MACH NATURAL RESOURCES LP

Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023

Revenue

The following table provides the components of our revenue, net of transportation and marketing costs for the periods indicated, as well as each period’s respective average realized prices and net production volumes. Some totals and changes throughout the below section may not sum or recalculate due to rounding.

(1)Not Meaningful

Revenue and Other Operating Income

Oil, natural gas and NGL sales

Revenues from oil, natural gas and NGL sales increased $289.4 million, or 45%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023. This increase was primarily related to a 72% production increase, which resulted in increased oil, natural gas and NGL sales of $336.1 million. These increases were slightly offset with an overall decrease in the average selling price of our products, which resulted in a decrease in oil, natural gas, and NGL sales of $46.7 million.

Oil, natural gas and NGL production

Production increased 13,320 MBoe, or 72%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase was primarily a result of acquisitions and the Corporate Reorganization which added approximately 15,864 MBoe, offset by natural declines on existing wells.

Oil and natural gas derivatives

For the year ended December 31, 2024, we had realized gains on derivative instruments of $17.5 million and unrealized losses of $36.3 million for total losses of $18.9 million. For the year ended December 31, 2023, we had realized gains on derivative instruments of $8.4 million and unrealized gains of $48.8 million for total gains of $57.3 million. The change in unrealized (losses) gains for the year ended December 31, 2024, as compared to the year ended December 31, 2023, is primarily due to new derivatives added in conjunction with the closing of acquisitions subsequent to December 31, 2023. The increase in realized gains is primarily from the overall decrease in oil and gas prices in 2024.

Midstream revenue

Midstream revenue decreased $2.0 million, or 8%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to lower third-party volumes flowing through our midstream facilities for the year ended December 31, 2024, as compared to the year ended December 31, 2023.

Product sales

Product sales decreased $4.0 million, or 13%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023. This decrease was primarily due to the decreases in third-party volume resulting in lower overall product sales of $4.5 million. This decrease was partially offset with an increase in average selling price of our NGLs. These changes corresponded with the decrease in our cost of product sales noted below.

Operating Expenses

The following table summarizes our expenses for the periods indicated and includes a presentation of certain expenses on a per Boe basis, as we use this information to evaluate our performance relative to our peers and to identify and measure trends we believe may require additional analysis:

Gathering and processing expense

Gathering and processing expense increased by $66.7 million, or 169%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily as a result of the Corporate Reorganization and acquisitions that closed in 2023, which contributed to increased gathering and processing costs of $68.2 million. The increase in gathering expense per Boe is due to BCE-Mach having higher gathering and processing costs per Boe than the Predecessor.

Lease operating expense

Lease operating expense increased $52.9 million, or 41%,for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily as a result of acquisitions and the Corporate Reorganization in 2023, which increased lease operating expenses by $66.4 million. These increases were partially offset with a $16.5 million reduction in lease operating expense associated with our Predecessor’s lease operating expense, which was driven by a decrease in workover expense, utilities, and contract services. Lease operating expenses per Boe decreased by $1.24, primarily a result of the lower cost profiles of acquired properties from 2023, and the increase in production from acquired properties as discussed above.

Production taxes

Production taxes increased $13.8 million, or 43%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023. This increase was primarily a result of increased production which resulted in additional production taxes of $16.0 million, partially offset with a decrease in pricing, which resulted in lower production taxes of $2.2 million. Production taxes as a percentage of oil, natural gas and NGL sales were consistent from year to year.

Midstream operating expense

Midstream operating expense decreased $0.4 million, or 4%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, which is in line with the decrease in associated midstream revenue.

Cost of product sales

Cost of product sales decreased $4.1 million, or 14%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023. This decrease was primarily a result of decreases in third-party volume resulting in lower overall cost of product sales of $4.5 million. This decrease was partially offset with an increase in the average purchase price of NGLs. These changes corresponded with the decrease in our product sales noted above.

Depreciation, depletion, amortization and accretion expense

Depreciation, depletion, amortization and accretion expense for oil and natural gas properties increased by $130.8 million, or 100%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase is primarily a result of acquisitions and the Corporate Reorganization in 2023 that increased the amortization base.

General and administrative costs

General and administrative costs increased $13.2 million, or 48%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase in general and administrative costs was primarily a result of the Corporate Reorganization which added approximately $5.9 million in general and administrative expense. Additionally there was an increase in our consulting and professional services of $6.1 million due to higher legal costs and additional public company expenses.

