Mach Natural Resources LP

Good morning, everyone, and thank you for joining us, and welcome to Mock Natural Resources' first quarter 2026 earnings call. 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 may cause actual results to differ materially from their forward-looking statements. including the factors identified and discussed in their press release and in other SEC filings. For further discussion of risks and uncertainties that can cause actual results to differ from those in such forward-looking statements, please read the company's filings with the SEC. Please recognize that except as required by law, they undertake no duty to update any forward-looking statements, and you should not place undue reliance on such statements. They may refer to some non-GAAP financial measures in today's discussions. For reconciliation from non-GAAP financial measures to the most directly comparable GAAP measures, please reference their press release and supplemental tables, which are available on Mock's website and their 10Q, 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 will turn the call over to Mr. Tom Ward. Tom?

Thank you, Darrell. Welcome to Mock Natural Resources first quarter earnings update. Each quarter we reiterate the company's four strategic pillars that have guided us since our founding in 2017. The first pillar I will discuss is disciplined execution. We bought only free cash flowing assets at discounts to the producing properties PV10. This allowed us to purchase producing assets without paying for any upside, even though over time we've proven significant upside exists. Each year, MOC publishes every well we've drilled and the overall IRR based on the year's price for oil and gas. We've averaged approximately 50% rates of return on drilling program since our program started in 2018. Said another way, we've invested more than $1.3 billion in properties that others would give no value to and returned excellent results. You can see that on page nine of our investor presentation that our free cash flow breakeven pricing is best in class for both oil and natural gas. It is rare, if not unheard of, to be a leader in both. It would be difficult to duplicate what we have built. In 2017, we had a strong opinion that the market was entering a time of distress. We focused on buying free cash flow at valuations most sellers would not even consider at first. We called it the stages of grief. Ultimately, we did not deal with management teams, but their lenders. either through fourth sales or the 363 bankruptcy process. We did not anticipate the COVID event, but we did anticipate investor rejection of our industry from the poor results of the previous decade chasing growth with high debt levels. The result was that our initial unit holders prospered by receiving more than twice their investment through distributions and still owning a company with an enterprise value of more than $3 billion. The purchases we have made continue to bear fruit through their cash flow streams, midstream systems, land that is held by production and continued drilling on properties we did not have to pay for. Even our purchases since the IPO have been contributing to our drilling program, one would have thought that post the 2022 run up in prices that it'd be hard to purchase any valuable drilling locations without paying for upside. However, As we review our potential 2026 locations, we're drilling on acquisitions from XTO, Paloma, Cheyenne, Flycatcher, Savanoff, and ICAB, which were all made post-December 2023. The second pillar to discuss is disciplined reinvestment rate. We maintain a reinvestment rate of less than 50% of operating cash flow to optimize distributions to shareholders. We did not establish mock to grow our production through drilling. Our drilling program is set to stabilize our production. As I mentioned, our inventory is best in class for both oil and natural gas reinvestment. In 2026, move down in natural gas is being offset by a move up in oil prices. Mock has a unique ability to react to these commodity price changes by pivoting from one commodity to another to maximize rates of return. Therefore, we have prioritized our drilling schedule to take advantage of these price changes. Starting May 1st, we moved in our first rig to start drilling for oil in the Oswego Formation in Kingfisher County, Oklahoma. This is an area that's well known to us. We've drilled more than 250 Oswego locations since 2021 with very good results. In the presentation, we're showing that $75 flat oil The changes in 2025 Oswego rates return from 39% to 90%. $85 flat oil prices move the program returns to 145%. We let pricing dictate where we spend capital. We will also move in a rig to drill southern Oklahoma Ardmore Basin assets that we acquired from Cheyenne and Flycatcher purchases in 2024. The third oil-weighted rig will be moving into the Red Forks and of western Oklahoma. The majority of Red Fork locations were acquired by our limited leasing program and trades with others from our Simerex acquisition in 2021. This shift in drilling will amount to adding three oil-weighted rigs by postponing the deep Anadarko dry gas program. We may also delay the completion of our San Juan Mancos program until 2027 to add another oil rig in the Clear Fork Formation from the Savinol acquisition. By making these changes, we can keep our reinvestment level below 50% of operating cash flow in 2026, even though we remain optimistic about the long-term potential of our natural gas assets in the Deep Andarco Basin and San Juan Basin. We now have five wells with more