TXO Partners(TXO) - 2024 Q3 - Quarterly Report

Acquisition and Production - The company completed the acquisition of producing properties in the Williston Basin for a total cash consideration of $241.8 million and 2.5 million common units valued at $50.0 million[92]. - Average daily production from the acquired Williston assets is expected to consist of approximately 78% oil, 12% NGLs, and 10% gas[98]. - Total leasehold and mineral acreage increased from approximately 846,000 gross (372,000 net) to approximately 1,120,000 gross (550,000 net) due to the acquisitions[99]. - Total production for the three months ended September 30, 2024, was 2,105 MBoe, slightly up from 2,104 MBoe in the same period in 2023[109]. Financial Performance - Net income for the three months ended September 30, 2024, was $203,000, a decrease of 97.6% from $8.48 million in the same period in 2023[108]. - Total revenues decreased by $1.1 million, or 2%, from $69.9 million in Q3 2023 to $68.7 million in Q3 2024, primarily due to a 40% decrease in average selling price of natural gas and an 11% decrease in oil prices[110]. - Total revenues decreased by $95.3 million, or 33%, from $288.7 million for the nine months ended September 30, 2023, to $193.5 million for the same period in 2024[124]. - Average selling price of natural gas decreased by 67%, leading to a revenue decrease of $86.0 million, while oil and NGLs saw minor decreases of less than 1% and 1%, respectively[124]. Expenses and Costs - Production expenses rose by $3.8 million, or 11%, from $35.7 million in Q3 2023 to $39.4 million in Q3 2024, mainly due to costs associated with Williston Basin acquisitions[111]. - General and administrative expenses increased by $1.5 million, or 87%, from $1.8 million in Q3 2023 to $3.3 million in Q3 2024, driven by higher personnel costs[117]. - General and administrative expenses increased by $5.5 million, or 108%, from $5.1 million in 2023 to $10.5 million in 2024, mainly due to higher personnel costs[132]. - Depreciation, depletion, and amortization expenses increased by $3.0 million, or 28%, from $10.6 million in Q3 2023 to $13.6 million in Q3 2024, primarily due to Williston Basin production[115]. Cash Flow and Financing - Cash available for distribution increased to $16.57 million in Q3 2024 from $14.65 million in Q3 2023, representing a 12.3% increase[106]. - Net cash provided by operating activities increased by $9.1 million, from $59.7 million in 2023 to $68.8 million in 2024, due to decreased cash paid on derivatives[149]. - Outstanding borrowings under the Credit Facility were $148.0 million as of September 30, 2024, compared to $21.0 million at December 31, 2023[136]. - The company expects to fund distributions, meet debt obligations, and finance its 2024 capital development program from cash flow from operations and borrowings[145]. Market Conditions - NYMEX crude oil prices reached a high of $93.68 per Bbl and a low of $65.75 per Bbl from January 1, 2023, to September 30, 2024[94]. - Natural gas prices peaked at $4.17 per MMBtu in January 2023 and fell to $2.26 per MMBtu as of October 18, 2024[94]. - The company anticipates continued volatility in crude oil and natural gas markets, impacting revenue and profitability[95]. - Inflationary pressures on operating costs are expected to persist, particularly for steel, chemicals, and transportation[97]. Debt and Credit Facilities - The company entered into Amendment No. 4 on its senior secured credit facility, increasing the borrowing base from $165 million to $275 million and extending the maturity date to August 30, 2028[151]. - The weighted average interest rate on Credit Facility borrowings was 8.80% for the nine months ended September 30, 2024[153]. - The company is required to maintain a current ratio greater than 1.0 to 1.0 and a total net debt-to-EBITDAX ratio not greater than 3.0 to 1.0[154]. Other Income - Other income increased by $1.1 million, or 22%, from $5.2 million in Q3 2023 to $6.3 million in Q3 2024, mainly from higher CO and plant income[119]. - Other income increased by $10.4 million, or 57%, from $18.2 million in 2023 to $28.6 million in 2024, driven by bonus payments and higher CO and plant income[134].