TXO Partners LP

Previous wording

•risks related to the Williston Acquisitions, including the risk that we may fail to complete the EMEP Acquisition on the terms and timing currently contemplated or at all, and/or to realize the expected benefits of the Williston Acquisitions;

Current wording

•risks related to the Williston Acquisitions, including the risk that we may fail to realize the expected benefits of the Williston Acquisitions;

Previous wording

•the concentration of our operations in the Permian Basin, the San Juan Basin and, following completion of the Williston Acquisitions, the Williston Basin;

Current wording

•the concentration of our operations in the Permian Basin, the San Juan Basin and the Williston Basin;

Previous wording

We are an independent oil and natural gas company focused on the acquisition, development, optimization and exploitation of conventional oil, natural gas and natural gas liquid reserves in North America. Our properties are predominately located in the Permian Basin of New Mexico and Texas, the San Juan Basin of New Mexico and Colorado and, following completion of the Williston Acquisitions, the Williston Basin;.

Current wording

We are an independent oil and natural gas company focused on the acquisition, development, optimization and exploitation of conventional oil, natural gas and natural gas liquid reserves in North America. Our properties are predominately located in the Permian Basin of New Mexico and Texas, the San Juan Basin of New Mexico and Colorado and the Williston Basin of Montana and North Dakota.

Previous wording

In June 2024, we entered into a purchase agreement to purchase certain oil and gas assets from Eagle Mountain Energy Partners, which are located in the Elm Coulee field in Montana and the Russian Creek field in North Dakota, for cash consideration of $225.0 million and 2.5 million common units of TXO, subject to customary purchase price adjustments. In connection with entering into the purchase agreement, we paid a deposit of $27.6 million. The EMEP Acquisition is expected to close during the third quarter of 2024 and is expected to be funded by a combination of cash on hand from the Offering and borrowings under our Credit Facility.

Current wording

In August 2024, we completed the acquisition of producing properties from Eagle Mountain Energy Partners and VR 4-ELM,LP, located in the Elm Coulee field in Montana and the Russian Creek field in North Dakota which are part of the Greater Williston Basin, for cash consideration of $241.8 million and 2.5 million common units of TXO valued at $50.0 million, subject to customary purchase price adjustments. The acquisition was funded by a combination of cash on hand from the Offering and borrowings under our Credit Facility

Previous wording

Additionally, in June 2024, we entered into a purchase agreement to purchase certain oil and gas assets from Kaiser-Francis Oil Company in the Russian Creek field in North Dakota for cash consideration of $18.2 million. In connection with entering into the purchase agreement, we paid a deposit of $1.8 million. The KFOC Acquisition closed August 1, 2024. The KFOC Acquisition was funded by cash on hand from the Offering.

Current wording

Additionally, in August 2024, we completed the acquisition of producing properties from Kaiser-Francis Oil Company in the Russian Creek field in North Dakota for cash consideration of $18.2 million, subject to customary purchase price adjustments. The KFOC Acquisition was funded by cash on hand from the Offering.

Previous wording

On June 28, 2024, we completed the Offering for the sale of 6.5 million common units at a price of $20.00 per common unit, which resulted in estimated proceeds of $122.5 million net of estimated underwriting discounts, commissions and other costs. On July 2, 2024, we completed the sale of an additional 975,000 common units at a price of $20.00 per common unit pursuant to the underwriter’s exercise in full of its option to purchase additional common units in the Offering, resulting in additional proceeds of approximately $18.5 million net of estimated underwriting discounts, commissions and other costs. We intend to use the net proceeds from the Offering to fund a portion of the cash consideration for the Williston Acquisitions. Pending the closing of the Williston Acquisitions, we used a portion of these proceeds to repay all outstanding borrowings under the Credit Facility.

Current wording

On June 28, 2024, we completed the Offering for the sale of 6.5 million common units at a price of $20.00 per common unit, which resulted in proceeds of $122.5 million net of underwriting discounts, commissions and other costs. On July 2, 2024, we completed the sale of an additional 975,000 common units at a price of $20.00 per common unit pursuant to the underwriter’s exercise in full of its option to purchase additional common units in the Offering, resulting in additional proceeds of $18.7 million net of underwriting discounts, commissions and other costs. We used the net proceeds from the Offering to fund a portion of the cash consideration for the Williston Acquisitions.

