[Report Announcement](index=1&type=section&id=Report%20Announcement) Mach Natural Resources LP reported Q2 2025 financial and operating results and declared its quarterly cash distribution - Mach Natural Resources LP (NYSE: MNR) reported financial and operating results for the three months ended June 30, 2025, and declared its quarterly cash distribution[1](index=1&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Mach reported strong Q2 2025 results, including strategic acquisitions and a cash distribution [Recent Strategic Developments](index=1&type=section&id=Recent%20Strategic%20Developments) Mach Natural Resources LP announced two accretive transactions on July 10, 2025, for a combined consideration of approximately $1.3 billion, significantly enhancing its scale and diversifying its portfolio with entry into the Permian Basin and San Juan Basin - Announced two accretive transactions on July 10, 2025, for approximately **$1.3 billion**, enhancing scale and diversifying Mach's portfolio with Permian Basin and San Juan Basin entry[3](index=3&type=chunk) - CEO Tom L. Ward stated that Q2 results reflect strong execution of the 2025 plan, allowing for a **$0.38 per common unit distribution**, and that recent acquisitions lay groundwork for sustainable long-term growth[3](index=3&type=chunk) [Key Financial and Operational Summary](index=1&type=section&id=Key%20Financial%20and%20Operational%20Summary) Mach reported total revenue of $289 million and net income of $90 million for Q2 2025, with an average total net production of 83.6 Mboe/d, generating $130 million in net cash from operating activities and maintaining a strong financial position Q2 2025 Key Financial & Operational Metrics | Metric | Value | Unit | | :-------------------------------- | :------ | :----- | | Total Revenue | $289 | million | | Net Income | $90 | million | | Adjusted EBITDA | $122 | million | | Net Cash Provided by Operating Activities | $130 | million | | Quarterly Cash Distribution | $0.38 | per common unit | | Total Net Production | 83.6 | Mboe/d | | Oil Production | 19.3 | MBbl/d | | Lease Operating Expense | $6.52 | per Boe | | Total Development Costs | $64 | million | Financial Position as of June 30, 2025 | Metric | Value | Unit | | :-------------------------------- | :------ | :----- | | Cash Balance | $14 | million | | Revolving Credit Facility Availability | $180 | million | | Pro Forma Net-Debt-to-Adjusted-EBITDA | 0.9x | | [Second Quarter 2025 Detailed Results](index=2&type=section&id=Second%20Quarter%202025%20Detailed%20Results) Mach's Q2 2025 detailed results cover operational performance, production, expenses, and capital costs [Operational Performance](index=2&type=section&id=Operational%20Performance) Mach achieved an average oil equivalent production of 83.6 Mboe/d in Q2 2025, with a production mix of 23% oil, 53% natural gas, and 24% NGLs, contributing to $219 million in production revenues, while spudding 9 gross (8 net) and bringing online 11 gross (9 net) operated wells Q2 2025 Production Volumes and Revenue Mix | Metric | Value | Unit | | :-------------------------------- | :------ | :----- | | Average Oil Equivalent Production | 83.6 | Mboe/d | | Production Mix: Oil | 23% | | | Production Mix: Natural Gas | 53% | | | Production Mix: NGLs | 24% | | | Total Production Revenues | $219 | million | | Revenue Mix: Oil | 51% | | | Revenue Mix: Natural Gas | 31% | | | Revenue Mix: NGLs | 18% | | - Spud **9 gross (8 net)** operated wells and brought online **11 gross (9 net)** operated wells in Q2 2025[8](index=8&type=chunk) - As of June 30, 2025, **3 gross (2.7 net)** operated wells were in various stages of drilling and completion[8](index=8&type=chunk) [Detailed Expenses and Capital Costs](index=2&type=section&id=Detailed%20Expenses%20and%20Capital%20Costs) Mach's lease operating expense in Q2 2025 was $50 million ($6.52 per Boe), with additional gathering and processing expenses of $32 million ($4.18 per Boe), and total development costs amounted to $64 million, including $59 million for upstream capital Q2 2025 Operating Expenses and Development Costs | Expense Category | Amount | Per Boe (where applicable) | | :------------------------------------ | :------- | :------------------------- | | Lease Operating Expense | $50 million | $6.52 | | Gathering and Processing Expenses | $32 million | $4.18 | | Production Taxes (as % of sales) | 4.8% | | | Midstream Operating Profit | ~$4 million | | | G&A Expenses (excl. equity-based comp) | $7 million | | | Interest Expense | $12 million | | | Total Development Costs | $64 million | | | Upstream Capital | $59 million | | | Other Capital (midstream & land) | $5 million | | [Distributions](index=2&type=section&id=Distributions) Mach's board declared a **$0.38** per common unit quarterly cash distribution for Q2 2025 [Quarterly Cash Distribution Declaration](index=2&type=section&id=Quarterly%20Cash%20Distribution%20Declaration) Mach's board of directors declared a quarterly cash distribution of $0.38 per common unit for the second quarter of 2025, payable on September 4, 2025, to unitholders of record as of August 21, 2025 - Declared a quarterly cash distribution of **$0.38 per common unit** for Q2 2025[11](index=11&type=chunk) - The distribution is payable on September 4, 2025, to common unitholders of record as of August 21, 2025[11](index=11&type=chunk) [2025 Outlook](index=2&type=section&id=2025%20Outlook) Mach will provide updated 2025 guidance after closing Permian and San Juan Basin transactions in Q3 2025 [Forward-Looking Guidance Update](index=2&type=section&id=Forward-Looking%20Guidance%20Update) Mach will provide updated forward-looking guidance for 2025 following the expected closing of the Permian Basin and San Juan Basin transactions during the third quarter of 2025 - Updated forward-looking guidance will be provided after the closing of the Permian Basin and San Juan Basin transactions, expected in Q3 2025[12](index=12&type=chunk) - Additional details of Mach's forward-looking guidance are available on the Company's website[13](index=13&type=chunk) [Conference Call and Webcast Information](index=2&type=section&id=Conference%20Call%20and%20Webcast%20Information) Mach will host a conference call and webcast on August 8, 2025, to discuss Q2 2025 results [Q2 2025 Results Call Details](index=2&type=section&id=Q2%202025%20Results%20Call%20Details) Mach will host a conference call and webcast on Friday, August 8, 2025, at 9:00 a.m. Central (10:00 a.m. Eastern) to discuss its second quarter 2025 results, with a replay available on the Company's website - Conference call and webcast for Q2 2025 results scheduled for Friday, August 8, 2025, at **9:00 a.m. Central (10:00 a.m. Eastern)**[14](index=14&type=chunk) - Participants can access the call by dialing **877-407-2984** or via webcast link on www.ir.machnr.com[14](index=14&type=chunk) - A replay will be available on the Company's website following the call[14](index=14&type=chunk) [About Mach Natural Resources LP](index=3&type=section&id=About%20Mach%20Natural%20Resources%20LP) Mach Natural Resources LP is an independent upstream oil and gas company focused on the Anadarko Basin [Company Profile](index=3&type=section&id=Company%20Profile) Mach Natural Resources LP is an independent upstream oil and gas company primarily focused on the acquisition, development, and production of oil, natural gas, and NGL reserves in the Anadarko Basin region of Western Oklahoma, Southern Kansas, and the panhandle of Texas - Mach Natural Resources LP is an independent upstream oil and gas company[15](index=15&type=chunk) - Focuses on