Sitio Royalties Corp. (NYSE:STR) Q4 2024 Earnings Conference Call February 27, 2024 8:30 AM ET Company Participants Alyssa Stephens - Vice President of Investor Relations Chris Conoscenti - Chief Executive Officer Carrie Osicka - Chief Financial Officer Jarret Marcoux - Executive Vice President, Operations Britton James - EVP of Land Conference Call Participants Neal Dingmann - Truist Derrick Whitfield - Texas Capital Jarrod Girou - Stephens Tim Rezvan - KeyBanc Capital Markets Noel Parks - Tuohy Brothers I ...

Financial Data and Key Metrics Changes - The company achieved record fourth quarter production of approximately 41,000 barrels of oil equivalent per day, a 14% year-over-year increase, and averaged over 39,000 barrels of oil equivalent for the year [7] - Adjusted EBITDA for the fourth quarter was $141,200,000, which was 4% higher than the prior quarter, reflecting strong production and lower than expected cash G&A [15] - The company returned $330,000,000 to shareholders in 2024, representing over 70% of discretionary cash flow [12] Business Line Data and Key Metrics Changes - The company closed 16 high-value acquisitions throughout the year, totaling more than $350,000,000, which were immediately accretive to discretionary cash flow per share [10] - The fourth quarter acquisitions added 3,300 net royalty acres to the portfolio, primarily in the Delaware Basin [11] Market Data and Key Metrics Changes - The company expects oil production at the midpoint to be 18,500 barrels per day and total production just under 40,000 BOE per day in 2025, representing a 3% increase over reported full year 2024 production [18] - The company has a strong presence in the Permian Basin, covering about 36% of the entire basin, with a higher concentration in the Texas part of the Delaware Basin [40] Company Strategy and Development Direction - The company is committed to a strong balance sheet and financial flexibility, with a borrowing base increased to $925,000,000 [11] - The company prioritizes capital returns to shareholders while also investing in high-rate return acquisitions [60] - The company aims to leverage its proprietary asset management systems to enhance efficiency and scalability [23] Management's Comments on Operating Environment and Future Outlook - Management noted that the acquisition environment remains robust, with a healthy deal flow and attractive opportunities for high return investments [20] - The company views the current natural gas market as favorable, with increasing demand expected to support long-term growth [45] - Management expressed confidence in maintaining production growth and financial strength despite market fluctuations [78] Other Important Information - The company captured $19,000,000 of missing revenue payments in 2024, offsetting over two-thirds of cash G&A [9] - The company has returned nearly $850,000,000 to shareholders since going public in mid-2022, representing nearly 30% of its current market capitalization [12] Q&A Session Summary Question: Can you talk about your various marketed deals and how they compare to the deals you completed? - Management highlighted a robust year for deal flow, emphasizing the consistency in their acquisition program and the high rate of return opportunities they pursued [26][27] Question: What does activity look like for the remainder of the year versus expectations? - Management indicated that guidance for 2025 is underpinned by operator activity that has already commenced, suggesting a stable outlook for production growth [33] Question: How would you frame your production trajectory for 2025? - Management expects contributions primarily from the Permian Basin, with a focus on line of sight development in the DJ Basin [38] Question: Does the more constructive natural gas backdrop change the size of the opportunity set? - Management noted that the investments made in people and systems lend themselves to scale, enhancing their ability to capitalize on market opportunities [42] Question: Can you provide color behind the cash G&A increase? - Management explained that the increase is due to investments in people and systems, which are expected to scale effectively in the future [66] Question: What are your strategic priorities for free cash flow allocation in 2025? - Management emphasized returning capital to shareholders as the top priority while also looking for high-rate return acquisition opportunities [60]

4Q24 Earnings Presentation INDUSTRY AND MARKET DATA The information, data and statistics contained herein are derived from various internal (including data that Sitio has internally collected) and external third-party sources. While Sitio believes such third-party information is reliable, there can be no assurance as to the accuracy or completeness of the indicated information. Sitio has not independently verified the accuracy or completeness of the information provided by third party sources. No representa ...

分组1 - Sitio Royalties reported quarterly earnings of $0.08 per share, missing the Zacks Consensus Estimate of $0.13 per share, and down from $1.12 per share a year ago, representing an earnings surprise of -38.46% [1] - The company posted revenues of $155.1 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.09%, and up from $149.35 million year-over-year [2] - Sitio Royalties has surpassed consensus revenue estimates three times over the last four quarters [2] 分组2 - The stock has added about 1.6% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [3] - The current consensus EPS estimate for the coming quarter is $0.15 on $151 million in revenues, and $0.61 on $615.33 million in revenues for the current fiscal year [7] - The Zacks Industry Rank for Oil and Gas - Royalty Trust - United States is currently in the top 1% of over 250 Zacks industries, indicating strong industry performance [8]

