Exhibit 99.2
Three months and six months ended June 30, 2024
Supplemental Information of Mach Natural Resources LP
1
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 144,621 | $ | 152,792 | ||||
| Accounts receivable – joint interest and other, net | 28,178 | 54,155 | ||||||
| Accounts receivable – oil, gas, and NGL sales | 118,277 | 78,051 | ||||||
| Short-term derivative assets | 9,110 | 24,802 | ||||||
| Inventories | 27,499 | 31,377 | ||||||
| Other current assets | 7,371 | 2,425 | ||||||
| Total current assets | 335,056 | 343,602 | ||||||
| Oil and natural gas properties, using the full cost method: | ||||||||
| Proved oil and natural gas properties | 2,179,014 | 2,097,540 | ||||||
| Less: accumulated depreciation, depletion and amortization | (393,653 | ) | (265,895 | ) | ||||
| Oil and natural gas properties, net | 1,785,361 | 1,831,645 | ||||||
| Other property, plant and equipment | 111,641 | 105,302 | ||||||
| Less: accumulated depreciation | (19,475 | ) | (15,642 | ) | ||||
| Other property, plant and equipment, net | 92,166 | 89,660 | ||||||
| Long-term derivative assets | 3,672 | 15,112 | ||||||
| Other assets | 5,895 | 7,102 | ||||||
| Operating lease assets | 12,887 | 17,394 | ||||||
| Total assets | $ | 2,235,037 | $ | 2,304,515 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 37,759 | $ | 44,577 | ||||
| Accounts payable – related party | 860 | 2,867 | ||||||
| Accrued liabilities | 53,230 | 44,529 | ||||||
| Revenue payable | 131,887 | 110,296 | ||||||
| Short-term derivative liabilities | 5,967 | — | ||||||
| Current portion of long-term debt | 82,500 | 61,875 | ||||||
| Current portion of operating lease liabilities | 7,468 | 10,765 | ||||||
| Total current liabilities | 319,671 | 274,909 | ||||||
| Long-term debt | 706,909 | 745,140 | ||||||
| Asset retirement obligations | 88,762 | 85,094 | ||||||
| Long-term portion of operating leases | 5,451 | 6,705 | ||||||
| Other long-term liabilities | 1,134 | 943 | ||||||
| Total long-term liabilities | 802,256 | 837,882 | ||||||
| Commitments and contingencies (Note 10) | ||||||||
| Partners’ capital: | ||||||||
| Partners’ capital | 1,113,110 | 1,191,724 | ||||||
| Total liabilities and partners’ capital | $ | 2,235,037 | $ | 2,304,515 | ||||
2
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per common unit data)
| Three
Months Ended June 30, | Six
Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | ||||||||||||||||
| Oil, natural gas, and NGL sales | $ | 231,539 | $ | 150,165 | $ | 486,779 | $ | 312,613 | ||||||||
| (Loss) gain on oil and natural gas derivatives | (4,635 | ) | 2,688 | (33,903 | ) | 15,742 | ||||||||||
| Midstream revenue | 6,441 | 6,786 | 12,660 | 13,318 | ||||||||||||
| Product sales | 6,649 | 7,282 | 13,613 | 17,421 | ||||||||||||
| Total revenues | 239,994 | 166,921 | 479,149 | 359,094 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Gathering and processing | 23,831 | 7,868 | 55,773 | 17,510 | ||||||||||||
| Lease operating expense | 46,497 | 27,802 | 87,257 | 60,615 | ||||||||||||
| Production taxes | 11,302 | 6,852 | 24,054 | 15,526 | ||||||||||||
| Midstream operating expense | 2,616 | 2,569 | 5,175 | 5,538 | ||||||||||||
| Cost of product sales | 5,786 | 6,463 | 11,886 | 15,575 | ||||||||||||
| Depreciation, depletion, amortization and accretion – oil and natural gas | 65,819 | 28,528 | 131,191 | 58,095 | ||||||||||||
| Depreciation and amortization – other | 2,242 | 1,436 | 4,340 | 2,793 | ||||||||||||
| General and administrative | 9,568 | 4,195 | 18,046 | 7,770 | ||||||||||||
| General and administrative - related party | 1,850 | 1,067 | 3,700 | 2,135 | ||||||||||||
| Total operating expenses | 169,511 | 86,780 | 341,422 | 185,557 | ||||||||||||
| Income from operations | 70,483 | 80,141 | 137,727 | 173,537 | ||||||||||||