Previous wording

The oil and natural gas industry is cyclical and commodity prices are highly volatile. For example, during the period from January 1, 2023 through June 30, 2024, NYMEX prices for crude oil and natural gas reached a high of $93.68 per Bbl and $4.17 per MMBtu, respectively, and a low of $66.74 per Bbl and $1.58 per MMBtu, respectively. Oil prices were relatively stable over the first half of 2023 before initially increasing in the second half of 2023 as a result of expected supply constraints and hostilities in the Middle East. Since these concerns did not materialize, oil prices declined in the last month of 2023 but continuing hostilities and higher global consumption have pushed prices higher in the first half of 2024. WTI crude oil prices have been volatile reaching a high of $93.68 per Bbl in September 2023 before declining to $82.77 per Bbl as of July 18, 2024. Natural gas prices reached a high of $4.17 per MMbtu in January 2023 before declining to $2.07 per MMbtu as of July 18, 2024.

Current wording

The oil and natural gas industry is cyclical and commodity prices are highly volatile. For example, during the period from January 1, 2023 through September 30, 2024, NYMEX prices for crude oil and natural gas reached a high of $93.68 per Bbl and $4.17 per MMBtu, respectively, and a low of $65.75 per Bbl and $1.58 per MMBtu, respectively. Oil prices were relatively stable over the first half of 2023 before initially increasing in the second half of 2023 as a result of expected supply constraints and hostilities in the Middle East. Since these concerns did not materialize, oil prices declined in December 2023 but continuing hostilities and higher global consumption pushed prices higher in the first half of 2024. However, increased supply led to lower prices in the third quarter of 2024. WTI crude oil prices have been volatile reaching a high of $93.68 per Bbl in September 2023 before declining to $69.22 per Bbl as of October 18, 2024. Natural gas prices reached a high of $4.17 per MMbtu in January 2023 before declining to $2.26 per MMbtu as of October 18, 2024.

Previous wording

With our anticipated cash flows from our long-lived property base, we intend to provide dynamic allocation of funds to prudently meet our goals. These goals include the highest projected economic returns on our capital budget, acquisition opportunities that fulfill our strategy, and cash distributions for the life of our legacy assets. From time to time, we may choose to amortize repayment of debt incurred in modest acquisitions to support the longer-term financial stewardship of our business. At other times, given fluctuations in industry costs and commodity prices, we may modify our capital budget or cash balances to shift funds towards cash distributions. We will use all of these tools to support our underlying strategy as a “production and distribution” enterprise.

Current wording

With our anticipated cash flows from our long-lived property base, we intend to provide allocation of funds to prudently meet our goals. These goals include the highest projected economic returns on our capital budget, acquisition opportunities that fulfill our strategy, and cash distributions for the life of our legacy assets. From time to time, we may choose to amortize repayment of debt incurred to support the longer-term financial stewardship of our business. At other times, given fluctuations in industry costs and commodity prices, we may modify our capital budget or cash balances to shift funds towards cash distributions. We will use all of these tools to support our underlying strategy as a “production and distribution” enterprise.

Previous wording

Concerns over global economic conditions, energy costs, supply chain disruptions, increased demand, labor shortages associated with a fully employed U.S. labor force, geopolitical issues, inflation, the availability and cost of credit and the United States financial market and other factors have contributed to increased economic uncertainty and diminished expectations for the global economy. During the year ended December 31, 2022, the U.S. economy experienced the highest rate of inflation in the past 40 years. Rising inflation has been pervasive since 2022, increasing the cost of salaries, wages, supplies, material, freight, and energy. While we expect inflation to moderate in 2024, inflation continues to run higher than the Federal Reserve target, resulting in higher costs. We continue to undertake actions and implement plans to address these pressures and protect the requisite access to commodities and services, however, these mitigation efforts may not succeed or be insufficient. Nevertheless, we expect for the foreseeable future to experience inflationary pressure on our cost structure. Principally, commodity costs for steel and chemicals required for drilling, higher transportation and fuel costs and wage increases have increased our operating costs. While prices appear to have stopped increasing as rapidly, we do not expect these cost increases to reverse in the short term. Typically, as prices for oil and natural gas increase, so do associated costs. Conversely, in a period of declining prices, associated cost declines are likely to lag and may not adjust downward in proportion to prices. We cannot predict the future inflation rate but to the extent these higher costs do not begin to reverse or start to increase again, we may experience a higher cost environment going forward. If we are unable to recover higher costs through higher commodity prices, our current revenue stream, estimates of future reserves, borrowing base calculations, impairment assessments of oil and natural gas properties, and values of properties in purchase and sale transactions would all be significantly impacted.