Revenue Sources and Dependence - Sitio's revenues are primarily derived from royalty payments based on the prices of crude oil, natural gas, and NGLs, which are subject to significant volatility[53]. - A substantial majority of Sitio's revenue is dependent on unaffiliated E&P operators for exploration, development, and production activities[53]. - Sitio's revenue is primarily dependent on unaffiliated E&P operators, and any reduction in production or drilling activities could adversely affect its cash flows[53]. - A substantial majority of Sitio's revenues are derived from royalty payments based on the prices of crude oil, natural gas, and NGLs, which are subject to volatility[53]. Growth Strategy and Acquisitions - Sitio's growth strategy includes acquisitions to increase reserves, production, and cash flows, with potential risks associated with identifying and integrating these acquisitions[53]. - Sitio relies on acquisitions to grow reserves and cash flows, and failure to successfully identify and integrate these acquisitions could materially impact its operations[53]. Regulatory and Environmental Risks - The company faces risks related to environmental regulations, particularly in Colorado, which may lead to increased costs and operational delays[57]. - The Inflation Reduction Act of 2022 could impose new costs on Sitio's E&P operators, potentially affecting their operations[57]. - The company may face increased costs and operational delays due to recent regulatory changes in Colorado affecting oil and natural gas permits[57]. Financial Risks and Market Conditions - Changes in general economic conditions and inflation may adversely affect Sitio's financial position and results of operations[53]. - Sitio's debt levels may limit its flexibility to obtain additional financing and pursue growth opportunities[57]. - The company may enter into derivative contracts to manage price fluctuations, which could expose it to financial risks[53]. - The company has entered into derivative contracts to manage cash flow predictability, which may expose it to financial loss under certain circumstances[53]. - A significant portion of Sitio's outstanding shares may be sold into the market soon, potentially causing a drop in the market price of its Class A Common Stock[57]. - Investment in new business ventures could disrupt ongoing operations and present unforeseen risks[53].

Production and Revenue - Fourth quarter production increased by 14% year-over-year to a record 40.9 MBoe/d, with a 6% increase quarter-over-quarter[4] - Full year pro forma production exceeded the high end of company guidance, with average daily production forecasted at 39.8 MBoe/d for 2025, representing a 3% increase from 2024[2][8] - Average daily production rose to 40,874 BOE/d in Q4 2024, compared to 35,776 BOE/d in Q4 2023, reflecting a 14.8% increase[19] - Crude oil production increased to 1,782 MBbls in Q4 2024, up 14.4% from 1,558 MBbls in Q4 2023[19] - Total revenues for 2024 reached $624.414 million, a 5.5% increase from $593.356 million in 2023[23] Financial Performance - Net income for the fourth quarter was $19.3 million, and Adjusted EBITDA was $141.2 million, reflecting increases of $111.0 million and $6.2 million (5%) respectively compared to Q4 2023[7] - Net income for 2024 was $94.929 million, a significant recovery from a net loss of $46.695 million in 2023[23] - Adjusted EBITDA for Q4 2024 was $141,249,000, compared to $135,037,000 in Q4 2023, reflecting a year-over-year increase of approximately 8.2%[35] - Discretionary Cash Flow for Q4 2024 was $116,872,000, up from $115,401,000 in Q4 2023, indicating a stable cash generation capability[38] Shareholder Returns - Sitio returned a total of $0.49 per share to shareholders in Q4 2024, consisting of a cash dividend of $0.41 and $0.08 from stock repurchases[10] - Cumulative return of capital to shareholders since the Falcon merger in June 2022 has exceeded $840 million, representing nearly 30% of current market capitalization[2][10] - The company repurchased $118.1 million of common stock in 2024, resulting in a 3% reduction in total shares outstanding year-over-year[4] Debt and Liquidity - As of December 31, 2024, total debt outstanding was $1.1 billion, with liquidity of $440.5 million[7] - Long-term debt increased to $1.078 billion in 2024, up 24.7% from $865.338 million in 2023[22] - Cash and cash equivalents at the end of the period were $3,290,000, down from $15,195,000 at the end of 2023[26] - The company reported a net change in cash and cash equivalents of $(11,905,000) for the year, indicating a decrease in liquidity[26] Acquisitions and Investments - The company closed three acquisitions in late 2024 for approximately $140 million, adding about 3,300 net royalty acres primarily in the Delaware Basin[4] - The company completed over 200 acquisitions, accumulating over 270,000 net royalty acres (NRAs) as of December 31, 2024[40] - Total cash used in investing activities was $329,959,000, compared to $59,726,000 in 2023, highlighting increased investment in oil and gas properties[25] Operational Costs - General and administrative expenses for the year ended December 31, 2024, were $54,725,000, an increase from $49,620,000 in 2023[39] - Cash G&A for Q4 2024 was $7,159,000, compared to $6,431,000 in Q4 2023, reflecting a rise in operational costs[39] - Production taxes and other expenses as a percentage of revenue decreased to 7.5% in Q4 2024 from 9.8% in Q4 2023[20] Market Risks and Forward-Looking Statements - The company emphasizes that forward-looking statements may include projections about expected results of operations, cash flows, and future dividends[41] - Risks impacting forward-looking statements include commodity price volatility, global economic uncertainty, and market volatility related to U.S. trade policy changes[41] - The company acknowledges potential impacts from slowing growth and demand, particularly from China, and geopolitical conflicts such as the situation in Ukraine and the Israel-Gaza region[41] - The accuracy of oil and gas reserve estimates is contingent on data quality, interpretation, and price assumptions made by reserve engineers[41] - Reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered, affecting future production schedules[41] - The company does not undertake any obligation to publicly update forward-looking statements unless required by law[41]

