Q3 2023 PHX Minerals Inc Earnings Call
Okay.
Good morning, and thank you for attending P. H X minerals June 30th 2023 quarter, and earning conference call. At this time all lines will be muted during the presentation of the call.
But there's an opportunity for question and answer session. At the end has reminded this call is being recorded I would now like to turn the call over to Rob Fink with F. N K I R. Please go ahead Sir.
Thank you for joining us today to discuss PHX minerals June 32023 quarter end results.
Hosting the call today are Jeff Stevens, President and Chief Executive Officer routes to Niko <unk> Senior Vice President and Chief Financial Officer, Danielle Meso, Vice President of Engineering.
The earnings press release that was issued yesterday. After the close there is also posted on <unk> Investor Relations website.
Before I turn the call over to Chad I'd like to remind everyone that during today's call, including the Q&A session.
We may make forward looking statements regarding expected revenue earnings future plans opportunities and other expectations of the company.
These estimates and forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be.
Materially different from those expressed or implied on the call.
These risks are detailed in Phs minerals. Most recent annual report on Form 10-K.
As such maybe amended or supplemented by subsequent.
Our quarterly reports on Form 10-Q, or other reports filed with the SEC.
These statements made during the call are based upon information known to PHX as of today August nine 2023, and the company does not intend to update these forward looking statements whether as a result of new information future events or otherwise unless required by law.
That said I'd like to turn the call over to Chad Chad the call is yours.
Thanks, Rob and thanks to all of you on this call for participating in ph exit June 32023 quarter end conference call. We appreciate your interest in the company.
As you may have seen a few moments ago quite healthy energy issued a public letter, indicating its interest in margin with PHX minerals.
The board will be reviewing the Whitehall collateral and evaluating the proposal carefully.
This time, we have nothing further to say about this matter and we will not be taking questions regarding white house expression of interest.
For the second quarter I am pleased with our <unk>.
Performance, despite historically low natural gas prices and I'm encouraged about future quarters, given the significant improvement in the macro dynamics.
During the second quarter, we continued to experience robust activities across acreage despite weak commodity prices. There was a notable improvement in our market share of operating rigs within our focus areas.
Based on the activities in our inventory of wells permitting and well conversions to production. We are confident in meeting our production forecast, we communicated earlier in the year.
As a matter of fact, we are raising the lower end of our guidance slightly higher based on improving conditions progress to date and enhanced visibility Ralph will discuss more on this later.
As I have previously stated it is more accurate to measure a royalty volume growth on a year over year basis, instead of the sequential quarter.
This eliminates the lumpiness created by operator timing in fact, we are on track to achieve annual year over year royalty volume growth approximately 25% in calendar 2023.
We believe the second quarter appears to be the bottom of natural gas prices and supply and demand imbalances continue to improve.
As we look forward toward 2024, and 2025 demand from LNG exports will be a significant demand driver to the natural gas market.
During the quarter several natural gas operators have signed heads of agreements or hoa's with LNG operators.
As we draw closer to the commissioning of these additional LNG facilities. We believe it will drive improvement in cinema as well as prices are haynesville will be the primary source to feed these LNG facilities.
Even though natural gas prices were at historic low levels. This quarter PHX continued to generate cash flow fund acquisitions and maintain ample liquidity demonstrating the advantage of a mineral business model.
At this point I'd like to turn the call over to Danielle to provide a quick operational overview, and then to Ralph to discuss the financials.
Thanks, Chad and good morning to everyone participating on the call for our June 30th 2023 ended quarter total production decreased 7% from the prior sequential quarter to 2304, and then C. S. E. Note that last quarter's volumes contain a full month of production from our legacy Eagle Ford and Arkoma assets that were divested.
On January 31st 2023, excluding these divested volumes total production from our assets decreased just 3% from the prior sequential quarter. Additionally, 80% of our quarterly production volumes were natural gas, which aligns with our long term position that natural gas is the key transition fuel for a sustainable energy future we all.
It is 11% of production volumes and NGL represented 9%.
