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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 13, 2024
Mach Natural Resources LP
(Exact name of registrant as specified in its
charter)
Delaware |
|
001-41849 |
|
93-1757616 |
(State or other jurisdiction
of incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
14201 Wireless Way, Suite 300, Oklahoma City, Oklahoma |
|
73134 |
(Address of principal executive offices) |
|
(Zip Code) |
(405) 252-8100
Registrant’s telephone number, including
area code
Not applicable.
(Former name or former address, if changed since
last report.)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Common units representing limited partner interests |
|
MNR |
|
New York Stock Exchange |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02. Results of Operations and Financial Condition.
On
August 13, 2024, Mach Natural Resources LP (the “Company”) issued a press release (the “Press Release”) providing
information on its results of operations and financial condition for the quarter ended June 30, 2024. The Press Release and certain supplemental
financial information are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K (this “Report”)
and are incorporated herein by reference.
The
information under this Item 2.02 and in Exhibit 99.1 and Exhibit 99.2 to this Report are being furnished and shall not be deemed “filed”
for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject
to the liabilities of that Section. The information under this Item 2.02 and in Exhibit 99.1 to this Report shall not be incorporated
by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended (the “Securities
Act”).
Item 7.01. Regulation FD Disclosure.
In addition to providing
the results of operations and financial condition for the quarter ended June 30, 2024, the Press Release announced the Company’s
declaration of its quarterly distribution for the second quarter of 2024. The full text of the Press Release is furnished as Exhibit 99.1
to this Report and is incorporated herein by reference.
The information under
this Item 7.01 and in Exhibit 99.1 to this Report are being furnished and shall not be deemed “filed” for the purpose of Section
18 of the Exchange Act, or otherwise subject to the liabilities of that Section. The information under this Item 7.01 and in Exhibit 99.1
to this Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
|
Mach Natural Resources LP |
|
|
|
|
By: |
Mach Natural Resources GP LLC, |
|
|
its general partner |
|
|
|
Dated: August 13, 2024 |
By: |
/s/ Tom L. Ward |
|
|
Name: |
Tom L. Ward |
|
|
Title: |
Chief Executive Officer |
Exhibit 99.1
Mach Natural Resources LP Reports Second Quarter
2024 Results; Declares Quarterly Cash Distribution of $0.90 Per Unit
OKLAHOMA CITY, Oklahoma, August 13, 2024 — Mach
Natural Resources LP (NYSE: MNR) (“Mach” or the “Company”) today reported financial and operating results for
the three months ended June 30, 2024. The Company also announced its quarterly cash distribution and updated its full year 2024 outlook.
Second Quarter 2024 Highlights
| ● | Averaged total net production of 89.3 thousand barrels of oil equivalent per day (“Mboe/d”)
exceeded the high-end of guidance |
| ● | Produced an average of 20.9 thousand barrels of oil per day (“MBbl/d”) |
| ● | Lease operating expense of $5.72 per barrel of oil equivalent (“Boe”) was below the low-end
of guidance |
| ● | Reported net income and Adjusted EBITDA of $40 million and $136 million, respectively |
| ● | Generated net cash provided by operating activities of $117 million |
| ● | Divested a portion of Western Anadarko acreage for $38 million with no associated production |
| ● | Made first quarterly term loan amortization payment of $21 million |
| ● | Declared a quarterly cash distribution of $0.90 per unit |
Tom L. Ward, Mach’s Chief Executive Officer, noted,
“Mach’s second quarter results reflect the continuation of our 2024 plan. A steady adherence to low leverage and disciplined cash
flow management allow us to announce a distribution of $0.90 per unit for the period. Our Company was founded on a distribution-focused
strategy, and this quarter’s cash distribution demonstrates Mach’s commitment to rewarding its unitholders while navigating the challenges
of the market.”
Second Quarter 2024 Financial Results
Mach reported total
revenue and net income of $240 million and $40 million in the second quarter of 2024, respectively. Additionally, during the second
quarter, the average realized price was $79.27 per barrel of oil, $1.33 per Mcf of natural gas, and $23.83 per barrel of natural gas
liquids (“NGLs”). These prices exclude the effects of derivatives.
