Disclaimer FORWARD-LOOKING STATEMENTS This presentation relates to Sitio Royalties Corp. (the Company or Sitio) and contains statements that may constitute forward-looking statements for purposes of federal securities laws.…
Sitio investment thesis Mineral and royalty interest ownership provides unique, cost advantaged oil and gas exposure and the highest free cash flow margins in the oil & gas value chain Well-positioned as a natural aggregator in a…
A leading oil-weighted mineral and royalty company focused on consolidation of the highly fragmented minerals sector Sitio acquires and manages oil and gas mineral and royalty interests with a focus on the Permian Basin Key statistics…
Mineral and Royalty Highlights 5
Mineral and royalty businesses are a structurally advantaged asset class Mineral interests are perpetual real property interests and when leased for royalties, have no development capital expenses SIMPLICITY No physical operations or…
Energy is underweight in the S&P 500 S&P 500 market value by sector Sector over / (under) weighting within the S&P 500 S&P 500 Sector % Diff. Energy accounts for 7.8% of S&P 500 2023E net income yet Technology 8.3% only represents…
Commodities act as a real hedge against inflation Change in WTI price vs. change in inflation rate (WTI % change) (Inflation % change) Oil prices have a strong 80% 4% positive correlation with Correlation coefficient: 0.78 60% 3%…
Mineral and royalty companies are insulated from inflation in drilling and completions costs 2022A vs. 2023E Capital expenditures and production E&P companies are projecting 19% growth in capex to achieve only 3% production 19.3%…
Sitio has a highly scalable business model 1Q23 Adjusted EBITDA per employee 3.0 Sitio has an efficient 1Q23 Adjusted EBITDA per employee (mm) business model, with 2.5 more than double the pro forma Adjusted 2.0 EBITDA / employee…
Sitio offers compelling returns compared to selected energy transition companies 1Q23 Free cash flow margin: Sitio vs. selected energy transition companies (1)(2) Vast majority of energy transition stocks are generating negative cash…
Sitios pro forma gross dividends for last 9 months exceeded that of the majority of SMID-cap E&P and minerals companies Last 9 months gross dividends vs. enterprise value(1)(2) 700 Sitios size, advantaged cost structure and 600…
Sitio Overview 13
Sitio has a proven track record of consolidation over an extended time period Change in NRAs by public mineral peers Sitio NRAs since inception: 187 acquisitions to date since year end 2018(1) (Cumulative NRAs) (NRAs acquired by…
Sitios disciplined underwriting approach results in strong returns Sitios recent large acquisitions are all outperforming Key underwriting criteria underwriting assumptions(1) Cumulative first 12-month production (boe/d) Target…
Consolidation of the minerals sector is still in a very early stage Aggregate public market capitalization(1) Estimated U.S. royalty revenue(2) ( in Bn) Only a fraction of U.S. oil and gas royalty payments 549 go to current public…
Permian minerals market, Sitios primary target area, remains highly fragmented Permian Basin NRAs Permian Basin addressable market Delaware Midland 20,000 and 45,000 unique mineral owners across the Delaware and Midland,…
Sitio is able to drive down Cash G&A / boe with each large acquisition Significant Cash G&A (/boe) reduction while well count grows 11x (NRAs) (Cash G&A /boe) 300,000 7.00 6.01 260,607 260,637 6.00 250,000 5.10 5.00 200,000…
Sitio has achieved significant synergies from corporate mergers Sitios 1Q23 G&A and Cash G&A are 38% and 46% lower, respectively, than these amounts for 1Q22 for the sum of Desert Peak Minerals, Brigham Minerals and Falcon Minerals G&A…
Spud and permit activity on Sitios existing asset base provides visibility into near-term production Sitio total line-of-sight development 17.8 253.3 25.0 141.3 42.8 line-of-sight wells on Sitio acreage 296.2 112.0…
Sitio line-of-sight wells by operator Other 25.0 17.8 Other Net Spuds Net Permits 21 Note: Well counts as of 3/31/23. All wells normalized to 5,000
Sitio has exposure to approximately 33% of the acreage in the Midland and Delaware Basins Sitios remaining Permian Basin inventory by drilling spacing unit (DSU) Sitio has over 3.8 million gross DSU acres across all basins Sitios…
