MNR — Mach Natural Resources LP

Summary of Mach Natural Resources LP (MNR) Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Production: 154,000 BOE per day, with 17% oil, 68% natural gas, and the remainder NGLs.
• Revenue: Total oil and gas revenues of $331 million, with adjusted EBITDA of $187 million and operating cash flow of $169 million.
• Average Realized Prices: $58.14 per barrel of oil, $2.54 per Mcf of gas, and $21.28 per barrel of NGLs.
• Cash Distribution: Generated $89 million cash available for distribution, resulting in a distribution of $0.53 per unit, yielding an annualized 15%.
• Reserves: Year-end reserves more than doubled to 705 million BOE, exceeding production by 18%.

2. Strategic Updates and Business Highlights

• Strategic Pillars: Focus on maximizing cash distributions, disciplined execution in acquisitions, maintaining a low reinvestment rate, and ensuring financial strength.
• Acquisition Strategy: Emphasis on acquiring assets at or below PDP PV-10, with a total of $1.4 billion invested since 2018.
• Drilling Focus: Transitioning from oil-dominated assets to dry gas locations in the Deep Anadarko and San Juan, with plans to bring back oil rigs in the Oswego area if prices remain favorable.
• Cost Management: Targeting a reinvestment rate of no more than 50% to maximize distributions while maintaining production levels.

3. Forward Guidance and Outlook

• 2026 Plans: Anticipate slight growth in barrels of oil equivalent while maintaining a reinvestment rate of 50%. Plans to drill seven to eight dry gas Mancos wells and potentially return to oil drilling in the Oswego area.
• Market Conditions: Expectation of rising commodity prices over the next few years, with a focus on maintaining flexibility in drilling operations based on price movements.

4. Bad News, Challenges, or Points of Concern

• Debt Management: Current leverage at 1.3x EBITDA; need to reduce debt before pursuing further acquisitions.
• Market Volatility: Concerns about widening natural gas basis in the Anadarko and San Juan regions due to oversupply and weather conditions.
• Operational Risks: Variability in well performance, particularly in the Oswego area, with some wells showing significantly different returns.

5. Notable Q&A Insights

• Rig Deployment: Discussion on potentially adding a rig in the Oswego area if oil prices remain above $70, with a focus on maximizing returns.
• M&A Activity: Currently sidelined in the M&A market until debt levels are reduced; open to partnerships in the Deep Anadarko to manage costs.
• Cost Reduction Strategies: Plans to lower drilling and completion costs in the Mancos area by optimizing proppant use and transportation logistics.
• Midstream Profit Guidance: Midstream profit guidance raised due to better-than-expected throughput volumes, reflecting improved operational efficiencies.

Overall, MNR demonstrated strong financial performance in Q4 2025, with a focus on disciplined growth and cash returns to unitholders, while navigating challenges related to debt management and market conditions.