| Other (expense) income | ||||||||||||||||
| Interest expense | (27,046 | ) | (1,975 | ) | (53,331 | ) | (3,789 | ) | ||||||||
| Other income (expense), net | (3,921 | ) | (357 | ) | (3,178 | ) | (245 | ) | ||||||||
| Total other expense | (30,967 | ) | (2,332 | ) | (56,509 | ) | (4,034 | ) | ||||||||
| Net income | $ | 39,516 | $ | 77,809 | $ | 81,218 | $ | 169,503 | ||||||||
| Net income per common unit: | ||||||||||||||||
| Basic | $ | 0.42 | $ | 0.85 | ||||||||||||
| Diluted | $ | 0.42 | $ | 0.85 | ||||||||||||
| Weighted average common units outstanding: | ||||||||||||||||
| Basic | 95,009 | 95,004 | ||||||||||||||
| Diluted | 95,187 | 95,129 | ||||||||||||||
3
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
| Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 81,218 | $ | 169,503 | ||||
| Adjustments to reconcile net income to cash provided by operating activities | ||||||||
| Depreciation, depletion, amortization and accretion | 135,531 | 60,888 | ||||||
| Loss (gain) on derivative instruments | 33,903 | (15,742 | ) | |||||
| Cash receipts (payments) on settlement of derivative contracts, net | 3,384 | 7,245 | ||||||
| Debt issuance costs amortization | 3,494 | 202 | ||||||
| Equity based compensation | 3,482 | 1,294 | ||||||
| Credit losses | 647 | — | ||||||
| (Gain) loss on sale of assets | (309 | ) | (1 | ) | ||||
| Settlement of asset retirement obligations | (418 | ) | (79 | ) | ||||
| Changes in operating assets and liabilities (decreasing) increasing cash: | ||||||||
| Accounts receivable | (24,381 | ) | 53,913 | |||||
| Revenue payable | 21,592 | (2,675 | ) | |||||
| Accounts payable and accrued liabilities | 2,280 | (5,133 | ) | |||||
| Other | 361 | 5,730 | ||||||
| Net cash provided by operating activities | 260,784 | 275,145 | ||||||
| Cash flows from investing activities | ||||||||
| Capital expenditures for oil and natural gas properties | (116,441 | ) | (182,427 | ) | ||||
| Capital expenditures for other property and equipment | (7,032 | ) | (4,953 | ) | ||||
| Acquisition of assets | (1,258 | ) | (468 | ) | ||||
| Proceeds from sales of oil and natural gas properties | 38,975 | — | ||||||
| Proceeds from sales of other property and equipment | 495 | 36 | ||||||
| Net cash used in investing activities | (85,261 | ) | (187,812 | ) | ||||
| Cash flows from financing activities | ||||||||
| Repayments of borrowings on term note | (20,625 | ) | — | |||||
| Proceeds from borrowings on credit facility | — | 7,000 | ||||||
| Distributions to unitholders | (161,617 | ) | — | |||||
| Distributions to members | — | (74,500 | ) | |||||
| Withholding taxes paid on vesting of phantom units | (570 | ) | — | |||||
| Payment of other financing fees | (882 | ) | (404 | ) | ||||
| Net cash used in financing activities | (183,694 | ) | (67,904 | ) | ||||
| Net (decrease) increase in cash and cash equivalents | (8,171 | ) | 19,429 | |||||
| Cash and cash equivalents, beginning of period | 152,792 | 29,417 | ||||||
| Cash and cash equivalents, end of period | $ | 144,621 | $ | 48,846 | ||||
4
| 2024 | ||||||||||||
| Q3 | Q4 | Full-Year | ||||||||||
| Net Production Guidance | ||||||||||||
| Oil (MBbls/d) | 18.6 - 19.9 | 18.6 - 19.9 | 19.4 - 20.6 | |||||||||
| NGLs (MBbls/d) | 18.4 - 19.5 | 18.1 - 19.2 | 19.1 - 20.3 | |||||||||
| Natural Gas (MMcf/d) | 249 - 265 | 243 - 258 | 262 - 278 | |||||||||
| Total (Mboe/d) | 78.5 - 83.6 | 77.2 - 82.1 | 82.2 - 87.2 | |||||||||
| Full-Year 2024 | ||||
| Price Realizations Guidance (excluding derivatives) | ||||
| Oil (differential to NYMEX WTI) ($/Bbl) | ($1.50) - ($0.50) | |||
| NGLs (% of WTI) | 31% - 35% | |||
| Natural Gas (differential to NYMEX Henry Hub) ($/Mcf) | ($0.36) - ($0.20) | |||
| Other Guidance Items | ||||
| Lease Operating Expense ($/Boe) | $5.80 - $6.10 | |||