At the end of the second quarter, Mach had a cash balance
of $145 million and a pro forma net-debt-to- Adjusted-EBITDA ratio of 0.9x.
Second Quarter 2024 Operational Results
During the second quarter of 2024, Mach achieved average
oil equivalent production of 89.3 Mboe/d, which consisted of 23% oil, 53% natural gas and 24% NGLs. Also, for the second quarter of 2024,
Mach’s production revenues from oil, natural gas, and NGLs sales totaled $232 million, comprised of 65% oil, 15% natural gas, and
20% NGLs.
The Company spud 12 gross (10 net)
operated wells and brought online 14 gross (12 net) operated wells in the second quarter of 2024. As of June 30, 2024, the Company had
5 gross (4 net) operated wells in various stages of drilling and completion.
Mach’s lease
operating expense in the second quarter of 2024 was $46 million, or $5.72 per Boe. Mach incurred $24 million, or $2.93 per Boe, of
gathering and processing expenses in the second quarter of 2024. Furthermore, during the second quarter of 2024, production taxes as
a percentage of oil, natural gas, and NGL sales were approximately 4.9%, midstream operating profit was approximately $5 million,
general and administrative expenses—excluding equity-based compensation of $2 million—was $9 million, and interest
expense was $27 million.
In the second quarter of 2024, Mach’s total capital
expenditures—excluding acquisitions—were $46 million, including $41 million of upstream capital and $5 million of other capital
(including midstream and land).
Distributions
Mach announced today that the board
of directors of its general partner declared a quarterly cash distribution for the second quarter of 2024 of $0.90 per common unit. The
quarterly cash distribution is to be paid on September 10, 2024, to common unitholders of record as of the close of trading on August
27, 2024.
2024 Operating Plan and Guidance
Today the Company provided updated guidance for 2024
that incorporates the impact of a rig-count reduction, as well as operational efficiencies achieved year-to-date.
During the second quarter, Mach lowered its operated
rig count in the Oswego from two rigs to one rig. As a result, the midpoint of full-year capital expenditure guidance is reduced by 15%.
Oil volumes for the third quarter 2024 and fourth quarter 2024 are expected to range between 18.6 MBbl/d to 19.9 MBbl/d. Full-year 2024
oil volumes are expected to range between 19.4 MBbl/d to 20.6 MBbl/d. The decision to reduce rig count is fully consistent with the Company’s
strategic framework that prioritizes a disciplined reinvestment rate.
In order to account for better-than-expected operational
efficiencies achieved year-to-date, the midpoint of full- year 2024 guidance for lease operating expense per BOE has been lowered by 3%.
In addition, full-year 2024 total oil-equivalent volumes are expected to range between 82.2 Mboe/d to 87.2 Mboe/d, representing a midpoint
improved by 1%. Additional details of Mach’s forward-looking guidance are available on the Company’s website at www.machnr.com.
Conference Call and Webcast Information
Mach will host a conference call and webcast at 8:00
a.m. Central (9:00 a.m. Eastern) on Wednesday, August 14, 2024, to discuss its second quarter 2024 results. Participants can access the
conference call by dialing 877-407-2984. A webcast link to the conference call will be provided on the Company’s website at www.ir.machnr.com.
A replay will also be available on the Company’s website following the call.
About Mach Natural Resources LP
Mach Natural Resources LP is an
independent upstream oil and gas Company focused on the acquisition, development and production of oil, natural gas and NGL reserves in
the Anadarko Basin region of Western Oklahoma, Southern Kansas and the panhandle of Texas. For more information, please visit www.machnr.com.
FOR FURTHER INFORMATION, PLEASE
CONTACT:
Mach Natural Resources LP
Investor Relations Contact: ir@machnr.com
Financial Statements and Non-GAAP Financial Measures
and Disclosures
This press release includes non-GAAP financial measures.
