TXO Partners, L.P.

Previous wording

Unless otherwise stated or the context indicates otherwise, references in this Quarterly Report to “our general partner” refers to TXO Partners GP, LLC, a Delaware limited liability company, and the terms “partnership,” the “Company,” “we,” “our,” “us” or similar terms refer to TXO Partners, L.P., a Delaware limited partnership (the "Partnership" or “TXO Partners”) and its subsidiaries. Unless otherwise indicated, throughout this discussion the term “MBoe” refers to thousands of barrels of oil equivalent quantities produced for the indicated period, with natural gas and NGL quantities converted to Bbl on an energy equivalent ratio of six Mcf to one barrel of oil.

Current wording

Unless otherwise stated or the context indicates otherwise, references in this Quarterly Report to “our general partner” refer to TXO Partners GP, LLC, a Delaware limited liability company, and the terms “partnership,” the “Company,” “we,” “our,” “us” or similar terms refer to TXO Partners, L.P., a Delaware limited partnership (the "Partnership" or “TXO Partners”) and its subsidiaries. Unless otherwise indicated, throughout this discussion the term “MBoe” refers to thousands of barrels of oil equivalent quantities produced for the indicated period, with natural gas and NGL quantities converted to Bbl on an energy equivalent ratio of six Mcf to one barrel of oil.

Previous wording

Some of the information in this Quarterly Report on Form 10-Q may contain “forward-looking statements.” All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “assume,” “forecast,” “could,” “should,” “will,” “plan,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “budget” and similar expressions are used to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events at the time such statement was made. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included in this Quarterly Report on Form 10-Q.

Current wording

Some of the information in this Quarterly Report on Form 10-Q may contain “forward-looking statements.” All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “assume,” “forecast,” “could,” “should,” “will,” “plan,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “budget” and similar expressions are used to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events at the time such statement was made. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026, as amended.

Previous wording

On April 1, 2026, the first Cross Timbers Transaction closed resulting in net proceeds of approximately $8.2 million, subject to customary purchase price adjustments.

Current wording

On April 1, 2026, the first Cross Timbers Transaction closed resulting in net proceeds of approximately $8.4 million.

Previous wording

On April 30, 2026, the second Cross Timbers Transaction closed resulting in net proceeds of approximately $30.8 million, subject to customary purchase price adjustments.

Current wording

On April 30, 2026, the second Cross Timbers Transaction closed resulting in net proceeds of approximately $30.9 million.

Previous wording

On May 28, 2026, the final Cross Timbers Transaction with CTOC closed resulting in net proceeds to TXO Partners of approximately $59.4 million, subject to customary purchase price adjustments.

Current wording

On May 28, 2026, the final Cross Timbers Transaction with CTOC closed resulting in net proceeds to TXO Partners of approximately $60.0 million.

Previous wording

As of June 30, 2026, we had not received our share of the proceeds from the Cross Timbers Transactions. Instead, the proceeds were held as cash at Cross Timbers Energy and our share is included as cash and cash equivalents on the June 30, 2026, balance sheet. However, in July 2026, we began the process of winding down Cross Timbers Energy. As part of the initial wind down, we received an initial distribution from Cross Timbers Energy of $95.0 million. We used a portion of the net proceeds to pay the $70.0 million deferred payment for our 2025 purchase of assets from White Rock Energy, LLC, due on July 31, 2026. The remainder of the initial distribution was used to pay down debt under our Credit Facility.

Current wording

In July 2026, we began the process of winding down Cross Timbers Energy. As part of the initial wind down, we received an initial distribution from Cross Timbers Energy of $95.0 million. We used a portion of the net proceeds to pay the $70.0 million deferred payment for our 2025 purchase of assets from White Rock Energy, LLC, which was due on July 31, 2026. The remainder of the initial distribution was used to pay down debt under our Credit Facility.