than nine days of production in the deep Anadarko. These five wells have averaged 90-day cumulative production of more than 12 million cubic feet of gas per day, while our 15 BCF gas type curve is projected to be 10.6 million cubic feet of gas per day. In the San Juan, we've begun our 2026 drilling program where we have one rig working drilling manco shell wells. san juan mancos is fast becoming known as a world-class natural gas asset with potential for meeting the growing demand that we expect to see in the western markets over the next five years we have 575 000 acres that are held by production and can be developed at any time the market allows currently we will drill seven wells during the summer's drilling window We continue to believe that we will be substantially lower than historical drilling costs as we bring in new service providers from the MEDCON and work with existing service providers in the San Juan to work with our dedicated staff. Our San Juan drilling program in 2025 was exceptional. We drilled five wells that came online last fall and have produced more than 14 BCF of gas and continue to produce over 60 million cubic feet of gas a day. These wells have been compared to the best set of wells drilled in the U.S. The San Juan gives us long-term natural gas optionality. When we acquired ICAV, we inherited a volume production contract that runs through 2030. Even with our limited drilling program, we can keep our production in the San Juan flat at approximately 300 million cubic feet of gas per day. We currently have approximately 65% of the volumes from the San Juan producing on this contract at a price of $1.72. If basis continues to be low, we have an effective hedge, and if basis moves lower, it will benefit from our drilling program and time as production payment amortizes. This is one of the larger volumes of natural gas that has access to the growing western markets as they develop. MOC has 3 million acres of land that are not going anywhere. We have time because our assets are held by production with few lease expiration dates. This large inventory of investment opportunities was the result of acquisitions made over time since 2018 and gives us maximum flexibility to choose where and when to drill to deliver the best-in-class results. Our third pillar to discuss today is to maintain financial strength. This pillar is designed to keep our leverage in check. Historically, we have kept our leverage at or below one times. The ICAB and Sabino acquisitions last September have moved our leverage up to approximately 1.3 times. Our goal is to move that ratio back to our desired level before we make any more acquisitions that require substantial debt. Therefore, our acquisition strategy is currently on hold unless we find an acquisition that's accretive to our cash available for distribution using equity to lower our debt levels. In the meantime, we can continue with our drilling program and let time move on as our leverage ratio down. We continue to have interest by sellers to exchange production for equity where we might be able to lower leverage by increasing our cash available for distribution to maintain the status quo. Our goal is to not move away from our current method of distributions unless we feel it is necessary. In that case, we can always use some of our distribution for debt reduction. It is safe to say that our debt levels are very manageable, but are a pebble in my shoe that I'd prefer to move away from and get back to one-times leverage. Our final pillar continues to be the most important, maximize distribution to equity holders. This pillar is the culmination of all we work for. Since inception, our goal is to find and acquire cash-flowing assets at distressed prices, reinvest less than 50% of our operating cash flow, keep our leverage low, and maximize this pillar. We have been and continue to be successful. The evidence is in our industry-leading distribution. You can see this in two ways. Our company has had a cash return on capital invested of more than 20% every year since our inception. We have averaged 35% croaking over the last five years. I believe we're in rare error here. Only a few tech companies can match our croaking. We have also averaged 15% yield since the beginning of 2024. Both are industry leading. I'll now turn the call over to Kevin to discuss the first quarter financial results.

Thanks, Tom. For the quarter, our production of 158,000 BOE per day was 16% oil, 70% natural gas, and 14% NGLs. Our average realized prices were $69.73 per barrel of oil. That's a 20% increase from fourth quarter, $2.74 per MCF of gas, and $23.75 per barrel of NGLs. Of the $366 million total oil and gas revenues, the relative contribution for oil was 42%, 45% for gas, and 13% for NGLs. On the expense side, worth pointing out, our lease operating expense was $101 million, or only $7.12 per BOE. Cash G&A was approximately $5 million, or only $0.37 per BOE. We ended the quarter with $53 million in cash and $305 million of availability under the credit facility. Total revenues including our hedges and midstream activities total $286 million. Adjusted EBITDA was $195 million, and we generated $170 million of operating cash flow. Spent $75 million in development CapEx, which represents 40% of our operating cash flow after interest. And in the quarter, we generated $107 million of cash available for distribution resulting in a distribution of 64 cents per unit, which will be paid on June 4th to holders of record on May 21st. And with that, Darrell, we'll turn it back to you to open the line for questions.