TXO Partners, L.P.
For the period ended Mar 31, 2025. Filed May 1, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 1, 2025
TXO$13.13+3.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0001559432-24-000052
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0001559432-25-000062
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 144 previous paragraphs and 116 current paragraphs.
76 unchanged; 25 reworded; 14 added; 40 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 7 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Leadership Changes
Current report
On March 19, 2025, Bob R. Simpson resigned from his position as Chief Executive Officer of our General Partner, effective April 1, 2025. He has continued to serve as Chairman of our board of directors. In connection with Bob R. Simpson’s resignation, on March 19, 2025, the board of directors appointed Brent W. Clum and Gary D. Simpson to serve as Co-Chief Executive Officers, also effective April 1, 2025. Prior to their new appointments, Brent W. Clum served as the President of Business Operations, Chief Financial Officer and a Director of our General Partner, while Gary D. Simpson served as our General Partner’s President of Production and Development. Both have continued to serve in their previous roles alongside their new appointments.
Current report
New Appointments to the Board of Directors
Current report
On March 19, 2025, Gary D. Simpson was appointed to serve as a member of the board of directors, effective April 1, 2025.
Current report
On March 31, 2025, Lawrence S. Massaro was appointed to serve as a member of the board of directors, effective April 1, 2025. In addition, Mr. Massaro was appointed to the Audit Committee of the board of directors, also effective April 1, 2025.
Current report
We are taking actions to mitigate inflationary pressures. We are working closely with other suppliers and contractors to ensure availability of supplies on site, especially fuel, steel and chemical supplies which are critical to many of our operations. However, these mitigation efforts may not succeed or be insufficient.
Current report
Production expenses increased $9.2 million, or 28%, from $33.1 million for thethree months ended March 31, 2024 to $42.3 million for thethree months ended March 31, 2025. Of this increase, $8.5 million is attributable to production fromthe Williston Basin acquisitions. The remaining increase is primarily related to increased labor, main tenance and energy costs.
Current report
On a per unit basis, production expenses increased from $16.17 per Boe sold for thethree months ended March 31, 2024 to $18.15 per Boe sold for thethree months ended March 31, 2025. The increase is primarily related to the increased costs per Boe from our historical properties as decreased production and increased labor, main tenance and energy in these properties resulted in higher costs per Boe.
Current report
Taxes, transportation, and other increased $2.3 million, or 15%, from $15.6 million for thethree months ended March 31, 2024 to $17.9 million for thethree months ended March 31, 2025. The increase is primarily attributable to the increase in natural gas and NGLs prices and increase in oil and NGLs production partially offset by decreased oil prices and natural gas production.
Current report
Depreciation, depletion, and amortization increased $10.9 million, or 104%, from $10.5 million for thethree months ended March 31, 2024 to $21.4 million for thethree months ended March 31, 2025. The increase is primarily attributable to the increased production associated withthe Williston Basin acquisitions of $10.0 million which has a higher rate than the historical properties, and a higher rate on our historical properties partially offset by decreased production.
Current report
Interest expense increased $2.6 million, or 271%, from $1.0 million for thethree months ended March 31, 2024 to $3.6 million for thethree months ended March 31, 2025. The increase is primarily attributable to the increased borrowings partially offset by a lower interest rate.
Current report
Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024
Current report
Net cash provided by operating activities increased $5.4 million for thethree months ended March 31, 2025 compared to thethree months ended March 31, 2024 due improved operating results, excluding the effects of derivatives, primarily due to improved revenues.
Current report
Net cash used in financing activities decreased $1.9 million for thethree months ended March 31, 2025 compared to thethree months ended March 31, 2024 due to the increase in net borrowings under our credit facility of $7.0 million and an increase in net proceeds from sale of units to cover withholding tax payments on vesting of restricted units of $0.7 million partially offset by increased distributions of $5.8 million.