Previous wording

The oil and natural gas industry is cyclical and commodity prices are highly volatile. For example, during the period from January 1, 2025 through June 30, 2026, NYMEX prices for crude oil and natural gas reached a high of $112.95 per Bbl and $7.46 per MMBtu, respectively, and a low of $55.27 per Bbl and $2.52 per MMBtu, respectively. Oil prices increased in the first half of 2026 due to hostilities in the Middle East which led to unexpected production cuts and supply constraints. These increases began to moderate in April 2026 due to the cease fire announcement, however, oil prices are increasing again with the resumption of hostilities, and oil prices remain volatile.

Current wording

The oil and natural gas industry is cyclical and commodity prices are highly volatile. For example, during the period from January 1, 2025 through September 30, 2026, NYMEX prices for crude oil and natural gas reached a high of $112.95 per Bbl and $7.46 per MMBtu, respectively, and a low of $55.27 per Bbl and $2.52 per MMBtu, respectively. Oil prices increased in the first half of 2026 due to hostilities in the Middle East which led to unexpected production cuts and supply constraints. While direct hostilities have dissipated, the continuing supply constraints due to difficulties transiting the Strait of Hormuz have continued to keep oil prices elevated.

Previous wording

We expect the crude oil and natural gas markets will continue to be volatile in the future. Our revenue, profitability and future growth are highly dependent on the prices we receive for our oil and natural gas production. Please see “Risk Factors--Risks Related to the Natural Gas, NGL and Oil Industry and Our Business--Commodity prices are volatile--A sustained decline in commodity prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.”

Current wording

We expect the crude oil and natural gas markets will continue to be volatile in the future. Our revenue, profitability and future growth are highly dependent on the prices we receive for our oil and natural gas production. Please see “Risk Factors--Risks Related to the Natural Gas, NGL and Oil Industry and Our Business--Commodity prices are volatile--A sustained decline in commodity prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

With our anticipated cash flows from our long-lived property base, we intend to allocate 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. 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, we may modify our capital budget or cash distribution policy. 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 allocate 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. From time to time, we may choose to prioritize the repayment of debt to support the longer-term financial stewardship of our business. At other times, we may modify our capital budget or cash distribution policy. 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, war, geopolitical issues, inflation, tariffs, 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, diesel 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, war, geopolitical issues, inflation, tariffs, 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 may be insufficient. Nevertheless, we expect for the foreseeable future to experience inflationary pressure on our cost structure. Principally, commodity costs for steel, diesel 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 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 wording

We are taking actions to mitigate inflationary pressures. We are working closely with our 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 may be insufficient.

Previous wording

Cash available for distribution is not a measure of net income or net cash flow provided by or used in operating activities as determined by GAAP. Cash available for distribution is a supplemental non-GAAP financial measure used by our management and by external users of our financial statements, such as investors, lenders and others (including industry analysts and rating agencies who will be using such measure), to assess our ability to internally fund our exploration and development activities, pay distributions, and to service or incur additional debt. We define cash available for distribution as Adjusted EBITDAX less net cash interest expense, exploration expense, non-recurring (gain) / loss and development costs. Development costs include all of our capital expenditures made for oil and gas properties, other than acquisitions. Cash available for distribution will not reflect changes in working capital balances. Cash available for distribution is not a measurement of our financial performance or liquidity under GAAP and should not be considered as an alternative to, or more meaningful than, net income (loss) or net cash provided by or used in operating activities as determined in accordance with GAAP or as indicators of our financial performance and liquidity. The GAAP measures most directly comparable to cash available for distribution are net income and net cash provided by operating activities. Cash available for distribution should not be considered as an alternative to, or more meaningful than, net income or net cash provided by operating activities.

Current wording

Cash available for distribution is not a measure of net income or net cash flow provided by or used in operating activities as determined by GAAP. Cash available for distribution is a supplemental non-GAAP financial measure used by our management and by external users of our financial statements, such as investors, lenders and others (including industry analysts and rating agencies who will be using such measure), to assess our ability to internally fund our exploration and development activities, pay distributions, and to service or incur additional debt. We define cash available for distribution as Adjusted EBITDAX less net cash interest expense, exploration expense, non-recurring (gain) / loss and development costs. Development costs include all of our capital expenditures made for oil and gas properties, other than acquisitions. Cash available for distribution will not reflect changes in working capital balances. Cash available for distribution is not a measurement of our financial performance or liquidity under GAAP and should not be considered as an alternative to, or more meaningful than, net income (loss) or net cash provided by or used in operating activities as determined in accordance with GAAP or as indicators of our financial performance and liquidity. The GAAP measures most directly comparable to cash available for distribution are net income (loss) and net cash provided by operating activities. Cash available for distribution should not be considered as an alternative to, or more meaningful than, net income (loss) or net cash provided by operating activities.