Current wording

Concerns over global economic conditions, energy costs, supply chain disruptions, increased demand, labor shortages associated with a fully employed U.S. labor force, geopolitical issues, inflation, the availability and cost of credit and the United States financial market and other factors have contributed to increased economic uncertainty and diminished expectations for the global economy. During the year ended December 31, 2022, the U.S. economy experienced the highest rate of inflation in the past 40 years. Rising inflation has been pervasive since 2022, increasing the cost of salaries, wages, supplies, material, freight, and energy. While we have seen inflation moderate in 2024, inflation continues to run higher than the Federal Reserve target, resulting in higher costs. We continue to undertake actions and implement plans to address these pressures and protect the requisite access to commodities and services, however, these mitigation efforts may not succeed or be insufficient. Nevertheless, we expect for the foreseeable future to experience inflationary pressure on our cost structure. Principally, commodity costs for steel and chemicals required for drilling, higher transportation and fuel costs and wage increases have increased our operating costs. We do not expect these cost increases to reverse in the short term. Typically, as prices for oil and natural gas increase, so do associated costs. Conversely, in a period of declining prices, associated cost declines are likely to lag and may not adjust downward in proportion to prices. We cannot predict the future inflation rate but to the extent these higher costs do not begin to reverse or start to increase again, we may experience a higher cost environment going forward. If we are unable to recover higher costs through higher commodity prices, our current revenue stream, estimates of future reserves, borrowing base calculations, impairment assessments of oil and natural gas properties, and values of properties in purchase and sale transactions would all be significantly impacted.

Previous wording

We expect that approximately $120.0 million of the funds to close the EMEP Acquisition will be borrowings under our Credit Facility, which is expected to increase ournet-debt-to-Adjusted EBITDAX ratio to approximately one times.

Current wording

Our borrowings under our Credit Facility of$148 million were incurred to partially fund the EMEP Acquisition. This has resulted in an increase to ournet-debt-to-Adjusted EBITDAX ratio to approximately one times, which is in compliance with our debt covenants.

Previous wording

As a result of the Williston Acquisitions (assuming the EMEP Acquisition closes), we expect to increase our total leasehold and mineral acreage from approximately 846,000 gross (372,000 net) to approximately 1,120,000 gross (550,000 net).

Current wording

As a result of the Williston Acquisitions, we increased our total leasehold and mineral acreage from approximately 846,000 gross (372,000 net) to approximately 1,120,000 gross (550,000 net).

Previous wording

(1)Oil and condensate prices include both realized losses and unrealized gains from derivatives. Unrealized gains were $3.4 million for the three months ended June 30, 2024 and $3.7 million for the three months ended June 30, 2023. Realized losses were $3.1 million for the three months ended June 30, 2024 and $0.7 million for the three months ended June 30, 2023.

Current wording

(1)Oil and condensate prices include both realized losses and unrealized gains and losses from derivatives. Unrealized gains were $5.7 million for the three months ended September 30, 2024 and unrealized losses were $8.8 million for the three months ended September 30, 2023. Realized losses were $0.0 million for the three months ended September 30, 2024 and $2.9 million for the three months ended September 30, 2023.

Previous wording

(2)Natural gas liquids prices include both realized gains and unrealized losses from derivatives. Unrealized losses were $0.3 million for the three months ended June 30, 2024 and $0.6 million for the three months ended June 30, 2023. Realized gains were $0.2 million for the three months ended June 30, 2024 and $0.3 million for the three months ended June 30, 2023.

