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What changed in MACH NATURAL RESOURCES LP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of MACH NATURAL RESOURCES LP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+265 added−251 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-13)

Top changes in MACH NATURAL RESOURCES LP's 2025 10-K

265 paragraphs added · 251 removed · 208 edited across 7 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

133 edited+38 added−24 removed448 unchanged
Biggest changeThe issuance of additional equity securities may be dilutive to our unitholders The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things: oil and natural gas prices; actual drilling results; the availability and cost of drilling rigs and labor and other services and equipment; the availability, cost and adequacy of midstream gathering, processing, compression and transportation infrastructure; and regulatory, technological and competitive developments. 28 Table of Contents Our cash flow from operations and access to capital are subject to a number of variables, including: • the prices at which our production is sold; • the amount of our proved reserves; • the amount of hydrocarbons we are able to produce from existing wells; • our ability to acquire, locate and produce new reserves; • the amount of our operating expenses; • cash settlements from our derivative activities; • our ability to borrow under the Revolving Credit Agreement; and • our ability to access the debt and equity capital markets or sell non-core assets.
Biggest changeOur cash flow from operations and access to capital are subject to a number of variables, including: • the prices at which our production is sold; • the amount of our proved reserves; • the amount of hydrocarbons we are able to produce from existing wells; • our ability to acquire, locate and produce new reserves; • the amount of our operating expenses; • cash settlements from our derivative activities; • our ability to borrow under the New Credit Agreement; and • our ability to access the debt and equity capital markets or sell non-core assets.
Increasing attention from governmental and regulatory bodies, investors, consumers, industry and other stakeholders on combating climate change, together with changes in consumer and industrial/commercial behavior, societal pressure on companies to address climate change, investor and societal expectations regarding voluntary climate-related disclosures, preferences and attitudes with respect to the generation and consumption of energy, the use of hydrocarbons, and the use of products manufactured with, or powered by, hydrocarbons, may result in the enactment of climate change-related regulations, policies and initiatives at the government, regulator, corporate and/or investor community levels, including alternative energy requirements, new fuel consumption standards, energy conservation, enhanced disclosure obligations and emissions reductions measures and responsible energy development; technological advances with respect to the generation, transmission, storage and consumption of energy (including advances in wind, solar and hydrogen power, as well as battery technology); increased availability of, and increased demand from consumers and industry for, energy sources other than oil and natural gas (including wind, solar, nuclear, and geothermal sources as well as electric vehicles); and development of, and increased demand from consumers and industry for, lower-emission products and services (including electric vehicles and renewable residential and commercial power supplies) as well as more efficient products and services.
Increased attention from governmental and regulatory bodies, investors, consumers, industry and other stakeholders on combating climate change, together with changes in consumer and industrial/commercial behavior, societal pressure on companies to address climate change, investor and societal expectations regarding voluntary climate-related disclosures, preferences and attitudes with respect to the generation and consumption of energy, the use of hydrocarbons, and the use of products manufactured with, or powered by, hydrocarbons, may result in the enactment of climate change-related regulations, policies and initiatives at the government, regulator, corporate and/or investor community levels, including alternative energy requirements, new fuel consumption standards, energy conservation, enhanced disclosure obligations and emissions reductions measures and responsible energy development; technological advances with respect to the generation, transmission, storage and consumption of energy (including advances in wind, solar and hydrogen power, as well as battery technology); increased availability of, and increased demand from consumers and industry for, energy sources other than oil and natural gas (including wind, solar, nuclear, and geothermal sources as well as electric vehicles); and development of, and increased demand from consumers and industry for, lower-emission products and services (including electric vehicles and renewable residential and commercial power supplies) as well as more efficient products and services.
Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.” Further, many factors may increase the cost of, curtail, delay or cancel our scheduled drilling projects, including: • declines in oil, natural gas and NGL prices; • increases in the cost of, and shortages or delays in the availability of, proppant, acid, equipment, services and qualified personnel or in obtaining water for hydraulic fracturing activities; • equipment failures, accidents or other unexpected operational events; • capacity or pressure limitations on gathering systems, processing and treating facilities or other related midstream infrastructure; • any future lack of available capacity on interconnecting transmission pipelines; • delays imposed by, or resulting from, compliance with regulatory requirements, including limitations on freshwater sourcing, wastewater disposal, emissions of GHGs and hydraulic fracturing; • pressure or irregularities in geological formations; • limited availability of financing on acceptable terms; • issues related to compliance with or liability arising under environmental laws and regulations; • environmental hazards, such as natural gas leaks, oil spills, pipeline and tank ruptures and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the air, surface and subsurface environment; • compliance with contractual requirements; • competition for surface locations from other operators that may own rights to drill at certain depths across portions of our leasehold; 22 Table of Contents • lack of available gathering facilities or delays in construction of gathering facilities; • adverse weather conditions, such as hurricanes, lightning storms, flooding, tornadoes, snow or ice storms and changes in weather patterns; • the availability and timely issuance of required governmental permits and licenses; • title issues or legal disputes regarding leasehold rights; and • other market limitations in our industry.
Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.” Further, many factors may increase the cost of, curtail, delay or cancel our scheduled drilling projects, including: • declines in oil, natural gas and NGL prices; • increases in the cost of, and shortages or delays in the availability of, proppant, acid, equipment, services and qualified personnel or in obtaining water for hydraulic fracturing activities; • equipment failures, accidents or other unexpected operational events; • capacity or pressure limitations on gathering systems, processing and treating facilities or other related midstream infrastructure; • any future lack of available capacity on interconnecting transmission pipelines; • delays imposed by, or resulting from, compliance with regulatory requirements, including limitations on freshwater sourcing, wastewater disposal, emissions of GHGs and hydraulic fracturing; • pressure or irregularities in geological formations; • limited availability of financing on acceptable terms; • issues related to compliance with or liability arising under environmental laws and regulations; 24 Table of Contents • environmental hazards, such as natural gas leaks, oil spills, pipeline and tank ruptures and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the air, surface and subsurface environment; • compliance with contractual requirements; • competition for surface locations from other operators that may own rights to drill at certain depths across portions of our leasehold; • lack of available gathering facilities or delays in construction of gathering facilities; • adverse weather conditions, such as hurricanes, lightning storms, flooding, tornadoes, snow or ice storms and changes in weather patterns; • the availability and timely issuance of required governmental permits and licenses; • title issues or legal disputes regarding leasehold rights; and • other market limitations in our industry.
Examples of decisions that our general partner may make in its individual capacity include: • how to allocate corporate opportunities among us and its other affiliates; • whether to exercise its limited call right; • whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the Board; provided, however, the MSA will require our general partner to seek approval by the conflicts committee of the Board in connection with an amendment to the MSA that, in the reasonable discretion of our general partner, adversely affects our unitholders; 45 Table of Contents • how to exercise its voting rights with respect to the units it owns; • whether to sell or otherwise dispose of any units or other partnership interests it owns; and • whether or not to consent to any merger or consolidation of the partnership or amendment to the partnership agreement. • our general partner will not have any liability to us or our unitholders for breach of any duty in connection with decisions made in its capacity as general partner so long as it acted in good faith (meaning that it subjectively believed that the decision was not adverse to our best interest); • our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or its officers and directors acted in bad faith or engaged in intentional fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and • our general partner will not be in breach of its obligations under the partnership agreement (including any duties to us or our unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is: • approved by the conflicts committee of the Board, although our general partner is not obligated to seek such approval; • approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner and its affiliates; • determined by the Board to be on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or • determined by the Board to be fair and reasonable to us, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us.
Examples of decisions that our general partner may make in its individual capacity include: • how to allocate corporate opportunities among us and its other affiliates; • whether to exercise its limited call right; • whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the Board; provided, however, the MSA will require our general partner to seek approval by the conflicts committee of the Board in connection with an amendment to the MSA that, in the reasonable discretion of our general partner, adversely affects our unitholders; • how to exercise its voting rights with respect to the units it owns; • whether to sell or otherwise dispose of any units or other partnership interests it owns; and • whether or not to consent to any merger or consolidation of the partnership or amendment to the partnership agreement. • our general partner will not have any liability to us or our unitholders for breach of any duty in connection with decisions made in its capacity as general partner so long as it acted in good faith (meaning that it subjectively believed that the decision was not adverse to our best interest); • our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or its officers and directors acted in bad faith or engaged in intentional fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and 48 Table of Contents • our general partner will not be in breach of its obligations under the partnership agreement (including any duties to us or our unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is: • approved by the conflicts committee of the Board, although our general partner is not obligated to seek such approval; • approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner and its affiliates; • determined by the Board to be on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or • determined by the Board to be fair and reasonable to us, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us.
In addition, although we plan to fund our drilling program entirely with cash flow from operations, if our cash flows are less than we expect or we alter our drilling plans, we may be required to borrow more under the Revolving Credit Agreement than we expect or issue new debt or equity securities in order to pursue the development of these locations, and we may not be able to raise or generate the capital required to do so.
In addition, although we plan to fund our drilling program entirely with cash flow from operations, if our cash flows are less than we expect or we alter our drilling plans, we may be required to borrow more under the New Credit Agreement than we expect or issue new debt or equity securities in order to pursue the development of these locations, and we may not be able to raise or generate the capital required to do so.
The Revolving Credit Agreement limits the amounts we can borrow up to certain borrowing base amounts, which the administrative agent in good faith and in accordance with its usual and customary procedures for evaluating oil and gas loans and related assets at that particular time and otherwise acting in its sole discretion, will determine and which will be approved by the required lenders or all lenders, as applicable in the case of an increase in the borrowing base, on a semi-annual basis based upon projected revenues from our natural gas properties, our commodity derivative contracts securing our loan and certain other information (including, without limitation, the status of title information with respect to the oil and natural gas properties and the existence of any other indebtedness, liabilities, fixed charges, cash flow, business, properties, prospects, management and ownership, hedged and unhedged exposure to price, price and production scenarios, interest rate and operating cost changes).
The New Credit Agreement limits the amounts we can borrow up to certain borrowing base amounts, which the administrative agent in good faith and in accordance with its usual and customary procedures for evaluating oil and gas loans and related assets at that particular time and otherwise acting in its sole discretion, will determine and which will be approved by the required lenders or all lenders, as applicable in the case of an increase in the borrowing base, on a semi-annual basis based upon projected revenues from our natural gas properties, our commodity derivative contracts securing our loan and certain other information (including, without limitation, the status of title information with respect to the oil and natural gas properties and the existence of any other indebtedness, liabilities, fixed charges, cash flow, business, properties, prospects, management and ownership, hedged and unhedged exposure to price, price and production scenarios, interest rate and operating cost changes).
The market price of our common units could be subject to wide fluctuations in response to a number of factors, most of which we cannot control, including: • changes in commodity prices; • changes in securities analysts’ recommendations and their estimates of our financial performance; • public reaction to our press releases, announcements and filings with the SEC; 50 Table of Contents • fluctuations in broader securities market prices and volumes, particularly among securities of oil and natural gas companies and securities of publicly traded partnerships and limited liability companies; • changes in market valuations of similar companies; • departures of key personnel; • commencement of or involvement in litigation; • variations in our quarterly results of operations or those of other oil and natural gas companies; • variations in the amount of our quarterly cash distributions to our unitholders; • changes in tax law; • an election by our general partner to convert or restructure us as a taxable entity; • future issuances and sales of our common units; and • changes in general conditions in the U.S. economy, financial markets or the oil and natural gas industry.