Quarterly royalty production decreased 4% sequentially to 2010, and then cfe, while royalty volumes remained relatively flat compared to last quarter year over year volumes have increased by 26%. It's important to note that as a mineral holder, we do not control timing on whether or not in it. So there can be some volatility on a quarter to quarter basis.
And volumes associated with our business model, our better evaluate it on a rolling 12 month basis.
On the working interest side production volumes declined 24% sequentially to 294, and then Cfe ended June 30th 2023 quarter as a result of the sale of our legacy Eagle Ford and Arkoma working interest well on January 31st as stated above.
The working interest volumes from the March 31st quarter contained a full month of production associated with the divested assets. Excluding these divested volumes working interest volumes remained flat quarter over quarter.
Royalty volumes represented 87% of total production during our June 30th quarter as recently at calendar 2021 royalty volumes were only 45% of our total.
Collecting on our reported volumes over the last several quarters, you'll know our volumes have remained relatively flat. This is due to the loss of volumes associated with the sale of working interest asset offset by the gain in our growing royalty volumes with the divestiture of our working interest assets virtually complete we estimate our total corporate volumes will reflect steady growth in the coming.
Quarters, as we have grown our royalty volumes and divested of our non op working interest the quality of our asset base is enhanced with improving margins.
This growth in royalty volumes. It's also reflected in our corporate reserves. Our proved reserves as of June 32023 were $68 six V. C. S E compared to our fiscal year end reserves of 81.1 P. C. S E. As of September 30th 2022. This decrease is primarily due to sales of our working interest assets as well as nine months of production.
Items rolling off over the same timeframe. Our proved royalty reserves have remained flat as a result of steady conversion of probable reserves to proved over the last three quarters, despite significantly lower natural gas prices.
During the quarter ended June 30th 2023 third party operators active on our mineral acreage converted 81 gross or three net wells in progress or with the producing wells compared to 117 gross or 14 net worth converted to PDP and the quarter ended March 31st 2023, the majority of the new wells brought online are located.
In the Haynesville and scoop.
At the same time, our inventory of wells in progress remained consistent at 186 gross or five one net wells compared to the 198 gross or six five net wells reported as of March 31, 2023. The continued track record of well conversions and replenishment of the inventory of wells in progress or with shows that.
Repeat ability of our business strategy. Additionally, we have mineral interests under a deep inventory of approximately 2000 gross and drilled locations that will continue to feed that activity.
In addition to our web we regularly monitor third party, operator rig activities and our focus areas and observed 15 rigs present on PHX narrow mineral acreage as of July 10th. Additionally, we had 61 rigs active within 2.5 miles of PHX ownership. Despite the recent decrease in natural gas prices are mark.
Share of total active rigs in the Haynesville play has doubled as of July 31st ph exit share of all active rigs was 18% compared to 9% a year ago. We believe this is a result of owning minerals in the core of the basin in which we focus with competitive economics across various pricing environments.
In summary, we continue to see steady development on both our legacy and recently acquired mineral assets, which should lead to annually increasing royalty volumes now I will turn the call back to Ralph to discuss financials.
Thanks, Danielle and thank you to everyone for being on the call today.
Natural gas oil and NGL sales, our sales revenues decreased 39% on a sequential quarter basis to a total of $7 2 million.
Breaking down this number further royalty sales volume revenues decreased 39% to $6 2 million because of a 4% decline in royalty production volumes and 36% lower realized commodity prices working interest sales revenues decreased 42% two 1 million as a result.
A lawyer lower production volumes associated with the divestiture of the Eagle Ford and Arkoma assets.
Which you recall that they may 31st the March 31st quarter still had one full month of production from these areas as Danielle talked about and working interest revenues for the June 30th quarter also had a 23% lower realized commodity price effect being realized.
Realized natural gas prices averaged $1 92 per mcf, 46% lower than the prior sequential quarter realized oil prices averaged $73.87 per barrel, 3% lower in Ngls averaged $18 93 per barrel, 25% lower.
