Financial Data and Key Metrics Changes - The company reported an average production of 81,000 BOE per day, with a revenue of $253 million, where oil contributed 49%, gas 33%, and NGLs 18% [25][26] - The net debt to EBITDA ratio improved from 1.0 times at the end of 2024 to 0.7 times at the end of Q1 2025 [6][23] - Projected interest expense for 2025 is expected to decrease by $22 million due to debt refinancing [6] Business Line Data and Key Metrics Changes - The production mix for the quarter was 24% oil, 53% natural gas, and 23% NGLs [25] - The company plans to shift its drilling focus towards natural gas, with a projected increase in natural gas production while keeping overall barrel oil equivalent flat [7][8] Market Data and Key Metrics Changes - Oil prices have recently dipped into the $50 range, impacting the company's strategy to focus on natural gas drilling [7] - The company maintains a strong position in the natural gas market, with a volume mix of 54% natural gas projected for 2025 [7] Company Strategy and Development Direction - The company emphasizes four strategic pillars: maintaining financial strength, disciplined execution, disciplined reinvestment rate, and maximizing cash distributions [3][4] - The company aims to keep its reinvestment rate below 50% of operating cash flow to optimize distributions to unitholders [4][12] - The recent acquisition of XTO assets is expected to enhance the company's drilling opportunities and production capabilities [10][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging market environment but believes the company is well-positioned to navigate through commodity cycles [7][23] - The company anticipates double-digit growth in natural gas production in 2026, driven by increased drilling activity in the Deep Anadarko Basin [7][8] Other Important Information - The company has distributed over $1 billion back to unitholders since inception, with a current distribution of $0.79 per unit, resulting in a 20% yield [16] - The company has made 21 acquisitions since early 2018, spending over $2 billion, focusing on cash-flowing properties at discounted prices [18] Q&A Session Summary Question: Can you elaborate on the recent acquisition and its impact? - The acquisition adds significant acreage but only produces about 1,600 BOE per day. It includes 1 million acres across various regions, primarily in the Greater Anadarko Basin [32][34] Question: What is the strategy regarding the reinvestment rate and rig deployment? - The company plans to maintain a reinvestment rate below 50%. Currently, two rigs will be operational, with a potential third rig added later in the year depending on cash flow [40][42] Question: How does the company view the oil to gas ratio in future development? - The company will prioritize gas drilling when gas prices are favorable compared to oil, with a focus on maintaining high rates of return [48][49] Question: What are the expectations for natural gas prices and production in 2026? - The company expects significant growth in gas production in 2026, with a projected increase of over 20% in gas volumes while oil production may decrease slightly [65]

Company Performance - Mach Natural Resources LP (MNR) reported quarterly earnings of $0.68 per share, missing the Zacks Consensus Estimate of $0.69 per share, and down from $0.79 per share a year ago, representing an earnings surprise of -1.45% [1] - The company posted revenues of $226.77 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 12.39%, compared to year-ago revenues of $239.16 million [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Performance - Mach Natural Resources LP shares have lost about 22.5% since the beginning of the year, while the S&P 500 has declined by -4.3% [3] - The current consensus EPS estimate for the coming quarter is $0.63 on revenues of $247.12 million, and for the current fiscal year, it is $2.60 on revenues of $1.01 billion [7] Industry Outlook - The Zacks Industry Rank for Oil and Gas - Exploration and Production - United States is currently in the bottom 34% of over 250 Zacks industries, indicating potential challenges for companies in this sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the industry outlook can significantly impact stock performance [5][8]