acquisition, development, and production of oil, natural gas, and NGL reserves[15](index=15&type=chunk) - Primary operational area is the Anadarko Basin region of Western Oklahoma, Southern Kansas, and the panhandle of Texas[15](index=15&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section defines Adjusted EBITDA, its purpose, and provides a reconciliation to GAAP net income [Adjusted EBITDA Definition and Use](index=3&type=section&id=Adjusted%20EBITDA%20Definition%20and%20Use) Mach defines Adjusted EBITDA as net income adjusted for interest, depreciation, depletion, amortization and accretion (DDA), unrealized derivative gains/losses, loss on debt extinguishment, equity-based compensation, and gain/loss on sale of assets; this non-GAAP measure is used by management and external users to evaluate operating performance without regard to financing methods, capital structure, or historical cost basis, but it is not a substitute for GAAP net income - Adjusted EBITDA is defined as net income before (1) interest expense, net, (2) depreciation, depletion, amortization and accretion, (3) unrealized loss (gain) on derivative instruments, (4) loss on debt extinguishment, (5) equity-based compensation expense and (6) (gain) loss on sale of assets, net[17](index=17&type=chunk) - Used by management and external users to evaluate operating performance and results of operation from period to period and against peers without regard to financing methods, capital structure or historical cost basis[18](index=18&type=chunk) - Adjusted EBITDA is a non-GAAP measure and should not be considered an alternative to, or more meaningful than, net income as determined in accordance with GAAP[18](index=18&type=chunk) [Adjusted EBITDA Reconciliation](index=4&type=section&id=Adjusted%20EBITDA%20Reconciliation) The report provides a detailed reconciliation of GAAP net income to Adjusted EBITDA for the three and six months ended June 30, 2025, and 2024, showing the specific adjustments made Reconciliation of Net Income to Adjusted EBITDA | ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $89,661 | $39,516 | $105,547 | $81,218 | | Interest expense, net | 12,097 | 25,880 | 29,514 | 50,952 | | Depreciation, depletion, amortization and accretion | 67,098 | 68,061 | 130,683 | 135,531 | | Unrealized (gain) loss on derivative instruments | (48,551) | (124) | (6,211) | 33,099 | | Loss on debt extinguishment | — | — | 18,540 | — | | Equity-based compensation expense | 2,103 | 2,300 | 4,215 | 3,482 | | Gain on sale of assets | (138) | (298) | (167) | (309) | | **Adjusted EBITDA** | **$122,270** | **$135,335** | **$282,121** | **$303,973** | [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section disclaims forward-looking statements, highlighting risks and advising consultation of Form 10-K [Disclaimer and Risk Factors](index=4&type=section&id=Disclaimer%20and%20Risk%20Factors) This section highlights that the release contains forward-looking statements based on management's current beliefs, which are subject to various assumptions, risks, and uncertainties beyond the company's control, including commodity price volatility, market conditions, regulatory changes, and operational challenges, and readers are cautioned against undue reliance on these statements and are directed to the 'Risk Factors' section in the Company's Annual Report on Form 10-K for further details - The release contains forward-looking statements based on management's current beliefs, subject to numerous assumptions, risks, and uncertainties beyond the Company's control[21](index=21&type=chunk) - Identified risks include commodity price volatility, impact of public health events, uncertainties in reserve estimates, difficult capital markets, lack of transportation, regulatory changes, and competition[21](index=21&type=chunk) - Readers should not place undue reliance on forward-looking statements and are advised to consult the 'Risk Factors' in the Company's Annual Report on Form 10-K for a discussion of potential risks[21](index=21&type=chunk)[22](index=22&type=chunk)

[DEFINITIONS](index=4&type=section&id=DEFINITIONS) This section defines key financial and industry-specific terms used throughout the report - The section provides definitions for key terms used throughout the report, including financial metrics like '**Adjusted EBITDA**' and '**PV-10**', and industry-specific terms such as '**Bbl**', '**Boe**', '**Proved reserves**', and '**NGLs**'[9](index=9&type=chunk)[10](index=10&type=chunk)[19](index=19&type=chunk)[21](index=21&type=chunk) [CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS](index=7&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This statement warns that forward-looking information is subject to inherent oil and natural gas industry risks and uncertainties - This section warns readers that the report contains forward-looking statements based on management's current beliefs, which are subject to various risks and uncertainties inherent in the oil and natural gas industry. Factors that could cause actual results to differ materially include **commodity price volatility**, **acquisition success**, **general economic conditions**, and **regulatory changes**[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[35](index=35&type=chunk) [PART I - FINANCIAL INFORMATION](index=9&type=section&id=Part%20I%20-%20Financial%20Information) This section presents the company's unaudited consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=9&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements and detailed notes on accounting policies, acquisitions, and debt [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and partners' capital at specific dates | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Total assets | $2,334,165 | $2,338,214 | $(4,049) | (0.17%) | | Current assets | $209,178 | $322,096 | $(112,918) | (35.06%) | | Cash and cash equivalents | $13,777 | $105,776 | $(91,999) | (87.00%) | | Oil and natural gas properties, net | $1,979,069 | $1,899,357 | $79,712 | 4.20% | | Total current liabilities | $266,341 | $352,421 | $(86,080) | (24.42%) | | Long-term debt | $565,000 | $668,778 | $(103,778) | (15.52%) | | Partners' capital | $1,375,695 | $1,199,046 | $176,649 | 14.73% | [Consolidated Statements of Operations](index=11&type=section&id=Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net income for the reported periods | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :--------- | | Total revenues | $288,517 | $239,994 | $48,523 | 20.22% | | Gain (loss) on oil and natural gas derivatives | $55,579 | $(4,635) | $60,214 | NM | | Total operating expenses | $177,220 | $169,511 | $7,709 | 4.55% | | Net income | $89,661 | $39,516 | $50,145 | 126.89% | | Basic Net income per common unit | $0.76 | $0.42 | $0.34 | 80.95% | | Diluted Net income per common unit | $0.76 | $0.42 | $0.34 | 80.95% | | Weighted average common units outstanding (Basic) | 118,336 | 95,009 | 23,327 | 24.55% | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :--------- | | Total revenues | $515,285 | $479,149 | $36,136 | 7.54% | | Gain (loss) on oil and natural gas derivatives | $14,886 | $(33,903) | $48,789 | NM | | Total operating expenses | $352,316 | $341,422 | $10,894 | 3.19% | | Net income | $105,547 | $81,218 | $24,329 | 29.96% | | Basic Net income per common unit | $0.92 | $0.85 | $0.07 | 8.24% | | Diluted Net income per common unit | $0.92 | $0.85 | $0.07 | 8.24% | | Weighted average common units outstanding (Basic) | 115,248 | 95,004 | 20,244 | 21.31% | [Consolidated Statements of Partners' Capital](index=12&type=section&id=Consolidated%20Statements%20of%20Partners%27%20Capital) This