Removed paragraphs (40)
Previous report
•risks related to the Williston Acquisitions, including the risk that we may fail to realize the expected benefits of the Williston Acquisitions;
Previous report
Williston Basin Acquisitions
Previous report
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 report
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 report
Equity Offering
Previous report
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 report
Prior to our completion of the EMEP Acquisition in August 2024, EMEP incurred approximately $40 million of development capital on their planned program. At the time of the acquisition, there were several incomplete EMEP projects we expect to complete during the balance of the year. While it is too early to determine the full success of the EMEP capital program, we expect the average daily production on the Williston assets to consist of approximately 78% oil, 12% NGLs and 10% gas. We have hedged a portion of our underlying production to protect our distributions and the balance sheet.
Previous report
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 report
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 report
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 report
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 report
Taxes, transportation, and other decreased $0.8 million, or 5%, from $15.3 million for the three months ended September 30, 2023 to $14.5 million for the three months ended September 30, 2024. The decrease is primarily attributable to lower natural gas and oil prices partially offset by increased NGL prices and the increase in production.
Previous report
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 report
Depreciation, depletion, and amortization increased $3.0 million, or 28%, from $10.6 million for the three months ended September 30, 2023 to $13.6 million for the three months ended September 30, 2024. The increase is primarily attributable to the Williston Basin production.
Previous report
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 report
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 report
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 report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Previous report
(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 report
(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 report
(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 report
Revenues
Previous report
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 report
Production expenses
Previous report
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 report
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 report
Taxes, transportation, and other
Previous report
Taxes, transportation, and other decreased $16.0 million, or 27%, from $59.3 million for the nine months ended September 30, 2023 to $43.2 million for the nine months ended September 30, 2024. The decrease is primarily attributable to the decrease in natural gas, NGLs and oil prices and the decrease in production.
Previous report
Depreciation, depletion, and amortization
Previous report
Depreciation, depletion, and amortization increased $1.3 million, or 4%, from $33.1 million for the nine months ended September 30, 2023 to $34.4 million for the nine months ended September 30, 2024. The increase is primarily attributable to a higher rate, primarily due to Williston Basin production which has a higher rate than the historical properties, partially offset by decreased production.
Previous report
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 report
General and administrative
Previous report
Other income
Previous report
Interest expense
Previous report
Interest expense increased $0.6 million, or 19%, from $3.3 million for the nine months ended September 30, 2023 to $3.9 million for the nine months ended September 30, 2024. The increase is primarily attributable to the increased borrowings and a higher interest rate.
Previous report
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 report
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 report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Previous report
Net cash provided by operating activities increased $9.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to a decrease in net cash paid on our derivatives, partially offset by a decline in operating results, excluding the effects of derivatives, primarily due to lower production and lower natural gas, NGL and oil realizations partially offset by decreased costs.
Previous report
Net cash provided by financing activities increased $226.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to an increase in net borrowings under our Credit Facility of $222.0 million and increased net proceeds from public offering of $35.0 million partially offset by increased distributions to unitholders of $27.9 million and increased debt offering costs of $3.0 million.
Reworded paragraphs (25)
Previous wording
We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development and production of oil, natural gas and NGL. We disclose important factors that could cause our actual results to differ materially from our expectations as discussed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statement include:
Current wording
We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development and production of oil, natural gas and natural gas liquids (“NGL”). We disclose important factors that could cause our actual results to differ materially from our expectations as discussed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statement include:
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 the Williston Basin of Montana and North Dakota.
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 Coloradoand the Williston Basin of Montana and North Dakota.
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 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.