| Gathering and Processing ($/Boe) | $3.20 - $3.40 | |||
| Production Taxes (% of Oil, natural gas, and NGL sales) | 5.0% - 6.0% | |||
| Midstream Operating Profit ($MM) | $15 - $18 | |||
| General and Administrative, excluding equity-based compensation ($MM) | $30 - $34 | |||
| Interest Expense ($MM) | $88 - $92 | |||
| Capital Expenditure Guidance ($MM) | ||||
| Upstream (D&C and Workovers) | $195 - $210 | |||
| Other (Midstream and Land) | $20 - $30 | |||
| Total | $215 - $240 |
5
Adjusted EBITDA
We include in the tables below the supplemental non-GAAP financial performance measure Adjusted EBITDA and provide our calculation of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, our most directly comparable financial measures calculated and presented in accordance with GAAP. We define Adjusted EBITDA as net income before (1) interest expense, net, (2) depreciation, depletion, amortization and accretion, (3) unrealized (gain) loss on derivative instruments, (4) equity-based compensation expense, (5) credit losses, and (6) (gain) loss on sale of assets.
Adjusted EBITDA is used as a supplemental financial performance measure by our management and by external users of our financial statements, such as industry analysts, investors, lenders, rating agencies and others, to more effectively evaluate our operating performance and our results of operation from period to period and against our peers without regard to financing methods, capital structure or historical cost basis. We exclude the items listed above from net income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as indicators of our operating performance. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax burden, as well as the historic costs of depreciable assets, none of which are reflected in Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our results will be unaffected by unusual items. Our computations of Adjusted EBITDA may not be identical to other similarly titled measures of other companies.
Cash Available for Distribution
Cash available for distribution is not a measure of net income or net cash flow provided by or used in operating activities as determined by GAAP. Cash available for distribution is a supplemental non-GAAP financial performance measure used by our management and by external users of our financial statements, such as industry analysts, investors, lenders, rating agencies and others, to assess our ability to internally fund our exploration and development activities, pay distributions, and to service or incur additional debt. We define cash available for distribution as net income less (1) interest expense, net, (2) depreciation, depletion, amortization and accretion, (3) unrealized (gain) loss on derivative instruments, (4) equity-based compensation expense, (5) credit losses, (6) (gain) loss on sale of assets, (7) settlement of asset retirement obligations, (8) cash interest expense, net (9) development costs, and (10) change in accrued realized derivative settlements. Development costs include all of our capital expenditures, other than acquisitions. Cash available for distribution will not reflect changes in working capital balances. Cash available for distribution is not a measurement of our financial performance or liquidity under GAAP and should not be considered as an alternative to, or more meaningful than, net income or net cash provided by or used in operating activities as determined in accordance with GAAP or as indicators of our financial performance and liquidity. The GAAP measures most directly comparable to cash available for distribution are net income and net cash provided by operating activities. Cash available for distribution should not be considered as an alternative to, or more meaningful than, net income or net cash provided by operating activities.
