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TXO TXO Partners LP

16.67
0.78 (4.91%)
After Hours
Last Updated: 01:00:00
Delayed by 15 minutes
Share Name Share Symbol Market Type
TXO Partners LP NYSE:TXO NYSE Common Stock
  Price Change % Change Share Price High Price Low Price Open Price Shares Traded Last Trade
  0.78 4.91% 16.67 16.8899 16.00 16.00 78,440 01:00:00

Form 10-Q - Quarterly report [Sections 13 or 15(d)]

05/11/2024 9:15pm

Edgar (US Regulatory)


0001559432--12-312024Q3false50509090
(a) Changes in Operating Assets and Liabilities
Accounts receivable$21,834 $(24,461)
Other current assets903 (2,081)
Aid-in-construction— 238 
Current liabilities(10,059)20,879 
Other operating liabilities(668)(170)
$12,010 $(5,595)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 001-04321
TXO Partners, L.P.
(Exact name of registrant as specified in its charter)
Delaware32-0368858
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
400 West 7th Street, Fort Worth, Texas
76102
(Address of Principal Executive Offices)(Zip Code)
(817) 334-7800
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common UnitsTXONew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated fileroAccelerated filerx
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyx
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The registrant had outstanding 40,913,332 common units as of November 5, 2024.


TABLE OF CONTENTS
i

Part I - Financial Information
Item 1. Financial Statements
TXO PARTNERS, L.P.
Consolidated Balance Sheets
(in thousands)
September 30,
2024
December 31,
2023
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents$3,846 $4,505 
Accounts receivable, net34,999 32,226 
Derivative fair value3,853 6,052 
Other11,431 12,406 
Total Current Assets54,129 55,189 
Property and Equipment, at cost – successful efforts method:
Proved properties1,888,570 1,540,105 
Unproved properties18,699 18,479 
Other85,584 83,854 
Total Property and Equipment1,992,853 1,642,438 
Accumulated depreciation, depletion and amortization(1,047,513)(1,013,115)
Net Property and Equipment945,340 629,323 
Other Assets:
Note receivable from related party7,131 7,131 
Derivative fair value3,221  
Other6,349 3,970 
Total Other Assets16,701 11,101 
TOTAL ASSETS$1,016,170 $695,613 
LIABILITIES AND PARTNERS’ CAPITAL
Current Liabilities:
Accounts payable$14,085 $8,598 
Accrued liabilities34,612 23,362 
Derivative fair value1,348 4,045 
Asset retirement obligation, current portion1,750 1,750 
Other current liabilities1,346 1,361 
Total Current Liabilities53,141 39,116 
Long-term Debt155,100 28,100 
Other Liabilities:
Asset retirement obligation178,062 152,222 
Derivative fair value7,266  
Other liabilities1,222 2,377 
Total Other Liabilities186,550 154,599 
Commitments and Contingencies
Partners’ Capital:
Partners’ capital621,379 473,798 
TOTAL LIABILITIES AND PARTNERS’ CAPITAL$1,016,170 $695,613 
See accompanying notes to the Consolidated Financial Statements
1

TXO PARTNERS, L.P.
Consolidated Statements of Operations (Unaudited)
(in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
REVENUES
Oil and condensate$56,111 $35,292 $136,944 $132,604 
Natural gas liquids7,195 5,446 20,367 21,602 
Gas5,425 29,136 36,167 134,539 
Total Revenues68,731 69,874 193,478 288,745 
EXPENSES
Production39,437 35,657 108,959 110,338 
Exploration20 24 214 107 
Taxes, transportation and other14,466 15,261 43,240 59,252 
Depreciation, depletion and amortization13,573 10,616 34,422 33,097 
Accretion of discount in asset retirement obligation2,926 2,185 8,491 6,462 
General and administrative3,275 1,756 10,520 5,062 
Total Expenses73,697 65,499 205,846 214,318 
OPERATING INCOME (LOSS)(4,966)4,375 (12,368)74,427 
OTHER INCOME (EXPENSE)
Other income6,329 5,199 28,584 18,233 
Interest income700 107 947 341 
Interest expense(1,860)(1,202)(3,885)(3,259)
Total Other Income5,169 4,104 25,646 15,315 
NET INCOME$203 $8,479 $13,278 $89,742 
NET INCOME PER COMMON UNIT
Basic$0.01$0.28$0.39$2.98
Diluted$0.01$0.27$0.39$2.93
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
Basic39,272 30,750 33,762 30,102 
Diluted39,828 31,285 34,340 30,640 
See accompanying notes to the Consolidated Financial Statements
2

TXO PARTNERS, L.P.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Nine months ended September 30, 2024
20242023
OPERATING ACTIVITIES
Net income$13,278 $89,742 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization34,422 33,097 
Accretion of discount in asset retirement obligation8,491 6,462 
Derivative fair value (gain) loss1,269 (3,216)
Net cash received from (paid to) counterparties2,278 (81,642)
Non-cash incentive compensation4,569 2,531 
Other non-cash items871 602 
Changes in operating assets and liabilities (a)
3,614 12,156 
Cash Provided by Operating Activities68,792 59,732 
INVESTING ACTIVITIES
Proceeds from sale of property and equipment5  
Proved property acquisitions(260,769)(8,570)
Development costs(10,866)(30,575)
Unproved property acquisitions(220)(60)
Other property and asset additions(1,162)(1,330)
Cash Used by Investing Activities(273,012)(40,535)
FINANCING ACTIVITIES
Proceeds from long-term debt222,000 64,000 
Payments on long-term debt(95,000)(159,000)
Net proceeds from public offering141,245  
Net proceeds from initial public offering 106,277 
Proceeds from sale of units to cover withholding taxes930  
Withholding taxes paid on vesting of restricted units(851) 
Debt issuance costs(3,173)(125)
Distributions(61,590)(33,662)
Cash Provided by (Used by) Financing Activities203,561 (22,510)
DECREASE IN CASH AND CASH EQUIVALENTS(659)(3,313)
Cash and Cash Equivalents, beginning of period4,505 9,204 
Cash and Cash Equivalents, end of period$3,846 $5,891 
(a) Changes in Operating Assets and Liabilities
Accounts receivable$(2,997)$19,388 
Other current assets1,238 69 
Current liabilities6,473 (6,451)
Other operating liabilities(1,100)(850)
$3,614 $12,156 
See accompanying notes to the Consolidated Financial Statements
3

TXO PARTNERS, L.P.
Consolidated Statements of Members’ Equity (Unaudited)
(in thousands)

Common Units
Units$
Balances, June 30, 202437,438 $572,788 
Net income— 203 
Net proceeds from sale of units975 18,745 
Units issued in acquisition of oil & gas properties2,500 50,000 
Expensing of unit awards— 1,596 
Distributions to unitholders— (21,953)
Balances, September 30, 202440,913 $621,379 

Units$
Balances, June 30, 202330,750 $688,030 
Net income— 8,479 
Expensing of unit awards— 940 
Distributions to unitholders— (14,761)
Balances, September 30, 202330,750 $682,688 

Units$
Balances, December 31, 202330,750 $473,798 
Net income— 13,278 
Net proceeds from sale of units7,475 141,245 
Units issued in acquisition of oil & gas properties2,500 50,000 
Proceeds from sale of units to cover withholding taxes188 930 
Withholding taxes paid on vesting of restricted units— (851)
Expensing of unit awards— 4,569 
Distributions to unitholders$— $(61,590)
Balances, September 30, 202440,913 $621,379 

Units$
Balances, December 31, 202214,356 $315,463 
Net income— 89,742 
Net proceeds from initial public offering5,750 102,540 
Expensing of unit awards— 2,531 
Distributions to unitholders— (33,662)
Conversion of Series 5 preferred to Common equity10,644 206,074 
Balances, September 30, 202330,750 $682,688 




See accompanying notes to the Consolidated Financial Statements
4

TXO PARTNERS, L.P.
Notes to Consolidated Financial Statements (Unaudited)
1.Organization and Summary of Significant Accounting Policies
TXO Partners, L.P. (TXO Partners or the Partnership) is an independent oil and gas company that was formed as a Delaware limited partnership in January 2012 (with an effective inception of operations at January 18, 2012). The operations of TXO Partners are governed by the provisions of the partnership agreement, as amended, executed by the general partner, TXO Partners GP, LLC (the General Partner) and the limited partners. The General Partner is the manager and operator of TXO Partners. The General Partner is managed by the board of directors and executive officers of our General Partner. The members of the board of directors of our General Partner are appointed by MorningStar Oil & Gas, LLC (“MSOG”), as the sole member of our General Partner. TXO Partners will remain in existence unless and until dissolved in accordance with the terms of the partnership agreement.
TXO Partners’ assets include its investment in an unincorporated joint venture, Cross Timbers Energy, LLC (“Cross Timbers Energy”). TXO Partners owns 50% of Cross Timbers Energy, and TXO Partners is the manager of Cross Timbers Energy. Cross Timbers Energy is governed by a Member Management Committee (MMC) and is comprised of six representatives, three from each group, with each group having one voting member. All matters that come before the MMC require the unanimous consent of the voting members. On the last day of each calendar quarter, Cross Timbers Energy distributes all excess cash to the members based on their ownership percentage of 50% each, except for earnings from the note receivable which is owned 5% by TXO Partners. Cross Timbers Energy’s properties are located primarily in the San Juan Basin of New Mexico and Colorado and the Permian Basin of West Texas and New Mexico.
TXO Partners also has a wholly-owned subsidiary, MorningStar Operating LLC which owns oil and gas assets primarily in the San Juan Basin of New Mexico and Colorado, the Permian Basin of West Texas and New Mexico and the Williston Basin of Montana and North Dakota.
2.Basis of Presentation and Significant Accounting Policies
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and on the same basis as our audited financial statements as of December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023. The consolidated balance sheet as of September 30, 2024 and the consolidated statements of operations, members’ equity and cash flows for the periods presented herein are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of results for the periods shown. Certain information and note disclosures normally included in annual financial statements have been omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Because the consolidated interim financial statements do not include all of the information and notes required by US GAAP for a complete set of financial statements, they should be read in conjunction with the audited consolidated financial statements referred to above. The results and trends in these interim financial statements may not be indicative of results for the full year.
Significant Accounting Policies
For a complete description of TXO Partners’ significant accounting policies, see our annual audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
3.Related Party Transactions
We earned management fees from Cross Timbers Energy of $1.4 million for the three months ended September 30, 2024 and $1.8 million for the three months ended September 30, 2023. We earned management fees from Cross Timbers Energy of $3.7 million for the nine months ended September 30, 2024 and $4.6 million for the nine months ended September 30, 2023.
4.Acquisitions
In August 2024, we completed the acquisition of producing properties from Eagle Mountain Energy Partners and VR 4-ELM,LP, located in the Elm Coulee field in Montana and the Russian Creek field in North Dakota which are part of the Greater Williston Basin, for cash consideration of $241.8 million and 2.5 million common units of TXO valued at
5

$50.0 million (the “EMEP Acquisition”), subject to customary purchase price adjustments. Our preliminary purchase price allocation included $312.2 million to proved properties, $0.6 million to other properties, $0.3 million to other current assets, $1.0 million to other assets, $5.4 million to other current liabilities and $16.8 million to asset retirement obligation. The acquisition was funded by a combination of cash on hand from the public offering (Note 12) and borrowings under our Credit Facility (Note 5). In the statements of operations for the three and nine months ended September 30, 2024, we recorded $8.8 million of revenues and net income of $3.7 million from this acquisition.

Additionally, in August 2024, we completed the acquisition of producing properties from Kaiser-Francis Oil Company in the Russian Creek field in North Dakota for cash consideration of $18.2 million (the “KFOC Acquisition”), subject to customary purchase price adjustments. Our preliminary purchase price allocation included $19.8 million to proved properties and $1.6 million to asset retirement obligation. The acquisition was funded by cash on hand from the public offering (Note 12).
Pro Forma Financial Information
The following unaudited pro forma financial information represents a summary of the condensed consolidated results of operations for the three and nine months ended September 30, 2024 and 2023, assuming the EMEP Acquisition had been completed as of January 1, 2023. The pro forma financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations would have been. Future results may vary significantly from the results reflected because of various factors.