The market price of our common units could be subject to wide fluctuations in response to a number of factors, most of which we cannot control, including: • changes in commodity prices; • changes in securities analysts’ recommendations and their estimates of our financial performance; • public reaction to our press releases, announcements and filings with the SEC; • fluctuations in broader securities market prices and volumes, particularly among securities of oil and natural gas companies and securities of publicly traded partnerships and limited liability companies; • changes in market valuations of similar companies; • departures of key personnel; • commencement of or involvement in litigation; • variations in our quarterly results of operations or those of other oil and natural gas companies; • variations in the amount of our quarterly cash distributions to our unitholders; • changes in tax law; 53 Table of Contents • an election by our general partner to convert or restructure us as a taxable entity; • future issuances and sales of our common units; and • changes in general conditions in the U.S. economy, financial markets or the oil and natural gas industry.
In the future, we may not be able to access adequate funding under the Revolving Credit Agreement as a result of a decrease in our borrowing base due to the issuance of new indebtedness, the outcome of a borrowing base redetermination, or an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the inability of other lenders to provide additional funding to cover a defaulting lender’s portion.
In the future, we may not be able to access adequate funding under the New Credit Agreement as a result of a decrease in our borrowing base due to the issuance of new indebtedness, the outcome of a borrowing base redetermination, or an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the inability of other lenders to provide additional funding to cover a defaulting lender’s portion.
LNG exports; • the impact on worldwide economic activity of an epidemic, outbreak or other public health events; • prevailing prices on local price indexes in the areas in which we operate; • the proximity, capacity, cost and availability of gathering and processing facilities; • localized and global supply and demand fundamentals and transportation availability; • the cost of exploring for, developing, producing and transporting reserves; • the spot price of LNG on world markets; • changes in ocean freight capacity, which could adversely impact LNG shipping capacity or lead to material interruptions in service or stoppages in LNG transportation; • political and economic conditions in or affecting major LNG consumption regions or countries, particularly Asia and Europe; • weather conditions and natural disasters, including those influenced by climate change; • technological advances affecting energy consumption; • the impact of energy conservation efforts; • the price and availability of alternative fuels; • activities to restrict the exploration, development and production of oil and natural gas to minimize greenhouse gas (“GHG”) emissions; • speculative trading in oil and natural gas derivative contracts; • increased end-user conservation; • U.S. trade policies and their effect on U.S. oil and natural gas exports; • expectations about future commodity prices; and • U.S. federal, state and local and non-U.S. governmental regulation and taxes, including legislation or regulations addressing GHG emissions or requiring the reporting of GHG emissions or climate-related information.
LNG exports; • the impact on worldwide economic activity of an epidemic, outbreak or other public health events; • prevailing prices on local price indexes in the areas in which we operate; • the proximity, capacity, cost and availability of gathering and processing facilities; • localized and global supply and demand fundamentals and transportation availability; • the cost of exploring for, developing, producing and transporting reserves; • the spot price of LNG on world markets; • changes in ocean freight capacity, which could adversely impact LNG shipping capacity or lead to material interruptions in service or stoppages in LNG transportation; • political and economic conditions in or affecting major LNG consumption regions or countries, particularly Asia and Europe; • weather conditions and natural disasters, including those influenced by climate change; • technological advances affecting energy consumption; • the impact of energy conservation efforts; • the price and availability of alternative fuels; 23 Table of Contents • activities to restrict the exploration, development and production of oil and natural gas to minimize greenhouse gas (“GHG”) emissions; • speculative trading in oil and natural gas derivative contracts; • increased end-user conservation; • U.S. trade policies and their effect on U.S. oil and natural gas exports; • expectations about future commodity prices; and • U.S. federal, state and local and non-U.S. governmental regulation and taxes, including legislation or regulations addressing GHG emissions or requiring the reporting of GHG emissions or climate-related information.
In addition, under these short-term and long-term, fixed-fee arrangements, our gathering and processing expenses are generally fixed on a per unit basis for the term of the applicable contract and do not automatically adjust in response to a decline in oil and natural gas prices.
Under these short-term and long-term, fixed-fee arrangements, our gathering and processing expenses are generally fixed on a per unit basis for the term of the applicable contract and do not automatically adjust in response to a decline in oil and natural gas prices.
We cannot predict the scope of any future methane regulatory requirements or the cost to comply with such requirements. However, given the long-term trend toward increasing regulation, future federal GHG regulations of the oil and gas industry remain a significant possibility.
However, given the long-term trend toward increasing regulation, future federal GHG regulations of the oil and gas industry remain a possibility. We cannot predict the scope of any future methane regulatory requirements or the cost to comply with such requirements.
Wide fluctuations in oil, natural gas and NGL prices may result from relatively minor changes in the supply of or demand for oil, natural gas and NGLs, market uncertainty and other factors that are beyond our control, including: • worldwide and regional economic conditions impacting the supply and demand for oil, natural gas and NGLs, including the potential impact of any significant new tariffs; • political and economic conditions and events in foreign oil and natural gas producing countries, including embargoes, continued hostilities in the Middle East and other sustained military campaigns, the war in Ukraine 20 Table of Contents and associated economic sanctions on Russia, conditions in South America, Central America, China and Russia, and acts of terrorism or sabotage; • actions of OPEC+ including the ability and willingness of the members of OPEC+ and other exporting nations to agree to and maintain oil price and production controls; • changes in seasonal temperatures, including the number of heating degree days during winter months and cooling degree days during summer months; • the level of oil, natural gas and NGL exploration, development and production; • the level of oil, natural gas and NGL inventories; • the level of U.S.
Wide fluctuations in oil, natural gas and NGL prices may result from relatively minor changes in the supply of or demand for oil, natural gas and NGLs, market uncertainty and other factors that are beyond our control, including: • worldwide and regional economic conditions impacting the supply and demand for oil, natural gas and NGLs, including the potential impact of any significant new tariffs; • political and economic conditions and events in foreign oil and natural gas producing countries, including embargoes, continued hostilities in the Middle East and other sustained military campaigns, the war in Ukraine and associated economic sanctions on Russia, conditions in South America, Central America, China and Russia, and acts of terrorism or sabotage; • actions of OPEC+ including the ability and willingness of the members of OPEC+ and other exporting nations to agree to and maintain oil price and production controls; • changes in seasonal temperatures, including the number of heating degree days during winter months and cooling degree days during summer months; • the level of oil, natural gas and NGL exploration, development and production; • the level of oil, natural gas and NGL inventories; • the level of U.S.
Our level of indebtedness could affect our operations in several ways, including the following: • requiring us to dedicate a substantial portion of our cash flow from operations to service our debt, thereby reducing the cash available to finance our operating and investing activities; • limiting management’s discretion in operating our business and our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • increasing our vulnerability to downturns and adverse developments in our business and industry; • limiting our ability to raise capital on favorable terms; • limiting our ability to raise available financing, make investments, lease equipment, sell assets and engage in business combinations; • making us vulnerable to increases in interest rates; • putting us at a competitive disadvantage relative to our competitors; and • limiting our flexibility in planning for and reacting to changes in our business, including possible acquisition opportunities, due to covenants contained in our Credit Agreements, including financial covenants.
Our level of indebtedness could affect our operations in several ways, including the following: • requiring us to dedicate a substantial portion of our cash flow from operations to service our debt, thereby reducing the cash available to finance our operating and investing activities; • limiting management’s discretion in operating our business and our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • increasing our vulnerability to downturns and adverse developments in our business and industry; • limiting our ability to raise capital on favorable terms; • limiting our ability to raise available financing, make investments, lease equipment, sell assets and engage in business combinations; • making us vulnerable to increases in interest rates; • putting us at a competitive disadvantage relative to our competitors; and • limiting our flexibility in planning for and reacting to changes in our business, including possible acquisition opportunities, due to covenants contained in our New Credit Agreement, including financial covenants.
We may be unable to obtain any required capital or financing on satisfactory terms, which could lead to a decline in our production and reserves.” Any drilling activities we are able to conduct on these locations may not be successful, may not result in production or additions to our estimated proved reserves and could result in a downward revision of our estimated proved reserves, which in turn could have a material adverse effect on the borrowing base under the Revolving Credit Agreement or our future business and results of operations.
We may be unable to obtain any required capital or financing on satisfactory terms, which could lead to a decline in our production and reserves.” Any drilling activities we are able to conduct on these locations may not be successful, may not result in production or additions to our estimated proved reserves and could result in a downward revision of our estimated proved reserves, which in turn could have a material adverse effect on the borrowing base under the New Credit Agreement or our future business and results of operations.
Our operations are subject to all of the risks associated with drilling for and producing oil, natural gas and NGLs and operating gathering and processing facilities including the possibility of: • environmental hazards, such as releases of pollutants into the environment, including groundwater, surface water, soil and air; • abnormally pressured formations; • mechanical difficulties, such as stuck oilfield drilling and service tools and casing collapse; • ruptures, fires and explosions; 34 Table of Contents • damage to pipelines, processing plants, compression assets, water infrastructure, and related equipment and surrounding properties caused by tornadoes, floods, freezes, fires and other natural disasters; • inadvertent damage from construction, vehicles and farm and utility equipment; • personal injuries and death; • natural disasters; and • terrorist attacks targeting oil and natural gas related facilities and infrastructure.
Our operations are subject to all of the risks associated with drilling for and producing oil, natural gas and NGLs and operating gathering and processing facilities including the possibility of: • environmental hazards, such as releases of pollutants into the environment, including groundwater, surface water, soil and air; • abnormally pressured formations; • mechanical difficulties, such as stuck oilfield drilling and service tools and casing collapse; • ruptures, fires and explosions; • damage to pipelines, processing plants, compression assets, water infrastructure, and related equipment and surrounding properties caused by tornadoes, floods, freezes, fires and other natural disasters; • inadvertent damage from construction, vehicles and farm and utility equipment; • personal injuries and death; • natural disasters; and • terrorist attacks targeting oil and natural gas related facilities and infrastructure.
If cash flow generated by our operations or available borrowings under the Revolving Credit Agreement are insufficient to meet our capital requirements, the failure to obtain additional financing could result in a curtailment of the development of our properties, which in turn could lead to a decline in our reserves and production and could materially and adversely affect our business, financial condition and results of operations.
If cash flow generated by our operations or available borrowings under the New Credit Agreement are insufficient to meet our capital requirements, the failure to obtain additional financing could result in a curtailment of the development of our properties, which in turn could lead to a decline in our reserves and production and could materially and adversely affect our business, financial condition and results of operations.
If our revenues or the borrowing bases under the Revolving Credit Agreement decrease as a result of lower commodity prices, operational difficulties, declines in reserves or for any other reason, we may have limited ability to obtain the capital necessary to make acquisitions or sustain our operations at current levels.
If our revenues or the borrowing bases under the New Credit Agreement decrease as a result of lower commodity prices, operational difficulties, declines in reserves or for any other reason, we may have limited ability to obtain the capital necessary to make acquisitions or sustain our operations at current levels.
Additionally, if we curtail or cancel our drilling program, we may be required to reduce our estimated proved reserves, which could in turn reduce the borrowing base under the Revolving Credit Agreement. Properties that we decide to drill may not yield oil and natural gas in commercially viable quantities.
