PHILADELPHIA, PA — WhiteHawk Minerals Corp. (NYSE: WHK) signed $111.8 million in natural gas mineral and royalty acquisitions following its June initial public offering, initiating a quarterly dividend as production surged despite a $39.2 million second-quarter loss driven by transaction-related charges.
The nine acquisitions cover interests in the Marcellus, Utica and Haynesville shale regions and are expected to add approximately $17 million in cash flow in 2027 and $18.5 million in 2028.
The transactions are anchored by approximately $105 million in assets to be acquired from San Jacinto Minerals II, including additional positions in Appalachian acreage where WhiteHawk already owns interests and new holdings in the Haynesville basin.
WhiteHawk plans to finance the purchases with $50 million in newly issued Series E preferred stock, along with cash and borrowings under its revolving credit facility.
The preferred shares will rank ahead of common stock and other classes of company equity. They will pay annualized monthly cash dividends of 10% through March 31, 2027, rising to 12% through December 31, 2028, and 14% thereafter if still outstanding.
The preferred financing also carries a minimum return equal to 1.05 times invested capital. It is expected to close in late September alongside the San Jacinto acquisition.
The acquired assets encompass approximately 600,000 gross unit acres in Appalachia and 100,000 gross unit acres in the Haynesville.
Together, the properties include more than 1,700 producing wells, 160 wells in process, 85 permitted locations and 2,500 undeveloped locations.
WhiteHawk expects the acquisitions to generate approximately 16 million cubic feet equivalent per day in 2027 and 17 million cubic feet equivalent per day in 2028.
“With the majority of the purchase price allocated to SJM II’s Marcellus and Utica assets, we are increasing our ownership in acreage where we already have an established position, significant asset-level data and a deeply informed view of underlying value,” stated Matthew Heinlein, the company’s vice president and head of corporate development and strategy.
Heinlein estimated that private equity-backed mineral assets across Appalachia and the Haynesville represent a $3 billion to $5 billion acquisition market.
Following the transactions, WhiteHawk expects to hold mineral and royalty interests across approximately 3.6 million gross unit acres, with exposure to more than 11,600 producing wells, 365 wells in process, 205 permitted wells and 9,200 undeveloped locations.
The company initiated a quarterly cash dividend of 50 cents per Class A share, equivalent to $2 annually.
Its first payment will be prorated to 11 cents per share for the period between the June 10 IPO and June 30. The dividend is payable August 28 to shareholders of record on August 24.
Second-quarter production averaged 70 million cubic feet equivalent per day, up 57% from 44.7 million a year earlier and 9% from 64.3 million in the first quarter.
Quarterly output included approximately 5.38 million thousand cubic feet of natural gas, 110,353 barrels of natural gas liquids and 53,847 barrels of oil. Natural gas accounted for 85% of total production.
Revenue increased 38% from a year earlier to $29.1 million, including $6.7 million in unrealized hedging gains. Gathering, processing, transportation and lease operating expenses totaled $3.3 million.
Adjusted earnings before interest, taxes, depreciation and amortization rose 104% from the prior-year quarter to $20.7 million.
Cash available for distribution reached $17.4 million, equivalent to 63 cents per diluted share or 96 cents per share based on weighted average shares outstanding.
The company’s $39.2 million net loss, equivalent to $2.54 per share, compared with a $200,000 loss a year earlier.
The latest loss included a $21.7 million debt-extinguishment charge tied to repayment repayment of $187.4 million in senior secured notes and $15.8 million in management and incentive fees associated with bringing its management operations in-house.
Results also included a $1.7 million noncash change in the value of an earnout liability.
WhiteHawk realized $3.43 per thousand cubic feet of natural gas including hedge settlements, compared with $2.42 before hedging. Approximately 96% of its natural gas production was hedged during the quarter.
Realized oil prices averaged $71.58 per barrel including hedges and $93 before hedging. Natural gas liquids sold for an average of $29.07 per barrel.
General and administrative expenses totaled $4.3 million, including $1.7 million in IPO-related costs and $900,000 in stock-based compensation. Excluding those items, expenses were $1.8 million.
The company ended June with $13.2 million in cash, $68.7 million in debt and an undrawn $150 million reserve-based revolving credit facility.
Over the preceding 12 months, operators brought 525 gross wells into production across WhiteHawk’s acreage, representing 1.91 net wells.
In Appalachia, EQT, Antero Resources, Range Resources and CNX Resources accounted for 96% of WhiteHawk’s production in the region.
Expand Energy, Adamas Energy, Comstock Resources and Tokyo Gas accounted for 58% of the company’s Haynesville production.
“We benefit directly from our best-in-class operators’ performance and growth potential, with no associated capital expenditures, and minimal operating expenses,” Chairman and Chief Executive Officer Daniel Herz stated.
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