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2024202320242023
Total revenue$84,882 $83,098 $242,763 $344,203 
Net income$1,006 $4,371 $13,434 $97,179 
5.Debt
(in thousands)September 30,
2024
December 31,
2023
Credit Facility, 9.0% at September 30, 2024 and 8.6% at December 31, 2023
$148,000 $21,000 
September 2016 Loan, 8.6% at September 30, 2024 and 8.7% at December 31, 2023
$7,100 $7,100 
Total Long-term Debt$155,100 $28,100 
November 2021 Credit Facility
On August 30, 2024, we entered into Amendment No. 4 and Borrowing Base Agreement (“Amendment No. 4”) on our senior secured credit facility (the “Credit Facility”) with certain commercial banks, as the lenders, and JPMorgan Chase Bank, N.A., as the administrative agent. We use the Credit Facility for general corporate purposes. Amendment No. 4 extended the maturity date of the Credit Facility to August 30, 2028, increased the borrowing base from $165 million to $275 million and joined certain new Lenders to the Credit Facility. In connection with the Credit Facility, we incurred financing fees and expenses, which are included in other assets on the balance sheets, of approximately $6.2 million as of September 30, 2024 and $3.0 million as of December 31, 2023 before accumulated amortization of $2.2 million as of September 30, 2024 and $1.5 million as of December 31, 2023. We incurred $3.1 million of financing fees and expenses in conjunction with Amendment No. 4. These costs are being amortized over the life of the credit facility. Such amortized expenses are recorded as interest expense on the statements of operations.
Redeterminations of the borrowing base under the Credit Facility, are based primarily on reserve reports that reflect commodity prices at such time, and occur semi-annually, in March and September, as well as upon request by the lenders at their sole discretion, no more than once per six-month period. We also have the right to request up to two additional borrowing base redeterminations each year at our discretion. Significant declines in commodity prices may result in a decrease in the borrowing base. These borrowing base declines can be offset by any commodity price hedges we enter. Our obligations under the credit facility are secured by substantially all assets of the Partnership, including, without limitation, (i) our interest in the joint venture, (ii) all our deposit accounts, securities accounts, and commodities accounts, (iii) any
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receivables owed to us by Cross Timbers Energy and (iv) any oil and gas properties owned directly by TXO Partners or its wholly-owned subsidiaries. We are required to maintain (i) a current ratio greater than 1.0 to 1.0 and current assets shall include availability under the Credit Facility but shall exclude the fair value of derivative instruments and current liabilities shall exclude the fair value of derivative instruments and any advances under the Credit Facility and (ii) a ratio of total indebtedness to EBITDAX of not greater than 3.0 to 1.0. For purposes of the total net debt-to-EBITDAX ratio (“Leverage Ratio”), total net debt includes total debt for borrowed money (including capital leases and purchase money debt), minus unrestricted cash and cash equivalents on hand at such time (not exceeding $15.0 million in the aggregate), minus the unpaid balance of the FAM Loan. EBITDAX means sum of (i) net income plus interest expense; income taxes paid; depreciation, depletion and amortization; exploration expenses, including workover expenses; non-cash charges including unrealized losses on derivative instruments; and, any extraordinary or non-recurring charges, minus (ii) any extraordinary or non-recurring income and any non-cash income including unrealized gains on derivative instruments. Effective with the Second Amendment, our hedge requirements are based on availability under the Credit Facility and the Leverage Ratio. If the Leverage Ratio is greater than 0.75 to 1.00, we are required to hedge at least 50% of reasonably anticipated projected production of proved developed producing reserves for the 24 months following the end of the most recent quarter. If the Leverage Ratio is less than 0.75 to 1.00 and availability under the Credit Facility is greater than 20% of the then current borrowing base, the minimum required hedge volume would be 35% for the 12 months following the end of the most recent quarter. If the Leverage Ratio is less than 0.50 to 1.00 and availability under the Credit Facility is greater than 66.7% of the then current borrowing base, there would be no minimum required hedge volume.  Our Credit Facility prohibits us from hedging more than 90% of our reasonably projected production for any fiscal year. Under the terms of the Credit Facility as amended, we were in compliance with all of our debt covenants as of September 30, 2024 and December 31, 2023. Additionally, we believe we have adequate liquidity to continue as a going concern for at least the next twelve months from the date of this report.
At our election, interest on borrowings under the Credit Facility is determined by reference to either the secured overnight financing rate (“SOFR”) plus an applicable margin between 3.00% and 4.00% per annum (depending on the then-current level of borrowings under the Credit Facility) or the alternate base rate (“ABR”) plus an applicable margin between 2.00% and 3.00% per annum (depending on the then-current level of borrowings under the Credit Facility). Interest is generally payable quarterly for loans bearing interest based on the ABR and at the end of the applicable interest period (either one, three or six months) for loans bearing interest at SOFR. We are required to pay a commitment fee to the lenders under the Credit Facility, which accrues at a rate per annum of 0.5% on the average daily unused amount of the lesser of: (i) the maximum commitment amount of the lenders and (ii) the then-effective borrowing base.
September 2016 Loan
On September 30, 2016, TXO Partners entered into an unsecured loan agreement with Cross Timbers Energy (the “FAM Loan”). The proceeds for the loan were taken from the cash held by the offshore subsidiary of Exxon Mobil Corporation and the loan was assigned to the offshore subsidiary (Note 6). The loan matures on November 29, 2028, but is automatically extended should the maturity date of the Credit Facility be extended. In all instances, this loan will mature ninety-one days after the maturity of the Credit Facility. Interest on the loan is the lesser of (a) London Interbank Offered Rate (“LIBOR”) plus three and one-quarter of one percent (3.25%) per annum, adjusted monthly or (b) the highest rate permitted by applicable law. Though the note is unsecured, we are required to stay in compliance with terms of the Credit Facility.
6.Note Receivable from Related Party
As of September 30, 2024 and December 31, 2023, we, through our 5% ownership interest in investment assets at Cross Timbers Energy, had a note receivable totaling $7.1 million outstanding with a highly-rated, offshore subsidiary of Exxon Mobil Corporation. Under the terms of the agreement, there is no stated maturity date and Cross Timbers Energy may demand repayment of all or any portion of the outstanding balance on two business days’ notice. Interest is earned based on the one-month SOFR rate and is paid monthly. Interest income totaled $0.3 million in the first nine months of 2024 and $0.3 million in the first nine months of 2023.
The note receivable is treated as a non-current asset, since Cross Timbers Energy does not have any intention of demanding repayment of all or any portion of the outstanding balance at this time. Repayment would require the approval of the Cross Timbers Energy MMC.
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7.Asset Retirement Obligation
Our asset retirement obligation primarily represents the estimated present value of the amount we will incur to plug, abandon and remediate our proved producing properties at the end of their productive lives, in accordance with applicable state and federal laws. We determine our asset retirement obligation by calculating the present value of estimated cash flows related to the liability. The following is a summary of changes in TXO Partners’ asset retirement obligation activity for the nine months ended September 30, 2024:
(in thousands)
Asset retirement obligation, January 1$153,972 
Liability incurred upon acquiring and drilling wells18,408 
Liability settled upon plugging and abandoning wells(1,059)
Accretion of discount expense8,491 
Asset retirement obligation, September 30179,812 
Less current portion(1,750)
Asset retirement obligation, long term$178,062 
8.Commitments and Contingencies
From time to time, the Partnership is subject to various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Partnership.
To date, our expenditures to comply with environmental and occupational health and safety laws and regulations have not been significant and are not expected to be significant in the future. However, new regulations, enforcement policies, claims for damages or other events could result in significant future costs.
9.Fair Value
We periodically use commodity-based and financial derivative contracts to manage exposures to commodity price. We do not hold or issue derivative financial instruments for speculative or trading purposes. We periodically enter into futures contracts, costless collars, energy swaps, swaptions and basis swaps to hedge our exposure to price fluctuations on crude oil, natural gas liquids and natural gas sales (Note 10).
Fair Value of Financial Instruments
Because of their short-term maturity, the fair value of cash and cash equivalents, accounts receivable and accounts payable approximates their carrying values at September 30, 2024 and December 31, 2023. The following are estimated fair values and carrying values of our other financial instruments at each of these dates:
Asset (Liability)
September 30, 2024December 31, 2023
(in thousands)Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Note receivable from related party$7,131 $7,131 $7,131 $7,131 
Long-term debt$(155,100)$(155,100)$(28,100)$(28,100)
Derivative asset$7,074 $7,074 $6,052 $6,052 
Derivative liability$(8,614)$(8,614)$(4,045)$(4,045)
The fair value of our note receivable from related party approximates the carrying amount because the interest rate is based on current market interest rates and can be called upon two business days’ notice (Note 6). The fair value of our long-term debt approximates the carrying amount because the interest rate is reset periodically at then current market rates (Note 5).
The fair value of our note receivable from related party (Note 6), derivative asset/(liability) (Note 10) and our long-term debt (Note 5) is measured using Level 2 inputs, and are determined by either market prices on an active market for
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similar assets or other market-corroborated prices. Counterparty credit risk is considered when determining the fair value of our note receivable and net derivative asset (liability). Since our counterparty is highly rated, the fair value of our note receivable from related party does not require an adjustment to account for the risk of nonperformance by the counterparty, however, an adjustment for counterparty credit risk has been applied to the net derivative asset (liability).
The following table summarizes our fair value measurements and the level within the fair value hierarchy in which the fair value measurements fall.
Fair Value Measurements
September 30, 2024December 31, 2023
(in thousands)Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Note receivable from related party$7,131 $ $7,131 $ 
Long-term debt$(155,100)$ $(28,100)$ 
Derivative asset$7,074 $ $6,052 $ 
Derivative liability$(8,614)$ $(4,045)$ 
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments whenever events or circumstances indicate that the carrying value of those assets may not be recoverable and are based upon Level 3 inputs. These assets and liabilities can include assets and liabilities acquired in a business combination, proved and unproved oil and natural gas properties, asset retirement obligations and other long-lived assets that are written down to fair value when they are impaired. Such fair value estimates require assumptions and judgments regarding the existence of liabilities, the amount and timing of cash outflows required to settle the liability, what constitutes adequate restoration, inflation factors, credit adjusted discount rates, and consideration of changes in legal, regulatory, environmental and political environments.
We periodically review our long-lived assets to be held and used, including proved oil and natural gas properties, whenever events or circumstances indicate that the carrying value of those assets may not be recoverable. We review our oil and natural gas properties by asset group. The estimated future net cash flows are based upon the underlying reserves and anticipated future pricing. An impairment loss is recognized if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If the estimated undiscounted future net cash flows are less than the carrying amount of a particular asset, the Partnership recognizes an impairment loss for the amount by which the carrying amount of the asset exceeds the estimated fair value of such assets. The fair value of the proved properties is measured based on the income approach, which incorporates a number of assumptions involving expectations of future product prices, which the Partnership bases on the forward-price curves, estimates of oil and gas reserves, estimates of future expected operating and capital costs and a risk adjusted discount rate of 10%. These inputs are categorized as Level 3 in the fair value hierarchy.
Commodity Price Hedging Instruments
We periodically enter into futures contracts, energy swaps, swaptions, costless collars and basis swaps to hedge our exposure to price fluctuations on crude oil, natural gas and natural gas liquids sales. When actual commodity prices exceed the fixed price provided by these contracts we pay this excess to the counterparty, and when the commodity prices are below the contractually provided fixed price, we receive this difference from the counterparty. See Note 10.
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The fair value of our derivatives contracts consists of the following:
Asset DerivativesLiability Derivatives
(in thousands)September 30,
2024
December 31,
2023
September 30,
2024
December 31,
2023
Derivatives not designated as hedging instruments:
Crude oil futures and differential swaps$5,694 $ $ $(3,163)
Natural gas liquids futures$ $477 $ $ 
Natural gas futures, collars and basis swaps$1,380 $5,575 $(8,614)$(882)
Total$7,074 $6,052 $(8,614)$(4,045)
Derivative fair value (gain) loss, included as part of the related revenue line on the consolidated income statements, comprises the following realized and unrealized components:
Three Months Ended September 30,Nine Months Ended
September 30,
(in thousands)2024202320242023
Net cash (received from) paid to counterparties$(6)$3,448 $(2,278)$81,642 
Non-cash change in derivative fair value$549 $1,571 $3,547 $(84,858)
Derivative fair value (gain) loss$543 $5,019 $1,269 $(3,216)
Concentrations of Credit Risk
Our receivables are from a diverse group of companies including major energy companies, pipeline companies, marketing companies, local distribution companies and end-users in various industries. Letters of credit or other appropriate security are obtained as considered necessary to limit risk of loss from the other companies. Including the bank that issued the letter of credit, we currently have greater concentrations of credit with several investment-grade (BBB- or better) rated companies.
10.Commodity Sales Commitments
Our policy is to consider hedging a portion of our production at commodity prices the general partner deems attractive. While there is a risk we may not be able to realize the benefit of rising prices, the general partner may enter into hedging agreements because of the benefits of predictable, stable cash flows.
We periodically enter futures contracts, energy swaps, swaptions and basis swaps to hedge our exposure to price fluctuations on crude oil, natural gas liquids and natural gas sales. When actual commodity prices exceed the fixed price provided by these contracts we pay this excess to the counterparty, and when the commodity prices are below the contractually provided fixed price, we receive this difference from the counterparty. We also enter costless price collars, which set a ceiling and floor price to hedge our exposure to price fluctuations on natural gas sales. When actual commodity prices exceed the ceiling price provided by these contracts we pay this excess to the counterparty, and when the commodity prices are below the floor price, we receive this difference from the counterparty. If the actual commodity price falls in between the ceiling and floor price, there is no cash settlement.
Crude Oil

We have entered into crude oil futures contracts and swap agreements that effectively fix prices for the production and periods shown below. Prices to be realized for hedged production may be less than these fixed prices because of location, quality and other adjustments. See Note 9.
Production PeriodBbls per DayWeighted Average
Sell Basis
Price per Bbl (a)
October 2024 - September 20262,000 $70.49 
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Net settlements on oil futures and sell basis swap contracts decreased oil revenues by $0.0 million in the three months ended September 30, 2024 and $2.9 million in the three months ended September 30, 2023. Net settlements on oil futures and sell basis swap contracts decreased oil revenues by $5.6 million in the nine months ended September 30, 2024 and $5.0 million in the nine months ended September 30, 2023. An unrealized gain increased oil revenues by $5.7 million in the three months ended September 30, 2024 and an unrealized loss decreased oil revenues by $8.8 million in the three months ended September 30, 2023. An unrealized gain increased oil revenues by $8.9 million in the nine months ended September 30, 2024 and $1.0 million in nine months ended September 30, 2023.
Natural Gas Liquids
Our natural gas liquids futures contracts and swap agreements for ethane that effectively fixed prices on our natural gas liquids production expired in June 2024.
Net settlements on NGL futures contracts decreased NGL revenues by $0.0 million in the three months ended September 30, 2024 and $0.2 million in the three months ended September 30, 2023. Net settlements on NGL futures contracts increased NGL revenues by $0.5 million in the nine months ended September 30, 2024 and $0.2 million in the nine months ended September 30, 2023. An unrealized loss decreased NGL revenues by $0.0 million in the three months ended September 30, 2024 and $0.5 million in the three months ended September 30, 2023. An unrealized loss decreased NGL revenues by $0.5 million in the nine months ended September 30, 2024 and an unrealized gain increased NGL revenues by $0.2 million in the nine months ended September 30, 2023.
Natural Gas

We have entered into natural gas futures contracts and swap agreements that effectively fix prices for the production and periods shown below. Prices to be realized for hedged production may be less than these fixed prices because of location, quality and other adjustments. See Note 9.
Production PeriodMMBtu per DayWeighted Average
NYMEX
Price per MMBtu
October 2024 - March 202650,000$3.21 
April 2026 - September 202635,000 $3.25 
The price we receive for our gas production is generally less than the NYMEX price because of adjustments for delivery location (“basis”), relative quality and other factors. We have entered sell basis swap agreements that effectively fix the basis adjustment for the San Juan Basin delivery location for the production and periods shown below.
Production PeriodMMBtu per DayWeighted Average
Sell Basis
Price per MMBtu(a)
October 2024 - December 202420,000$(0.25)
November 2024 - December 202430,000 $0.70 
January 2025 - December 202550,000$(0.01)
_________________________________
(a)Reductions or additions to NYMEX gas price for delivery location
Net settlements on gas futures and sell basis swap contracts decreased gas revenues by $0.0 million in the three months ended September 30, 2024 and $0.3 million in the three months ended September 30, 2023. Net settlements on gas futures and sell basis swap contracts increased gas revenues by $7.4 million in the nine months ended September 30, 2024 and decreased gas revenues by $76.9 million in the nine months ended September 30, 2023. An unrealized loss to record the fair value of derivative contracts decreased gas revenues by $6.2 million in the three months ended September 30, 2024 and an unrealized gain increased gas revenues by $7.7 million in the three months ended September 30, 2023. An unrealized loss to record the fair value of derivative contracts decreased gas revenues by $11.9 million in the nine months ended September 30, 2024 and an unrealized gain increased gas revenues by $83.7 million in the nine months ended September 30, 2023.

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11. Earnings per Unit

The following represents basic and diluted earnings per Common Unit for the three and nine months ended September 30, 2024 and 2023:

(in thousands, except per unit data)Net incomeUnitsIncome per Unit
Three Months Ended September 30, 2024
Basic$203 39,272 $0.01
Dilutive effect of phantom units 556 
Diluted$203 39,828 $0.01
Three Months Ended September 30, 2023
Basic$8,479 30,750 $0.28
Dilutive effect of phantom units 535 
Diluted$8,479 31,285 $0.27
Nine Months Ended September 30, 2024
Basic$13,278 33,762 $0.39
Dilutive effect of phantom units 579 
Diluted$13,278 34,340 $0.39
Nine Months Ended September 30, 2023
Basic$89,742 30,102 $2.98
Dilutive effect of phantom units 539 
Diluted$89,742 30,640 $2.93

12.Partners’ Capital

During 2024, we have paid $61.6 million of distributions to our Common unitholders. The following is a summary of distributions paid in 2024:

PeriodDistribution per UnitPayment Date
Fourth Quarter 2023$0.58 3/28/2024
First Quarter 2024$0.65 5/29/2024
Second Quarter 2024$0.57 8/27/2024

On November 5, 2024, the board of directors of our general partner declared a cash distribution of $0.58 per common unit for the quarter ended September 30, 2024. The distribution will be paid on November 22, 2024, to unitholders of record on November 15, 2024.

On June 28, 2024, we completed an underwritten public offering for the sale of 6.5 million common units at a price of $20.00 per common unit resulting in proceeds of $122.5 million net of underwriting discounts, commissions and other costs (“the Offering”). On July 2, 2024, we completed the sale of an additional 975,000 common units at a price of $20.00 per common unit pursuant to the underwriter’s exercise in full of its option to purchase additional common units in the Offering, resulting in additional proceeds of $18.7 million net of underwriting discounts, commissions and other costs. We used the net proceeds from the Offering to fund a portion of the cash consideration for the EMEP Acquisition and the KFOC Acquisition (Note 4).

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On August 30, 2024, as part of the consideration paid in the EMEP Acquisition, we issued 2.5 million common units of TXO valued at $50.0 million (Note 4).

