WhiteHawk Income Corporation Q2 FY2026 earnings call

This is White Hawk Minerals' first earnings call following its initial public offering (IPO) completed in June 2026. Key operational and strategic highlights are organized below:

• Core Business Model and Positioning

  • The company owns mineral and royalty interests across major U.S. natural gas basins, requiring zero capital expenditures and minimal operating expenditures, as development is completed by third-party major upstream operators
  • Holds royalty rights to 13% of total U.S. natural gas production, positioning it as a leading pure-play natural gas mineral and royalty owner
  • Prioritizes downside protection through conservative balance sheet management and a structured natural gas hedging strategy while retaining exposure to long-term upside potential

• Acquisition Strategy Execution Post-IPO

  • Follows a two-prong acquisition strategy: large strategic acquisitions and smaller "ground game" purchases from individual mineral owners
  • Within two months of the IPO, the company has signed definitive agreements for acquisitions totaling $112 million focused on the Marcellus and Haynesville Shales
  • These acquisitions are expected to add ~16 million cubic feet per day of production and ~$17 million in incremental annual cash flow starting in 2027, with a projected acquisition cash flow multiple at or below the previously guided 6 to 7 times range
  • The company identifies $3 billion to $5 billion in upcoming large strategic acquisition opportunities in the Marcellus, Utica, and Haynesville Shales, with limited competition for these opportunities (many held by late-life private equity funds)
  • The ground game acquisition opportunity is estimated at over $30 billion, more than 35 times the company's current asset base, and the company holds a unique data advantage from its large existing footprint; some major operators have already formed partnerships to acquire minerals ahead of drilling activity

• Operational Production Growth

  • Q2 2026 net production reached ~70 million cubic feet equivalents per day, a 57% increase year-over-year (Q2 2025) and a 9% increase quarter-over-quarter (Q1 2026)
  • Has 500 gross line-of-site identified producing wells for growth over the next 12 months, and over 9,000 gross identified undeveloped locations across its footprint

• Macro Demand Tailwinds

  • 21 new natural gas power plants have been announced near the company's Appalachian assets to support growing power demand from data centers and AI, projected to add 7 billion cubic feet per day of Marcellus Shale demand by 2031
  • 14 billion cubic feet per day of new LNG export capacity is under construction in the U.S. and expected online by 2030, providing growing demand for Haynesville Shale production
  • Total projected natural gas demand growth of 21 billion cubic feet per day by 2031 is expected to be largely supplied by the Marcellus, Utica, and Haynesville Shales, directly benefiting White Hawk's asset base

• Financial and Capital Structure Highlights

  • IPO generated over $220 million in gross proceeds, which was used to repay more than $162 million in debt, resulting in a net debt position of $55.5 million at quarter-end and a leverage ratio of 0.67 times adjusted EBITDA
  • Maintains an undrawn $150 million revolving credit facility, with a long-term leverage target of 1 times adjusted EBITDA to preserve acquisition flexibility and protect dividend payments
  • The board initiated the company's first quarterly dividend, with a full quarterly rate of 50 cents per share ($2 annualized), representing a 1.3 times coverage ratio by cash available for distribution; the company targets a payout ratio of at least 75% of cash available for distribution
  • Secured $50 million in Series E Preferred Stock commitments to fund recent signed acquisitions, with a 10% coupon and redemption flexibility

White Hawk Minerals operates as a natural gas mineral and royalty owner with production split across two primary basin segments: 1) Marcellus and Utica Shale (Appalachia): This segment contributed approximately 55% of total Q2 2026 production, with 96% of segment production coming from major operators EQT, Range, CNX, and Antero. White Hawk holds royalty rights to 43% of these operators' combined gross production in the basin. 2) Haynesville Shale: This segment contributed approximately 25% of total Q2 2026 production, with 58% of segment production coming from major operators Xpand, Mitsubishi Adamas, Comstock, and Tokyo Gas. White Hawk holds royalty rights to 45% of these operators' combined gross production in the basin. The remaining 20% of production is distributed across other minor positions, with the company holding royalty interests across a total 3.6 million gross unit acres and 11,500 producing wells overall. On a company-wide basis for Q2 2026: operating revenue (including realized hedge gains) was $25.7 million, total asset cash flow was $22.4 million (10% increase over Q1 2026), GAAP total revenue was $29.1 million (including $6.7 million in unrealized mark-to-market hedge gains), adjusted EBITDA was $20.7 million, and cash available for distribution was $17.4 million (63 cents per share).

Management did not issue explicit quantitative quarterly or annual revenue/earnings guidance, and maintained previously communicated strategic and financial guidance that has not been revised:

• Maintains the 6 to 7 times acquisition cash flow multiple target, with recent completed acquisitions falling at or below the low end of this range
• Maintains the long-term leverage target of 1 times adjusted EBITDA, with current leverage below this target at 0.67 times
• Maintains the minimum 75% payout ratio target for cash available for distribution as dividends, with the newly initiated dividend covered at 1.3 times this payout level
• Maintains the structured hedging guidance: the company targets hedging 90% of expected production for the next 12 months, 80% for the subsequent 12 months, and 60% for the third 12 months to balance downside protection and upside exposure

• Forward-looking statements about future production, cash flow, acquisition opportunities, natural gas demand growth and price increases are subject to inherent risks and uncertainties that could cause actual results to differ materially, as detailed in the company's SEC filings
• Natural gas price volatility represents a core business risk, which the company mitigates through its hedging strategy but cannot eliminate entirely
• Acquisition execution risk: the company relies on completing targeted acquisitions to grow production and cash flow, and there is no guarantee that expected opportunities will be available on acceptable terms or will deliver the projected production and cash flow
• Leverage and financing risk: while the company maintains a conservative balance sheet, changes in operating cash flow could impact the company's ability to maintain leverage targets and sustain dividend payments

Q: Analyst Wayne Cooperman asks how management's long-term hedging strategy will adjust if natural gas prices are expected to rise materially over the next several years, asking if hedging will be scaled back at any point or if management will continue following the existing approach along the futures curve. / A: The Q&A session was interrupted by technical difficulty after the question was asked, so no management answer was provided in the excerpted transcript.