Mach Natural Resources LP(US:MNR)2025-05-09 15:02Financial Data and Key Metrics Changes - The company reduced its net debt to EBITDA ratio from 1.0 times at the end of 2024 to 0.7 times at the end of Q1 2025 [7][25]. - Projected interest expense for 2025 was lowered by $22 million due to debt refinancing, which also eliminated quarterly amortization payments of $21 million [8][25]. - Total revenues for the quarter were $253 million, with oil contributing 49%, gas 33%, and NGLs 18% [27]. Business Line Data and Key Metrics Changes - Production for the quarter averaged 81,000 BOE per day, with a breakdown of 24% oil, 53% natural gas, and 23% NGLs [27]. - The company plans to shift its drilling focus from oil to natural gas, particularly in the Deep Anadarko Basin, while maintaining overall production levels [9][10]. Market Data and Key Metrics Changes - The current market environment is challenging, with oil prices dipping into the $50s, while the company is well-positioned with a production mix of 54% natural gas, 23% NGLs, and 23% oil projected for 2025 [9][10]. - The company expects to see double-digit growth in natural gas production in 2026 due to increased drilling activity [10]. Company Strategy and Development Direction - The company focuses on four strategic pillars: maintaining financial strength, disciplined execution, disciplined reinvestment rate, and maximizing cash distributions [4][5][17]. - The company aims to keep its reinvestment rate below 50% of operating cash flow to optimize distributions to unitholders [5][14]. - Recent acquisitions, including a $60 million deal, are aimed at enhancing cash flow and maintaining a robust drilling schedule [19][21]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather market volatility and build a stronger foundation for future growth [25][26]. - The company anticipates a balanced natural gas market in 2026, with significant production growth expected if two rigs are deployed in the Deep Anadarko [85][86]. Other Important Information - The company has distributed over $1 billion back to unitholders since its inception, with an upcoming distribution of $0.79 per unit, resulting in a 20% yield [18]. - The company has made 21 acquisitions since early 2018, spending over $2 billion, focusing on cash-flowing properties at discounted prices [20]. Q&A Session Summary Question: Can you elaborate on the recent acquisition and its impact? - Management confirmed the acquisition added significant acreage but only modest production, emphasizing the long-term value of the land [34][39]. Question: What is the current rig count and future plans? - The company is currently operating four rigs, with plans to reduce to two in June and potentially add a third rig in the Deep Anadarko by Q4, depending on cash flow [42][43]. Question: How does the company view the oil to gas ratio moving forward? - Management indicated that the decision to drill in the Oswego area is driven by the rate of return, with current conditions favoring natural gas over oil [50][51]. Question: What is the outlook for natural gas prices? - Management expressed a balanced outlook for natural gas, noting that while there are uncertainties, the market appears stable for the upcoming year [86].