Previous wording

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:

Current wording

The following table provides a summary of our sales volumes, average prices (both including and excluding the effects of derivatives, and including the effects of realized derivatives only) and operating expenses on a per Boe basis for the periods indicated:

Previous wording

Oil and condensate prices include both realized gains and losses and unrealized gains from derivatives. Unrealized gains were $41.9 million for the three months ended June 30, 2026 and $3.3 million for the three months ended June 30, 2025. Realized losses were $28.5 million for the three months ended June 30, 2026 and realized gains were $2.0 million for the three months ended June 30, 2025.

Current wording

Oil and condensate prices include both realized gains and losses and unrealized losses from derivatives. Unrealized losses were $39.4 million for the three months ended September 30, 2026 and unrealized gains were $0.3 million for the three months ended September 30, 2025. Realized losses were $22.4 million for the three months ended September 30, 2026 and $0.1 million for the three months ended September 30, 2025.

Previous wording

Natural gas liquids prices include both realized gains and unrealized gains and losses from derivatives. Unrealized gains were $16.0 thousand for the three months ended June 30, 2026 and $12.0 thousand for the three months ended June 30, 2025. There were no realized gains for the three months ended June 30, 2026 and no realized gains for the three months ended June 30, 2025.

Current wording

Natural gas liquids prices include unrealized gains and losses from derivatives. Unrealized losses were $14.0 thousand for the three months ended September 30, 2026 and unrealized gains were $15.0 thousand for the three months ended September 30, 2025.

Previous wording

Natural gas prices include both realized gains and unrealized gains and losses from derivatives. Unrealized losses were $2.3 million for the three months ended June 30, 2026 and unrealized gains were $4.1 million for the three months ended June 30, 2025. Realized gains were $5.3 million for the three months ended June 30, 2026 and $5.4 million for the three months ended June 30, 2025.

Current wording

Natural gas prices include both realized and unrealized gains from derivatives. Unrealized gains were $2.1 million for the three months ended September 30, 2026 and $6.9 million for the three months ended September 30, 2025. Realized gains were $1.8 million for the three months ended September 30, 2026 and $3.1 million for the three months ended September 30, 2025.

Previous wording

Revenues increased $61.0 million, or 68%, from $89.9 million for the three months ended June 30, 2025 to $150.9 million for the three months ended June 30, 2026. Revenue increased $32.0 million due to an increase in production of 228 MBoe primarily as a result of the acquisition of producing assets in the Williston Basin of 492 MBoe being partially offset by the decreased production due to the sale of Cross Timbers Energy assets of 201 MBoe and natural declines in the San Juan Basin and Permian Basin. Additionally, an increase in the average selling price on oil, excluding the effects of derivatives, of 58% resulted in an increase in revenue of $31.3 million and an increase in the average selling price on NGLs, excluding the effects of derivatives, of 30% which resulted in an increase in revenue of $2.3 million. Finally, we recognized net gains on our hedging activity of $1.6 million, of which $32.2 million were unrealized gains and $30.6 million were realized losses. These increases were partially offset by a 47% decrease in the average selling price of natural gas, excluding the effects of derivatives, which resulted in a decrease in revenue of $6.3 million.

