UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF MACH NATURAL RESOURCES LP AS OF JUNE 30, 2025, FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND FOR THE YEAR ENDED DECEMBER 31, 2024
Published on September 19, 2025
Exhibit 99.7
MACH NATURAL RESOURCES LP
Unaudited Pro Forma Condensed Combined Financial Statements
Introduction
Mach Natural Resources LP (the “Company”) is a limited partnership focused on the acquisition, development and production of oil, natural gas and natural gas liquid (“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.
On July 9, 2025, the Company entered into a membership interest purchase agreement (the “IKAV Purchase Agreement”) with VEPU Inc. and Simlog Inc. (collectively, the “IKAV Sellers”), pursuant to which the Company would acquire one hundred percent (100%) of the IKAV Sellers’ membership interests in certain rights, titles and interests in oil and gas properties, rights and related assets located in certain designated lands in the San Juan Basin of New Mexico and Colorado. Specifically, the Company acquired 100% of the membership interests of SIMCOE LLC (“SIMCOE”) and Simlog LLC from VEPU Inc. and Simlog Inc, respectively. Simlog LLC owns 100% of the issued and outstanding equity interests of SJ INVESTMENT OPPS LLC (“SJ” and together with SIMCOE, the “IKAV Companies”), which represents substantially all of Simlog LLC. On September 16, 2025, the Company entered into that certain First Amendment to the IKAV Purchase Agreement (the “IKAV Purchase Agreement Amendment” and together with the IKAV Purchase Agreement, the “IKAV MIPA”).
On September 16, 2025, the Company acquired the IKAV Companies, pursuant to the IKAV MIPA, for consideration of approximately $758.9 million comprising (i) $349.0 million in cash and (ii) 30.6 million common units of the Company (the “IKAV Unit Consideration”), subject to certain customary post-close adjustments (such transaction, the “IKAV Acquisition”). The IKAV Unit Consideration has a value of approximately $409.9 million.
On July 9, 2025, the Company entered into a Purchase and Sale Agreement (the “Sabinal PSA”) with Sabinal Energy Operating, LLC, Sabinal Resources, LLC and Sabinal CBP, LLC (collectively, the “Sabinal Sellers”), pursuant to which the Company would acquire certain oil and gas assets located in certain designated lands in the Permian Basin (the “Sabinal Assets”).
On September 16, 2025, the Company acquired the Sabinal Assets, pursuant to the Sabinal PSA, for consideration of approximately $464.2 million comprising (i) $207.3 million in cash and (ii) 19.2 million common units (the “Sabinal Unit Consideration”), subject to certain customary post-close adjustments (such transaction, the “Sabinal Acquisition” and together with the IKAV Acquisition, the “Transactions”). The Sabinal Unit Consideration has a value of approximately $256.9 million.
The unaudited pro forma condensed combined financial statements (the “pro forma financial statements”) have been prepared in accordance with Article 11 of Regulation S-X, Pro Forma Financial Information, using assumptions set forth in the notes to the unaudited pro forma financial statements. The following unaudited pro forma condensed combined financial statements (the “pro forma financial statements”) reflect the historical results of the Company, SIMCOE, SJ, and Sabinal Energy Operating, LLC and subsidiaries (“Sabinal”) on a pro forma basis to give effect to the Transactions, which are described in further detail below, as if they had occurred on June 30, 2025 for the unaudited condensed combined pro forma balance sheet (the “pro forma balance sheet”) and on January 1, 2024 for the unaudited condensed combined pro forma statements of operations (the “pro forma statements of operations”):
| 1. | The consummation of the IKAV Acquisition pursuant to the terms of the IKAV MIPA. |
| 2. | The consummation of the Sabinal Acquisition pursuant to the terms of the Sabinal PSA. |
| 3. | The entrance into the First Amendment to the Company’s credit agreement as further described in “Note 1 – Basis of Pro Forma Presentation” included elsewhere in these pro forma financial statements. |
The pro forma adjustments are based on currently available information which is considered preliminary and is based on certain estimates and assumptions. Therefore, the actual adjustments may differ from the pro forma adjustments. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the Transactions as contemplated and the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the pro forma financial statements. The Company has not included any adjustments depicting synergies or dis-synergies of the IKAV Acquisition or the Sabinal Acquisition.
The pro forma financial statements and related notes are presented for illustrative purposes only. If the IKAV Acquisition and the Sabinal Acquisition had occurred in the past, the Company’s operating results might have been materially different from those presented in the pro forma financial statements. The pro forma financial statements should not be relied upon as an indication of operating results that the Company would have achieved if the IKAV Acquisition and the Sabinal Acquisition had taken place on the dates specified in the pro forma financial statements. In addition, future results may vary significantly from the results reflected in the pro forma financial statements of operations and should not be relied upon as an indication of the future results the Company.
MACH NATURAL RESOURCES LP
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2025
(in thousands)
| Mach Natural Resources LP (Historical) | IKAV Companies As Adjusted (See Note 4) | Sabinal Assets As Adjusted (See Note 5) | Transaction Accounting Adjustments (Pro Forma) | Mach Natural Resources LP Combined (Pro Forma) | ||||||||||||||||||
| ASSETS | ||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 13,777 | $ | 59,283 | $ | — | $ | (59,283 | ) | (f) | $ | 13,777 | ||||||||||
| Accounts receivable – joint interest and other, net | 37,836 | 15,092 | — | — | 52,928 | |||||||||||||||||
| Accounts receivable – oil, gas, and NGL sales | 109,038 | 40,502 | — | — | 149,540 | |||||||||||||||||
| Short-term derivative assets | 16,537 | 1,067 | — | — | 17,604 | |||||||||||||||||
| Inventories | 25,842 | 24,171 | 5,589 | — | 55,602 | |||||||||||||||||
| Other current assets | 6,148 | 16,760 | — | — | 22,908 | |||||||||||||||||
| Total current assets | 209,178 | 156,875 | 5,589 | (59,283 | ) | 312,359 | ||||||||||||||||
| Oil and natural gas properties, using the full cost method: | ||||||||||||||||||||||
| Proved oil and natural gas properties | 2,621,011 | 916,820 | 1,042,684 | (707,932 | ) | (a) | 3,872,583 | |||||||||||||||
| Less: accumulated depreciation, depletion and amortization | (641,942 | ) | (354,499 | ) | (353,853 | ) | 708,352 | (a) | (641,942 | ) | ||||||||||||
| Oil and natural gas properties, net | 1,979,069 | 562,321 | 688,831 | 420 | 3,230,641 | |||||||||||||||||
| Other property, plant and equipment | 125,461 | 14,367 | — | 106,116 | (b) | 245,944 | ||||||||||||||||
| Less: accumulated depreciation | (28,694 | ) | (4,389 | ) | — | 4,389 | (b) | (28,694 | ) | |||||||||||||
| Other property, plant and equipment, net | 96,767 | 9,978 | — | 110,505 | 217,250 | |||||||||||||||||
