Mach Natural Resources (MNR) 14 May 242024 Q1 Earnings call transcript

Good morning, everyone. Thank you for joining today's call to discuss Mach Natural Resources First Quarter 2024 Financial and Operational Results.

During this morning's call, the speakers will be making forward-looking statements that cannot be confirmed by reference to existing information, including statements regarding expectations, projections, future performance and the assumptions underlying such statements.

Please note, a number of factors will cause actual results to differ materially from the forward-looking statements, including the factors identified and discussed in the press release this morning and other SEC filings.

For a further discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements, please read the company's annual report on Form 10-K, which is available on the company's website or the SEC's website.

statements. as any law, should forward-looking undue on except duty undertake not that reliance update to statements, such recognize required they by no place Please and you

measures filed. is They on and in when non-GAAP may the Mach's measures most reference website measures. the also their on comparable to some website which their refer non-GAAP press financial today's for release, be reconciliations to available discussion from GAAP Please which directly XX-Q, financial is available

Today's Ward, introduction CFO. overview. call financial Tom for speakers will Kevin Tom then open and Mach's White, are questions. Kevin and CEO; discuss give the and an be results, will will

to With Tom Ward. that, Tom? turn I'll call over Mr. the

earnings update. Welcome Mach you. Thank Mach quarter Resources to -- first Natural Resources

days are a different corp update my I only Therefore, brief. be C last prepared bit we each will was call why companies. start XX ago. than most remembering comments Our

in cash operating leverage same mind. less X These formed maintaining low XX% main and was acquisitions with tenets remain to core distribution, flow. today. in accretive our of making are distributions, than goals XXXX our Mach Maximizing cash reinvesting are: the These that

do around centered we distribution. our Everything is

is cash Therefore, at variable. commodities quarter. the our However, our of X change price on our each distribution how the most on much main each has set distribution will on we end distribution the of We impact quarter. hand have the quarter. The

and some our These of risk, offsets distributions. reduces help production program our also price hedging stabilize Our declines. drilling the to most

be will volatility. there However,

holders those cash company. avoided were is past X and of distributions. leverage to over and We've years. last consistently $X.XX acquisition MLPs Mach have ] returned an the high The [ our equity fixed

more adding ways reserves them. are efficiently and them finding We our underwriting adept forecast than manage to at

results operated X,XXX new of staff our a that acquisitions. than acquisition fits nonoperated without positive which production hold X,XXX over we into a that have cost. XXX additional acres all factor been and of of more oversee nicely large a small in achieve portfolio meaningful Therefore, corporate X One million is to employees, able We've can existing wells land.

attention producing focus on take more becomes natural products natural on increases singular pay commodity as drilling. reliant wells do to instead world the abates. we price also view oil, long-term on not and ever demand We where close We a produce. for a see the gas liquids gas We time of

demand and mentioned As [ gas power based bullish increase exports continuous long-term before, we're LNG ] in on natural on demand.

County. the Kingfisher demand need in running in additional luxury the County see this during do in currently We believe world as the have who meet tries Oklahoma, X the second X has Canadian a Mach comparison. to oil X to living will continue changing and towards relative to production achieved in not world lucky move standard billion X rigs of We quarter.

gas some we up, natural to ourselves moves from can allow the strip As inventory. more ability gas our the unlock

next the forward above price by As year. of of end the today, $X is

you've know before, that we earlier. believe hit you if I However, will me number to that listened

our with line in expectations. were quarter this results drilling Our

January production gas natural than storm, which was oil from downtime lower nearly higher Our production totaled due slightly slightly barrels. the our then the winter was than the after to And expected XX,XXX expected. storm,

this the changes guidance. our [ below of in The any ]. to making quarter lowered came Paloma LOE guidance. ] LOE another assets dramatically [ watch have low point before our We'll

is than higher. slightly our drilling working Oswego expected Our quarter, interest higher more during CapEx was in-unit first the to wells where due

efficiency gains drilling to program continue Paloma and Oswego with see under in our estimates. our both wells in We coming

using million attributes. one have Once Mach our our purchased billion by $XXX upstream producing drilling at key to bull remains on our million of over $X.X the to in of on will X.X of invested to operators an quarterly properties top of cash billion. puts ability cash equity that The while acquiring and deliver us value toggle returns. we maintaining from markets unitholders We distribution, back of recovered believe enterprise distributing $XXX

for XX%, on and is categories to result the Our closely X-year X-year of our [ returning [ these the is ]. Cherokee estimate capital because follow of internal importance ] return unitholders. We of XX% our profits