Additionally, if we curtail or cancel our drilling program, we may be required to reduce our estimated proved reserves, which could in turn reduce the borrowing base under the New Credit Agreement. Properties that we decide to drill may not yield oil and natural gas in commercially viable quantities.
Ward in his capacity as a member of our general partner through his ownership of Mach Resources and their respective affiliates, including our general partner, on the one hand, and us and our unitholders, on the other hand; provided, however, that under our code of business conduct, any such member of our management, so long as they are an executive officer, is required to avoid personal conflicts of interest and not compete against us, in each case unless approved by the Board.
Ward in his capacity as a member of 46 Table of Contents our general partner through his ownership of Mach Resources and their respective affiliates, including our general partner, on the one hand, and us and our unitholders, on the other hand; provided, however, that under our code of business conduct, any such member of our management, so long as they are an executive officer, is required to avoid personal conflicts of interest and not compete against us, in each case unless approved by the Board.
We may use the Revolving Credit Agreement to finance a portion of our future growth, and these factors could cause our cost of doing business to increase, limit our ability to pursue acquisition opportunities, reduce cash flow used for drilling and place us at a competitive disadvantage.
We may use the New Credit Agreement to finance a portion of our future growth, and these factors could cause our cost of doing business to increase, limit our ability to pursue acquisition opportunities, reduce cash flow used for drilling and place us at a competitive disadvantage.
In January 2021, the Department of the Interior finalized a rule limiting the application of the MBTA. In October 2021, the Biden administration published two rules that reversed those changes, and in June and July 2022, the FWS issued final rules rescinding Trump-era regulations concerning the definition of “habitat” and critical habitat exclusions.
In January 2021, the Department of the Interior finalized a rule limiting the application of the MBTA. In October 2021, the Biden administration published two rules that reversed those changes, and in June and July 2022, the FWS issued final rules rescinding prior Trump Administration regulations concerning the definition of “habitat” and critical habitat exclusions.
The proposed rule sought to impose emissions reduction standards on both new and existing sources in the oil and natural gas industry, expand the scope of Clean Air Act (“CAA”) regulation by making regulations in Subpart OOOOa more stringent 37 Table of Contents and creating a Subpart OOOOb to expand reduction requirements for new, modified, and reconstructed oil and gas sources, including standards focusing on certain source types that have never been regulated under the CAA.
The proposed rule sought to impose emissions reduction standards on both new and existing sources in the oil and natural gas industry, expand the scope of Clean Air Act (“CAA”) regulation by making regulations in Subpart OOOOa more stringent and creating a Subpart OOOOb to expand reduction requirements for new, modified, and reconstructed oil and gas sources, including standards focusing on certain source types that have never been regulated under the CAA.
Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our units. Our general partner may elect to convert or restructure us from a partnership to an entity taxable as a corporation for U.S. federal income tax purposes without unitholder consent.
Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our units. 54 Table of Contents Our general partner may elect to convert or restructure us from a partnership to an entity taxable as a corporation for U.S. federal income tax purposes without unitholder consent.
As a result, we expect to rely primarily upon our cash reserves and external financing sources, including the issuance of additional common units and other partnership securities and borrowings under our Revolving Credit Agreement, to fund future acquisitions and finance our growth.
As a result, we expect to rely primarily upon our cash reserves and external financing sources, including the issuance of additional common units and other partnership securities and borrowings under our New Credit Agreement, to fund future acquisitions and finance our growth.
In accordance with SEC requirements, we base the estimated discounted future net cash flow from our estimated proved reserves on the 12-month average oil and natural gas index prices, calculated as the unweighted arithmetic average for the first-day-of-the-month price for each month and costs in effect as of the date of the estimate, holding the prices and costs constant throughout the life of the properties.
In accordance with SEC requirements, we base the 27 Table of Contents estimated discounted future net cash flow from our estimated proved reserves on the 12-month average oil and natural gas index prices, calculated as the unweighted arithmetic average for the first-day-of-the-month price for each month and costs in effect as of the date of the estimate, holding the prices and costs constant throughout the life of the properties.
If we are unable to fund renewals of expiring leases, we could lose portions of our acreage and our actual drilling activities may differ materially from our current expectations, which could adversely affect our business. We own non-operating interests in properties developed and operated by third parties and some of our leasehold acreage could be pooled by a third-party operator.
If we are unable to fund renewals of expiring leases, we could lose portions of our acreage and our actual drilling activities may differ materially from our current expectations, which could adversely affect our business. 29 Table of Contents We own non-operating interests in properties developed and operated by third parties and some of our leasehold acreage could be pooled by a third-party operator.
Increased drilling 29 Table of Contents activity could materially increase the demand for and prices of these goods and services, and we could encounter rising costs and delays in or an inability to secure the personnel, equipment, power, services, resources and facilities access necessary for us to conduct our drilling and development activities, which could result in net production volumes being below our forecasted volumes.
Increased drilling activity could materially increase the demand for and prices of these goods and services, and we could encounter rising costs and delays in or an inability to secure the personnel, equipment, power, services, resources and facilities access necessary for us to conduct our drilling and development activities, which could result in net production volumes being below our forecasted volumes.
For example, some parties have initiated public nuisance claims under federal or state common law against certain companies involved in the production of oil and natural gas, or claims alleging that the companies have been aware of the adverse effects of climate 36 Table of Contents change for some time but failed to adequately disclose such impacts to their investors or customers.
For example, some parties have initiated public nuisance claims under federal or state common law against certain companies involved in the production of oil and natural gas, or claims alleging that the companies have been aware of the adverse effects of climate change for some time but failed to adequately disclose such impacts to their investors or customers.
Our partnership agreement has designated the Court of Chancery of the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by our unitholders which would limit our unitholders’ ability to choose the judicial forum for disputes with us or our general partner or its directors, officers or other employees.
Our partnership agreement has designated the Court of Chancery of the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by our unitholders which would limit our unitholders’ 51 Table of Contents ability to choose the judicial forum for disputes with us or our general partner or its directors, officers or other employees.
Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays, limit the areas in which we can operate, and reduce our oil and natural gas production, which could adversely affect our production and business.
Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays, limit the areas in 42 Table of Contents which we can operate, and reduce our oil and natural gas production, which could adversely affect our production and business.
While these permits are issued pursuant to existing laws and regulations, these legal requirements are subject to change, which could result in the imposition of more stringent operating constraints or new monitoring and reporting requirements, owing to, among other things, concerns of the public or governmental authorities regarding such gathering or disposal activities.
While these permits are issued pursuant to existing laws and regulations, these legal requirements are subject to change, which could result in the imposition of more stringent operating constraints or new monitoring and reporting requirements, owing to, among other 43 Table of Contents things, concerns of the public or governmental authorities regarding such gathering or disposal activities.
In addition, such reserves, if established, may not be sufficient to satisfy such future decommissioning, abandonment and reclamation costs and we will be responsible for the payment of the balance of such costs. 41 Table of Contents Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in areas where we operate.
In addition, such reserves, if established, may not be sufficient to satisfy such future decommissioning, abandonment and reclamation costs and we will be responsible for the payment of the balance of such costs. Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in areas where we operate.
In addition, if any lender under the Revolving Credit Agreement is unable to fund its commitment, our liquidity will be reduced by an amount up to the aggregate amount of such lender’s commitment under the credit agreement.
In addition, if any lender under the New Credit Agreement is unable to fund its commitment, our liquidity will be reduced by an amount up to the aggregate amount of such lender’s commitment under the credit agreement.
For example, lawsuits in which landowners sue every operator in the chain of title for environmental damages to their property are not uncommon in states in which we operate. In connection with certain acquisitions, we could acquire, or be required to provide indemnification against, environmental liabilities that could expose us to material losses.
For example, lawsuits in which 39 Table of Contents landowners sue every operator in the chain of title for environmental damages to their property are not uncommon in states in which we operate. In connection with certain acquisitions, we could acquire, or be required to provide indemnification against, environmental liabilities that could expose us to material losses.
Please read “— Our general partner and its affiliates own a controlling interest in us and have conflicts of interest with, and owe limited duties to, us, which may permit them to favor their own interests to the detriment of us and our unitholders.” 47 Table of Contents Even if our unitholders are dissatisfied, they cannot remove our general partner without its consent.
Please read “— Our general partner and its affiliates own a controlling interest in us and have conflicts of interest with, and owe limited duties to, us, which may permit them to favor their own interests to the detriment of us and our unitholders.” Even if our unitholders are dissatisfied, they cannot remove our general partner without its consent.
In addition, because the amount realized may include a unitholder’s share of our nonrecourse liabilities, a unitholder that sells common units may incur a tax liability in excess of the amount of the cash received from the sale. 54 Table of Contents Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.
In addition, because the amount realized may include a unitholder’s share of our nonrecourse liabilities, a unitholder that sells common units may incur a tax liability in excess of the amount of the cash received from the sale. Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.
Our third-party midstream service providers are under no obligation to renegotiate their contracts with us. Our failure to obtain these services on competitive terms could materially harm our business. The loss of senior management or technical personnel could adversely affect operations. We depend on the services of our senior management and technical personnel.
Our third-party midstream service providers are under no obligation to renegotiate their contracts with us. Our failure to obtain these services on competitive terms could materially harm our business. 28 Table of Contents The loss of senior management or technical personnel could adversely affect operations. We depend on the services of our senior management and technical personnel.
There have been efforts, for example, to influence the investment community, including investment advisors, insurance companies, and certain sovereign wealth, pension and endowment funds and other groups, by promoting divestment of fossil fuel equities and pressuring lenders to limit funding and insurance underwriters to limit coverages to companies engaged in the extraction of fossil fuel reserves.
There have been efforts, for example, to influence the investment community, including 38 Table of Contents investment advisors, insurance companies, and certain sovereign wealth, pension and endowment funds and other groups, by promoting divestment of fossil fuel equities and pressuring lenders to limit funding and insurance underwriters to limit coverages to companies engaged in the extraction of fossil fuel reserves.
In April 2024, the BLM finalized a rule to reduce the waste of natural gas from venting, flaring, and leaks during oil and gas production activities on Federal and Indian leases. The final rule took effect in June 40 Table of Contents 2024. However, in May 2024, the states of North Dakota, Texas, Montana, Wyoming, and Utah challenged the rule.
In April 2024, the BLM finalized a rule to reduce the waste of natural gas from venting, flaring, and leaks during oil and gas production activities on Federal and Indian leases. The final rule took effect in June 2024. However, in May 2024, the states of North Dakota, Texas, Montana, Wyoming, and Utah challenged the rule.
Therefore, changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in our common units, and a rising interest rate environment could have an adverse impact on our unit price and our ability to issue additional equity or incur debt.
Therefore, changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in our common units, and a rising interest 49 Table of Contents rate environment could have an adverse impact on our unit price and our ability to issue additional equity or incur debt.
In addition, the 10% discount factor we use when calculating discounted future net cash flow for reporting 25 Table of Contents requirements in compliance with Accounting Standards Codification 932, “Extractive Activities — Oil and Gas,” may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and natural gas industry in general.
In addition, the 10% discount factor we use when calculating discounted future net cash flow for reporting requirements in compliance with Accounting Standards Codification 932, “Extractive Activities — Oil and Gas,” may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and natural gas industry in general.