13. Revenue from Contracts with Customers
The Partnership recognizes sales of oil, natural gas, and NGLs when it satisfies a performance obligation by transferring control of the product to a customer, in an amount that reflects the consideration to which the Partnership expects to be entitled in exchange for the product.
As discussed in Note 10, the Partnership recognizes the impact of derivative gains and losses as a component of revenue. See table below for the reconciliation of revenue from contracts with customers and derivative gains and losses.
Three Months Ended September 30, 2024
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$50,417 $7,194 $11,663 $69,274 
Unrealized gain (loss) on derivatives5,694  (6,243)(549)
Realized gain (loss) on derivatives 1 5 6 
Total revenues$56,111 $7,195 $5,425 $68,731 
Three Months Ended September 30, 2023
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$47,085 $6,086 $21,722 $74,893 
Unrealized gain (loss) on derivatives(8,848)(465)7,742 (1,571)
Realized gain (loss) on derivatives(2,945)(175)(328)(3,448)
Total Revenues$35,292 $5,446 $29,136 $69,874 
Nine Months Ended September 30, 2024
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$133,726 $20,370 $40,651 $194,747 
Unrealized gain (loss) on derivatives8,857 (477)(11,927)(3,547)
Realized gain (loss) on derivatives$(5,639)$474 $7,443 $2,278 
Total revenues$136,944 $20,367 $36,167 $193,478 
Nine Months Ended September 30, 2023
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$136,567 $21,223 $127,739 $285,529 
Unrealized gain (loss) on derivatives1,048 157 83,653 84,858 
Realized gain (loss) on derivatives(5,011)222 (76,853)(81,642)
Total revenues$132,604 $21,602 $134,539 $288,745 
Natural Gas and NGL Sales
Under our natural gas processing contracts, we deliver natural gas to a midstream processing entity at the wellhead or at the inlet of a facility. The midstream provider gathers and processes the product, and both the residue gas and the resulting natural gas liquids are sold at the tailgate of the plant. The Partnership’s natural gas production is primarily sold under market-sensitive contracts that are typically priced at a differential to the published natural gas index price for the
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producing area due to the natural gas quality and the proximity to the market. We evaluated these arrangements and determined that control of the products transfers at the tailgate of the plant, meaning that the Partnership is the principal, and the third-party purchaser is its customer. As such, we present the gas and NGL sales on a gross basis and the related gathering and processing costs as a component of taxes, transportation, and other on the statement of operations.
Oil and Condensate Sales
Oil production is typically sold at the wellhead under market-sensitive contracts at an index price, net of pricing differentials. The Partnership recognizes revenue when control transfers to the purchaser at the wellhead at the net price received from the customer.
Production imbalances
The Partnership uses the sales method to account for production imbalances. If the Partnership’s sales volumes for a well exceed the Partnership’s proportionate share of production from the well, a liability is recognized to the extent that the Partnership’s share of estimated remaining recoverable reserves from the well is insufficient to satisfy the imbalance. No receivables are recorded for those wells on which the Partnership has taken less than its proportionate share of production.
Contract Balances
Under the Partnership’s product sales contracts, its customers are invoiced once the Partnership’s performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Partnership’s product sales contracts do not give rise to contract assets or contract liabilities.
Performance Obligations
The majority of the Partnership’s sales are short-term in nature with a contract term of one year or less. For those contracts, the Partnership has utilized the practical expedient in ASC 606-10-50-14 exempting the Partnership from disclosures of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original duration of one year or less.
For the Partnership’s product sales that have a contract term greater than one year, the Partnership has utilized the practical expedient in ASC 606-10-50-14(a), which states the Partnership is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these contracts, each unit of product generally represents a separate performance obligation; therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligation is not required.
14. Employee Benefit Plans

In January 2024, the compensation committee approved grants of 208,875 time-vesting phantom units with distribution equivalent rights to the non-employee directors, officers and certain key employees. These phantom units will vest ratably over a three-year period for the officers and key employees and will fully vest on the one-year anniversary of the grant for the non-employee directors. The phantom units will be settled in common units and distribution equivalents will be paid to holders of outstanding phantom units, including unvested phantom units.

Additionally, in January 2024, the compensation committee approved grants of 159,475 performance-vesting phantom units to the officers and certain key employees. These performance-based phantom units will be earned based on the Company’s performance during the 2024 calendar year according to certain performance objectives and will vest in one-half increments on January 31, 2026 and January 31, 2027. Prior to determination of the achievement of the performance objectives, distribution equivalent rights will be paid according to the target number of phantom units grants; following determination of the number of earned phantom units based on achievement of the performance objectives, distribution equivalent rights will be paid according to the number of earned phantom units. The phantom units will be settled in common units and distribution equivalents will be paid to holders of outstanding phantom units, including unvested phantom units.
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The following summarizes the status of nonvested phantom units as of September 30, 2024:

(in thousands, except per unit amounts)Weighted Average Grant Date Fair ValueNumber of Units
Nonvested at January 1, 2024$20.00 535,000 
    Grants$18.62 208,875 
    Vestings$20.00 (188,332)
Nonvested at September 30, 2024$19.48 555,543 

We recognized compensation expense related to these grants of $4.6 million for the nine months ended September 30, 2024 and $2.5 million for the nine months ended September 30, 2023. As of September 30, 2024, we had total deferred compensation expense of $10.8 million. For these non-vested unit awards, we estimate that compensation expense for service periods after September 30, 2024 will be $1.6 million in 2024, $6.1 million in 2025, $2.9 million in 2026 and $0.2 million in 2027. The weighted average remaining vesting period is 1.7 years.
15.Accrued Liabilities
Accrued liabilities consist of the following at September 30, 2024 and December 31, 2023:
September 30,
2024
December 31,
2023
Accrued production expenses$19,841 $17,443 
Accrued capital expenditures$5,545 $676 
Accrued bonuses$3,619 $ 
Accrued ad valorem taxes$3,048 $2,177 
Accrued severance taxes$2,400 $2,828 
Other accrued liabilities$159 $238 
Total accrued liabilities$34,612 $23,362 
16.Supplemental Cash Flow Information
Interest payments totaled $3.5 million for the nine months ended September 30, 2024 and $2.5 million for the nine months ended September 30, 2023. Income tax payments were $1.9 million during the nine months ended September 30, 2024 and $1.1 million during the nine months ended September 30, 2023.
17.Subsequent Events
We have evaluated subsequent events through the date the financial statements were available to be issued.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and notes thereto presented in Item 1 of this Quarterly Report. Additionally, the following discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto and the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Unless otherwise stated or the context indicates otherwise, references in this Quarterly Report to “our general partner” refers to TXO Partners GP, LLC, a Delaware limited liability company, and the terms “partnership,” the “Company,” “we,” “our,” “us” or similar terms refer to TXO Partners, L.P., a Delaware limited partnership (“TXO Partners”) and its subsidiaries. Unless otherwise indicated, throughout this discussion the term “MBoe” refers to thousands of barrels of oil equivalent quantities produced for the indicated period, with natural gas and NGL quantities converted to Bbl on an energy equivalent ratio of six Mcf to one barrel of oil.

Cautionary Statement Regarding Forward-Looking Statements

Some of the information in this Quarterly Report on Form 10-Q may contain “forward-looking statements.” All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “assume,” “forecast,” “could,” “should,” “will,” “plan,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “budget” and similar expressions are used to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events at the time such statement was made. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included in this Quarterly Report on Form 10-Q.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development and production of oil, natural gas and NGL. We disclose important factors that could cause our actual results to differ materially from our expectations as discussed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statement include:

commodity price volatility;

the impact of epidemics, outbreaks or other public health events, and the related effects on financial markets, worldwide economic activity and our operations;
uncertainties about our estimated oil, natural gas and NGL reserves, including the impact of commodity price declines on the economic producibility of such reserves, and in projecting future rates of production;

risks related to the Williston Acquisitions, including the risk that we may fail to realize the expected benefits of the Williston Acquisitions;

the concentration of our operations in the Permian Basin, the San Juan Basin and the Williston Basin;

difficult and adverse conditions in the domestic and global capital and credit markets;

lack of transportation and storage capacity as a result of oversupply, government regulations or other factors;

lack of availability of drilling and production equipment and services;

potential financial losses or earnings reductions resulting from our commodity price risk management program or any inability to manage our commodity risks;

failure to realize expected value creation from property acquisitions and trades;
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access to capital and the timing of development expenditures;

environmental, weather, drilling and other operating risks;

regulatory changes, including potential shut-ins or production curtailments mandated by the Railroad Commission of Texas;

competition in the oil and natural gas industry;

loss of production and leasehold rights due to mechanical failure or depletion of wells and our inability to re-establish their production;

our ability to service our indebtedness;

cost inflation;

political and economic conditions and events in foreign oil and natural gas producing countries, including embargoes, the Israel-Hamas war, attacks in the Red Sea and other continued hostilities in the Middle East and other sustained military campaigns, the armed conflict in Ukraine and associated economic sanctions on Russia, conditions in South America, Central America, China and Russia, and acts of terrorism or sabotage;

evolving cybersecurity risks such as those involving unauthorized access, denial-of-service attacks, malicious software, data privacy breaches by employees, insider or other with authorized access, cyber or phishing-attacks, ransomware, social engineering, physical breaches or other actions; and

risks related to our ability to expand our business, including through the recruitment and retention of qualified personnel.

Reserve engineering is a process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, our reserve and PV-10 estimates may differ significantly from the quantities of oil, natural gas and NGLs that are ultimately recovered.

Should one or more of the risks or uncertainties described in this Quarterly Report on Form 10-Q occur, or should underlying assumptions prove to be incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.
Overview
We are an independent oil and natural gas company focused on the acquisition, development, optimization and exploitation of conventional oil, natural gas and natural gas liquid reserves in North America. Our properties are predominately located in the Permian Basin of New Mexico and Texas, the San Juan Basin of New Mexico and Colorado and the Williston Basin of Montana and North Dakota.

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Recent Developments

Williston Basin Acquisitions
In August 2024, we completed the acquisition of producing properties from Eagle Mountain Energy Partners and VR 4-ELM,LP, located in the Elm Coulee field in Montana and the Russian Creek field in North Dakota which are part of the Greater Williston Basin, for cash consideration of $241.8 million and 2.5 million common units of TXO valued at $50.0 million, subject to customary purchase price adjustments. The acquisition was funded by a combination of cash on hand from the Offering and borrowings under our Credit Facility

Additionally, in August 2024, we completed the acquisition of producing properties from Kaiser-Francis Oil Company in the Russian Creek field in North Dakota for cash consideration of $18.2 million, subject to customary purchase price adjustments. The KFOC Acquisition was funded by cash on hand from the Offering.

Equity Offering
On June 28, 2024, we completed the Offering for the sale of 6.5 million common units at a price of $20.00 per common unit, which resulted in proceeds of $122.5 million net of underwriting discounts, commissions and other costs. On July 2, 2024, we completed the sale of an additional 975,000 common units at a price of $20.00 per common unit pursuant to the underwriter’s exercise in full of its option to purchase additional common units in the Offering, resulting in additional proceeds of $18.7 million net of underwriting discounts, commissions and other costs. We used the net proceeds from the Offering to fund a portion of the cash consideration for the Williston Acquisitions.
Market Outlook
The oil and natural gas industry is cyclical and commodity prices are highly volatile. For example, during the period from January 1, 2023 through September 30, 2024, NYMEX prices for crude oil and natural gas reached a high of $93.68 per Bbl and $4.17 per MMBtu, respectively, and a low of $65.75 per Bbl and $1.58 per MMBtu, respectively. Oil prices were relatively stable over the first half of 2023 before initially increasing in the second half of 2023 as a result of expected supply constraints and hostilities in the Middle East. Since these concerns did not materialize, oil prices declined in December 2023 but continuing hostilities and higher global consumption pushed prices higher in the first half of 2024. However, increased supply led to lower prices in the third quarter of 2024. WTI crude oil prices have been volatile reaching a high of $93.68 per Bbl in September 2023 before declining to $69.22 per Bbl as of October 18, 2024. Natural gas prices reached a high of $4.17 per MMbtu in January 2023 before declining to $2.26 per MMbtu as of October 18, 2024.
We expect the crude oil and natural gas markets will continue to be volatile in the future. Our revenue, profitability and future growth are highly dependent on the prices we receive for our oil and natural gas production. Please see “Risk Factors--Risks Related to the Natural Gas, NGL and Oil Industry and Our Business--Commodity prices are volatile--A sustained decline in commodity prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.”

With our anticipated cash flows from our long-lived property base, we intend to provide allocation of funds to prudently meet our goals. These goals include the highest projected economic returns on our capital budget, acquisition opportunities that fulfill our strategy, and cash distributions for the life of our legacy assets. From time to time, we may choose to amortize repayment of debt incurred to support the longer-term financial stewardship of our business. At other times, given fluctuations in industry costs and commodity prices, we may modify our capital budget or cash balances to shift funds towards cash distributions. We will use all of these tools to support our underlying strategy as a “production and distribution” enterprise.

Concerns over global economic conditions, energy costs, supply chain disruptions, increased demand, labor shortages associated with a fully employed U.S. labor force, geopolitical issues, inflation, the availability and cost of credit and the United States financial market and other factors have contributed to increased economic uncertainty and diminished expectations for the global economy. During the year ended December 31, 2022, the U.S. economy experienced the highest rate of inflation in the past 40 years. Rising inflation has been pervasive since 2022, increasing the cost of salaries, wages, supplies, material, freight, and energy. While we have seen inflation moderate in 2024, inflation continues to run higher
18

than the Federal Reserve target, resulting in higher costs. We continue to undertake actions and implement plans to address these pressures and protect the requisite access to commodities and services, however, these mitigation efforts may not succeed or be insufficient. Nevertheless, we expect for the foreseeable future to experience inflationary pressure on our cost structure. Principally, commodity costs for steel and chemicals required for drilling, higher transportation and fuel costs and wage increases have increased our operating costs. We do not expect these cost increases to reverse in the short term. Typically, as prices for oil and natural gas increase, so do associated costs. Conversely, in a period of declining prices, associated cost declines are likely to lag and may not adjust downward in proportion to prices. We cannot predict the future inflation rate but to the extent these higher costs do not begin to reverse or start to increase again, we may experience a higher cost environment going forward. If we are unable to recover higher costs through higher commodity prices, our current revenue stream, estimates of future reserves, borrowing base calculations, impairment assessments of oil and natural gas properties, and values of properties in purchase and sale transactions would all be significantly impacted.

Prior to our completion of the EMEP Acquisition in August 2024, EMEP incurred approximately $40 million of development capital on their planned program. At the time of the acquisition, there were several incomplete EMEP projects we expect to complete during the balance of the year. While it is too early to determine the full success of the EMEP capital program, we expect the average daily production on the Williston assets to consist of approximately 78% oil, 12% NGLs and 10% gas. We have hedged a portion of our underlying production to protect our distributions and the balance sheet.

Our borrowings under our Credit Facility of $148 million were incurred to partially fund the EMEP Acquisition. This has resulted in an increase to our net-debt-to-Adjusted EBITDAX ratio to approximately one times, which is in compliance with our debt covenants.

As a result of the Williston Acquisitions, we increased our total leasehold and mineral acreage from approximately 846,000 gross (372,000 net) to approximately 1,120,000 gross (550,000 net).
How We Evaluate Our Operations
We use a variety of financial and operational metrics to assess the performance of our operations, including:
production volumes;
realized prices on the sale of oil, NGLs and natural gas;
production expenses;
acquisition and development expenditures;
Adjusted EBITDAX; and
Cash Available for Distribution.
Non-GAAP Financial Measures

Adjusted EBITDAX

We include in this Quarterly Report the non-GAAP financial measure Adjusted EBITDAX and provide our calculation of Adjusted EBITDAX and a reconciliation of Adjusted EBITDAX to net income (loss), our most directly comparable financial measures calculated and presented in accordance with GAAP. We define Adjusted EBITDAX as net income (loss) before (1) interest income, (2) interest expense, (3) depreciation, depletion and amortization, (4) impairment expenses, (5) accretion of discount on asset retirement obligations, (6) exploration expenses, (7) unrealized (gains) losses on commodity derivative contracts, (8) non-cash incentive compensation, (9) non-cash (gain) loss on forgiveness of debt and (10) certain other non-cash expenses.

Adjusted EBITDAX is used as a supplemental financial measure by our management and by external users of our financial statements, such as industry analysts, investors, lenders, rating agencies and others, to more effectively evaluate
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our operating performance and our results of operation from period to period and against our peers without regard to financing methods, capital structure or historical cost basis. We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX is not a measurement of our financial performance under GAAP and should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP or as indicators of our operating performance. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax burden, as well as the historic costs of depreciable assets, none of which are reflected in Adjusted EBITDAX. Our presentation of Adjusted EBITDAX should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of Adjusted EBITDAX may not be identical to other similarly titled measures of other companies.
Cash Available for Distribution

Cash available for distribution is not a measure of net income or net cash flow provided by or used in operating activities as determined by GAAP. Cash available for distribution is a supplemental non-GAAP financial measure used by our management and by external users of our financial statements, such as investors, lenders and others (including industry analysts and rating agencies who will be using such measure), to assess our ability to internally fund our exploration and development activities, pay distributions, and to service or incur additional debt. We define cash available for distribution as Adjusted EBITDAX less net cash interest expense, exploration expense, non-recurring (gain) / loss and development costs. Development costs include all of our capital expenditures made for oil and gas properties, other than acquisitions. Cash available for distribution will not reflect changes in working capital balances. Cash available for distribution is not a measurement of our financial performance or liquidity under GAAP and should not be considered as an alternative to, or more meaningful than, net income (loss) or net cash provided by or used in operating activities as determined in accordance with GAAP or as indicators of our financial performance and liquidity. The GAAP measures most directly comparable to cash available for distribution are net income and net cash provided by operating activities. Cash available for distribution should not be considered as an alternative to, or more meaningful than, net income or net cash provided by operating activities.

