and
reconciliations to their most directly comparable GAAP financial
measures, please see “Non-GAAP financial measures”
(4) 2Q 2023 Pro Forma Adjusted EBITDA includes an incremental 74
days of EBITDA from the Stock Acquisition, which reflects as if
Sitio had owned the Stock Acquisition for the entire second quarter
of 2023
(5) Pro forma combined net line-of-sight wells represents the
total net spuds and net permits assuming the Stock & Cash
Acquisitions assets were owned on June 30, 2023
(6) Calculated as cash taxes paid of $8.3 million divided by net
loss before taxes of $3.7 million for the three months ended June
30, 2023 for the "2Q 2023 Results" column. Shown as "NM", or "not
meaningful" because the implied reported 2Q 2023 cash tax rate is
negative
Chris Conoscenti, Chief Executive Officer of Sitio, commented,
"We are excited to announce the closing of five mineral and royalty
interest acquisitions since the end of 1Q 2023, which collectively
increase our Permian acreage footprint by 7% and add 3.7 net LOS
wells to our record-high LOS inventory. Given these recent
acquisitions, we are issuing new guidance for 2H 2023 that includes
a production guidance range of 35,000 - 37,000. I’m proud of the
accomplishments of the Sitio team on these accretive acquisitions
and on the management of our existing assets, which requires a
culture of continuous improvement and differentiates our ability to
continue to scale up.”
ASSET ACTIVITY UPDATE
The following table summarizes Sitio's net average daily
production, pro forma net wells online, pro forma net line-of-sight
wells and pro forma 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 June 30, 2023
As reported
17,187
8,088
2,853
3,803
1,074
1,048
628
34,681
% Oil
49
%
65
%
32
%
55
%
1
%
29
%
63
%
50
%
Net Well Activity (normalized to 5,000'
laterals)
Net wells online as of March 31, 2023
109.2
51.7
35.5
34.4
3.7
9.8
9.0
253.3
Pro forma net wells online as of June 30,
2023(8)
121.8
60.1
35.6
35.3
3.7
9.9
9.2
275.6
Net wells online increase since March 31,
2023
12.6
8.4
0.1
0.9
0.0
0.1
0.2
22.3
Pro forma spuds
14.1
7.5
3.8
1.0
0.0
0.1
0.6
27.1
Pro forma permits
13.7
5.3
1.5
2.6
-
0.0
0.6
23.7
Pro forma net LOS wells as of June 30,
2023(8)
27.8
12.8
5.3
3.6
0.0
0.1
1.2
50.8
Net Royalty Acres (normalized to 1/8th
royalty equivalent)
March 31, 2023
140,602
42,894
24,934
21,595
12,535
9,872
8,205
260,637
Pro forma June 30, 2023(9)
152,234
45,339
24,978
21,752
12,669
9,872
8,203
275,047
NRA increase (decrease) since March 31,
2023
11,632
2,445
44
157
134
-
(2
)
14,410
(8) Includes net wells from the Stock & Cash
Acquisitions
(9) Includes NRAs from the Stock & Cash Acquisitions
FINANCIAL UPDATE
Sitio's second quarter 2023 average unhedged realized prices
including all expected quality, transportation and demand
adjustments were $70.90 per barrel of oil, $1.53 per Mcf of natural
gas and $18.63 per barrel of natural gas liquids, for a total
equivalent price of $42.01 per barrel of oil equivalent. During the
second quarter of 2023, the Company received $7.7 million in net
cash settlements for commodity derivative contracts and as a
result, average hedged realized prices were $74.40 per barrel of
oil, $1.92 per Mcf of natural gas and $18.63 per barrel of natural
gas liquids, for a total equivalent price of $44.45 per barrel of
oil equivalent. This represents a $4.42 per barrel of oil
equivalent, or a 9% decrease relative to hedged realized prices for
the three months ended March 31, 2023.