Current wording
The oil and natural gas industry is cyclical and commodity prices are highly volatile. For example, during the period from January 1, 2024 through March 31, 2025, NYMEX prices for crude oil and natural gas reached a high of $86.91 per Bbl and $4.49 per MMBtu, respectively, and a low of $65.75 per Bbl and $1.58 per MMBtu, respectively. Oil prices increased in the first half of 2024 due to hostilities in the Middle East and higher global consumption. However, increased supply led to lower prices in the second half of 2024 and into 2025. These declines accelerated in April due to the tariff announcement and the increased expectation for a global recession. WTI crude oil prices have been volatile reaching a high of $86.91 per Bbl in April 2024 before declining to $61.50 per Bbl as of April 11, 2025. Natural gas prices reached a high of $4.49 per MMbtu in March 2025 before declining to $3.53 per MMbtu as of April 11, 2025.
Previous 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.
Current 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 prioritize the repayment of debt incurred in 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.
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 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.
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 markets and other factors have contributed to increased economic uncertainty and diminished expectations for the global economy. Rising inflation has been pervasive for the last several years, increasing the cost of salaries, wages, supplies, material, freight, and energy. While we have seen inflation moderate, 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.
Previous 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.
Current wording
(1)Oil and condensate prices include both realized losses and unrealized gains and losses from derivatives. The unrealized gains were $3.1 million for the three months ended March 31, 2025 and the unrealized losses were $0.3 million for the three months ended March 31, 2024. The realized gains were $0.1 million for the three months ended March 31, 2025 and the realized losses were $2.5 million for the three months ended March 31, 2024.
Previous 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.
Current wording
(2)Natural gas liquids prices include both realized and unrealized gains and losses from derivatives. The unrealized losses were $0.0 million for the three months ended March 31, 2025 and $0.2 million for the three months ended March 31, 2024. There were no realized gains for the three months ended March 31, 2025 and $0.2 million for the three months ended March 31, 2024.
Previous 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.
Current wording
(3)Natural gas prices include both realized losses and unrealized gains and losses from derivatives. The unrealized losses were $10.6 million for the three months ended March 31, 2025 and $0.2 million for the three months ended March 31, 2024. The realized losses were $2.0 million for the three months ended March 31, 2025 and the realized gains were $1.9 million for the three months ended March 31, 2024.
Previous 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.
Current wording
Revenues increased $16.9 million, or 25%, from $67.4 million for thethree months ended March 31, 2024 to $84.3 million for thethree months ended March 31, 2025. The increase was primarily attributable to a 282 MBoe increase in production which resulted in a $23.2 million increase in revenue primarily as a result of the acquisition of producing assets in the Williston Basin being offset by natural declines in San Juan Basin and Permian Basin. Additionally, a 19% increase in the average selling price of natural gas, excluding the effects of derivatives, resulting in an increase in revenue of $4.1 million and an increase in the average selling price on NGLs of 27%, excluding the effects of derivatives, resulting in an increase in revenue of $1.8 million. These increases were partially offset by net losses on our hedging activity of $8.4 million, of which $6.9 million were unrealized losses and $1.5 million were realized losses, as well as a decrease in the average selling price, excluding the effects of derivatives, on oil of 9% resulting in a decrease in revenue of $3.7 million.
Previous 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.
Current wording
On a per unit basis, taxes, transportation, and other increased from $7.61 per Boe sold for thethree months ended March 31, 2024 to $7.68 per Boe sold for thethree months ended March 31, 2025. The increase is primarily related to the higher natural gas and NGLs prices and change in production mix.
Previous 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.
Current wording
On a per unit basis, depreciation, depletion, and amortization increased from $5.14 per Boe sold for thethree months ended March 31, 2024 to $9.20 per Boe sold for thethree months ended March 31, 2025. The increase is primarily related to the production associated withthe Williston Basin acquisitions which has a higher rate than the historical properties.
Previous 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.
Current wording
General and administrative (“G&A”) expenses decreased $0.2 million, or (8)%, from $2.7 million for thethree months ended March 31, 2024 to $2.4 million for thethree months ended March 31, 2025. The decrease is primarily attributable to lower personnel costs of $0.8 million partially offset by higher professional costs related to being public.
Previous 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.