Pursuant to regulatory disclosure requirements, Mach is required to reconcile non-GAAP financial measures to the related GAAP information
(GAAP refers to generally accepted accounted principles). Reconciliations of these non-GAAP measures, along with other financial and operational
disclosures, are provided within the supplemental tables that are available on the Company’s website at www.machnr.com and in the
related Form 10-Q filed with the Securities and Exchange Commission (the “SEC”).
Adjusted EBITDA and Cash Available for Distribution
are non-GAAP financial measures. Such non-GAAP measures are used as a supplemental financial performance measure by our management and
by external users of our financial statements, such as industry analysts, investors, lenders, rating agencies and others, to more effectively
evaluate our operating performance and our results of operation from period to period and against our peers without regard to financing
methods, capital structure or historical cost basis. Such non-GAAP measures are not alternatives to GAAP measures.
Such non-GAAP measures should not be considered in
isolation or as a substitute for analysis of results as reported under GAAP. Such non-GAAP measures are used as a supplemental financial
performance measure by our management and by external users of our financial statements, such as industry analysts, investors, lenders,
rating agencies and others, to more effectively evaluate our operating performance and our results of operation from period to period
and against our peers without regard to financing methods, capital structure or historical cost basis. Such non-GAAP measures are not
alternatives to GAAP measures.
Cautionary Note Regarding Forward-Looking Statements
This release
contains statements that express the Company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections
regarding future events or future results, in contrast with statements that reflect historical facts. All statements, other than
statements of historical fact included in this release regarding our strategy, future operations, financial position, estimated
revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements When used in this
release, words such as “may,” “assume,” “forecast,” “could,” “should,”
“will,” “plan,” “believe,” “anticipate,” “intend,”
“estimate,” “expect,” “project,” “budget” and similar expressions are used to
identify forward-looking statements, although not all forward-looking statements contain such identifying words. These
forward-looking statements are based on management’s current belief, based on currently available information as to the
outcome and timing of future events at the time such statement was made. Such statements are subject to a number of assumptions,
risk and uncertainties, many of which are beyond the control of the Company. These include, but are not limited to, commodity price
volatility; the impact of epidemics, outbreaks or other public health events, and the related effects on financial markets,
worldwide economic activity and our operations; uncertainties about our estimated oil, natural gas and natural gas liquids reserves,
including the impact of commodity price declines on the economic producibility of such reserves, and in projecting future rates of
production; the concentration of our operations in the Anadarko Basin; difficult and adverse conditions in the domestic and global
capital and credit markets; lack of transportation and storage capacity as a result of oversupply, government regulations or other
factors; lack of availability of drilling and production equipment and services; potential financial losses or earnings reductions
resulting from our commodity price risk management program or any inability to manage our commodity risks; failure to realize
expected value creation from property acquisitions and trades; access to capital and the timing of development expenditures;
environmental, weather, drilling and other operating risks; regulatory changes, including potential shut-ins or production
curtailments mandated by the Railroad Commission of Texas, the Oklahoma Corporation Commission and/or the Kansas Corporation
Commission; competition in the oil and natural gas industry; loss of production and leasehold rights due to mechanical failure or
depletion of wells and our inability to re-establish their production; our ability to service our indebtedness; any downgrades in
our credit ratings that could negatively impact our cost of and ability to access capital; cost inflation; political and economic
conditions and events in foreign oil and natural gas producing countries, including embargoes, continued hostilities in the Middle
East and other sustained military campaigns, the war in Ukraine and associated economic sanctions on Russia, conditions in South
America, Central America, China and Russia, and acts of terrorism or sabotage; evolving cybersecurity risks such as those involving
unauthorized access, denial-of-service attacks, malicious software, data privacy breaches by employees, insider or other with
authorized access, cyber or phishing-attacks, ransomware, social engineering, physical breaches or other actions; and risks related
to our ability to expand our business, including through the recruitment and retention of qualified personnel. Please read the
Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including “Risk
Factors” in the Company’s Annual Report on Form 10-K, which is on file with the SEC, for a discussion of risks and
uncertainties that could cause actual results to differ from those in such forward-looking statements.
As a result, these forward-looking statements are
not a guarantee of our performance, and you should not place undue reliance on such statements. Any forward-looking statement speaks only
as of the date on which such statement is made, and the Company undertakes no obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or otherwise.