| Long-term derivative assets | 3,241 | — | — | — | 3,241 | |||||||||||||||||
| Intangible assets, net | — | 7,949 | — | — | 7,949 | |||||||||||||||||
| Other assets | 30,363 | 2,377 | — | 9,600 | 42,340 | |||||||||||||||||
| Operating lease assets | 15,547 | 2,172 | — | — | 17,719 | |||||||||||||||||
| Total assets | $ | 2,334,165 | $ | 741,672 | $ | 694,420 | $ | 61,242 | $ | 3,831,499 | ||||||||||||
| LIABILITIES AND PARTNERS’ CAPITAL | ||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||
| Accounts payable | $ | 48,508 | $ | 33,312 | $ | — | $ | — | $ | 81,820 | ||||||||||||
| Accounts payable – related party | 1,828 | — | — | — | 1,828 | |||||||||||||||||
| Accrued liabilities | 64,094 | 39,972 | 2,876 | 23,200 | (g) | 130,142 | ||||||||||||||||
| Revenue payable | 141,204 | 17,379 | 1,336 | — | 159,919 | |||||||||||||||||
| Short-term derivative liabilities | 5,439 | 2,711 | — | — | 8,150 | |||||||||||||||||
| Current portion of long-term debt | — | 49,273 | — | (49,273 | ) | (c) | — | |||||||||||||||
| Other current liabilities | — | 1,815 | — | — | 1,815 | |||||||||||||||||
| Current portion of operating lease liabilities | 5,268 | 319 | — | — | 5,587 | |||||||||||||||||
| Total current liabilities | 266,341 | 144,781 | 4,212 | (26,073 | ) | 389,261 | ||||||||||||||||
| Long-term debt | 565,000 | 169,134 | — | 387,155 | (c) | 1,121,289 | ||||||||||||||||
| Asset retirement obligations | 110,189 | 101,117 | — | 33,031 | (a) | 244,337 | ||||||||||||||||
| Gas off-take liability | — | 88,385 | — | (88,385 | ) | (d) | — | |||||||||||||||
| Long-term derivative liabilities | 4,524 | 9,369 | — | — | 13,893 | |||||||||||||||||
| Long-term portion of operating leases | 10,320 | 1,881 | — | — | 12,201 | |||||||||||||||||
| Other long-term liabilities | 2,096 | 16,421 | — | — | 18,517 | |||||||||||||||||
| Total long-term liabilities | 692,129 | 386,307 | — | 331,801 | 1,410,237 | |||||||||||||||||
| Members’ capital: | ||||||||||||||||||||||
| Members’ capital | — | 210,584 | 690,208 | (900,792 | ) | (e) | — | |||||||||||||||
| Partners’ capital: | ||||||||||||||||||||||
| Partners’ capital | 1,375,695 | — | — | 656,306 | (a-f) | 2,032,001 | ||||||||||||||||
| Total liabilities and partners’ capital | $ | 2,334,165 | $ | 741,672 | $ | 694,420 | $ | 61,242 | $ | 3,831,499 | ||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
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MACH NATURAL RESOURCES LP
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended June 30, 2025
(in thousands, except per unit data)
| Mach Natural Resources LP (Historical) | IKAV Companies As Adjusted (See Note 4) | Sabinal Assets As Adjusted (See Note 5) | Transaction Accounting Adjustments (Pro Forma) | Mach Natural Resources LP Combined (Pro Forma) | ||||||||||||||||||
| Revenue | ||||||||||||||||||||||
| Oil, natural gas, and NGL sales | $ | 472,138 | $ | 136,506 | $ | 123,273 | $ | — | $ | 731,917 | ||||||||||||
| (Loss) gain on oil and natural gas derivatives | 14,886 | (6,865 | ) | — | — | 8,021 | ||||||||||||||||
| Midstream revenue | 12,387 | 7,196 | — | — | 19,583 | |||||||||||||||||
| Product sales | 15,874 | — | — | — | 15,874 | |||||||||||||||||
| Gas off-take agreement amortization | — | 10,466 | — | (10,466 | ) | (a) | — | |||||||||||||||
| Other revenues | — | 202 | — | — | 202 | |||||||||||||||||
| Total revenues | 515,285 | 147,505 | 123,273 | (10,466 | ) | 775,597 | ||||||||||||||||
| Operating expenses | ||||||||||||||||||||||
| Gathering and processing | 59,945 | 25,883 | — | — | 85,828 | |||||||||||||||||
| Lease operating expense | 98,318 | 51,489 | 43,568 | — | 193,375 | |||||||||||||||||
| Production taxes | 23,270 | 11,763 | 11,227 | — | 46,260 | |||||||||||||||||
| Midstream operating expense | 6,170 | — | — | — | 6,170 | |||||||||||||||||
| Cost of product sales | 14,261 | — | — | — | 14,261 | |||||||||||||||||
| Depreciation, depletion, amortization and accretion – oil and natural gas | 125,525 | 45,805 | — | 51,278 | (b) | 222,608 | ||||||||||||||||
| Depreciation and amortization – other | 5,158 | 1,712 | — | 1,300 | (c) | 8,170 | ||||||||||||||||
| General and administrative | 15,969 | 15,367 | — | — | 31,336 | |||||||||||||||||
| General and administrative – related party | 3,700 | — | — | — | 3,700 | |||||||||||||||||
| Total operating expenses | 352,316 | 152,019 | 54,795 | 52,578 | 611,708 | |||||||||||||||||
| Income (loss) from operations | 162,969 | (4,514 | ) | 68,478 | (63,044 | ) | 163,889 | |||||||||||||||
| Other (expense) income | ||||||||||||||||||||||
| Interest expense | (30,034 | ) | (8,526 | ) | — | (16,040 | ) | (d) | (54,600 | ) | ||||||||||||
| Loss on debt extinguishment | (18,540 | ) | — | — | — | (18,540 | ) | |||||||||||||||
| Other income (expense), net | (8,848 | ) | 27 | — | — | (8,821 | ) | |||||||||||||||
| Total other expense | (57,422 | ) | (8,499 | ) | — | (16,040 | ) | (81,961 | ) | |||||||||||||
| Net income (loss) | $ | 105,547 | $ | (13,013 | ) | $ | 68,478 | $ | (79,084 | ) | $ | 81,928 | ||||||||||
| Net income per common unit: | ||||||||||||||||||||||
| Basic | $ | 0.92 | $ | (0.42 | ) | (f) | $ | 0.50 | ||||||||||||||
| Diluted | $ | 0.92 | $ | (0.42 | ) | (f) | $ | 0.50 | ||||||||||||||
| Weighted average common units outstanding: | ||||||||||||||||||||||
| Basic | 115,248 | 49,799 | (e) | 165,047 | ||||||||||||||||||
| Diluted | 115,313 | 49,799 | (e) | 165,112 | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
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MACH NATURAL RESOURCES LP
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2024
(in thousands, except per unit data)
| Mach Natural Resources LP (Historical) | IKAV Companies As Adjusted (See Note 4) | Sabinal Assets As Adjusted (See Note 5) | Transaction Accounting Adjustments (Pro Forma) | Mach Natural Resources LP Combined (Pro Forma) | ||||||||||||||||||
| Revenue | ||||||||||||||||||||||
| Oil, natural gas, and NGL sales | $ | 936,785 | $ | 271,142 | $ | 295,997 | $ | — | $ | 1,503,924 | ||||||||||||
| (Loss) gain on oil and natural gas derivatives | (18,854 | ) | 3,427 | — | — | (15,427 | ) | |||||||||||||||
| Midstream revenue | 24,341 | 17,287 | — | — | 41,628 | |||||||||||||||||
| Product sales | 27,356 | — | — | — | 27,356 | |||||||||||||||||
| Gas off-take agreement amortization | — | 23,265 | — | (23,265 | ) | (a) | — | |||||||||||||||
| Other revenues | — | 2,805 | — | — | 2,805 | |||||||||||||||||
| Total revenues | 969,628 | 317,926 | 295,997 | (23,265 | ) | 1,560,286 | ||||||||||||||||
| Operating expenses | ||||||||||||||||||||||
| Gathering and processing | 106,152 | 65,771 | — | — | 171,923 | |||||||||||||||||
| Lease operating expense | 180,513 | 101,754 | 100,618 | — | 382,885 | |||||||||||||||||
| Production taxes | 45,674 | 25,459 | 23,005 | — | 94,138 | |||||||||||||||||
| Midstream operating expense | 10,466 | — | — | — | 10,466 | |||||||||||||||||
| Cost of product sales | 24,026 | — | — | — | 24,026 | |||||||||||||||||
| Depreciation, depletion, amortization and accretion – oil and natural gas | 261,949 | 102,274 | — | 57,197 | (b) | 421,420 | ||||||||||||||||
| Depreciation and amortization – other | 9,018 | 3,827 | — | 2,197 | (c) | 15,042 | ||||||||||||||||
| General and administrative | 33,438 | 26,713 | — | 10,500 | (g) | 70,651 | ||||||||||||||||
| General and administrative – related party | 7,400 | — | — | — | 7,400 | |||||||||||||||||