Realized hedge gains for the quarter were $1 million for the quarter, approximately 45% of our natural gas, 53% of our oil and zero percent of our NGL production volumes were hedged at average prices of $3.37 and $74.68 respectively.
Approximately 39% of our anticipated remaining calendar 2023 natural gas production is downside protection at approximately $3.27 per Mcf on the oil side, approximately 39% of our anticipated production.
Has downside protection at approximately $72 98 per barrel most of our natural gas hedges are structured as costless collars, which means that we also have upside on these volumes are up to the $6 range. Our current hedge book position is available in our recently filed 10-Q.
Total transportation gathering and marketing decreased 20% on a sequential quarter basis to $906000 and decreased 13% on a per M. C. A fee basis to 39 cents, primarily because of higher haynesville volumes as a percentage of total volumes, which have lower associated.
<unk> costs, and where we have a meaningful number of cost free leases production taxes decreased 21% on a sequential quarter basis to approximately $462000 due to lower sales revenues offset by higher production in Louisiana, which applies its tax rate to production volumes and not.
Revenues.
Louis associated with their legacy non operated working interest wells decreased 42% on a sequential quarter basis to $314000. This is the first clean quarter without the impact of the Eagle Ford and Arkoma working interests, which we sold in late January .
Cash G&A was up 5% to $2 million $470000 compared to the prior sequential quarter, primarily due to additional costs associated with legal work and tax work during the quarter.
Adjusted EBITDA was approximately $4.100 million in our quarter ended June 30, as compared to $7 7 million in the March 31st quarter, DD&A was up 17% to $2 2 million compared to the prior sequential quarter due to new insignificant over overwriting royalty.
Duction that has depreciated on a unit of production basis and conversion of non producing minerals to producing minerals, which have a shorter depreciable life as these new royalty wells come online net loss net loss for the quarter was $41000 were effectively zero cents per share compared.
Net income of $9 6 million or 27 cents per share for the prior sequential quarter.
Adjusting for the unrealized mark to market on our hedges and the gain on sale sales in the June quarter pre tax net income decreased approximately 87% to $468000 or two cents per share. We had total debt of $23 $75 million as of June 32023.
<unk> compared to 26 million as of March 31st as we have continued to focus on maintaining a strong balance sheet and enhancing liquidity for potential future acquisition opportunities our debt to trailing 12 month EBITDA was zero point 93 times at June 30th twenty-three.
Lastly, we updated our company outlook for calendar 2023 to reflect higher confidence from forecast the volumes. The estimated royalty production range is now seven six to eight six bcf fee compared to the prior outlook of seven 4% to eight six P. C. S. E. We also reduced the estimates.
Per unit transportation gathering and marketing costs to a 45 to 50 range compared to a 53% to 58 cent range to reflect a higher percentage of sales volumes coming from the Haynesville, which is I talked about his lower associated costs, and where we have a significant number of cost free.
Leases production taxes as a percentage of our pre hedged say of all sales volumes.
<unk> is being increased to five to five 5% to 6% from $4 75 to $5 two 5% again as a result of higher production volumes in the Haynesville and Louisiana tax being being applied to volumes and not revenues on the G&A side, we've reduced the high end of our per unit production.
<unk> metric from a dollar Oh seven to a dollar one six to reflect the higher.
Our production volumes production volumes estimates and a stable cash G&A on an absolute basis with that I'd like to turn the call over to back to Chad for some final remarks.
Yeah.
Thank you Ralph.
Conclusion, we have made remarkable progress in transforming PHX over the last three years and have achieved on the specific plans. We originally established back then.
We are now positioned to grow even further using the free cash flow from our quality assets and strong financial position and look forward to keeping you updated before we close I would like to highlight a couple of important points first with our non op working interest divestitures largely complete we expect to resume growth at a corporate level.
For our corporate volumes, which will be primarily driven by an increasing royalty volumes.
In spite of record low natural gas prices THX continues to see robust activity on its minerals, which will drive royalty volume growth in the coming quarters.
