Financial Performance - Total revenues increased by $16.9 million, or 25%, from $67.4 million in Q1 2024 to $84.3 million in Q1 2025, primarily due to a 282 MBoe increase in production and a 19% increase in average selling price of natural gas [123]. - Net income for Q1 2025 was $2.4 million, a decrease from $10.3 million in Q1 2024, impacted by increased expenses and lower oil prices [119]. - Cash available for distribution was $29.3 million in Q1 2025, compared to $22.8 million in Q1 2024, reflecting improved operational cash flow [119]. Production and Expenses - Production expenses rose by $9.2 million, or 28%, from $33.1 million in Q1 2024 to $42.3 million in Q1 2025, with $8.5 million attributed to production from Williston Basin acquisitions [124]. - Depreciation, depletion, and amortization increased by $10.9 million, or 104%, from $10.5 million in Q1 2024 to $21.4 million in Q1 2025, mainly due to higher production rates from Williston Basin acquisitions [129]. - General and administrative expenses decreased by $0.2 million, or 8%, from $2.7 million in Q1 2024 to $2.4 million in Q1 2025, primarily due to lower personnel costs [131]. - Interest expense increased by $2.6 million, or 271%, from $1.0 million in Q1 2024 to $3.6 million in Q1 2025, primarily due to increased borrowings [134]. Market Conditions - The company reported a high of $86.91 per Bbl for crude oil and $4.49 per MMBtu for natural gas during the period from January 1, 2024, to March 31, 2025, with a low of $65.75 per Bbl and $1.58 per MMBtu respectively [102]. - The company anticipates continued volatility in crude oil and natural gas markets, which will significantly impact revenue and profitability [103]. - Inflationary pressures have increased operating costs, particularly for steel, chemicals, transportation, and wages, with no short-term reversal expected [104]. - The company is taking actions to mitigate inflationary pressures by ensuring the availability of critical supplies [106]. Leadership and Governance - Leadership changes include the appointment of Brent W. Clum and Gary D. Simpson as Co-Chief Executive Officers effective April 1, 2025 [99]. - The company has appointed Lawrence S. Massaro to the board of directors and the Audit Committee effective April 1, 2025 [100]. Cash Flow and Financing - Net cash provided by operating activities increased by $5.4 million to $30.6 million for the three months ended March 31, 2025, compared to $25.2 million for the same period in 2024 [144]. - Net cash used by investing activities increased by $3.8 million to $6.8 million for the three months ended March 31, 2025, primarily due to an increase in development costs of $5.5 million [145]. - Net cash used in financing activities decreased by $1.9 million to $20.2 million for the three months ended March 31, 2025, compared to $22.1 million for the same period in 2024 [145]. - Proceeds from long-term debt increased significantly to $36.0 million in Q1 2025 from $10.0 million in Q1 2024 [145]. - The weighted average interest rate on Credit Facility borrowings was 8.0% for the three months ended March 31, 2025 [148]. - As of March 31, 2025, the company had $155.0 million in debt outstanding and $120.0 million available under its Credit Facility [152]. - The company entered into Amendment No. 4 of its Credit Facility, increasing the borrowing base from $165 million to $275 million and extending the maturity date to August 30, 2028 [146]. Obligations and Future Plans - The company budgeted approximately $30.0 - $50.0 million for drilling, completion, and recompletion activities in 2025 [139]. - The company expects to fund its distributions, meet debt obligations, and finance its 2025 capital development programs from cash flow from operations and borrowings under its Credit Facility [141]. - The current liability related to derivative contracts was $25.6 million and the long-term liability was $8.5 million as of March 31, 2025 [154]. - Asset retirement obligations totaled $193.4 million, including a current portion of $3.0 million as of March 31, 2025 [155].