| Total operating expenses | 678,636 | 325,798 | 123,623 | 69,894 | 1,197,951 | |||||||||||||||||
| Income (loss) from operations | 290,992 | (7,872 | ) | 172,374 | (93,159 | ) | 362,335 | |||||||||||||||
| Other (expense) income | ||||||||||||||||||||||
| Interest expense | (104,596 | ) | (17,747 | ) | — | (29,466 | ) | (d) | (151,809 | ) | ||||||||||||
| Other income (expense), net | (1,217 | ) | 53 | — | — | (1,164 | ) | |||||||||||||||
| Total other expense | (105,813 | ) | (17,694 | ) | — | (29,466 | ) | (152,973 | ) | |||||||||||||
| Net income (loss) | $ | 185,179 | $ | (25,566 | ) | $ | 172,374 | $ | (122,625 | ) | $ | 209,362 | ||||||||||
| Net income per common unit: | ||||||||||||||||||||||
| Basic | $ | 1.90 | $ | (0.48 | ) | (f) | $ | 1.42 | ||||||||||||||
| Diluted | $ | 1.90 | $ | (0.48 | ) | (f) | $ | 1.42 | ||||||||||||||
| Weighted average common units outstanding: | ||||||||||||||||||||||
| Basic | 97,591 | 49,799 | (e) | 147,390 | ||||||||||||||||||
| Diluted | 97,701 | 49,799 | (e) | 147,500 | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
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MACH NATURAL RESOURCES LP
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 – Basis of Pro Forma Presentation
The historical financial information included herein is derived from the financial statements of the Company, the IKAV Companies and Sabinal. For purposes of the pro forma balance sheet, it is assumed that each of the Transactions took place on June 30, 2025. For purposes of the pro forma statements of operations, it is assumed that each of the Transactions took place on January 1, 2024.
The pro forma financial statements reflect i) the consummation of the IKAV Acquisition pursuant to the terms of the IKAV MIPA, ii) the consummation of the Sabinal Acquisition pursuant to the terms of the Sabinal PSA and iii) the entrance in the First Amendment to the Company’s credit agreement.
In conjunction with the closing of the Transactions, the First Amendment to the Company’s credit agreement provided for an increase to the borrowing base of $700.0 million and established an aggregate term loan commitment amount of $450.0 million, which was fully funded in connection with the closing of the Transactions. The Company’s term loan bears interest at a rate equal to Term SOFR plus a margin of 4.00% per annum.
The pro forma financial statements reflect pro forma adjustments that are based on available information and certain assumptions that management believes are reasonable. However, actual results may differ from those reflected in these statements. In management’s opinion, all adjustments known to date that are necessary to fairly present the pro forma information have been made. The pro forma financial statements do not purport to represent what the combined entity’s results of operations would have been if the Transactions had actually occurred on January 1, 2024, nor are they indicative of the Company’s future results of operations.
These pro forma financial statements should be read in conjunction with the historical financial statements for the three and six months ended June 30, 2025 and for the year ended December 31, 2024 included in the Company’s Quarterly Report on Form 10-Q and Annual Report on Form 10-K, respectively, as well as the historical financial statements of the IKAV Companies and Sabinal included herewith.
Note 2 – Purchase Price Allocations
The IKAV Acquisition is expected to be accounted for as a business combination, under the acquisition method, as the Company is obtaining control of a business by obtaining the legal right to use and develop the oil and natural gas properties included in the IKAV MIPA, as well as additional oil and gas related assets that can be used to enhance the value of the business. The allocation of the purchase price for the IKAV Acquisition was based upon management’s estimates of and assumptions related to the fair value of assets acquired and liabilities assumed using available information.
5
The table below reflects the fair value estimates of the assets acquired and liabilities assumed as of the acquisition date. Below is a reconciliation of the assets acquired and liabilities assumed (in thousands, except unit data):
| IKAV Acquisition | ||||
| Consideration transferred: | ||||
| Common units issued | 30,611,264 | |||
| Closing price of common units on September 15, 2025 | $ | 13.39 | ||
| Equity consideration | $ | 409,885 | ||
| Cash consideration | 348,998 | |||
| Total acquisition consideration | $ | 758,882 | ||
| Assets acquired: | ||||
| Accounts receivable | $ | 55,594 | ||
| Other current assets | 41,998 | |||
| Proved oil and natural gas properties | 728,685 | |||
| Other property, plant, and equipment | 120,483 | |||
| Other long-term assets | 12,498 | |||
| Total assets to be acquired | 959,258 | |||
| Liabilities assumed: | ||||
| Accounts payable and accrued liabilities | 73,284 | |||
| Revenue suspense | 17,379 | |||
| Other current liabilities | 4,845 | |||
| Asset retirement obligations | 77,197 | |||
| Other long-term liabilities | 27,671 | |||
| Total liabilities assumed | 200,376 | |||
| Net assets acquired | $ | 758,882 | ||
The Sabinal Acquisition is expected to be accounted for as an asset acquisition as substantially all of the gross fair value of the Sabinal Assets was concentrated in proved oil and natural gas properties, which were considered to be a group of similar identifiable assets. The allocation of the purchase price for the Sabinal Acquisition was based upon management’s estimates of and assumptions related to the fair value of assets acquired and liabilities assumed using available information.
6
The table below reflects the fair value estimates of the assets acquired and liabilities assumed as of the acquisition date. Below is a reconciliation of the assets acquired and liabilities assumed (in thousands, except unit data):
| Sabinal Acquisition | ||||
| Consideration transferred: | ||||
| Common units issued | 19,187,580 | |||
| Closing price of common units on September 15, 2025 | $ | 13.39 | ||
| Equity consideration | $ | 256,922 | ||
| Cash consideration | 207,291 | |||
| Capitalized transaction costs | 3,100 | |||
| Total acquisition consideration | $ | 467,313 | ||
| Assets acquired: | ||||
| Proved oil and natural gas properties | $ | 522,887 | ||
| Inventories | 5,589 | |||
| Total assets to be acquired | 528,476 | |||
| Liabilities assumed: | ||||
| Accrued liabilities | 2,876 | |||
| Revenue suspense | 1,336 | |||
| Asset retirement obligations | 56,951 | |||
| Total liabilities assumed | 61,163 | |||
| Net assets acquired | $ | 467,313 | ||
Note 3 – Pro Forma Adjustments and Assumptions
The pro forma financial statements have been prepared to illustrate the effect of the Transactions and have been prepared for informational purposes only.
The preceding pro forma financial statements have been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaced the previous pro forma adjustment criteria with simplified requirements to depict the accounting for the Transactions (“Transaction Accounting Adjustments”) and allows for supplemental disclosure of the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management Adjustments”). Management has elected not to disclose Management Adjustments.