You should not infer from our presentation of Adjusted EBITDAX that its results will be unaffected by unusual or non-recurring items. You should not consider Adjusted EBITDAX or cash available for distribution in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because Adjusted EBITDAX and cash available for distribution may be defined differently by other companies in our industry, our definition of Adjusted EBITDAX and cash available for distribution may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
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Reconciliation of Adjusted EBITDAX and Cash Available for Distribution to GAAP Financial Measures
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(in thousands)
Net income $203 $8,479 $13,278 $89,742 
Interest expense1,860 1,202 3,885 3,259 
Interest income(700)(107)(947)(341)
Depreciation, depletion and amortization13,573 10,616 34,422 33,097 
Accretion of discount in asset retirement obligation2,926 2,185 8,491 6,462 
Exploration expense20 24 214 107 
Unrealized (gain)/loss on derivatives549 1,571 3,547 (84,858)
Non-cash incentive compensation1,596 940 4,569 2,531 
Non-recurring (gain)/loss$135 $50 $225 $50 
Adjusted EBITDAX$20,162 $24,960 $67,684 $50,049 
Cash Interest expense(1,607)(1,010)(3,239)(2,707)
Cash Interest income700 107 947 341 
Exploration expense(20)(24)(214)(107)
Development costs(2,668)(9,379)(10,866)(30,575)
Cash Available for Distribution$16,567 $14,654 $54,312 $17,001 
Net cash provided by operating activities$20,710 $24,179 $68,792 $59,732 
Changes in operating assets and liabilities(1,475)(146)(3,614)(12,156)
Development costs(2,668)(9,379)(10,866)(30,575)
Cash Available for Distribution$16,567 $14,654 $54,312 $17,001 

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Results of Operations

Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023
Three Months Ended September 30,
20242023
(in thousands)
REVENUES
Oil and condensate$56,111 $35,292 
Natural gas liquids7,195 5,446 
Gas5,425 29,136 
Total Revenues68,731 69,874 
EXPENSES
Production39,437 35,657 
Exploration20 24 
Taxes, transportation and other14,466 15,261 
Depreciation, depletion and amortization13,573 10,616 
Accretion of discount in asset retirement obligation2,926 2,185 
General and administrative3,275 1,756 
Total Expenses73,697 65,499 
OPERATING INCOME (LOSS)(4,966)4,375 
OTHER INCOME (EXPENSE)
Other income6,329 5,199 
Interest income700 107 
Interest expense(1,860)(1,202)
Total Other Income5,169 4,104 
NET INCOME$203 $8,479 












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The following table provides a summary of our sales volumes, average prices (both including and excluding the effects of derivatives) and operating expenses on a per Boe basis for the periods indicated:
Three Months Ended September 30,
20242023
Sales:
Oil and condensate sales (MBbls)
699583
Natural gas liquids sales (MBbls)
308292
Natural gas sales (MMcf)
6,5877,376
Total (MBoe)
2,1052,104
Total (MBoe/d)
2323
Average sales prices:
Oil and condensate excluding the effects of derivatives (per Bbl)
$72.13 $80.81 
Oil and condensate (per Bbl) (1)
$80.28 $60.57 
Natural gas liquids excluding the effects of derivatives (per Bbl)
$23.33 $20.83 
Natural gas liquids (per Bbl) (2)
$23.33 $18.64 
Natural gas excluding the effects of derivatives (per Mcf)
$1.77 $2.94 
Natural gas (per Mcf) (3)
$0.82 $3.95 
Expense per Boe:
Production
$18.73 $16.95 
Taxes, transportation and other
$6.87 $7.25 
Depreciation, depletion and amortization
$6.45 $5.05 
General and administrative expenses
$1.56 $0.83 
_________________________________
(1)Oil and condensate prices include both realized losses and unrealized gains and losses from derivatives. Unrealized gains were $5.7 million for the three months ended September 30, 2024 and unrealized losses were $8.8 million for the three months ended September 30, 2023. Realized losses were $0.0 million for the three months ended September 30, 2024 and $2.9 million for the three months ended September 30, 2023.
(2)Natural gas liquids prices include both realized losses and unrealized losses from derivatives. Unrealized losses were $0.0 million for the three months ended September 30, 2024 and $0.5 million for the three months ended September 30, 2023. Realized losses were $0.0 million for the three months ended September 30, 2024 and $0.2 million for the three months ended September 30, 2023.
(3)Natural gas prices include both realized losses and unrealized gains and losses from derivatives. Unrealized losses were $6.2 million for the three months ended September 30, 2024 and unrealized gains were $7.7 million for the three months ended September 30, 2023. Realized losses were $0.0 million for the three months ended September 30, 2024 and $0.3 million for the three months ended September 30, 2023.
Revenues
Revenues decreased $1.1 million, or 2%, from $69.9 million for the three months ended September 30, 2023 to $68.7 million for the three months ended September 30, 2024. Revenue decreased $8.7 million as a result of a decrease in the average selling price, excluding the effects of derivatives, on natural gas of 40% and $5.1 million as a result of a decrease in the average selling price, excluding the effects of derivatives, on oil of 11%. These decreases were partially offset by an increase of $7.4 million due to an increase in production of 1 MBoe primarily as a result of increased oil production of 116 MBbls and increased NGL production of 16 MBbls due to production from the Williston Basin Acquisitions partially offset by natural declines and downtime. This increased production was partially offset by decreased natural gas production of 788 MMcf primarily due to natural declines. Additionally, gains on our hedging activity of $4.5 million, of which $1.0 million were unrealized gains and $3.5 million were realized gains and an increase in the average selling price, excluding the effects of derivatives, on NGLs of 12% resulted in an increase in revenue of $0.7 million.
Production expenses
Production expenses increased $3.8 million, or 11%, from $35.7 million for the three months ended September 30, 2023 to $39.4 million for the three months ended September 30, 2024. The increase is primarily due to costs from the Williston Basin Acquisitions.
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On a per unit basis, production expenses increased from $16.95 per Boe sold for the three months ended September 30, 2023 to $18.73 per Boe sold for the three months ended September 30, 2024. The increase is primarily related to having a higher percentage of oil production, which is more expensive on a Boe basis than natural gas production.
Taxes, transportation, and other
Taxes, transportation, and other decreased $0.8 million, or 5%, from $15.3 million for the three months ended September 30, 2023 to $14.5 million for the three months ended September 30, 2024. The decrease is primarily attributable to lower natural gas and oil prices partially offset by increased NGL prices and the increase in production.
On a per unit basis, taxes, transportation, and other decreased from $7.25 per Boe sold for the three months ended September 30, 2023 to $6.87 per Boe sold for the three months ended September 30, 2024. The decrease is primarily related to the lower natural gas and oil prices.
Depreciation, depletion, and amortization
Depreciation, depletion, and amortization increased $3.0 million, or 28%, from $10.6 million for the three months ended September 30, 2023 to $13.6 million for the three months ended September 30, 2024. The increase is primarily attributable to the Williston Basin production.
On a per unit basis, depreciation, depletion, and amortization increased from $5.05 per Boe sold for the three months ended September 30, 2023 to $6.45 per Boe sold for the three months ended September 30, 2024. The increase is primarily related to the Williston Basin production which has a higher rate than the historical properties.
General and administrative
General and administrative (“G&A”) expenses increased $1.5 million, or 87%, from $1.8 million for the three months ended September 30, 2023 to $3.3 million for the three months ended September 30, 2024. The increase is primarily attributable to higher personnel costs of $0.9 million due, in part, to amortization of unit awards and increased acquisition costs.
On a per unit basis, G&A expense increased from $0.83 per Boe sold for the three months ended September 30, 2023 to $1.56 per Boe sold for the three months ended September 30, 2024. The increase is primarily related to increased costs partially offset by increased production.
Other income
Other income increased $1.1 million, or 22%, from $5.2 million for the three months ended September 30, 2023 to $6.3 million for the three months ended September 30, 2024. The increase is primarily attributable to higher CO2 and plant income of $1.1 million. The CO2 and plant income is ancillary to the operations of the gas processing plant in the Permian Basin in New Mexico and CO2 assets in Colorado.
Interest expense
Interest expense increased $0.7 million, or 55%, from $1.2 million for the three months ended September 30, 2023 to $1.9 million for the three months ended September 30, 2024. The increase is primarily attributable to increased borrowings and a higher interest rate.




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Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Nine Months Ended September 30,
20242023
(in thousands)
REVENUES
Oil and condensate$136,944 $132,604 
Natural gas liquids20,367 21,602 
Gas36,167 134,539 
Total Revenues193,478 288,745 
EXPENSES
Production108,959 110,338 
Exploration214 107 
Taxes, transportation and other43,240 59,252 
Depreciation, depletion and amortization34,422 33,097 
Accretion of discount in asset retirement obligation8,491 6,462 
General and administrative10,520 5,062 
Total Expenses205,846 214,318 
OPERATING INCOME (LOSS)(12,368)74,427 
OTHER INCOME (EXPENSE)
Other income28,584 18,233 
Interest income947 341 
Interest expense(3,885)(3,259)
Total Other Income25,646 15,315 
NET INCOME$13,278 $89,742 













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The following table provides a summary of our sales volumes, average prices (both including and excluding the effects of derivatives) and operating expenses on a per Boe basis for the periods indicated:
Nine Months Ended September 30,
20242023
Sales:
Oil and condensate sales (MBbls)
1,7751,806
Natural gas liquids sales (MBbls)
889913
Natural gas sales (MMcf)
20,69421,231
Total (MBoe)
6,1126,257
Total (MBoe/d)
2223
Average sales prices:
Oil and condensate excluding the effects of derivatives (per Bbl)
$75.35 $75.63 
Oil and condensate (per Bbl) (1)
$77.17 $73.43 
Natural gas liquids excluding the effects of derivatives (per Bbl)
$22.92 $23.25 
Natural gas liquids (per Bbl) (2)
$22.92 $23.67 
Natural gas excluding the effects of derivatives (per Mcf)
$1.96 $6.02 
Natural gas (per Mcf) (3)
$1.75 $6.34 
Expense per Boe:
Production
$17.84 $17.64 
Taxes, transportation and other
$7.07 $9.47 
Depreciation, depletion and amortization
$5.63 $5.29 
General and administrative expenses
$1.72 $0.81 
_________________________________
(1)Oil and condensate prices include both realized gains from derivatives. Unrealized gains were $8.9 million for the nine months ended September 30, 2024 and $1.0 million for the nine months ended September 30, 2023. Realized losses were $5.6 million for the nine months ended September 30, 2024 and $5.0 million for the nine months ended September 30, 2023.
(2)Natural gas liquids prices include both realized gains and unrealized gains and losses from derivatives. Unrealized losses were $0.5 million for the nine months ended September 30, 2024 and unrealized gains were $0.2 million for the nine months ended September 30, 2023. Realized gains were $0.5 million for the nine months ended September 30, 2024 and $0.2 million for the nine months ended September 30, 2023.
(3)Natural gas prices include both realized and unrealized gains and losses from derivatives. Unrealized losses were $11.9 million for the nine months ended September 30, 2024 and unrealized gains were $83.7 million for the nine months ended September 30, 2023. Realized gains were $7.4 million for the nine months ended September 30, 2024 and realized losses were $76.9 million for the nine months ended September 30, 2023.
Revenues
Revenues decreased $95.3 million, or 33%, from $288.7 million for the nine months ended September 30, 2023 to $193.5 million for the nine months ended September 30, 2024. The decrease was primarily attributable to a 67% decrease in the average selling price of natural gas, excluding the effects of derivatives, resulting in a decrease in revenue of $86.0 million, on oil of less than 1% resulting in a decrease in revenue of $0.5 million and on NGLs of 1% resulting in a decrease in revenue of $0.3 million. Additionally, revenue decreased $3.9 million due to a decrease in production of 145 MBoe primarily as a result of natural production declines and downtime partially offset by production from the Williston Basin Acquisitions. Finally, we incurred net losses on our hedging activity of $4.5 million, of which $88.4 million were unrealized losses and $83.9 million were realized gains.
Production expenses
Production expenses decreased $1.4 million, or 1%, from $110.3 million for the nine months ended September 30, 2023 to $109.0 million for the nine months ended September 30, 2024. This decrease is primarily due to decreased maintenance and energy costs partially offset by costs related to the Williston Basin Acquisitions.
On a per unit basis, production expenses increased from $17.64 per Boe sold for the nine months ended September 30, 2023 to $17.84 per Boe sold for the nine months ended September 30, 2024. The increase is primarily related to costs related to the Williston Basin Acquisitions and the decrease in production partially offset by decreased maintenance and energy costs.
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Taxes, transportation, and other
Taxes, transportation, and other decreased $16.0 million, or 27%, from $59.3 million for the nine months ended September 30, 2023 to $43.2 million for the nine months ended September 30, 2024. The decrease is primarily attributable to the decrease in natural gas, NGLs and oil prices and the decrease in production.
On a per unit basis, taxes, transportation, and other decreased from $9.47 per Boe sold for the nine months ended September 30, 2023 to $7.07 per Boe sold for the nine months ended September 30, 2024. The decrease is primarily related to the lower natural gas, NGLs and oil prices.
Depreciation, depletion, and amortization
Depreciation, depletion, and amortization increased $1.3 million, or 4%, from $33.1 million for the nine months ended September 30, 2023 to $34.4 million for the nine months ended September 30, 2024. The increase is primarily attributable to a higher rate, primarily due to Williston Basin production which has a higher rate than the historical properties, partially offset by decreased production.
On a per unit basis, depreciation, depletion, and amortization increased from $5.29 per Boe sold for the nine months ended September 30, 2023 to $5.63 per Boe sold for the nine months ended September 30, 2024. The increase is primarily related to the Williston Basin production which has a higher rate than the historical properties.
General and administrative
General and administrative (“G&A”) expenses increased $5.5 million, or 108%, from $5.1 million for the nine months ended September 30, 2023 to $10.5 million for the nine months ended September 30, 2024. The increase is primarily attributable to higher personnel costs of $4.3 million due in part to amortization of unit awards and additional expenses related to being a public company.
On a per unit basis, G&A expense increased from $0.81 per Boe sold for the nine months ended September 30, 2023 to $1.72 per Boe sold for the nine months ended September 30, 2024. The increase is primarily related to increased costs and decreased production.
Other income
Other income increased $10.4 million, or 57%, from $18.2 million for the nine months ended September 30, 2023 to $28.6 million for the nine months ended September 30, 2024. The increase is primarily attributable to $7.0 million in bonus payments on term assignment of leases, higher CO2 and plant income of $2.6 million and a $0.8 million increase in marketing income. The CO2 and plant income is ancillary to the operations of the gas processing plant in the Permian Basin in New Mexico and CO2 assets in Colorado.
Interest expense
Interest expense increased $0.6 million, or 19%, from $3.3 million for the nine months ended September 30, 2023 to $3.9 million for the nine months ended September 30, 2024. The increase is primarily attributable to the increased borrowings and a higher interest rate.
Liquidity and Capital Resources
Our primary sources of liquidity and capital will be cash flows generated by operating activities and borrowings under our Credit Facility. Outstanding borrowings under our Credit Facility were $148.0 million at September 30, 2024 and $21.0 million at December 31, 2023, and the remaining availability under our Credit Facility was $127.0 million at September 30, 2024 and $144.0 million at December 31, 2023. Additionally, we had negative net working capital (including cash and excluding the effects of derivative instruments) of $1.5 million at September 30, 2024 and positive net working capital (including cash and excluding the effects of derivative instruments) $14.1 million at December 31, 2023.
On June 28, 2024, we completed the Offering, which resulted in proceeds of $122.5 million net of underwriting discounts, commissions and other costs. On July 2, 2024, we completed the sale of an additional 975,000 common units at
27

a price of $20.00 per common unit pursuant to the underwriter’s exercise in full of its option to purchase additional common units in the Offering, resulting in additional proceeds of $18.7 million net of underwriting discounts, commissions and other costs. We used the net proceeds from the Offering to fund a portion of the cash consideration for the Williston Acquisitions.
As of September 30, 2024, we have $148.0 million outstanding borrowings under our Credit Facility and cash on hand of $3.8 million. These borrowings under our Credit Facility, which increased our net-debt-to-EBITDAX ratio to approximately one times, were incurred to fund the remainder of the Williston Basin Acquisitions. We expect to carry this level of debt moving forward.
Our partnership agreement requires that we distribute all of our available cash (as defined in the partnership agreement) to our unitholders. Our quarterly cash distributions may vary from quarter to quarter as a direct result of variations in the performance of our business, including those caused by fluctuations in the prices of oil and natural gas. Such variations may be significant and quarterly distributions paid to our unitholders may be zero. Our third quarter distribution of $0.58 per unit with respect to cash available for distribution for the three months ended September 30, 2024, was declared on November 5, 2024 and will be paid on November 22, 2024 to unitholders of record on November 15, 2024.

