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MN

MACH NATURAL RESOURCES LP (MNR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong operational execution (80.9 Mboe/d, LOE $6.69/Boe) and a materially higher cash distribution of $0.79 per unit, while GAAP total revenue of $227M and net income of $16M reflected derivative headwinds; Adjusted EBITDA was $160M .
  • Versus Wall Street consensus (S&P Global), the quarter missed on EPS ($0.31* vs $0.68*), revenue ($254.7M* vs $261.8M*), and EBITDA ($115.3M* vs $163.0M*), noting definitional differences between company “Adjusted EBITDA” and S&P EBITDA; forward Q2 2025 estimates imply normalization in EBITDA and EPS trajectory* (Values retrieved from S&P Global).
  • 2025 outlook was reaffirmed; interest expense midpoint for 2025 was lowered by $22M post-refinancing in March, enhancing free cash flow capacity .
  • Balance sheet strengthened: new $750M RBL; net debt-to-Adjusted EBITDA fell to 0.7x; remaining RBL availability $285M; cash $8M .
  • Strategic pivot toward deep Anadarko gas: rigs reduced in June from Oswego oil program, with plan to add a third gas rig in Q4 subject to staying ≤50% reinvestment; acquisition of XTO assets ($60M) adds ~1.0M net acres to inventory .

What Went Well and What Went Wrong

  • What Went Well

    • Distribution increased to $0.79 per unit, reflecting stronger cash generation and disciplined reinvestment (37% in Q1) .
    • Leverage reduced: net debt/Adjusted EBITDA fell to 0.7x; new $750M RBL enhances liquidity and interest savings path .
    • Clear operational efficiency: LOE held low at $6.69/Boe; production 80.9 Mboe/d with realized prices of $70.75 oil, $3.56 gas, $27.33 NGLs .
    • Management quote: “We are well positioned to transition our drilling program toward natural gas while maintaining our reinvestment rate of less than 50%” — CEO Tom Ward .

  • What Went Wrong

    • GAAP financials impacted by unrealized derivative losses ($42.3M), producing a gap between production revenues ($253M) and total GAAP revenue ($227M) .
    • Q1 EPS, revenue, and EBITDA below S&P Global consensus* (Values retrieved from S&P Global).
    • Some cost pressure tied to third‑party infrastructure (saltwater disposal) outside core Oswego area, elevating LOE in Anadarko development .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Total Revenue ($USD Millions)$255.7*$235.0 $227.0
Net Income ($USD Millions)$41.7 $37.0 $16.0
Diluted EPS ($)$0.43*$0.35*$0.31*
Adjusted EBITDA ($USD Millions)—$162.1 $159.9
EBITDA (S&P, $USD Millions)$134.7*$128.4*$115.3*
EBITDA Margin (%)52.7%*53.1%*45.3%*
Net Income Margin (%)16.3%*15.1%*6.2%*

Notes: Asterisks denote values retrieved from S&P Global.

Segment and Price Mix

MetricQ4 2024Q1 2025
Production Revenues ($USD Millions)$241 $253
Mix (% of Production Revenues)Oil 56%; Gas 24%; NGL 20 Oil 49%; Gas 33%; NGL 18
Production Volume (Mboe/d)86.7 80.9
Commodity Mix (% of volume)Oil 24%; Gas 52%; NGL 24 Oil 24%; Gas 53%; NGL 23
Realized PricesOil $70.06/bbl; Gas $2.31/Mcf; NGL $25.82/bbl Oil $70.75/bbl; Gas $3.56/Mcf; NGL $27.33/bbl

Operational KPIs

KPIQ3 2024Q4 2024Q1 2025
Net Production (Mboe/d)81.8 86.7 80.9
LOE ($MM; $/Boe)$44; $5.85/Boe $49; $6.17/Boe $49; $6.69/Boe
Gathering & Processing ($MM; $/Boe)$24; $3.13/Boe $27; $3.36/Boe $28; $3.87/Boe
Production Taxes (% of sales)~4.7% ~4.9% ~5.1%
Midstream Operating Profit ($MM)~$4 ~$4 ~$4
Cash G&A ($MM)~$8 $8 $9
Interest Expense ($MM)$27 $24 $18
Cash from Operations ($MM)$111 $134 $143
Development Costs ($MM)$53 $60 $52
Reinvestment Rate (%)YTD 49% FY 47% 37%
Cash Balance ($MM)$185 $106 $8
Net Debt/Adj EBITDA (x)0.9x 1.0x 0.7x
RBL Availability ($MM)——$285

Distributions

QuarterDistribution per Unit
Q3 2024$0.60
Q4 2024$0.50
Q1 2025$0.79

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Net Production (Mboe/d)FY 202578.2–83.1 Reaffirmed Maintained
LOE ($/Boe)FY 2025$6.25–$6.50 Reaffirmed Maintained
Gathering & Processing ($/Boe)FY 2025$3.00–$3.30 Reaffirmed Maintained
Production Taxes (% of sales)FY 20255%–6% Reaffirmed Maintained
Midstream Operating Profit ($MM)FY 2025$15–$18 Reaffirmed Maintained
Cash G&A ($MM)FY 2025$30–$34 Reaffirmed Maintained
Interest Expense ($MM)FY 2025$75–$80 Midpoint lowered by $22M Lowered
Capital Expenditures ($MM)FY 2025$260–$280 Reaffirmed Maintained
Distribution (Quarterly)Q1 2025—$0.79 per unit Announced

