Phoenix Energy One, LLC - Form 8-K Summary
Business Context and Reporting Period
This Current Report (Form 8-K) was filed on June 5, 2025, by Phoenix Energy One, LLC, a Delaware limited liability company. The filing details the Company's oil and gas production, reserves, and drilling activities for the three months ended March 31, 2025. The Company holds mineral, royalty, and working interests in productive wells, primarily in the Bakken/Williston Basin, and operates through its wholly-owned subsidiary, Phoenix Operating LLC ("PhoenixOp").
Key Financial and Operational Metrics
Production (Three Months Ended March 31, 2025):
- Total Production: 1,759,320 Boe (All Properties), representing an average daily production of 19,548 Boe/d.
- Oil Production: 1,552,609 Bbl.
- Natural Gas Production: 712,492 Mcf.
- NGL Production: 87,962 Bbl.
Reserves (As of March 31, 2025):
- Total Proved Reserves: 67,845,406 Boe (43% developed, 57% undeveloped).
- Proved Developed Reserves: 28,986,053 Boe.
- Proved Undeveloped Reserves: 38,859,353 Boe.
- Probable Undeveloped Reserves: 133,513,702 Boe.
Financials and Costs:
- Depletion Expense: $31.3 million for the quarter ($17.77 per Boe).
- Capital Expenditures (Q1 2025): Approximately $101.2 million for acquisition and development of proved reserves.
- Operating Costs: $18.01 per Boe (including taxes), representing 27.1% of revenue.
- PV-10 (Total Proved): $1,224.3 million.
Well Count (As of March 31, 2025):
- Productive Wells: 6,956 gross / 82.5 net.
- Wells in Progress (WIP): 113 gross / 32.3 net.
Material Changes vs. Prior Period
Production Growth: Total production for the three months ended March 31, 2025, increased significantly to 1,759,320 Boe compared to 751,492 Boe in the same period in 2024. Average daily production rose from 8,258 Boe/d to 19,548 Boe/d.
Reserve Increases: Total proved reserves increased by approximately 4.0 million Boe from December 31, 2024, to 67.8 million Boe. This growth was driven by a 5.8 million Boe increase in proved developed reserves, primarily due to positive revisions of previous estimates (4.8 million Boe) and transfers from proved undeveloped reserves, offset by production.
Drilling Activity: Drilling activity decreased in Q1 2025 compared to Q1 2024. E&P operators drilled 26 gross (4.2 net) productive development wells in Q1 2025, compared to 105 gross (7.5 net) in Q1 2024.
Cost Increases: Operating costs per Boe increased to $18.01 from $13.69 in the prior year quarter. Depletion expense per Boe remained relatively stable at $17.77 compared to $17.63 in the prior year quarter.
Outlook, Risks, and Contingencies
Delivery Commitments: PhoenixOp has committed to deliver 2.2 million barrels of crude oil between June 1, 2025, and December 31, 2030, with a maximum yearly minimum of 958,000 barrels. Failure to meet this commitment results in a shortfall fee. The Company has dedicated specific rights to oil extracted from wells in Dunn, Williams, and Divide Counties, North Dakota, to fulfill this obligation.
Capital Expenditure Outlook: The Company expects depletion expense to continue to increase in subsequent periods as gross production increases. Significant capital expenditures were incurred in Q1 2025 ($101.2 million) to develop operated wells.
Lease Expirations: As of March 31, 2025, 175,440 gross working interest acres are scheduled to expire through the end of 2027, with additional expirations in 2028 and 2029.
Risks: Reserve estimates are subject to substantial variation based on future production, cash flows, taxes, and development expenditures. The Company notes that actual results may differ from estimates.
Investor Verification Checklist
- Reserve Revisions: Verify the magnitude of the 4.8 million Boe positive revision to proved developed reserves in Q1 2025 and the specific drivers (transfers vs. performance).
- Delivery Commitment Feasibility: Assess the operational plan and productivity potential of the dedicated leaseholds in North Dakota to ensure the 2.2 million barrel delivery commitment can be met without incurring shortfall fees.
- Cost Structure: Monitor the trend in operating costs per Boe, which rose to $18.01, and its impact on margins given the realized oil price of $70.50.
- Drilling Pace: Evaluate the strategic rationale behind the significant reduction in gross drilling activity (26 wells in Q1 2025 vs. 105 in Q1 2024) and its impact on future reserve replacement.
- Lease Expirations: Review the status of the 175,440 gross working interest acres expiring by the end of 2027 to determine the risk of acreage loss.