[Overview and Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) Mach Natural Resources reported strong Q1 2025 results, including a **$60 million** asset acquisition and a **$0.79** per unit distribution - Acquired certain oil and gas assets in Oklahoma, Kansas, and Wyoming from XTO Energy for an unadjusted purchase price of **$60 million**[3](index=3&type=chunk) - CEO Tom L. Ward highlighted the company's ability to generate strong cash returns, reduce leverage, and strategically pivot its drilling program toward natural gas while maintaining a reinvestment rate under **50%**[3](index=3&type=chunk) - Declared a quarterly cash distribution of **$0.79** per common unit[1](index=1&type=chunk)[5](index=5&type=chunk) [Financial Results](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results) Mach generated **$227 million** in Q1 2025 total revenue and **$16 million** net income, maintaining a strong balance sheet Q1 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Total Revenue | $227 million | | Net Income | $16 million | | Adjusted EBITDA | $160 million | | Net Cash from Operating Activities | $143 million | | Total Development Costs | $52 million | | Reinvestment Rate | 37% | Q1 2025 Average Realized Prices (Ex-Derivatives) | Commodity | Price | | :--- | :--- | | Oil | $70.75 / bbl | | Natural Gas | $3.56 / Mcf | | NGLs | $27.33 / bbl | - As of March 31, 2025, the company had a cash balance of **$8 million**, **$285 million** in remaining availability under its Revolving Credit Facility, and a pro forma net-debt-to-Adjusted-EBITDA ratio of **0.7x**[6](index=6&type=chunk) [Operational Performance](index=2&type=section&id=First%20Quarter%202025%20Operational%20Results) Q1 2025 average net production was **80.9 Mboe/d**, with natural gas at **53%**, and **$253 million** in production revenues Q1 2025 Production & Revenue Mix | Metric | Oil | Natural Gas | NGLs | Total | | :--- | :--- | :--- | :--- | :--- | | **Production Mix** | 24% | 53% | 23% | 80.9 Mboe/d | | **Revenue Mix** | 49% | 33% | 18% | $253 million | Q1 2025 Operating Costs per Boe | Expense Category | Cost per Boe | | :--- | :--- | | Lease Operating Expense (LOE) | $6.69 | | Gathering and Processing | $3.87 | - In Q1 2025, the company spud **8 gross (6.5 net)** operated wells and brought **10 gross (8.9 net)** operated wells online[8](index=8&type=chunk) [Unitholder Distributions](index=2&type=section&id=Distributions) The board declared a quarterly cash distribution of **$0.79** per common unit for Q1 2025, payable on June 5, 2025 - A quarterly cash distribution of **$0.79** per common unit was declared for Q1 2025[11](index=11&type=chunk) - The distribution will be paid on June 5, 2025, to unitholders of record on May 22, 2025[11](index=11&type=chunk) [2025 Outlook](index=2&type=section&id=2025%20Outlook) The company reiterated its full-year 2025 outlook, with further details available on its website - The company reiterated its full-year 2025 outlook, with further details available on the company's website[12](index=12&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Disclosures) The company uses Adjusted EBITDA, a non-GAAP measure, to evaluate operating performance, with reconciliation to net income provided - The company uses Adjusted EBITDA as a supplemental non-GAAP measure to evaluate operating performance, consistent with its management and external analysts' practices[14](index=14&type=chunk)[18](index=18&type=chunk) - Adjusted EBITDA is defined as net income before interest expense, DD&A, unrealized loss (gain) on derivative instruments, loss on debt extinguishment, equity-based compensation expense, and (gain) loss on sale of assets[17](index=17&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=4&type=section&id=Reconciliation%20of%20GAAP%20Financial%20Measure%20to%20Adjusted%20EBITDA) Reconciliation of Net Income to Adjusted EBITDA ($ in thousands) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | | **2025** | **2024** | | **Net income** | **$15,886** | **$41,702** | | Interest expense, net | 17,417 | 25,072 | | Depreciation, depletion, amortization and accretion | 63,585 | 67,470 | | Unrealized loss on derivative instruments | 42,340 | 33,223 | | Loss on debt extinguishment | 18,540 | — | | Equity-based compensation expense | 2,112 | 1,182 | | Gain on sale of assets | (29) | (11) | | **Adjusted EBITDA** | **$159,851** | **$168,638** | [Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements subject to risks including commodity price volatility, regulatory changes, and cybersecurity threats - The report includes forward-looking statements that are not guarantees of future performance and are subject to significant risks and uncertainties[21](index=21&type=chunk)[22](index=22&type=chunk) - Key risk factors mentioned include commodity price volatility, concentration of operations in the Anadarko Basin, capital market conditions, regulatory changes, competition, and cybersecurity threats[21](index=21&type=chunk)

