Pure Cycle Corporation (NASDAQ:PCYO) stock fell 0.99% (As on July 13, 11:28:47 AM UTC-4, Source: Google Finance) after the company in the third quarter of FY 23 has reported the $6.9 million of revenue compared to $3.2 million for the same period in 2022. The increase was due to a record level of water sales to oil and gas operators and the start of the Phase 2B construction at Sky Ranch (Phase 2A is nearly 90% complete as of May 31, 2023 while Phase 2B is about 21% complete). For the three months ended May 31, 2023 and 2022, the company generated $1.3 million and $1.3 million in tap fees. As of May 31, 2023, the single-family rental business has four homes built and rented in Phase 1 of Sky Ranch and 10 homes under construction in Phase 2A. After May 31, 2023, the company completed and rented six of the units in Phase 2A with the remaining four expected to be completed around the end of August 2023. As noted in the prior quarter, due to the overwhelming demand for rental units at Sky Ranch, the company increased the number of lots to be used in the single-family rental business from 55 to 69 in Phase 1 and Phase 2 of Sky Ranch.

Moreover, for the three and nine months ended May 31, 2023, residential water usage revenue increased over 2022 mainly due to new home sales in Sky Ranch which adds customers to the water and wastewater operations. For the three months ended May 31, 2023 compared to 2022, commercial water usage revenue increased due to increased water sales to oil and gas operators for use in drilling operations, which the company believes will continue at a high level through the remainder of the fiscal 2023. Despite the challenges with the weather and housing market, for the three months ended May 31, 2023, lot sales revenue increased as compared to 2022. This was mainly due to 2023 having two phases under construction (Phase 2A and Phase 2B). Revenue for lot sales is recognized over time with progress measured using the percent of completion method.

Further, in the third quarter of fiscal 2022, the company had contracted for the construction of 10 rental units in Phase 2A, six of which were completed and rented after May 31, 2023, and the remaining four the company believe will be ready for rental around the end of the fiscal 2023.