3
Exhibit 99.2
Three months and six months ended
June 30, 2024
Supplemental Information of Mach Natural Resources LP
MACH NATURAL RESOURCES LP
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
| |
June 30, | | |
December 31, | |
| |
2024 | | |
2023 | |
ASSETS | |
| | |
| |
Current assets: | |
| | |
| |
Cash and cash equivalents | |
$ | 144,621 | | |
$ | 152,792 | |
Accounts receivable – joint interest and other, net | |
| 28,178 | | |
| 54,155 | |
Accounts receivable – oil, gas, and NGL sales | |
| 118,277 | | |
| 78,051 | |
Short-term derivative assets | |
| 9,110 | | |
| 24,802 | |
Inventories | |
| 27,499 | | |
| 31,377 | |
Other current assets | |
| 7,371 | | |
| 2,425 | |
Total current assets | |
| 335,056 | | |
| 343,602 | |
Oil and natural gas properties, using the full cost method: | |
| | | |
| | |
Proved oil and natural gas properties | |
| 2,179,014 | | |
| 2,097,540 | |
Less: accumulated depreciation, depletion and amortization | |
| (393,653 | ) | |
| (265,895 | ) |
Oil and natural gas properties, net | |
| 1,785,361 | | |
| 1,831,645 | |
Other property, plant and equipment | |
| 111,641 | | |
| 105,302 | |
Less: accumulated depreciation | |
| (19,475 | ) | |
| (15,642 | ) |
Other property, plant and equipment, net | |
| 92,166 | | |
| 89,660 | |
Long-term derivative assets | |
| 3,672 | | |
| 15,112 | |
Other assets | |
| 5,895 | | |
| 7,102 | |
Operating lease assets | |
| 12,887 | | |
| 17,394 | |
Total assets | |
$ | 2,235,037 | | |
$ | 2,304,515 | |
LIABILITIES AND EQUITY | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 37,759 | | |
$ | 44,577 | |
Accounts payable – related party | |
| 860 | | |
| 2,867 | |
Accrued liabilities | |
| 53,230 | | |
| 44,529 | |
Revenue payable | |
| 131,887 | | |
| 110,296 | |
Short-term derivative liabilities | |
| 5,967 | | |
| — | |
Current portion of long-term debt | |
| 82,500 | | |
| 61,875 | |
Current portion of operating lease liabilities | |
| 7,468 | | |
| 10,765 | |
Total current liabilities | |
| 319,671 | | |
| 274,909 | |
Long-term debt | |
| 706,909 | | |
| 745,140 | |
Asset retirement obligations | |
| 88,762 | | |
| 85,094 | |
Long-term portion of operating leases | |
| 5,451 | | |
| 6,705 | |
Other long-term liabilities | |
| 1,134 | | |
| 943 | |
Total long-term liabilities | |
| 802,256 | | |
| 837,882 | |
Commitments and contingencies (Note 10) | |
| | | |
| | |
Partners’ capital: | |
| | | |
| | |
Partners’ capital | |
| 1,113,110 | | |
| 1,191,724 | |
Total liabilities and partners’ capital | |
$ | 2,235,037 | | |
$ | 2,304,515 | |
MACH NATURAL RESOURCES LP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per common unit data)
| |
Three
Months Ended
June 30, | | |
Six
Months Ended
June 30, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
Revenue | |
| | |
| | |
| | |
| |
Oil,
natural gas, and NGL sales | |
$ | 231,539 | | |
$ | 150,165 | | |
$ | 486,779 | | |
$ | 312,613 | |
(Loss)
gain on oil and natural gas derivatives | |
| (4,635 | ) | |
| 2,688 | | |
| (33,903 | ) | |
| 15,742 | |
Midstream
revenue | |
| 6,441 | | |
| 6,786 | | |
| 12,660 | | |
| 13,318 | |
Product
sales | |
| 6,649 | | |
| 7,282 | | |
| 13,613 | | |
| 17,421 | |
Total
revenues | |