The Company made the following adjustments and assumptions in preparation of the pro forma balance sheet:
| a) | Adjustments reflect removal of the historical cost and accumulated depreciation, depletion, and amortization of oil and natural gas properties, offset by recording the preliminary fair value of oil and natural gas properties as a result of the Transactions. The preliminary fair value of the oil and gas properties was assessed by utilizing a fair value reserve report that used future pricing and other commonly used valuation techniques. |
| b) | Adjustments reflect removal of the historical cost and accumulated depreciation and amortization of other property and equipment, offset by recording the preliminary fair value of other property and equipment as a result of the IKAV Acquisition. The preliminary fair value of the other property and equipment is primarily attributed to the acquired midstream facilities and was assessed by utilizing a discounted cash flow approach. |
| c) | Adjustments reflect the payoff of debt associated with the IKAV Companies and Sabinal; and the subsequent draw of $556.3 million under the Company’s amended credit facility to partially fund the cash required to close the Transactions. |
| d) | Adjustment reflects removal of the historical cost of the gas off-take liability as it is now included within the preliminary fair value of oil and gas properties. |
| e) | Adjustment reflects elimination of members’ capital of the IKAV Companies and Sabinal as part of purchase accounting. |
| f) | Adjustment reflects the elimination of cash not acquired from the IKAV Companies in the acquisition. |
7
| g) | Adjustment reflects the accrual for transaction costs associated with amending the Company’s credit facility and the Transactions. As an offset to the $23.2 million adjustment to accrued liabilities, $9.6 million has been capitalized to other assets as this amount relates to deferred financing costs, $10.5 million is included in general and administrative expense for the year ended December 31, 2024 as this amount relates to transaction costs for the IKAV Acquisition which will be accounted for as a business combination, and $3.1 million has been capitalized to proved properties as this amount relates to transaction costs for the Sabinal Acquisition which will be accounted for as an asset acquisition. |
The Company made the following adjustments and assumptions in preparation of the pro forma statements of operations:
| a) | Adjustment reflects elimination of the amortization as a result of removing the gas off-take liability noted in footnote (d) on the pro forma balance sheet. |
| b) | Adjustments reflect changes to depreciation, depletion and amortization expense that would have been incurred as a result of the preliminary fair value of acquired oil and natural gas properties under the full cost method of accounting. |
| c) | Adjustments reflect changes to depreciation and amortization of other assets that would have been incurred based on the preliminary fair value of acquired other property and equipment. |
| d) | Adjustments reflect the elimination of interest expense for the IKAV Companies and Sabinal and the additional interest expense related to the Company’s amended credit facility. The increase to the Company’s credit facility is made up of a $450.0 million term loan bearing interest at 8.2% and a $106.3 million increase to its revolver bearing interest at 7.9%. The impact on interest expense of a 1% (or 100 basis points) increase or decrease in the assumed weighted average interest rate on our increase in variable interest debt would be approximately $5.6 million per year. |
| e) | Adjustments reflect the common units issued as consideration transferred for the Transactions on a pro forma basis assuming the common units issued on September 16, 2025 were outstanding from January 1, 2024. |
| f) | Adjustments reflect the pro forma impact of the Transactions, including the issuance of additional common units of the Company, on the calculation of net income per common unit. |
| g) | Adjustment reflects the expense for transaction costs associated with the IKAV acquisition as noted above in footnote (g) on the pro forma balance sheet. |
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Note 4 – Historical Financial Statements of the IKAV Companies
The following tables presents pro forma adjustments to the historical financial statements of the IKAV Companies. Certain reclassification adjustments were made to the financial statement presentation of the IKAV Companies in order to conform with the Company’s financial statement presentation.
The historical balance sheets for the IKAV Companies as of June 30, 2025 and related adjustments are presented below (in thousands):
| SIMCOE LLC (Historical) | SJ INVESTMENT OPPS LLC (Historical) | Reclassification Adjustments | IKAV Companies As Adjusted | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 24,950 | $ | 34,333 | $ | — | $ | 59,283 | ||||||||
| Accounts receivable | 52,332 | 3,032 | (55,364 | ) | — | |||||||||||
| Accounts receivable – related party | 230 | — | (230 | ) | — | |||||||||||
| Accounts receivable – joint interest and other, net | — | — | 15,092 | 15,092 | ||||||||||||
| Accounts receivable – oil, gas, and NGL sales | — | — | 40,502 | 40,502 | ||||||||||||
| Short-term derivative assets | — | 1,067 | — | 1,067 | ||||||||||||
| Prepaids and other current assets | 14,016 | 2,744 | (16,760 | ) | — | |||||||||||
| Inventories | 24,171 | — | — | 24,171 | ||||||||||||
| Other current assets | — | — | 16,760 | 16,760 | ||||||||||||
| Total current assets | 115,699 | 41,176 | — | 156,875 | ||||||||||||
| Property, Plant and Equipment: | ||||||||||||||||
| Oil and natural gas properties, successful efforts method | 813,123 | 103,697 | (916,820 | ) | — | |||||||||||
| Other property and equipment | 14,367 | — | (14,367 | ) | — | |||||||||||
| Total property, plant and equipment | 827,490 | 103,697 | (931,187 | ) | — | |||||||||||
| Less: accumulated depreciation | (324,379 | ) | (34,509 | ) | 358,888 | — | ||||||||||
| Property, plant and equipment, net | 503,111 | 69,188 | (572,299 | ) | — | |||||||||||
| Oil and natural gas properties, using the full cost method: | ||||||||||||||||
| Proved oil and natural gas properties | — | — | 916,820 | 916,820 | ||||||||||||
| Less: accumulated depreciation, depletion and amortization | — | — | (354,499 | ) | (354,499 | ) | ||||||||||
| Oil and natural gas properties, net | — | — | 562,321 | 562,321 | ||||||||||||
| Other property, plant and equipment | — | — | 14,367 | 14,367 | ||||||||||||
| Less: accumulated depreciation | — | — | (4,389 | ) | (4,389 | ) | ||||||||||
| Other property, plant and equipment, net | — | — | 9,978 | 9,978 | ||||||||||||
| Intangible assets, net | 7,949 | — | — | 7,949 | ||||||||||||
| Other assets | 4,297 | 252 | (2,172 | ) | 2,377 | |||||||||||
| Operating lease assets | — | — | 2,172 | 2,172 | ||||||||||||
| Total assets | $ | 631,056 | $ | 110,616 | $ | — | $ | 741,672 | ||||||||
| LIABILITIES AND MEMBERS’ CAPITAL | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | 51,265 | $ | 14,872 | $ | (66,137 | ) | $ | — | |||||||
| Accounts payable | — | — | 33,312 | 33,312 | ||||||||||||
