Mach Natural Resources (NYSE:MNR) used its fourth-quarter 2025 earnings call to emphasize a strategy centered on cash distributions, disciplined capital deployment, and maintaining flexibility across oil and natural gas development. CEO Tom Ward and CFO Kevin White outlined results from a year that included major acquisitions, a shift in drilling emphasis toward natural gas, and continued adherence to a reinvestment framework tied to operating cash flow.
Strategy pillars: cash returns, disciplined acquisitions, and flexible development
Ward reiterated Mach’s four “strategic pillars,” led by maximizing distributions. He said the company has distributed $1.3 billion to unitholders starting in the fourth quarter of 2018 after its first acquisition. Post public offering, Ward said Mach has delivered distributions totaling $5.67 per unit from the beginning of 2024 through its last announced distribution of $0.53, which he described as an annualized yield of 15%.
Ward also described the company’s hedging framework: Mach hedges 50% of production in year one and 25% in year two on a rolling basis, aiming to lock in near-term cash flow while keeping exposure to higher future prices.
Shifting commodity mix: gas focus in 2026, potential oil rig return later
Management discussed shifting drilling activity based on relative commodity economics. Ward said Mach moved over the last year from drilling oil-dominated assets in the Oswego and condensate-window STACK to dry gas locations in the Deep Anadarko and San Juan. He cited Bloomberg fair value prices that, as presented on the call, declined for WTI crude from $71.72 in 2024 to $57.42 in 2025, while Henry Hub natural gas rose from $3.43 in 2024 to $4.42 in 2025.
For 2026, Ward said drilling is “once again concentrating on drilling natural gas wells in the San Juan and Deep Anadarko through the first half” of the year. He added that the company is preparing to bring back an oil rig in the Oswego and associated oil areas in the last half of 2026 if crude prices remain elevated, noting that since 2021 Mach has drilled and completed more than 250 Oswego locations that “consistently had rates of return above 50%.” He said additional targets include the Red Fork, Sycamore, and Osage.
Ward said Mach plans to reduce Deep Anadarko capital spending by moving from two rigs to one rig and potentially shifting activity to Oswego if market conditions allow. In the Q&A, he characterized adding an Oswego rig in the second half of 2026 as optionality and clarified that the company’s current guidance did not contemplate that shift.
Operational and drilling details: Deep Anadarko and Mancos
Since the prior earnings release, Ward said the company brought on production from three additional Deep Anadarko locations that combined for approximately 40 million cubic feet per day of gas. He outlined expectations for the Deep Anadarko of approximately 19.5 Bcf of estimated ultimate recovery (or about 6.5 Bcf per mile of lateral), with a stated range of 5–8 Bcf per mile. He said the wells are drilled at 14,000–17,000 feet true vertical depth with laterals of about 15,000 feet, resulting in total depths of 29,000–32,000 feet. Mach’s projected drilling and completion cost for those wells is $14 million to $15 million per location.
In the San Juan, Ward said Mach plans to drill 7–8 dry gas Mancos wells. He described Mancos true vertical depth at approximately 7,000 feet with two- and three-mile laterals. A three-mile Mancos well is projected to cost $15 million and recover about 24 Bcf of reserves, with a 60% first-year decline. The company’s goal is to reduce Mancos drilling and completion cost to about $13 million during the 2026 drilling season, which Ward said runs from April 1 through the end of November.
Discussing performance versus expectations, Ward said early Deep Anadarko wells were better than anticipated and that the last three were “right on our type curve,” adding that the play is performing as expected. He said the Mancos has been “better than expected” and called it a “world-class reservoir,” arguing that costs in the basin have historically been too high and should be reducible with tighter operational focus.
Fourth-quarter financial results and distributions
CFO Kevin White said 2025 year-end reserves more than doubled to 705 MMBOE from 337 MMBOE, reflecting drilling and acquisitions during the year. He added that additions from development exceeded 2025 production by 18%.
For the fourth quarter, White reported production of 154,000 BOE per day, consisting of 17% oil, 68% natural gas, and 15% NGLs. Average realized prices were $58.14 per barrel of oil, $2.54 per Mcf of gas, and $21.28 per barrel of NGLs. Total oil and gas revenues were $331 million, with oil contributing 42%, gas 44%, and NGLs 14%.
On costs, White said lease operating expenses were $106 million, or $7.50 per BOE, while cash G&A was $11 million, or $0.77 per BOE. The company ended the quarter with $43 million in cash and $338 million of availability under its credit facility.
Total revenues including hedges and midstream activities were $388 million; hedges contributed $42 million, according to White. Adjusted EBITDA was $187 million, operating cash flow was $169 million, and development capital expenditures were $77 million, or 46% of operating cash flow. For full-year 2025, White said development costs were $252 million, representing 47% of operating cash flow. Cash available for distribution in the quarter was $89 million, supporting a distribution of $0.53 per unit, which management said was paid the day before the call.
Balance sheet priorities, monetization options, and midstream guidance change
Ward said Mach’s long-term target is 1x debt-to-EBITDA and described that leverage level as a threshold for pursuing additional acquisitions. In response to questions about M&A, he said the company was “pretty much on the sidelines” until leverage declines from about 1.3x to roughly 1.0x, with a stated focus on paying down debt. Ward outlined potential levers to reduce debt-to-EBITDA, including higher commodity prices, reducing distributions (which he said is not preferred), or selling non-EBITDA generating assets.
Ward said the Deep Anadarko is the company’s only area not held by production and includes leasehold with term, making it the most likely place to sell some acreage. He said Mach has about 50,000 acres there, describing that as the amount it wants if it does not bring in a partner. He added that a partner could allow the company to keep two rigs running while reducing working interest and costs.
When asked about potentially monetizing midstream assets to reduce debt faster, Ward said the company could do so but would “pay for it in the longer run,” adding that midstream systems acquired at no cost provide an ongoing stream of cash flow.
On 2026 guidance, management addressed a question about an increase in expected midstream profit. A company representative identified as Kent said that when Mach initially issued pro forma guidance reflecting the IKAV and Sabinal transactions, it did not anticipate an accounting treatment related to the company’s own throughput volumes through one of the IKAV plants. After reviewing fourth-quarter results, Kent said certain expenses were being reclassified from lease operating expense to gathering, processing, and transportation, which improved midstream operating profit in the updated guidance.
About Mach Natural Resources (NYSE:MNR)
Mach Natural Resources LP, an independent upstream oil and gas company, focuses on the acquisition, development, and production of oil, natural gas, and natural gas liquids reserves in the Anadarko Basin region of Western Oklahoma, Southern Kansas, and the panhandle of Texas. It also owns a portfolio of midstream assets, as well as owns plants and water infrastructure. The company was incorporated in 2023 and is headquartered in Oklahoma City, Oklahoma.