The natural gas market.
Macro dynamics improve we are seeing additional consolidation opportunities in our core areas in the Haynesville and scoop.
We are excited about these prospects and we'll use the same rigorous approach to evaluate these opportunities in order to drive shareholder value.
As always I would like to recognize and thank our dedicated employees for their hard work and our board of directors for their support and insightful wisdom they provide.
This concludes the prepared remarks portion of the call operator, please open up the queue for questions. Thank.
Thank you if he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Our first question is from Derrick Whitfield with Stifel. Please proceed.
Good morning.
All and thanks for your time.
Hi, there.
For my first question I wanted to focus on your growth outlook, while we are seeing a reduction in your with your relative market share in the Haynesville is increasing and you are raising the lower end of your minerals guidance.
Could you perhaps speak to your expected trajectory trajectory for the second half.
And your views on how the macro environment is shaping up for 2020 for activity across your assets.
Well, if you want to you want to address that and I'll follow up with a closing comment.
Sure, Yeah, Hey, Derik, Yeah, and look I mean, I think again you know the the.
We like her bought our motto is this focus as we focus on natural gas. The Haynesville is the key basin in which you know to be fewer.
If you're playing a.
And improvement natural gas commodity price cycle in LNG exports, right and I think the base and even at these prices are highly economic and and the fact that we're focused on the core of the core rights really what's enabled us to increase the market share of the operating rigs right. So what that means is.
You know to us is that even in a down cycle.
Our acreage is so economic two operators that it would be the last rig that they lay down and as opposed to the first rig rights or were not around the margins were in the core of the core.
You know the operators that we're under we're focused also on growing production, which helps you know which helps us right, they're not focused on purely just maintaining production.
Steady, it's highly fragmented there's lots of good operators and so that visibility.
Now enables us to kind of look at the World and say you know we have a high level of confidence that the wells being worked on are going to convert right and we continue to see active permitting on our acreage every day. So we're encouraged about the future as it pertains to the Haynesville and then if you look at the springboard three play.
If you look at our corporate presentation, if just a map right and you look at the amount of permitting that you're seeing coming out of continental right and it certainly seems like they are.
Picking up the pace there as we always thought and predicted that they would sell them I.
I think I think we just all of that gives us conviction that the inventory that we built should continue to be converted and drive up revenue production.
Volumes on the royalty side revenues and cash flow.
And we can thanks Ralph.
And we can we can really look back to the.
This strategy will be reasonably put forth and being in the best rock quality and are the best operators when you look at.
Rig counts in our two core areas the haynesville in the spring more three six months ago and today in a virtually unchanged on our minerals same same rig count so that that really speaks to the quality of the assets and the quality operators and as Ralph said, we weekly watch permitting in the wells that are.
It is being drilled on our acreage and the docs the wells have been drilled and waiting on completion and that continues on a week over week and month over month remains relatively flat as these wells are being converted again theres a bit of lumpiness to it as we allude to.
But we're very confident as you as you asked we're very confident in the trajectory of our growth going into next year, we think.
Springboard III given what we see continental doing we think springboard III next year should really be driving a lot of our rules and volume growth.
That's our expectation so.
We're pretty excited about that great asset write off later.
That's great color and then for my follow up could you speak to what you're seeing in the market from an M&A perspective at present, given the firming of commodity prices and perhaps also speak to your preference.
For capital allocation between the Anadarko and Haynesville mineral opportunities.
Well, we continue to focus on those two areas, we have great technical knowledge.
And have had great success in both of those areas. So we're we're pretty opportunistic in both those areas whichever comes first best Best Economics Best returns best will evaluate an asset and whichever one if we're competing whichever one provides the best economics, we will try to close on <unk>.
Six months ago, or three months ago, when gas prices were at the bottom there was a really wide spread in the bid ask between sellers and buyers and we couldn't we were having a hard time transacting in the Haynesville, we've had a little bit of success.