Core Viewpoint - TXO Partners LP is expected to report a year-over-year increase in earnings and revenues for the quarter ended March 2025, with the consensus outlook being crucial for assessing the company's earnings picture [1] Earnings Expectations - The consensus estimate for TXO's quarterly earnings is $0.36 per share, reflecting a year-over-year increase of 9.1% [3] - Revenues are anticipated to reach $88.21 million, which is a 30.8% increase from the same quarter last year [3] Estimate Revisions - The consensus EPS estimate has been revised down by 27.17% over the last 30 days, indicating a reassessment by analysts [4] - The Most Accurate Estimate for TXO is the same as the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [10][11] Earnings Surprise Prediction - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8] - TXO currently holds a Zacks Rank of 5, making it challenging to predict an earnings beat [11] Historical Performance - In the last reported quarter, TXO was expected to post earnings of $0.39 per share but only achieved $0.26, resulting in a surprise of -33.33% [12] - Over the past four quarters, TXO has only beaten consensus EPS estimates once [13] Conclusion - TXO Partners LP does not appear to be a compelling candidate for an earnings beat, and investors should consider other factors when making investment decisions [16]

Core Viewpoint - TXO Partners LP is experiencing a decline in stock performance, with a significant drop over the past month, while upcoming earnings are expected to show growth in both EPS and revenue [1][2][3]. Group 1: Stock Performance - TXO Partners LP closed at $17, reflecting a gain of +0.29% from the previous session, outperforming the S&P 500's gain of 0.06% [1]. - The stock has depreciated by 11.49% over the past month, underperforming the Oils-Energy sector's loss of 10.24% and the S&P 500's loss of 4.29% [1]. Group 2: Earnings Expectations - Analysts predict TXO Partners LP will report an EPS of $0.36, indicating a growth of 9.09% compared to the same quarter last year [2]. - Revenue is anticipated to be $88.21 million, reflecting a 30.8% increase from the same quarter last year [2]. - For the full year, earnings are expected to be $1.33 per share and revenue of $326.08 million, marking changes of +104.62% and +15.3% respectively from last year [3]. Group 3: Analyst Estimates and Rankings - Recent changes to analyst estimates for TXO Partners LP suggest a positive outlook, with revisions indicating optimism about the company's business trends [4]. - The Zacks Rank system currently rates TXO Partners LP as 5 (Strong Sell), with a consensus EPS projection moving 25.14% lower in the past 30 days [6]. Group 4: Valuation Metrics - TXO Partners LP has a Forward P/E ratio of 12.79, which is a premium compared to the industry average Forward P/E of 11.89 [7]. - The Energy and Pipeline - Master Limited Partnerships industry, part of the Oils-Energy sector, holds a Zacks Industry Rank of 241, placing it in the bottom 3% of over 250 industries [7].

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on TXO Partners LP, and highlights the disparity between brokerage ratings and actual stock performance, suggesting that investors should be cautious in relying solely on these recommendations [1][5][10]. Group 1: Brokerage Recommendations for TXO Partners LP - TXO Partners LP has an average brokerage recommendation (ABR) of 1.00, indicating a Strong Buy based on recommendations from three brokerage firms, all of which are Strong Buy [2][4]. - Despite the Strong Buy recommendation, the article cautions against making investment decisions solely based on this information, as studies show limited success of brokerage recommendations in predicting stock price increases [5][10]. Group 2: Limitations of Brokerage Recommendations - Brokerage firms often exhibit a strong positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [6][10]. - The interests of brokerage firms may not align with those of retail investors, providing little insight into future stock price movements [7][10]. Group 3: Zacks Rank vs. ABR - The Zacks Rank is presented as a more reliable indicator of near-term stock performance, based on earnings estimate revisions, and is classified into five groups from Strong Buy to Strong Sell [8][11]. - Unlike the ABR, which is based solely on brokerage recommendations and may not be up-to-date, the Zacks Rank reflects timely changes in earnings estimates, making it a more effective tool for predicting stock price movements [9][12]. Group 4: Current Earnings Estimates for TXO - The Zacks Consensus Estimate for TXO Partners LP has declined by 27.5% over the past month to $1.39, indicating growing pessimism among analysts regarding the company's earnings prospects [13]. - This decline in earnings estimates has resulted in a Zacks Rank of 5 (Strong Sell) for TXO Partners LP, suggesting that the previously favorable ABR should be viewed with skepticism [14].