Current wording

Revenues decreased $45.8 million, or 45%, from $100.9 million for the three months ended September 30, 2025 to $55.1 million for the three months ended September 30, 2026. Revenue decreased $68.3 million due to the change in results from our hedging activity, from net gains of $10.3 million for the three months ended September 30, 2025 to net losses of $57.9 million for the three months ended September 30, 2026, of which $44.6 million related to the change in unrealized results and $23.7 million related to the change in realized results. Additionally, a 10% decrease in the average selling price of natural gas, excluding the effects of derivatives, resulted in a decrease in revenue of $1.7 million. Finally, revenue decreased $1.5 million due to a decrease in production of 293 MBoe primarily as a result of the sale of Cross Timbers Energy assets and natural decline in the San Juan Basin partially offset by increased production in the Williston Basin and Permian Basin. These decreases were partially offset by increases in the average selling prices, excluding the effects of derivatives, of oil of 34% which resulted in an increase in revenue of $22.5 million and of NGLs of 42% which resulted in an increase in revenue of $3.1 million.

Previous wording

On a per unit basis, production expenses decreased from $18.23 per Boe sold for the six months ended June 30, 2025 to $16.21 per Boe sold for the six months ended June 30, 2026. The decrease is primarily related to the increase in production of 805 MBoe and decreased costs attributable to lost production due to the Cross Timbers Energy asset sale partially offset by increased costs attributable to production from the Williston Acquisition.

Current wording

On a per unit basis, production expenses increased from $18.23 per Boe sold for the three months ended September 30, 2025 to $18.73 per Boe sold for the three months ended September 30, 2026. The increase is primarily related to a decrease in production of 293 MBoe partially offset by decreased costs principally attributable to the Cross Timbers Energy sale.

Previous wording

Taxes, transportation, and other increased $4.5 million, or 29%, from $15.2 million for the three months ended June 30, 2025 to $19.7 million for the three months ended June 30, 2026. The increase is primarily attributable to the increase in production and higher oil and NGL prices partially offset by decreased natural gas prices.

Current wording

Taxes, transportation, and other increased $1.8 million, or 11%, from $16.6 million for the three months ended September 30, 2025 to $18.4 million for the three months ended September 30, 2026. The increase is primarily attributable to higher oil and NGL prices partially offset by the decrease in production and lower natural gas prices.

Previous wording

On a per unit basis, taxes, transportation, and other increased from $6.43 per Boe sold for the three months ended June 30, 2025 to $7.59 per Boe sold for the three months ended June 30, 2026. The increase is primarily related to increased costs partially offset by increased production.

Current wording

On a per unit basis, taxes, transportation, and other increased from $6.34 per Boe sold for the three months ended September 30, 2025 to $7.90 per Boe sold for the three months ended September 30, 2026. The increase is primarily related to increased costs, a change in production mix and decreased production.

Previous wording

Depreciation, depletion, and amortization (“DD&A”) increased $2.3 million, or 11%, from $21.7 million for the three months ended June 30, 2025 to $24.0 million for the three months ended June 30, 2026. The increase is primarily attributable to the DD&A from increased production associated with the Williston Basin acquisitions which has a higher rate than the historical properties partially offset by decreased production on our historical properties and the sale of Cross Timbers Energy.

Current wording

Depreciation, depletion, and amortization (“DD&A”) increased $0.5 million, or 2%, from $23.7 million for the three months ended September 30, 2025 to $24.2 million for the three months ended September 30, 2026. The increase is primarily attributable to the DD&A from increased production associated with the Williston Basin acquisitions of $5.6 million, which has a higher rate than the historical properties partially offset by the sale of Cross Timbers Energy assets and decrease in production in the San Juan Basin.

Previous wording

On a per unit basis, depreciation, depletion, and amortization increased from $9.16 per Boe sold for the three months ended June 30, 2025 to $9.23 per Boe sold for the three months ended June 30, 2026. The increase is primarily related to the production associated with the Williston Basin acquisitions, which has a higher rate than the historical properties.

Current wording

On a per unit basis, depreciation, depletion, and amortization increased from $9.02 per Boe sold for the three months ended September 30, 2025 to $10.39 per Boe sold for the three months ended September 30, 2026. The increase is primarily related to the production associated with the Williston Basin acquisitions, which has a higher rate than the historical properties.