Current wording

(2)Natural gas liquids prices include both realized losses and unrealized losses from derivatives. Unrealized losses were $0.0 million for the three months ended September 30, 2024 and $0.5 million for the three months ended September 30, 2023. Realized losses were $0.0 million for the three months ended September 30, 2024 and $0.2 million for the three months ended September 30, 2023.

Previous wording

(3)Natural gas prices include both realized gains and unrealized losses from derivatives. Unrealized losses were $5.5 million for the three months ended June 30, 2024 and $12.1 million for the three months ended June 30, 2023. Realized gains were $5.6 million for the three months ended June 30, 2024 and $2.7 million for the three months ended June 30, 2023.

Current wording

(3)Natural gas prices include both realized losses and unrealized gains and losses from derivatives. Unrealized losses were $6.2 million for the three months ended September 30, 2024 and unrealized gains were $7.7 million for the three months ended September 30, 2023. Realized losses were $0.0 million for the three months ended September 30, 2024 and $0.3 million for the three months ended September 30, 2023.

Previous wording

Revenues decreased $3.2 million, or 5%, from $60.5 million for the three months ended June 30, 2023 to $57.3 million for the three months ended June 30, 2024. Revenue decreased $8.2 million due to a decrease in production of 170 MBoe primarily as a result of natural production declines and downtime and decreased $7.2 million as a result of a decrease in the average selling price, excluding the effects of derivatives, on natural gas of 47%. These decreases were partially offset by gains on our hedging activity of $7.1 million, of which $6.7 million were unrealized gains and $0.4 million were realized gains. Additionally, an increase in the average selling price, excluding the effects of derivatives, on oil of 10% resulted in an increase in revenue of $4.5 million and on NGLs of 9% resulted in an increase in revenue of $0.6 million.

Current wording

Revenues decreased $1.1 million, or 2%, from $69.9 million for the three months ended September 30, 2023 to $68.7 million for the three months ended September 30, 2024. Revenue decreased $8.7 million as a result of a decrease in the average selling price, excluding the effects of derivatives, on natural gas of 40% and $5.1 million as a result of a decrease in the average selling price, excluding the effects of derivatives, on oil of 11%. These decreases were partially offset by an increase of $7.4 million due to an increase in production of 1 MBoe primarily as a result of increased oil production of 116 MBbls and increased NGL production of 16 MBbls due to production from the Williston Basin Acquisitions partially offset by natural declines and downtime. This increased production was partially offset by decreased natural gas production of 788 MMcf primarily due to natural declines. Additionally, gains on our hedging activity of $4.5 million, of which $1.0 million were unrealized gains and $3.5 million were realized gains and an increase in the average selling price, excluding the effects of derivatives, on NGLs of 12% resulted in an increase in revenue of $0.7 million.

Previous wording

Production expenses decreased $2.9 million, or 7%, from $39.4 million for the three months ended June 30, 2023 to $36.4 million for the three months ended June 30, 2024. The decrease is primarily due to decreased maintenance and energy costs.

Current wording

Production expenses increased $3.8 million, or 11%, from $35.7 million for the three months ended September 30, 2023 to $39.4 million for the three months ended September 30, 2024. The increase is primarily due to costs from the Williston Basin Acquisitions.

Previous wording

On a per unit basis, production expenses increased from $18.47 per Boe sold for the three months ended June 30, 2023 to $18.59 per Boe sold for the three months ended June 30, 2024. The increase is primarily related to a decrease in production of 170 MBoe partially offset by decreased maintenance and energy costs.

Current wording

On a per unit basis, production expenses increased from $16.95 per Boe sold for the three months ended September 30, 2023 to $18.73 per Boe sold for the three months ended September 30, 2024. The increase is primarily related to having a higher percentage of oil production, which is more expensive on a Boe basis than natural gas production.

Previous wording

On a per unit basis, taxes, transportation, and other decreased from $7.08 per Boe sold for the three months ended June 30, 2023 to $6.73 per Boe sold for the three months ended June 30, 2024. The decrease is primarily related to the lower natural gas prices.