An increase in interest rates could increase our interest expense and materially adversely affect our financial condition. A significant reduction in cash flow from operations or the availability of credit could materially and adversely affect our ability to carry out our development plan, our cash available for distribution and operating results.
An 34 Table of Contents increase in interest rates could increase our interest expense and materially adversely affect our financial condition. A significant reduction in cash flow from operations or the availability of credit could materially and adversely affect our ability to carry out our development plan, our cash available for distribution and operating results.
Additionally, members of our management and our directors may, from time to time, be involved in various legal and other proceedings against the Company naming those officers or directors as co-defendants. Such legal and regulatory proceedings are inherently uncertain, and their results cannot be predicted.
Additionally, members of our management and our directors may, from time to time, be involved in various legal and other proceedings against the Company naming those officers or directors as co-defendants. Such legal and regulatory 45 Table of Contents proceedings are inherently uncertain, and their results cannot be predicted.
Due to these potential future affiliations, they may have duties to present potential business opportunities to those entities prior to presenting them to us, which could cause additional conflicts of interest. The Sponsor will be under no obligation to make any acquisition opportunities available to us.
Due to these 47 Table of Contents potential future affiliations, they may have duties to present potential business opportunities to those entities prior to presenting them to us, which could cause additional conflicts of interest. The Sponsor will be under no obligation to make any acquisition opportunities available to us.
Certain of our directors and officers may in the future spend significant time serving, and may have significant duties with, investment partnerships or other 44 Table of Contents private entities that compete with us in seeking out acquisitions and business opportunities and, accordingly, may have conflicts of interest in allocating time or pursuing business opportunities.
Certain of our directors and officers may in the future spend significant time serving, and may have significant duties with, investment partnerships or other private entities that compete with us in seeking out acquisitions and business opportunities and, accordingly, may have conflicts of interest in allocating time or pursuing business opportunities.
There are and will be no limitations in our partnership agreement or the Credit Agreements on our ability to issue additional units, including units ranking senior to the common units.
There are and will be no limitations in our partnership agreement or the New Credit Agreement on our ability to issue additional units, including units ranking senior to the common units.
We cannot be certain that our efforts to develop and maintain our internal controls will be successful, that we will be able to maintain adequate controls over our financial processes and reporting in the future or that we will be 51 Table of Contents able to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002.
We cannot be certain that our efforts to develop and maintain our internal controls will be successful, that we will be able to maintain adequate controls over our financial processes and reporting in the future or that we will be able to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002.
Volatility in the global financial markets, significant losses in financial institutions’ U.S. energy loan portfolios, or environmental and social concerns may lead to a contraction in credit availability impacting our ability to finance our operations or our ability to refinance the Credit Agreements or other outstanding indebtedness.
Volatility in the global financial markets, significant losses in financial institutions’ U.S. energy loan portfolios, or environmental and social concerns may lead to a contraction in credit availability impacting our ability to finance our operations or our ability to refinance the New Credit Agreement or other outstanding indebtedness.
To the extent we transact with counterparties in foreign jurisdictions, we may 42 Table of Contents become subject to such regulations, which could have adverse effects on our operations similar to the possible effects on our operations of the Dodd-Frank Act’s swap regulatory provisions and the rules of the CFTC.
To the extent we transact with counterparties in foreign jurisdictions, we may become subject to such regulations, which could have adverse effects on our operations similar to the possible effects on our operations of the Dodd-Frank Act’s swap regulatory provisions and the rules of the CFTC.
The Inflation Reduction Act amends the CAA to include a Methane Emissions and Waste Reduction Incentive Program, which requires the EPA to impose a “Waste Emissions Charge” on certain natural gas and oil sources that are already required to report under the EPA’s Greenhouse Gas Reporting Program.
The Inflation Reduction Act amended the CAA to include a Methane Emissions and Waste Reduction Incentive Program, which required the EPA to impose a “Waste Emissions Charge” on certain natural gas and oil sources that are already required to report under the EPA’s Greenhouse Gas Reporting Program.
To the extent we issue additional units in connection with any 46 Table of Contents acquisitions or capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level.
To the extent we issue additional units in connection with any acquisitions or capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level.
The amount of available cash that we distribute to our unitholders will depend principally on the cash we generate from operations, which will depend on, among other factors: • the amount of oil, natural gas and NGLs we produce; • the prices at which we sell our oil, natural gas and NGL production; • the amount and timing of settlements on our commodity derivative contracts; • the level of our capital expenditures, including scheduled and unexpected maintenance expenditures; • the level of our operating costs, including payments to our general partner and its affiliates for general and administrative expenses; • the restrictive covenants in the Term Loan Credit Agreement and the Revolving Credit Agreement (collectively, the “Credit Agreements”) and other agreements governing indebtedness that limit our ability to pay dividends or distributions in respect of our equity; and • the level of our interest expenses, which will depend on the amount of our outstanding indebtedness and the applicable interest rate.
The amount of available cash that we distribute to our unitholders will depend principally on the cash we generate from operations, which will depend on, among other factors: • the amount of oil, natural gas and NGLs we produce; • the prices at which we sell our oil, natural gas and NGL production; • the amount and timing of settlements on our commodity derivative contracts; • the level of our capital expenditures, including scheduled and unexpected maintenance expenditures; • the level of our operating costs, including payments to our general partner and its affiliates for general and administrative expenses; • the restrictive covenants in the New Credit Agreement and other agreements governing indebtedness that limit our ability to pay dividends or distributions in respect of our equity; and • the level of our interest expenses, which will depend on the amount of our outstanding indebtedness and the applicable interest rate.
The credit risk of financial institutions could adversely affect us. We have entered into transactions with counterparties in the financial services industry, including commercial banks, investment banks, insurance companies and other institutions. These transactions expose us to credit risk in the event of default of our counterparty.
We have entered into transactions with counterparties in the financial services industry, including commercial banks, investment banks, insurance companies and other institutions. These transactions expose us to credit risk in the event of default of our counterparty.
As a result, you may be required to sell your common units at an undesirable time or price and may not receive any return on your investment. You may also incur a tax liability 48 Table of Contents upon a sale of your common units.
As a result, you may be required to sell your common units at an undesirable time or price and may not receive any return on your investment. You may also incur a tax liability upon a sale of your common units.
If Mach Resources were unable or unwilling to provide these services, it would result in a disruption in our business that could have an adverse effect on our financial position, financial results and cash flow. We do not directly employ directors, officers or employees.
We depend on Mach Resources to provide us services necessary to operate our business. If Mach Resources were unable or unwilling to provide these services, it would result in a disruption in our business that could have an adverse effect on our financial position, financial results and cash flow. We do not directly employ directors, officers or employees.
It is difficult to predict the legislative and regulatory changes that may result due to the new administration. The new administration and make-up of the Senate and/or House of Representatives may cause broader economic changes due to changes in governing ideology and style.
It is difficult to predict the legislative and regulatory changes that may result due to the new administration. The new administration and make-up of the Senate and/or House of Representatives may cause broader economic changes due to changes in governing ideology 36 Table of Contents and style.
The EPA also finalized rules under the Clean Water Act (“CWA”) in June 2016 that prohibit the discharge of wastewater from hydraulic fracturing and certain other natural gas operations to publicly owned wastewater treatment plants. Additionally, in December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources.
The EPA also finalized rules under the CWA in June 2016 that prohibit the discharge of wastewater from hydraulic fracturing and certain other natural gas operations to publicly owned wastewater treatment plants. Additionally, in December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources.
The third-party facilities may experience unplanned downtime or maintenance for a variety of reasons outside our control and our production could be materially negatively impacted as a result of such outages.
The third-party facilities may 26 Table of Contents experience unplanned downtime or maintenance for a variety of reasons outside our control and our production could be materially negatively impacted as a result of such outages.
Our partnership agreement does not set a limit 49 Table of Contents on the amount of expenses for which our general partner and its affiliates may be reimbursed. The amount and timing of such reimbursements will be determined by our general partner.
Our partnership agreement does not set a limit on the amount of expenses for which our general partner and its affiliates may be reimbursed. The amount and timing of such reimbursements will be determined by our general partner.
Oklahoma and Kansas each impose a personal income tax. Texas does not currently impose a personal income tax on individuals, but it does impose an entity level tax (to which we will be subject) on corporations and other entities.
Oklahoma, Kansas, New Mexico and Colorado each impose a personal income tax. Texas does not currently impose a personal income tax on individuals, but it does impose an entity level tax (to which we will be subject) on corporations and other entities.
The incurrence of additional indebtedness, either through borrowings under the Revolving Credit Agreement, the issuance of additional debt securities or otherwise, would require that a portion of our cash flow from operations be used for the payment of interest and principal on our indebtedness, thereby reducing our ability to use cash flow from operations to fund capital expenditures, our development plan, acquisitions and cash distributions to unitholders.
The incurrence of additional indebtedness, either through borrowings under the New Credit Agreement, the issuance of additional debt securities or otherwise, would require that a portion of our cash flow from 30 Table of Contents operations be used for the payment of interest and principal on our indebtedness, thereby reducing our ability to use cash flow from operations to fund capital expenditures, our development plan, acquisitions and cash distributions to unitholders.
A breach of any covenant in the Credit Agreements will result in a default under our Credit Agreements and an event of default if there is no grace period or if such default is not cured during any applicable grace period.
A breach of any covenant in the New Credit Agreement will result in a default under our New Credit Agreement and an event of default if there is no grace period or if such default is not cured during any applicable grace period.
Future collateral requirements will depend on arrangements with our counterparties and oil and natural gas prices. 32 Table of Contents The cost to drill and complete oil and natural gas wells often increases in times of rising oil and natural gas prices.
Future collateral requirements will depend on arrangements with our counterparties and oil and natural gas prices. The cost to drill and complete oil and natural gas wells often increases in times of rising oil and natural gas prices.
Our general partner may not be removed except by vote of the holders of at least 66⅔% of all outstanding units voting together as a single class is required to remove our general partner. As of March 7, 2025, affiliates of our general partner (including the Sponsor and Tom L.
Our general partner may not be removed except by vote of the holders of at least 66⅔% of all outstanding units voting together as a single class is required to remove our general partner. As of March 5, 2026, affiliates of our general partner (including the Sponsor and Tom L.
The Credit Agreements contain a number of significant covenants, including restrictive covenants that, subject to certain qualifications, limit our ability to, among other things: • make certain payments, including paying dividends or distributions in respect of our equity; • incur additional indebtedness; 30 Table of Contents • make loans to others; • make certain acquisitions and investments; • make or pay distributions on our common units, if an event of default or borrowing base deficiency exists; • merge or consolidate with another entity; • hedge future production or interest rates; • incur liens; • sell assets; and • engage in certain other transactions without the prior consent of the lenders.
The New Credit Agreement contains a number of significant covenants, including restrictive covenants that, subject to certain qualifications, limit our ability to, among other things: • make certain payments, including paying dividends or distributions in respect of our equity; • incur additional indebtedness; • make loans to others; • make certain acquisitions and investments; • make or pay distributions on our common units, if an event of default or borrowing base deficiency exists; • merge or consolidate with another entity; • hedge future production or interest rates; • incur liens; • sell assets; and • engage in certain other transactions without the prior consent of the lenders.