| 239,994 | | |
| 166,921 | | |
| 479,149 | | |
| 359,094 | |
| |
| | | |
| | | |
| | | |
| | |
Operating
expenses | |
| | | |
| | | |
| | | |
| | |
Gathering
and processing | |
| 23,831 | | |
| 7,868 | | |
| 55,773 | | |
| 17,510 | |
Lease
operating expense | |
| 46,497 | | |
| 27,802 | | |
| 87,257 | | |
| 60,615 | |
Production
taxes | |
| 11,302 | | |
| 6,852 | | |
| 24,054 | | |
| 15,526 | |
Midstream
operating expense | |
| 2,616 | | |
| 2,569 | | |
| 5,175 | | |
| 5,538 | |
Cost
of product sales | |
| 5,786 | | |
| 6,463 | | |
| 11,886 | | |
| 15,575 | |
Depreciation,
depletion, amortization and accretion – oil and natural gas | |
| 65,819 | | |
| 28,528 | | |
| 131,191 | | |
| 58,095 | |
Depreciation
and amortization – other | |
| 2,242 | | |
| 1,436 | | |
| 4,340 | | |
| 2,793 | |
General
and administrative | |
| 9,568 | | |
| 4,195 | | |
| 18,046 | | |
| 7,770 | |
General
and administrative - related party | |
| 1,850 | | |
| 1,067 | | |
| 3,700 | | |
| 2,135 | |
Total
operating expenses | |
| 169,511 | | |
| 86,780 | | |
| 341,422 | | |
| 185,557 | |
Income
from operations | |
| 70,483 | | |
| 80,141 | | |
| 137,727 | | |
| 173,537 | |
| |
| | | |
| | | |
| | | |
| | |
Other
(expense) income | |
| | | |
| | | |
| | | |
| | |
Interest
expense | |
| (27,046 | ) | |
| (1,975 | ) | |
| (53,331 | ) | |
| (3,789 | ) |
Other
income (expense), net | |
| (3,921 | ) | |
| (357 | ) | |
| (3,178 | ) | |
| (245 | ) |
Total
other expense | |
| (30,967 | ) | |
| (2,332 | ) | |
| (56,509 | ) | |
| (4,034 | ) |
Net
income | |
$ | 39,516 | | |
$ | 77,809 | | |
$ | 81,218 | | |
$ | 169,503 | |
Net income
per common unit: | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.42 | | |
| | | |
$ | 0.85 | | |
| | |
Diluted | |
$ | 0.42 | | |
| | | |
$ | 0.85 | | |
| | |
Weighted average common units outstanding: |
Basic | |
| 95,009 | | |
| | | |
| 95,004 | | |
| | |
Diluted | |
| 95,187 | | |
| | | |
| 95,129 | | |
| | |
MACH NATURAL RESOURCES LP
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
| |
Six Months Ended
June 30, | |
| |
2024 | | |
2023 | |
Cash flows from operating activities | |
| | |
| |
Net income | |
$ | 81,218 | | |
$ | 169,503 | |
Adjustments to reconcile net income to cash provided by operating activities | |
| | | |
| | |
Depreciation, depletion, amortization and accretion | |
| 135,531 | | |
| 60,888 | |
Loss (gain) on derivative instruments | |
| 33,903 | | |
| (15,742 | ) |
Cash receipts (payments) on settlement of derivative contracts, net | |
| 3,384 | | |
| 7,245 | |
Debt issuance costs amortization | |
| 3,494 | | |
| 202 | |
Equity based compensation | |
| 3,482 | | |
| 1,294 | |
Credit losses | |
| 647 | | |
| — | |
(Gain) loss on sale of assets | |
| (309 | ) | |
| (1 | ) |
Settlement of asset retirement obligations | |
| (418 | ) | |
| (79 | ) |
Changes in operating assets and liabilities (decreasing) increasing cash: | |
| | | |
| | |
Accounts receivable | |
| (24,381 | ) | |
| 53,913 | |
Revenue payable | |
| 21,592 | | |
| (2,675 | ) |
Accounts payable and accrued liabilities | |
| 2,280 | | |
| (5,133 | ) |
Other | |
| 361 | | |
| 5,730 | |
Net cash provided by operating activities | |
| 260,784 | | |
| 275,145 | |