The fourth quarter distribution of $0.58 per unit with respect to cash available for distribution for the three months ended December 31, 2023, was paid on March 28, 2024. The first quarter distribution of $0.65 per unit with respect to cash available for distribution for the three months ended March 31, 2024, was paid May 29, 2024. The second quarter distribution of $0.57 per unit with respect to cash available for distribution for the three months ended June 30, 2024, was paid August 27, 2024.
Our acquisition and development expenditures consist of acquisitions of proved, unproved and other property and development expenditures. Our capital expenditures including acquisitions were $273.0 million for the nine months ended September 30, 2024 and $40.5 million for the nine months ended September 30, 2023.

In order to mitigate volatility in oil and natural gas prices, we have entered into commodity derivative contracts. See “Quantitative and Qualitative Disclosures About Market Risk—Commodity Price Risk.”
We incurred costs of approximately $15.7 million for drilling, completion and recompletion activities and facilities costs in the nine months ended September 30, 2024 and we have budgeted approximately $20.0 million for such costs in 2024.
The amount and timing of these capital expenditures is substantially within our control and subject to management’s discretion. We retain the flexibility to defer a portion of these planned capital expenditures depending on a variety of factors, including, but not limited to the prevailing and anticipated prices for oil, NGLs and natural gas, the availability of necessary equipment, infrastructure and capital, seasonal conditions and drilling and acquisition costs. Any postponement or elimination of our development program could result in a reduction of proved reserve volumes, production and cash flow, including distributions to unitholders.
Based on current commodity prices and our drilling success rate to date, we expect to be able to fund our distributions, meet our debt obligations and fund our 2024 capital development program and acquisitions from cash flow from operations, the Offering and borrowings under our Credit Facility.
If cash flow from operations does not meet our expectations, we may reduce our expected level of capital expenditures and/or distributions to unitholders. Alternatively, we may fund these expenditures using borrowings under our Credit Facility, issuances of debt and equity securities or from other sources, such as asset sales. We cannot assure you that necessary capital will be available on acceptable terms or at all. Our ability to raise funds through the incurrence of additional indebtedness could be limited by covenants in our debt arrangements. If we are unable to obtain funds when needed or on acceptable terms, we may not be able to complete acquisitions that may be favorable to us, finance the capital expenditures necessary to maintain our production or proved reserves, or make distributions to unitholders.
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Cash flows
The following table summarizes our cash flows for the periods indicated (in thousands):
Nine Months Ended
September 30,
20242023
Net cash provided by operating activities
$68,792 $59,732 
Net cash used by investing activities
(273,012)(40,535)
Net cash provided by (used by) financing activities
203,561 (22,510)

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Net cash provided by operating activities
Net cash provided by operating activities increased $9.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to a decrease in net cash paid on our derivatives, partially offset by a decline in operating results, excluding the effects of derivatives, primarily due to lower production and lower natural gas, NGL and oil realizations partially offset by decreased costs.
Net cash used by investing activities
Net cash used by investing activities increased $232.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to an increase in proved property acquisitions of $252.2 million partially offset by decreased development costs of $19.7 million.
Net cash used by financing activities
Nine Months Ended
September 30,
20242023
(in thousands)
Proceeds from long-term debt$222,000 $64,000 
Payments on long-term debt(95,000)(159,000)
Net proceeds from public offering141,245 — 
Net proceeds from initial public offering— 106,277 
Proceeds from sale of units to cover withholding taxes930 — 
Withholding taxes paid on vesting of restricted units(851)— 
Debt issuance costs(3,173)(125)
Distributions(61,590)(33,662)
Net cash provided by (used by) financing activities
$203,561 $(22,510)
Net cash provided by financing activities increased $226.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to an increase in net borrowings under our Credit Facility of $222.0 million and increased net proceeds from public offering of $35.0 million partially offset by increased distributions to unitholders of $27.9 million and increased debt offering costs of $3.0 million.
Revolving credit agreement
On August 30, 2024, we entered into Amendment No. 4 and Borrowing Base Agreement (“Amendment No. 4”) on our senior secured credit facility (the “Credit Facility”) with certain commercial banks, as the lenders, and JPMorgan Chase Bank, N.A., as the administrative agent. We use the Credit Facility for general corporate purposes. Amendment No. 4 extended the maturity date of the Credit Facility to August 30, 2028, increased the borrowing base from $165 million to $275 million and joined certain new Lenders to the Credit Facility.
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Our Credit Facility contains certain customary representations, warranties and covenants, including but not limited to, limitations on incurring debt and liens, limitations on merging or consolidating with another company, limitations on making certain restricted payments, limitations on investments, limitations on paying distributions on, redeeming, or repurchasing common units, limitations on entering into transactions with affiliates, and limitations on asset sales. The Credit Facility also contains customary events of default, including non-payment, breach of covenants, materially incorrect representations, cross-default, bankruptcy and change of control. If an event of default occurs and is continuing, the lenders may declare all amounts outstanding under the Credit Facility to be immediately due and payable.
At our election, interest on borrowings under the credit facility is determined by reference to either the secured overnight financing rate plus an applicable margin between 3.00% and 4.00% per annum (depending on the then-current level of borrowings under the Credit Facility) or the alternate base rate plus an applicable margin between 2.00% and 3.00% per annum (depending on the then-current level of borrowings under the Credit Facility). The weighted average interest rate on Credit Facility borrowings was 8.80% in the nine months ended September 30, 2024.
We are required to maintain (i) a current ratio (the ratio of current assets to current liabilities) greater than 1.0 to 1.0, which for purposes of this definition includes availability under the Credit Facility but excludes the fair value of derivative instruments, and (ii) a ratio of total net debt-to-EBITDAX of not greater than 3.0 to 1.0. For purposes of the total net debt-to-EBITDAX ratio, total net debt is total debt for borrowed money (including capital leases and purchase money debt) minus unrestricted cash and cash equivalents on hand at such time (not exceeding $15.0 million in the aggregate), minus the unpaid balance of the FAM Loan. EBITDAX means the sum of (i) net income plus interest expense; income taxes paid; depreciation, depletion and amortization; exploration expenses, including workover expenses; non-cash charges including unrealized losses on derivative instruments; and, any extraordinary or non-recurring charges, minus (ii) any extraordinary or non-recurring income and any non-cash income including unrealized gains on derivative instruments.
We had $148 million of debt outstanding and $127 million available under our Credit Facility as of September 30, 2024.
Contractual obligations and commitments
We have not guaranteed the debt or obligations of any other party, nor do we have any other arrangements or relationships with other entities that could potentially result in consolidated debt or losses.
Derivative contracts
We have entered into derivative instruments to hedge our exposure to commodity price fluctuations. If market prices are higher than the contract prices when the cash settlement amount is calculated, we are required to pay the contract counterparties. As of September 30, 2024, the current liability related to such contracts was $1.3 million. Such payments will generally be funded by higher prices received from the sale of oil, NGLs and natural gas. For further information on derivative contracts, see Note 10 in the financial statements included elsewhere in this Quarterly Report.
Asset Retirement Obligation
At September 30, 2024, we had asset retirement obligations of $179.8 million inclusive of a current portion of $1.8 million. For further information on asset retirement obligations, see Note 7 in the financial statements included elsewhere in this Quarterly Report.

Critical Accounting Policies

There has been no change in our critical accounting policies from those disclosed in our Annual Report on Form 10-K filed with the SEC on March 5, 2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk, including the effects of adverse changes in commodity prices and interest rates as described below. The primary objective of the following information is to provide quantitative and qualitative information about our potential exposure to market risks. The term “market risk” refers to the risk of loss arising from adverse changes in commodity prices and interest rates. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. All of our market risk sensitive instruments were entered into for purposes
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other than speculative trading. Also, gains and losses on these instruments are generally offset by losses and gains on the offsetting expenses.
Commodity price risk
Our major market risk exposure is in the pricing that we receive for our oil, NGL and natural gas production. Pricing for oil, NGLs, and natural gas has been volatile and unpredictable for several years, and this volatility is expected to continue in the future. The prices we receive for our oil, NGL, and natural gas production depend on many factors outside of our control, such as the strength of the global economy and global supply and demand for the commodities we produce.
To reduce the impact of fluctuations in oil, NGL and natural gas prices on our revenues, we periodically enter into commodity derivative contracts with respect to certain of our oil, NGL and natural gas production through various transactions that limit the risks of fluctuations of future prices. We plan to continue our practice of entering into such transactions to reduce the impact of commodity price volatility on our cash flow from operations. Future transactions may include price swaps whereby we will receive a fixed price for our production and pay a variable market price to the contract counterparty. Additionally, we may enter into collars, whereby we receive the excess, if any, of the fixed floor over the floating rate or pay the excess, if any, of the floating rate over the fixed ceiling. These hedging activities are intended to limit our exposure to product price volatility and to maintain stable cash flows.
As of September 30, 2024, the fair market value of our oil, NGL and natural gas derivative contracts was a net liability of $1.5 million. Based upon our open commodity derivative positions at September 30, 2024, a hypothetical 10% change in the NYMEX WTI and Henry Hub prices, OPIS prices and basis prices would change our net oil, NGL and natural gas derivative liability by approximately $21.4 million.
(in thousands)
Fair Value at
September 30, 2024
Hypothetical
Price Increase
or Decrease
of
10%
Derivative asset (liability) – Crude Oil
$5,694 $(9,721)
Derivative asset (liability) – Natural Gas Liquids
$— $— 
Derivative asset (liability) – Natural Gas
$(7,234)$(11,643)
Net derivative liability
$(1,540)$(21,364)
The hypothetical change in fair value could be a gain or loss depending on whether prices increase or decrease.
Counterparty and customer credit risk
Our cash and cash equivalents are exposed to concentrations of credit risk. We manage and control this risk by investing these funds in major financial institutions. We often have balances in excess of the federally insured limits.
We sell oil, NGL and natural gas production to various types of customers. Credit is extended based on an evaluation of the customer’s financial condition and historical payment record. The future availability of a ready market for our production depends on numerous factors outside of our control, none of which can be predicted with certainty. For the years ended December 31, 2023 and December 31, 2022, we had two customers, that each accounted for more than 10% of total revenues. We do not believe the loss of any single purchaser would materially impact our operating results because oil, NGLs and natural gas are fungible products with well-established markets and numerous purchasers.
At September 30, 2024, we had commodity derivative contracts with counterparties. We are currently not required to provide collateral or other security to counterparties to support derivative instruments; however, to minimize the credit risk in derivative instruments, it is our policy to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by management as competent and competitive market makers. Additionally, we use master netting arrangements to minimize credit risk exposure. The creditworthiness of our counterparties is subject to periodic review.
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Interest rate risk
At September 30, 2024, we had $148 million of variable rate debt outstanding. Assuming no change in the amount outstanding, the impact on interest expense of a 1% increase or decrease in the average interest rate would be approximately $1.5 million per year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Revolving credit agreement.”
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of September 30, 2024. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2024, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized, and reported as and when required, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding its required disclosure. Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II - Other Information
Item 1. Legal Proceedings
We are party to lawsuits arising in the ordinary course of our business. We cannot predict the outcome of any such lawsuits with certainty, but management believes it is remote that pending or threatened legal matters will have a material adverse impact on our financial condition. Due to the nature of our business, we are, from time to time, involved in other routine litigation or subject to disputes or claims related to our business activities, including workers’ compensation claims and employment-related disputes. In the opinion of our management, none of these other pending litigation matters, disputes or claims against us, if decided adversely, will have a material adverse effect on our financial condition, cash flows or results of operations.
Item 1A. Risk Factors
Other than the risks set forth below, there have been no material changes in the risk factors disclosed under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

Risks Related to the Williston Acquisitions

We may not be able to achieve the expected benefits of the EMEP Acquisition and our assessment and estimates of the Williston Assets may prove to be incorrect.

We may not be able to achieve the expected benefits of the EMEP Acquisition. There can be no assurance that the EMEP Acquisition will be beneficial to us. We may not be able to integrate the Williston Assets without increases in costs or other difficulties. Any unexpected costs or delays incurred in connection with the integration of the EMEP Acquisition could have an adverse effect on our business, results of operations, financial condition and prospects, as well as the market price of our common units.

Our assessment and estimates of the properties in the EMEP Acquisition to date has been limited and may prove to be incorrect. Our assessment of these properties may not reveal all existing or potential problems. In addition, any inspection that we do may not reveal all title issues or other problems. We may be required to assume the risk that the properties may not perform in accordance with our expectations. Our ability to make specified claims against the seller generally expires over time and we may be left with no recourse for liabilities and other problems associated with the Williston Acquisitions that we do not discover prior to the expiration date related to such matters arising under the Williston Acquisitions. Moreover, there can be no assurance that the EMEP 2024 development program will increase production or enable us to achieve a three-year average annual decline rate on the Williston Assets of approximately 14%.

The market price of our common units may decline as a result of the Williston Acquisitions if, among other things, the integration of the properties acquired in the Williston Acquisitions is unsuccessful or if the properties are not successfully developed by working interest owners or if the liabilities, expenses, title and other defects, or transaction costs related to the Williston Acquisitions is greater than expected. The market price of our common units may decline if we do not achieve the perceived benefits of the Williston Acquisitions as rapidly or to the extent anticipated by us or by securities market participants or if the effect of the Williston Acquisitions on our business, results of operations or financial condition or prospects is not consistent with our expectations or those of securities market participants.

As a result of the completion of the EMEP Acquisition, we are required to prepare and disclose historical and pro forma financial statements with the SEC, which such financial statements have not been prepared or filed as of the date of this report.

As a result of the completion of the EMEP Acquisition, we are required to file audited financial statements in accordance with the requirements of Regulation S-X (“Regulation S-X”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and pro forma financial statements in connection with the Williston Acquisitions no later than 75 calendar days after the date on which the EMEP Acquisition closes. You will not have the benefit of the financial statements or pro forma information relating to the Williston Acquisitions until such financial statements are filed, and the pro forma financial statements of the Company, pro forma for the Williston Acquisitions, may differ significantly from the historical financial statements of the Company.




33

Any acquisitions we complete, including the Williston Acquisitions, are subject to substantial risks that could reduce our ability to make distributions to our common unitholders.

Even if we do make acquisitions that we believe will increase the amount of cash available for distribution to our common unitholders, these acquisitions, including the Williston Acquisitions, may nevertheless result in a decrease in the amount of cash available for distribution. Any acquisition, including the Williston Acquisitions, involves potential risks, including, among other things:

the validity of our assumptions about estimated proved reserves, future production, drilling locations, prices, revenues, capital expenditures and production costs;

the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which any indemnity we receive is inadequate;

our inability to obtain satisfactory title to the assets we acquire; and

the occurrence of other significant changes, such as impairment of oil and natural gas properties, goodwill or other intangible assets, asset devaluation or restructuring charges.

We incurred significant indebtedness to finance the EMEP Acquisition.

As of September 30, 2024, we have $148.0 million of outstanding borrowings under our Credit Facility. This resulted in an increase to our net-debt-to-Adjusted EBITDAX ratio to approximately one times.

This indebtedness will increase our borrowing costs and may have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions. Furthermore, our borrowings under our revolving credit facility bear interest at a variable rate, and such indebtedness will expose us to interest rate risk, as our debt service obligations could increase if interest rates increase. As a result, this indebtedness will require that an increased portion of our cash flows from operations be used for the payment of interest and principal on such indebtedness, thereby reducing our ability to use cash flows from operations to fund working capital, capital expenditures and acquisitions and our cash available for distribution to our unitholders.

The Williston Acquisitions may have liabilities that are not known to us, and the indemnities in the applicable Purchase Agreement may not offer adequate protection.