Failing to meet the qualifying income requirement or a change in current law could cause us to be treated as a corporation for U.S. federal income tax purposes or otherwise subject us to taxation as an entity.
Failing to meet the qualifying income requirement or a change in current law could cause us to be treated as a corporation for 55 Table of Contents U.S. federal income tax purposes or otherwise subject us to taxation as an entity.
Similar protections are offered to migratory birds under the MBTA, which makes it illegal to, among other things, hunt, capture, kill, possess, sell, or purchase migratory birds, nests, or eggs without a permit. This prohibition covers most bird species in the United States.
Similar protections are offered to migratory birds under the MBTA, which makes it illegal to, among other things, hunt, capture, kill, possess, sell, or purchase migratory birds, nests, or eggs without a permit. This prohibition covers most bird species in the United States. However, in April 2025, the U.S.
Companies across all industries continue to face increasing scrutiny from a variety of stakeholders, including investor advocacy groups, proxy advisory firms, certain institutional investors and lenders, investment funds and other influential 39 Table of Contents investors and rating agencies, related to their ESG and sustainability practices.
Companies across all industries continue to face increased scrutiny from a variety of stakeholders, including investor advocacy groups, proxy advisory firms, certain institutional investors and lenders, investment funds and other influential investors and rating agencies, related to their ESG and sustainability practices.
Our unitholders will likely be required to file state and local income tax returns and pay state and local 55 Table of Contents income taxes in some or all of these various jurisdictions. Further, our unitholders may be subject to penalties for failure to comply with those requirements. We currently own property or conduct business in Oklahoma, Kansas and Texas.
Our unitholders will likely be required to file state and local income tax returns and pay state and local income taxes in some or all of these various jurisdictions. Further, our unitholders may be subject to penalties for failure to comply with those requirements. We currently own property or conduct business in Oklahoma, Kansas, Texas, New Mexico and Colorado.
Ward through his ownership of Mach Resources) collectively own and control the voting of an aggregate of approximately 74.3% of our outstanding common units as of March 7, 2025, the other unitholders do not have an ability to influence any operating decisions and are not able to prevent us from entering into any transactions.
Ward through his ownership of Mach Resources) collectively own and control the voting of an aggregate of approximately 52.7% of our outstanding common units as of March 5, 2026, the other unitholders do not have an ability to influence any operating decisions and are not able to prevent us from entering into any transactions.
In addition, the Credit Agreements impose certain limitations on our ability to enter into mergers or combination transactions and to incur certain indebtedness, which could limit our ability to acquire assets and businesses. Our development projects and acquisitions require substantial capital expenditures.
In addition, the New Credit Agreement imposes certain limitations on our ability to enter into mergers or combination transactions and to incur certain indebtedness, which could limit our ability to acquire assets and businesses. Our development projects and acquisitions require substantial capital expenditures.
Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced. As of December 31, 2024, approximately 27% of our total estimated proved reserves were classified as PUDs using SEC Pricing. Development of these undeveloped reserves may take longer and require higher levels of capital expenditures than we currently anticipate.
The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced. As of December 31, 2025, approximately 7% of our total estimated proved reserves were classified as PUDs using SEC Pricing.
The reimbursement of expenses to our general partner and its affiliates will reduce the amount of cash available for distribution to our unitholders.
The reimbursement of expenses to our 52 Table of Contents general partner and its affiliates will reduce the amount of cash available for distribution to our unitholders.
In addition, the Credit Agreements require us to maintain compliance with certain financial covenants. The restrictions in the Credit Agreements also impact our ability to obtain capital to withstand a downturn in our business or the economy in general, or to otherwise conduct necessary corporate activities.
In addition, the New Credit Agreement requires us to maintain compliance with certain financial covenants. The restrictions in the New Credit Agreement also impact our ability to obtain capital to withstand a downturn in our business or the economy in general, or to otherwise conduct necessary corporate activities.
If our general partner exercises its limited call right, the effect would be to take us private and, if the units were subsequently deregistered, we would no longer be subject to the reporting requirements of the Exchange Act of 1934, as amended (the “Exchange Act”).
If our general partner exercises its limited call right, the effect would be to take us private and, if the units were subsequently deregistered, we would no longer be subject to the reporting requirements of the Exchange Act.
In December 2023, the EPA announced a final rule, which, among other things, requires the phase out of routine flaring of natural gas from newly constructed wells (with some exceptions) and routine leak monitoring at all well sites and compressor stations.
In December 2023, the EPA announced a final rule, later published on March 8, 2024, which, among other things, requires the phase out of routine flaring of natural gas from newly constructed wells (with some exceptions) and routine leak monitoring at all well sites and compressor stations.
In response to findings that emissions of carbon dioxide, 38 Table of Contents methane and other GHGs present an endangerment to public health and the environment and in the absence of comprehensive federal legislation on GHG emission control, the EPA has adopted regulations pursuant to the CAA to monitor, report, and/or reduce GHG emissions from various sources.
In response to findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to public health and the environment and in the absence of comprehensive federal legislation on GHG emission control, the EPA has adopted regulations pursuant to the CAA to monitor, report, and/or reduce GHG emissions from various sources. The 2007 case Massachusetts v.
Our general partner has control over all decisions related to our operations. The Sponsor and Tom L. Ward through his ownership of Mach Resources own all of the membership interests in our general partner which are in the same proportion to each other as their limited partner interest ownership in us. The Sponsor and Tom L.
The Sponsor and Tom L. Ward through his ownership of Mach Resources own all of the membership interests in our general partner which are in the same proportion to each other as their limited partner interest ownership in us. The Sponsor and Tom L.
We currently own property or do business in Oklahoma, Kansas and Texas, among other states.
We currently own property or do business in Oklahoma, Kansas, Texas, New Mexico and Colorado among other states.
Ward through his ownership of Mach Resources) own approximately 74.3% of our outstanding common units, which enable those holders, collectively, to prevent the removal of our general partner. Control of our general partner may be transferred to a third party without unitholder consent.
Ward through his ownership of Mach Resources) own approximately 52.7% of our outstanding common units, which enable those holders, collectively, to prevent the removal of our general partner. 50 Table of Contents Control of our general partner may be transferred to a third party without unitholder consent.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity practices include: Data Monitoring and Loss Prevention: We continuously scan and monitor our systems to detect and prevent data breaches, in an effort to ensure sensitive information remains secure. 56 Table of Contents - Network Vulnerability Testing: Regular assessments of our network’s security through certified third-party testers to identify and remediate vulnerabilities. - Robust Encryption: Implement strong encryption protocols to protect data in transit and at rest, mitigating the risk of unauthorized access. - Continuous Monitoring: We are monitoring our digital environment continuously to detect and respond to potential security incidents quickly. - Regular Updates: Systematic updates to our security systems in response to new threats and vulnerabilities, in an effort to maintain effective defenses.
Biggest changeOur cybersecurity practices include: - Data Monitoring and Loss Prevention: We continuously scan and monitor our systems to detect and prevent data breaches, in an effort to ensure sensitive information remains secure. - Network Vulnerability Testing: Regular assessments of our network’s security through certified third-party testers to identify and remediate vulnerabilities. - Robust Encryption: Implement strong encryption protocols to protect data in transit and at rest, mitigating the risk of unauthorized access. - Continuous Monitoring: We are monitoring our digital environment continuously to detect and respond to potential security incidents quickly. 59 Table of Contents - Regular Updates: Systematic updates to our security systems in response to new threats and vulnerabilities, in an effort to maintain effective defenses.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company maintains insurance coverage that is customary in the industry, although the Company is not fully insured against all environmental risks. 57 Table of Contents The Company is not aware of any environmental claims existing as of December 31, 2024.
Biggest changeThe Company maintains insurance coverage that is customary in the industry, although the Company is not fully insured against all environmental risks. The Company is not aware of any environmental claims existing as of December 31, 2025.
There can be no assurance, however, that current regulatory requirements will not change, or past non-compliance with environmental issues will not be discovered on the Company’s oil and gas properties. Item 4. Mine Safety Disclosures Not applicable. 58 Table of Contents Part II
There can be no assurance, however, that current regulatory requirements will not change, or past non-compliance with environmental issues will not be discovered on the Company’s oil and gas properties. Item 4. Mine Safety Disclosures Not applicable. 60 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common units are listed and traded on the NYSE under the ticker symbol “MNR.” As of March 7, 2025, there were 118,334,519 common units outstanding held by 5 holders of record.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common units are listed and traded on the NYSE under the ticker symbol “MNR.” As of March 5, 2026, there were 168,218,770 common units outstanding held by 8 holders of record.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [ Reserved ] 59 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 59 Results of Operations 62 Liquidity and Capital Resources 67 Critical Accounting Policies and Estimates 69 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 70 Item 8. Financial Statements and Supplementary Data 72
Biggest changeItem 6. [ Reserved ] 61 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 Results of Operations 64 Liquidity and Capital Resources 67 Critical Accounting Policies and Estimates 72 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 73 Item 8. Financial Statements and Supplementary Data 75

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

61 edited+19 added−19 removed34 unchanged
Biggest changeThese changes corresponded with the decrease in our cost of product sales noted below. 63 Table of Contents 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: Year Ended December 31, Change ($ in thousands) 2024 2023 Amount Percent Operating Expenses: Gathering and processing expense $ 106,152 $ 39,449 $ 66,703 169 % Lease operating expense 180,513 127,602 52,911 41 % Production taxes 45,674 31,882 13,792 43 % Midstream operating expense 10,466 10,873 (407) (4 %) Cost of product sales 24,026 28,089 (4,063) (14 %) Depreciation, depletion, amortization and accretion expense – oil and natural gas 261,949 131,145 130,804 100 % Depreciation and amortization expense – other 9,018 6,472 2,546 39 % General and administrative 40,838 27,653 13,185 48 % Total operating expenses $ 678,636 $ 403,165 $ 275,471 68 % Operating Expenses ($/Boe) Gathering and processing expense $ 3.35 $ 2.14 $ 1.21 57 % Lease operating expense $ 5.69 $ 6.93 $ (1.24) (18 %) Production taxes (% of oil, natural gas and NGL sales) 4.9 % 4.9 % — % — % Depreciation, depletion, amortization and accretion expense – oil and natural gas $ 8.26 $ 7.12 $ 1.14 16 % Depreciation and amortization expense – other $ 0.28 $ 0.35 $ (0.07) (20 %) General and administrative $ 1.29 $ 1.50 $ (0.21) (14) % 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 $68.2 million.
