TXO Partners(TXO) - 2025 Q2 - Quarterly Report

Acquisition and Investments - The company acquired oil and gas assets from White Rock Energy, LLC for cash consideration of $338.6 million, including a deferred payment of $70.0 million due on July 31, 2026[104]. - The company completed a public offering resulting in net proceeds of approximately $189.5 million, which were used to fund the WRE Acquisition and repay borrowings[157]. - The company incurred approximately $15.2 million for drilling, completion, and recompletion activities in the six months ended June 30, 2025, with a budget of approximately $65.0 million for such costs in 2025[160]. Financial Performance - Total revenues increased by $32.6 million, or 57%, from $57.3 million in Q2 2024 to $89.9 million in Q2 2025, driven by a 407 MBoe increase in production and a 73% rise in average selling price of natural gas[126]. - Adjusted EBITDAX for Q2 2025 was $27.5 million, compared to $21.1 million in Q2 2024, reflecting a 30% increase[120]. - Cash available for distribution rose to $18.8 million in Q2 2025, up from $15.0 million in Q2 2024, marking a 25% increase[120]. - Revenues increased by $49.5 million, or 40%, from $124.7 million in 2024 to $174.2 million in 2025, driven by a 689 MBoe increase in production and a 32% increase in average selling price of natural gas[142]. - Net cash provided by operating activities increased by $9.4 million, from $48.1 million in 2024 to $57.5 million in 2025, attributed to improved operating results[166]. Expenses and Costs - Production expenses increased by $6.9 million, or 19%, from $36.4 million in Q2 2024 to $43.3 million in Q2 2025, primarily due to acquisitions in the Williston Basin[127]. - General and administrative expenses surged by $4.9 million, or 106%, from $4.6 million in Q2 2024 to $9.5 million in Q2 2025, mainly due to higher personnel costs[134]. - Depreciation, depletion, and amortization (DD&A) increased by $11.4 million, or 110%, from $10.3 million in Q2 2024 to $21.7 million in Q2 2025, largely due to higher rates from Williston Basin acquisitions[132]. - Total expenses for Q2 2025 were $93.6 million, up from $67.4 million in Q2 2024, reflecting a 39% increase[122]. - Production expenses rose by $16.1 million, or 23%, from $69.5 million in 2024 to $85.6 million in 2025, primarily due to acquisitions in the Williston Basin[143]. - Depreciation, depletion, and amortization increased by $22.3 million, or 107%, from $20.8 million in 2024 to $43.1 million in 2025, largely due to higher rates associated with Williston Basin acquisitions[148]. - General and administrative expenses increased by $4.7 million, or 64%, from $7.2 million in 2024 to $11.9 million in 2025, mainly due to higher personnel costs[150]. Market Conditions - NYMEX crude oil prices reached a high of $86.91 per Bbl and a low of $57.13 per Bbl from January 1, 2024, to June 30, 2025, indicating significant price volatility[107]. - Natural gas prices peaked at $4.49 per MMBtu in March 2025 before declining to $3.57 per MMBtu as of July 18, 2025[107]. - The company anticipates continued volatility in crude oil and natural gas markets, which will impact revenue and profitability[108]. - Inflationary pressures have increased operating costs, particularly for steel, chemicals, and transportation, with no short-term reversal expected[109]. Debt and Liquidity - The company increased its revolving credit facility borrowing base from $275 million to $410 million, extending the maturity date to August 30, 2029[105]. - Outstanding borrowings under the Credit Facility were $12.0 million at June 30, 2025, down from $150.0 million at December 31, 2024, with remaining availability increasing to $263.0 million[155]. - The weighted average interest rate on Credit Facility borrowings was 8.0% for the six months ended June 30, 2025[171]. - The net-debt-to-EBITDAX ratio is expected to increase to between 1.0 times and 1.5 times following the WRE Acquisition[158]. - The company believes it has adequate liquidity to continue as a going concern for at least the next twelve months from the date of the report[173]. Other Financial Metrics - Cash available for distribution is defined as Adjusted EBITDAX less net cash interest expense, exploration expense, non-recurring gains/losses, and development costs[118]. - Adjusted EBITDAX is used to evaluate operating performance, excluding interest, depreciation, impairment, and other non-cash expenses[114]. - The company plans to dynamically allocate funds to meet goals, including capital budget returns and acquisition opportunities[108]. - The second quarter distribution was declared at $0.45 per unit, with payments scheduled for August 22, 2025[159]. - As of June 30, 2025, the company had $12 million in debt outstanding and $263 million available under its Credit Facility[174].