statement outlines changes in partners' capital, including unit issuances and net income | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Partners' Capital | $1,375,695 | $1,199,046 | $176,649 | 14.73% | | Common Units Outstanding | 118,336 | 103,490 | 14,846 | 14.34% | - The company issued **14,839 thousand common units** in a public offering, generating **$221.1 million** in net proceeds by March 31, 2025[41](index=41&type=chunk) [Consolidated Statements of Cash Flows](index=13&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement details cash inflows and outflows from operating, investing, and financing activities | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :--------- | | Net cash provided by operating activities | $272,660 | $260,784 | $11,876 | 4.55% | | Net cash used in investing activities | $(212,391) | $(85,261) | $(127,130) | 149.11% | | Net cash used in financing activities | $(152,268) | $(183,694) | $31,426 | (17.11%) | | Net (decrease) in cash and cash equivalents | $(91,999) | $(8,171) | $(83,828) | 1025.92% | | Cash and cash equivalents, end of period | $13,777 | $144,621 | $(130,844) | (90.47%) | [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the consolidated financial statements [1. Organization and Nature of Business](index=14&type=section&id=1.%20Organization%20and%20Nature%20of%20Business) This section describes the company's primary business as an independent upstream oil and gas producer in the Anadarko Basin - **Mach Natural Resources LP** is an independent upstream oil and gas company focused on the acquisition, development, and production of oil, natural gas, and NGL reserves in the **Anadarko Basin** region of Western Oklahoma, Southern Kansas, and the panhandle of Texas[46](index=46&type=chunk) - The company operates as a **single reportable segment**, which is the **exploration and production** of oil, natural gas, and NGLs, with all operations and assets located in the United States[49](index=49&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies](index=14&type=section&id=2.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the basis of financial statement preparation and the company's significant accounting policies - The financial statements are prepared in accordance with **US GAAP**, requiring management to make estimates and assumptions, particularly for **proved oil and natural gas reserves**, **fair value of acquired assets**, and **commodity derivatives**[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - The company uses the **full cost method** of accounting for exploration and development activities, capitalizing costs and depreciating them using the **unit-of-production method**. **No impairments** on proved oil and natural gas properties were recorded for the three and six months ended June 30, 2025 and 2024[60](index=60&type=chunk)[63](index=63&type=chunk) - Revenue from oil, natural gas, and NGL sales is recognized when **control transfers** to the purchaser at the delivery point. The company's major market risk exposure is in the pricing of these commodities, which is **volatile and unpredictable**[82](index=82&type=chunk)[83](index=83&type=chunk) Purchaser Concentration | Purchaser | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | Philips 66 Company | 26.9 % | 29.1 % | | NextEra Energy Marketing LLC | 24.1 % | * | | CVR Supply & Trading, LLC | 11.2 % | * | | Shell Oil Company | * | 17.7 % | * Purchaser did not account for greater than 10% of oil, natural gas, and NGL sales for the period. [3. Acquisitions and Divestitures](index=21&type=section&id=3.%20Acquisitions%20and%20Divestitures) This section details the company's recent acquisitions and a divestiture of certain acreage - The company completed several acquisitions: XTO Acquisition (**$77.9 million** cash consideration, closed April 30, 2025), Flycatcher Acquisition (**$24.1 million** cash consideration, closed January 31, 2025), Ardmore Basin Acquisition (**$75.4 million** cash consideration, closed October 1, 2024), and Western Kansas Acquisition (**$37.5 million** cash consideration, closed September 25, 2024)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[112](index=112&type=chunk) - A divestiture of certain acreage not attributable to proved developed reserves occurred on June 26, 2024, generating approximately **$38.0 million** in proceeds, which were applied as a credit against the full cost pool with **no gain or loss recognized**[113](index=113&type=chunk) [4. Property and Equipment](index=25&type=section&id=4.%20Property%20and%20Equipment) This section provides a breakdown of the company's property and equipment, including oil and natural gas properties | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------- | :------------------------------- | | Proved oil and natural gas properties | $2,621,011 | $2,419,998 | | Accumulated depreciation, depletion and amortization | $(641,942) | $(520,641) | | Oil and natural gas properties, net | $1,979,069 | $1,899,357 | | Total other property and equipment, net | $96,767 | $91,765 | [5. Accrued Liabilities](index=25&type=section&id=5.%20Accrued%20Liabilities) This section itemizes the company's accrued liabilities, including operating expenses and capital expenditures | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------- | :------------------------------- | | Operating expenses | $13,682 | $12,489 | | Capital expenditures | $16,062 | $24,027 | | Payroll costs | $8,551 | $7,842 | | Severance and other tax | $11,052 | $5,202 | | General, administrative, and other | $13,142 | $2,631 | | Total accrued liabilities | $64,094 | $53,500 | [6. Long-Term Debt](index=25&type=section&id=6.%20Long-Term%20Debt) This section details the company's long-term debt, including its new revolving credit facility and prior debt repayments - On February 27, 2025, the company entered into a New Revolving Credit Facility with an initial borrowing base of **$750.0 million** and a maturity date of February 27, 2029. As of June 30, 2025, **$565.0 million** was outstanding with **$180.0 million** remaining availability[117](index=117&type=chunk)[118](index=118&type=chunk)[121](index=121&type=chunk) - The company fully repaid and terminated the previous Term Loan Credit Agreement and Revolving Credit Agreement using proceeds from the New Revolving Credit Facility and a February 2025 public offering. The termination of the Term Loan resulted in **$18.5 million** in debt extinguishment costs[121](index=121&type=chunk)[124](index=124&type=chunk)[127](index=127&type=chunk) [7. Derivative Contracts](index=27&type=section&id=7.%20Derivative%20Contracts) This section describes the company's use of derivative contracts to manage commodity price risk - The company uses **fixed price swap contracts** for oil and natural gas to reduce exposure to commodity price fluctuations, but **does not designate them for hedge accounting**. These contracts are indexed to NYMEX WTI for crude oil and NYMEX Henry Hub for natural gas[129](index=129&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) Open Oil Derivative Positions as of June 30, 2025 | Period | Volume (Mbbl) | Weighted Average Fixed Price ($) | | :------- | :------------ | :----------------------------- | | Q3 2025 | 705 | 68.41 | | Q4 2025 | 646 | 68.09 | | Q1 2026 | 600 | 67.35 | | Q2 2026 | 563 | 69.50 | | Q3 2026 | 266 | 66.20 | | Q4 2026 | 253 | 65.37 | | Q1 2027 | 241 | 65.00 | | Q2 2027 | 230 | 66.16 | Open Natural Gas Derivative Positions as of June 30, 2025 | Period | Volume (Bbtu) | Weighted Average Fixed Price ($) | | :------- | :------------ | :----------------------------- | | Q3 2025 | 10,782 | 3.58 | | Q4 2025 | 10,308 | 4.03 | | Q1 2026 | 9,896 | 4.03 | | Q2 2026 | 9,532 | 3.68 | | Q3 2026 | 4,602 | 3.53 | | Q4 2026 | 4,453 | 3.77 | | Q1 2027 | 4,316 | 4.35 | | Q2 2027 | 4,190 | 3.83 | Gains and Losses on Derivative Contracts (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Settlements of oil derivatives | $6,640 | $(7,124) | $7,548 | $(5,213) | | Settlements of natural gas derivatives | $388 | $2,365 | $1,127 | $4,409 | | MTM gains (losses) on oil derivatives, net | $15,401 | $6,788 | $16,196 | $(31,392) | | MTM gains (losses) on natural gas derivatives, net | $33,150 | $(6,664) | $(9,985) | $(1,707) | | Total gains (losses) on derivative contracts | $55,579 | $(4,635) | $14,886 | $(33,903) | [8. Fair Value Measurements](index=29&type=section&id=8.