Mach Natural Resources LP Q3 FY2024 earnings call

Pillars of the Company - Maintain financial strength: Goal is long-term debt-to-EBITDA ratio of 1x or less. - Disciplined execution: Acquire cash-flowing assets at a discount to PDP PV-10 that are accretive to distribution. - Disciplined reinvestment rate: Maintain reinvestment rate of less than 50% of operating cash flow. - Maximize cash distributions: Target peer-leading distributions, with distributions variable based on commodity prices. ### Operational Highlights - In Q3, realized average oil price $74.55 per barrel, gas $1.73 per Mcf. - Drilled and brought online 11 gross and 9 net wells while running 2 rigs. - Completed a follow-on public offering generating $129 million to fund acquisitions. - Lease operating expense for Q3 was $5.85 per BOE, at low end of guidance. - Overall cost per completed foot improved from Q2 to Q3 in Oswego and Woodford areas.

In the third quarter, Mach Natural Resources had a production of 82,000 BOE a day, with 23% oil, 53% natural gas, and 24% NGLs. Total oil and gas revenues were $209 million, with oil contributing 60%, gas 20%, and NGLs 20%. Lease operating expense (LOE) was $44 million, or $5.85 per BOE, which came in at the low end of guidance. Cash G&A was approximately $8 million, or $1.08 per BOE.

2025 Plan - Increase rig count to 3 rigs: 2 drilling deeper wells and 1 drilling shallow Oswego wells. - Plan to expand drilling in Ardmore Basin, Stevens County (Oklahoma), Custer County (Oklahoma), and Canadian County (Oklahoma). - Acquisitions to be primary driver for production growth and future distributions. - Reinvestment rate to remain at or below 50% of operating cash flow. - Drilling in 2025 may defer some oil guidance into 2026 due to pad drilling delays.

Q: John Freeman asked about the 2025 rig program, cycle-times, LOE color.

A: Tom Ward and Kevin White discussed the 2025 rig plan, no lumpy CapEx expected, LOE impacted by flush production from newly acquired assets.

Q: Charles Meade inquired about M&A deals, gas vs oil deals, and 2025 drilling plans.

A: Tom Ward mentioned looking at both gas and oil deals outside Mid-Con, 2025 drilling in various areas with focus on rates of return.

Q: Neal Dingmann asked about thoughts on accretive M&A deals and deeper Mississippi wells.

A: Tom Ward discussed looking at stranded areas for acquisitions, deeper Mississippi wells have high rates of return.

Q: Michael Scialla asked about refinancing the term loan and Cherokee shale play.

A: Tom Ward mentioned reviewing refinancing options and rates of return determining Cherokee shale drilling.

Q: Geoff Jay asked about rig funding and strip pricing.

A: Tom Ward stated rig funding is based on strip pricing and stays within 50% reinvestment rate.