TXO Partners(US:TXO)2025-11-04 21:38Operations and Market Focus - The company operates primarily in the Permian Basin, San Juan Basin, and Williston Basin, focusing on the acquisition and development of oil and natural gas reserves[102]. - The oil and natural gas industry remains cyclical, with commodity prices subject to significant fluctuations due to various external factors[105]. - The company faces risks related to commodity price volatility, regulatory changes, and geopolitical issues that could impact operations and financial performance[103]. Market Conditions and Price Volatility - From January 1, 2024, to September 30, 2025, NYMEX crude oil prices peaked at $86.91 per Bbl and fell to $57.52 per Bbl by October 20, 2025, while natural gas prices reached a high of $4.49 per MMBtu before declining to $3.40 per MMBtu[105]. - The company anticipates continued volatility in crude oil and natural gas markets, which will significantly impact revenue and profitability[106]. Financial Performance - Total revenues increased by $32.1 million, or 47%, from $68.7 million in Q3 2024 to $100.9 million in Q3 2025, driven by a production increase of 521 MBoe and a 34% rise in average selling price of natural gas[124]. - Net income for Q3 2025 was $4.352 million, a significant increase from $203,000 in Q3 2024[120]. - Adjusted EBITDAX rose to $32.75 million in Q3 2025, compared to $20.16 million in Q3 2024, reflecting improved operational performance[120]. - Revenues increased by $81.6 million, or 42%, from $193.5 million in 2024 to $275.1 million in 2025, driven by a 1,210 MBoe increase in production and a 33% rise in average selling price of natural gas[140]. Operating Costs and Expenses - Inflationary pressures have increased operating costs, particularly for steel, chemicals, transportation, and wages, with no short-term reversal expected[107]. - Production expenses increased by $8.4 million, or 21%, from $39.4 million in Q3 2024 to $47.9 million in Q3 2025, primarily due to acquisitions in the Williston Basin[125]. - Total expenses for Q3 2025 were $97.116 million, compared to $73.697 million in Q3 2024, reflecting increased operational costs[120]. - General and administrative expenses increased by $1.6 million, or 48%, from $3.3 million in Q3 2024 to $4.8 million in Q3 2025, mainly due to higher personnel costs[132]. Cash Flow and Capital Expenditures - Cash available for distribution was $7.543 million in Q3 2025, down from $16.567 million in Q3 2024[120]. - Capital expenditures, including acquisitions, totaled $305.4 million for the nine months ended September 30, 2025, compared to $273.0 million in 2024[157]. - Net cash provided by operating activities increased by $16.9 million, reaching $85.7 million in 2025 compared to $68.8 million in 2024, attributed to improved operating results[163]. Debt and Financing - Outstanding borrowings under the Credit Facility increased from $150.0 million at December 31, 2024, to $264.0 million at September 30, 2025[153]. - The weighted average interest rate on Credit Facility borrowings was 8.0% for the nine months ended September 30, 2025[169]. - The company entered into Amendment No. 5 to its Credit Facility on July 31, 2025, increasing the borrowing base from $275 million to $410 million and extending the maturity date to August 30, 2029[166]. Production and Sales Volumes - Total sales volumes for the nine months ended September 30, 2025, reached 7,322 MBoe, compared to 6,112 MBoe in 2024, representing a daily average increase from 22 MBoe/d to 27 MBoe/d[140]. - Average sales price for oil and condensate decreased by 15% from $77.17 per Bbl in 2024 to $67.30 per Bbl in 2025, while natural gas prices increased from $1.75 per Mcf to $2.94 per Mcf[140]. Future Outlook and Strategic Plans - The company plans to dynamically allocate funds to maximize economic returns, support acquisition opportunities, and manage debt repayment[106]. - The company is actively working with suppliers to mitigate inflationary pressures and ensure the availability of critical supplies[108].