Non-GAAP Financial Measures

Adjusted EBITDA

We include in this Annual Report the supplemental non-GAAP financial performance measure Adjusted EBITDA and provide our calculation of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, our most directly comparable financial measures calculated and presented in accordance with GAAP. We define Adjusted EBITDA as net income before (1) interest expense, net, (2) depreciation, depletion, amortization and accretion, (3) unrealized loss (gain) on derivative instruments, (4) equity-based compensation expense, (5) credit losses and (6) (gain) loss on sale of assets, net.

Adjusted EBITDA is used as a supplemental financial performance measure by our management and by external users of our financial statements, such as industry analysts, investors, lenders, rating agencies and others, to more effectively evaluate our operating performance and our results of operation from period to period and against our peers without regard to financing methods, capital structure or historical cost basis. We exclude the items listed above from net income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as indicators of our operating performance. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax burden, as well as the historic costs of depreciable assets, none of which are reflected in Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our results will be unaffected by unusual items. Our computations of Adjusted EBITDA may not be identical to other similarly titled measures of other companies.

Cash Available for Distribution

Cash available for distribution is not a measure of net income or net cash flow provided by or used in operating activities as determined by GAAP. Cash available for distribution is a supplemental non-GAAP financial performance measure used by our management and by external users of our financial statements, such as industry analysts, investors, lenders, rating agencies and others, to assess our ability to internally fund our exploration and development activities, pay distributions, and to service or incur additional debt. We define cash available for distribution as net income adjusted for (1) interest expense, net, (2) depreciation, depletion, amortization and accretion, (3) unrealized loss (gain) on derivative instruments, (4) equity-based compensation expense, (5) credit losses, (6) (gain) loss on sale of assets, net, (7) settlement of asset retirement obligations, (8) cash interest expense, net (9) development costs and (10) change in accrued realized derivative settlements. Development costs include all of our capital expenditures, other than acquisitions. Cash available for distribution will not reflect changes in working capital balances. Cash available for distribution is not a measurement of our financial performance or liquidity under GAAP and should not be considered as an alternative to, or more meaningful than, net income or net cash provided by or used in operating activities as determined in accordance with GAAP or as indicators of our financial performance and liquidity. The GAAP measures most directly comparable to cash available for distribution are net income and net cash provided by operating activities. Cash available for distribution should not be considered as an alternative to, or more meaningful than, net income or net cash provided by operating activities.

Reconciliations of GAAP Financial Measures to Adjusted EBITDA and Cash Available for Distribution

The following table presents our reconciliation of the GAAP financial measures of net income and net cash provided by operating activities to the non-GAAP financial measures Adjusted EBITDA and cash available for distribution, as applicable, for each of the periods indicated.

Reconciliation of PV-10 to Standardized Measure

Certain of our oil and natural gas reserve disclosures included in this Annual Report are presented on a PV-10 basis. PV-10 is a non-GAAP financial measure and represents the estimated present value of the future cash flows less future development and production costs from our proved reserves before income taxes discounted using a 10% discount rate. PV-10 of proved reserves generally differs from the standardized measure of discounted future net cash flows from production of proved oil and natural gas reserves (the “Standardized Measure”), the most directly comparable GAAP financial measure, because it does not include the effects of future income taxes, as is required under GAAP in computing the Standardized Measure. The Company is a limited partnership treated as a partnership for federal and state income tax purposes, and accordingly is not subject to entity level taxation. However, the Company does pay franchise taxes in the state of Texas, which are represented as income taxes in the calculation of the Company’s Standardized Measure in Note 17 in our financial statements.

We believe that the presentation of a pre-tax PV-10 value provides relevant and useful information because it is widely used by investors and analysts as a basis for comparing the relative size and value of our proved reserves to other oil and natural gas companies. Because many factors that are unique to each individual company may impact the amount and timing of future income taxes, the use of PV-10 value provides greater comparability when evaluating oil and natural gas companies. The PV-10 value is not a measure of financial or operating performance under GAAP, nor is it intended to represent the current market value of proved oil and gas reserves. However, the definition of PV-10 value as defined above may differ significantly from the definitions used by other companies to compute similar measures. As a result, the PV-10 value as defined may not be comparable to similar measures provided by other companies.

Investors should be cautioned that neither PV-10 nor Standardized Measure of proved reserves represents an estimate of the fair market value of our proved reserves. We and others in the industry use PV-10 as a measure to compare the relative size and value of estimated reserves held by companies without regard to the specific tax characteristics of such entities.