TXO Partners Reports Mixed Q3 Results, Acquires Properties Amid Challenging Market Conditions

TXO Partners, L.P. reported its financial results for the third quarter and the nine months ended September 30, 2024, revealing significant changes in revenue and profitability compared to the previous fiscal period. For the three months ended September 30, 2024, the company generated revenues of $68.7 million, a slight decrease from $69.9 million in the same period of 2023. Notably, oil and condensate revenues surged to $56.1 million from $35.3 million year-over-year, while natural gas revenues fell sharply due to a 40% decrease in average selling prices.

For the nine months ended September 30, 2024, total revenues dropped to $193.5 million from $288.7 million in 2023, primarily driven by a 67% decline in natural gas prices, which accounted for an $86 million revenue decrease. Despite the revenue decline, cash provided by operating activities increased to $68.8 million from $59.7 million in the prior year.

The company reported an operating loss of $5.0 million for the third quarter of 2024, contrasting with an operating income of $4.4 million in the same quarter of 2023. Net income for the third quarter was $203,000, a significant decline from $8.5 million in the prior year. For the nine-month period, net income fell to $13.3 million from $89.7 million in 2023, reflecting the challenging market conditions.

Strategically, TXO Partners completed two significant acquisitions in August 2024, acquiring producing properties from Eagle Mountain Energy Partners and VR 4-ELM, LP for $241.8 million and 2.5 million common units valued at $50 million. Additionally, the company acquired properties from Kaiser-Francis Oil Company for $18.2 million. These acquisitions contributed to an increase in proved properties, which rose to $1.89 billion as of September 30, 2024, from $1.54 billion at the end of 2023.

The company’s total assets increased to $1.02 billion, up from $695.6 million at the end of 2023, while total liabilities rose significantly, with long-term debt increasing to $155.1 million from $28.1 million. The partnership's capital also grew to $621.4 million from $473.8 million.

In terms of cash flow, TXO Partners reported net cash used in investing activities of $273 million, a substantial increase from $40.5 million in the previous year, primarily due to the acquisitions. The company also raised $141.2 million from a public offering in June 2024, which was utilized to fund part of the acquisitions.

Overall, TXO Partners is navigating a challenging market environment characterized by fluctuating commodity prices and increased operational costs, while strategically expanding its asset base through acquisitions.