E&P companies have significant remaining drilling inventory on Sitios acreage Operators have drilled a range of 3,500 4,750 5k normalized wells per year on Sitios acreage over the past 3 years Gross 5k normalized remaining inventory…
Sitio has increased production per debt adjusted share while making large-scale acquisitions over the last 12 months Sitios production per million debt adjusted shares(1) % change in production per debt adjusted share over the last 4…
Sitios risk management strategy is designed to protect returns on cash acquisitions made in commodity price environments above mid-cycle pricing Hedging methodology Oil and gas hedging summary as of 3/31/23 Utilization of hedging as a…
Sitio maintains a balanced capital allocation framework Sitio expects to pay Sitio expects to a dividend of at least retain up to 65% of its Discretionary Cash Flow(1) 35% of its Discretionary Cash Flow(1) to shareholders…
Sitios governance model provides strong alignment with shareholders Board and management Incentive compensation is 100% compensation is structured to drive equity based, with emphasis on total long-term shareholder returns total…
Leading example of environmental and social responsibility ENVIRONMENTAL SOCIAL Zero environmental liabilities Employee base and Board reflective of a culture that values diversity No scope 1 emissions; scope 2 emissions are only…
Sitio has no scope 1 and minimal scope 2 emissions Sitios differentiated nature of operations results in lower scope 1 and scope 2 emissions than E&P operators(1) E&P operators bear 100% of the environmental liabilities of operations…
Sitio investment thesis Mineral and royalty interest ownership provides unique, cost advantaged oil and gas exposure and the highest free cash flow margins in the oil & gas value chain Well-positioned as a natural aggregator in a…
Appendix 31
Selected mineral and royalty company benchmarking 1Q23 Production (Mboe/d) NRAs(1) 39.3 Oil 1,210,261 Permian 35.0 34.4 Gas Non-Permian NGL 20.9 17.0 593,503 260,637 217,072 194,859 BSM VNOM STR TPL KRP KRP BSM STR VNOM…
Delaware Basin overview Acreage footprint by drilling spacing unit Asset summary(1) Delaware NRAs 140,602 Average Horizontal NRI 1.3% Normalized net wells TIL since 1/1/19 62.9 Normalized net spuds and permits 23.0 Top…
Midland Basin overview Acreage footprint by drilling spacing unit Asset summary(1) Midland NRAs 42,894 Average Horizontal NRI 0.5% Normalized net wells TIL since 1/1/19 42.5 Normalized net spuds and permits 11.5 Top…
DJ Basin overview Acreage footprint by drilling spacing unit Asset summary(1) DJ NRAs 24,934 Average Horizontal NRI 0.7% Normalized net wells TIL since 1/1/19 17.1 Normalized net spuds and permits 5.1 Top operators(2) (1)…
Eagle Ford overview Acreage footprint by drilling spacing unit Asset summary(1) Eagle Ford NRAs 21,595 Average Horizontal NRI 1.2% Normalized net wells TIL since 1/1/19 8.6 Normalized net spuds and permits 1.7 Top operators(2)…
Appalachia overview Acreage footprint by drilling spacing unit Asset summary(1) Appalachia NRAs 12,535 Average Horizontal NRI 0.5% Normalized net wells TIL since 1/1/19 1.3 Normalized net spuds and permits 0.0 Top operators(2)…
Anadarko Basin overview Acreage footprint by drilling spacing unit Asset summary(1) Anadarko NRAs 9,872 Average Horizontal NRI 0.6% Normalized net wells TIL since 1/1/19 5.6 Normalized net spuds and permits 0.1 Top operators(2)…
Williston Basin overview Acreage footprint by drilling spacing unit Asset summary(1) Williston NRAs 8,205 Average Horizontal NRI 0.2% Normalized net wells TIL since 1/1/19 3.3 Normalized net spuds and permits 1.3 Top…
Non-GAAP definitions and reconciliations Adjusted EBITDA ( 000) and Discretionary Cash Flow ( 000) Three Months Ended Three Months Ended March 31, March 31, 2023 2022 2023 2022 Cash flow from operations 128,825 44,603 Net income…
Non-GAAP definitions and reconciliations (contd) Cash G&A ( 000) Three Months Ended March 31, 2023 2022 General and administrative expense 11,676 4,063 Less: Non-cash share-based compensation expense 4,684 One-time transaction costs…
Contact Information Ross Wong Corporate Headquarters: 1401 Lawrence Street, Suite 1750 VP of Finance and Investor Relations Denver, CO 80202 Phone: Houston Office: (720) 640-7647 609 Main Street, Suite 3950 Email: Houston, TX 77002…
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