WhiteHawk Energy proposes to combine with PHX Minerals in stock-for-stock deal

An affiliate of WhiteHawk Energy sent a letter to Mark Behrman, the Chairman of PHX Minerals board of directors, with respect to its proposal to combine with PHX in a stock-for-stock transaction to form a publicly traded corporation, WhiteHawk Minerals Corporation. Under the terms of the proposal, first made privately to PHX in a May 31, 2023 letter and revised by WhiteHawk in a June 20, 2023 letter, PHX stockholders would own approximately 61%1 of the pro forma equity of WhiteHawk Minerals Corporation and receive a one-time $0.20 per share cash dividend. The non-binding offer was reiterated in a letter sent today to Mr. Behrman, after several unsuccessful attempts to engage PHX’s board of directors and management in productive discussions. WhiteHawk is disclosing the contents of its letter in order to inform PHX stockholders of the potential opportunity to combine the two companies. As detailed in the proposal, WhiteHawk believes a combination of the two companies will result in the following benefits to PHX stockholders: An enhanced pro forma asset base with WhiteHawk’s 850,000 gross unit acres in the Marcellus and the Haynesville shales, two of the most prolific natural gas basins in the U.S.; G&A synergies of approximately $4 million per year; An increased stockholder payout ratio to 50% to 60% of distributable cash flow, which will increase the dividend by over 100%; Immediate accretion to PHX’s distributable cash flow per share; Accelerated conversion to an increased weighting in mineral and royalty assets; A larger company with a more liquid stock; and A combined company to be led by the WhiteHawk management team, which has run publicly-traded mineral and royalty, upstream, and midstream companies totaling over $13 billion in enterprise value. “While we have been disappointed with the engagement to date, we believe today marks a new beginning of the discussions between WhiteHawk and PHX Minerals,” said Daniel Herz, WhiteHawk’s CEO. “PHX stockholders deserve the opportunity to consider and communicate directly with the company regarding their views of the substantial benefits of our proposal.”