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• Production: Record fourth quarter production of approximately 41,000 barrels of oil equivalent per day, a 14% year-over-year increase.

• Adjusted EBITDA: $141.2 million, 4% higher than the prior quarter.

• Acquisitions: Closed approximately $140 million of acquisitions in the fourth quarter, totaling more than $350 million for the year.

• Cash Dividend: Fourth quarter cash dividend of $0.41 per share.

• Share Repurchases: Repurchased 643,000 shares for $12.9 million, equating to $0.08 per share in repurchases.

• Debt: $1.1 billion of debt outstanding with $437.2 million of availability under the revolving credit facility.

• Borrowing Base: Increased by $75 million to $925 million.

• Return of Capital: Returned $330 million to shareholders in 2024, over 70% of discretionary cash flow.

• Interest Expense: Annual interest expense per BOE down over 17% year-over-year.

• Warning! GuruFocus has detected 5 Warning Signs with STR.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sitio Royalties Corp (NYSE:STR) achieved a record fourth quarter production of about 41,000 barrels of oil equivalent per day, marking a 14% year-over-year increase.

• The company exceeded the high end of its full-year guidance, even after raising guidance twice during the year.

• STR closed 16 high-value acquisitions throughout the year, which were immediately accretive to discretionary cash flow per share.

• The company returned $330 million to shareholders in 2024, representing over 70% of its discretionary cash flow.

• STR's investments in proprietary asset management applications and AI models have significantly increased operational efficiencies, capturing $19 million of missing revenue payments in 2024.

Negative Points

• The company's cash G&A expenses increased by approximately 25% year-over-year, although this was attributed to investments in people and systems.

• Despite strong production growth, the company's oil skew decreased slightly, influenced by recent acquisitions and the maturation of certain basins.

• The rapidly declining price environment is identified as the least favorable for STR's acquisition activities.

• The company faces challenges in the Appalachia region due to land complexities, which may limit future mineral acquisitions there.

• STR's guidance for 2025 implies maintenance-level activity, with only a 3% increase in production expected, not accounting for potential acquisitions.

Q & A Highlights

Q: Could you talk about your various marketed deals and how those compare to the first number of deals that y'all are able to complete? A: Hi, good morning, Neil. It's Chris, great to hear from you. The M&A environment was robust, and we consistently delivered on our acquisition program. We evaluated hundreds of thousands of net royalty acres and acquired only 20,000, focusing on the highest rate of return opportunities. Our acquisitions had a cash flow yield over 25% for the next 12 months. Looking forward, 2025 presents an enormous opportunity with a large tangible pipeline.