Kevin. that, it I'll turn With over to

the first represent Reported XXXX have quarter quarter show activity Tom. Thanks, reported of results that for entire up publicly that Mach make we Natural first all of the combined quarter's entities an Resources. the

is III results comparative that the of and the the noting XXXX direct [ the for and Additionally, not quarter useful reflect it predecessor, comparison. worth for Mach ], from statements only first income cash are flow

For XX,XXX oil, XX% per BOE NGLs. natural was day, the XX% we XX% quarter, and which averaged gas production of

Excluding and Of XX% for the and gas oil hedges, were XX%, XX% our of the impact $X.XX contribution was average total the revenue. $XX.XX that per gas $XXX of per was NGLs. the prices NGLs of oil, of barrel revenues, per oil and barrel of gas relative realized contributed $XX.XX Mcf million

companies. On side, mentioned, or notably slightly as lease lower compared of $X or million BOE over per came mid-February $XX $X.XX of BOE $X.XX cash expense low than million per our G&A only the in many expense our is Tom to operating guidance, other and

$XX.XX on of million $XXX will Total June EBITDA hedges of And totaled revenues, we to and May of operating our including cash million flow. million, adjusted $XXX record XX. million on distribute XX, unitholders $XXX midstream and activities,

I will to with to questions. call that the for open you Kevin, turn back overview, quick line the And

is Our Instructions] Whitfield from Stifel. question [Operator first coming Derrick today from

I wanted XXXX guidance. with to your open

both the efficiency production activity CapEx trajectory Does production ] and your higher place, you Regarding CapEx. got forward impact and QX, Or for you simply the year? guys expectations near your of of your Street's were ranges. that pull and ahead end for [

Yes.

CapEx range. the as think out guidance will year, expectation I the stay ultimately our we level the is and progress that within through

comments, impact, to drilling. where Our his that first rig in some drilling were addition of we mentioned honestly, quarter had Oswego in higher counts the Tom

quarter would those higher that guidance the working range. in for still Oswego we drilling, Higher volumes just within full we impact do first to production our go hit volumes wells wouldn't but have year CapEx as It the those year. the the interest come just -- throughout back interest actually working expect with yet

Yes.

So under reinvestment our and to is, Derrick, be rate. plan goal to XX% hitting on that. We yes, that, still maintain

drilling is Our with actually going driver. well efficiency, the main quite cost

Oswego point Our per first -- million quarter. X in average X.X now wells the million, X.XX under well

well. XXXX first we think just over million If quarter, $X per you back to were

estimate Our a in -- is modeling or basis X.XX. our well X.X per on yes,

anticipate year. that the do the coming throughout down we So number CapEx is

the lateral so -- X-mile estimates. drilled ] far. [ Paloma beating only We're also, I beat those in starting Paloma assets, out think, We've will

to our So $XXX,XXX early AFE But estimating the also. million tell. Paloma $X it's I'm to too less on than assets

little the was the the CapEx and if So the -- I end XX% total. we year-long that, year we'll that under basis, even bit a for though year on of over, to think by be kept our a in back

Terrific. set notable the evolved assets? been fully how your with Paloma just asset Last were the asset maybe first now I think more And your quarter, to asset. with you earnings in-house guess and asset on well efficiencies the and -- have efficiencies. if then that staying maybe we some integration the teams the any on in you highlighted plans, it's views and/or the you've speak of your there operational with to broadly, and about if could have

LOE than LOE continues quarter effect We the move it wait We'll knew our ]. most before notable guidance. just think the thing [ But seems we I ] to expected. a our down. overall like better in, [ have but on nice been assets is would, coming had change another it's it Paloma very

And then on just I drilling, the seeing think gains. positive we also -- are efficiency

TD-ed but really any drilling be but don't expected see numbers estimates able also nice been solidify. I to to we the well, We second will in that yet have go the down. coming it's for to But that. see continue think in, We've to

just And it number was a asset, but a incorporating as large as by volume, in a small asset wells. far asset of the

to person of we here, our So a others. amount and didn't production, Paloma by and handful the bring of very easy it from one increase in staff only was

increased compliance than probably I Paloma employees think more SOX has did.

question today next Meade from coming is Charles Johnson Your Rice. from

acquisition some you how for comments, every... there, I I'll leave just you offer the what evolving is some Mid-Con. set could was the give opportunity hoping in comments on

