Sitio Royalties (STR) Q2 Results - Aug 8

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Sitio Royalties (STR) Q2 Results - Aug 8

Post by dan_s »

STR closed at $27.39 on August 8. It is one of four minerals companies in our High Yield Income Portfolio. This one is going to take some work to fully understand, but the dividend yield (over 10% looks good). I will update my forecast/valuation model tomorrow afternoon.
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Average Daily Production Volume of 12,402 Boe/d and Pro Forma Average Daily Production Volume of 15,149 Boe/d Including Falcon Minerals Volumes for the Entire Second Quarter 20221

Asset Footprint Increased by 65% to 173,800 Net Royalty Acres < Lots of "Running Room".

Declared $0.71 Dividend Per Share of Class A Common Stock < Annualize yield of 10.37% based on today's closing price.

Active Quarter of Acquisitions, Including Closing Merger With Falcon Minerals, Closing Acquisitions of Approximately 22,000 Net Royalty Acres and Signing Acquisition of Approximately 12,200 Additional Net Royalty Acres

Additional Scale Significantly Enhances Profitability on a Per Boe Basis

DENVER, August 08, 2022--(BUSINESS WIRE)--Sitio Royalties Corp. (NYSE: STR) ("Sitio", "STR" or the "Company") today announced operational and financial results for the quarter ended June 30, 2022.

SECOND QUARTER 2022 OPERATIONAL AND FINANCIAL HIGHLIGHTS AND RECENT DEVELOPMENTS

Average daily production volume of 12,402 barrels of oil equivalent per day ("Boe/d"), (52% oil), up 9% sequentially from 1Q 2022; pro forma average daily production volume of 15,149 Boe/d (50% oil) including Falcon Minerals volumes for the entire second quarter 2022

Net income of $72.0 million, up 87% sequentially from 1Q 2022 and cash flow from operations of $43.8 million, down 2% sequentially from 1Q 2022

Adjusted EBITDA of $76.7 million, up 29% sequentially from 1Q 2022 and Discretionary Cash Flow ("DCF") of $75.5 million, up 29% sequentially from 1Q 2022

Pro forma Adjusted EBITDA of $92.7 million and pro forma Discretionary Cash Flow of $91.4 million, including Falcon Minerals results for full 2Q 2022

Declared 2Q 2022 dividend of $0.71 per share of Class A Common Stock4; implied annualized dividend yield of 10.3% based on STR's Class A Common Stock closing price of $27.55 on August 5, 2022

126.8 net producing wells online as of June 30, 2022 including net wells on acquired acreage from Momentum Minerals

Including activity on the acquired acreage from Momentum Minerals, 5.2 net wells turned-in-line ("TIL") during 2Q 2022, approximately 88% of which were in the Permian Basin

Including net line-of-sight ("LOS") wells on acquired acreage from Momentum Minerals, 26.8 net LOS wells as of June 30, 2022, comprised of 14.4 net spuds and 12.4 net permits, with approximately 94% of total net LOS wells in the Permian Basin4

Completed all-stock merger with Falcon Minerals Corporation ("Falcon Merger") for over 34,000 net royalty acres ("NRAs") and cash acquisitions of approximately $357 million for an additional 22,000 NRAs

Signed agreement to acquire 12,200 NRAs from Momentum Minerals, which closed in July of 2022 ("Momentum Acquisition")

Chris Conoscenti, Chief Executive Officer of Sitio commented, "We are excited to announce strong results for our first quarter as a public company. Active operator development of our assets, incremental royalty revenue from acquired assets, and favorable commodity prices contributed to a successful inaugural quarter. We continued to execute well on our large-scale, Permian-weighted consolidation strategy. This was our most active quarter in our Company’s history with the closing of the Falcon Merger, the closing of the acquisition of Permian assets from Foundation Minerals, LLC ( the "Foundation Acquisition") and two other all cash acquisitions, and the announcement of the Momentum Acquisition. In aggregate, these acquisitions increase our footprint by 65% to over 173,000 NRAs. In addition, I'm pleased to announce our inaugural dividend of $0.71 per share for the second quarter, which is based on cash flow for legacy Desert Peak Minerals and Falcon Minerals as if both entities had been combined for the entire quarter and is not burdened with transaction fees from the Falcon Merger. Our second quarter dividend per share is nearly 99% of the split adjusted dividend per share that was paid to Falcon Minerals stockholders for the first quarter of 2022, even though our target payout ratio of 65% of Discretionary Cash Flow is lower than Falcon Minerals' historical payout ratio of approximately 100%, which gives Sitio significantly more financial flexibility to protect the balance sheet and pursue accretive acquisitions."

TipRanks: "In the last 3 months, 4 ranked analysts set 12-month price targets for STR. The average price target among the analysts is $36.25. The 4 price targets range from $32 to $43."
Dan Steffens
Energy Prospectus Group
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