Mach Natural Resources LP(MNR) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the fourth quarter, the company reported total net production of 86,700 BOE per day, with net income of $185 million and adjusted EBITDA of $601 million [21][35] - Average realized prices were $70.06 per barrel of oil, $2.31 per Mcf of gas, and $25.82 per barrel of NGLs [35] - The company generated $235 million in total revenues, with EBITDA of $162 million and operating cash flow of $134 million [36] - Free cash flow for the quarter was $81 million, leading to a distribution of $60 million or $0.50 per unit [36][62] Business Line Data and Key Metrics Changes - The company maintained a production mix of 24% oil, 52% natural gas, and 24% NGLs for the fourth quarter [35] - The company achieved a median payout period of 15 months for its wells, assuming flat pricing conditions [12] Market Data and Key Metrics Changes - The company anticipates a higher operating cash flow in 2025 due to recent increases in natural gas prices [10] - The commodity mix by revenue in 2024 was 59% oil, 21% natural gas, and 20% NGLs, with expectations of a shift towards 54% natural gas in 2025 [30] Company Strategy and Development Direction - The company focuses on four strategic pillars: maintaining financial strength, disciplined execution, disciplined reinvestment rate, and maximizing cash distributions [3][4] - The company plans to continue its acquisition strategy, targeting cash-flowing assets at discounted prices, and aims to maintain a low reinvestment rate to optimize distributions [6][32] - The company is looking to add a third rig in 2025 to enhance drilling activities in the Oswego and Anadarko formations [11][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for natural gas, viewing it as a critical fuel for the next decade [53] - The company does not foresee a prolonged downturn similar to 2015-2020 and is prepared to make acquisitions when favorable opportunities arise [26][27] - Management emphasized the importance of maintaining a clean balance sheet and maximizing distributions during varying commodity price environments [20][19] Other Important Information - The company has a net debt-to-EBITDA ratio of 0.8x, indicating strong financial health [17] - The company has distributed over $1 billion to unitholders since inception, reflecting its commitment to returning capital [19] Q&A Session Summary Question: Expectations for gas and oil prices - Management expects to see better deals in both gas and oil, with a preference for crude oil acquisitions when prices are in the $60 range [42][43] Question: Value of infrastructure and potential monetization - Management views their infrastructure as critical to operations and does not plan to sell it, as it generates more EBITDA than its purchase price [44][46] Question: Timing and focus of the third rig - The third rig is expected to arrive soon, initially focusing on the Oswego formation before moving to the deep Mississippian project [49] Question: Competitive landscape for acquisitions - The competitive environment in the Mid-Con has increased, with well-capitalized companies seeking larger packages, but the company will continue to focus on smaller, accretive acquisitions [73][74] Question: Organic leasing opportunities - The company has significant acreage held by production and plans to allocate around $30 million for leasing in 2025, primarily in deeper areas [76][77] Question: Impact of non-op budget - The non-op budget remains consistently low, with limited participation in non-operated wells [87]