Current wording

On a per unit basis, taxes, transportation, and other decreased from $7.25 per Boe sold for the three months ended September 30, 2023 to $6.87 per Boe sold for the three months ended September 30, 2024. The decrease is primarily related to the lower natural gas and oil prices.

Previous wording

On a per unit basis, depreciation, depletion, and amortization decreased from $5.42 per Boe sold for the three months ended June 30, 2023 to $5.27 per Boe sold for the three months ended June 30, 2024. The decrease is primarily related to changes in production mix.

Current wording

On a per unit basis, depreciation, depletion, and amortization increased from $5.05 per Boe sold for the three months ended September 30, 2023 to $6.45 per Boe sold for the three months ended September 30, 2024. The increase is primarily related to the Williston Basin production which has a higher rate than the historical properties.

Previous wording

General and administrative (“G&A”) expenses increased $3.9 million, or 119%, from $3.3 million for the six months ended June 30, 2023 to $7.2 million for the six months ended June 30, 2024. The increase is primarily attributable to higher personnel costs of $3.3 million due in part to amortization of unit awards and additional expenses related to being a public company.

Current wording

General and administrative (“G&A”) expenses increased $1.5 million, or 87%, from $1.8 million for the three months ended September 30, 2023 to $3.3 million for the three months ended September 30, 2024. The increase is primarily attributable to higher personnel costs of $0.9 million due, in part, to amortization of unit awards and increased acquisition costs.

Previous wording

On a per unit basis, G&A expense increased from $0.80 per Boe sold for the six months ended June 30, 2023 to $1.81 per Boe sold for the six months ended June 30, 2024. The increase is primarily related to increased costs and decreased production.

Current wording

On a per unit basis, G&A expense increased from $0.83 per Boe sold for the three months ended September 30, 2023 to $1.56 per Boe sold for the three months ended September 30, 2024. The increase is primarily related to increased costs partially offset by increased production.

Previous wording

Other income increased $7.1 million, or 106%, from $6.7 million for the three months ended June 30, 2023 to $13.8 million for the three months ended June 30, 2024. The increase is primarily attributable to $5.4 million in bonus payments on term assignment of leases and higher CO 2 and plant income of $1.8 million. The CO 2 and plant income is ancillary to the operations of the gas processing plant in the Permian Basin in New Mexico and CO 2 assets in Colorado.

Current wording

Other income increased $1.1 million, or 22%, from $5.2 million for the three months ended September 30, 2023 to $6.3 million for the three months ended September 30, 2024. The increase is primarily attributable to higher CO 2 and plant income of $1.1 million. The CO 2 and plant income is ancillary to the operations of the gas processing plant in the Permian Basin in New Mexico and CO 2 assets in Colorado.

Previous wording

Interest expense increased $0.4 million, or 70%, from $0.6 million for the three months ended June 30, 2023 to $1.0 million for the three months ended June 30, 2024. The increase is primarily attributable to a higher interest rate and increased borrowings.

Current wording

Interest expense increased $0.7 million, or 55%, from $1.2 million for the three months ended September 30, 2023 to $1.9 million for the three months ended September 30, 2024. The increase is primarily attributable to increased borrowings and a higher interest rate.

Previous wording

(1)Oil and condensate prices include both realized losses and unrealized gains from derivatives. Unrealized gains were $3.2 million for the six months ended June 30, 2024 and $9.9 million for the six months ended June 30, 2023. Realized losses were $5.6 million for the six months ended June 30, 2024 and $2.1 million for the six months ended June 30, 2023.

Current wording

(1)Oil and condensate prices include both realized gains from derivatives. Unrealized gains were $8.9 million for the nine months ended September 30, 2024 and $1.0 million for the nine months ended September 30, 2023. Realized losses were $5.6 million for the nine months ended September 30, 2024 and $5.0 million for the nine months ended September 30, 2023.

Previous wording

(2)Natural gas liquids prices include both realized gains and unrealized gains and losses from derivatives. Unrealized losses were $0.5 million for the six months ended June 30, 2024 and unrealized gains were $0.6 million for the six months ended June 30, 2023. Realized gains were $0.5 million for the six months ended June 30, 2024 and $0.4 million for the six months ended June 30, 2023.