In connection with the Williston Acquisitions, we have agreed to assume certain liabilities. In addition, there may be liabilities that we failed or were unable to discover in the course of performing due diligence investigations into the Williston Acquisitions, or we may not have correctly assessed the significance of certain liabilities identified in the course of our due diligence. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations. We may learn additional information as we integrate the entities and their businesses into our operations, such as unknown or contingent liabilities or issues relating to compliance with applicable laws, which could potentially have an adverse effect on our business, financial condition and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information

On August 30, 2024, Brent W. Clum, the Company's President of Business Operations and Chief Financial Officer and director, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule
34

10b5-1(c) of the Securities Act for the sale of the Company’s common units to cover taxes due in connection with the vesting of phantom units after November 28, 2024. The duration of this arrangement is until the final vesting date or forfeiture of the applicable phantom units. The number of common units that will be sold under this arrangement is not currently determinable as the number will vary based on the extent to which vesting conditions are satisfied and the market price of our common units at the time of settlement.

On August 30, 2024, Scott T. Agosta, the Company's Chief Accounting Officer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) of the Securities Act for the sale of the Company’s common units to cover taxes due in connection with the vesting of phantom units after November 28, 2024. The duration of this arrangement is until the final vesting date or forfeiture of the applicable phantom units. The number of common units that will be sold under this arrangement is not currently determinable as the number will vary based on the extent to which vesting conditions are satisfied and the market price of our common units at the time of settlement.

No other directors or executive officers of the Company adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement, (as defined in Item 408(c) of Regulation S-K) during the quarterly period covered by this report.


35

Item 6. Exhibits
Exhibit
Number
Description
3.1
Amended and Restated Certificate of Limited Partnership of TXO Partners, L.P. (incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q filed on May 9, 2023)
3.2
Amended and Restated Certificate of Formation of TXO Partners, GP, LLC (incorporated by reference to Exhibit 3.2 to Quarterly Report on Form 10-Q filed on May 9, 2023)
3.3
Seventh Amended and Restated Agreement of Limited Partnership of TXO Partners, L.P. (incorporated by reference to Exhibit 3.2 to Current Report on Form 8-K filed on January 31, 2023)
3.4
Amendment No. 1 to the Seventh Amended and Restated Agreement of Limited Partnership of TXO Partners, L.P. (incorporated by reference to Exhibit 3.3 to Quarterly Report on Form 10-Q filed on May 9, 2023)
3.5
Amended and Restated Limited Liability Company Agreement of TXO Partners GP, LLC (incorporated by reference to Exhibit 3.4 to Annual Report on Form 10-K filed on March 31, 2023)
3.6
Amendment No. 1 to the Amended and Restated Limited Liability Company Agreement of TXO Partners GP, LLC (incorporated by reference to Exhibit 3.4 to Quarterly Report on Form 10-Q filed on May 9, 2023)
4.1
10.1
31.1*
31.2*
32.1*
32.2*
101.INSInline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104.0Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
_________________________________
*    Filed herewith

36

SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TXO Partners, L.P.
By:TXO Partners GP, LLC, its general partner
By:/s/ Brent W. Clum
Name: Brent W. Clum
Title: President of Business Operations and Chief Financial Officer

37
Exhibit 31.1
I, Bob R. Simpson, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of TXO Partners, L.P.;
2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



|US-DOCS\141341123.1||


Date: November 5, 2024                        

s/ Bob R. Simpson            
Chief Executive Officer
TXO Partners GP, LLC, its general partner

|US-DOCS\141341123.1||
Exhibit 31.2
I, Brent W. Clum, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of TXO Partners, L.P.;
2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



|US-DOCS\141342751.1||


Date: November 5, 2024            

s/ Brent W. Clum                    
President of Business Operations and Chief Financial Officer
TXO Partners GP, LLC, its general partner

|US-DOCS\141342751.1||
Exhibit 32.1
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of TXO Partners, L.P. (the “Partnership”) hereby certifies, to such officer’s knowledge, that:

    (i)    the Quarterly Report on Form 10-Q of the Partnership for the fiscal quarter ended September 30, 2024 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

    (ii)    the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.


Dated: November 5, 2024        s/ Bob R. Simpson                 
Bob R. Simpson
Chief Executive Officer
TXO Partners GP, LLC, its general partner

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Partnership, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

|US-DOCS\141340910.1||
Exhibit 32.2
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of TXO Partners, L.P. (the “Partnership”) hereby certifies, to such officer’s knowledge, that:

    (i)    the Quarterly Report on Form 10-Q of the Partnership for the fiscal quarter ended September 30, 2024 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

    (ii)    the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.


Dated: November 5, 2024        s/ Brent W. Clum                 
Brent W. Clum
President of Business Operations and Chief Financial Officer
TXO Partners GP, LLC, its general partner

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Partnership, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

|US-DOCS\141341017.1||
v3.24.3
Cover - shares
9 Months Ended
Sep. 30, 2024
Nov. 05, 2024
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2024  
Document Transition Report false  
Entity File Number 001-04321  
Entity Registrant Name TXO Partners, L.P.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 32-0368858  
Entity Address, Address Line One 400 West 7th Street  
Entity Address, City or Town Fort Worth  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 76102  
City Area Code 817  
Local Phone Number 334-7800  
Title of 12(b) Security Common Units  
Trading Symbol TXO  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company true  
Entity Ex Transition Period false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   40,913,332
Entity Central Index Key 0001559432  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q3  
Amendment Flag false  
v3.24.3
Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Current Assets:    
Cash and cash equivalents $ 3,846 $ 4,505
Accounts receivable, net 34,999 32,226
Derivative fair value 3,853 6,052
Other 11,431 12,406
Total Current Assets 54,129 55,189
Property and Equipment, at cost – successful efforts method:    
Proved properties 1,888,570 1,540,105
Unproved properties 18,699 18,479
Other 85,584 83,854
Total Property and Equipment 1,992,853 1,642,438
Accumulated depreciation, depletion and amortization (1,047,513) (1,013,115)
Net Property and Equipment 945,340 629,323
Other Assets:    
Note receivable from related party 7,131 7,131
Derivative fair value 3,221 0
Other 6,349 3,970
Total Other Assets 16,701 11,101
TOTAL ASSETS 1,016,170 695,613
Current Liabilities:    
Accounts payable 14,085 8,598
Accrued liabilities 34,612 23,362
Derivative fair value 1,348 4,045
Asset retirement obligation, current portion 1,750 1,750
Other current liabilities 1,346 1,361
Total Current Liabilities 53,141 39,116
Long-term Debt 155,100 28,100
Other Liabilities:    
Asset retirement obligation 178,062 152,222
Derivative fair value 7,266 0
Other liabilities 1,222 2,377
Total Other Liabilities 186,550 154,599
Commitments and Contingencies
Partners’ Capital:    
Partners’ capital 621,379 473,798
TOTAL LIABILITIES AND PARTNERS’ CAPITAL $ 1,016,170 $ 695,613
v3.24.3
Consolidated Statements of Operations (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Total Revenues $ 68,731 $ 69,874 $ 193,478 $ 288,745
EXPENSES        
Production 39,437 35,657 108,959 110,338
Exploration 20 24 214 107
Taxes, transportation and other 14,466 15,261 43,240 59,252
Depreciation, depletion and amortization 13,573 10,616 34,422 33,097
Accretion of discount in asset retirement obligation 2,926 2,185 8,491 6,462
General and administrative 3,275 1,756 10,520 5,062
Total Expenses 73,697 65,499 205,846 214,318
OPERATING INCOME (LOSS) (4,966) 4,375 (12,368) 74,427
OTHER INCOME (EXPENSE)        
Other income 6,329 5,199 28,584 18,233
Interest income 700 107 947 341
Interest expense (1,860) (1,202) (3,885) (3,259)
Total Other Income 5,169 4,104 25,646 15,315
NET INCOME $ 203 $ 8,479 $ 13,278 $ 89,742
NET INCOME PER COMMON UNIT        
Basic (in dollars per share) $ 0.01 $ 0.28 $ 0.39 $ 2.98
Diluted (in dollars per share) $ 0.01 $ 0.27 $ 0.39 $ 2.93
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING        
Basic (in shares) 39,272 30,750 33,762 30,102
Diluted (in shares) 39,828 31,285 34,340 30,640
Oil and condensate        
Total Revenues $ 56,111 $ 35,292 $ 136,944 $ 132,604
Natural gas liquids        
Total Revenues 7,195 5,446 20,367 21,602
Gas        
Total Revenues $ 5,425 $ 29,136 $ 36,167 $ 134,539
v3.24.3
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
OPERATING ACTIVITIES    
Net income $ 13,278 $ 89,742
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation, depletion and amortization 34,422 33,097
Accretion of discount in asset retirement obligation 8,491 6,462
Derivative fair value (gain) loss 1,269 (3,216)
Net cash received from (paid to) counterparties 2,278 (81,642)
Non-cash incentive compensation 4,569 2,531
Other non-cash items 871 602
Changes in operating assets and liabilities [1] 3,614 12,156
Cash Provided by Operating Activities 68,792 59,732
INVESTING ACTIVITIES    
Proceeds from sale of property and equipment 5 0
Proved property acquisitions (260,769) (8,570)
Development costs (10,866) (30,575)
Unproved property acquisitions (220) (60)
Other property and asset additions (1,162) (1,330)
Cash Used by Investing Activities (273,012) (40,535)
FINANCING ACTIVITIES    
Proceeds from long-term debt 222,000 64,000
Payments on long-term debt (95,000) (159,000)
Net proceeds from public offering 141,245 0
Net proceeds from initial public offering 0 106,277
Proceeds from sale of units to cover withholding taxes 930 0
Withholding taxes paid on vesting of restricted units (851) 0
Debt issuance costs (3,173) (125)
Distributions (61,590) (33,662)
Cash Provided by (Used by) Financing Activities 203,561 (22,510)
DECREASE IN CASH AND CASH EQUIVALENTS (659) (3,313)
Cash and Cash Equivalents, beginning of period 4,505 9,204
Cash and Cash Equivalents, end of period 3,846 5,891
Changes in Operating Assets and Liabilities    
Accounts receivable (2,997) 19,388
Other current assets 1,238 69
Current liabilities 6,473 (6,451)
Other operating liabilities (1,100) (850)
Changes in operating assets and liabilities [1] $ (3,614) $ (12,156)
[1]
(a) Changes in Operating Assets and Liabilities
Accounts receivable$21,834 $(24,461)
Other current assets903 (2,081)
Aid-in-construction— 238 
Current liabilities(10,059)20,879 
Other operating liabilities(668)(170)
$12,010 $(5,595)
v3.24.3
Consolidated Statements of Members’ Equity (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Balance at beginning of period (in units) at Dec. 31, 2022   14,356
Balance at beginning of period at Dec. 31, 2022   $ 315,463
Increase (Decrease) in Partners' Capital [Roll Forward]    
Net income $ 89,742 $ 89,742
Net proceeds from sale of units (in units)   5,750
Net proceeds from initial public offering   $ 102,540
Expensing of unit awards   2,531
Distributions to unitholders   $ (33,662)
Conversion of Series 5 preferred to Common equity (in units)   10,644
Conversion of Series 5 preferred to Common equity   $ 206,074
Balance at end of period (in units) at Sep. 30, 2023   30,750
Balance at end of period at Sep. 30, 2023   $ 682,688
Balance at beginning of period (in units) at Jun. 30, 2023   30,750
Balance at beginning of period at Jun. 30, 2023   $ 688,030
Increase (Decrease) in Partners' Capital [Roll Forward]    
Net income 8,479 8,479
Expensing of unit awards   940
Distributions to unitholders   $ (14,761)
Balance at end of period (in units) at Sep. 30, 2023   30,750
Balance at end of period at Sep. 30, 2023   $ 682,688
Balance at beginning of period (in units) at Dec. 31, 2023   30,750
Balance at beginning of period at Dec. 31, 2023 473,798 $ 473,798
Increase (Decrease) in Partners' Capital [Roll Forward]    
Net income 13,278 $ 13,278
Net proceeds from sale of units (in units)   7,475
Net proceeds from initial public offering   $ 141,245
Units issued in acquisition of oil & gas properties (in units)   2,500
Units issued in acquisition of oil & gas properties   $ 50,000
Proceeds from sale of units to cover withholding taxes (in units)   188
Proceeds from sale of units to cover withholding taxes   $ 930
Withholding taxes paid on vesting of restricted units   (851)
Expensing of unit awards   4,569
Distributions to unitholders   $ (61,590)
Balance at end of period (in units) at Sep. 30, 2024   40,913
Balance at end of period at Sep. 30, 2024 621,379 $ 621,379
Balance at beginning of period (in units) at Jun. 30, 2024   37,438
Balance at beginning of period at Jun. 30, 2024   $ 572,788
Increase (Decrease) in Partners' Capital [Roll Forward]    
Net income 203 $ 203
Net proceeds from sale of units (in units)   975
Net proceeds from initial public offering   $ 18,745
Units issued in acquisition of oil & gas properties (in units)   2,500
Units issued in acquisition of oil & gas properties   $ 50,000
Expensing of unit awards   1,596
Distributions to unitholders   $ (21,953)
Balance at end of period (in units) at Sep. 30, 2024   40,913
Balance at end of period at Sep. 30, 2024 $ 621,379 $ 621,379
v3.24.3
Organization and Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Summary of Significant Accounting Policies Organization and Summary of Significant Accounting Policies
TXO Partners, L.P. (TXO Partners or the Partnership) is an independent oil and gas company that was formed as a Delaware limited partnership in January 2012 (with an effective inception of operations at January 18, 2012). The operations of TXO Partners are governed by the provisions of the partnership agreement, as amended, executed by the general partner, TXO Partners GP, LLC (the General Partner) and the limited partners. The General Partner is the manager and operator of TXO Partners. The General Partner is managed by the board of directors and executive officers of our General Partner. The members of the board of directors of our General Partner are appointed by MorningStar Oil & Gas, LLC (“MSOG”), as the sole member of our General Partner. TXO Partners will remain in existence unless and until dissolved in accordance with the terms of the partnership agreement.
TXO Partners’ assets include its investment in an unincorporated joint venture, Cross Timbers Energy, LLC (“Cross Timbers Energy”). TXO Partners owns 50% of Cross Timbers Energy, and TXO Partners is the manager of Cross Timbers Energy. Cross Timbers Energy is governed by a Member Management Committee (MMC) and is comprised of six representatives, three from each group, with each group having one voting member. All matters that come before the MMC require the unanimous consent of the voting members. On the last day of each calendar quarter, Cross Timbers Energy distributes all excess cash to the members based on their ownership percentage of 50% each, except for earnings from the note receivable which is owned 5% by TXO Partners. Cross Timbers Energy’s properties are located primarily in the San Juan Basin of New Mexico and Colorado and the Permian Basin of West Texas and New Mexico.
TXO Partners also has a wholly-owned subsidiary, MorningStar Operating LLC which owns oil and gas assets primarily in the San Juan Basin of New Mexico and Colorado, the Permian Basin of West Texas and New Mexico and the Williston Basin of Montana and North Dakota.
v3.24.3
Basis of Presentation and Significant Accounting Policies
9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Basis of Presentation and Significant Accounting Policies Basis of Presentation and Significant Accounting Policies
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and on the same basis as our audited financial statements as of December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023. The consolidated balance sheet as of September 30, 2024 and the consolidated statements of operations, members’ equity and cash flows for the periods presented herein are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of results for the periods shown. Certain information and note disclosures normally included in annual financial statements have been omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Because the consolidated interim financial statements do not include all of the information and notes required by US GAAP for a complete set of financial statements, they should be read in conjunction with the audited consolidated financial statements referred to above. The results and trends in these interim financial statements may not be indicative of results for the full year.
Significant Accounting Policies
For a complete description of TXO Partners’ significant accounting policies, see our annual audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
v3.24.3
Related Party Transactions
9 Months Ended
Sep. 30, 2024
Related Party Transactions [Abstract]  
Related Party Transactions Related Party Transactions
We earned management fees from Cross Timbers Energy of $1.4 million for the three months ended September 30, 2024 and $1.8 million for the three months ended September 30, 2023. We earned management fees from Cross Timbers Energy of $3.7 million for the nine months ended September 30, 2024 and $4.6 million for the nine months ended September 30, 2023.
v3.24.3
Acquisitions
9 Months Ended
Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Acquisitions Acquisitions
In August 2024, we completed the acquisition of producing properties from Eagle Mountain Energy Partners and VR 4-ELM,LP, located in the Elm Coulee field in Montana and the Russian Creek field in North Dakota which are part of the Greater Williston Basin, for cash consideration of $241.8 million and 2.5 million common units of TXO valued at
$50.0 million (the “EMEP Acquisition”), subject to customary purchase price adjustments. Our preliminary purchase price allocation included $312.2 million to proved properties, $0.6 million to other properties, $0.3 million to other current assets, $1.0 million to other assets, $5.4 million to other current liabilities and $16.8 million to asset retirement obligation. The acquisition was funded by a combination of cash on hand from the public offering (Note 12) and borrowings under our Credit Facility (Note 5). In the statements of operations for the three and nine months ended September 30, 2024, we recorded $8.8 million of revenues and net income of $3.7 million from this acquisition.