Previous wording

General and administrative (“G&A”) expenses decreased $4.7 million, or 50%, from $9.5 million for the three months ended June 30, 2025 to $4.8 million for the three months ended June 30, 2026. The decrease is primarily attributable to lower personnel costs of $4.0 million, principally due to decreased amortization of unit-based compensation.

Current wording

General and administrative (“G&A”) expenses decreased $0.9 million, or 19%, from $4.8 million for the three months ended September 30, 2025 to $3.9 million for the three months ended September 30, 2026. The decrease is primarily attributable to lower professional fees.

Previous wording

On a per unit basis, G&A expense decreased from $2.53 per Boe sold for the six months ended June 30, 2025 to $1.74 per Boe sold for the six months ended June 30, 2026. The decrease is primarily related to decreased costs and increased production.

Current wording

On a per unit basis, G&A expense decreased from $1.84 per Boe sold for the three months ended September 30, 2025 to $1.69 per Boe sold for the three months ended September 30, 2026. The decrease is primarily related to decreased costs partially offset by decreased production.

Previous wording

Other income increased $2.6 million, or 45%, from $5.9 million for the three months ended June 30, 2025 to $8.5 million for the three months ended June 30, 2026. The increase is primarily attributable to the gain on the Cross Timbers Energy asset sale of $1.6 million and bonus payments from term leases of $1.4 million partially offset by lower CO 2 and plant income of $0.5 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 $6.7 million, or 135%, from $5.0 million for the three months ended September 30, 2025 to $11.7 million for the three months ended September 30, 2026. The increase is primarily attributable to higher CO 2 and plant income of $4.1 million due to the absence of third-party pipeline disruptions and lease bonus on term lease assignment of $2.0 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 $3.0 million, or 117%, from $2.6 million for the three months ended June 30, 2025 to $5.6 million for the three months ended June 30, 2026. The increase is primarily attributable to increased borrowings and amortization of capitalized debt costs partially offset by a lower average interest rate.

Current wording

Interest expense increased $1.0 million, or 23%, from $4.5 million for the three months ended September 30, 2025 to $5.5 million for the three months ended September 30, 2026. The increase is primarily attributable to increased borrowings partially offset by a lower average interest rate.

Previous wording

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:

Current wording

The following table provides a summary of our sales volumes, average prices (both including and excluding the effects of derivatives, and including the effects of realized derivatives only) and operating expenses on a per Boe basis for the periods indicated:

Previous wording

Oil and condensate prices include both realized gains and losses and unrealized gains from derivatives. Unrealized losses were $42.2 million for the six months ended June 30, 2026 and unrealized gains were $6.4 million for the six months ended June 30, 2025. Realized losses were $36.8 million for the six months ended June 30, 2026 and realized gains were $2.1 million for the six months ended June 30, 2025.

Current wording

Oil and condensate prices include both realized and unrealized gains and losses from derivatives. Unrealized losses were $81.6 million for the nine months ended September 30, 2026 and unrealized gains were $6.7 million for the nine months ended September 30, 2025. Realized losses were $59.2 million for the nine months ended September 30, 2026 and realized gains were $2.0 million for the nine months ended September 30, 2025.

Previous wording

Revenues increased $4.9 million, or 3%, from $174.2 million for the six months ended June 30, 2025 to $179.1 million for the six months ended June 30, 2026. The increase was primarily attributable to a 805 MBoe increase in production which resulted in a $63.5 million increase in revenue primarily as a result of the acquisition of producing assets in the Williston Basin of 1,058 MBoe partially offset by the decreased production due to the sale of Cross Timbers Energy assets of 201 MBoe and natural declines in San Juan Basin and Permian Basin. Additionally, a 27% increase in the average selling price of oil, excluding the effects of derivatives, resulted in an increase of revenue of $30.6 million. These increases were partially offset by net losses on our hedging activity of $80.2 million, of which $35.9 million were unrealized losses and $44.3 million were realized losses. Finally, a decrease in the average selling price, excluding the effects of derivatives, on gas of 24% resulted in a decrease in revenue of $9.0 million.