Consolidated net loss for the second quarter of 2023 was $3.0
million, which is $50.7 million less than consolidated net income
in the first quarter of 2023. This decrease was driven primarily by
a $25.6 million non-cash pre-tax impairment charge related to
Appalachian Basin proved properties and 11% lower realized unhedged
commodity prices, partially offset by $6.1 million of commodity
derivative gains. For the three months ended June 30, 2023,
Adjusted EBITDA was $127.2 million, down 9% sequentially from first
quarter 2023 Adjusted EBITDA, primarily due to the aforementioned
decrease in commodity prices.
As of June 30, 2023, the Company had $902.3 million principal
value of total debt outstanding (comprised of $486.0 million drawn
on Sitio's revolving credit facility and $416.3 million of senior
unsecured notes) and liquidity of $264.3 million, including $0.3
million of cash and $264.0 million of remaining availability under
its $750.0 million credit facility. In June 2023, Sitio made its
third consecutive quarterly amortization payment of $11.3 million
at par value on its senior unsecured notes, reducing the principal
from $427.5 million to $416.3 million.
As of August 7, 2023, which was post closing of the Stock &
Cash Acquisitions, Sitio had $1,021.3 million principal value of
total debt outstanding (comprised of $605.0 million drawn on
Sitio's revolving credit facility and $416.3 million of senior
unsecured notes).
Sitio did not add to or extinguish any of its commodity swaps or
collars during the second quarter of 2023. A summary of the
Company's existing commodity derivative contracts as of July 1,
2023 is included in the table below.
Oil (NYMEX WTI)
2023
2024
1H25
Swaps
Bbl per day
3,050
3,300
1,100
Average price ($/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
2H 2023 FINANCIAL AND OPERATIONAL GUIDANCE
Sitio is issuing financial and operational guidance for the
second half of 2023 based on results to date, expected impact of
the Stock & Cash Acquisitions and current expectations of
macroeconomic environment and future activity. The midpoint of the
guidance range for second half 2023 average daily production of
36,000 Boe/d, is approximately 1,439 Boe/d higher than reported
average daily production for the first half of 2023. The guidance
range of 2% to 4% for cash tax rate has been decreased relative to
prior guidance due to expected non-recurring tax benefits for the
second half of 2023. This new guidance supersedes any previous
guidance that had been issued for full year 2023. The table below
includes Sitio's second half 2023 guidance ranges.
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)
$
25.0
$
27.0
Production taxes (% of royalty
revenue)
6
%
8
%
Cash tax rate (% of pre-tax income)
2
%
4
%
SECOND QUARTER 2023 RETURN OF CAPITAL UPDATE
CASH DIVIDEND
The Company's Board of Directors declared a cash dividend of
$0.40 per share of Class A Common Stock with respect to the second
quarter of 2023. The dividend is payable on August 31, 2023 to the
stockholders of record at the close of business on August 18, 2023.
Based on a 65% payout ratio of second quarter 2023 Discretionary
Cash Flow and not including the pro forma impacts from the Stock
Acquisition, Sitio's quarterly dividend would have been
approximately $0.38 per Class A common share; however, the
Company's Board of Directors approved a second quarter 2023
dividend of $0.40 per Class A common share, which equates to a 65%
payout ratio including pro forma Discretionary Cash Flow for the
full three months ended June 30, 2023 for the Stock Acquisition
that closed during the second quarter 2023.
REPURCHASE WAIVER
Sitio and holders of Sitio’s senior unsecured notes have amended
the Company’s Note Purchase Agreement pursuant to which the Company
is permitted to repurchase up to an aggregate value of $25 million
of its Class A Common Stock and common units representing limited
partnership interests in Sitio Royalties Operating Partnership, LP,
an indirect subsidiary of the Company. Under this waiver, the
Company will be allowed to both pay a dividend of up to 65% of its
Discretionary Cash Flow and repurchase shares with its retained
cash flow. The Company’s Board of Directors has not authorized a
share repurchase program yet, while the Company continues to focus
on accretive acquisitions and the paydown of indebtedness.
