Mach Natural Resources LP recorded a slight drop in its net earnings in the second quarter, according to the financial report released this week by the Oklahoma City company. At the same time, the company expects to reduce its drilling and rig activity.
It had reported net income of $40 million and adjusted EBITDA of $136 million along with $117 million in net cash generated from its operating activities. It compared to $42 million in net income and $169 million adjusted EBITDA in the first quarter along with $144 million in net cash generated by operating activites.
“Mach’s second quarter results reflect the continuation of our 2024 plan. A steady adherence to low leverage and disciplined cash flow management allow us to announce a distribution of $0.90 per unit for the period. Our Company was founded on a distribution-focused strategy, and this quarter’s cash distribution demonstrates Mach’s commitment to rewarding its unitholders while navigating the challenges of the market,” stated Tom L. Ward, Mach’s Chief Executive Officer.
Mach had average total net production of 89.3 thousand barrels of oil equivalent a day which was more than the company’s guidance. It also had average production of 20.9 thousand barrels of oil a day.
During the quarter, Mach divested part of its Western Anadarko acreage for $38 million with no associated production. The firm also declared a quarterly cash distribution of 90 cents a share.
Additionally, during the second quarter, the average realized price was $79.27 per barrel of oil, $1.33 per Mcf of natural gas, and $23.83 per barrel of natural gas liquids (“NGLs”). These prices exclude the effects of derivatives.
At the end of the second quarter, Mach had a cash balance of $145 million and a pro forma net-debt-to-Adjusted-EBITDA ratio of 0.9x.
Second Quarter 2024 Operational Results
During the second quarter of 2024, Mach achieved average oil equivalent production of 89.3 Mboe/d, which consisted of 23% oil, 53% natural gas and 24% NGLs. Also, for the second quarter of 2024, Mach’s production revenues from oil, natural gas, and NGLs sales totaled $232 million, comprised of 65% oil, 15% natural gas, and 20% NGLs.
The company spud 12 gross (10 net) operated wells and brought online 14 gross (12 net) operated wells in the second quarter of 2024. As of June 30, 2024, the Company had 5 gross (4 net) operated wells in various stages of drilling and completion.
In the second quarter of 2024, Mach’s total capital expenditures—excluding acquisitions—were $46 million, including $41 million of upstream capital and $5 million of other capital (including midstream and land).
During the second quarter, Mach lowered its operated rig count in the Oswego from two rigs to one rig. As a result, the midpoint of full-year capital expenditure guidance is reduced by 15%. Oil volumes for the third quarter 2024 and fourth quarter 2024 are expected to range between 18.6 MBbl/d to 19.9 MBbl/d. Full-year 2024 oil volumes are expected to range between 19.4 MBbl/d to 20.6 MBbl/d. The decision to reduce rig count is fully consistent with the Company’s strategic framework that prioritizes a disciplined reinvestment rate.
In order to account for better-than-expected operational efficiencies achieved year-to-date, the midpoint of full-year 2024 guidance for lease operating expense per BOE has been lowered by 3%. In addition, full-year 2024 total oil-equivalent volumes are expected to range between 82.2 Mboe/d to 87.2 Mboe/d, representing a midpoint improved by 1%.