%20Fair%20Value%20Measurements) This section details the company's fair value measurements, categorized into a three-level hierarchy - The company classifies fair value measurements into a **three-level hierarchy**. Commodity derivative instruments are primarily valued using **Level 2 inputs**, while proved properties acquired in business combinations and asset retirement obligations are valued using **Level 3 inputs**[136](index=136&type=chunk)[137](index=137&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) [9. Equity Compensation and Deferred Compensation Plan](index=31&type=section&id=9.%20Equity%20Compensation%20and%20Deferred%20Compensation%20Plan) This section outlines the company's equity compensation plans, including Time-Based and Performance Phantom Units - The company issues **Time-Based Phantom Units** and **Performance Phantom Units** under its Long-Term Incentive Plan. Time-Based Phantom Units vest ratably over three years, while Performance Phantom Units vest based on TSR, relative TSR, and total recordable incident rate[147](index=147&type=chunk)[152](index=152&type=chunk) Non-Cash Compensation Cost (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Time-Based Phantom Units | $3,700 | $3,300 | | Performance Phantom Units | $500 | $100 | Unrecognized Compensation Cost as of June 30, 2025 (in millions) | Metric | Amount | Weighted Average Period (years) | | :----------------------------------- | :----- | :------------------------------ | | Time-Based Phantom Units | $12.8 | 1.9 | | Performance Phantom Units | $1.6 | 1.9 | [10. Commitments and Contingencies](index=32&type=section&id=10.%20Commitments%20and%20Contingencies) This section addresses the company's legal, environmental, and contractual commitments and contingencies - The company is involved in ordinary course legal and environmental matters, accruing **$11.1 million** for legal matters as of June 30, 2025. Management does **not expect a materially adverse effect** on financial position[155](index=155&type=chunk) - The company has NGL sales and natural gas firm transportation commitments, incurring **$0.2 million** in transportation charges for the six months ended June 30, 2025. Contributions to its 401(k) plan totaled **$2.2 million** for the same period[159](index=159&type=chunk)[160](index=160&type=chunk) [11. Leases](index=33&type=section&id=11.%20Leases) This section details the company's operating lease arrangements for office spaces, vehicles, and compressors - The company has operating leases for office spaces, vehicles, and compressors, with a weighted-average remaining lease term of **3.33 years** and a weighted-average discount rate of **7.5%** as of June 30, 2025[161](index=161&type=chunk)[162](index=162&type=chunk)[165](index=165&type=chunk) Total Lease Costs (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $1,875 | $2,864 | $3,963 | $6,937 | | Short-term lease cost | $10,818 | $5,990 | $18,320 | $11,862 | | Total lease cost | $12,693 | $8,854 | $22,283 | $18,799 | [12. Partners' Capital](index=34&type=section&id=12.%20Partners'%20Capital) This section outlines changes in partners' capital, including public offerings and cash distributions - The company completed public offerings in February 2025 and September 2024, raising net proceeds of **$221.1 million** and **$128.9 million**, respectively, used for debt repayment and acquisitions[167](index=167&type=chunk)[168](index=168&type=chunk) Common Units and Distributions | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Common units outstanding (millions) | 118.3 | 103.5 | | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :----------------------------------- | :------------------------------- | :----------------------------- | | Cash distributions per unit | $0.79 | $1.29 | | Total cash distributions (millions) | $93.5 | $152.7 | [13. Earnings Per Common Unit](index=34&type=section&id=13.%20Earnings%20Per%20Common%20Unit) This section presents the basic and diluted earnings per common unit for the reported periods Earnings Per Common Unit | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income - basic and diluted (thousands) | $89,661 | $39,516 | $105,547 | $81,218 | | Weighted-average common units outstanding - basic (thousands) | 118,336 | 95,009 | 115,248 | 95,004 | | Earnings per common unit - basic | $0.76 | $0.42 | $0.92 | $0.85 | | Earnings per common unit - diluted | $0.76 | $0.42 | $0.92 | $0.85 | - The company's phantom units are considered potentially dilutive securities, with **0.1 million** phantom units dilutive for the three and six months ended June 30, 2025[170](index=170&type=chunk) [14. Related Party Transactions](index=35&type=section&id=14.%20Related%20Party%20Transactions) This section describes transactions with related parties, including management fees and unit purchases - The company has a Management Services Agreement (MSA) with Mach Resources, paying an annual management fee of approximately **$7.4 million** and reimbursing costs. Payments to Mach Resources were **$57.2 million** for the six months ended June 30, 2025[173](index=173&type=chunk) - BCE-Mach Aggregator, an affiliate of the General Partner, purchased **5,161,290 common units** for **$79.2 million** in the February 2025 Offering[174](index=174&type=chunk) [15. Segment Information](index=35&type=section&id=15.%20Segment%20Information) This section identifies the company's single reportable segment as the exploration and production of oil, natural gas, and NGLs - The company operates as a **single reportable segment**: the **exploration and production** of oil, natural gas, and NGLs (E&P Segment). The CEO uses **consolidated net income** to measure segment performance[175](index=175&type=chunk)[176](index=176&type=chunk) E&P Segment Financial Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $288,517 | $239,994 | $515,285 | $479,149 | | Total significant expenses | $91,846 | $81,630 | $181,533 | $167,084 | | Net income | $89,661 | $39,516 | $105,547 | $81,218 | | Capital expenditures, including acquisitions | $125,452 | $45,669 | $206,810 | $127,245 | [16. Subsequent Events](index=36&type=section&id=16.