Exhibit 99.2

 

Three months and nine months ended September 30, 2024

Supplemental Information of Mach Natural Resources LP

 

Table of Contents:   Page
Consolidated Balance Sheets   2
Consolidated Statements of Operations   3
Consolidated Statements of Cash Flows   4
2025 Guidance   5
Non-GAAP Financial Measures and Reconciliations   6
Derivative Contracts   8

 

 

 

 

MACH NATURAL RESOURCES LP

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

 

   September 30,
2024
   December 31,
2023
 
ASSETS        
Current assets:        
Cash and cash equivalents  $184,533   $152,792 
Accounts receivable – joint interest and other, net   34,326    54,155 
Accounts receivable – oil, gas, and NGL sales   98,924    78,051 
Short-term derivative assets   30,282    24,802 
Inventories   26,311    31,377 
Other current assets   6,080    2,425 
Total current assets   380,456    343,602 
Oil and natural gas properties, using the full cost method:          
Proved oil and natural gas properties   2,275,042    2,097,540 
Less: accumulated depreciation, depletion and amortization   (455,164)   (265,895)
Oil and natural gas properties, net   1,819,878    1,831,645 
Other property, plant and equipment   114,162    105,302 
Less: accumulated depreciation   (21,767)   (15,642)
Other property, plant and equipment, net   92,395    89,660 
Long-term derivative assets   7,077    15,112 
Other assets   15,180    7,102 
Operating lease assets   11,114    17,394 
Total assets  $2,326,100   $2,304,515 
LIABILITIES AND EQUITY          
Current liabilities:          
Accounts payable  $42,541   $44,577 
Accounts payable – related party   1,776    2,867 
Accrued liabilities   49,818    44,529 
Revenue payable   120,984    110,296 
Short-term derivative liabilities   2,111     
Current portion of long-term debt   82,500    61,875 
Current portion of operating lease liabilities   6,423    10,765 
Total current liabilities   306,153    274,909 
Long-term debt   687,669    745,140 
Asset retirement obligations   99,380    85,094 
Long-term derivative liabilities   1,315     
Long-term portion of operating leases   4,718    6,705 
Other long-term liabilities   2,203    943 
Total long-term liabilities   795,285    837,882 
Commitments and contingencies (Note 10)          
Partners’ capital:          
Partners’ capital   1,224,662    1,191,724 
Total liabilities and partners’ capital  $2,326,100   $2,304,515 

 

2

 

 

MACH NATURAL RESOURCES LP

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per common unit data)

 

  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2024   2023   2024   2023 
Revenue                
Oil, natural gas, and NGL sales  $209,165   $166,706   $695,944   $479,319 
Gain (loss) on oil and natural gas derivatives   33,684    (4,900)   (219)   10,842 
Midstream revenue   5,889    6,683    18,549    20,001 
Product sales   6,798    6,900    20,411    24,321 
Total revenues   255,536    175,389    734,685    534,483 
                     
Operating expenses                    
Gathering and processing   23,587    7,962    79,360    25,472 
Lease operating expense   44,029    28,879    131,286    89,494 
Production taxes   9,784    7,660    33,838    23,186 
Midstream operating expense   2,607    2,725    7,782    8,263 
Cost of product sales   5,833    6,024    17,719    21,599 
Depreciation, depletion, amortization and accretion – oil and natural gas   63,262    31,277    194,453    89,372 
Depreciation and amortization – other   2,315    1,758    6,655    4,551 
General and administrative   7,535    4,293    25,581    12,063 
General and administrative - related party   1,850    1,067    5,550    3,202 
Total operating expenses   160,802    91,645    502,224    277,202 
Income from operations   94,734    83,744    232,461    257,281 
                     
Other (expense) income                    
Interest expense   (26,772)   (2,054)   (80,103)   (5,843)
Other (expense) income, net   (518)   1,795    (3,696)   1,550 
Total other expense   (27,290)   (259)   (83,799)   (4,293)
Net income  $67,444   $83,485   $148,662   $252,988 
Net income per common unit:                    
Basic  $0.70        $1.55      
Diluted  $0.70        $1.55      
Weighted average common units outstanding:                    
Basic   96,856         95,626      
Diluted   97,033         95,762      

 

3

 

 

MACH NATURAL RESOURCES LP

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

   Nine Months Ended
September 30,
 
   2024   2023 
Cash flows from operating activities        
Net income  $148,662   $252,988 
Adjustments to reconcile net income to cash provided by operating activities          
Depreciation, depletion, amortization and accretion   201,108    93,923 
Loss (gain) on derivative instruments   219    (10,842)
Cash receipts (payments) on settlement of derivative contracts, net   4,287    5,207 
Debt issuance costs amortization   5,521    232 
Equity based compensation   4,749    1,941 
Credit losses   1,890     
(Gain) loss on sale of assets   (349)   (1)
Settlement of asset retirement obligations   (676)   (445)
Changes in operating assets and liabilities (decreasing) increasing cash:          
Accounts receivable   (7,188)   28,549 
Revenue payable   10,689    6,394 
Accounts payable and accrued liabilities   (192)   (2,764)
Other   2,911    6,785 
Net cash provided by operating activities   371,631    381,967 
           