Biggest changeThese increases corresponded with the increase in our cost of product sales noted below. 65 Table of Contents Operating Expenses The following table summarizes our expenses for the periods indicated and includes a presentation of certain expenses on a per Boe basis, as we use this information to evaluate our performance relative to our peers and to identify and measure trends we believe may require additional analysis: Year Ended December 31, Change ($ in thousands) 2025 2024 Amount Percent Operating Expenses: Gathering and processing expense $ 138,836 $ 106,152 $ 32,684 31 % Lease operating expense 263,793 180,513 83,280 46 % Production taxes 48,761 45,674 3,087 7 % Midstream operating expense 13,319 10,466 2,853 27 % Cost of product sales 25,901 24,026 1,875 8 % Depreciation, depletion, amortization and accretion expense – oil and natural gas 280,459 261,949 18,510 7 % Depreciation and amortization expense – other 12,305 9,018 3,287 36 % General and administrative 56,636 40,838 15,798 39 % Impairment of oil and gas properties 90,430 — 90,430 100 % Total operating expenses $ 930,440 $ 678,636 $ 251,804 37 % Operating Expenses ($/Boe) Gathering and processing expense $ 3.68 $ 3.35 $ 0.33 10 % Lease operating expense $ 6.99 $ 5.69 $ 1.30 23 % Production taxes (% of oil, natural gas and NGL sales) 4.7 % 4.9 % (0.2 %) (4 %) Depreciation, depletion, amortization and accretion expense – oil and natural gas $ 7.43 $ 8.26 $ (0.83) (10 %) Depreciation and amortization expense – other $ 0.33 $ 0.28 $ 0.05 18 % General and administrative $ 1.50 $ 1.29 $ 0.21 16 % Gathering and processing expense Gathering and processing expense increased by $32.7 million, or 31%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily as a result of higher fuel costs due to higher natural gas prices, the IKAV Acquisition which added $13.9 million of expenses, and changes in certain purchaser contracts in the second quarter of 2025, which resulted in certain post-production costs that were previously presented as a reduction to gas revenue are now presented as gathering and processing expense.
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.
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 measure calculated and presented in accordance with GAAP.
We could choose to defer a portion of these planned 2025 capital expenditures depending on a variety of factors, including, but not limited to, the success of our drilling activities, prevailing and anticipated prices for oil and natural gas, the availability of necessary equipment, including acid to be used for our acid stimulation completion, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs and the level of participation by other working interest owners.
We could choose to defer a portion of these planned capital expenditures depending on a variety of factors, including, but not limited to, the success of our drilling activities, prevailing and anticipated prices for oil and natural gas, the availability of necessary equipment, including acid to be used for our acid stimulation completion, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs and the level of participation by other working interest owners.
We have applied provisions of the SEC’s FAST Act Modernization and Simplification of Regulation S-K, which limits the discussion to the two most recent fiscal years. The following information updates the discussion of our financial condition provided in our previous filings, and analyzes the changes in the results of operations between the years ended December 31, 2024 and 2023.
We have applied provisions of the SEC’s FAST Act Modernization and Simplification of Regulation S-K, which limits the discussion to the two most recent fiscal years. The following information updates the discussion of our financial condition provided in our previous filings, and analyzes the changes in the results of operations between the years ended December 31, 2025 and 2024.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide the reader of the financial statements with a narrative from the perspective of management on the financial 59 Table of Contents condition, results of operations, liquidity and certain other factors that may affect the Company’s operating results.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide the reader of the financial statements with a narrative from the perspective of management on the financial 61 Table of Contents condition, results of operations, liquidity and certain other factors that may affect the Company’s operating results.
For example, we expect a portion of our future capital expenditures to be financed with cash flows from operations derived from wells drilled on drilling locations not classified as proved reserves in our December 31, 2024 reserve report.
For example, we expect a portion of our future capital expenditures to be financed with cash flows from operations derived from wells drilled on drilling locations not classified as proved reserves in our December 31, 2025 reserve report.
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.
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 71 Table of Contents may differ significantly from the definitions used by other companies to compute similar measures.
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.
We exclude the items listed above from net income in 69 Table of Contents 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.
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 65 Table of Contents of our financial performance and liquidity.
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.
Recently Issued Accounting Pronouncements A summary of recent accounting pronouncements and our assessment of any expected impact of these pronouncements, if known, is included in Note 2 of our audited consolidated financial statements included in Item 8 of Part II of this Annual Report.
Recently Issued Accounting Pronouncements A summary of recent accounting pronouncements and our assessment of any expected impact of these pronouncements, if known, is included in Note 2 of our audited consolidated financial statements included in Item 8 of Part II of this Annual Report. 72 Table of Contents
In December 2024, inflation, as measured by the consumer price index, was 2.9%. We cannot predict the future inflation rate but to the extent we experience high inflation, we may see cost increases in our operations, including costs for drill rigs, workover rigs, tubulars and other well equipment, as well as increased labor costs.
In December 2025, inflation, as measured by the consumer price index, was 2.7%. We cannot predict the future inflation rate but to the extent we experience high inflation, we may see cost increases in our operations, including costs for drill rigs, workover rigs, tubulars and other well equipment, as well as increased labor costs.
Within our operating areas, our assets are prospective for multiple formations, most notably the Oswego, Woodford and Mississippian formations. Our experience in the Anadarko Basin and these formations allows us to generate significant cash available for distribution from these low declining assets in a variety of commodity price environments.
Within our operating areas, our assets are prospective for multiple formations, most notably the Oswego, Woodford and Mississippian, Mancos and Fruitland formations. Our experience across these formations allows us to generate significant cash available for distribution from these low declining assets in a variety of commodity price environments.
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.
This increase was primarily a result of increased production which resulted in additional production taxes of $3.5 million, partially offset with a decrease in pricing. Production taxes as a percentage of oil, natural gas and NGL sales were consistent from year to year.
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.
We define cash available for distribution as net income adjusted for (1) interest expense, net, (2) depreciation, depletion, amortization and accretion, (3) unrealized (gain) loss on derivative instruments, (4) impairment on oil and gas assets, (5) loss on debt extinguishment, (6) equity-based compensation expense, (7) gain on sale of assets, (8) cash interest expense, net, (9) development costs and (10) change in accrued realized derivative settlements.
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.
We define Adjusted EBITDA as net income before (1) interest expense, net, (2) depreciation, depletion, amortization and accretion, (3) unrealized (gain) loss on derivative instruments, (4) impairment on oil and gas assets, (5) loss on debt extinguishment, (6) equity-based compensation expense and (7) gain on sale of assets, net.
Overview We are an independent upstream oil and gas company focused on the acquisition, development and production of oil, natural gas and NGL reserves in the Anadarko Basin region of Western Oklahoma, Southern Kansas and the panhandle of Texas, and we operate approximately 5,000 PDP wells.
Overview We are an independent upstream oil and gas company focused on the acquisition, development and production of oil, natural gas and NGL reserves in the Anadarko Basin region of Western Oklahoma, Southern Kansas and the panhandle of Texas; the San Juan Basin region of New Mexico and Colorado; and the Permian Basin region of West Texas, and we operate approximately 12,000 PDP wells.
Our development efforts and capital for 2025 is anticipated to focus on a mix of drilling Oswego, Woodford and Mississippian wells.
Our development efforts and capital for 2026 is anticipated to focus on a mix of drilling Mississippian and Mancos wells.
Between 2022 and 2024, the Federal Reserve raised the target range for the federal funds rate in an effort to curb inflation. In September 2024 and November 2024, the Federal Reserve lowered the target range for the federal funds rate to its current range of 4.25% to 4.50% in light of the reduced inflation.
Between 2022 and 2024, the Federal Reserve raised the target range for the federal funds rate in an effort to curb inflation. In September 2025, October 2025 and December 2025 the Federal Reserve lowered the target range for the federal funds rate to its current range of 3.50% to 3.75% in light of the reduced inflation.
This increase was primarily related to a 72% production increase, which resulted in increased oil, natural gas and NGL sales of $336.1 million.
This increase was primarily related to a 19% production increase, which resulted in increased oil, natural gas and NGL sales of $115.5 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. 62 Table of Contents 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.
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 $14.6 million. 64 Table of Contents Oil, natural gas and NGL production Production increased 6,002 MBoe, or 19%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
We spent approximately $239.4 million in 2024 on development costs and our budget for 2025 is between $260.0 million and $280.0 million. For purposes of calculating our cash available for distribution, we define development costs as all of our capital expenditures, other than acquisitions.
We spent approximately $251.9 million in 2025 on development costs and our budget for 2026 is between $315.0 million and $360.0 million. For purposes of calculating our cash available for distribution, we define development costs as all of our capital expenditures, other than acquisitions.
These acquisitions are reflected in our results of operations as of and after the date of completion for each such acquisition. As a result, periods prior to each such acquisition will not contain the results of such acquired assets which will affect the comparability of our results of operations for certain historical periods.
As a result, periods prior to each such acquisition will not contain the results of such acquired assets which will affect the comparability of our results of operations for certain historical periods.
The war in Ukraine and conflict in the Middle East, uncertainty regarding interest rates, global supply chain disruptions, the potential for significant new tariffs, concerns about a potential economic downturn or recession, and instability in the financial sector have contributed to recent economic and pricing volatility and may continue to impact pricing throughout 2025.
The war in Ukraine and conflict in the Middle East and South America, uncertainty regarding interest rates, global supply chain disruptions, tariff volatility, OPEC+’s decision to increase production in May and July 2025, concerns about a potential economic downturn or recession, and instability in the financial sector have contributed to recent economic and pricing volatility and may continue to impact pricing throughout 2026.
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.
Cash available for distribution should not be considered as an alternative to, or more meaningful than, net income. 70 Table of Contents 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.
Factors Affecting the Comparability of Our Future Results of Operations to Our Historical Results of Operations Our future results of operations may not be comparable to our historical results of operations for the periods presented, primarily for the reasons described below. Acquisitions We have completed six acquisitions in the last two years.
Factors Affecting the Comparability of Our Future Results of Operations to Our Historical Results of Operations Our future results of operations may not be comparable to our historical results of operations for the periods presented, primarily for the reasons described below.
Net cash (used in) provided by financing activities decreased $904.8 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Net cash provided by (used in) by financing activities increased $575.1 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
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.
Depreciation, depletion, amortization and accretion expense Depreciation, depletion, amortization and accretion expense for oil and natural gas properties increased by $18.5 million, or 7%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The increase is primarily a result of acquisitions that closed during 2025.
The decrease in net cash used in investing activities is primarily attributable to a decrease in cash used in acquisitions of $628.8 million as well as a decrease in capital expenditures on our oil and gas properties of $93.0 million from 2024 to 2023. Net cash (used in) provided by financing activities.
The increase in net cash used in investing activities is primarily attributable to an increase in cash used in acquisitions of $507.3 million as well as an increase in capital expenditures on our oil and gas properties of $52.9 million from 2025 to 2024. Net cash provided (used in) by financing activities.
Cash Flows The following table summarizes our cash flows for the periods indicated: Year ended December 31, (in thousands) 2024 2023 Net cash provided by operating activities $ 505,292 $ 491,742 Net cash (used in) investing activities (306,316) (1,027,157) Net cash (used in) provided by financing activities (245,992) 658,790 Net cash provided by operating activities.
Cash Flows The following table summarizes our cash flows for the periods indicated: Year ended December 31, (in thousands) 2025 2024 Net cash provided by operating activities $ 506,956 $ 505,292 Net cash (used in) investing activities (899,162) (306,316) Net cash provided by (used in) financing activities 329,063 (245,992) Net cash provided by operating activities.
Between January 1, 2023 and December 31, 2024, NYMEX WTI prices for crude oil ranged from $65.75 to $93.68 per Bbl, and the NYMEX Henry Hub price of natural gas ranged from $1.58 to $4.17 per MMbtu.
Between January 1, 2024 and December 31, 2025, NYMEX WTI prices for crude oil ranged from $55.27 to $86.91 per Bbl, and the NYMEX Henry Hub price of natural gas ranged from $1.58 to $5.29 per MMbtu.
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.
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. Critical Accounting Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States require us to make estimates and assumptions.
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.