%20Subsequent%20Events) This section discloses significant events that occurred after the reporting period, including major acquisitions and distributions - On July 9, 2025, the company entered into agreements for the Sabinal Acquisition (**$500.0 million**, including **$200.0 million** cash and **20.6 million common units**) and the IKAV Acquisition (**$787.2 million**, including **$325.0 million** cash and **31.7 million common units**), both expected to close in **Q3 2025**[179](index=179&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) - On July 8, 2025, lenders under the New Revolving Credit Facility **waived certain restrictions** related to financial covenants. On August 7, 2025, a quarterly distribution of **$0.38 per common unit** for Q2 2025 was declared[183](index=183&type=chunk)[184](index=184&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operational results, liquidity, and capital resources [Overview](index=38&type=section&id=Overview) This section provides an overview of the company's upstream oil and gas operations and midstream assets - The company is an independent upstream oil and gas company focused on acquisition, development, and production in the **Anadarko Basin**, with assets prospective for Oswego, Woodford, and Mississippian formations[187](index=187&type=chunk)[188](index=188&type=chunk) - It also owns extensive complementary **midstream assets** (gathering systems, processing plants, water infrastructure) that enhance property value and generate third-party revenue[188](index=188&type=chunk) [Market Outlook](index=38&type=section&id=Market%20Outlook) This section discusses the market outlook, highlighting commodity price volatility and potential impacts of inflation - Financial results are highly dependent on **volatile commodity prices**, influenced by global economic factors, supply/demand, geopolitical events (Ukraine war, Middle East conflict), and interest rate uncertainty[189](index=189&type=chunk) - NYMEX WTI crude oil prices ranged from **$57.13 to $86.91 per Bbl**, and NYMEX Henry Hub natural gas prices ranged from **$1.58 to $4.49 per MMBtu** between January 1, 2024, and June 30, 2025[189](index=189&type=chunk) - Inflation concerns may lead to **increased operating costs**, and the company is evaluating mitigation actions, but these efforts may not be sufficient[190](index=190&type=chunk)[191](index=191&type=chunk) [How We Evaluate Our Operations](index=39&type=section&id=How%20We%20Evaluate%20Our%20Operations) This section outlines the key financial and operational metrics used to evaluate the company's performance - The company assesses performance using financial and operational metrics including **net production volumes**, **realized prices**, **lease operating expense**, **Adjusted EBITDA**, and **cash available for distribution**[192](index=192&type=chunk)[194](index=194&type=chunk) [Factors Affecting the Comparability of Our Future Results of Operations to Our Historical Results of Operations](index=39&type=section&id=Factors%20Affecting%20the%20Comparability%20of%20Our%20Future%20Results%20of%20Operations%20to%20Our%20Historical%20Results%20of%20Operations) This section highlights that recent acquisitions will impact the comparability of future and historical financial results - Future results may not be comparable to historical results due to **four acquisitions** completed since the beginning of 2024, which impact the comparability of financial periods[193](index=193&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, including revenue and operating expenses [Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024](index=40&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20the%20Three%20Months%20Ended%20June%2030%2C%202024) This section compares the company's financial and operational results for the three months ended June 30, 2025, and 2024 Revenue and Production (Three Months Ended June 30) | Metric | 2025 | 2024 | Change Amount | Change % | | :----------------------------------- | :----- | :----- | :------------ | :------- | | Total revenues (in thousands) | $288,517 | $239,994 | $48,523 | 20% | | Oil sales (in thousands) | $111,053 | $150,889 | $(39,836) | (26%) | | Natural gas sales (in thousands) | $68,420 | $34,237 | $34,183 | 100% | | NGL sales (in thousands) | $39,939 | $46,413 | $(6,474) | (14%) | | Gain (loss) on derivatives (in thousands) | $55,579 | $(4,635) | $60,214 | NM | | Total production (MBoe) | 7,606 | 8,130 | (524) | (6%) | | Average daily total volumes (MBoe/d) | 83.59 | 89.34 | (5.75) | (6%) | | Average Oil Price ($/Bbl) | $63.10 | $79.27 | $(16.17) | (20%) | | Average Natural Gas Price ($/Mcf) | $2.81 | $1.33 | $1.48 | 111% | | Average NGL Price ($/Bbl) | $22.41 | $23.83 | $(1.42) | (6%) | Operating Expenses (Three Months Ended June 30, in thousands) | Expense Category | 2025 | 2024 | Change Amount | Change % | | :----------------------------------- | :----- | :----- | :------------ | :------- | | Gathering and processing expense | $31,784 | $23,831 | $7,953 | 33% | | Lease operating expense | $49,566 | $46,497 | $3,069 | 7% | | Production taxes | $10,496 | $11,302 | $(806) | (7%) | | Midstream operating expense | $3,200 | $2,616 | $584 | 22% | | Cost of product sales | $6,274 | $5,786 | $488 | 8% | | Depreciation, depletion, amortization and accretion – oil and natural gas | $64,340 | $65,819 | $(1,479) | (2%) | | General and administrative | $8,802 | $11,418 | $(2,616) | (23%) | - The increase in total revenues was driven by a significant swing from derivative losses to gains and higher natural gas prices, despite a **6% decrease** in overall production[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - Operating expenses increased due to higher fuel costs and reclassification of post-production costs to gathering and processing expense, as well as increased company labor and contract services in lease operating expense[203](index=203&type=chunk)[204](index=204&type=chunk) [Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024](index=43&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20the%20Six%20Months%20Ended%20June%2030%2C%202024) This section compares the company's financial and operational results for the six months ended June 30, 2025, and 2024 Revenue and Production (Six Months Ended June 30) | Metric | 2025 | 2024 | Change Amount | Change % | | :----------------------------------- | :----- | :----- | :------------ | :------- | | Total revenues (in thousands) | $515,285 | $479,149 | $36,136 | 8% | | Oil sales (in thousands) | $236,064 | $295,410 | $(59,346) | (20%) | | Natural gas sales (in thousands) | $151,141 | $96,518 | $54,623 | 57% | | NGL sales (in thousands) | $84,933 | $94,851 | $(9,918) | (10%) | | Gain (loss) on derivatives (in thousands) | $14,886 | $(33,903) | $48,789 | NM | | Total production (MBoe) | 14,890 | 16,228 | (1,338) | (8%) | | Average daily total volumes (MBoe/d) | 82.26 | 89.17 | (6.91) | (8%) | | Average Oil Price ($/Bbl) | $66.93 | $78.23 | $(11.30) | (14%) | | Average Natural Gas Price ($/Mcf) | $3.17 | $1.85 | $1.32 | 71% | | Average NGL Price ($/Bbl) | $24.77 | $25.32 | $(0.55) | (2%) | Operating Expenses (Six Months Ended June 30, in thousands) | Expense Category | 2025 | 2024 | Change Amount | Change % | | :----------------------------------- | :----- | :----- | :------------ | :------- | | Gathering and processing expense | $59,945 | $55,773 | $4,172 | 7% | | Lease operating expense | $98,318 | $87,257 | $11,061 | 13% | | Production taxes | $23,270 | $24,054 | $(784) | (3%) | | Midstream operating expense | $6,170 | $5,175 | $995 | 19% | | Cost of product sales | $14,261 | $11,886 | $2,375 | 20% | | Depreciation, depletion, amortization and accretion – oil and natural gas | $125,525 | $131,191 | $(5,666) | (4%) | | General and administrative | $19,669 | $21,746 | $(2,077) | (10%) | - Total revenues increased by **8%** for the six-month period, primarily due to a significant positive swing in derivative gains and higher natural gas prices, despite an **8% decrease** in overall production[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) - Operating expenses rose, driven by increases in lease operating expense (company labor, contract services, saltwater disposal, compression) and gathering and processing expense (higher