PHX PHX Minerals Inc

Entry into Purchase and Sale Agreements

On December 6, 2021, PHX Minerals Inc. (the “Company”) entered into two separate Purchase and Sale Agreements (collectively, the “Purchase Agreements”) with affiliated sellers (the “Sellers”) to acquire certain mineral interests, royalty interests and overriding royalty interests underlying certain lands located in Caddo Parish, Louisiana (the “Assets”). The Company entered into one Purchase Agreement with Merrimac Properties Partners, LLC and Quarter Horse Energy Partners, LLC (the “Merrimac Purchase Agreement”) to acquire a portion of the Assets for consideration equal to $5,185,475 in cash, and a separate Purchase Agreement with Palmetto Investment Partners II, LLC (the “Palmetto Purchase Agreement”) to acquire the remainder of the Assets for consideration equal to $601,797 in cash. The Assets include mineral and royalty interests totaling approximately 426 net royalty acres in the Haynesville play. The transactions contemplated in the Purchase Agreements are conditioned upon both Purchase Agreements closing concurrently and are expected to close by December 15, 2021.  As of December 6, 2021, the Sellers and their affiliates collectively own 3,549,207 shares of common stock of the Company, or approximately 10.8% of the issued and outstanding shares of common stock of the Company.

The terms and conditions of both Purchase Agreements are substantially similar, and the purchase price under each Purchase Agreement is subject to customary adjustments, including adjustments based on due diligence performed by the Company prior to closing. Both Purchase Agreements contain customary representations, warranties, covenants and indemnities by each of the applicable parties thereto.  The obligations of the Company and the Sellers to close each acquisition is subject to certain customary closing conditions as set forth in the Purchase Agreements. There can be no assurance that the conditions to closing the acquisitions of the Assets will be satisfied.

The above description of the material terms and conditions of the Purchase Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Merrimac Purchase Agreement, which is filed as Exhibit 10.1 hereto, and the Palmetto Purchase Agreement, which is filed as Exhibit 10.2 hereto.

First Amendment to Credit Agreement

On December 6, 2021 (the “Amendment Closing Date”), the Company entered into the First Amendment to Credit Agreement (the “Amendment”), which amends and modifies the Credit Agreement dated as of September 1, 2021 among the Company, Independent Bank, as Administrative Agent and L/C Issuer, and certain other lenders (the “Credit Agreement”).

The Amendment provides for an increase to the Company’s Borrowing Base from $27.5 million to $32.0 million effective on the Amendment Closing Date. The Borrowing Base will remain at $32.0 million until the next scheduled semi-annual redetermination, which is scheduled to occur on or about June 1, 2022, unless otherwise redetermined pursuant to an Unscheduled Redetermination. In addition, the Amendment amends the commitment schedule to reallocate the Committed Sum and Commitment Percentage of each Lender under the Credit Agreement.  All capitalized terms in this description of the Amendment that are not otherwise defined in this Current Report on Form 8-K have the meaning assigned to them in the Credit Agreement.

The above description of the material terms and conditions of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which is filed as Exhibit 10.3 hereto.