Part I - Financial Information [Financial Statements](index=9&type=section&id=Item%201.%20Financial%20Statements) Unaudited statements show lower net income from a debt extinguishment loss, while a refinancing reshaped the balance sheet Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $7,790 | $105,776 | | Total current assets | $195,673 | $322,096 | | Oil and natural gas properties, net | $1,914,895 | $1,899,357 | | **Total assets** | **$2,242,102** | **$2,338,214** | | **Liabilities & Equity** | | | | Total current liabilities | $281,853 | $352,421 | | Long-term debt | $460,000 | $668,778 | | **Total liabilities** | **$863,741** | **$1,139,168** | | Partners' capital | $1,378,361 | $1,199,046 | | **Total liabilities and partners' capital** | **$2,242,102** | **$2,338,214** | Statement of Operations Summary (in thousands, except per unit data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $226,768 | $239,155 | | Income from operations | $51,672 | $67,244 | | Loss on debt extinguishment | ($18,540) | $0 | | **Net income** | **$15,886** | **$41,702** | | Basic EPS | $0.14 | $0.44 | | Diluted EPS | $0.14 | $0.44 | - In Q1 2025, the company issued 14.8 million common units in a public offering, raising **net proceeds of $221.1 million**[42](index=42&type=chunk) - Distributions to unitholders in Q1 2025 amounted to **$59.7 million**, compared to $90.9 million in Q1 2024[42](index=42&type=chunk) - Financing activities in Q1 2025 included **proceeds from an offering of $221.6 million**, **repayment of a $763.1 million term note**, and **proceeds from new credit facilities of $533.0 million**[45](index=45&type=chunk) - On January 31, 2025, the company closed the **Flycatcher Acquisition for consideration of $29.8 million in cash**, funded by borrowings on its Revolving Credit Agreement[102](index=102&type=chunk)[103](index=103&type=chunk) - On February 27, 2025, the company entered a **new $750 million senior secured revolving credit facility**, using the proceeds to repay and terminate its existing Term Loan and Revolving Credit Agreement, resulting in a **debt extinguishment loss of $18.5 million**[115](index=115&type=chunk)[122](index=122&type=chunk) - In February 2025, the company completed a public offering of common units, resulting in **net proceeds of $221.1 million**, which were used to repay debt[164](index=164&type=chunk) - Subsequent to the quarter end, on April 30, 2025, the company closed the **XTO Acquisition for $60.0 million**, funded by borrowings and cash on hand[178](index=178&type=chunk) Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $142,519 | $143,953 | | Net cash used in investing activities | ($78,010) | ($54,720) | | Net cash used in financing activities | ($162,495) | ($90,725) | | **Net decrease in cash** | **($97,986)** | **($1,492)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses flat revenues offset by higher gas prices, rising operating costs, and liquidity from a new credit facility - The company's business is focused on the acquisition, development, and production of oil, natural gas, and NGLs in the **Anadarko Basin**, complemented by its own midstream assets[184](index=184&type=chunk)[185](index=185&type=chunk) - Management expects **continued commodity price volatility** influenced by the war in Ukraine, conflict in the Middle East, interest rate uncertainty, and global economic conditions[186](index=186&type=chunk) - As of March 31, 2025, the company had **$460.0 million outstanding** on its new revolving credit facility, with **$285.0 million of remaining availability**[209](index=209&type=chunk) - The **2025 capital budget is set between $260.0 million and $280.0 million**, primarily for drilling Oswego, Woodford, Red Fork, and Mississippian wells[212](index=212&type=chunk)[213](index=213&type=chunk) - In Q1 2025, capital expenditures included **$42.8 million for drilling and completions**, **$8.2 million for workovers**, and **$26.3 million for acquisitions**[213](index=213&type=chunk) - Adjusted EBITDA is defined as net income adjusted for interest, DD&A, unrealized derivative gains/losses, debt extinguishment loss, equity-based compensation, and asset sale gains/losses[226](index=226&type=chunk) Revenue and Production Comparison (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total oil, gas, and NGL sales ($ thousands) | $252,726 | $255,240 | (1%) | | Total Production (MBoe) | 7,283 | 8,098 | (10%) | | Average Oil Price ($/Bbl) | $70.75 | $77.17 | (8%) | | Average Natural Gas Price ($/Mcf) | $3.56 | $2.35 | 51% | Operating Expense Comparison (Q1 2025 vs Q1 2024) | Expense ($ thousands) | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Gathering and processing | $28,161 | $31,942 | (12%) | | Lease operating expense | $48,752 | $40,760 | 20% | | Production taxes | $12,774 | $12,752 | 0% | | DD&A – oil and natural gas | $61,185 | $65,372 | (6%) | Reconciliation of Net Income to Non-GAAP Measures (in thousands) | Measure | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $15,886 | $41,702 | | **Adjusted EBITDA** | **$159,851** | **$168,638** | | **Cash available for distribution** | **$94,576** | **$67,011** | [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include commodity prices, counterparty credit, and interest rates from variable-rate debt - The company uses commodity derivative instruments, primarily swaps, to hedge price risk associated with a portion of its anticipated production[236](index=236&type=chunk) - As of March 31, 2025, the company had **$460.0 million of