fuel costs, reclassified post-production costs)[219](index=219&type=chunk)[220](index=220&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity sources, capital expenditures, and funding for recent acquisitions - Primary liquidity sources are cash flows from operations, borrowings under the New Revolving Credit Facility, and equity/debt issuances. As of June 30, 2025, **$565.0 million** was outstanding on the New Revolving Credit Facility with **$180.0 million** available[226](index=226&type=chunk) - The company's 2025 capital expenditures budget for development costs is between **$260.0 million and $280.0 million**, focusing on drilling Oswego, Woodford, Red Fork, and Mississippian wells[229](index=229&type=chunk) - Recent acquisitions (Sabinal and IKAV) involve issuing **52.3 million common units** and significant cash components, with the company expecting **sufficient cash flows and credit facility availability** to meet future cash requirements[232](index=232&type=chunk) [Cash Flows](index=46&type=section&id=Cash%20Flows) This section summarizes the company's cash flows from operating, investing, and financing activities Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Type | 2025 | 2024 | Change Amount | Change % | | :----------------------------------- | :----- | :----- | :------------ | :------- | | Net cash provided by operating activities | $272,660 | $260,784 | $11,876 | 4.55% | | Net cash used in investing activities | $(212,391) | $(85,261) | $(127,130) | 149.11% | | Net cash used in financing activities | $(152,268) | $(183,694) | $31,426 | (17.11%) | - Operating cash flow increased due to higher natural gas prices and increased realized derivative gains. Investing cash flow significantly increased due to higher cash used for asset acquisitions[234](index=234&type=chunk)[235](index=235&type=chunk) - Financing cash flow decreased (less cash used) primarily due to net borrowings on credit facilities and proceeds from public offerings, partially offset by term loan repayments and debt extinguishment costs[237](index=237&type=chunk) [Debt Agreements](index=47&type=section&id=Debt%20Agreements) This section describes the terms of the New Revolving Credit Facility and the repayment of previous debt agreements - The New Revolving Credit Facility, established February 27, 2025, has an initial borrowing base of **$750.0 million**, matures February 27, 2029, and requires maintaining specific consolidated total net leverage and current ratios[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) - The company repaid and terminated its previous Term Loan Credit Agreement and Revolving Credit Agreement using funds from the New Revolving Credit Facility and a February 2025 offering[241](index=241&type=chunk) [Contractual Obligations and Commitments](index=47&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's contractual obligations, including firm transportation contracts and operating lease commitments - The company has firm transportation contracts for natural gas, incurring **$0.2 million** in charges for the six months ended June 30, 2025, with no material amounts remaining. Operating lease obligations are expected to be approximately **$17.7 million** through 2029[242](index=242&type=chunk)[243](index=243&type=chunk) [Non-GAAP Financial Measures](index=47&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures like Adjusted EBITDA and Cash Available for Distribution - The company uses **Adjusted EBITDA** and **Cash Available for Distribution** as supplemental non-GAAP financial measures to evaluate operating performance and liquidity, respectively. These measures exclude items like interest expense, DDA, unrealized derivative gains/losses, and equity-based compensation[246](index=246&type=chunk)[248](index=248&type=chunk) Reconciliation of Non-GAAP Measures (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $89,661 | $39,516 | $105,547 | $81,218 | | Adjusted EBITDA | $122,270 | $135,335 | $282,121 | $303,973 | | Cash available for distribution | $45,982 | $67,705 | $140,558 | $134,716 | [Critical Accounting Policies and Estimates](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to the company's critical accounting policies and estimates - **No material changes** have been made to the company's critical accounting policies and estimates during the six months ended June 30, 2025, as previously disclosed in its 2024 Annual Report on Form 10-K[251](index=251&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily commodity price volatility and interest rate fluctuations [Commodity Price Risk](index=49&type=section&id=Commodity%20Price%20Risk) This section addresses the company's exposure to volatile commodity prices and its mitigation strategies - The company's revenue and cash flow are highly susceptible to **volatile commodity prices**, which are influenced by global economic factors, supply/demand, and other external conditions[253](index=253&type=chunk)[254](index=254&type=chunk) - To mitigate this risk, the company uses **commodity derivative instruments**, primarily fixed price swaps, to hedge a portion of its anticipated production, providing partial price protection and cash flow certainty[255](index=255&type=chunk)[256](index=256&type=chunk) [Counterparty and Customer Credit Risk](index=50&type=section&id=Counterparty%20and%20Customer%20Credit%20Risk) This section addresses credit risk from derivative counterparties and major oil and gas purchasers - The company is exposed to **credit risk** from its derivative counterparties and major oil and gas purchasers/joint interest owners. It mitigates this by engaging only with **creditworthy financial institutions** for derivatives and can withhold future revenue disbursements from non-paying joint interest owners[257](index=257&type=chunk)[258](index=258&type=chunk) [Interest Rate Risk](index=50&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to interest rate fluctuations on its variable rate debt - As of June 30, 2025, the company had **$565.0 million** in variable rate debt outstanding under the New Revolving Credit Facility at an effective interest rate of **8.1%**. A **1% change** in interest rates would impact annual interest expense by approximately **$5.7 million**[259](index=259&type=chunk) - The company currently **does not have interest rate derivative arrangements** but may enter into them in the future[260](index=260&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and reports no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=51&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were **designed and effective** as of June 30, 2025, ensuring timely and accurate reporting of information[261](index=261&type=chunk) [Changes in Internal Control over Financial Reporting](index=51&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports no material changes in the company's internal control over financial reporting - There were **no material changes** in the company's internal control over financial reporting during the six-month period ended June 30, 2025[263](index=263&type=chunk) [PART II - OTHER INFORMATION](index=52&type=section&id=Part%20II%20-%20Other%20Information) This section provides additional information, including legal proceedings, risk factors, and other required disclosures [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses the company's involvement in legal and environmental matters, accruing **$11.1 million** for legal costs - The company is subject to ordinary course litigation, including title, royalty, contract, personal injury, and employment claims. It accrues liabilities when costs are