The increase was primarily a result of acquisitions that closed during 2025 which added approximately 8,271 MBoe, offset by natural declines on existing wells. Oil and natural gas derivatives For the year ended December 31, 2025, we had realized gains on derivative instruments of $49.2 million and unrealized gains of $32.1 million for total gains of $81.3 million.
Net cash provided by operating activities increased $13.6 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Net cash provided by operating activities increased $1.7 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. Net cash (used in) investing activities. Net cash (used in) investing activities increased $592.8 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
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.
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.
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.
Lease operating expense Lease operating expense increased $83.3 million, or 46%,for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily as a result of acquisitions in the fourth quarter of 2024 and throughout 2025, which increased lease operating expenses by $76.1 million.
We paid approximately $11.7 million in operating lease payments for the year ended December 31, 2024 and expect to pay approximately $16.8 million in operating lease payments through 2029. For further information on our operating lease obligations, see the notes to our audited financial statements included in Item 8 of Part II of this Annual Report.
We paid approximately $8.3 million in operating lease payments for the year ended December 31, 2025 and expect to pay approximately $22.1 million in operating lease payments through 2030. For further information on our operating lease obligations, see Note 11 of our consolidated financial statements.
For further information on firm transportation contracts, see the notes to our audited financial statements included in Item 8 of Part II of this Annual Report. Operating lease obligations Our operating lease obligations include long-term lease payments for office space, vehicles, and equipment related to exploration, development and production activities.
For further information on firm sales commitments, see Note 10 of our consolidated financial statements. Operating lease obligations Our operating lease obligations include long-term lease payments for office space, vehicles, and equipment related to exploration, development and production activities.
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.
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.
Further, 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. 60 Table of Contents How We Evaluate Our Operations We use a variety of financial and operational metrics to assess the performance of our operations, including the following sources of our revenue, principal components of our cost structure and other financial metrics: • net production volumes; • realized prices on the sale of oil, natural gas and NGLs; • lease operating expense; • Adjusted EBITDA; and • cash available for distribution.
How We Evaluate Our Operations We use a variety of financial and operational metrics to assess the performance of our operations, including the following sources of our revenue, principal components of our cost structure and other financial metrics: • net production volumes; • realized prices on the sale of oil, natural gas and NGLs; • lease operating expense; • Adjusted EBITDA; and • cash available for distribution.
Liquidity and Capital Resources Our primary sources of liquidity and capital are cash flows generated by operating activities, borrowings under our Credit Agreements, and proceeds from the issuance of equity and debt. Outstanding borrowings under our Credit Agreements were $763.1 million at December 31, 2024, and the remaining availability under our Credit Agreements was $70.0 million at December 31, 2024.
Liquidity and Capital Resources Our primary sources of liquidity and capital are cash flows generated by operating activities, borrowings under the New Credit Agreement, and proceeds from the issuance of equity and debt.
Critical Accounting Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States require us to make estimates and assumptions. The accounting estimates and assumptions we consider to be most significant to our financial statements are discussed below.
The accounting estimates and assumptions we consider to be most significant to our financial statements are discussed below.
The Revolving Credit Agreement includes customary covenants, mandatory repayments and events of default of financings of this type. The Company is also required to pay a commitment fee of 0.50% per annum on the average daily unused portion of the current aggregate commitments under the Revolving Credit Agreement.
The Company is also required to pay a commitment fee of 0.50% per annum on the daily unused portion of the current aggregate commitments under the New Credit Agreement. The New Credit Agreement’s borrowing base is redetermined semi-annually, in April and October.
A deferral of planned capital expenditures, particularly with respect to drilling and completing new wells, could result in a reduction in anticipated production and cash flows and reduce our cash available for distribution to unitholders. 67 Table of Contents Based on current oil and natural gas price expectations, we believe that our cash flow from operations, together with borrowings from time to time under the Revolving Credit Agreement, will be sufficient to fund our operations through 2025 and the foreseeable future.
Based on current oil and natural gas price expectations, we believe that our cash flow from operations, together with borrowings from time to time under the New Credit Agreement, will be sufficient to fund our operations through 2026 and the foreseeable future.
In addition, differences between the future commodity prices when acquiring assets and the historical 12-month average trailing price to calculate ceiling test impairments of upstream assets may impact net earnings. See Note 3 of our consolidated financial statements for further discussion of business combinations.
Estimated fair values assigned to assets acquired can have a significant effect on results of operations in the future. In addition, differences between the future commodity prices when acquiring assets and the historical 12-month average trailing price to calculate ceiling test impairments of upstream assets may impact net earnings.
The most significant assumptions relate to the estimated fair values assigned to our proved oil and natural gas properties. The assumptions made in performing these valuations include future net production volumes, future commodity prices and costs, future operating and development activities, projections of oil and gas reserves and a weighted average cost of capital rate.
The assumptions made in performing these valuations include future net production volumes, future commodity prices and costs, future operating and development activities, projections of oil and gas reserves and a weighted average cost of capital rate. There is no assurance the underlying assumptions or estimates associated with the valuation will occur as initially expected.
During the year ended December 31, 2024, we spent approximately $195.0 million on drilling and completion activities and related equipment and spud 50.1 net wells while bringing online 52.4 net wells, $33.5 million on remedial workovers and other capital projects, $10.9 million on midstream and other property and equipment capital projects and $123.1 million on acquisitions.
During the year ended December 31, 2025, we spent approximately $205.1 million on drilling and completion activities and related equipment and spud 27.1 net wells while bringing online 34.1 net wells, $38.5 million on remedial workovers and other capital projects, $8.3 million on midstream and other property and equipment capital projects and $1.3 billion on acquisitions. 67 Table of Contents Our 2026 capital expenditures program is largely discretionary and within our control.
Year Ended December 31, Change ($ in thousands) 2024 2023 Amount Percent Revenues: Oil $ 555,692 $ 422,312 $ 133,380 32 % Natural gas 195,472 149,795 45,677 30 % Natural gas liquids 185,621 75,245 110,376 147 % Total oil, natural gas, and NGL sales 936,785 647,352 289,433 45 % (Loss) gain on oil and natural gas derivatives, net (18,854) 57,272 (76,126) NM (1) Midstream revenue 24,341 26,328 (1,987) (8 %) Product sales 27,356 31,357 (4,001) (13 %) Total revenues $ 969,628 $ 762,309 $ 207,319 27 % Average Sales Price: Oil ($/Bbl) $ 75.27 $ 77.57 $ (2.30) (3 %) Natural gas ($/Mcf) $ 1.93 $ 2.52 $ (0.59) (23 %) NGL ($/Bbl) $ 24.79 $ 24.52 $ 0.27 1 % Total ($/Boe) – before effects of realized derivatives $ 29.52 $ 35.16 $ (5.64) (16 %) Total ($/Boe) – after effects of realized derivatives $ 30.07 $ 35.62 $ (5.55) (16 %) Net Production Volumes: Oil (MBbl) 7,382 5,445 1,937 36 % Natural gas (MMcf) 101,147 59,378 41,769 70 % NGL (MBbl) 7,489 3,068 4,421 144 % Total (MBoe) 31,729 18,409 13,320 72 % Average daily total volumes (MBoe/d) 86.69 50.44 36.25 72 % (1) Not Meaningful Revenue and Other Operating Income Oil, natural gas and NGL sales Revenues from oil, natural gas and NGL sales increased $289.4 million, or 45%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Year Ended December 31, Change ($ in thousands) 2025 2024 Amount Percent Revenues: Oil $ 491,837 $ 555,692 $ (63,855) (11 %) Natural gas 373,134 195,472 177,662 91 % Natural gas liquids 172,679 185,621 (12,942) (7 %) Total oil, natural gas, and NGL sales 1,037,650 936,785 100,865 11 % Gain (loss) on oil and natural gas derivatives, net 81,289 (18,854) 100,143 NM (1) Midstream revenue 27,561 24,341 3,220 13 % Product sales 28,890 27,356 1,534 6 % Total revenues $ 1,175,390 $ 969,628 $ 205,762 21 % Average Sales Price: Oil ($/Bbl) $ 63.72 $ 75.27 $ (11.55) (15 %) Natural gas ($/Mcf) $ 2.76 $ 1.93 $ 0.83 43 % NGL ($/Bbl) $ 23.00 $ 24.79 $ (1.79) (7 %) Total ($/Boe) – before effects of realized derivatives $ 27.46 $ 29.52 $ (2.06) (7 %) Total ($/Boe) – after effects of realized derivatives $ 28.76 $ 30.07 $ (1.31) (4 %) Net Production Volumes: Oil (MBbl) 7,719 7,382 337 5 % Natural gas (MMcf) 135,026 101,147 33,879 33 % NGL (MBbl) 7,507 7,489 18 0 % Total (MBoe) 37,731 31,729 6,002 19 % Average daily total volumes (MBoe/d) 103.37 86.69 16.68 19 % (1) Not Meaningful Revenue and Other Operating Income Oil, natural gas and NGL sales Revenues from oil, natural gas and NGL sales increased $100.9 million, or 11%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
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.
General and administrative costs General and administrative costs increased $15.8 million, or 39%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The increase in general and administrative costs was primarily acquisition transaction expenses of $17.8 million included in general and administrative expense for the year ended December 31, 2025.
Such amendment to the Revolving Credit Agreement remains in effect as of the date hereof though no such increase to commitments was realized. We have not guaranteed the debt or obligations of any other party, nor do we have any other arrangements or relationships with other entities that could potentially result in consolidated debt or losses.
We have not guaranteed the debt or obligations of any other party, nor do we have any other arrangements or relationships with other entities that could potentially result in consolidated debt or losses. Contractual Obligations and Commitments We are a party to firm transportation contracts for the transport of natural gas.
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.
Lease operating expenses per Boe increased by $1.30, primarily as a result of the oil-heavy production from the Sabinal Acquisition that added to our overall cost profile. Production taxes Production taxes increased $3.1 million, or 7%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
Year Ended December 31, (in thousands) 2024 2023 Net Income Reconciliation to Adjusted EBITDA: Net income $ 185,179 $ 346,558 Interest expense, net 100,179 9,546 Depreciation, depletion, amortization and accretion 270,967 137,617 Unrealized loss (gain) on derivative investments 36,311 (48,826) Equity-based compensation expense 6,531 3,440 Credit losses 2,240 1,746 (Gain) loss on sale of assets, net (686) (1) Adjusted EBITDA $ 600,721 $ 450,080 Net Income Reconciliation to Cash Available for Distribution: Net income $ 185,179 $ 346,558 Interest expense, net 100,179 9,546 Depreciation, depletion, amortization and accretion 270,967 137,617 Unrealized loss (gain) on derivative investments 36,311 (48,826) Equity-based compensation expense 6,531 3,440 Credit losses 2,240 1,746 (Gain) loss on sale of assets, net (686) (1) Settlement of asset retirement obligations (881) (537) Cash interest expense, net (92,789) (7,596) Development costs (239,435) (302,799) Change in accrued realized derivative settlements (150) (4,029) Cash Available for Distribution $ 267,466 $ 135,119 Net Cash Provided by Operating Activities Reconciliation to Cash Available for Distribution: Net cash provided by operating activities $ 505,292 $ 491,742 Change in operating assets and liabilities 1,609 (53,824) Development costs (239,435) (302,799) Cash Available for Distribution $ 267,466 $ 135,119 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.