variable-rate debt outstanding**, and a **1% (100 basis points) change in the interest rate would impact annual interest expense by approximately $4.6 million**[240](index=240&type=chunk)[241](index=241&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective as of March 31, 2025 - The CEO and CFO concluded that as of March 31, 2025, the company's **disclosure controls and procedures were effective**[243](index=243&type=chunk) - **No changes occurred during Q1 2025** that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[245](index=245&type=chunk) Part II - Other Information [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary course legal matters and has accrued $1.5 million for potential liabilities - The company is involved in ordinary course litigation such as title disputes, royalty disputes, and contract claims[246](index=246&type=chunk) - The company is **not aware of any environmental claims** existing as of March 31, 2025, that would materially impact its financial position[248](index=248&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported compared to the most recent Annual Report on Form 10-K - **No material changes** to the Company's "Risk Factors" were disclosed in this report compared to the Annual Report for the year ended December 31, 2024[249](index=249&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or specific use of proceeds during the period - None[250](index=250&type=chunk) [Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities - None[251](index=251&type=chunk) [Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company provided no mine safety disclosures for the period - None[252](index=252&type=chunk) [Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the first quarter of 2025 - **No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement** during the three months ended March 31, 2025[253](index=253&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) Filed exhibits include the new Revolving Credit Agreement, partnership agreements, and required CEO/CFO certifications - Key exhibits filed include the **Revolving Credit Agreement dated February 27, 2025**, and various CEO/CFO certifications[254](index=254&type=chunk)[255](index=255&type=chunk)

Core Insights - Mach Natural Resources LP (MNR) is positioned to potentially continue its earnings-beat streak in upcoming reports, particularly within the Zacks Oil and Gas - Exploration and Production - United States industry [1] - The company has a history of beating earnings estimates, with an average surprise of 29.78% over the last two quarters [1] Earnings Performance - For the last reported quarter, Mach Natural Resources LP achieved earnings of $0.62 per share, exceeding the Zacks Consensus Estimate of $0.44 per share, resulting in a surprise of 40.91% [2] - In the previous quarter, the company was expected to report earnings of $0.59 per share but delivered $0.70 per share, leading to a surprise of 18.64% [2] Earnings Estimates and Predictions - Estimates for Mach Natural Resources LP have been trending higher, influenced by its history of earnings surprises [4] - The company currently has a positive Earnings ESP (Expected Surprise Prediction) of +7.49%, indicating a bullish outlook from analysts regarding its earnings prospects [7] - The combination of a positive Earnings ESP and a Zacks Rank 3 (Hold) suggests a strong possibility of another earnings beat [7] Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [5] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [6]

Financial Data and Key Metrics Changes - For the fourth quarter, the company reported total net production of 86,700 BOE per day, with net income of $185 million and adjusted EBITDA of $601 million [21][35] - Average realized prices were $70.06 per barrel of oil, $2.31 per Mcf of gas, and $25.82 per barrel of NGLs [35] - The company generated $235 million in total revenues, with EBITDA of $162 million and operating cash flow of $134 million [36] - Free cash flow for the quarter was $81 million, leading to a distribution of $60 million or $0.50 per unit [36][62] Business Line Data and Key Metrics Changes - The company maintained a production mix of 24% oil, 52% natural gas, and 24% NGLs for the fourth quarter [35] - The company achieved a median payout period of 15 months for its wells, assuming flat pricing conditions [12] Market Data and Key Metrics Changes - The company anticipates a higher operating cash flow in 2025 due to recent increases in natural gas prices [10] - The commodity mix by revenue in 2024 was 59% oil, 21% natural gas, and 20% NGLs, with expectations of a shift towards 54% natural gas in 2025 [30] Company Strategy and Development Direction - The company focuses on four strategic pillars: maintaining financial strength, disciplined execution, disciplined reinvestment rate, and maximizing cash distributions [3][4] - The company plans to continue its acquisition