Wiring over the last couple of months in the springboard three area, but but not so much in the Haynesville, but then recently we've had a lot of inbound opportunities in the haynesville as well and we're really excited about a couple of opportunities. We're looking at right now so we.
We think that that the sellers have gotten a little bit of market therapy, and they realize that they're not going to be able to transact. It at what was $6 gas six months ago.
The strip today is $3 54 Bucks.
They've got to they've got to come down to be able to transact. So we're seeing that that spread on the bid ask narrow come come our way. So we're excited about the opportunities we're looking at right now.
Yeah, one other thing Derik I mean, I think it's important to note that regardless of the commodity price environment. We use the same very rigorous approach to how we evaluate acquisition opportunities right and you know and I think being patient works in our favor right and that's what we're seeing in the Haynesville today.
You know that being rigorous with a revaluation in and not.
Being overly you know not not doing deals just for the sake of doing deals, which has never been our approach right is paying off and we're seeing a lot of opportunities at prices that are you know significantly better than they water a few months ago.
That's great. Thanks again for your time.
Thanks Tahira.
As a reminder, just star one on your telephone keypad, if he would like to ask the question. Our next question is from Jeff Grant with Alliance Global Partners. Please proceed.
Morning, guys.
I understand you obviously.
I understand you can't obviously can't comment directly on the White Hot letter, but broadly speaking as you guys think about larger M&A opportunities. What are the main boxes that you guys want checked off when evaluating those kinds of opportunities when thinking about whether it makes sense from us from a PHX and its shareholders perspective.
When you had the board the board is obviously going to they're going to look at any and every opportunity.
That is in the best interest of the shareholders. We look at all all opportunities all requests all inbounds.
With the same rigor and the same series sincere.
Effort.
So to protect our shareholders, we want to make sure that any proposal is NAV accretive and as is.
In the best interest of the shareholders from that perspective. So that's always the I guess the main hurdle is is it the best deal the right deal for our shareholders from a value perspective.
Yeah and Andy.
They're at meet the Herrick, I'm, sorry, Jeff and Jeff I mean, I think and again it always in and chat has always said this right from day one it always starts with the rock right. What is the quality of the rock right is it in the core of the core regardless of the size of the deal. We've always evaluated every deal the exact same way what is the rock quality.
Toward the operators on them, what's the growth you know what's the growth rate you know at which those assets are going to be developed and is it accretive.
You know it doesn't you know.
We look at it the same way and I think that consistency has always been you know what's led to the success.
<unk> that we've had in terms of growing those royalty volumes you know over the last three years I mean, we've grown that at over a 20% compounded annual rate.
Right.
You know and you know I think that consistency is the key to our success in terms of what we've achieved under royalty growth side.
Great I appreciate that and for my follow up.
Obviously, the natural gas market is pretty dynamic right now what kind of assumptions.
As it relates to guidance or are you guys, making in it.
In regards to operators potentially ducking up wells maybe for early 2024 do you view that at all as as a material risk for hitting the 2023 full year guidance or just kind of any thoughts or understanding that obviously, it's out of your controls and are a holder.
Yeah. Most of the four are 100% of the volumes we've forecasted for this year based on our existing base PDP production and wells that are already drilling are being completed and we have a pretty good idea of when theyre going to be put on put into sales.
You get into 2024, and there's a little bit more risk around those volumes, but again given the location of those assets the footprint of where they are and the operators, we risk them and have a pretty good idea of what volumes are going to be coming on and what our volumes look like for 2024.
Yes, Jeff I mean, I think that's why it's a range right. So we have a kid that's not a number but a range right. It takes into account the possibility if somebody doing something they control and that we don't control in terms of ducking up inventory, you know et cetera et cetera. So it's all it's all baked into our assumptions.
Alright, great. Thanks for the time guys.
Yes.
Our next question is from Jonathan Schaffer with Northland Capital markets. Please proceed.
Hi, guys.
A couple of calls so apologies if any of this has already been.
But the first question I have is you know, it's a challenging price environment for the quarter.