| Accrued liabilities – related party | 23,550 | 976 | (24,526 | ) | — | |||||||||||
| Accrued liabilities | — | — | 39,972 | 39,972 | ||||||||||||
| Revenue payable | — | — | 17,379 | 17,379 | ||||||||||||
| Short-term derivative liabilities | 526 | 2,185 | — | 2,711 | ||||||||||||
| Current portion of long-term debt | 38,273 | 11,000 | — | 49,273 | ||||||||||||
| Other current liabilities | 2,134 | — | (319 | ) | 1,815 | |||||||||||
| Current portion of operating lease liabilities | — | — | 319 | 319 | ||||||||||||
| Total current liabilities | 115,748 | 29,033 | — | 144,781 | ||||||||||||
| Long-term debt | 123,819 | 45,315 | — | 169,134 | ||||||||||||
| Asset retirement obligations | 100,937 | 180 | — | 101,117 | ||||||||||||
| Long-term derivative liabilities | 2,109 | 7,260 | — | 9,369 | ||||||||||||
| Gas off-take liability | 88,385 | — | — | 88,385 | ||||||||||||
| Long-term portion of operating leases | — | — | 1,881 | 1,881 | ||||||||||||
| Other long-term liabilities | 12,048 | 6,254 | (1,881 | ) | 16,421 | |||||||||||
| Total long-term liabilities | 327,298 | 59,009 | — | 386,307 | ||||||||||||
| Members’ capital: | ||||||||||||||||
| Members’ capital | 188,231 | 22,574 | — | 210,805 | ||||||||||||
| Other comprehensive income | (221 | ) | — | — | (221 | ) | ||||||||||
| Total members’ capital | 188,010 | 22,574 | — | 210,584 | ||||||||||||
| Total liabilities and members’ capital | $ | 631,056 | $ | 110,616 | $ | — | $ | 741,672 | ||||||||
9
The historical statements of operations for the IKAV Companies for the six months ended June 30, 2025 and related adjustments are presented below (in thousands):
| SIMCOE LLC (Historical) | SJ INVESTMENT OPPS LLC (Historical) | Reclassification Adjustments | IKAV Companies As Adjusted | |||||||||||||
| Revenue | ||||||||||||||||
| Oil, gas and plant products | $ | 120,219 | $ | — | $ | (120,219 | ) | $ | — | |||||||
| Natural gas | — | 16,287 | (16,287 | ) | — | |||||||||||
| Oil, natural gas, and NGL sales | — | — | 136,506 | 136,506 | ||||||||||||
| Gain on oil and natural gas derivatives | — | — | (6,865 | ) | (6,865 | ) | ||||||||||
| Midstream revenue | 6,976 | — | 220 | 7,196 | ||||||||||||
| Gas off-take agreement amortization | 10,466 | — | — | 10,466 | ||||||||||||
| Saltwater disposal revenues | 220 | — | (220 | ) | — | |||||||||||
| Rental revenue | 87 | — | — | 87 | ||||||||||||
| Other revenues | 202 | — | — | 202 | ||||||||||||
| Total revenues | 138,170 | 16,287 | (6,865 | ) | 147,592 | |||||||||||
| Operating expenses | ||||||||||||||||
| Gathering and processing | 21,394 | 4,489 | — | 25,883 | ||||||||||||
| Workover | 6,647 | 158 | (6,805 | ) | — | |||||||||||
| Lease operating expense | 42,482 | 2,202 | 6,805 | 51,489 | ||||||||||||
| Production taxes | 10,100 | 1,663 | — | 11,763 | ||||||||||||
| Midstream operating expense | — | — | — | — | ||||||||||||
| Accretion expense | 2,674 | 9 | (2,683 | ) | — | |||||||||||
| Depreciation, depletion and amortization | 37,715 | 7,119 | (44,834 | ) | — | |||||||||||
| Depreciation, depletion, amortization and accretion – oil and natural gas | — | — | 45,805 | 45,805 | ||||||||||||
| Depreciation and amortization – other | — | — | 1,712 | 1,712 | ||||||||||||
| General and administrative | 2,097 | 448 | 12,822 | 15,367 | ||||||||||||
| General and administrative – related party | 10,362 | 2,460 | (12,822 | ) | — | |||||||||||
| Total operating expenses | 133,471 | 18,548 | — | 152,019 | ||||||||||||
| Income (loss) from operations | 4,699 | (2,261 | ) | (6,865 | ) | (4,427 | ) | |||||||||
| Other (expense) income | ||||||||||||||||
| Interest expense | (5,688 | ) | (2,838 | ) | — | (8,526 | ) | |||||||||
| Foreign currency gain | 27 | — | (27 | ) | — | |||||||||||
| (Loss) gain on derivatives, net | (494 | ) | (6,371 | ) | 6,865 | — | ||||||||||
| Other income (expense), net | — | — | 27 | 27 | ||||||||||||
| Total other expense | (6,155 | ) | (9,209 | ) | 6,865 | (8,499 | ) | |||||||||
| Net loss | $ | (1,456 | ) | $ | (11,470 | ) | $ | — | $ | (12,926 | ) | |||||
10
The historical statements of operations for the IKAV Companies for the year ended December 31, 2024 and related adjustments are presented below (in thousands):
| SIMCOE LLC (Historical) | SJ INVESTMENT OPPS LLC (Historical) | Reclassification Adjustments | IKAV Companies As Adjusted | |||||||||||||
| Revenue | ||||||||||||||||
| Oil, gas and plant products | $ | 233,905 | $ | — | $ | (233,905 | ) | $ | — | |||||||
| Natural gas | — | 37,237 | (37,237 | ) | — | |||||||||||
| Oil, natural gas, and NGL sales | — | — | 271,142 | 271,142 | ||||||||||||
| Gain on oil and natural gas derivatives | — | — | 3,427 | 3,427 | ||||||||||||
| Midstream revenue | 16,901 | — | 386 | 17,287 | ||||||||||||
| Gas off-take agreement amortization | 23,265 | — | — | 23,265 | ||||||||||||
| Saltwater disposal revenues | 386 | — | (386 | ) | — | |||||||||||
| Other revenues | 2,805 | — | — | 2,805 | ||||||||||||
| Total revenues | 277,262 | 37,237 | 3,427 | 317,926 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Gathering and processing | 53,236 | 12,535 | — | 65,771 | ||||||||||||
| Workover | 10,471 | 86 | (10,557 | ) | — | |||||||||||
| Lease operating expense | 84,327 | 6,870 | 10,557 | 101,754 | ||||||||||||
| Production taxes | 22,482 | 2,977 | — | 25,459 | ||||||||||||
| Midstream operating expense | — | — | — | — | ||||||||||||
| Accretion expense | 5,688 | 13 | (5,701 | ) | — | |||||||||||
| Depreciation, depletion and amortization | 79,323 | 21,077 | (100,400 | ) | — | |||||||||||
| Depreciation, depletion, amortization and accretion – oil and natural gas | — | — | 102,274 | 102,274 | ||||||||||||
| Depreciation and amortization – other | — | — | 3,827 | 3,827 | ||||||||||||
| (Gain) loss on sale/transfer of assets | (36 | ) | — | 36 | — | |||||||||||
| General and administrative | 6,588 | 787 | 19,338 | 26,713 | ||||||||||||
| General and administrative – related party | 13,609 | 5,729 | (19,338 | ) | — | |||||||||||
| Total operating expenses | 275,688 | 50,074 | 36 | 325,798 | ||||||||||||
| Income (loss) from operations | 1,574 | (12,837 | ) | 3,391 | (7,872 | ) | ||||||||||
| Other (expense) income | ||||||||||||||||
| Interest expense | (12,287 | ) | (5,460 | ) | — | (17,747 | ) | |||||||||
| Foreign currency gain | 17 | — | (17 | ) | — | |||||||||||
| (Loss) gain on derivatives, net | (4,536 | ) | 7,963 | (3,427 | ) | — | ||||||||||
| Other income (expense), net | — | — | 53 | 53 | ||||||||||||
| Total other expense | (16,806 | ) | 2,503 | (3,391 | ) | (17,694 | ) | |||||||||
| Net loss | $ | (15,232 | ) | $ | (10,334 | ) | $ | — | $ | (25,566 | ) | |||||
11
Note 5 – Historical Financial Statements of Sabinal
The following tables presents pro forma adjustments to the historical financial statements of Sabinal. In addition to carve-out adjustments for certain oil and natural gas properties and activities that were not acquired from Sabinal as part of the Sabinal Acquisition, certain reclassification adjustments were made to the financial statement presentation of Sabinal in order to conform with the Company’s financial statement presentation, including the reclassification of $35.9 million of unproved properties to proved oil and natural gas properties.