Current wording
On a per unit basis, G&A expense decreased from $1.30 per Boe sold for thethree months ended March 31, 2024 to $1.05 per Boe sold for thethree months ended March 31, 2025. The decrease is related to increased production and lower costs.
Previous 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.
Current wording
Other income increased $1.1 million, or 13%, from $8.4 million for thethree months ended March 31, 2024 to $9.5 million for thethree months ended March 31, 2025. The increase is primarily attributable to a $2.4 million increase in bonus receipts on term assignments partially offset by lower CO 2 and plant income of $1.1 million and a $0.3 million decrease 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 $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.
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 $155.0 million at March 31, 2025 and $150.0 million at December 31, 2024, and the remaining availability under our Credit Facility was $120.0 million at March 31, 2025 and$125.0 million at December 31, 2024. Additionally, we had positive net working capital (including cash and excluding the effects of derivative instruments) of $6.4 million at March 31, 2025 and negative net working capital of$2.5 million at December 31, 2024.
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 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.
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. The first quarter distribution of $0.61 per unit with respect to cash available for distribution for the three months ended March 31, 2025, was declared on May 1, 2025 and will be paid May 23, 2025 to unitholders of record on May 16, 2025.
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 $273.0 million for the nine months ended September 30, 2024 and $40.5 million for the nine months ended September 30, 2023.
Current wording
Our acquisition and development expenditures consist of acquisitions of unproved and other property and development expenditures partially offset by final settlement on previous acquisition of proved property. Our capital expenditures including acquisitions were $6.8 million for thethree months ended March 31, 2025 and $3.0 million for thethree months ended March 31, 2024.
Previous wording
We incurred costs of approximately $15.7 million for drilling, completion and recompletion activities and facilities costs in the nine months ended September 30, 2024 and we have budgeted approximately $20.0 million for such costs in 2024.
Current wording
We incurred costs of approximately $6.9 million for drilling, completion and recompletion activities and facilities costs in thethree months ended March 31, 2025 and we have budgeted approximately $30.0 - $50.0 million for such costs in 2025.
Previous wording
Based on current commodity prices and our drilling success rate to date, we expect to be able to fund our distributions, meet our debt obligations and fund our 2024 capital development program and acquisitions from cash flow from operations, the Offering and borrowings under our Credit Facility.
Current wording
Based on current commodity prices and our drilling success rate to date, we expect to be able to fund our distributions, meet our debt obligations and fund our 2025 capital development programs from cash flow from operations and borrowings under our Credit Facility.
Previous wording
Net cash used by investing activities increased $232.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to an increase in proved property acquisitions of $252.2 million partially offset by decreased development costs of $19.7 million.
Current wording
Net cash used by investing activities increased $3.8 million for thethree months ended March 31, 2025 compared to thethree months ended March 31, 2024 due to an increase in development costs of $5.5 million and other asset additions of $0.1 million partially offset by final settlement of previous property acquisition of $1.8 million
Previous wording
At our election, interest on borrowings under the credit facility is determined by reference to either the secured overnight financing rate plus an applicable margin between 3.00% and 4.00% per annum (depending on the then-current level of borrowings under the Credit Facility) or the alternate base rate plus an applicable margin between 2.00% and 3.00% per annum (depending on the then-current level of borrowings under the Credit Facility). The weighted average interest rate on Credit Facility borrowings was 8.80% in the nine months ended September 30, 2024.
Current wording
At our election, interest on borrowings under the credit facility is determined by reference to either the secured overnight financing rate (“SOFR”) plus an applicable margin between 3.00% and 4.00% per annum (depending on the then-current level of borrowings under the Credit Facility) or the alternate base rate (“ABR”) plus an applicable margin between 2.00% and 3.00% per annum (depending on the then-current level of borrowings under the Credit Facility). The weighted average interest rate on Credit Facility borrowings was 8.0% in thethree months ended March 31, 2025.