Cash flows from investing activities |
Capital expenditures for oil and natural gas properties | |
| (116,441 | ) | |
| (182,427 | ) |
Capital expenditures for other property and equipment | |
| (7,032 | ) | |
| (4,953 | ) |
Acquisition of assets | |
| (1,258 | ) | |
| (468 | ) |
Proceeds from sales of oil and natural gas properties | |
| 38,975 | | |
| — | |
Proceeds from sales of other property and equipment | |
| 495 | | |
| 36 | |
Net cash used in investing activities | |
| (85,261 | ) | |
| (187,812 | ) |
Cash flows from financing activities |
Repayments of borrowings on term note | |
| (20,625 | ) | |
| — | |
Proceeds from borrowings on credit facility | |
| — | | |
| 7,000 | |
Distributions to unitholders | |
| (161,617 | ) | |
| — | |
Distributions to members | |
| — | | |
| (74,500 | ) |
Withholding taxes paid on vesting of phantom units | |
| (570 | ) | |
| — | |
Payment of other financing fees | |
| (882 | ) | |
| (404 | ) |
Net cash used in financing activities | |
| (183,694 | ) | |
| (67,904 | ) |
Net (decrease) increase in cash and cash equivalents | |
| (8,171 | ) | |
| 19,429 | |
Cash and cash equivalents, beginning of period | |
| 152,792 | | |
| 29,417 | |
Cash and cash equivalents, end of period | |
$ | 144,621 | | |
$ | 48,846 | |
Updated 2024 Guidance:
| |
| 2024 | |
| |
| Q3 | | |
| Q4 | | |
| Full-Year | |
Net Production
Guidance | |
| | | |
| | | |
| | |
Oil (MBbls/d) | |
| 18.6
- 19.9 | | |
| 18.6
- 19.9 | | |
| 19.4
- 20.6 | |
NGLs (MBbls/d) | |
| 18.4
- 19.5 | | |
| 18.1
- 19.2 | | |
| 19.1
- 20.3 | |
Natural Gas (MMcf/d) | |
| 249
- 265 | | |
| 243
- 258 | | |
| 262
- 278 | |
Total
(Mboe/d) | |
| 78.5
- 83.6 | | |
| 77.2
- 82.1 | | |
| 82.2
- 87.2 | |
| |
| Full-Year 2024 | |
Price Realizations Guidance (excluding derivatives) | |
| | |
Oil (differential to NYMEX WTI) ($/Bbl) | |
| ($1.50) - ($0.50) | |
NGLs (% of WTI) | |
| 31% - 35% | |
Natural Gas (differential to NYMEX Henry Hub) ($/Mcf) | |
| ($0.36) - ($0.20) | |
| |
| | |
Other Guidance Items | |
| | |
Lease Operating Expense ($/Boe) | |
| $5.80 - $6.10 | |
Gathering and Processing ($/Boe) | |
| $3.20 - $3.40 | |
Production Taxes (% of Oil, natural gas, and NGL sales) | |
| 5.0% - 6.0% | |
Midstream Operating Profit ($MM) | |
| $15 - $18 | |
General and Administrative, excluding equity-based compensation ($MM) | |
| $30 - $34 | |
Interest Expense ($MM) | |
| $88 - $92 | |
| |
| | |
Capital Expenditure Guidance ($MM) | |
| | |
Upstream (D&C and Workovers) | |
| $195 - $210 | |
Other (Midstream and Land) | |
| $20 - $30 | |
Total | |
| $215 - $240 | |
Non-GAAP Financial Measures
Adjusted EBITDA
We
include in the tables below the supplemental non-GAAP financial performance measure Adjusted EBITDA and provide our calculation of
Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, our most directly comparable financial measures calculated
and presented in accordance with GAAP. We define Adjusted EBITDA as net income before (1) interest expense, net, (2) depreciation,
depletion, amortization and accretion, (3) unrealized (gain) loss on derivative instruments, (4) equity-based compensation expense,
(5) credit losses, and (6) (gain) loss on sale of assets.