The Company made adjustments to Sabinal’s historical balance sheet as of June 30, 2025 and historical statements of operations for the six months ended June 30, 2025 and for the year ended December 31, 2024 as shown below in (a) to reflect the elimination of assets not acquired and liabilities not assumed as part of the Sabinal Acquisition. The historical balance sheet for Sabinal as of June 30, 2025 and related adjustments are presented below (in thousands):
| Sabinal Energy Operating, LLC (Historical) | Sabinal Assets Carve-out Adjustments (a) | Reclassification Adjustments | Sabinal Assets As Adjusted | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 3,616 | $ | (3,616 | ) | $ | — | $ | — | |||||||
| Accounts receivable | 34,416 | (34,416 | ) | — | — | |||||||||||
| Short-term derivative assets | 11,949 | (11,949 | ) | — | — | |||||||||||
| Prepaids and other current assets | 6,486 | (897 | ) | (5,589 | ) | — | ||||||||||
| Inventories | — | — | 5,589 | 5,589 | ||||||||||||
| Total current assets | 56,467 | (50,878 | ) | — | 5,589 | |||||||||||
| Oil and gas properties, successful efforts: | ||||||||||||||||
| Proved properties | 1,006,804 | — | (1,006,804 | ) | — | |||||||||||
| Unproved properties | 35,880 | — | (35,880 | ) | — | |||||||||||
| Total oil and natural gas properties | 1,042,684 | — | (1,042,684 | ) | — | |||||||||||
| Less: accumulated depreciation, depletion and amortization | (353,853 | ) | — | 353,853 | — | |||||||||||
| Total oil and natural gas properties, net | 688,831 | — | (688,831 | ) | — | |||||||||||
| Oil and natural gas properties, using the full cost method: | ||||||||||||||||
| Proved oil and natural gas properties | — | — | 1,042,684 | 1,042,684 | ||||||||||||
| Less: accumulated depreciation, depletion and amortization | — | — | (353,853 | ) | (353,853 | ) | ||||||||||
| Oil and natural gas properties, net | — | — | 688,831 | 688,831 | ||||||||||||
| Other property, plant and equipment, net | 2,225 | (2,225 | ) | — | — | |||||||||||
| Long-term derivative assets | 10,017 | (10,017 | ) | — | — | |||||||||||
| Deferred financing costs, net | 3,034 | (3,034 | ) | — | — | |||||||||||
| Operating lease assets | 1,996 | (1,996 | ) | — | — | |||||||||||
| Total assets | $ | 762,570 | $ | (68,150 | ) | $ | — | $ | 694,420 | |||||||
| LIABILITIES AND MEMBERS’ CAPITAL | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable | $ | 5,025 | $ | (5,025 | ) | $ | — | $ | — | |||||||
| Accrued liabilities | 23,114 | (20,238 | ) | — | 2,876 | |||||||||||
| Revenue payable | 10,714 | (9,378 | ) | — | 1,336 | |||||||||||
| Lease liability, current | 865 | (865 | ) | — | — | |||||||||||
| Short-term derivative liabilities | 1,378 | (1,378 | ) | — | — | |||||||||||
| Asset retirement obligations, current | 3,004 | (3,004 | ) | — | — | |||||||||||
| Total current liabilities | 44,100 | (39,888 | ) | — | 4,212 | |||||||||||
| Long-term debt | 155,000 | (155,000 | ) | — | — | |||||||||||
| Asset retirement obligations | 95,988 | (95,988 | ) | — | — | |||||||||||
| Long-term derivative liabilities | 1,370 | (1,370 | ) | — | — | |||||||||||
| Long-term portion of operating leases | 1,474 | (1,474 | ) | — | — | |||||||||||
| Total long-term liabilities | 253,832 | (253,832 | ) | — | — | |||||||||||
| Members’ capital: | ||||||||||||||||
| Members’ capital | 464,638 | 225,570 | — | 690,208 | ||||||||||||
| Total members’ capital | 464,638 | 225,570 | — | 690,208 | ||||||||||||
| Total liabilities and members’ capital | $ | 762,570 | $ | (68,150 | ) | $ | — | $ | 694,420 | |||||||
12
The Company made adjustments to Sabinal’s historical statements of operations for the six months ended June 30, 2025 as shown below in (a) to reflect the carve-out of revenues and operating expenses for certain oil and natural gas properties that were not acquired from Sabinal as part of the Sabinal Acquisition. The historical statement of operations for Sabinal for the six months ended June 30, 2025 and related adjustments are presented below (in thousands):
| Sabinal Energy Operating, LLC (Historical) | Sabinal Assets Carve-out Adjustments (a) | Reclassification Adjustments | Sabinal Assets As Adjusted | |||||||||||||
| Revenue | ||||||||||||||||
| Oil sales | $ | 132,463 | $ | (11,258 | ) | $ | (121,205 | ) | $ | — | ||||||
| Natural gas sales | 493 | (218 | ) | (275 | ) | — | ||||||||||
| Natural gas liquids sales | 2,038 | (245 | ) | (1,793 | ) | — | ||||||||||
| Oil, natural gas, and NGL sales | — | — | 123,273 | 123,273 | ||||||||||||
| Total revenues | 134,994 | (11,721 | ) | — | 123,273 | |||||||||||
| Operating expenses | ||||||||||||||||
| Workover expenses | 10,761 | (156 | ) | (10,605 | ) | — | ||||||||||
| Lease operating expense | 33,898 | (935 | ) | 10,605 | 43,568 | |||||||||||
| Production taxes | 12,050 | (823 | ) | — | 11,227 | |||||||||||
| Accretion expense | 2,706 | (2,706 | ) | — | — | |||||||||||
| Depreciation, depletion and amortization | 26,516 | (26,516 | ) | — | — | |||||||||||
| Exploration and abandonment expense | 437 | (437 | ) | — | — | |||||||||||
| General and administrative | 7,461 | (7,461 | ) | — | — | |||||||||||
| Total operating expenses | 93,829 | (39,034 | ) | — | 54,795 | |||||||||||
| Income from operations | 41,165 | 27,313 | — | 68,478 | ||||||||||||
| Other (expense) income | ||||||||||||||||
| Interest expense | (8,374 | ) | 8,374 | — | — | |||||||||||
| Gain on derivatives, net | 17,851 | (17,851 | ) | — | — | |||||||||||
| Other income (expense), net | 3,374 | (3,374 | ) | — | — | |||||||||||
| Total other expense | 12,851 | (12,851 | ) | — | — | |||||||||||
| Income before taxes | 54,016 | 14,462 | — | 68,478 | ||||||||||||
| Tax expense | 400 | (400 | ) | — | — | |||||||||||
| Net income | $ | 53,616 | $ | 14,862 | $ | — | $ | 68,478 | ||||||||
13
The Company made adjustments to Sabinal’s historical statements of operations for the year ended December 31, 2024 as shown below in (a) to reflect the carve-out of revenues and operating expenses for certain oil and natural gas properties that were not acquired from Sabinal as part of the Sabinal Acquisition. The historical statement of operations for Sabinal for the year ended December 31, 2024 and related adjustments are presented below (in thousands):
| Sabinal Energy Operating, LLC (Historical) | Sabinal Assets Carve-out Adjustments (a) | Reclassification Adjustments | Sabinal Assets As Adjusted | |||||||||||||
| Revenue | ||||||||||||||||
| Oil sales | $ | 303,124 | $ | (10,287 | ) | $ | (292,837 | ) | $ | — | ||||||
| Natural gas sales | 368 | (195 | ) | (173 | ) | — | ||||||||||
| Natural gas liquids sales | 3,077 | (90 | ) | (2,987 | ) | — | ||||||||||
| Oil, natural gas, and NGL sales | — | — | 295,997 | 295,997 | ||||||||||||
| Total revenues | 306,569 | (10,572 | ) | — | 295,997 | |||||||||||
| Operating expenses | ||||||||||||||||
| Workover expenses | 32,516 | (150 | ) | (32,366 | ) | — | ||||||||||