6
Reconciliation of GAAP Financial Measures to Adjusted EBITDA and Cash Available for Distribution
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| ($ in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net Income Reconciliation to Adjusted EBITDA: | ||||||||||||||||
| Net income | $ | 39,516 | $ | 77,809 | $ | 81,218 | $ | 169,503 | ||||||||
| Interest expense, net | 25,880 | 1,570 | 50,952 | 3,294 | ||||||||||||
| Depreciation, depletion, amortization and accretion | 68,061 | 29,964 | 135,531 | 60,888 | ||||||||||||
| Unrealized (gain) loss on derivative instruments | (124 | ) | 2,097 | 33,099 | (8,212 | ) | ||||||||||
| Equity-based compensation expense | 2,300 | 647 | 3,482 | 1,294 | ||||||||||||
| Credit losses | 193 | — | 647 | — | ||||||||||||
| Gain on sale of assets | (298 | ) | — | (309 | ) | (1 | ) | |||||||||
| Adjusted EBITDA | $ | 135,528 | $ | 112,087 | $ | 304,620 | $ | 226,766 | ||||||||
| Net Income Reconciliation to Cash Available for Distribution: | ||||||||||||||||
| Net income | $ | 39,516 | $ | 77,809 | $ | 81,218 | $ | 169,503 | ||||||||
| Interest expense, net | 25,880 | 1,570 | 50,952 | 3,294 | ||||||||||||
| Depreciation, depletion, amortization and accretion | 68,061 | 29,964 | 135,531 | 60,888 | ||||||||||||
| Unrealized (gain) loss on derivative instruments | (124 | ) | 2,097 | 33,099 | (8,212 | ) | ||||||||||
| Equity-based compensation expense | 2,300 | 647 | 3,482 | 1,294 | ||||||||||||
| Credit losses | 193 | — | 647 | — | ||||||||||||
| Gain on sale of assets | (298 | ) | — | (309 | ) | (1 | ) | |||||||||
| Settlement of asset retirement obligations | (390 | ) | (8 | ) | (418 | ) | (79 | ) | ||||||||
| Cash interest expense, net | (23,654 | ) | (1,490 | ) | (47,458 | ) | (3,092 | ) | ||||||||
| Development costs | (45,562 | ) | (88,301 | ) | (125,987 | ) | (192,892 | ) | ||||||||
| Change in accrued realized derivative settlements | 1,586 | (243 | ) | 4,188 | (285 | ) | ||||||||||
| Cash available for distribution | $ | 67,508 | $ | 22,045 | $ | 134,945 | $ | 30,418 | ||||||||
| Net Cash Provided by Operating Activities Reconciliation to Cash Available for Distribution: | ||||||||||||||||
| Net cash provided by operating activities | 116,831 | 127,996 | $ | 260,784 | $ | 275,145 | ||||||||||
| Changes in operating assets and liabilities | (3,761 | ) | (17,650 | ) | 148 | (51,835 | ) | |||||||||
| Development costs | (45,562 | ) | (88,301 | ) | (125,987 | ) | (192,892 | ) | ||||||||
| Cash available for distribution | $ | 67,508 | $ | 22,045 | $ | 134,945 | $ | 30,418 | ||||||||
7
The table below represents a summary of the Company’s derivative contracts as of August 1, 2024:
| Oil Derivative Contracts | ||||||||||||||||
| 2024 | Q3 | Q4 | ||||||||||||||
| Oil Volumes (MBbl) | 781 | 706 | ||||||||||||||
| Weighted Average Fixed Price (per Bbl) | $72.77 | $73.21 | ||||||||||||||
| 2025 | Q1 | Q2 | Q3 | Q4 | ||||||||||||
| Oil Volumes (MBbl) | 650 | 605 | 284 | 269 | ||||||||||||
| Weighted Average Fixed Price (per Bbl) | $72.45 | $72.94 | $71.88 | $71.87 | ||||||||||||
| 2026 | Q1 | Q2 | Q3 | Q4 | ||||||||||||
| Oil Volumes (MBbl) | 255 | 243 | - | - | ||||||||||||
| Weighted Average Fixed Price (per Bbl) | $68.90 | $73.98 | - | - | ||||||||||||
| Natural Gas Derivative Contracts | ||||||||||||||||
| 2024 | Q3 | Q4 | ||||||||||||||
| Natural Gas Volumes (Bbtu) | 10,653 | 10,158 | ||||||||||||||
| Weighted Average Fixed Price (per Mmbtu) | $2.96 | $3.73 | ||||||||||||||
| 2025 | Q1 | Q2 | Q3 | Q4 | ||||||||||||
| Natural Gas Volumes (Bbtu) | 4,860 | 4,680 | 4,510 | 4,360 | ||||||||||||
| Weighted Average Fixed Price (per Mmbtu) | $4.34 | $3.69 | $3.92 | $4.36 | ||||||||||||
8