Additionally, in August 2024, we completed the acquisition of producing properties from Kaiser-Francis Oil Company in the Russian Creek field in North Dakota for cash consideration of $18.2 million (the “KFOC Acquisition”), subject to customary purchase price adjustments. Our preliminary purchase price allocation included $19.8 million to proved properties and $1.6 million to asset retirement obligation. The acquisition was funded by cash on hand from the public offering (Note 12).
Pro Forma Financial Information
The following unaudited pro forma financial information represents a summary of the condensed consolidated results of operations for the three and nine months ended September 30, 2024 and 2023, assuming the EMEP Acquisition had been completed as of January 1, 2023. The pro forma financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations would have been. Future results may vary significantly from the results reflected because of various factors.

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2024202320242023
Total revenue$84,882 $83,098 $242,763 $344,203 
Net income$1,006 $4,371 $13,434 $97,179 
v3.24.3
Debt
9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Debt Debt
(in thousands)September 30,
2024
December 31,
2023
Credit Facility, 9.0% at September 30, 2024 and 8.6% at December 31, 2023
$148,000 $21,000 
September 2016 Loan, 8.6% at September 30, 2024 and 8.7% at December 31, 2023
$7,100 $7,100 
Total Long-term Debt$155,100 $28,100 
November 2021 Credit Facility
On August 30, 2024, we entered into Amendment No. 4 and Borrowing Base Agreement (“Amendment No. 4”) on our senior secured credit facility (the “Credit Facility”) with certain commercial banks, as the lenders, and JPMorgan Chase Bank, N.A., as the administrative agent. We use the Credit Facility for general corporate purposes. Amendment No. 4 extended the maturity date of the Credit Facility to August 30, 2028, increased the borrowing base from $165 million to $275 million and joined certain new Lenders to the Credit Facility. In connection with the Credit Facility, we incurred financing fees and expenses, which are included in other assets on the balance sheets, of approximately $6.2 million as of September 30, 2024 and $3.0 million as of December 31, 2023 before accumulated amortization of $2.2 million as of September 30, 2024 and $1.5 million as of December 31, 2023. We incurred $3.1 million of financing fees and expenses in conjunction with Amendment No. 4. These costs are being amortized over the life of the credit facility. Such amortized expenses are recorded as interest expense on the statements of operations.
Redeterminations of the borrowing base under the Credit Facility, are based primarily on reserve reports that reflect commodity prices at such time, and occur semi-annually, in March and September, as well as upon request by the lenders at their sole discretion, no more than once per six-month period. We also have the right to request up to two additional borrowing base redeterminations each year at our discretion. Significant declines in commodity prices may result in a decrease in the borrowing base. These borrowing base declines can be offset by any commodity price hedges we enter. Our obligations under the credit facility are secured by substantially all assets of the Partnership, including, without limitation, (i) our interest in the joint venture, (ii) all our deposit accounts, securities accounts, and commodities accounts, (iii) any
receivables owed to us by Cross Timbers Energy and (iv) any oil and gas properties owned directly by TXO Partners or its wholly-owned subsidiaries. We are required to maintain (i) a current ratio greater than 1.0 to 1.0 and current assets shall include availability under the Credit Facility but shall exclude the fair value of derivative instruments and current liabilities shall exclude the fair value of derivative instruments and any advances under the Credit Facility and (ii) a ratio of total indebtedness to EBITDAX of not greater than 3.0 to 1.0. For purposes of the total net debt-to-EBITDAX ratio (“Leverage Ratio”), total net debt includes total debt for borrowed money (including capital leases and purchase money debt), minus unrestricted cash and cash equivalents on hand at such time (not exceeding $15.0 million in the aggregate), minus the unpaid balance of the FAM Loan. EBITDAX means sum of (i) net income plus interest expense; income taxes paid; depreciation, depletion and amortization; exploration expenses, including workover expenses; non-cash charges including unrealized losses on derivative instruments; and, any extraordinary or non-recurring charges, minus (ii) any extraordinary or non-recurring income and any non-cash income including unrealized gains on derivative instruments. Effective with the Second Amendment, our hedge requirements are based on availability under the Credit Facility and the Leverage Ratio. If the Leverage Ratio is greater than 0.75 to 1.00, we are required to hedge at least 50% of reasonably anticipated projected production of proved developed producing reserves for the 24 months following the end of the most recent quarter. If the Leverage Ratio is less than 0.75 to 1.00 and availability under the Credit Facility is greater than 20% of the then current borrowing base, the minimum required hedge volume would be 35% for the 12 months following the end of the most recent quarter. If the Leverage Ratio is less than 0.50 to 1.00 and availability under the Credit Facility is greater than 66.7% of the then current borrowing base, there would be no minimum required hedge volume.  Our Credit Facility prohibits us from hedging more than 90% of our reasonably projected production for any fiscal year. Under the terms of the Credit Facility as amended, we were in compliance with all of our debt covenants as of September 30, 2024 and December 31, 2023. Additionally, we believe we have adequate liquidity to continue as a going concern for at least the next twelve months from the date of this report.
At our election, interest on borrowings under the Credit Facility is determined by reference to either the secured overnight financing rate (“SOFR”) plus an applicable margin between 3.00% and 4.00% per annum (depending on the then-current level of borrowings under the Credit Facility) or the alternate base rate (“ABR”) plus an applicable margin between 2.00% and 3.00% per annum (depending on the then-current level of borrowings under the Credit Facility). Interest is generally payable quarterly for loans bearing interest based on the ABR and at the end of the applicable interest period (either one, three or six months) for loans bearing interest at SOFR. We are required to pay a commitment fee to the lenders under the Credit Facility, which accrues at a rate per annum of 0.5% on the average daily unused amount of the lesser of: (i) the maximum commitment amount of the lenders and (ii) the then-effective borrowing base.
September 2016 Loan
On September 30, 2016, TXO Partners entered into an unsecured loan agreement with Cross Timbers Energy (the “FAM Loan”). The proceeds for the loan were taken from the cash held by the offshore subsidiary of Exxon Mobil Corporation and the loan was assigned to the offshore subsidiary (Note 6). The loan matures on November 29, 2028, but is automatically extended should the maturity date of the Credit Facility be extended. In all instances, this loan will mature ninety-one days after the maturity of the Credit Facility. Interest on the loan is the lesser of (a) London Interbank Offered Rate (“LIBOR”) plus three and one-quarter of one percent (3.25%) per annum, adjusted monthly or (b) the highest rate permitted by applicable law. Though the note is unsecured, we are required to stay in compliance with terms of the Credit Facility.
v3.24.3
Note Receivable from Related Party
9 Months Ended
Sep. 30, 2024
Receivables [Abstract]  
Note Receivable from Related Party Note Receivable from Related Party
As of September 30, 2024 and December 31, 2023, we, through our 5% ownership interest in investment assets at Cross Timbers Energy, had a note receivable totaling $7.1 million outstanding with a highly-rated, offshore subsidiary of Exxon Mobil Corporation. Under the terms of the agreement, there is no stated maturity date and Cross Timbers Energy may demand repayment of all or any portion of the outstanding balance on two business days’ notice. Interest is earned based on the one-month SOFR rate and is paid monthly. Interest income totaled $0.3 million in the first nine months of 2024 and $0.3 million in the first nine months of 2023.
The note receivable is treated as a non-current asset, since Cross Timbers Energy does not have any intention of demanding repayment of all or any portion of the outstanding balance at this time. Repayment would require the approval of the Cross Timbers Energy MMC.
v3.24.3
Asset Retirement Obligation
9 Months Ended
Sep. 30, 2024
Asset Retirement Obligation Disclosure [Abstract]  
Asset Retirement Obligation Asset Retirement Obligation
Our asset retirement obligation primarily represents the estimated present value of the amount we will incur to plug, abandon and remediate our proved producing properties at the end of their productive lives, in accordance with applicable state and federal laws. We determine our asset retirement obligation by calculating the present value of estimated cash flows related to the liability. The following is a summary of changes in TXO Partners’ asset retirement obligation activity for the nine months ended September 30, 2024:
(in thousands)
Asset retirement obligation, January 1$153,972 
Liability incurred upon acquiring and drilling wells18,408 
Liability settled upon plugging and abandoning wells(1,059)
Accretion of discount expense8,491 
Asset retirement obligation, September 30179,812 
Less current portion(1,750)
Asset retirement obligation, long term$178,062 
v3.24.3
Commitments and Contingencies
9 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
From time to time, the Partnership is subject to various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Partnership.
To date, our expenditures to comply with environmental and occupational health and safety laws and regulations have not been significant and are not expected to be significant in the future. However, new regulations, enforcement policies, claims for damages or other events could result in significant future costs.
v3.24.3
Fair Value
9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Fair Value
We periodically use commodity-based and financial derivative contracts to manage exposures to commodity price. We do not hold or issue derivative financial instruments for speculative or trading purposes. We periodically enter into futures contracts, costless collars, energy swaps, swaptions and basis swaps to hedge our exposure to price fluctuations on crude oil, natural gas liquids and natural gas sales (Note 10).
Fair Value of Financial Instruments
Because of their short-term maturity, the fair value of cash and cash equivalents, accounts receivable and accounts payable approximates their carrying values at September 30, 2024 and December 31, 2023. The following are estimated fair values and carrying values of our other financial instruments at each of these dates:
Asset (Liability)
September 30, 2024December 31, 2023
(in thousands)Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Note receivable from related party$7,131 $7,131 $7,131 $7,131 
Long-term debt$(155,100)$(155,100)$(28,100)$(28,100)
Derivative asset$7,074 $7,074 $6,052 $6,052 
Derivative liability$(8,614)$(8,614)$(4,045)$(4,045)
The fair value of our note receivable from related party approximates the carrying amount because the interest rate is based on current market interest rates and can be called upon two business days’ notice (Note 6). The fair value of our long-term debt approximates the carrying amount because the interest rate is reset periodically at then current market rates (Note 5).
The fair value of our note receivable from related party (Note 6), derivative asset/(liability) (Note 10) and our long-term debt (Note 5) is measured using Level 2 inputs, and are determined by either market prices on an active market for
similar assets or other market-corroborated prices. Counterparty credit risk is considered when determining the fair value of our note receivable and net derivative asset (liability). Since our counterparty is highly rated, the fair value of our note receivable from related party does not require an adjustment to account for the risk of nonperformance by the counterparty, however, an adjustment for counterparty credit risk has been applied to the net derivative asset (liability).
The following table summarizes our fair value measurements and the level within the fair value hierarchy in which the fair value measurements fall.
Fair Value Measurements
September 30, 2024December 31, 2023
(in thousands)Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Note receivable from related party$7,131 $— $7,131 $— 
Long-term debt$(155,100)$— $(28,100)$— 
Derivative asset$7,074 $— $6,052 $— 
Derivative liability$(8,614)$— $(4,045)$— 
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments whenever events or circumstances indicate that the carrying value of those assets may not be recoverable and are based upon Level 3 inputs. These assets and liabilities can include assets and liabilities acquired in a business combination, proved and unproved oil and natural gas properties, asset retirement obligations and other long-lived assets that are written down to fair value when they are impaired. Such fair value estimates require assumptions and judgments regarding the existence of liabilities, the amount and timing of cash outflows required to settle the liability, what constitutes adequate restoration, inflation factors, credit adjusted discount rates, and consideration of changes in legal, regulatory, environmental and political environments.
We periodically review our long-lived assets to be held and used, including proved oil and natural gas properties, whenever events or circumstances indicate that the carrying value of those assets may not be recoverable. We review our oil and natural gas properties by asset group. The estimated future net cash flows are based upon the underlying reserves and anticipated future pricing. An impairment loss is recognized if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If the estimated undiscounted future net cash flows are less than the carrying amount of a particular asset, the Partnership recognizes an impairment loss for the amount by which the carrying amount of the asset exceeds the estimated fair value of such assets. The fair value of the proved properties is measured based on the income approach, which incorporates a number of assumptions involving expectations of future product prices, which the Partnership bases on the forward-price curves, estimates of oil and gas reserves, estimates of future expected operating and capital costs and a risk adjusted discount rate of 10%. These inputs are categorized as Level 3 in the fair value hierarchy.
Commodity Price Hedging Instruments
We periodically enter into futures contracts, energy swaps, swaptions, costless collars and basis swaps to hedge our exposure to price fluctuations on crude oil, natural gas and natural gas liquids sales. When actual commodity prices exceed the fixed price provided by these contracts we pay this excess to the counterparty, and when the commodity prices are below the contractually provided fixed price, we receive this difference from the counterparty. See Note 10.
The fair value of our derivatives contracts consists of the following:
Asset DerivativesLiability Derivatives
(in thousands)September 30,
2024
December 31,
2023
September 30,
2024
December 31,
2023
Derivatives not designated as hedging instruments:
Crude oil futures and differential swaps$5,694 $— $— $(3,163)
Natural gas liquids futures$— $477 $— $— 
Natural gas futures, collars and basis swaps$1,380 $5,575 $(8,614)$(882)
Total$7,074 $6,052 $(8,614)$(4,045)
Derivative fair value (gain) loss, included as part of the related revenue line on the consolidated income statements, comprises the following realized and unrealized components:
Three Months Ended September 30,Nine Months Ended
September 30,
(in thousands)2024202320242023
Net cash (received from) paid to counterparties$(6)$3,448 $(2,278)$81,642 
Non-cash change in derivative fair value$549 $1,571 $3,547 $(84,858)
Derivative fair value (gain) loss$543 $5,019 $1,269 $(3,216)
Concentrations of Credit Risk
Our receivables are from a diverse group of companies including major energy companies, pipeline companies, marketing companies, local distribution companies and end-users in various industries. Letters of credit or other appropriate security are obtained as considered necessary to limit risk of loss from the other companies. Including the bank that issued the letter of credit, we currently have greater concentrations of credit with several investment-grade (BBB- or better) rated companies.
v3.24.3
Commodity Sales Commitments
9 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Commodity Sales Commitments Commodity Sales Commitments
Our policy is to consider hedging a portion of our production at commodity prices the general partner deems attractive. While there is a risk we may not be able to realize the benefit of rising prices, the general partner may enter into hedging agreements because of the benefits of predictable, stable cash flows.
We periodically enter futures contracts, energy swaps, swaptions and basis swaps to hedge our exposure to price fluctuations on crude oil, natural gas liquids and natural gas sales. When actual commodity prices exceed the fixed price provided by these contracts we pay this excess to the counterparty, and when the commodity prices are below the contractually provided fixed price, we receive this difference from the counterparty. We also enter costless price collars, which set a ceiling and floor price to hedge our exposure to price fluctuations on natural gas sales. When actual commodity prices exceed the ceiling price provided by these contracts we pay this excess to the counterparty, and when the commodity prices are below the floor price, we receive this difference from the counterparty. If the actual commodity price falls in between the ceiling and floor price, there is no cash settlement.
Crude Oil

We have entered into crude oil futures contracts and swap agreements that effectively fix prices for the production and periods shown below. Prices to be realized for hedged production may be less than these fixed prices because of location, quality and other adjustments. See Note 9.
Production PeriodBbls per DayWeighted Average
Sell Basis
Price per Bbl (a)
October 2024 - September 20262,000 $70.49 
Net settlements on oil futures and sell basis swap contracts decreased oil revenues by $0.0 million in the three months ended September 30, 2024 and $2.9 million in the three months ended September 30, 2023. Net settlements on oil futures and sell basis swap contracts decreased oil revenues by $5.6 million in the nine months ended September 30, 2024 and $5.0 million in the nine months ended September 30, 2023. An unrealized gain increased oil revenues by $5.7 million in the three months ended September 30, 2024 and an unrealized loss decreased oil revenues by $8.8 million in the three months ended September 30, 2023. An unrealized gain increased oil revenues by $8.9 million in the nine months ended September 30, 2024 and $1.0 million in nine months ended September 30, 2023.
Natural Gas Liquids
Our natural gas liquids futures contracts and swap agreements for ethane that effectively fixed prices on our natural gas liquids production expired in June 2024.
Net settlements on NGL futures contracts decreased NGL revenues by $0.0 million in the three months ended September 30, 2024 and $0.2 million in the three months ended September 30, 2023. Net settlements on NGL futures contracts increased NGL revenues by $0.5 million in the nine months ended September 30, 2024 and $0.2 million in the nine months ended September 30, 2023. An unrealized loss decreased NGL revenues by $0.0 million in the three months ended September 30, 2024 and $0.5 million in the three months ended September 30, 2023. An unrealized loss decreased NGL revenues by $0.5 million in the nine months ended September 30, 2024 and an unrealized gain increased NGL revenues by $0.2 million in the nine months ended September 30, 2023.
Natural Gas