probable and estimable, with **$11.1 million** accrued for such matters as of June 30, 2025[265](index=265&type=chunk) - The company is also subject to environmental laws and regulations but is **not aware of any environmental claims** as of June 30, 2025[266](index=266&type=chunk)[267](index=267&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) This section reports no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - **No material changes** to the company's risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024[268](index=268&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities during the period - There were **no unregistered sales** of equity securities during the reporting period[269](index=269&type=chunk) [Item 3. Defaults Upon Senior Securities](index=52&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - There were **no defaults** upon senior securities during the reporting period[270](index=270&type=chunk) [Item 4. Mine Safety Disclosures](index=52&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that there are no mine safety disclosures to report - There are **no mine safety disclosures** to report[271](index=271&type=chunk) [Item 5. Other Information](index=52&type=section&id=Item%205.%20Other%20Information) This section confirms no directors or officers adopted or terminated Rule 10b5-1 trading arrangements - **No directors or officers adopted or terminated Rule 10b5-1 trading agreements** or non-Rule 10b5-1 trading arrangements during the six months ended June 30, 2025[272](index=272&type=chunk) [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including agreements and certifications - The exhibits include **purchase and sale agreements** for the Sabinal and IKAV acquisitions, various **partnership and limited liability company agreements**, a letter agreement related to the New Revolving Credit Facility, and **certifications** from the CEO and CFO[273](index=273&type=chunk)[274](index=274&type=chunk) [Signatures](index=54&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q, confirming its official submission - The report is signed by **Mach Natural Resources LP**, by its general partner **Mach Natural Resources GP LLC**, with **Kevin R. White, Chief Financial Officer**, signing on August 7, 2025[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)

Group 1 - The article promotes a free two-week trial for the Distressed Value Investing community, which provides exclusive research on various companies and investment opportunities [1] - Aaron Chow, known as Elephant Analytics, has over 15 years of analytical experience and is recognized as a top-rated analyst on TipRanks [2] - The focus of the Distressed Value Investing group is on value opportunities and distressed plays, particularly in the energy sector [2]

Summary of Mach Natural Resources (MNR) Conference Call Company Overview - **Company**: Mach Natural Resources (MNR) - **Event**: M&A Announcement Conference Call - **Date**: July 10, 2025 Key Points Acquisitions - MNR announced two acquisitions totaling approximately **$1.3 billion** [2] - These acquisitions are described as transformative, nearly doubling MNR's production and increasing natural gas exposure from **53% to 66%** [2][8] - The acquired assets have an annual production decline of less than **10%** and will reduce MNR's base decline rate to **15%** [2] Financial Strategy - MNR maintains a leverage ratio of **1.0 times debt to EBITDA or less** and reinvests less than **50%** of operating cash flow [3] - The company has achieved an industry-leading cash return on investment of over **30%** per year over the last six years [3] - MNR plans to increase its rig count from **two to five rigs** by 2026 while keeping the reinvestment rate below **50%** of operating cash flow [4][12] Operational Insights - The acquisitions allow MNR to establish anchor positions in the Permian and San Juan Basins, which are seen as ripe for further consolidation [4] - MNR has a history of reducing lease operating expenses (LOE) by **25% to 35%** in past acquisitions and expects similar opportunities in the new assets [5][6] - The company has a five-well drilling program in place, with three-mile laterals expected to yield significant gas production [17] Market Position and Future Outlook - MNR is focusing on acquiring large, free cash-flowing assets at attractive prices, moving away from increased competition in the Mid Con region [5] - The company anticipates a dynamic market for natural gas in the West, particularly from the San Juan Basin [7] - MNR's strategy includes maintaining a strong cash return to unitholders through increased distributions [8] Additional Considerations - The acquired companies come with robust hedge books to protect near-term cash flows [4] - MNR has a history of integrating acquisitions with minimal increases in general and administrative expenses (G&A) [6] - The company is open to future acquisitions that are accretive to cash flow while maintaining low leverage [33][34] Conclusion - MNR's recent acquisitions and strategic focus on cash flow generation and cost control position the company favorably for future growth and shareholder returns [8][34]

Acquisitions Overview - Mach Natural Resources LP is entering into two definitive agreements to acquire oil and gas assets to enhance scale and add strategic multi-basin positioning[11] - The acquisitions include Sabinal Energy for a purchase price of $787 million, consisting of $325 million in cash and 32 million units[10] - The acquisitions include IKAV San Juan for a purchase price of $500 million, consisting of $200 million in cash and 21 million units[10] Pro Forma Impact - Pro forma Q1 2025 production increases to 152 mboe/d, up from Mach's standalone 81 mboe/d[13] - The acquisitions diversify the company's production mix, resulting in a pro forma liquids/gas ratio of 34%/66%[13] - The combined net acreage increases to 2,815,000 acres, including 130,000 net acres from Sabinal and 570,000 net acres from IKAV San Juan[13] Strategic Benefits - The transactions reinforce the company's commitment to financial strength by funding approximately 60% with common equity issued to sellers[15] - The acquisitions are accretive to the business, with assets being acquired at a discount to PDP PV-10[15] - The acquisitions reduce the company's base decline rate from 20% to 15%[17]

Company Overview - Mach Natural Resources (NYSE: MNR) reported solid Q1 2025 results, indicating strong performance in the current fiscal period [2] - The company plans to shift capital expenditures (capex) towards natural gas development, reflecting a strategic focus on this energy sector [2] Future Plans - Mach Natural Resources is potentially set to operate two rigs in the deep gas area of the Anadarko Basin by Q4 2025, which may enhance its production capabilities [2] Analyst Background - Aaron Chow, known as Elephant Analytics, has over 15 years of analytical experience and is a top-rated analyst on TipRanks, providing credibility to the analysis of Mach Natural Resources [2]