Group 1 - TXO Partners LP closed at $19.40, reflecting a -1.57% change from the previous session, underperforming the S&P 500's loss of 1.12% [1] - Over the last month, TXO's shares decreased by 0.1%, while the Oils-Energy sector gained 3.39% and the S&P 500 lost 2.91% [1] Group 2 - TXO Partners LP is expected to report an EPS of $0.44, representing a 33.33% increase from the prior-year quarter, with revenue estimated at $84.51 million, indicating a 25.31% increase year-over-year [2] - For the entire year, earnings are forecasted at $1.91 per share and revenue at $339.79 million, reflecting increases of +193.85% and +20.15% respectively compared to the previous year [3] Group 3 - Recent modifications to analyst estimates for TXO Partners LP indicate changing near-term business trends, with upward revisions suggesting analysts' positive outlook on the company's operations [4] - The Zacks Rank system, which includes estimate changes, has a strong track record, with stocks rated 1 producing an average annual return of +25% since 1988; TXO currently holds a Zacks Rank of 3 (Hold) [5][6] Group 4 - TXO Partners LP's Forward P/E ratio is 10.32, which is a discount compared to the industry's average Forward P/E of 10.63; the Energy and Pipeline - Master Limited Partnerships industry ranks 183 out of over 250 industries, placing it in the bottom 28% [7]

Group 1 - TXO Partners LP closed at $19.55, reflecting a +1.3% increase from the previous day, outperforming the S&P 500's gain of 1.08% [1] - Over the past month, TXO shares have decreased by 1.03%, while the Oils-Energy sector declined by 2.69% and the S&P 500 fell by 8.26% [1] Group 2 - TXO Partners LP is expected to report earnings of $0.47 per share, indicating a year-over-year growth of 42.42%, with projected revenue of $84.51 million, a 25.31% increase from the same quarter last year [2] - For the entire fiscal year, earnings are projected at $1.91 per share and revenue at $339.79 million, representing increases of +193.85% and +20.15% respectively from the prior year [3] Group 3 - The Zacks Rank system, which includes estimate revisions, indicates a current Zacks Rank of 3 (Hold) for TXO Partners LP, with the consensus EPS estimate remaining unchanged over the past month [5] - TXO Partners LP is trading at a Forward P/E ratio of 10.1, which is below the industry average of 10.5, suggesting it is trading at a discount [6] Group 4 - The Energy and Pipeline - Master Limited Partnerships industry, part of the Oils-Energy sector, currently holds a Zacks Industry Rank of 208, placing it in the bottom 18% of over 250 industries [6] - Research indicates that industries in the top 50% of the Zacks Industry Rank outperform those in the bottom half by a factor of 2 to 1 [7]

Core Insights - TXO Partners LP reported quarterly earnings of $0.26 per share, missing the Zacks Consensus Estimate of $0.39 per share, and down from $0.98 per share a year ago, resulting in an earnings surprise of -33.33% [1] - The company posted revenues of $89.33 million for the quarter, surpassing the Zacks Consensus Estimate by 8.47%, but down from $91.97 million year-over-year [2] - TXO Partners LP shares have increased by approximately 10.8% since the beginning of the year, while the S&P 500 has declined by -0.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.47 on revenues of $84.51 million, and for the current fiscal year, it is $1.91 on revenues of $339.79 million [7] - The estimate revisions trend for TXO Partners LP is favorable, leading to a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Energy and Pipeline - Master Limited Partnerships industry is currently in the top 36% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8]