| Lease operating expense | 69,718 | (1,466 | ) | 32,366 | 100,618 | |||||||||||
| Production taxes | 24,143 | (1,138 | ) | — | 23,005 | |||||||||||
| Accretion expense | 5,315 | (5,315 | ) | — | — | |||||||||||
| Depreciation, depletion and amortization | 51,955 | (51,955 | ) | — | — | |||||||||||
| Exploration and abandonment expense | 1,141 | (1,141 | ) | — | — | |||||||||||
| General and administrative | 16,116 | (16,116 | ) | — | — | |||||||||||
| Total operating expenses | 200,904 | (77,281 | ) | — | 123,623 | |||||||||||
| Income from operations | 105,665 | 66,709 | — | 172,374 | ||||||||||||
| Other (expense) income | ||||||||||||||||
| Interest expense | (19,851 | ) | 19,851 | — | — | |||||||||||
| (Loss) on derivatives, net | (7,018 | ) | 7,018 | — | — | |||||||||||
| Other income (expense), net | 911 | (911 | ) | — | — | |||||||||||
| Total other expense | (25,958 | ) | 25,958 | — | — | |||||||||||
| Income before taxes | 79,707 | 92,667 | — | 172,374 | ||||||||||||
| Tax expense | 385 | (385 | ) | — | — | |||||||||||
| Net income | $ | 79,322 | $ | 93,052 | $ | — | $ | 172,374 | ||||||||
14
Note 6 – Supplementary Disclosure for Oil and Natural Gas Producing Activities
Oil and natural gas reserves
The following tables present the estimated pro forma combined net proved developed and undeveloped oil, natural gas and NGLs reserves information as of December 31, 2024 for the Company’s proved reserves. The Sabinal Acquisition transaction adjustments represent adjustments to remove the effects of properties retained by Sabinal Energy Operating, LLC, which were not included in the Sabinal Acquisition, from the Sabinal historical amounts. Reserve quantities cannot be measured with precision and their estimation requires many judgmental determinations and frequent revisions. The estimates below are in certain instances presented on a “barrels of oil equivalent” or “Boe” basis. To determine Boe in the following tables, natural gas is converted to a crude oil equivalent at the ratio of six Mcf of natural gas to one barrel of crude oil equivalent.
The pro forma oil and natural gas reserves information is not necessarily indicative of the results that might have occurred had the Transactions been completed on January 1, 2024 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected because of various factors, including those discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 pursuant to Rule 424(b)(4).
| Oil and Condensate (MBbls) | ||||||||||||||||||||||||
| Mach Natural Resources LP (Historical) | SIMCOE LLC (Historical) | SJ INVESTMENT OPPS LLC (Historical) | Sabinal Energy Operating, LLC (Historical) | Sabinal Acquisition Transaction Adjustments (Pro Forma) | Mach Natural Resources LP Combined (Pro Forma) | |||||||||||||||||||
| Proved Developed and Undeveloped Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 75,573 | 990 | — | 56,363 | (1,271 | ) | 131,655 | |||||||||||||||||
| Revisions of previous estimates | (5,762 | ) | (308 | ) | — | 3,140 | — | (2,930 | ) | |||||||||||||||
| Purchases in place | 5,015 | — | — | — | — | 5,015 | ||||||||||||||||||
| Extensions, discoveries and other additions | — | — | — | — | — | — | ||||||||||||||||||
| Sales in place | (9 | ) | — | — | — | — | (9 | ) | ||||||||||||||||
| Production | (7,382 | ) | (64 | ) | — | (4,069 | ) | — | (11,515 | ) | ||||||||||||||
| December 31, 2024 | 67,435 | 618 | — | 55,434 | (1,271 | ) | 122,216 | |||||||||||||||||
| Proved Developed Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 49,629 | 990 | — | 49,778 | — | 100,397 | ||||||||||||||||||
| December 31, 2024 | 46,056 | 618 | — | 47,339 | — | 94,013 | ||||||||||||||||||
| Proved Undeveloped Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 25,944 | — | — | 6,585 | (1,271 | ) | 31,258 | |||||||||||||||||
| December 31, 2024 | 21,379 | — | — | 8,095 | (1,271 | ) | 28,203 | |||||||||||||||||
15
| Natural Gas (MMcf) | ||||||||||||||||||||||||
| Mach Natural Resources LP (Historical) | SIMCOE LLC (Historical) | SJ INVESTMENT OPPS LLC (Historical) | Sabinal Energy Operating, LLC (Historical) | Sabinal Acquisition Transaction Adjustments (Pro Forma) | Mach Natural
Resources LP Combined (Pro Forma) | |||||||||||||||||||
| Proved Developed and Undeveloped Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 1,106,474 | 1,449,418 | 94,618 | 11,304 | (2,375 | ) | 2,659,439 | |||||||||||||||||
| Revisions of previous estimates | 39,892 | (582,610 | ) | (22,936 | ) | (2,426 | ) | — | (568,080 | ) | ||||||||||||||
| Purchases in place | 26,783 | — | — | — | — | 26,783 | ||||||||||||||||||
| Extensions, discoveries and other additions | — | — | — | — | — | — | ||||||||||||||||||
| Sales in place | — | — | — | — | — | — | ||||||||||||||||||
| Production | (101,147 | ) | (109,777 | ) | (19,134 | ) | (806 | ) | — | (230,864 | ) | |||||||||||||
| December 31, 2024 | 1,072,002 | 757,031 | 52,548 | 8,072 | (2,375 | ) | 1,887,278 | |||||||||||||||||
| Proved Developed Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 909,372 | 1,449,418 | 94,618 | 8,312 | — | 2,461,720 | ||||||||||||||||||
| December 31, 2024 | 808,820 | 757,031 | 52,548 | 6,293 | — | 1,624,692 | ||||||||||||||||||
| Proved Undeveloped Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 197,102 | — | — | 2,992 | (2,375 | ) | 197,719 | |||||||||||||||||
| December 31, 2024 | 263,182 | — | — | 1,779 | (2,375 | ) | 262,586 | |||||||||||||||||
| NGLs (MBbls) | ||||||||||||||||||||||||
| Mach Natural Resources LP (Historical) | SIMCOE LLC (Historical) | SJ INVESTMENT OPPS LLC (Historical) | Sabinal Energy Operating, LLC (Historical) | Sabinal Acquisition Transaction Adjustments (Pro Forma) | Mach Natural Resources LP Combined (Pro Forma) | |||||||||||||||||||
| Proved Developed and Undeveloped Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 85,665 | 20,430 | — | 2,833 | (456 | ) | 108,472 | |||||||||||||||||
| Revisions of previous estimates | 8,518 | (6,502 | ) | — | (230 | ) | — | 1,786 | ||||||||||||||||
| Purchases in place | 4,456 | — | — | — | — | 4,456 | ||||||||||||||||||
| Extensions, discoveries and other additions | — | — | — | — | — | — | ||||||||||||||||||
| Sales in place | — | — | — | — | — | — | ||||||||||||||||||
| Production | (7,489 | ) | (1,538 | ) | — | (154 | ) | — | (9,181 | ) | ||||||||||||||
| December 31, 2024 | 91,150 | 12,390 | — | 2,449 | (456 | ) | 105,533 | |||||||||||||||||
| Proved Developed Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 69,193 | 20,430 | — | 2,020 | — | 91,643 | ||||||||||||||||||
| December 31, 2024 | 66,772 | 12,390 | — | 1,887 | — | 81,049 | ||||||||||||||||||
| Proved Undeveloped Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 16,472 | — | — | 813 | (456 | ) | 16,829 | |||||||||||||||||
| December 31, 2024 | 24,378 | — | — | 562 | (456 | ) | 24,484 | |||||||||||||||||
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| Total (MBoe) | ||||||||||||||||||||||||