Core Insights - The article discusses various strategies for investing in dividend stocks, highlighting the balance between stable income and growth potential [1][2][3] Group 1: Dividend Stock Strategies - Traditional dividend investing focuses on established companies that provide steady payouts, appealing during market volatility [1] - An alternative approach involves seeking companies with higher growth potential, albeit with increased risk of dividend cuts [2][3] Group 2: Eagle Point Credit - Eagle Point Credit Co. Inc. (NYSE: ECC) offers a high dividend yield of 21.87% with an annual dividend of $1.68 and a significant annualized 3-year dividend growth of 13.57% [4] - The company has invested nearly $200 million in new investments in Q1, benefiting from lower debt costs and beating earnings expectations by 2 cents per share [5] - Despite a high payout ratio of -420%, analysts project nearly 11% upside potential for ECC shares, indicating possible capital appreciation [6] Group 3: Mach Natural Resources - Mach Natural Resources LP (NYSE: MNR) has a dividend yield of 24.18% and an annual dividend of $3.16, with a payout ratio of 197.50% [8] - Analysts unanimously rate MNR as a Buy, estimating over 80% upside potential, despite the stock falling nearly a third in the past year [8][9] - The company is transitioning to natural gas drilling, which may align with increasing demand for cleaner energy sources [9] Group 4: TXO Partners - TXO Partners LP (NYSE: TXO) has a dividend yield of 16.26% and a payout ratio of 580.95%, with a Buy rating and about 34% upside potential [11] - The company is expanding by acquiring property in the Elm Coulee field for approximately $350 million, which may impact its dividend schedule [12][13] - The Elm Coulee field is estimated to contain around four billion barrels of oil, presenting potential for both capital appreciation and passive income [13]

Financial Data and Key Metrics Changes - The company reduced its net debt to EBITDA ratio from 1.0 times at the end of 2024 to 0.7 times at the end of Q1 2025 [7][25]. - Projected interest expense for 2025 was lowered by $22 million due to debt refinancing, which also eliminated quarterly amortization payments of $21 million [8][25]. - Total revenues for the quarter were $253 million, with oil contributing 49%, gas 33%, and NGLs 18% [27]. Business Line Data and Key Metrics Changes - Production for the quarter averaged 81,000 BOE per day, with a breakdown of 24% oil, 53% natural gas, and 23% NGLs [27]. - The company plans to shift its drilling focus from oil to natural gas, particularly in the Deep Anadarko Basin, while maintaining overall production levels [9][10]. Market Data and Key Metrics Changes - The current market environment is challenging, with oil prices dipping into the $50s, while the company is well-positioned with a production mix of 54% natural gas, 23% NGLs, and 23% oil projected for 2025 [9][10]. - The company expects to see double-digit growth in natural gas production in 2026 due to increased drilling activity [10]. Company Strategy and Development Direction - The company focuses on four strategic pillars: maintaining financial strength, disciplined execution, disciplined reinvestment rate, and maximizing cash distributions [4][5][17]. - The company aims to keep its reinvestment rate below 50% of operating cash flow to optimize distributions to unitholders [5][14]. - Recent acquisitions, including a $60 million deal, are aimed at enhancing cash flow and maintaining a robust drilling schedule [19][21]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather market volatility and build a stronger foundation for future growth [25][26]. - The company anticipates a balanced natural gas market in 2026, with significant production growth expected if two rigs are deployed in the Deep Anadarko [85][86]. Other Important Information - The company has distributed over $1 billion back to unitholders since its inception, with an upcoming distribution of $0.79 per unit, resulting in a 20% yield [18]. - The company has made 21 acquisitions since early 2018, spending over $2 billion, focusing on cash-flowing properties at discounted prices [20]. Q&A Session Summary Question: Can you elaborate on the recent acquisition and its impact? - Management confirmed the acquisition added significant acreage but only modest production, emphasizing the long-term value of the land [34][39]. Question: What is the current rig count and future plans? - The company is currently operating four rigs, with plans to reduce to two in June and potentially add a third rig in the Deep Anadarko by Q4, depending on cash flow [42][43]. Question: How does the company view the oil to gas ratio moving forward? - Management indicated that the decision to drill in the Oswego area is driven by the rate of return, with current conditions favoring natural gas over oil [50][51]. Question: What is the outlook for natural gas prices? - Management expressed a balanced outlook for natural gas, noting that while there are uncertainties, the market appears stable for the upcoming year [86].

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% [27][28] - 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 [7][25] - The company generated over $94 million in cash available for distribution, resulting in a distribution of $0.79 per unit, yielding 20% [18][29] Business Line Data and Key Metrics Changes - The production mix for the quarter was 24% oil, 53% natural gas, and 23% NGLs, with lease operating expenses at $6.69 per BOE [27][22] - The company plans to shift its drilling focus from oil to natural gas, particularly in the Deep Anadarko Basin, which is expected to grow natural gas production significantly in 2026 [9][10] Market Data and Key Metrics Changes - The current market environment is challenging, with oil prices dipping into the $50s, while the company is well-positioned with a production mix of 54% natural gas, 23% NGLs, and 23% oil projected for 2025 [9][19] - The company has hedged volumes at an average price of $69.31 for oil and $3.77 for gas over the next twelve months [18] Company Strategy and Development Direction - The company focuses on four strategic pillars: maintaining financial strength, disciplined execution, disciplined reinvestment rate, and maximizing cash distributions [4][5] - The company aims to keep its reinvestment rate below 50% of operating cash flow to optimize distributions to unitholders [5][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather market volatility and emphasized the importance of maintaining a strong balance sheet [25][26] - The company anticipates a significant increase in natural gas production in 2026, driven by additional drilling in the Deep Anadarko Basin [9][10] Other Important Information - The company completed a $60 million acquisition that doubled its acreage position, primarily in the Greater Anadarko Basin, which is expected to enhance production and lower operating costs [19][38] - The company has made 21 acquisitions since early 2018, totaling over $2 billion, focusing on cash-flowing properties at discounted prices [20][21] Q&A Session Summary Question: Can you elaborate on the recent acquisition and its impact? - Management confirmed the acquisition added significant acreage in the Greater Anadarko Basin, with potential for increased production and lower lease operating expenses [38][39] Question: What is the strategy regarding the reinvestment rate and rig deployment? - Management clarified that they will adjust rig deployment based on maintaining a reinvestment rate below 50%, with plans to add rigs as cash flow allows [41][43] Question: How does the company view the oil to gas ratio moving forward? - Management indicated that the shift in development activity is driven by the current oil to gas price ratio, favoring natural gas drilling due to higher returns [50][51] Question: What are the expectations for natural gas prices and production in the coming year? - Management expressed a balanced outlook for natural gas prices, with expectations for significant growth in gas production in 2026 [84][85]

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]