Adjusted EBITDA is used as a supplemental financial performance
measure by our management and by external users of our financial statements, such as industry analysts, investors, lenders, rating agencies
and others, to more effectively evaluate our operating performance and our results of operation from period to period and against our
peers without regard to financing methods, capital structure or historical cost basis. We exclude the items listed above from net income
in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon
accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA is
not a measurement of our financial performance under GAAP and should not be considered as an alternative to, or more meaningful than,
net income as determined in accordance with GAAP or as indicators of our operating performance. Certain items excluded from Adjusted EBITDA
are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital
and tax burden, as well as the historic costs of depreciable assets, none of which are reflected in Adjusted EBITDA. Our presentation
of Adjusted EBITDA should not be construed as an inference that our results will be unaffected by unusual items. Our computations of Adjusted
EBITDA may not be identical to other similarly titled measures of other companies.
Cash Available for Distribution
Cash available for distribution is not a measure of net income
or net cash flow provided by or used in operating activities as determined by GAAP. Cash available for distribution is a supplemental
non-GAAP financial performance measure used by our management and by external users of our financial statements, such as industry analysts,
investors, lenders, rating agencies and others, to assess our ability to internally fund our exploration and development activities, pay
distributions, and to service or incur additional debt. We define cash available for distribution as net income less (1) interest expense,
net, (2) depreciation, depletion, amortization and accretion, (3) unrealized (gain) loss on derivative instruments, (4) equity-based compensation
expense, (5) credit losses, (6) (gain) loss on sale of assets, (7) settlement of asset retirement obligations, (8) cash interest expense,
net (9) development costs, and (10) change in accrued realized derivative settlements. Development costs include all of our capital expenditures,
other than acquisitions. Cash available for distribution will not reflect changes in working capital balances. Cash available for distribution
is not a measurement of our financial performance or liquidity under GAAP and should not be considered as an alternative to, or more meaningful
than, net income or net cash provided by or used in operating activities as determined in accordance with GAAP or as indicators of our
financial performance and liquidity. The GAAP measures most directly comparable to cash available for distribution are net income and
net cash provided by operating activities. Cash available for distribution should not be considered as an alternative to, or more meaningful
than, net income or net cash provided by operating activities.
Reconciliation of GAAP Financial Measures to Adjusted EBITDA and
Cash Available for Distribution
| |
Three Months Ended June 30, | | |
Six Months Ended June 30, | |
($ in thousands) | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
Net Income Reconciliation to Adjusted EBITDA: | |
| | |
| | |
| | |
| |
Net income | |
$ | 39,516 | | |
$ | 77,809 | | |
$ | 81,218 | | |
$ | 169,503 | |
Interest expense, net | |
| 25,880 | | |
| 1,570 | | |
| 50,952 | | |
| 3,294 | |
Depreciation, depletion, amortization and accretion | |
| 68,061 | | |