| Mach Natural Resources LP (Historical) | SIMCOE LLC (Historical) | SJ INVESTMENT OPPS LLC (Historical) | Sabinal Energy Operating, LLC (Historical) | Sabinal Acquisition Transaction Adjustments (Pro Forma) | Mach Natural Resources LP Combined (Pro Forma) | |||||||||||||||||||
| Proved Developed and Undeveloped Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 345,650 | 262,990 | 15,770 | 61,080 | (2,123 | ) | 683,366 | |||||||||||||||||
| Revisions of previous estimates | 9,404 | (103,912 | ) | (3,823 | ) | 2,506 | — | (95,825 | ) | |||||||||||||||
| Purchases in place | 13,934 | — | — | — | — | 13,934 | ||||||||||||||||||
| Extensions, discoveries and other additions | — | — | — | — | — | — | ||||||||||||||||||
| Sales in place | (9 | ) | — | — | — | — | (9 | ) | ||||||||||||||||
| Production | (31,729 | ) | (19,898 | ) | (3,189 | ) | (4,357 | ) | — | (59,173 | ) | |||||||||||||
| December 31, 2024 | 337,250 | 139,180 | 8,758 | 59,229 | (2,123 | ) | 542,293 | |||||||||||||||||
| Proved Developed Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 270,384 | 262,990 | 15,770 | 53,183 | — | 602,326 | ||||||||||||||||||
| December 31, 2024 | 247,630 | 139,180 | 8,758 | 50,275 | — | 445,843 | ||||||||||||||||||
| Proved Undeveloped Reserves as of: | ||||||||||||||||||||||||
| December 31, 2023 | 75,266 | — | — | 7,897 | (2,123 | ) | 81,040 | |||||||||||||||||
| December 31, 2024 | 89,620 | — | — | 8,954 | (2,123 | ) | 96,450 | |||||||||||||||||
Standardized measure of discounted future net cash flows
The following tables present the pro forma standardized measure of discounted future net cash flows (the “pro forma standardized measure”) applicable to the Company’s proved reserves as of December 31, 2024. The future cash flows are discounted at 10% per year and assume continuation of existing economic conditions.
The standardized measure of discounted future net cash flows, in management’s opinion, should be examined with caution. The basis for this table is the reserve studies prepared by independent petroleum engineering consultants, which contain imprecise estimates of quantities and rates of production of reserves. Revisions of previous year estimates can have a significant impact on these results. Also, exploration costs in one year may lead to significant discoveries in later years and may significantly change previous estimates of proved reserves and their valuation. Therefore, the standardized measure of discounted future net cash flow is not necessarily indicative of the fair value of the Company’s proved oil and natural gas properties.
The data presented should not be viewed as representing the expected cash flow from, or current value of, existing proved reserves since the computations are based on a large number of estimates and assumptions. Reserve quantities cannot be measured with precision and their estimation requires many judgmental determinations and frequent revisions. Actual future prices and costs are likely to be substantially different from the prices and costs utilized in the computation of reported amounts.
The pro forma standardized measure is not necessarily indicative of the results that might have occurred had the Transactions been completed on January 1, 2024 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected because of various factors, including those discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 pursuant to Rule 424(b)(4).
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The pro forma standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves as of December 31, 2024 is as follows:
| (in thousands) | ||||||||||||||||||||||||
| Mach Natural Resources LP (Historical) | SIMCOE LLC (Historical) | SJ INVESTMENT OPPS LLC (Historical) | Sabinal Energy Operating, LLC (Historical) | Sabinal Acquisition Transaction Adjustments (Pro Forma) | Mach Natural Resources LP Combined (Pro Forma) | |||||||||||||||||||
| Future cash inflows | $ | 8,120,568 | $ | 1,280,146 | $ | 83,499 | $ | 4,181,606 | $ | (99,256 | ) | $ | 13,566,563 | |||||||||||
| Future costs: | ||||||||||||||||||||||||
| Production costs1 | (3,489,856 | ) | (794,919 | ) | (67,828 | ) | (1,843,048 | ) | 34,607 | (6,161,044 | ) | |||||||||||||
| Development costs2 | (1,150,411 | ) | (245,688 | ) | (1,039 | ) | (385,673 | ) | 2,721 | (1,780,090 | ) | |||||||||||||
| Income taxes3 | (1,099 | ) | — | — | (21,285 | ) | — | (22,384 | ) | |||||||||||||||
| Future net cash flows | 3,479,202 | 239,539 | 14,632 | 1,931,600 | (61,928 | ) | 5,603,045 | |||||||||||||||||
| 10% annual discount | (1,589,447 | ) | (64,324 | ) | (2,719 | ) | (958,286 | ) | 21,384 | (2,593,392 | ) | |||||||||||||
| Standardized measure | $ | 1,889,755 | $ | 175,215 | $ | 11,913 | $ | 973,314 | $ | (40,544 | ) | $ | 3,009,653 | |||||||||||
| 1 | Production costs include production severance taxes, ad valorem taxes and operating expenses. |
| 2 | Development costs include plugging expenses, net of salvage and net capital investment. |
| 3 | Represents Texas franchise tax. |
Changes in standardized measure
The changes in the pro forma standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves for the year ended December 31, 2024 are as follows:
| (in thousands) | ||||||||||||||||||||||||
| Mach Natural Resources LP (Historical) | SIMCOE LLC (Historical) | SJ INVESTMENT OPPS LLC (Historical) | Sabinal Energy Operating, LLC (Historical) | Sabinal Acquisition Transaction Adjustments (Pro Forma) | Mach Natural Resources LP Combined (Pro Forma) | |||||||||||||||||||
| Standardized measure, beginning of period | $ | 2,575,808 | $ | 935,169 | $ | 136,351 | $ | 1,064,515 | $ | (36,858 | ) | $ | 4,674,985 | |||||||||||
| Revisions of previous quantity estimates | 72,769 | (686,312 | ) | (33,095 | ) | 49,015 | — | (597,623 | ) | |||||||||||||||
| Changes in estimated future development costs | (91,198 | ) | (15,042 | ) | — | (506 | ) | — | (106,746 | ) | ||||||||||||||
| Purchases of minerals in place | 111,481 | — | — | — | — | 111,481 | ||||||||||||||||||
| Net changes in prices and production costs | (536,970 | ) | (127,104 | ) | (93,812 | ) | (8,844 | ) | — | (766,730 | ) | |||||||||||||
| Divestiture of reserves | (295 | ) | — | — | — | — | (295 | ) | ||||||||||||||||
| Accretion of discount | 257,686 | 93,517 | 13,635 | 107,622 | (3,686 | ) | 468,774 | |||||||||||||||||
| Net change in taxes | 443 | — | — | 1,109 | — | 1,552 | ||||||||||||||||||
| Sales of oil and gas produced, net of production costs | (604,446 | ) | (63,389 | ) | (14,769 | ) | (180,312 | ) | — | (862,916 | ) | |||||||||||||
| Development costs incurred during the period | 168,617 | — | — | 23,213 | — | 191,830 | ||||||||||||||||||
| Change in timing of estimated future production and other | (64,140 | ) | 38,376 | 3,603 | (82,498 | ) | — | (104,659 | ) | |||||||||||||||
| Standardized measure, end of period | $ | 1,889,755 | $ | 175,215 | $ | 11,913 | $ | 973,314 | $ | (40,544 | ) | $ | 3,009,653 | |||||||||||
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