strategy, targeting cash-flowing assets at discounted prices, and aims to maintain a low reinvestment rate to optimize distributions [6][32] - The company is looking to add a third rig in 2025 to enhance drilling activities in the Oswego and Anadarko formations [11][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for natural gas, viewing it as a critical fuel for the next decade [53] - The company does not foresee a prolonged downturn similar to 2015-2020 and is prepared to make acquisitions when favorable opportunities arise [26][27] - Management emphasized the importance of maintaining a clean balance sheet and maximizing distributions during varying commodity price environments [20][19] Other Important Information - The company has a net debt-to-EBITDA ratio of 0.8x, indicating strong financial health [17] - The company has distributed over $1 billion to unitholders since inception, reflecting its commitment to returning capital [19] Q&A Session Summary Question: Expectations for gas and oil prices - Management expects to see better deals in both gas and oil, with a preference for crude oil acquisitions when prices are in the $60 range [42][43] Question: Value of infrastructure and potential monetization - Management views their infrastructure as critical to operations and does not plan to sell it, as it generates more EBITDA than its purchase price [44][46] Question: Timing and focus of the third rig - The third rig is expected to arrive soon, initially focusing on the Oswego formation before moving to the deep Mississippian project [49] Question: Competitive landscape for acquisitions - The competitive environment in the Mid-Con has increased, with well-capitalized companies seeking larger packages, but the company will continue to focus on smaller, accretive acquisitions [73][74] Question: Organic leasing opportunities - The company has significant acreage held by production and plans to allocate around $30 million for leasing in 2025, primarily in deeper areas [76][77] Question: Impact of non-op budget - The non-op budget remains consistently low, with limited participation in non-operated wells [87]

Financial Data and Key Metrics Changes - In Q4 2024, the company reported total net production of 86,700 BOE per day, with net income of $185 million and adjusted EBITDA of $601 million [21][35] - Average realized prices were $70.06 per barrel of oil, $2.31 per Mcf of gas, and $25.82 per barrel of NGLs [35] - The company generated $235 million in total revenues, with EBITDA of $162 million and operating cash flow of $134 million [36] - Free cash flow for the quarter was $81 million, leading to a distribution of $0.50 per unit [36][62] - The net debt-to-EBITDA ratio improved to 0.8x from 1.0x [23] Business Line Data and Key Metrics Changes - The company maintained a production mix of 24% oil, 52% natural gas, and 24% NGLs in Q4 2024 [35] - The company achieved a median payout period of 15 months for its wells, with Oswego D&C costs averaging $2.6 million [12][21] - The reinvestment rate for 2024 was 47%, with a projected PDP decline of 20% over the next 12 months [16] Market Data and Key Metrics Changes - The company noted that 2024 had the lowest natural gas prices since the early 1990s, impacting overall revenue [29] - The commodity mix by revenue in 2024 was 59% oil, 21% natural gas, and 20% NGLs, shifting to 54% natural gas in 2025 due to higher natural gas prices [30][31] Company Strategy and Development Direction - The company focuses on four strategic pillars: maintaining financial strength, disciplined execution, disciplined reinvestment rate, and maximizing cash distributions [3][4] - The company plans to add a third rig in 2025, focusing on high-return wells while keeping the reinvestment rate below 50% [10][11] - The company aims to continue making accretive acquisitions, having completed 20 acquisitions since its founding in 2017 [6][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for natural gas, viewing it as a key fuel for the next decade [53] - The company anticipates a more favorable operating environment in 2025, with increased operating cash flow due to rising natural gas prices [10][31] - Management does not foresee a prolonged downturn similar to 2015-2020 and is prepared to capitalize on acquisition opportunities [26] Other Important Information - The company has a strong balance sheet, with total proved acreage coverage of 3.9% and net debt to enterprise value of 21% [16] - The company has distributed over $1 billion to unitholders since inception, maintaining a consistent distribution strategy [19] Q&A Session Summary Question: Expectations for gas and oil prices this year - Management expects to see better deals in both gas and oil, with a preference for crude oil acquisitions when prices are in the $60 range [42][43] Question: Value of infrastructure and potential monetization - Management views infrastructure as critical to