SECOND QUARTER 2023 EARNINGS CONFERENCE CALL
Sitio will host a conference call at 8:30 a.m. Eastern on
Wednesday, August 9, 2023 to discuss its second 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 584245 or via webcast at
https://events.q4inc.com/attendee/759041923. Participants can also
pre-register for the event by going to the following link:
https://www.netroadshow.com/events/login?show=c9a7a7ad&confId=52782.
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 Citi
One-on-One Midstream / Energy Infrastructure Conference on August
23, 2023 and the Barclays CEO Energy Power Conference from
September 5 – 7, 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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Production Data:
Crude oil (MBbls)
1,580
588
3,169
1,123
Natural gas (MMcf)
5,575
1,871
11,010
3,565
NGLs (MBbls)
647
229
1,252
436
Total (MBoe)(6:1)
3,156
1,129
6,256
2,153
Average daily production (Boe/d)(6:1)
34,681
12,402
34,561
11,897
Average Realized Prices:
Crude oil (per Bbl)
$
70.90
$
109.87
$
72.50
$
101.37
Natural gas (per Mcf)
$
1.53
$
6.55
$
2.10
$
5.64
NGLs (per Bbl)
$
18.63
$
42.29
$
20.14
$
40.17
Combined (per Boe)
$
42.01
$
76.65
$
44.46
$
70.33
Average Realized Prices After Effects
of Derivative Settlements:
Crude oil (per Bbl)
$
74.40
$
109.35
$
75.78
$
101.10
Natural gas (per Mcf)
$
1.92
$
6.49
$
2.40
$
5.60
NGLs (per Bbl)
$
18.63
$
42.29
$
20.14
$
40.17
Combined (per Boe)
$
44.45
$
76.28
$
46.64
$
70.14
Selected Expense Metrics
Three Months Ended June
30,
2023
2022
Severance and ad valorem taxes
7.8
%
7.9
%
Depreciation, depletion and amortization
($/Boe)
$
23.52
$
17.64
General and administrative ($/Boe)
$
4.46
$
5.91
Cash G&A ($/Boe)
$
2.12
$
3.29
Interest expense, net ($/Boe)
$
7.34
$
1.72
Condensed Consolidated Balance
Sheets
(In thousands except par and share
amounts)
June 30,
December 31,
2023
2022
.
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents
$
348
$
18,818
Accrued revenue and accounts
receivable
118,376
142,010
Prepaid assets
20,704
12,489
Derivative asset
25,887
18,874
Total current assets
165,315
192,191
Property and equipment
Oil and natural gas properties, successful
efforts method:
Unproved properties
3,030,334
3,244,436
Proved properties
2,233,885
1,926,214
Other property and equipment
3,440
3,421
Accumulated depreciation, depletion,
amortization, and impairment
(390,833
)
(223,214
)
Total property and equipment, net
4,876,826
4,950,857
Deposits for property acquisitions
17,947
-
Long-term derivative asset
13,936
13,379
Deferred financing costs
11,783
7,082
Operating lease right-of-use asset
4,368
5,679
Other long-term assets
530
1,714
Total long-term assets
48,564
27,854
TOTAL ASSETS
$
5,090,705
$
5,170,902
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses
$
17,306
$
21,899
Warrant liability
8
2,950
Operating lease liability
1,343
1,563
Total current liabilities
18,657
26,412
Long-term liabilities
Long-term debt
893,665
938,896
Deferred tax liability
341,677
313,607
Non-current operating lease liability
4,159
5,303
Other long-term liabilities
1,189
89
Total long-term liabilities
1,240,690
1,257,895
Total liabilities
1,259,347
1,284,307
Equity
Class A Common Stock, par value $0.0001
per share; 240,000,000 shares authorized; 81,659,354 and 80,804,956
shares issued and 81,659,354 and 80,171,951 outstanding at June 30,
2023 and December 31, 2022, respectively
8
8