We're X in from is prices every the competition close this and capital, April, really discussed early We competition had coming the we from today, it weren't basically. we're since the is competition that changed. to bid more seeing -- always deals access XXXX, different in in on, sources seeing hasn't acquisition Mid-Con last -- to. But Yes. -- that we've would think even I I have and which we

we that undeveloped Mid-Con We if that becomes that to that's our need so a of And and to outside we niches can look a fierce don't locations. there pay are if trend fit or people look for or style. doesn't premium I if continues to want competition too -- know the that

probably been and there's paid isn't last it's do. we substantial would undeveloped move premiums have the In Mid-Con, transactions away we we that So the need few if to. made from been something in for land, that what

in know. if like criteria ago, it -- don't We see to not our the all and we I past. buy we different I Paloma like of have will. So used that were need. probably It's we to we tend able areas the to can believe in find we too niche early long fit

steadfast reviewing But remain staying to hope to different what in do. I X fish that think to we're place. a see opportunities we'd to more in you and acquisitions I us make that go year. the have in still if we us requires guess, this that that's will now, pillars have right And like,

is -- Got are to Tom, PDP locations. those -- close really it. not recollection really me, value, great Paloma really, much the bought you more pretty correct that some And and my

changed announced would And bit quite from so actually that when suggest that it's deal. a you

difference also. packages smaller a make Yes,

we that guidelines. that's did, our bought We So fit fair. within Paloma

didn't any PV-XX. we pay yes, And exactly upside. bought PDP you're below right. for So that We

So I'm -- that ago. yes, long I that still wasn't mean,

days. quickly So change things XX that usually don't in

they're just that competition what they're competitive. here. always the latest I remain is is, optimistic. as So telling most you there competition new is I'm And --

the powder the acquisitions? then we as [ the you it. that? $XXX think think cash, about should dry most -- Got about XQ, that at that ] -- your of use that we Is million of end of in should on future for likely sheet kind balance for And have

Yes, I think don't so.

we doubt And think -- and an that hand you'll at we've and out we to to nice I ] don't that whatever stabilize cash see our helps of just our distributions, lot make drain a see on had acquisition. out that changing. and it every distributing that I that always and quarter, on -- cash I look a would [ we're hand,

coming is today question Next from Scialla Stephens. from Michael

assets. Paloma see you I if bit little to more the a want talk about

a first to plan of that the there? the drilled you year? the ] is wells. X well said you've like or to when get the outlined. costs Can Will How wells Mississippian mix It well, year? the really drill for went you many about they based You this on [ just for plans talk Woodford sounded Sycamore how drilling completion you asset that be zones developed and going are

Sure, if Woodford Michael. And the X. the wells think but to right The acreage we're to X-mile wells are going drill plan now. we towards on drilling wells of a more Woodford and that's amount -- mix Paloma Mississippian of I be that this leaning year

future. always drilling preparing so flux, but is we're that's that's not those the what Our in stone, out locations schedule in in

-- prices drill we could not this gas any quality additional were rig more up wells. to Paloma if gas in use -- higher to Also, that have could move that locations,

them change, really the assets, So deeper outlook there's it as drilling that's Paloma now, the with far as -- X,XXX we but And our Paloma. horsepower assets, that rig that's deeper have. the call I right does the

the Woodford $X And reference AFE, to in below X-mile was to Tom, that $XXX,XXX million or...

in actually think duplicate Mississippian, to in I a but reference X-mile that Yes, Woodford. X-mile a was it we'll

Great.

the principal gets I then the will over And ask just like you the talk of serviced? that to wanted the look how course the term can on debt, Okay. year? there What about loan. Kevin,

principal the then, that And it's amortizing per start next -- month. $XX.X We amortization. quarterly I think question. be starting quarter a great at a That's will Sure. million

basis. be So use quarterly a that of that cash a of part the we will generate on

you. Thank

next Geoff from from Our Energy today Partners. is Jay Daniel question coming

projects natural why curious. LNG the XXXX. ]. into if to number of some maybe the So and back I little [ I strip of up a the could comments and people pushed wondered you right you're kind kind I I'm of follow and tell being are, so are of about boiled just than you based your bearish up wanted the on more me talked to a who on contango on gas,

Yes.

around I same Bcf LNG to the with just X coming time, think do of on. just amount preparing the to demand that on. read a the I day sit it's load of At at even is basically gen, looking hub, power and come

you ] just example, the If Duke's [ the look for Carolinas, in release, extraordinary. it's Virginia at to

If decade, load power it's you between XX and you goes met by that look can't on of a be I coming gas. have -- that part out large that think to natural the to gigawatts next of over And XX part wind. of solar --

think as I Bcf year-over-year -- we X move of to we'll see I summer kind X the a but us as into at tight. see day continues,

on the gas. fairly we summer. why gets should wiped And so fall, a then bullish natural early at outlook excess gets I out think looking the going that be this into And pretty

'XX basically of strip, be So I the even. the 'XX of and strip fall a would the buyer

Thank the floor to question-and-answer over any the comments. reached or our end I'd turn for closing We've you. of back further like session.

I to you want for always questions think to today. nothing guys close us and else for take just joining here in. happy Thanks as call

Thank today's and webcast. conclude you. does teleconference That

thank a You time, wonderful your day. We lines and may disconnect participation you at today. your for this have