operations and does not plan to sell it, as it generates more EBITDA than its purchase price [44][46] Question: Timing and focus of the third rig - The third rig will be operational shortly, initially focusing on the Oswego formation before moving to the deep Mississippian project [49] Question: Competitive landscape in the Mid-Con region - The Mid-Con region has seen increased competition, but the company focuses on smaller acquisitions that fit its criteria [74] Question: Organic leasing opportunities - The company has significant acreage held by production and plans to allocate around $30 million for leasing in 2025 [76] Question: Impact of non-op budget - The non-op budget remains low, with limited participation in non-operated wells [87] Question: Natural gas production guidance - Management expects natural gas production to trend towards the high end, with a stable range for NGLs [91]

Reserves and Revenue - As of December 31, 2024, Mach Natural Resources LP has total proved reserves of 67,434.5 Mbbl of oil, 1,072,002.6 MMcf of gas, and 91,149.8 Mbbl of NGL[3] - The estimated revenue from proved reserves is $5,013,270.8 million for oil, $1,234,426.9 million for gas, and $1,826,444.1 million for NGL, totaling $8,074,171.8 million[3] - The Minor Upstream properties have proved reserves of 6,293.0 Mbbl of oil, 165,946.0 MMcf of gas, and 11,640.0 Mbbl of NGL, with total revenue estimated at $810,689.0 million[4] Operating Income and Expenses - Operating income before interest and taxes (BFIT) is estimated at $3,480,301.5 million, discounted at 10%[3] - The total operating expenses are projected to be $2,868,566.2 million, with severance and ad valorem taxes amounting to $621,293.0 million[3] - The discounted operating income for the Major Upstream properties is $1,347,017.1 million, while for the Minor Upstream properties it is $118,722.1 million[4] Property Investments - Investments for the Major Upstream properties are estimated at $852,255.1 million, while the Minor Upstream properties have investments of $162,887.6 million[4] Market Prices - The average Henry Hub spot market gas price used in the report is $2.130 per MMBtu, and the average WTI Cushing spot oil price is $75.48 per barrel[7] Methodology - The reserve estimates are based on a combination of production performance and analogy methods, reflecting the best judgment based on available data[10] Cash Flows - The Major Upstream properties account for approximately 92% of the cumulative discounted cash flows from proved developed producing reserves[4]

Reserves and Production - Proved developed reserves as of December 31, 2024, include 49,629 MBbl of oil, 909,372 MMcf of natural gas, and 69,193 MBbl of natural gas liquids, totaling 270,384 MBoe[71] - The company drilled 58 gross wells in 2024 and plans to drill approximately 68 gross wells in 2025[80] - Average daily production increased to 86.69 MBoe/d in 2024, up from 50.44 MBoe/d in 2023[83] - The company converted 19,663 MBoe of proved undeveloped reserves into proved developed reserves in 2024[79] - The total acreage owned by the company as of December 31, 2024, includes 2,436,815 total acres, with 2,420,054 acres developed[85] - The company operated 58 productive development wells in 2024, with a net production of 50.9 wells, compared to 91 gross and 81.0 net in 2023[90] - The company has interests in 10,015 productive wells as of December 31, 2024, with 5,816 being natural gas wells and 4,199 being oil wells[93] Financial Performance - Total revenues for the year ended December 31, 2024, reached $969.628 million, a significant increase from $762.309 million in 2023[84] - The total operating expenses for 2024 were $678.636 million, compared to $403.165 million in 2023[84] - The company reported a loss of $18.854 million on oil and natural gas derivatives for 2024[84] - The average realized price for oil in 2024 was $74.55 per barrel, down from $76.51 in 2023[83] Regulatory and Environmental Compliance - Compliance with environmental laws, such as CERCLA and RCRA, may impose significant costs and liabilities on the company, affecting financial performance[121][125] - The Federal Water Pollution Control Act imposes strict controls on pollutant discharges, requiring permits for any discharges into regulated waters[127] - The EPA's final rule in September 2023 aligns the definition of "waters of the United States" with the Supreme Court's decision, but litigation continues in roughly half of the states, creating uncertainty regarding future implementation[128] - The U.S. Supreme Court's decision in April 2020 requires permits for certain discharges through groundwater, which may increase costs and delays for obtaining permits[128] - The EPA's proposed rule in November 2021 aimed to reduce methane emissions from oil and gas sources, with a final rule announced in December 2023 requiring routine leak monitoring and phasing out routine flaring of natural