Mach Natural Resources LP

Good morning, everyone. Thank you for joining today's call to discuss Mock Natural Resources First Quarter 2024 Financial and Operational Results. During this morning's call, the speakers will be making forward-looking statements that cannot be confirmed by reference to existing information, including statements regarding expectations, projections, future performance, and the assumptions underlying such statements. Please note a number of factors will cause actual results to differ materially from the forward-looking statements including the factors identified and discussed in their press release this morning and other SEC filings. For further discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements, please read the company's annual report on Form 10-K, which is available on the company's website or the SEC's website. Please recognize that, except as required by law, they undertake no duty to update any forward-looking statements or and you should not place undue reliance on such statements. They may refer to some non-GAAP financial measures in today's discussion. For reconciliations from non-GAAP financial measures to the most directly comparable GAAP measures, please reference their press release, which is available on Mock's website, and their 10-Q, which will also be available on their website when filed. Today's speakers are Tom Ward, CEO, and Kevin White, CFO. Tom will give an introduction and overview, Kevin will discuss Mock's financial results, and then the call will be open for questions. With that, I'll turn the call over to Mr. Tom Ward. Tom?

Thank you. Welcome to Mock Natural Resources' first quarter earnings update. Our last update was only 45 days ago. Therefore, my prepared comments will be brief. I start each call remembering why we are a bit different than most C-Corp companies. MOC was formed in 2017 with four main goals in mind. These are maximizing cash distributions, making acquisitions that are creative to our distribution, maintaining low leverage, and reinvesting less than 50% of our operating cash flow. These core tenets remain the same today. Everything we do is centered around our distribution. However, our distribution is variable. We set our distribution on how much cash we have on hand at the end of a quarter. Therefore, the distribution will change each quarter. The price of our three main commodities has the most impact on each quarter. Our hedging program reduces some price risk and our drilling offsets most of the production declines. These also help to stabilize our distributions. However, there will be volatility. The two sins of past MLPs were high leverage and fixed distributions. We've avoided those and have consistently returned cash to our equity holders over the last six years. Mark is an acquisition company. We are adept at adding reserves and finding ways to manage them more efficiently than our underwriting forecasts them. We've been able to achieve positive results in all acquisitions. One factor is that we have a small corporate staff of 125 employees, which can oversee a large portfolio of more than 4,600 operated and 9,000 non-operated wells that hold over a million acres of land. Therefore, a new acquisition fits nicely into our existing production without meaningful additional cost. We also pay close attention to producing wells instead of singular focus on drilling. We take a long-term view on commodity price increases as the world becomes ever more reliant on the products we produce. We do not see a time where demand for oil, natural gas, and natural gas liquids abates. As mentioned before, we're bullish long-term natural gas demand based on LNG exports and continuous increasing power demand. We believe the world will continue to need additional oil production to meet demand as the world tries to move the standard of living towards the lucky 1 billion who have achieved relative luxury in comparison. Mock currently has two rigs running in Oklahoma, one in Canadian County and one in Kingfisher County. We do not see this changing during the second quarter. As the natural gas strip moves up, we can allow ourselves the ability to unlock some more gas from our inventory. As of today, the forward price is above $4 by the end of next year. However, if you've listened to me before, you know that I believe we'll hit that number earlier. Our drilling results this quarter were in line with our expectations. Our oil production was slightly lower than expected due to the downtime from the January winter storm, which totaled nearly 60,000 barrels. Even after this storm, our natural gas production was slightly higher than expected. LOE came in below the low point of our guidance. Diploma assets have dramatically lowered our LOE. We'll watch this another quarter before making any changes to guidance. Our capex was slightly higher than expected due to drilling more in-unit Oswego wells during the first quarter, where our working interest is higher. We continue to see efficiency gains in our drilling program with both Oswego and Plumwells coming in under our estimates. The ability to toggle from acquiring to drilling in bull markets remains one of our key attributes. Once we deliver, Our quarterly distribution mock will have purchased $1.8 billion of producing properties by using $521 million of equity and distributing back over $800 million to our unit holders while maintaining an enterprise value of $2.5 billion. We believe that puts us at the top of upstream operators on cash recovered on cash invested returns. Our internal estimate for the five-year result of CROKI is 34%, and our five-year return on capital is 19%. We follow these categories closely because of the importance of returning our profits to unit holders. With that, I'll turn it over to Kevin.

Thanks, Tom. The reported results for the first quarter of 2024 represent the first quarter we have public report. We have publicly reported that show an entire quarter's activity of all the combined entities that make up Mock Natural Resources. Additionally, it is worth noting that the comparative income and cash flow statements for the first quarter of 2023 reflect only the results for Mock 3, the predecessor, and are not useful for direct comparison. For the quarter, we averaged production of 89,000 BOE per day, which was 23% oil, 55% natural gas, and 22% NGLs. Excluding the impact of our hedges, the average realized prices were $77.17 per barrel of oil, $2.35 per MCF of gas, and $26.92 per barrel of NGLs. Of the $255 million total oil and gas revenues, the relative contribution for oil was 57%, gas was 24%, and NGLs contributed 19% of that revenue. On the expense side, as Tom mentioned, our lease operating expense of $41 million of 503 per BOE came in lower than our mid-February guidance, and cash G&A of slightly over $9 million, or only $1.13 per BOE, is notably low compared to many other companies. Total revenues, including our hedges and midstream activities, total $239 million. Adjusted EBITDA of $169 million and $144 million of operating cash flow. And on June 10th, we will distribute $71.25 million to unit holders of record on May 28th. And with that quick overview, Kevin, I will turn the call back to you to open the line for questions.