Current wording

(2)Natural gas liquids prices include both realized gains and unrealized gains and losses from derivatives. Unrealized losses were $0.5 million for the nine months ended September 30, 2024 and unrealized gains were $0.2 million for the nine months ended September 30, 2023. Realized gains were $0.5 million for the nine months ended September 30, 2024 and $0.2 million for the nine months ended September 30, 2023.

Previous wording

(3)Natural gas prices include both realized and unrealized gains and losses from derivatives. Unrealized losses were $5.7 million for the six months ended June 30, 2024 and unrealized gains were $75.9 million for the six months ended June 30, 2023. Realized gains were $7.4 million for the six months ended June 30, 2024 and realized losses were $76.5 million for the six months ended June 30, 2023.

Current wording

(3)Natural gas prices include both realized and unrealized gains and losses from derivatives. Unrealized losses were $11.9 million for the nine months ended September 30, 2024 and unrealized gains were $83.7 million for the nine months ended September 30, 2023. Realized gains were $7.4 million for the nine months ended September 30, 2024 and realized losses were $76.9 million for the nine months ended September 30, 2023.

Previous wording

Revenues decreased $94.1 million, or 43%, from $218.9 million for the six months ended June 30, 2023 to $124.7 million for the six months ended June 30, 2024. The decrease was primarily attributable to a 73% decrease in the average selling price of natural gas, excluding the effects of derivatives, resulted in a decrease in revenue of $77.5 million and on NGLs of 7% resulting in a decrease in revenue of $1.0 million. Additionally, revenue decreased $11.8 million due to a decrease in production of 145 MBoe primarily as a result of natural production declines and downtime. Finally, we incurred net losses on our hedging activity of $9.0 million, of which $89.4 million were unrealized losses and $80.5 million were realized gains. These declines were partially offset by an increase in the average selling price, excluding the effects of derivatives, on oil of 6% resulting in an increase in revenue of $5.2 million.

Current wording

Revenues decreased $95.3 million, or 33%, from $288.7 million for the nine months ended September 30, 2023 to $193.5 million for the nine months ended September 30, 2024. The decrease was primarily attributable to a 67% decrease in the average selling price of natural gas, excluding the effects of derivatives, resulting in a decrease in revenue of $86.0 million, on oil of less than 1% resulting in a decrease in revenue of $0.5 million and on NGLs of 1% resulting in a decrease in revenue of $0.3 million. Additionally, revenue decreased $3.9 million due to a decrease in production of 145 MBoe primarily as a result of natural production declines and downtime partially offset by production from the Williston Basin Acquisitions. Finally, we incurred net losses on our hedging activity of $4.5 million, of which $88.4 million were unrealized losses and $83.9 million were realized gains.

Previous wording

Production expenses decreased $5.2 million, or 7%, from $74.7 million for the six months ended June 30, 2023 to $69.5 million for the six months ended June 30, 2024. This decrease is primarily due to decreased maintenance and energy costs.

Current wording

Production expenses decreased $1.4 million, or 1%, from $110.3 million for the nine months ended September 30, 2023 to $109.0 million for the nine months ended September 30, 2024. This decrease is primarily due to decreased maintenance and energy costs partially offset by costs related to the Williston Basin Acquisitions.

Previous wording

On a per unit basis, production expenses decreased from $17.99 per Boe sold for the six months ended June 30, 2023 to $17.35 per Boe sold for the six months ended June 30, 2024. The decrease is primarily related to decreased maintenance and energy costs partially offset by the decrease in production.

Current wording

On a per unit basis, production expenses increased from $17.64 per Boe sold for the nine months ended September 30, 2023 to $17.84 per Boe sold for the nine months ended September 30, 2024. The increase is primarily related to costs related to the Williston Basin Acquisitions and the decrease in production partially offset by decreased maintenance and energy costs.

Previous wording

On a per unit basis, taxes, transportation, and other decreased from $10.59 per Boe sold for the six months ended June 30, 2023 to $7.18 per Boe sold for the six months ended June 30, 2024. The decrease is primarily related to the lower natural gas and NGLs prices partially offset by higher oil prices.

