WhiteHawk Minerals Corp. 2026 Q2 Earnings Call

Please go ahead. Good morning, and welcome to WhiteHawk Minerals' second quarter 2026 earnings conference call.

Before we begin, please note that today's discussion may include forward-looking statements regarding the company's financial condition, results of operations, and future performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to WhiteHawk's SEC filings for a statement of discussion around these risk factors. The company undertakes no obligation to update these statements except as required by law. We may also reference certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are available in yesterday's earnings release on our website. With me on the call today are Daniel Herz, Chief Executive Officer, and Jeffrey Slotterback, Chief Financial Officer. I'll now turn the call over to Daniel.

Thanks, John. Good morning, and welcome to the inaugural WhiteHawk Minerals second quarter earnings call. It's good to be back. To quote Plato from "The Republic," "The beginning is the most important part of the work." Plato's original meaning is, of course, much deeper than business and relates to education, character, and the formation of the soul. I do believe this quote is directly applicable to WhiteHawk Minerals now. We must create the right character and soul of our company, a character rooted in working every day to deliver for our shareholders, protecting the downside while benefiting meaningfully from the significant upside potential. We are off to an excellent start. WhiteHawk is uniquely positioned across our 3.6 million gross unit acres to benefit directly from the largest operators in the most economic natural gas basins, with zero capital expenditures and minimal operating expenditures.

This positions us to benefit from the tremendous work and capital deployment by EQT, Range, CNX, Antero, Expand, and others, resulting in significant cash flow and dividends to our shareholders. That means shareholders are directly tied to these operators while receiving significant returns through dividends and reinvestments through our acquisitions of additional minerals and royalties. We have previously discussed the two-prong acquisition strategy: strategic or larger acquisitions and ground-game acquisitions. Since our initial public offering just 2 months ago, we have executed on both prongs, signing definitive agreements for acquisitions totaling nearly $112 million. Those acquisitions, focused in the Marcellus Shale and Haynesville Shale, are expected to add approximately 16 million cubic feet per day in 2027, which we expect will add approximately $17 million of incremental cash flow.

Further, we expect these assets to generate even more production and cash flow in 2028, placing the acquisition squarely within and even to the low side of our 6-7x acquisition cash flow multiple previously discussed. When I consider the potential for WhiteHawk Minerals, I see several ways for us to succeed. First, our strategic and ground-game acquisition strategy. Second, the exposure we have to the two most economic natural gas basins in the U.S. Third, our mineral and royalty ownership benefiting from the largest natural gas producers in the U.S. And fourth, the medium and long-term significant tailwinds behind natural gas.

While I consider these areas the primary drivers of value of WhiteHawk, I first and foremost balance that with protecting the downside risks, something we focus on every day and something I believe we have done a very good job at through our balance sheet and natural gas hedging strategy. I will discuss each of these drivers in more detail shortly, but first, I want to briefly review our second quarter operation results and then later on hand it off to Jeff Slotterback, our Chief Financial Officer, to review the financial results. We delivered a strong second quarter with net production of approximately 70 million cubic feet equivalents per day of natural gas. This was an increase of 57% over the same period in 2025 and a 9% increase over the first quarter of 2026.

We generated this production from our more than 11,500 producing wells. We have more than 500 gross line of sight wells, positioning us for solid production from our asset base over the next year. We are then benefited from our more than 9,000 gross identified undeveloped locations across our 3.6 million gross unit acres. In the Marcellus Shale, 96% of our production came from EQT, Range, CNX, and Antero. WhiteHawk currently receives royalties on 43% of their combined gross production. That is, WhiteHawk receives 43% of their combined gross production. In the Haynesville Shale, 58% of our production came from Expand Energy, Mitsubishi, Adamas, Comstock Resources, and Tokyo Gas. WhiteHawk currently receives royalties on 45% of their combined gross production.

For the quarter, approximately 55% of our production came from the Marcellus and Utica Shale in Appalachia, with an additional 25% from our Haynesville Shale assets. Our line of sight wells carry a similar basin weighting. And of course, as a reminder, we receive royalties on 13% of total U.S. natural gas production, making us what I believe is the premier natural gas mineral and royalty owner. Now, to dig in deeper on how I expect WhiteHawk to succeed and outperform. With respect to our acquisition strategy and opportunities, we see between $3 billion and $5 billion of strategic acquisition opportunities in front of us in the Marcellus, Utica, and Haynesville Shale. These are larger opportunities owned by private equity firms or funds later in their fund life.

We have limited competition for these opportunities, and I believe our acquisition announcement today demonstrates the depth of our relationships and ability to execute. Furthermore, the ground game opportunity where we buy from individual mineral owners is well over 35 times our existing asset base, or over $30 billion. We currently own a 0.51% royalty interest on our gross acreage position out of an average 17% royalty rate. Of course, there are additional minerals surrounding our position that we are interested in purchasing. To that point, given our massive footprint, we have tremendous data on our operators and on all of the wells on our position and the surrounding position, which I believe provides a unique data advantage.

Not only do I believe it is a significant advantage to have the amount of information that we have, some of our operators agree and have entered into partnerships with us to buy on the ground ahead of the drill bit in defined areas, opportunities that augur well for WhiteHawk Minerals' acquisition future. Next, being exposed to the two most economic natural gas basins has several benefits to WhiteHawk Minerals. First, development activity remains robust in both high and low natural gas price environments, which helps mitigate downside at WhiteHawk Minerals. Second, because we are in a power race, situating new natural gas power generation next to the most economic areas not only makes sense, it is exactly what is currently happening.

There are 21 announced new or planned natural gas power plants to support data center and AI power demand surrounding our Appalachian assets, which is expected to add 7 billion cubic feet per day of natural gas demand in the Marcellus Shale by 2031. Finally, having our production and footprint in the Haynesville Shale gives us direct access to the growing liquified natural gas export markets. Currently, there are 14 billion cubic feet per day of LNG export facilities under construction, which should be online by 2030. In total, we expect 21 billion cubic feet per day of natural gas demand growth by 2031, much of which will be met by growth in the Marcellus, Utica, and Haynesville Shale. Third, our current and future production is tied to the largest natural gas producers in the U.S.

These operators spend billions of dollars per year developing our position, working with power companies, hyperscalers, LNG export facilities, and many others to ensure both production and demand is balanced, not just over the next year, but over the next decade and beyond. Benefiting from EQT, Range, Antero, CNX, and Expand uniquely positions WhiteHawk Minerals to benefit from their expected growth. Finally, the macro tailwinds of natural gas are very strong. I often say I want WhiteHawk Minerals to do well when prices go up and when prices go down. With that said, when we look out over the next five years, it is extremely encouraging.

I have touched on this already, but when we look at the demand growth from LNG exports and power generation for data centers and AI, we see a natural gas price environment which will demand higher prices to incentivize operators, our operators, to develop their position more quickly to meet that demand. It is that simple, and WhiteHawk Minerals will benefit. We are off to a good start. But let's be clear, we are just getting started. There is a lot more to do on the acquisition side. We will remain disciplined, but we will take advantage of the opportunities as they come. Our asset base will then be even larger when the macro tailwinds develop into a higher natural gas price environment which should further drive shareholder returns beyond just the immediate accretion to cash flow and net asset value per share.