| 29,964 | | |
| 135,531 | | |
| 60,888 | |
Unrealized (gain) loss on derivative instruments | |
| (124 | ) | |
| 2,097 | | |
| 33,099 | | |
| (8,212 | ) |
Equity-based compensation expense | |
| 2,300 | | |
| 647 | | |
| 3,482 | | |
| 1,294 | |
Credit losses | |
| 193 | | |
| — | | |
| 647 | | |
| — | |
Gain on sale of assets | |
| (298 | ) | |
| — | | |
| (309 | ) | |
| (1 | ) |
Adjusted EBITDA | |
$ | 135,528 | | |
$ | 112,087 | | |
$ | 304,620 | | |
$ | 226,766 | |
Net Income Reconciliation to Cash Available for Distribution: | |
| | | |
| | | |
| | | |
| | |
Net income | |
$ | 39,516 | | |
$ | 77,809 | | |
$ | 81,218 | | |
$ | 169,503 | |
Interest expense, net | |
| 25,880 | | |
| 1,570 | | |
| 50,952 | | |
| 3,294 | |
Depreciation, depletion, amortization and accretion | |
| 68,061 | | |
| 29,964 | | |
| 135,531 | | |
| 60,888 | |
Unrealized (gain) loss on derivative instruments | |
| (124 | ) | |
| 2,097 | | |
| 33,099 | | |
| (8,212 | ) |
Equity-based compensation expense | |
| 2,300 | | |
| 647 | | |
| 3,482 | | |
| 1,294 | |
Credit losses | |
| 193 | | |
| — | | |
| 647 | | |
| — | |
Gain on sale of assets | |
| (298 | ) | |
| — | | |
| (309 | ) | |
| (1 | ) |
Settlement of asset retirement obligations | |
| (390 | ) | |
| (8 | ) | |
| (418 | ) | |
| (79 | ) |
Cash interest expense, net | |
| (23,654 | ) | |
| (1,490 | ) | |
| (47,458 | ) | |
| (3,092 | ) |
Development costs | |
| (45,562 | ) | |
| (88,301 | ) | |
| (125,987 | ) | |
| (192,892 | ) |
Change in accrued realized derivative settlements | |
| 1,586 | | |
| (243 | ) | |
| 4,188 | | |
| (285 | ) |
Cash available for distribution | |
$ | 67,508 | | |
$ | 22,045 | | |
$ | 134,945 | | |
$ | 30,418 | |
Net Cash Provided by Operating Activities Reconciliation to Cash Available for
Distribution: |
|
|
|
Net cash provided by operating activities | |
| 116,831 | | |
| 127,996 | | |
$ | 260,784 | | |
$ | 275,145 | |
Changes in operating assets and liabilities | |
| (3,761 | ) | |
| (17,650 | ) | |
| 148 | | |
| (51,835 | ) |
Development costs | |
| (45,562 | ) | |
| (88,301 | ) | |
| (125,987 | ) | |
| (192,892 | ) |
Cash available for distribution | |
$ | 67,508 | | |
$ | 22,045 | | |
$ | 134,945 | | |
$ | 30,418 | |
Derivative Contracts
The table below represents a summary of the Company’s
derivative contracts as of August 1, 2024:
Oil Derivative Contracts | |
| | |
| | |
| | |
| |
2024 | |
| | |
| | |
Q3 | | |
Q4 | |
Oil Volumes (MBbl) | |
| | | |
| | | |
| 781 | | |
| 706 | |
Weighted Average Fixed Price (per Bbl) | |
| | | |
| | | |
| $72.77 | | |
| $73.21 | |
| |
| | | |
| | | |
| | | |
| | |
2025 | |
| Q1 | | |
| Q2 | | |
| Q3 | | |
| Q4 | |
Oil Volumes (MBbl) | |
| 650 | | |
| 605 | | |
| 284 | | |
| 269 | |
Weighted Average Fixed Price (per Bbl) | |
| $72.45 | | |
| $72.94 | | |
| $71.88 | | |
| $71.87 | |
| |
| | | |
| | | |
| | | |
| | |
2026 | |
| Q1 | | |
| Q2 | | |
| Q3 | | |
| Q4 | |
Oil Volumes (MBbl) | |
| 255 | | |
| 243 | | |
| - | | |
| - | |
Weighted Average Fixed Price (per Bbl) | |
| $68.90 | | |
| $73.98 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Natural Gas Derivative Contracts |
2024 | |
| | | |
| | | |
| Q3 | | |
| Q4 | |
Natural Gas Volumes (Bbtu) | |
| | | |
| | | |
| 10,653 | | |
| 10,158 | |
Weighted Average Fixed Price (per Mmbtu) | |
| | | |
| | | |
| $2.96 | | |
| $3.73 | |
| |
| | | |
| | | |
| | | |
| | |
2025 | |
| Q1 | | |
| Q2 | | |
| Q3 | | |
| Q4 | |
Natural Gas Volumes (Bbtu) | |
| 4,860 | | |
| 4,680 | | |
| 4,510 | | |
| 4,360 | |
Weighted Average Fixed Price (per Mmbtu) | |
| $4.34 | | |
| $3.69 | | |
| $3.92 | | |
| $4.36 | |
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