Cash flows from investing activities          
Capital expenditures for oil and natural gas properties   (162,432)   (251,538)
Capital expenditures for other property and equipment   (9,187)   (9,083)
Acquisition of assets   (47,192)   (20,613)
Proceeds from sales of oil and natural gas properties   38,975    3,305 
Proceeds from sales of other property and equipment   561    36 
Net cash used in investing activities   (179,275)   (277,893)
           
Cash flows from financing activities          
Proceeds from public offering, net of offering costs   129,812     
Repayments of borrowings on term note   (41,250)    
Proceeds from borrowings on credit facility       7,000 
Distributions to unitholders   (247,153)    
Distributions to members       (101,350)
Contributions from members       20,000 
Withholding taxes paid on vesting of phantom units   (570)    
Payment of other financing fees   (1,454)   (404)
Net cash used in financing activities   (160,615)   (74,754)
Net increase in cash and cash equivalents   31,741    29,320 
Cash and cash equivalents, beginning of period   152,792    29,417 
Cash and cash equivalents, end of period  $184,533   $58,737 

 

4

 

 

2025 Guidance:

 

   2025
   Full-Year
Net Production Guidance   
Oil (MBbls/d)  18.2 - 19.3
NGLs (MBbls/d)  17.8 - 18.9
Natural Gas (MMcf/d)  253 - 269
Total (Mboe/d)  78.2 - 83.1
    
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)  ($0.45) - ($0.25)
    
Other Guidance Items   
Lease Operating Expense ($/Boe)  $6.25 - $6.50
Gathering and Processing ($/Boe)  $3.00 - $3.30
Production Taxes (% of Oil, natural gas, and NGL sales)  5.0% - 6.0%
Midstream Operating Profit ($MM)  $15 - $18
General and Administrative, excluding equity-based compensation ($MM)  $30 - $34
Interest Expense ($MM)  $75 - $80
    
Capital Expenditure Guidance ($MM)   
Upstream (D&C and Workovers)  $225 - $240
Other (Midstream and Land)  $35 - $40
Total  $260 - $280

 

5

 

 

Non-GAAP Financial Measures

 

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

September 30,

  

Nine Months Ended

September 30,

 
($ in thousands)  2024   2023   2024   2023 
Net Income Reconciliation to Adjusted EBITDA:                
Net income  $67,444   $83,485   $148,662   $252,988 
Interest expense, net   25,598    1,667    76,550    4,962 
Depreciation, depletion, amortization and accretion   65,577    33,035    201,108    93,923 
Unrealized (gain) loss on derivative instruments   (27,118)   1,678    5,981    (6,534)
Equity-based compensation expense   1,267    647    4,749    1,941 
Credit losses   1,243        1,890     
Gain on sale of assets   (40)       (349)   (1)
Adjusted EBITDA  $133,971   $120,512   $438,591   $347,279 
Net Income Reconciliation to Cash Available for Distribution:                    
Net income  $67,444   $83,485   $148,662   $252,988 
Interest expense, net   25,598    1,667    76,550    4,962 
Depreciation, depletion, amortization and accretion   65,577    33,035    201,108    93,923 
Unrealized (gain) loss on derivative instruments   (27,118)   1,678    5,981    (6,534)
Equity-based compensation expense   1,267    647    4,749    1,941 
Credit losses   1,243        1,890     
Gain on sale of assets   (40)       (349)   (1)
Settlement of asset retirement obligations   (258)   (366)   (676)   (445)
Cash interest expense, net   (23,571)   (1,636)   (71,029)   (4,730)
Development costs   (52,922)   (66,052)   (178,909)   (258,944)
Change in accrued realized derivative settlements   (5,663)   1,183    (1,475)   899 
Cash available for distribution  $51,557   $53,641   $186,502   $84,059 
Net Cash Provided by Operating Activities Reconciliation to Cash Available for Distribution:                    
Net cash provided by operating activities  $110,847   $106,822   $371,631   $381,967 
Changes in operating assets and liabilities   (6,368)   12,871    (6,220)   (38,964)
Development costs   (52,922)   (66,052)   (178,909)   (258,944)
Cash available for distribution  $51,557   $53,641   $186,502   $84,059 

 

7

 

 

Derivative Contracts

 

The table below represents a summary of the Company’s derivative contracts as of November 1, 2024:

 

Oil Derivative Contracts                
2024                  Q4 
Oil Volumes (MBbl)                  729 
Weighted Average Fixed Price (per Bbl)                 $73.00 
                     
2025   Q1    Q2    Q3    Q4 
Oil Volumes (MBbl)   663    614    575    271 
Weighted Average Fixed Price (per Bbl)  $72.32   $72.85   $69.06   $71.83 
                     
2026   Q1    Q2    Q3    Q4 
Oil Volumes (MBbl)   257    245    233    - 
Weighted Average Fixed Price (per Bbl)  $68.89   $73.95   $66.30    - 
                     
Natural Gas Derivative Contracts                    
2024                  Q4 
Natural Gas Volumes (Bbtu)                  10,868 
Weighted Average Fixed Price (per Mmbtu)                 $3.68 
                     
2025   Q1    Q2    Q3    Q4 
Natural Gas Volumes (Bbtu)   10,349    9,905    9,515    4,584 
Weighted Average Fixed Price (per Mmbtu)  $3.72   $3.42   $3.52   $4.30 
                     
2026   Q1    Q2    Q3    Q4 
Natural Gas Volumes (Bbtu)   4,427    4,285    4,155    - 
Weighted Average Fixed Price (per Mmbtu)  $3.47   $3.48   $3.48    - 

 

8