It's actually kind of nice to see how you still end up at.
Like a breakeven.
And you know kind of what do you think it kind of highlights the business model in a positive way.
Is this it.
And kind of looking back at historical performance when you had more.
No working interest wells it looks like maybe you didn't have as much as that it's almost like downside protection, where you could you just you really just covering overhead yeah see you know historically you could have some pretty big.
GAAP net income losses does this is this kind of representative going forward, where you know now that you're really now that you're.
More mineral and royalty interests, you know the cost burden really just becomes the overhead and if you can kind of size that properly and then do some hedging.
Is it should we kind of view this is it.
Emblematic of a floor.
But floor I guess I mean.
You know in the future if natural gas prices are really kind of what seems to be a bottom.
Should you be in this kind of position is still being able to be breakeven is that kind of the strategy and the thinking just looking to validate my perspective here.
Yeah. So I I think we we started the business in January 'twenty and have built the business around scale.
And we have 20 employees have our accountants.
Accountants back office financial people do all the public filings with SEC and the other half is.
Technical people and we evaluate five or six or seven deals a month, we're evaluating 80 to 100 deals a year.
Only do a few a handful of those because as Ralph said the rigorous.
Technical focus we apply to any any acquisition, whether it's 100000 dollar deal and a $10 million do we use the same rigor.
Rigorous technical work. So the business is set up for scale and were built to grow. So every new deal, we acquire and close on and bring the asset in house, we don't add too we don't add G&A G&A stays the same so we're built to grow and yes. It is.
As we move forward and as we use our cash flow to acquire more assets that G&A will become less and less of a burden in a breakeven will lower really overall.
Okay, and then shifting gears a little bit.
This might sound like a little bit of paranoia on my part.
Probably from my own experience, Mike My first job out of college with petroleum engineer in the Marcellus shale in Appalachia.
The Mountain Valley pipeline.
Yes.
The debt ceiling act kind of green, let that now the U S. Supreme Court is also kind of helped to bring my thought and so.
And I haven't I haven't looked closely at the <unk>.
Interconnections between the different the various pipelines or anything but it just makes me think about that.
Are there any <unk>.
Risks kind of in the.
Mid term or longer term kind of time horizon of.
Lots of gas coming out of Appalachia and having.
Putting some downward pressure on natural gas prices just trying to.
Think about that and if there's a.
Yeah like a it's such a historically such a prolific gas basin, but you know you just couldnt get the gas out of it with pipelines. So.
And for us to kind of you're mindful of and watching there and what are you guys. How are you thinking about it and how are you monitoring that.
Well put.
Really the answer to that question you got to look at the overall.
One the U S domestic natural gas supply and demand fundamentals and then in that context and a global.
Natural gas through all of the LNG terminals built around the world has become Ralph and I were talking about this this morning.
They come up it's a fungible commodity.
And for instance in Australia, there were a couple of LNG terminals that the workers, we're going to strike and that hurt.
The possibilities of the LNG imports into Europe , So European prices have spiked so now.
Natural gas prices in the U S. Henry hub way up this morning, it's up six or 7%. This morning, just because of news.
Around the world that doesn't really have any immediate impact here, but that just shows you. The fungible nature of natural gas to today. So I don't think mountain Valley to your question Mountain Valley pipeline is going to anyway.
Materially impact the macro dynamics in the U S that pipeline goes to North Carolina, it's going to serve kind of the southeastern portion of the United States.
I think most of the in the future most of the growth in natural gas supply is going to come from the Permian basin and in the Haynesville and as these as I alluded to them.
Comments.
As these LNG under construction these LNG terminals, the new ones come into service in 2020, 565 Bcf a day of additional export capacity, which will mean the U S will be exporting about 20 Bcf a day by 2025 of LNG, you've got the U S.
Gas decline is at 18 or 20%. So you got to replace the decline first and now you got to add another six bcf of demand for it.
From LNG, so you need more supply to feed.
Just the obvious increase in demand besides what's going to happen in industrial wise as we come out of this.