Current wording

Revenues decreased $40.8 million, or 15%, from $275.1 million for the nine months ended September 30, 2025 to $234.2 million for the nine months ended September 30, 2026. The decrease was primarily attributable to the change in results from our hedging activity of $148.4 million, from net gains of $15.7 million for the nine months ended September 30, 2025 to net losses of $132.8 million for the nine months ended September 30, 2026, of which $80.4 million related to the change in unrealized results and $68.0 million related to the change in realized results. Additionally, a 20% decrease in the average selling price of natural gas, excluding the effects of derivatives, resulted in a decrease in revenue of $10.8 million. These decreases were partially offset by a 512 MBoe increase in production which resulted in a $62.7 million increase in revenue primarily as a result of the acquisition of producing assets in the Williston Basin and new wells drilled under our capital program, partially offset by the sale of Cross Timbers Energy assets and natural declines in the San Juan Basin. Also, increases in the average selling prices, excluding the effects of derivatives, of oil of 29% and NGLs of 12% resulted in increases in revenue of $52.8 million on oil and $2.9 million on NGLs.

Previous wording

On a per unit basis, production expenses decreased from $18.30 per Boe sold for the three months ended June 30, 2025 to $15.97 per Boe sold for the three months ended June 30, 2026. The decrease is primarily related to decreased costs principally attributable to the Cross Timbers Energy sale and an increase in production of 228 MBoe.

Current wording

On a per unit basis, production expenses decreased from $18.23 per Boe sold for the nine months ended September 30, 2025 to $16.96 per Boe sold for the nine months ended September 30, 2026. The decrease is primarily related to decreased costs principally attributable to the Cross Timbers Energy sale and an increase in production of 512 MBoe.

Previous wording

Taxes, transportation, and other increased $6.4 million, or 19%, from $33.1 million for the six months ended June 30, 2025 to $39.5 million for the six months ended June 30, 2026. The increase is primarily attributable to the increase in production and oil prices partially offset by decreased natural gas and NGL prices.

Current wording

Taxes, transportation, and other increased $8.1 million, or 16%, from $49.8 million for the nine months ended September 30, 2025 to $57.9 million for the nine months ended September 30, 2026. The increase is primarily attributable to the increase in production, as well as an increase in oil and NGL prices, partially offset by decreased natural gas prices.

Previous wording

On a per unit basis, taxes, transportation, and other increased from $7.05 per Boe sold for the six months ended June 30, 2025 to $7.17 per Boe sold for the six months ended June 30, 2026. The increase is primarily attributable to increased costs partially offset by increased production.

Current wording

On a per unit basis, taxes, transportation, and other increased from $6.80 per Boe sold for the nine months ended September 30, 2025 to $7.39 per Boe sold for the nine months ended September 30, 2026. The increase is primarily attributable to increased costs partially offset by increased production.

Previous wording

Depreciation, depletion, and amortization increased $9.7 million, or 22%, from $43.1 million for the six months ended June 30, 2025 to $52.8 million for the six months ended June 30, 2026. The increase is attributable to the DD&A from increased production associated with the Williston Basin acquisitions, which has a higher rate than the historical properties partially offset by decreased production on the historical properties and the sale of Cross Timbers Energy.

Current wording

Depreciation, depletion, and amortization increased $10.2 million, or 15%, from $66.8 million for the nine months ended September 30, 2025 to $77.0 million for the nine months ended September 30, 2026. The increase is attributable to the DD&A from increased production associated with the Williston Basin acquisitions of $22.6 million, which has a higher rate than the historical properties partially offset by the Cross Timbers Energy sale and decreased production in the San Juan Basin.

Previous wording

On a per unit basis, depreciation, depletion, and amortization increased from $9.18 per Boe sold for the six months ended June 30, 2025 to $9.60 per Boe sold for the six months ended June 30, 2026. The increase is primarily related to the production associated with the Williston Basin acquisitions, which has a higher rate than the historical properties.

Current wording

On a per unit basis, depreciation, depletion, and amortization increased from $9.12 per Boe sold for the nine months ended September 30, 2025 to $9.83 per Boe sold for the nine months ended September 30, 2026. The increase is primarily related to the production associated with the Williston Basin acquisitions, which has a higher rate than the historical properties.