gas from newly constructed wells[133] - The Inflation Reduction Act imposes a Waste Emissions Charge starting at $900 per ton for methane emissions exceeding thresholds, increasing to $1,200 in 2025 and $1,500 in 2026, with ongoing litigation challenging this rule[137] - The EPA's review of the National Ambient Air Quality Standard for ozone may lead to more stringent permitting requirements, potentially increasing costs for compliance[132] - Future federal GHG regulations remain a significant possibility, which could require enhanced record-keeping and increased maintenance activities for compliance[135] - The Supreme Court's decision in Loper Bright Enterprises v. Raimondo complicates federal agencies' regulatory interpretations, impacting climate change policy administration[141] Operational Risks and Challenges - The company faces risks associated with climate change, including extreme weather events that could disrupt operations and increase operational costs[241] - Climate-related transition risks, including evolving legislation and technological advances, may lead to increased operating expenses and reduced demand for oil and natural gas[242] - Negative public perception and advocacy group pressures regarding climate change could result in increased reputational risks and regulatory scrutiny[244] - The company may incur substantial losses and liabilities due to operational risks, with insurance coverage potentially being inadequate[236] - Litigation claims from landowners and royalty owners may increase during periods of declining commodity prices, impacting financial results[235] - The company anticipates that economic uncertainty and inflation may adversely affect results of operations and liquidity[229] Partnership and Governance - The partnership agreement requires the company to distribute all available cash each quarter, which may limit its ability to grow reserves and production[286] - The company expects to rely on cash reserves and external financing sources to fund future acquisitions and growth, which may be impacted by market conditions and interest rates[287] - The general partner has control over all operational decisions, which may lead to conflicts of interest that could affect unitholders[276] - The partnership agreement does not restrict the general partner from competing with the company, potentially leading to conflicts in business opportunities[278] - Unitholders have limited voting rights, reducing their ability to influence management decisions and potentially affecting the trading price of common units[292] Market and Economic Conditions - The Federal Reserve raised the target range for the federal funds rate to 4.25% to 4.5% in November 2024, with inflation recorded at 2.9% in December 2024[230] - Supply chain constraints and inflationary pressures are expected to continue impacting operating costs, potentially affecting the ability to procure materials and equipment in a timely manner[231] - Ongoing geopolitical tensions, such as the Russian invasion of Ukraine, and decreased demand from China may contribute to an economic slowdown, adversely affecting the price of petroleum products[233] Cybersecurity and Data Protection - Cybersecurity threats pose risks to the company's information systems, potentially disrupting operations and affecting business performance[272] - The company faces various security threats, including evolving cyber-security attacks that could disrupt critical systems and lead to significant losses[273] - The regulatory environment surrounding data protection laws is uncertain, with potential significant penalties for violations that could harm the company's business and reputation[274]

Core Viewpoint - Mach Natural Resources LP (MNR) has experienced a decline of 11.2% over the past week, but the formation of a hammer chart pattern suggests potential support and a possible trend reversal in the future [1][2]. Technical Analysis - The hammer chart pattern indicates a potential bottom, suggesting that selling pressure may be subsiding, which could lead to a bullish trend for the stock [2][4]. - A hammer pattern typically forms during a downtrend, where the stock opens lower, makes a new low, but then closes near or above the opening price, indicating buying interest [3][4]. Fundamental Analysis - There is a strong consensus among Wall Street analysts to raise earnings estimates for MNR, which enhances the stock's prospects for a trend reversal [2][6]. - The consensus EPS estimate for MNR has increased by 12.8% over the last 30 days, indicating analysts' agreement on the company's potential for better earnings [7]. Zacks Rank - MNR currently holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks, which typically outperform the market [8]. - The Zacks Rank serves as a timing indicator, suggesting that MNR's prospects are beginning to improve, further supporting the case for a potential trend reversal [8].