Year Ended December 31, (in thousands) 2025 2024 Net Income Reconciliation to Adjusted EBITDA: Net income $ 142,984 $ 185,179 Interest expense, net 71,555 100,179 Depreciation, depletion, amortization and accretion 292,764 270,967 Unrealized (gain) loss on derivative investments (32,109) 36,311 Impairment of oil and gas properties 90,430 — Loss on debt extinguishment 18,540 — Equity-based compensation expense 9,390 6,531 Gain on sale of assets (298) (686) Adjusted EBITDA $ 593,256 $ 598,481 Net Income Reconciliation to Cash Available for Distribution: Net income $ 142,984 $ 185,179 Interest expense, net 71,555 100,179 Depreciation, depletion, amortization and accretion 292,764 270,967 Unrealized (gain) loss on derivative investments (32,109) 36,311 Impairment of oil and gas properties 90,430 — Loss on debt extinguishment 18,540 — Equity-based compensation expense 9,390 6,531 Gain on sale of assets (298) (686) Cash interest expense, net (66,405) (92,789) Development costs (251,854) (239,435) Change in accrued realized derivative settlements (604) (150) Cash Available for Distribution $ 274,393 $ 266,107 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.
See Note 17 of our consolidated financial statements for further information. 69 Table of Contents Business Combinations We account for business combinations using the acquisition method, which is the only method permitted under FASB ASC Topic 805 — Business Combinations, and involves the use of significant judgment.
Business Combinations We account for business combinations using the acquisition method, which is the only method permitted under FASB ASC Topic 805 — Business Combinations, and involves the use of significant judgment. Under the acquisition method of accounting, a business combination is accounted for at a purchase price based on the fair value of the consideration given.
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.
Product sales Product sales increased $1.5 million, or 6%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. This increase was primarily a result of the increase in the average selling price of natural gas.
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.
Midstream revenue Midstream revenue increased $3.2 million, or 13%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to the acquisition of additional midstream facilities in the IKAV Acquisition in September 2025.
Under the acquisition method of accounting, a business combination is accounted for at a purchase price based on the fair value of the consideration given. The assets and liabilities acquired are measured at their fair values, and the purchase price is allocated to the assets and liabilities based upon these fair values.
The assets and liabilities acquired are measured at their fair values, and the purchase price is allocated to the assets and liabilities based upon these fair values. The most significant assumptions relate to the estimated fair values assigned to our proved oil and natural gas properties.
Contractual Obligations and Commitments Firm transportation contracts We are a party to firm transportation contracts for the transport of natural gas. We incurred approximately $3.4 million in firm transportation contracts for the year ended December 31, 2024 and expect to pay approximately $0.3 million in firm transportation contracts through 2025.
We incurred approximately $0.4 million in firm transportation contracts for the year ended December 31, 2025. For further information on firm transportation contracts, see Note 10 of our consolidated financial statements.
Public Company Expenses We expect to incur significant and recurring expenses as a publicly traded partnership, including costs associated with the employment of additional personnel, compliance under the Exchange Act, annual and quarterly reports to unitholders, tax return and Schedule K-1 preparation, independent auditor fees, investor relations activities, registrar and transfer agent fees, incremental director and officer liability insurance costs and independent director compensation. 61 Table of Contents Results of Operations 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.
We may continue to grow our operations through acquisitions when economical, including by funding such acquisitions under our New Credit Agreement. 63 Table of Contents Results of Operations Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024 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.
The Revolving Credit Agreement has (i) a maximum available principal amount of $75.0 million, (ii) a maturity date of December 28, 2026 and (iii) an interest rate equal to one, three, or six month SOFR, at the 68 Table of Contents Company’s election, plus a credit spread adjustment equal to 0.10%, 0.15% or 0.25%, respectively, in each case, plus 3.00%, provided that the applicable tenor SOFR will not be less than 3.50%.
The New Credit Agreement has (i) an initial borrowing base and elected commitment amount of $750.0 million, with a maximum commitment amount of $2.0 billion subject to borrowing base availability, (ii) a maturity date of February 27, 2029 and (iii) an interest rate equal to, at the Company’s election, (a) term SOFR (subject to a 0.10% per annum adjustment) plus a margin ranging from 3.00-4.00% per annum or (b) a base rate plus a margin ranging from 2.00-3.00% 68 Table of Contents per annum, with the margin dependent upon borrowing base utilization at the time of determination.
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.
The GAAP measure most directly comparable to cash available for distribution is net income.
Net cash (used in) investing activities decreased $720.8 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Midstream operating expense Midstream operating expense increased $2.9 million, or 27%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
The decrease in net cash provided by financing activities is primarily attributable to a decrease in proceeds from borrowings, net of repayments and issuance costs, of $705.9 million, as well as an increase of distributions made to unitholders in 2024 and members in 2023 of $208.5 million.
The increase in cash provided by borrowings under our New Credit Agreement and Revolving Credit Agreement, net of repayments of $448.8 million, and an increase in cash provided from proceeds from equity offerings of $92.2 million. Additionally, there was a decrease of distributions paid to unitholders of $65.3 million.
Removed
We may continue to grow our operations through acquisitions when economical, including by funding such acquisitions under our Revolving Credit Agreement. Corporate Reorganization The historical consolidated financial statements included in this Annual Report are of our Predecessor for periods prior to the Corporate Reorganization, and of the Company for periods after the Corporate Reorganization.
Added
Further, if we are unable to recover higher costs through higher commodity prices, our current 62 Table of Contents 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.
Removed
Our historical financial data presented herein does not present what our actual performance results would have been on a combined basis for all fiscal periods presented.
Added
Acquisitions We have completed six acquisitions in the last two years, most notably the IKAV and Sabinal Acquisitions (as defined in Note 3 ) that closed in September 2025. These acquisitions are reflected in our results of operations as of and after the date of completion for each such acquisition.
Removed
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.
Added
The increase in realized gains is primarily from the overall decrease in oil prices throughout 2025, as well as $13.8 million in early settlements from unwinding a portion of our natural gas derivatives in 2025.
Removed
The increase in gathering expense per Boe is due to BCE-Mach having higher gathering and processing costs per Boe than the Predecessor.
Added
The increase in midstream operating expense is primarily related to increases from 66 Table of Contents acquisitions of $1.2 million, increases of produced water operating expense of $1.1 million, and increases to gathering operating expense of $1.3 million. These increases were offset with a decrease to plant operating expense of $0.7 million, driven by lower ad valorem taxes in 2025.
Removed
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.
Added
Cost of product sales Cost of product sales increased $1.9 million, or 8%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. This increase was primarily a result of the increase in the average selling price of natural gas. These increases were consistent with the increase in product sales noted above.
Removed
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. 64 Table of Contents 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.
Added
Impairment of oil and gas properties Impairment of oil and gas properties increased $90.4 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, as a result of the full cost ceiling test during the third quarter of 2025.
Removed
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.
Added
At December 31, 2025, outstanding borrowings under the New Credit Agreement were $1.15 billion with $5.0 million in letters of credit outstanding, and the remaining availability under the New Credit Agreement was $295.0 million at December 31, 2025.
Removed
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.
Added
A deferral of planned capital expenditures, particularly with respect to drilling and completing new wells, could result in a reduction in anticipated production and cash flows and reduce our cash available for distribution to unitholders.
Removed
The Company is a limited partnership treated as a partnership for federal and state income tax 66 Table of Contents purposes, and accordingly is not subject to entity level taxation.
Added
These were partially offset by increases in new debt issuance costs of $23.5 million and prepayment penalties of $7.7 million.
Removed
Our 2025 capital expenditures program is largely discretionary and within our control.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−0 removed14 unchanged
Biggest changeIn the case of joint interest owners, we often have the ability to withhold future revenue disbursements to recover non-payment of joint interest billings. Interest Rate Risk Variable rate debt At December 31, 2024, we had $763.1 million of debt outstanding under the Term Loan Credit Agreement.
Biggest changeIn the case of joint interest owners, we often have the ability to withhold future revenue disbursements to recover non-payment of joint interest billings. Interest Rate Risk Variable rate debt At December 31, 2025, we had $1.15 billion of debt outstanding under the New Credit Agreement.
Interest rate derivative activities As of December 31, 2024, we did not have any derivative arrangements to protect against fluctuations in interest rates applicable to our outstanding indebtedness, but we may enter into such derivative arrangements in the future.
Interest rate derivative activities As of December 31, 2025, we did not have any derivative arrangements to protect against fluctuations in interest rates applicable to our outstanding indebtedness, but we may enter into such derivative arrangements in the future.
Both our purchasers and joint interest partners have recently experienced the impact of significant commodity price volatility as discussed above under “— Commodity Price Risk — Oil and Gas Revenue.” This concentration of customers and joint interest owners may impact our overall credit risk in that these entities may be similarly affected by changes in commodity prices and economic and other conditions.
Both our purchasers and joint interest partners have recently experienced the impact of significant commodity price volatility as discussed above under “— Commodity Price Risk — Oil and Gas Revenue.” This concentration of customers and joint interest owners may impact our overall credit risk in that these entities may be similarly affected by changes in commodity 73 Table of Contents prices and economic and other conditions.
To the extent we enter into any such interest rate derivative arrangement, we would be subject to risk for financial loss. 71 Table of Contents
To the extent we enter into any such interest rate derivative arrangement, we would be subject to risk for financial loss. 74 Table of Contents
The Credit Agreements contain various covenants and restrictive provisions which, among other things, limit our ability to enter into commodity price hedges exceeding a certain percentage of production. Our hedging activities are intended to support oil and natural gas prices at targeted levels and manage our exposure to natural gas price volatility.
The New Credit Agreement contains various covenants and restrictive provisions which, among other things, limit our ability to enter into commodity price hedges exceeding a certain percentage of production. Our hedging activities are intended to support oil and natural gas prices at targeted levels and manage our exposure to natural gas price volatility.
Under swap contracts, the counterparty is required to make a payment to us for the difference 70 Table of Contents between the swap price specified in the contract and the settlement price, which is based on market prices on the settlement date, if the settlement price is below the swap price.
Under swap contracts, the counterparty is required to make a payment to us for the difference between the swap price specified in the contract and the settlement price, which is based on market prices on the settlement date, if the settlement price is below the swap price.
The creditworthiness of our counterparties is subject to periodic review. As of December 31, 2024, we had derivative instruments in place with four different counterparties. We believe our counterparties currently represent acceptable credit risks.
The creditworthiness of our counterparties is subject to periodic review. As of December 31, 2025, we had derivative instruments in place with 9 different counterparties. We believe our counterparties currently represent acceptable credit risks.
Assuming no change in the amount outstanding, the impact on interest expense of a 1% (or 100 basis points) increase or decrease in the assumed weighted average interest rate on our variable interest debt would be approximately $7.6 million per year based on our borrowings outstanding at December 31, 2024.
Assuming no change in the amount outstanding, the impact on interest expense of a 1% (or 100 basis points) increase or decrease in the assumed weighted average interest rate on our variable interest debt would be approximately $11.5 million per year based on our borrowings outstanding at December 31, 2025.
Borrowings outstanding under the Term Loan Credit Agreement bore an effective interest rate of 12.3% as of December 31, 2024.
Borrowings outstanding under the New Credit Agreement bore an interest rate of 7.7% as of December 31, 2025.

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