Current wording

On a per unit basis, taxes, transportation, and other decreased from $9.47 per Boe sold for the nine months ended September 30, 2023 to $7.07 per Boe sold for the nine months ended September 30, 2024. The decrease is primarily related to the lower natural gas, NGLs and oil prices.

Previous wording

On a per unit basis, depreciation, depletion, and amortization decreased from $5.41 per Boe sold for the six months ended June 30, 2023 to $5.20 per Boe sold for the six months ended June 30, 2024. The decrease is primarily related to changes in production mix.

Current wording

On a per unit basis, depreciation, depletion, and amortization increased from $5.29 per Boe sold for the nine months ended September 30, 2023 to $5.63 per Boe sold for the nine months ended September 30, 2024. The increase is primarily related to the Williston Basin production which has a higher rate than the historical properties.

Previous wording

General and administrative (“G&A”) expenses increased $3.5 million, or 324%, from $1.1 million for the three months ended June 30, 2023 to $4.6 million for the three months ended June 30, 2024. The increase is primarily attributable to higher personnel costs of $2.6 million due, in part, to amortization of unit awards and additional expenses related to being a public company.

Current wording

General and administrative (“G&A”) expenses increased $5.5 million, or 108%, from $5.1 million for the nine months ended September 30, 2023 to $10.5 million for the nine months ended September 30, 2024. The increase is primarily attributable to higher personnel costs of $4.3 million due in part to amortization of unit awards and additional expenses related to being a public company.

Previous wording

On a per unit basis, G&A expense increased from $0.51 per Boe sold for the three months ended June 30, 2023 to $2.34 per Boe sold for the three months ended June 30, 2024. The increase is primarily related to increased costs and decreased production.

Current wording

On a per unit basis, G&A expense increased from $0.81 per Boe sold for the nine months ended September 30, 2023 to $1.72 per Boe sold for the nine months ended September 30, 2024. The increase is primarily related to increased costs and decreased production.

Previous wording

Other income increased $9.2 million, or 71%, from $13.0 million for the six months ended June 30, 2023 to $22.3 million for the six months ended June 30, 2024. The increase is primarily attributable to $7.0 million in bonus payments on term assignment of leases, higher CO 2 and plant income of $1.6 million and a $0.7 million increase in marketing income. The CO 2 and plant income is ancillary to the operations of the gas processing plant in the Permian Basin in New Mexico and CO 2 assets in Colorado.

Current wording

Other income increased $10.4 million, or 57%, from $18.2 million for the nine months ended September 30, 2023 to $28.6 million for the nine months ended September 30, 2024. The increase is primarily attributable to $7.0 million in bonus payments on term assignment of leases, higher CO 2 and plant income of $2.6 million and a $0.8 million increase in marketing income. The CO 2 and plant income is ancillary to the operations of the gas processing plant in the Permian Basin in New Mexico and CO 2 assets in Colorado.

Previous wording

Our primary sources of liquidity and capital will be cash flows generated by operating activities and borrowings under our Credit Facility. Outstanding borrowings under our Credit Facility were $0.0 million at June 30, 2024 and$21.0 million at December 31, 2023, and the remaining availability under our Credit Facility was $165.0 million at June 30, 2024 and $144.0 million at December 31, 2023. Additionally, we had positive net working capital (including cash and excluding the effects of derivative instruments) of $82.2 million at June 30, 2024 and$14.1 million at December 31, 2023.

Current wording

Our primary sources of liquidity and capital will be cash flows generated by operating activities and borrowings under our Credit Facility. Outstanding borrowings under our Credit Facility were $148.0 million at September 30, 2024 and$21.0 million at December 31, 2023, and the remaining availability under our Credit Facility was $127.0 million at September 30, 2024 and $144.0 million at December 31, 2023. Additionally, we had negative net working capital (including cash and excluding the effects of derivative instruments) of $1.5 million at September 30, 2024 andpositive net working capital (including cash and excluding the effects of derivative instruments) $14.1 million at December 31, 2023.