Operations and Production - The company focuses on the acquisition, development, optimization, and exploitation of conventional oil, natural gas, and NGL reserves in North America, primarily in the Permian Basin, San Juan Basin, and Williston Basin[35]. - The company aims to maintain a flat to low growth production profile while offsetting natural declines through acquisitions and drilling[37]. - The base decline rate of the company's reserves is currently estimated to be approximately 9%[39]. - The company seeks to enhance production and reserves through effective integration of acquisitions and operational improvements[39]. - The company produced an average of 23,387 Boe per day in 2024, with 66% of production from operated assets[44]. - Total production for the year ended December 31, 2024, was 8,559 MBoe, with a daily average of 23.5 MBoe[74]. - The company drilled or participated in the drilling of 26 gross wells in 2024 and plans to drill approximately 14 gross wells in the San Juan Basin in 2025[49]. - The company drilled or participated in 6 gross wells in the Permian Basin in 2024, with expectations to drill approximately 1 gross well in 2025[72]. - The company expects to focus nearly 50% of its drilling and recompletion work in 2025 on Williston Basin assets[52]. - The company completed 26 development wells in 2024, comprising 18 oil wells and 8 gas wells, compared to 38 total wells completed in 2023[83]. Financial Performance - The development budget for 2025 is projected to be between $30 million and $50 million[37]. - The company intends to distribute all available cash at the end of each quarter, which is dependent on prevailing commodity prices[36]. - The company plans to utilize cash flow from operations primarily to fund capital expenditures, with potential borrowings under its Credit Facility for acquisitions[37]. - The company aims to maintain a conservative capital structure with a net debt-to-EBITDAX ratio not exceeding one times[39]. - The company incurred development costs of $28.0 million in 2024 and $29.8 million in 2023, with no PUDs converted to proved developed reserves in both years[70]. - The company expects to incur approximately $30 - $50 million for development in 2025, following $28.0 million in development capital spent in 2024[55]. - For the year ended December 31, 2024, consolidated revenues were derived 66% from oil, 24% from natural gas, and 10% from NGL revenues, with total average production comprising approximately 32% oil, 54% natural gas, and 14% NGLs[53]. - The company earned management fees from Cross Timbers of $5.1 million in 2024, down from $6.2 million in 2023[94]. Reserves and Assets - As of December 31, 2024, the company had total estimated proved reserves of approximately 94 MMBoe, with 65% being liquids and 89% proved developed[44]. - The company’s net proved reserves as of December 31, 2024, included 47,191.9 MBbls of oil, 13,794.4 MBbls of NGLs, and 197,035.7 MMcf of natural gas[59]. - As of December 31, 2024, proved undeveloped reserves (PUDs) totaled 10,067.1 MBoe, consisting of 9,297.3 MBbls of oil, 599.5 MBbls of NGLs, and 1,022.0 MMcf of natural gas[68]. - The total balance of proved undeveloped reserves as of December 31, 2023, was 23,827.4 MBoe, reflecting a significant revision from previous estimates[69]. - The average net revenue interest on the company's properties is approximately 86.4% on a 100% working interest basis[104]. - The total developed acreage amounted to 1,116,804 gross acres, with 548,526 net acres as of December 31, 2024[81]. Regulatory and Compliance - The company is subject to various federal, state, and local laws and regulations that can increase operational costs and affect profitability[111]. - The company must comply with reporting requirements for natural gas transactions exceeding 2.2 million MMBtus annually[120]. - The company is required to hedge at least 50% of reasonably anticipated projected production if the Leverage Ratio is greater than 0.75 to 1.00[98]. - The company is subject to civil penalties of up to approximately $1,426,319 per violation per day for market manipulation under FTC regulations[127]. - The company is subject to various environmental regulations, including NEPA, which may delay or increase costs for exploration and production activities[164]. - The company is required to observe stringent environmental regulations, which may necessitate costly compliance actions[128]. - The company is subject to ongoing legal challenges regarding emissions regulations, which may create uncertainty in future compliance and operational costs[156]. Market and Competition - The company faces intense competition from larger companies with greater resources in the oil and natural gas industry[102]. - The competitive landscape in the oil and natural gas industry is intense, with larger companies having greater resources to absorb regulatory changes[102]. - The company has no long-term contracts with customers, with most sales made under arm's length contracts of 12 months or less[96]. Environmental Impact - The company is exposed to credit risk and market risk due to its use of derivative instruments for hedging[101]. - The demand for natural gas typically decreases during summer months and increases during winter months, affecting seasonal operations[109]. - The company may incur substantial costs for cleanup and compliance with hazardous waste regulations under RCRA and CERCLA[135]. - The company engages in hydraulic fracturing, which is regulated by state commissions and may face increased scrutiny and regulations related to seismic activity[157][159]. - The Inflation Reduction Act imposes a fee on GHG emissions starting at $900 per ton in 2024, increasing to $1,500 per ton in 2026, which could affect the company's financials[153]. - The company is monitoring the potential impact of stricter National Ambient Air Quality Standards (NAAQS) for ground-level ozone, which could lead to increased regulatory burdens[150]. Human Resources - As of December 31, 2024, the company had a total of 209 employees, with 201 being full-time[175]. - The company is focused on attracting and retaining top talent, emphasizing employee well-being and career development opportunities[176].

