Mach Natural Resources LP Q1 FY2026 earnings call

Tom Ward discussed the company's four strategic pillars: disciplined execution (bought free cash flowing assets at discounts, averaged ~50% IRR on drilling program, free cash flow breakeven pricing best in class), disciplined reinvestment rate (maintain <50% reinvestment of operating cash flow, shifted drilling to oil-weighted rigs due to price changes, delayed some gas programs to add oil rigs, San Juan and Anadarko gas assets have potential), maintain financial strength (leverage at ~1.3 times, acquisition strategy on hold unless accretive, goal to get back to 1 times leverage), maximize distribution to equity holders (industry-leading distribution, cash return on capital invested >20% since inception, 35% CROI last five years, 15% yield since 2024)

Production was 158,000 BOE per day, with 16% oil, 70% natural gas, and 14% NGLs. Average realized prices: $69.73 per barrel of oil, $2.74 per MCF of gas, $23.75 per barrel of NGLs. Total oil and gas revenues were $366 million, with oil contributing 42%, gas 45%, and NGLs 13%. Lease operating expense was $101 million ($7.12 per BOE), cash G&A was approximately $5 million ($0.37 per BOE). Ended the quarter with $53 million in cash and $305 million of availability under the credit facility. Total revenues including hedges and midstream activities totaled $286 million. Adjusted EBITDA was $195 million, operating cash flow was $170 million, and cash available for distribution was $107 million resulting in a distribution of 64 cents per unit.

May revise guidance mid-year as shift to oil program progresses. CapEx guidance remains, with shift in drilling mix and potential delay of San Juan completions depending on prices

Factors causing actual results to differ from forward-looking statements include those in press release and SEC filings, oilfield inflation, commodity price fluctuations, and potential delays in drilling/completion plans affecting financial results

Q: About shift to oilier drilling and impact on oil percentage.

A: Move to oil side keeps oil production from declining significantly, might grow ~1% a year.

Q: About LOE and inflation.

A: No lock-ins, can move rigs quickly, seeing oilfield inflation, but chasing best areas with high rates of return.

Q: About new guidance and San Juan completion delay.

A: Planning to delay Mancos, may revise guidance mid-year, delay completion of San Juan wells until 2027.

Q: About distribution strategy and debt.

A: Payout ratio takes care of itself over time, private credit likes them due to free cash flow, bias to defer gas completions for clear fork rig.

Q: About M&A and maintenance CapEx.

A: Focus on current basins, issue is too much debt, maintenance CapEx tied to operating cash flow and decline rate.

Q: About natural gas break-even price.

A: Around $1.72, shown on Slide 9.

Q: About divestitures and Permian levers.

A: Gas prices lower make divestitures harder, clear fork in Permian has 100% rates of return.

Q: About service costs and Andarco.

A: Seeing service cost inflation, flexible to move between oil and gas based on prices.

Q: About drilling plays and San Juan supply-demand.

A: Oswego, Ardmore, Clear Fork, Red Fork have varying rates of return, San Juan gas has potential with LNG expansion and pipe developments