Group 1 - Sitio Royalties Corp. (NYSE: STR) has increased its full-year production guidance by 1,000 BOEPD due to asset outperformance and minor acquisitions [2] - The majority of the guidance increase is attributed to asset outperformance [2] Group 2 - The article is authored by Aaron Chow, who has over 15 years of analytical experience and is a top-rated analyst on TipRanks [3] - Aaron Chow co-founded a mobile gaming company that was acquired by PENN Entertainment and has experience in designing economic models for mobile apps [3] - The investing group Distressed Value Investing focuses on value opportunities and distressed plays, particularly in the energy sector [3]

Financial Data and Key Metrics Changes - Sitio Royalties reported robust financial results for Q3 2024, with production reaching nearly 38,600 BOEs per day, half of which was oil [17] - The company closed five new acquisitions totaling approximately $22 million, adding over 2,300 NRAs in the DJ Basin [15][16] - Total debt was reduced by nearly $60 million over the last quarter, and interest expense on a barrel of oil equivalent basis is 18% lower than one year ago [12] Business Line Data and Key Metrics Changes - The company has seen strong performance from both legacy assets and recent acquisitions, enhancing the 2024 production outlook by raising the midpoint of production guidance by 1,000 BOEs per day [16] - The average market cap of the top five public company operators on Sitio's acreage has more than doubled since the end of 2022, indicating improved operational efficiency [18] Market Data and Key Metrics Changes - The bulk of activity on Sitio's assets was in the Permian and DJ Basins, with a solid 11% increase in net line of sight wells compared to the second quarter [27] - The company has 9,000 gross line of sight wells expected over the next 12 to 18 months, providing high confidence in near-term operator activity [39] Company Strategy and Development Direction - Sitio's strategy focuses on identifying high-quality acquisitions with the highest expected returns, maintaining a strong capital structure, and returning capital to shareholders through dividends and share buybacks [14][30] - The company is well-positioned to capitalize on the ongoing consolidation in the mineral sector, enhancing returns and smoothing volatility from commodity price fluctuations [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of the business model, emphasizing disciplined capital allocation and the ability to weather commodity price cycles [12][29] - The M&A market remains active, with a robust flow of opportunities, particularly in the DJ Basin, where rate of return has been superior recently [34][41] Other Important Information - Sitio has recovered approximately $25 million in missing payments over the last 12 months through proprietary data management systems [11] - The company has committed to returning at least 65% of discretionary cash flow to shareholders, with a cash dividend yield significantly higher than the S&P 500 [45][47] Q&A Session Summary Question: How does Sitio view the M&A market? - Management indicated that the M&A market is exciting, with active outbound business development efforts and a robust flow of marketed processes [32] Question: What drove the increase in Line-of-Sight wells? - The increase was attributed to diverse activity across multiple basins, including the Permian and DJ, with a significant number of gross wells being spun and permitted [36][38] Question: What are the thoughts on acquisitions in the DJ Basin? - The DJ Basin has shown superior rate of return opportunities, leading to directed capital investments there, while the Permian remains the largest opportunity set [41][42] Question: How does Sitio balance buybacks and debt reduction? - The company has committed to returning at least 65% of discretionary cash flow to shareholders while retaining 35% for balance sheet protection and opportunistic acquisitions [45][46] Question: What regions are driving cumulative production outperformance? - Management highlighted that acquisitions are performing in line or better than underwriting assumptions, with no significant outperformance or underperformance noted [50][52] Question: What is the outlook for cash tax guidance? - The company expects a more straightforward tax situation going forward, reverting to estimated tax rates based on statutory rates [56][57] Question: How does consolidation affect asset portfolios? - Management noted that as assets change hands, they become a priority for operators, leading to improved performance and efficiency [63][64]

3Q24 Earnings Presentation November 6, 2024 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. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions. The words "anticipate," "beli ...

Core Viewpoint - Sitio Royalties reported quarterly earnings of $0.15 per share, exceeding the Zacks Consensus Estimate of $0.14, but down from $0.23 per share a year ago, indicating a 7.14% earnings surprise [1][2] Financial Performance - The company posted revenues of $149.38 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 1.40%, and down from $156.71 million year-over-year [2] - Over the last four quarters, Sitio Royalties has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Sitio Royalties shares have declined approximately 3.7% since the beginning of the year, contrasting with the S&P 500's gain of 21.2% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.13 on revenues of $151 million, and for the current fiscal year, it is $0.56 on revenues of $623 million [7] - The estimate revisions trend for Sitio Royalties is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Oil and Gas - Royalty Trust - United States industry is currently in the bottom 6% of over 250 Zacks industries, suggesting a challenging environment for stocks in this sector [8]