Previous wording

General and administrative (“G&A”) expenses decreased $2.3 million, or 20%, from $11.9 million for the six months ended June 30, 2025 to $9.6 million for the six months ended June 30, 2026. The decrease is primarily attributable to lower personnel costs of $2.4 million, principally due to decreased amortization of unit-based compensation.

Current wording

General and administrative (“G&A”) expenses decreased $3.2 million, or 19%, from $16.7 million for the nine months ended September 30, 2025 to $13.5 million for the nine months ended September 30, 2026. The decrease is primarily attributable to lower personnel costs of $2.5 million and lower professional fees.

Previous wording

On a per unit basis, G&A expense decreased from $3.99 per Boe sold for the three months ended June 30, 2025 to $1.83 per Boe sold for the three months ended June 30, 2026. The decrease is primarily related to decreased costs and increased production.

Current wording

On a per unit basis, G&A expense decreased from $2.28 per Boe sold for the nine months ended September 30, 2025 to $1.72 per Boe sold for the nine months ended September 30, 2026. The decrease is primarily related to decreased costs and increased production.

Previous wording

Other income increased $2.0 million, or 13%, from $15.4 million for the six months ended June 30, 2025 to $17.3 million for the six months ended June 30, 2026. The increase is primarily attributable to the gain on the Cross Timbers Energy asset sale of $1.6 million and increased marketing income of $1.4 million partially offset by lower CO 2 and plant income of $2.1 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.

Current wording

Other income increased $8.7 million, or 43%, from $20.4 million for the nine months ended September 30, 2025 to $29.1 million for the nine months ended September 30, 2026. The increase is primarily attributable to increased marketing income of $2.2 million, $2.1 million in bonus payments on term assignment of leases, higher CO 2 and plant income of $2.0 million and the $1.4 million gain on sale of Cross Timbers Energy assets. 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 $5.1 million, or 83%, from $6.2 million for the six months ended June 30, 2025 to $11.3 million for the six months ended June 30, 2026. The increase is primarily attributable to the increased borrowings and amortization of capitalized loan costs partially offset by a lower average interest rate.

Current wording

Interest expense increased $6.1 million, or 57%, from $10.7 million for the nine months ended September 30, 2025 to $16.8 million for the nine months ended September 30, 2026. The increase is primarily attributable to the increased borrowings and amortization of capitalized loan costs partially offset by a lower average interest rate.

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 $263.0 million at June 30, 2026 and $284.0 million at December 31, 2025, and the remaining availability under our Credit Facility was $147.0 million at June 30, 2026 and $126.0 million at December 31, 2025. Additionally, we had positive net working capital (including cash and excluding the effects of derivative instruments) of $22.1 million at June 30, 2026 and negative net working capital of $71.8 million at December 31, 2025. The positive working capital of $22.1 million at June 30, 2026 is primarily related to the cash held at Cross Timbers Energy partially offset by the $70.0 million deferred payment on the Williston Acquisition that was due July 31, 2026. The negative working capital of $71.8 million at December 31, 2025 is primarily related to the $70.0 million deferred payment on the Williston Acquisition.

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 $264.0 million at September 30, 2026 and $284.0 million at December 31, 2025, and the remaining availability under our Credit Facility was $146.0 million at September 30, 2026 and $126.0 million at December 31, 2025. Additionally, we had negative net working capital (including cash and excluding the effects of derivative instruments) of $14.4 million at September 30, 2026 and negative net working capital of $71.8 million at December 31, 2025. The negative working capital of $71.8 million at December 31, 2025 is primarily related to the $70.0 million deferred payment on the WRE Acquisition that was due July 31, 2026.

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 $0.40 per unit with respect to cash available for distribution for the three months ended June 30, 2026, was declared on August 4, 2026 and will be paid on August 21, 2026 to unitholders of record on August 14, 2026.

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 $0.44 per unit with respect to cash available for distribution for the three months ended September 30, 2026, was declared on November 3, 2026 and will be paid on November 20, 2026 to unitholders of record on November 13, 2026.