Previous wording
We are required to maintain (i) a current ratio (the ratio of current assets to current liabilities) greater than 1.0 to 1.0, which for purposes of this definition includes availability under the Credit Facility but excludes the fair value of derivative instruments, and (ii) a ratio of total net debt-to-EBITDAX of not greater than 3.0 to 1.0. For purposes of the total net debt-to-EBITDAX ratio, total net debt is total debt for borrowed money (including capital leases and purchase money debt) minus unrestricted cash and cash equivalents on hand at such time (not exceeding$15.0 million in the aggregate), minus the unpaid balance of the FAM Loan. EBITDAX means the sum of (i) net income plus interest expense; income taxes paid; depreciation, depletion and amortization; exploration expenses, including workover expenses; non-cash charges including unrealized losses on derivative instruments; and, any extraordinary or non-recurring charges, minus (ii) any extraordinary or non-recurring income and any non-cash income including unrealized gains on derivative instruments.
Current wording
We are required to maintain (i) a current ratio (the ratio of current assets to current liabilities) greater than 1.0 to 1.0, which for purposes of this definition includes availability under the Credit Facility but excludes the fair value of derivative instruments, and (ii) a ratio of total net debt-to-EBITDAX of not greater than 3.0 to 1.0. For purposes of the total net debt- to-EBITDAX ratio, total net debt is total debt for borrowed money (including capital leases and purchase money debt) minus unrestricted cash and cash equivalents on hand at such time (not exceeding $15.0 million in the aggregate), minus the unpaid balance of the FAM Loan. EBITDAX means the sum of (i) net income plus interest expense; income taxes paid; depreciation, depletion and amortization; exploration expenses, including workover expenses; non-cash charges including unrealized losses on derivative instruments; and, any extraordinary or non-recurring charges, minus (ii) any extraordinary or non-recurring income and any non-cash income including unrealized gains on derivative instruments. Under the terms of the Credit Facility, we were in compliance with all of our debt covenants as of March 31, 2025. Additionally, we believe we have adequate liquidity to continue as a going concern for at least the next twelve months from the date of this report.
Previous wording
We had $148 million of debt outstanding and $127 million available under our Credit Facility as of September 30, 2024.
Current wording
We had $155.0 million debt outstanding and $120.0 million available under our Credit Facility as of March 31, 2025.
Previous wording
We have entered into derivative instruments to hedge our exposure to commodity price fluctuations. If market prices are higher than the contract prices when the cash settlement amount is calculated, we are required to pay the contract counterparties. As of September 30, 2024, the current liability related to such contracts was $1.3 million. Such payments will generally be funded by higher prices received from the sale of oil, NGLs and natural gas. For further information on derivative contracts, see Note 10 in the financial statements included elsewhere in this Quarterly Report.
Current wording
We have entered into derivative instruments to hedge our exposure to commodity price fluctuations. If market prices are higher than the contract prices when the cash settlement amount is calculated, we are required to pay the contract counterparties. As of March 31, 2025, the current liability related to such contracts was $25.6 million and the long-term liability related to such contracts was $8.5 million. Such payments will generally be funded by higher prices received from the sale of oil, NGLs and natural gas. For further information on derivative contracts, see Note 10 in the financial statements included elsewhere in this Quarterly Report.
Previous wording
At September 30, 2024, we had asset retirement obligations of $179.8 million inclusive of a current portion of $1.8 million. For further information on asset retirement obligations, see Note 7 in the financial statements included elsewhere in this Quarterly Report.
Current wording
At March 31, 2025, we had asset retirement obligations of $193.4 million inclusive of a current portion of $3.0 million. For further information on asset retirement obligations, see Note 7 in the financial statements included elsewhere in this Quarterly Report.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
The following table provides a summary of our sales volumes, average prices (both including and excluding the effects of derivatives) and operating expenses on a per Boe basis for the periods indicated:
Previous report — wording carried elsewhere
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.