Sitio Royalties (STR) Update - Nov 28

[dan_s]

This morning I posted our updated profile on Sitio Royalties Corp. (NYSE: STR), a C-Corp., to the EPG website.

STR is one of the four minerals companies in our High Yield Income Portfolio.

This Company was formed by a merger of a private company into Falcon Minerals on June 6, 2022. In less than 18 months Sitio's production has grown from ~12,000 Boepd to over ~36,500 Boepd (50% crude oil, 30% natural gas and 20% NGLs). Not including additional acquisitions, I expect their production to grow at 5% to 10% each year because lots of new wells will be completed where STR holds mineral rights. As a mineral owner, STR has no costs related to the drilling, completing or operating expenses of wells on their acreage. 36,500 Boepd generates a lot of free cash flow for this company.

Sitio pays variable quarterly dividends that are ~65% of "Discretionary Cash Flow", which equates to ~35% of their total Operating Cash Flow. Their last four dividends totaled $1.99/share. Based on my forecast, they should continue to pay out close to $0.50/quarter for annualized yield of approximately 9% based on today's share price.

The remaining Discretionary Cash Flow will be used to acquire more minerals, primarily in the Permian Basin.

As a C-Corp., STR is a good choice for your IRA.