Class C Common Stock, par value $0.0001
per share; 120,000,000 shares authorized; 75,539,279 and 74,347,005
shares issued and 75,513,142 and 74,347,005 outstanding at June 30,
2023 and December 31, 2022, respectively
8
7
Additional paid-in capital
1,783,450
1,750,640
Accumulated deficit
(76,979
)
(9,203
)
Class A Treasury Shares, 0 and 633,005
shares at June 30, 2023 and December 31, 2022, respectively
—
(19,085
)
Class C Treasury Shares, 26,137 and 0
shares at June 30, 2023 and December 31, 2022, respectively
(677
)
-
Noncontrolling interest
2,125,548
2,164,228
Total equity
3,831,358
3,886,595
TOTAL LIABILITIES AND EQUITY
$
5,090,705
$
5,170,902
Unaudited Condensed Consolidated
Statements of Operations
(In thousands, except per share
amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues:
Oil, natural gas and natural gas liquids
revenues
$
132,567
$
86,507
$
278,121
$
151,458
Lease bonus and other income
3,899
1,297
9,171
2,709
Total revenues
136,466
87,804
287,292
154,167
Operating expenses:
Management fees to affiliates
—
1,371
—
3,241
Depreciation, depletion and
amortization
74,239
19,912
142,002
35,297
General and administrative
14,066
6,675
25,742
10,736
Severance and ad valorem taxes
10,344
6,950
20,803
10,804
Impairment of oil and natural gas
properties
25,617
-
25,617
-
Total operating expenses
124,266
34,908
214,164
60,078
Net income from operations
12,200
52,896
73,128
94,089
Other income (expense):
Interest expense, net
(23,159
)
(1,942
)
(45,362
)
(3,110
)
Change in fair value of warrant
liability
584
3,306
2,942
3,306
Loss on extinguishment of debt
—
—
(783
)
—
Commodity derivatives gains
6,112
20,010
20,875
18,895
Interest rate derivatives gains
607
—
447
—
Net income (loss) before taxes
(3,656
)
74,270
51,247
113,180
Income tax (expense) benefit
683
(2,257
)
(6,501
)
(2,645
)
Net income (loss)
(2,973
)
72,013
44,746
110,535
Net income attributable to Predecessor
—
(39,582
)
—
(78,104
)
Net income attributable to temporary
equity
—
(26,271
)
—
(26,271
)
Net (income) loss attributable to
noncontrolling interest
2,177
-
(22,889
)
-
Net income (loss) attributable to Class
A stockholders
$
(796
)
$
6,160
$
21,857
$
6,160
Net income (loss) per Class A common
share
Basic
$
(0.01
)
$
0.49
$
0.26
$
0.49
Diluted
$
(0.01
)
$
0.39
$
0.26
$
0.39
Weighted average Class A common shares
outstanding
Basic
81,044
12,522
80,614
12,522
Diluted
81,044
83,841
80,614
83,841
Unaudited Condensed Consolidated
Statements of Cash Flow
(In thousands)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities:
Net income
$
44,746
$
110,535
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and
amortization
142,002
35,297
Amortization of deferred financing costs
and long-term debt discount
2,793
—
Share-based compensation
10,106
978
Change in fair value of warrant
liability
(2,942
)
(3,306
)
Loss on extinguishment of debt
783
—
Impairment of oil and natural gas
properties
25,617
—
Commodity derivative gains
(20,875
)
(18,895
)
Net cash received (paid) for commodity
derivative settlements
13,659
(420
)
Interest rate derivative gains
(447
)
—
Net cash received for interest rate
derivative settlements
93
—
Deferred tax expense (benefit)
(7,421
)
133
Change in operating assets and
liabilities:
Accrued revenue and accounts
receivable
23,900
(21,741
)
Prepaid assets
7,187
(734
)
Other long-term assets
1,622
350
Accounts payable and accrued expenses
(7,654
)
(13,374
)
Due to affiliates
—