If it's a recession or no nobody can decide whether we're in a recession or not.
The overall economy in the next couple of years includes you'll get industrial demand commercial demand. So.
I'm not that worried about it.
Any sort of.
Too much supply for the most part given the LNG export capacity that can really balance U S natural gas macro.
You know in India, one thing to add to Donovan is I mean, I think you know.
Yeah, if you think about the op rate because again, regardless of that pipeline right. What are the what is the intent that's been communicated by the operators right right and I think we've talked about there's sort of three key operators there in the.
In the in the Marcellus right. What is what is your desire to grow overseas the pressures that they face to focus on.
Returning capital right I mean, I think that's the other that's the other piece of the puzzle.
They you have to think about right and I don't you know I don't know if and when that ever changes right, but I think what we like about the debt. The haynesville is that it's more fragment that even from an operator standpoint, there's a lot more private folks we're not.
As a you know they they don't wake up every day thinking about what is wall Street think about return of capital right. So they they they want to grow production do you want to take advantage of the market right and so I think that dynamic provides in the haynesville provides a lot of opportunity for us.
Going forward to continue to grow you know at similar a similar pace of what we've done over the last three years from a royalty standpoint.
Okay that makes sense, but that's actually helpful perspective.
And then last question if I can squeeze one more in is just.
Yeah, when we look at the other there's certainly some much larger minerals or royalty focus companies out there and they do it seems like they got a premium valuation really probably driven by their size and scale them I think they seem to be a little bit more hands off approach. So you know it seems like you guys could make.
B.
You can make the counter argument that maybe a good multiple should be assigned to you as well because youre doing more proactive effort to kind of see what that drove its gonna go but.
Leaving that aside are there any you've made great strides in shifting from working interest through its interests are there any other kinds of things you can do or that you plan to do or that you think explains that valuation gap that you can.
Where you can start to close it was it just a matter of you know growing and trying to get to larger and larger scale over time, you know I know that would that would take some time, but or are there sort of other things you think or feel you can do that.
That help kind of reduce that valuation gap.
So that's probably the question of the day and we every <unk>.
Existing investors shareholder or new potential shareholders.
Comes down to that question they like the strategy like they liked the execution and they like the results we've achieved over the last three years as I alluded to.
My comments.
It just comes down to overall with the daily float and the ability to get into the stocking out were small.
We need to get bigger we know that and we're peddling as hard as we can in all of these acquisitions. We got some some interesting things that we're working on too to address as you say how can we better address these various issues and that's I think the real issue of the day is just our overall float and ability for la.
Investors, who are interested to get in and get out. So that's what we're working on that.
Yeah.
Out of it right I mean, you know look I think you know look multiple expansion is always good right, but I mean, I think you know I think it's also important to consider that at.
What the pace that we're going in terms of our growth rate in the expanding margins.
Associated with you know all minerals et cetera, et cetera, right. I mean, there is value creation that we are always working on right that is not that.
And that is not dependent upon.
Closing the gap with you know, where we trade relative to you know some of the peer group you know some of the other mineral peer group out there that's the Cherry on top and we do think about it and we do we we do try to Hum.
Behavior in a way that's going to compress that spread.
But that's not that's.
That's not at the core of what drives value right. It's not just multiple expansion, it's executing on the day to day growing royalty volumes growing cash flow and youre going to create value that way as well.
Yes, absolutely that makes sense. Okay. Thank you guys I'll take the rest of my questions offline.
Yeah.
We have reached the end of our question answer session I would like to turn the conference back over to Chad for closing remarks.
Thank you operator, again I'd like to thank our employees and shareholders for their continued support I would also like to note that Ralph and I will continue to expand our investor marketing activities over the coming weeks and months through a series of non deal Roadshows and conference presentations aimed at expanding investor awareness if you'd.
Be interested meeting please don't hesitate to reach out to myself wow or the folks that take Iowa, we look forward to hosting our next quarterly call in mid November . Thank you and have a good day.
Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you again for your participation.
Okay.
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