Previous wording

On June 28, 2024, we completed the Offering, which resulted in estimated proceeds of $122.5 million net of estimated underwriting discounts, commissions and other costs. On July 2, 2024, we completed the sale of an additional 975,000 common units at a price of $20.00 per common unit pursuant to the underwriter’s exercise in full of its option to purchase additional common units in the Offering, resulting in additional proceeds of approximately $18.5 million net of estimated underwriting discounts, commissions and other costs. We intend to use the net proceeds from the Offering to fund a portion of the cash consideration for the Williston Acquisitions. Pending the closing of the Williston Acquisitions, we used a portion of these proceeds to repay all outstanding borrowings under the Credit Facility.

Current wording

On June 28, 2024, we completed the Offering, which resulted in proceeds of $122.5 million net of underwriting discounts, commissions and other costs. On July 2, 2024, we completed the sale of an additional 975,000 common units at a price of $20.00 per common unit pursuant to the underwriter’s exercise in full of its option to purchase additional common units in the Offering, resulting in additional proceeds of $18.7 million net of underwriting discounts, commissions and other costs. We used the net proceeds from the Offering to fund a portion of the cash consideration for the Williston Acquisitions.

Previous wording

As of June 30, 2024 we haveno outstanding borrowings under our Credit Facility and cash on hand of $76.0 million. We expect that approximately$120.0 million of the funds to close the EMEP Acquisition will be borrowings under our Credit Facility, which is expected to increase our net-debt-to-EBITDAX ratio to approximately one times. After closing the EMEP Acquisition, we expect to carry a prudent level of debt moving forward.

Current wording

As of September 30, 2024, we have$148.0 million outstanding borrowings under our Credit Facility and cash on hand of $3.8 million. These borrowings under our Credit Facility, which increased our net-debt-to-EBITDAX ratio to approximately one times, were incurred to fund the remainder of the Williston Basin Acquisitions. We expect to carry this level of debt moving forward.

Previous wording

Our partnership agreement requires that we distribute all of our available cash (as defined in the partnership agreement) to our unitholders. Our quarterly cash distributions may vary from quarter to quarter as a direct result of variations in the performance of our business, including those caused by fluctuations in the prices of oil and natural gas. Such variations may be significant and quarterly distributions paid to our unitholders may be zero. Our second quarter distribution of $0.57 per unit with respect to cash available for distribution for the three months ended June 30, 2024, was declared on August 6, 2024 and will be paid on August 27, 2024 to unitholders of record on August 20, 2024.

Current wording

Our partnership agreement requires that we distribute all of our available cash (as defined in the partnership agreement) to our unitholders. Our quarterly cash distributions may vary from quarter to quarter as a direct result of variations in the performance of our business, including those caused by fluctuations in the prices of oil and natural gas. Such variations may be significant and quarterly distributions paid to our unitholders may be zero. Our third quarter distribution of $0.58 per unit with respect to cash available for distribution for the three months ended September 30, 2024, was declared on November 5, 2024 and will be paid on November 22, 2024 to unitholders of record on November 15, 2024.

Previous wording

The fourth quarter distribution of $0.58 per unit with respect to cash available for distribution for the three months ended December 31, 2023, was declared on March 05, 2024 and was paid on March 28, 2024 to unitholders of record on March 15, 2024. The first quarter distribution of $0.65 per unit with respect to cash available for distribution for the three months ended March 31, 2024, was declared on May 7, 2024 and was paid May 29, 2024 to unitholders of record on May 20, 2024.

Current wording

The fourth quarter distribution of $0.58 per unit with respect to cash available for distribution for the three months ended December 31, 2023, was paid on March 28, 2024. The first quarter distribution of $0.65 per unit with respect to cash available for distribution for the three months ended March 31, 2024, was paid May 29, 2024. The second quarter distribution of $0.57 per unit with respect to cash available for distribution for the three months ended June 30, 2024, was paid August 27, 2024.

Previous wording

Our acquisition and development expenditures consist of acquisitions of proved, unproved and other property and development expenditures. Our capital expenditures including acquisitions were $38.5 million for the six months ended June 30, 2024 and $28.6 million for the six months ended June 30, 2023.

Current wording

Our acquisition and development expenditures consist of acquisitions of proved, unproved and other property and development expenditures. Our capital expenditures including acquisitions were $273.0 million for the nine months ended September 30, 2024 and $40.5 million for the nine months ended September 30, 2023.