(380
)
Operating lease liabilities and other
long-term liabilities
(492
)
(12
)
Net cash provided by operating
activities
232,677
88,431
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
5,689
(356,799
)
Purchases of other property and
equipment
(19
)
(676
)
Deposits for property acquisitions
(17,947
)
(22,428
)
Net cash used in investing
activities
(12,277
)
(390,648
)
Cash flows from financing
activities:
Borrowings on credit facilities
619,500
156,895
Repayments on credit facilities
(643,500
)
(79,000
)
Borrowings on Bridge Loan Facility
-
250,000
Bridge Loan Facility issuance costs
-
(6,281
)
Repayments on 2026 Senior Notes
(22,500
)
—
2026 Senior Notes issuance costs
(269
)
—
Distributions to noncontrolling
interest
(91,162
)
(13,318
)
Dividends paid to Class A stockholders
(88,850
)
—
Dividend equivalent rights paid
(783
)
—
Cash paid for taxes related to net
settlement of share-based compensation awards
(3,379
)
—
Payments of deferred financing costs
(7,927
)
(2,830
)
Deferred initial public offering costs
-
(10
)
Net cash (used in) provided by
financing activities
(238,870
)
305,456
Net change in cash and cash
equivalents
(18,470
)
3,239
Cash and cash equivalents, beginning of
period
18,818
12,379
Cash and cash equivalents, end of
period
$
348
$
15,618
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
Stock Acquisition EBITDA from April 1, 2023 to June 13, 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 Stock Acquisition Discretionary Cash Flow from April
1, 2023 to June 13, 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 June
30,
2023
2022
Net income (loss)
$
(2,973
)
$
72,013
Interest expense, net
23,159
1,942
Income tax expense (benefit)
(683
)
2,257
Depreciation, depletion and
amortization
74,239
19,912
Impairment of oil and natural gas
properties
25,617
—
EBITDA
$
119,359
$
96,124
Non-cash share-based compensation
expense
5,422
978
Losses (gains) on unsettled derivative
instruments
1,140
(20,429
)
Change in fair value of warrant
liability
(584
)
(3,306
)
Management fees to affiliates
—
1,371
Merger-related transaction costs
1,814
1,979
Adjusted EBITDA
$
127,151
$
76,717
Stock Acquisition EBITDA: April 1 to June
13, 2023
2,275
—
Pro Forma Adjusted EBITDA
$
129,426
$
76,717
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 June
30,
2023
2022
Cash flow from operations
$
103,852
$
43,828
Interest expense, net
23,159
1,942
Income tax expense (benefit)
(683
)
2,257
Deferred tax expense
10,172
(133
)
Changes in operating assets and
liabilities
(9,715
)
25,473
Management fees to affiliates
—
1,371
Amortization of deferred financing costs
and long-term debt discount
(1,448
)
—
Merger-related transaction costs
1,814
1,979
Adjusted EBITDA
$
127,151
$
76,717
Less:
Cash interest expense
24,040
1,873
Cash taxes
8,261
477
Discretionary Cash Flow
$
94,850
$
74,367
Stock Acquisition Discretionary Cash Flow:
April 1 to June 13, 2023
$
2,275
—
Pro Forma Discretionary Cash
Flow
$
97,125
$
74,367
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 June
30,
2023
2022
General and administrative expense
$
14,066
$
6,675
Less:
Non-cash share-based compensation
expense
5,422
978
Merger-related transaction costs
1,814
1,979
Rental income
135
—
Cash G&A
$
6,695
$
3,718
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/20230808675359/en/
IR contact: Ross Wong (720) 640–7647 IR@sitio.com
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