Phoenix Energy One, LLC (PHXE-P)

Phoenix Energy One is an independent oil and gas producer focused on exploration and production across multiple U.S. basins, with particular emphasis on the Williston Basin of North Dakota and Montana. The company was formed in 2019 and operates from headquarters in Irvine, California with a significant operational presence in the Williston Basin. Like other independent energy producers, Phoenix Energy sits in the middle of the petroleum industry — not an integrated megacap like Chevron or Exxon that manages the full chain from exploration to refining to retail, and not a service company that provides drilling or engineering to others. Instead, Phoenix Energy drills wells, produces oil and natural gas from the ground, and sells the product at wholesale prices set by global markets. It is a straightforward extraction business: find productive acreage, drill wells, extract the resource, and collect revenues. The margin between the cost of extraction and the market price of oil and gas is the profit.

The oil and gas industry is driven by geology, physics and global commodity markets. Productive reservoirs exist in specific geographic locations. The Williston Basin, centered on North Dakota, is one of the largest onshore petroleum provinces in the United States and has been exploited at high intensity for the past 15 years as hydraulic fracturing technology made it economical to extract oil from tight shale formations. The geology itself does not change — reservoirs either have oil and gas or they do not — but the profitability of extraction fluctuates with global crude oil prices. When oil trades at high prices, production from high-cost wells makes economic sense. When prices collapse, marginal wells become uneconomical to operate. This price volatility is fundamental to the business. Phoenix Energy, like all independent producers, is exposed to this volatility directly.

Phoenix Energy operates a diversified strategy across three channels. The first is direct drilling: the company acquires leases on land it believes contains oil and gas, drills wells on that land and retains the operating interest and right to produced revenues. This is capital-intensive — a single wellbore can cost millions of dollars — but it gives Phoenix Energy the full upside from production. Second, the company acquires mineral interests and non-operating working interests in existing wells and fields. This means buying a percentage stake in wells or acreage that someone else operates. Phoenix Energy receives the cash flow from that stake but does not control the drilling or production decisions. This is less capital-intensive than direct drilling but also gives up control and usually produces lower returns. Third, through a securities segment, the company has engaged in capital raising through debt offerings. This segment is a financial and structural function rather than an operating business, and its focus reflects the capital needs of the energy company.

The Williston Basin remains Phoenix Energy’s core geography. The company’s drilling program focuses on Williams County and Divide County in North Dakota, using three-mile lateral wellbores that extend horizontally through the producing formation to maximize exposure to the reservoir. Horizontal drilling is the standard technology in U.S. unconventional petroleum production. A vertical well might encounter a productive formation for a few hundred feet; a three-mile lateral exposes it to three miles of that formation, extracting much more oil and gas per wellbore. The economics of drilling in the Williston Basin are well understood — the geology is productive, the acreage ownership is clearly defined, and the infrastructure for production and transportation is already in place. The company has also staked positions in other major basins including the Permian in Texas, the Denver-Julesburg Basin in Colorado and Wyoming, and the Powder River Basin in Wyoming. Diversification across multiple basins reduces the risk that a company is entirely dependent on the productivity of a single formation.

Phoenix Energy’s operations are inherently labor and capital intensive. The company operates more than 165 employees across offices in California, Colorado, Texas, Florida and Wyoming as well as North Dakota. Each office typically has geologists who evaluate where to drill, engineers who design wells and manage operations, and administrative staff who handle accounting and regulatory compliance. Operating a producing well requires monitoring equipment, managing production, maintaining infrastructure and ensuring regulatory compliance. When a well develops problems — pressure anomalies, mechanical failures, water intrusion — technical teams must diagnose and fix the issue. Oil and gas production is also heavily regulated. The Environmental Protection Agency, the Department of Interior, state environmental agencies and state petroleum commissions all have jurisdiction over where drilling can occur, how it must be conducted, how waste must be managed and what environmental impacts must be monitored. Compliance with these regulations is expensive and mandatory.

The business has experienced meaningful growth in recent years. The company reported record oil production in the first quarter of 2026, extracting 1.23 million barrels of crude oil. Production volumes grew substantially compared to the prior year, driven by both the expansion of direct drilling in the Williston Basin and the acquisition of producing interests in other basins. Natural gas production also increased. Revenue growth has been pronounced, reflecting both volume expansion and the elevated oil prices that have prevailed in global markets. These are favorable conditions for an independent producer. If oil prices remain elevated and the company’s drilling program continues to deliver productive wells at reasonable cost, the business will generate strong cash flows.

The principal risks to Phoenix Energy’s business are commodity price exposure and operating hazard. Oil prices can move sharply over short periods, driven by geopolitical events, changes in global petroleum supply and demand, and shifts in expectations about future supply. A steep decline in oil prices reduces revenues immediately and can turn profitable operations into cash-losing ones. The company also faces normal operating risks: wells can underperform expectations, drilling costs can exceed budget, equipment can fail, accidents can occur. Environmental regulations are becoming more stringent, particularly around methane emissions and freshwater protection, which could increase operating costs. Climate policy is also evolving, and there is genuine uncertainty about whether future regulations will constrain oil and gas production at all or only at margins. An independent producer with debt obligations is particularly vulnerable to commodity price swings — if oil prices fall sharply, revenues collapse but debt obligations remain fixed, which can create financial stress. Phoenix Energy’s capital structure, leverage ratio and access to capital in a low-price environment all matter to its financial stability.

Understanding Phoenix Energy as an investment requires tracking both the global oil market and the company’s specific operational execution. The 10-K filing with the Securities and Exchange Commission (CIK 0001818643) details the company’s acreage holdings, the reserve base underlying those holdings, production volumes and capital spending. The quarterly earnings releases show whether production volumes are on track and whether the company is finding oil at reasonable cost. The key metrics to watch are proved reserves (the volumes the company is confident it can extract at current technology and economics), the reserve replacement ratio (whether the company is discovering or acquiring more oil and gas than it produces), the cost to find and develop each unit of oil equivalent, and the company’s cash position and leverage ratio. For investors, the simplest framework is that an independent producer like Phoenix Energy is a cyclical business that performs well when oil prices are strong and struggles when they are weak. The company’s long-term value depends on whether management can deploy capital to find or acquire reserves at costs below the price at which those reserves can be sold.