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Reinvestment ≤50%Reinforced discipline; YTD reinvestment ~49% FY reinvestment 47%; plan 3 rigs in 2025 37% in Q1; add third gas rig in Q4 subject to ≤50% Maintaining discipline; gas‑weighted pivot
Debt refinancing & leverageTerm loan in place; considering RBL/high-yield refi New $750M RBL; net debt/EBITDA ~0.8x Net debt/EBITDA 0.7x; interest savings highlighted Improving balance sheet
Commodity strategy (gas vs oil)Building toward 3 rigs; evaluate gas economics Leave more liquids in gas stream at higher gas prices Shift rigs to deep Anadarko natural gas; defer Oswego until oil recovers More gas‑weighted
M&A pipelineActive; smaller accretive deals favored Bolt‑on in Ardmore; equity financing used XTO assets for $60M; ~1M net acres; 1.6 mboe/d Consistent small accretive deals
LOE managementLow LOE at guidance low end LOE $6.17/Boe LOE $6.69/Boe; higher costs tied to 3rd‑party infra Slight cost pressure
Hedging & distributionsHedged volumes; variable payouts Variable distribution philosophy reaffirmed Hedge avg: oil $69.31, gas $3.77; LTM yield ~20% Risk‑managed cash returns

Management Commentary

  • “Our strong distribution reflects our ongoing ability to generate industry‑leading cash returns…we are well positioned to transition our drilling program toward natural gas while maintaining our reinvestment rate of less than 50%” — CEO Tom Ward .
  • “We exited the quarter with $460 million drawn on our new credit facility, which reduced our net debt‑to‑EBITDA ratio from 1.0x year‑end 2024 to 0.7x at the end of Q1” — Tom Ward .
  • “Over the next 12 months, our hedge volumes are an average price of $69.31 for oil and $3.77 for gas…Our upcoming distribution of $0.79 per unit results in an LTM yield of 20%” — Tom Ward .
  • “Total revenues…totaled $227 million, adjusted EBITDA of $160 million and $143 million of operating cash flow” — CFO Kevin White .
  • “We will grow our natural gas production at the expense of our oil volume in 2025…in 2026, we will experience double‑digit growth on the back of the additional gas drilling” — Tom Ward .

Q&A Highlights

  • XTO acquisition specifics: ~1.6 Mboe/d, ~1,400 operated wells, ~990k net acres (OK, KS, WY); strategic value in low‑cost LOE reductions and rework potential .
  • Rig cadence and reinvestment: rigs dropping from 4 to 2 in June (Oswego exit), then add 3rd deep gas rig in Q4, contingent on ≤50% reinvestment .
  • Deep Anadarko well economics: 15k’ laterals, target ~5 Bcf per section, IRR >50%; primary risk is cost/inflation vs gas price .
  • LOE commentary: higher disposal costs in areas reliant on third‑party infrastructure vs owned midstream; expect efficiencies as assets integrate .
  • Macro tone: less bullish near‑term on gas vs prior quarter given refill season dynamics and pipelines; outlook balanced into 2026 .

Estimates Context

  • Q1 2025 vs consensus (S&P Global): EPS $0.31* vs $0.68*; Revenue $254.7M* vs $261.8M*; EBITDA $115.3M* vs $163.0M* — headline misses. Company’s “Adjusted EBITDA” of $159.9M is closer to consensus, reflecting non‑GAAP adjustments .
  • Q2 2025 consensus (S&P Global): EPS $0.50*; Revenue $238.4M*; EBITDA $137.9M* — implies sequential moderation in revenue but recovery in EBITDA and EPS*.
    Values retrieved from S&P Global.
MetricQ1 2025 Actual*Q1 2025 Consensus*Q2 2025 Consensus*
Primary EPS ($)0.30680.67870.5045
Revenue ($USD Millions)254.7261.8238.4
EBITDA ($USD Millions)115.3163.0137.9
# of EPS Estimates3—4
# of Revenue Estimates3—3

Notes: Asterisks denote values retrieved from S&P Global.

Key Takeaways for Investors

  • Distribution reset (+58% QoQ to $0.79) underscores cash return focus and lower interest burden post‑refinancing .
  • Balance sheet flexibility (0.7x net debt/Adj EBITDA; $285M undrawn under RBL) supports opportunistic M&A and gas‑weighted drilling .
  • Near‑term earnings sensitivity to derivatives and commodity mix; production revenues strong, but GAAP revenues can be volatile with hedge marks .
  • Strategic pivot to deep Anadarko gas is the 2025–2026 growth driver; watch rig adds vs ≤50% reinvestment constraint and gas price strip .
  • Cost discipline remains a differentiator (LOE <$7/Boe), but monitor disposal and third‑party infra costs as activity shifts to new areas .
  • Estimates likely to adjust for non‑GAAP vs GAAP EBITDA definitions and derivative impacts; consensus may converge toward company Adjusted EBITDA framing* (Values retrieved from S&P Global).
  • Trading setup: distribution strength and leverage decline are positives; misses vs consensus and hedge impacts are near‑term overhangs; catalysts include successful deep Anadarko results and accretive bolt‑on deals .

Citations:
Press release and 8‑K Q1 2025: .
Earnings call Q1 2025: .
Prior quarter materials Q4 2024: .
Prior quarter materials Q3 2024: .
Notes: Asterisks indicate values retrieved from S&P Global.