Sitio Royalties Corp. First Quarter 2023 Results

Sitio Royalties Corp. announced operational and financial results for the quarter ended March 31, 2023. Unless the context clearly indicates otherwise, references to "we," "our," "us" or similar terms refer to Sitio.

Chris Conoscenti, Chief Executive Officer of Sitio, commented, "Producer activity on our assets continues to be steady, with average production of 34,440 Boe/d in the first quarter, which is in-line with Sitio's pro forma production of 34,424 Boe/d in the fourth quarter of 2022. We evaluated approximately 50,000 net royalty acres for acquisition in the first quarter of 2023, but we did not find any opportunities that met our returns criteria. This was the first quarter in over two years that we haven't announced or closed an acquisition. Instead, we focused on strengthening the balance sheet by reducing long-term debt by approximately $34 million and continuing to improve our internal efficiencies."

1Q 2023 RESULTS RELATIVE TO FULL YEAR 2023 GUIDANCE

The table below shows first quarter 2023 results relative to financial and operational guidance for full year 2023 that was provided on March 8, 2023.

MERGERS AND ACQUISITIONS UPDATE

For the three months ended March 31, 2023, Sitio remained active in the M&A market, evaluating acquisition opportunities of approximately 50,000 NRAs in aggregate. Despite these efforts, Sitio did not find acquisition opportunities that met its underwriting criteria and therefore did not transact on any M&A deals during the first quarter of 2023.

FINANCIAL UPDATE

Sitio's first quarter 2023 average unhedged realized prices including all expected quality, transportation and demand adjustments were $74.10 per barrel of oil, $2.70 per Mcf of natural gas and $21.75 per barrel of natural gas liquids, for a total equivalent price of $46.96 per barrel of oil equivalent. During the first quarter of 2023, the Company received $5.9 million in net cash settlements for commodity derivative contracts and as a result, average hedged realized prices were $77.14 per barrel of oil, $2.90 per Mcf of natural gas and $21.75 per barrel of natural gas liquids, for a total equivalent price of $48.87 per barrel of oil equivalent. This represents an $8.61 per barrel of oil equivalent, or a 15% decrease relative to hedged realized prices for the three months ended December 31, 2022.

Consolidated net income for the first quarter of 2023 was $47.7 million, which is $43.1 million greater than consolidated net income in the fourth quarter of 2022. This increase was driven primarily because of the contribution from the Brigham Minerals assets for the entire quarter vs. three days in the fourth quarter of 2022. For the three months ended March 31, 2023, Adjusted EBITDA was $140.0 million, down 17% sequentially from fourth quarter 2022 pro forma Adjusted EBITDA, primarily due to the aforementioned decrease in commodity prices.

As of March 31, 2023, the Company had $914.5 million principal value of total debt (comprised of $487.0 million drawn on Sitio's revolving credit facility and $427.5 million of senior unsecured notes) and liquidity of $273.2 million, including $10.2 million of cash and $263.0 million of remaining availability under its $750.0 million credit facility, which was reaffirmed on April 28, 2023. As of May 5, 2023, Sitio had $868.5 million principal value of total debt (comprised of $441.0 million drawn on Sitio's revolving credit facility and $427.5 million of senior unsecured notes). On March 31, 2023, Sitio made its second quarterly amortization payment of $11.3 million at par value on its senior unsecured notes, reducing the principal from $438.8 million to $427.5 million.

FIRST QUARTER 2023 CASH DIVIDEND

The Company's Board of Directors declared a cash dividend of $0.50 per share of Class A Common Stock with respect to the first quarter of 2023. The dividend is payable on May 31, 2023 to the stockholders of record at the close of business on May 19, 2023.