Company Overview - TXO Partners LP (TXO) is a notable stock within the Oils-Energy sector, which consists of 247 companies and is currently ranked 5 in the Zacks Sector Rank [2] - TXO is categorized under the Energy and Pipeline - Master Limited Partnerships industry, which includes 3 companies and is ranked 16 in the Zacks Industry Rank [6] Performance Analysis - TXO has achieved a year-to-date return of approximately 16.7%, significantly outperforming the average gain of 2.9% for the Oils-Energy sector [4] - Over the past 90 days, the Zacks Consensus Estimate for TXO's full-year earnings has increased by 35%, indicating improved analyst sentiment and a stronger earnings outlook [4] Comparison with Peers - Capricorn Energy PLC Unsponsored ADR (CRNCY) is another stock in the Oils-Energy sector that has outperformed, with a return of 7.9% since the beginning of the year [5] - The consensus EPS estimate for Capricorn Energy has surged by 411.8% over the past three months, and it currently holds a Zacks Rank of 2 (Buy) [5] - In contrast, the Oil and Gas - Exploration and Production - International industry, which includes Capricorn Energy, has seen a decline of 10% this year, ranking 146 [7]

Core Viewpoint - TXO Partners LP (TXO) is experiencing solid improvement in earnings estimates, indicating potential investment opportunities as the stock has gained short-term price momentum [1][2]. Estimate Revisions - The upward trend in earnings estimate revisions reflects growing analyst optimism regarding TXO's earnings prospects, which is expected to positively influence the stock price [2]. - For the current quarter, TXO is projected to earn $0.39 per share, showing a year-over-year decline of 60.2%. However, the Zacks Consensus Estimate has increased by 40.3% over the last 30 days, with one estimate rising and no negative revisions [4]. - For the full year, TXO is expected to earn $1.02 per share, representing a 23.88% decrease from the previous year. The consensus estimate has improved by 34.98% in the past month, with one estimate moving higher and no negative revisions [5]. Zacks Rank - TXO Partners LP has achieved a Zacks Rank 1 (Strong Buy) due to favorable estimate revisions, which historically correlate with significant outperformance compared to the S&P 500 [6]. - Stocks with Zacks Rank 1 and 2 are shown to significantly outperform the S&P 500, indicating a strong investment potential for TXO [6]. Investment Outlook - The strong estimate revisions have led to a 12.5% increase in TXO's stock price over the past four weeks, suggesting further upside potential, making it a candidate for portfolio addition [7].