We have entered into natural gas futures contracts and swap agreements that effectively fix prices for the production and periods shown below. Prices to be realized for hedged production may be less than these fixed prices because of location, quality and other adjustments. See Note 9.
Production PeriodMMBtu per DayWeighted Average
NYMEX
Price per MMBtu
October 2024 - March 202650,000$3.21 
April 2026 - September 202635,000 $3.25 
The price we receive for our gas production is generally less than the NYMEX price because of adjustments for delivery location (“basis”), relative quality and other factors. We have entered sell basis swap agreements that effectively fix the basis adjustment for the San Juan Basin delivery location for the production and periods shown below.
Production PeriodMMBtu per DayWeighted Average
Sell Basis
Price per MMBtu(a)
October 2024 - December 202420,000$(0.25)
November 2024 - December 202430,000 $0.70 
January 2025 - December 202550,000$(0.01)
_________________________________
(a)Reductions or additions to NYMEX gas price for delivery location
Net settlements on gas futures and sell basis swap contracts decreased gas revenues by $0.0 million in the three months ended September 30, 2024 and $0.3 million in the three months ended September 30, 2023. Net settlements on gas futures and sell basis swap contracts increased gas revenues by $7.4 million in the nine months ended September 30, 2024 and decreased gas revenues by $76.9 million in the nine months ended September 30, 2023. An unrealized loss to record the fair value of derivative contracts decreased gas revenues by $6.2 million in the three months ended September 30, 2024 and an unrealized gain increased gas revenues by $7.7 million in the three months ended September 30, 2023. An unrealized loss to record the fair value of derivative contracts decreased gas revenues by $11.9 million in the nine months ended September 30, 2024 and an unrealized gain increased gas revenues by $83.7 million in the nine months ended September 30, 2023.
v3.24.3
Earnings per Unit
9 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
Earnings per Unit Earnings per Unit
The following represents basic and diluted earnings per Common Unit for the three and nine months ended September 30, 2024 and 2023:

(in thousands, except per unit data)Net incomeUnitsIncome per Unit
Three Months Ended September 30, 2024
Basic$203 39,272 $0.01
Dilutive effect of phantom units— 556 
Diluted$203 39,828 $0.01
Three Months Ended September 30, 2023
Basic$8,479 30,750 $0.28
Dilutive effect of phantom units— 535 
Diluted$8,479 31,285 $0.27
Nine Months Ended September 30, 2024
Basic$13,278 33,762 $0.39
Dilutive effect of phantom units— 579 
Diluted$13,278 34,340 $0.39
Nine Months Ended September 30, 2023
Basic$89,742 30,102 $2.98
Dilutive effect of phantom units— 539 
Diluted$89,742 30,640 $2.93
v3.24.3
Partners’ Capital
9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Partners’ Capital Partners’ Capital
During 2024, we have paid $61.6 million of distributions to our Common unitholders. The following is a summary of distributions paid in 2024:

PeriodDistribution per UnitPayment Date
Fourth Quarter 2023$0.58 3/28/2024
First Quarter 2024$0.65 5/29/2024
Second Quarter 2024$0.57 8/27/2024

On November 5, 2024, the board of directors of our general partner declared a cash distribution of $0.58 per common unit for the quarter ended September 30, 2024. The distribution will be paid on November 22, 2024, to unitholders of record on November 15, 2024.

On June 28, 2024, we completed an underwritten public offering for the sale of 6.5 million common units at a price of $20.00 per common unit resulting in proceeds of $122.5 million net of underwriting discounts, commissions and other costs (“the Offering”). On July 2, 2024, we completed the sale of an additional 975,000 common units at a price of $20.00 per common unit pursuant to the underwriter’s exercise in full of its option to purchase additional common units in the Offering, resulting in additional proceeds of $18.7 million net of underwriting discounts, commissions and other costs. We used the net proceeds from the Offering to fund a portion of the cash consideration for the EMEP Acquisition and the KFOC Acquisition (Note 4).
On August 30, 2024, as part of the consideration paid in the EMEP Acquisition, we issued 2.5 million common units of TXO valued at $50.0 million (Note 4).
v3.24.3
Revenue from Contracts with Customers
9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers Revenue from Contracts with Customers
The Partnership recognizes sales of oil, natural gas, and NGLs when it satisfies a performance obligation by transferring control of the product to a customer, in an amount that reflects the consideration to which the Partnership expects to be entitled in exchange for the product.
As discussed in Note 10, the Partnership recognizes the impact of derivative gains and losses as a component of revenue. See table below for the reconciliation of revenue from contracts with customers and derivative gains and losses.
Three Months Ended September 30, 2024
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$50,417 $7,194 $11,663 $69,274 
Unrealized gain (loss) on derivatives5,694 — (6,243)(549)
Realized gain (loss) on derivatives— 
Total revenues$56,111 $7,195 $5,425 $68,731 
Three Months Ended September 30, 2023
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$47,085 $6,086 $21,722 $74,893 
Unrealized gain (loss) on derivatives(8,848)(465)7,742 (1,571)
Realized gain (loss) on derivatives(2,945)(175)(328)(3,448)
Total Revenues$35,292 $5,446 $29,136 $69,874 
Nine Months Ended September 30, 2024
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$133,726 $20,370 $40,651 $194,747 
Unrealized gain (loss) on derivatives8,857 (477)(11,927)(3,547)
Realized gain (loss) on derivatives$(5,639)$474 $7,443 $2,278 
Total revenues$136,944 $20,367 $36,167 $193,478 
Nine Months Ended September 30, 2023
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$136,567 $21,223 $127,739 $285,529 
Unrealized gain (loss) on derivatives1,048 157 83,653 84,858 
Realized gain (loss) on derivatives(5,011)222 (76,853)(81,642)
Total revenues$132,604 $21,602 $134,539 $288,745 
Natural Gas and NGL Sales
Under our natural gas processing contracts, we deliver natural gas to a midstream processing entity at the wellhead or at the inlet of a facility. The midstream provider gathers and processes the product, and both the residue gas and the resulting natural gas liquids are sold at the tailgate of the plant. The Partnership’s natural gas production is primarily sold under market-sensitive contracts that are typically priced at a differential to the published natural gas index price for the
producing area due to the natural gas quality and the proximity to the market. We evaluated these arrangements and determined that control of the products transfers at the tailgate of the plant, meaning that the Partnership is the principal, and the third-party purchaser is its customer. As such, we present the gas and NGL sales on a gross basis and the related gathering and processing costs as a component of taxes, transportation, and other on the statement of operations.
Oil and Condensate Sales
Oil production is typically sold at the wellhead under market-sensitive contracts at an index price, net of pricing differentials. The Partnership recognizes revenue when control transfers to the purchaser at the wellhead at the net price received from the customer.
Production imbalances
The Partnership uses the sales method to account for production imbalances. If the Partnership’s sales volumes for a well exceed the Partnership’s proportionate share of production from the well, a liability is recognized to the extent that the Partnership’s share of estimated remaining recoverable reserves from the well is insufficient to satisfy the imbalance. No receivables are recorded for those wells on which the Partnership has taken less than its proportionate share of production.
Contract Balances
Under the Partnership’s product sales contracts, its customers are invoiced once the Partnership’s performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Partnership’s product sales contracts do not give rise to contract assets or contract liabilities.
Performance Obligations
The majority of the Partnership’s sales are short-term in nature with a contract term of one year or less. For those contracts, the Partnership has utilized the practical expedient in ASC 606-10-50-14 exempting the Partnership from disclosures of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original duration of one year or less.
For the Partnership’s product sales that have a contract term greater than one year, the Partnership has utilized the practical expedient in ASC 606-10-50-14(a), which states the Partnership is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these contracts, each unit of product generally represents a separate performance obligation; therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligation is not required.
v3.24.3
Employee Benefit Plans
9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Employee Benefit Plans Employee Benefit Plans
In January 2024, the compensation committee approved grants of 208,875 time-vesting phantom units with distribution equivalent rights to the non-employee directors, officers and certain key employees. These phantom units will vest ratably over a three-year period for the officers and key employees and will fully vest on the one-year anniversary of the grant for the non-employee directors. The phantom units will be settled in common units and distribution equivalents will be paid to holders of outstanding phantom units, including unvested phantom units.

Additionally, in January 2024, the compensation committee approved grants of 159,475 performance-vesting phantom units to the officers and certain key employees. These performance-based phantom units will be earned based on the Company’s performance during the 2024 calendar year according to certain performance objectives and will vest in one-half increments on January 31, 2026 and January 31, 2027. Prior to determination of the achievement of the performance objectives, distribution equivalent rights will be paid according to the target number of phantom units grants; following determination of the number of earned phantom units based on achievement of the performance objectives, distribution equivalent rights will be paid according to the number of earned phantom units. The phantom units will be settled in common units and distribution equivalents will be paid to holders of outstanding phantom units, including unvested phantom units.
The following summarizes the status of nonvested phantom units as of September 30, 2024:

(in thousands, except per unit amounts)Weighted Average Grant Date Fair ValueNumber of Units
Nonvested at January 1, 2024$20.00 535,000 
    Grants$18.62 208,875 
    Vestings$20.00 (188,332)
Nonvested at September 30, 2024$19.48 555,543 

We recognized compensation expense related to these grants of $4.6 million for the nine months ended September 30, 2024 and $2.5 million for the nine months ended September 30, 2023. As of September 30, 2024, we had total deferred compensation expense of $10.8 million. For these non-vested unit awards, we estimate that compensation expense for service periods after September 30, 2024 will be $1.6 million in 2024, $6.1 million in 2025, $2.9 million in 2026 and $0.2 million in 2027. The weighted average remaining vesting period is 1.7 years.
v3.24.3
Accrued Liabilities
9 Months Ended
Sep. 30, 2024
Payables and Accruals [Abstract]  
Accrued Liabilities Accrued Liabilities
Accrued liabilities consist of the following at September 30, 2024 and December 31, 2023:
September 30,
2024
December 31,
2023
Accrued production expenses$19,841 $17,443 
Accrued capital expenditures$5,545 $676 
Accrued bonuses$3,619 $— 
Accrued ad valorem taxes$3,048 $2,177 
Accrued severance taxes$2,400 $2,828 
Other accrued liabilities$159 $238 
Total accrued liabilities$34,612 $23,362 
v3.24.3
Supplemental Cash Flow Information
9 Months Ended
Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Supplemental Cash Flow Information Supplemental Cash Flow Information
Interest payments totaled $3.5 million for the nine months ended September 30, 2024 and $2.5 million for the nine months ended September 30, 2023. Income tax payments were $1.9 million during the nine months ended September 30, 2024 and $1.1 million during the nine months ended September 30, 2023.
v3.24.3
Subsequent Events
9 Months Ended
Sep. 30, 2024
Subsequent Events [Abstract]  
Subsequent Events Subsequent EventsWe have evaluated subsequent events through the date the financial statements were available to be issued.
v3.24.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Pay vs Performance Disclosure        
Net income $ 203 $ 8,479 $ 13,278 $ 89,742
v3.24.3
Insider Trading Arrangements
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2024
Trading Arrangements, by Individual    
Non-Rule 10b5-1 Arrangement Adopted false  
Rule 10b5-1 Arrangement Terminated false  
Non-Rule 10b5-1 Arrangement Terminated false  
Brent W. Clum [Member]    
Trading Arrangements, by Individual    
Material Terms of Trading Arrangement  
On August 30, 2024, Brent W. Clum, the Company's President of Business Operations and Chief Financial Officer and director, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule
10b5-1(c) of the Securities Act for the sale of the Company’s common units to cover taxes due in connection with the vesting of phantom units after November 28, 2024. The duration of this arrangement is until the final vesting date or forfeiture of the applicable phantom units. The number of common units that will be sold under this arrangement is not currently determinable as the number will vary based on the extent to which vesting conditions are satisfied and the market price of our common units at the time of settlement.
Name Brent W. Clum  
Title President of Business Operations and Chief Financial Officer  
Rule 10b5-1 Arrangement Adopted true  
Adoption Date August 30, 2024  
Expiration Date November 28, 2024  
Arrangement Duration 90 days  
Scott T. Agosta [Member]    
Trading Arrangements, by Individual    
Material Terms of Trading Arrangement   On August 30, 2024, Scott T. Agosta, the Company's Chief Accounting Officer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) of the Securities Act for the sale of the Company’s common units to cover taxes due in connection with the vesting of phantom units after November 28, 2024. The duration of this arrangement is until the final vesting date or forfeiture of the applicable phantom units. The number of common units that will be sold under this arrangement is not currently determinable as the number will vary based on the extent to which vesting conditions are satisfied and the market price of our common units at the time of settlement.
Name Scott T. Agosta  
Title Chief Accounting Officer  
Rule 10b5-1 Arrangement Adopted true  
Adoption Date August 30, 2024  
Expiration Date November 28, 2024  
Arrangement Duration 90 days  
v3.24.3
Basis of Presentation and Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and on the same basis as our audited financial statements as of December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023. The consolidated balance sheet as of September 30, 2024 and the consolidated statements of operations, members’ equity and cash flows for the periods presented herein are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of results for the periods shown. Certain information and note disclosures normally included in annual financial statements have been omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Because the consolidated interim financial statements do not include all of the information and notes required by US GAAP for a complete set of financial statements, they should be read in conjunction with the audited consolidated financial statements referred to above. The results and trends in these interim financial statements may not be indicative of results for the full year.
Revenue from Contracts with Customers
Natural Gas and NGL Sales
Under our natural gas processing contracts, we deliver natural gas to a midstream processing entity at the wellhead or at the inlet of a facility. The midstream provider gathers and processes the product, and both the residue gas and the resulting natural gas liquids are sold at the tailgate of the plant. The Partnership’s natural gas production is primarily sold under market-sensitive contracts that are typically priced at a differential to the published natural gas index price for the
producing area due to the natural gas quality and the proximity to the market. We evaluated these arrangements and determined that control of the products transfers at the tailgate of the plant, meaning that the Partnership is the principal, and the third-party purchaser is its customer. As such, we present the gas and NGL sales on a gross basis and the related gathering and processing costs as a component of taxes, transportation, and other on the statement of operations.
Oil and Condensate Sales
Oil production is typically sold at the wellhead under market-sensitive contracts at an index price, net of pricing differentials. The Partnership recognizes revenue when control transfers to the purchaser at the wellhead at the net price received from the customer.
Production imbalances
The Partnership uses the sales method to account for production imbalances. If the Partnership’s sales volumes for a well exceed the Partnership’s proportionate share of production from the well, a liability is recognized to the extent that the Partnership’s share of estimated remaining recoverable reserves from the well is insufficient to satisfy the imbalance. No receivables are recorded for those wells on which the Partnership has taken less than its proportionate share of production.
Contract Balances
Under the Partnership’s product sales contracts, its customers are invoiced once the Partnership’s performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Partnership’s product sales contracts do not give rise to contract assets or contract liabilities.
Performance Obligations
The majority of the Partnership’s sales are short-term in nature with a contract term of one year or less. For those contracts, the Partnership has utilized the practical expedient in ASC 606-10-50-14 exempting the Partnership from disclosures of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original duration of one year or less.
For the Partnership’s product sales that have a contract term greater than one year, the Partnership has utilized the practical expedient in ASC 606-10-50-14(a), which states the Partnership is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these contracts, each unit of product generally represents a separate performance obligation; therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligation is not required.
v3.24.3
Acquisitions (Tables)
9 Months Ended
Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Schedule of Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information represents a summary of the condensed consolidated results of operations for the three and nine months ended September 30, 2024 and 2023, assuming the EMEP Acquisition had been completed as of January 1, 2023. The pro forma financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations would have been. Future results may vary significantly from the results reflected because of various factors.

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2024202320242023
Total revenue$84,882 $83,098 $242,763 $344,203 
Net income$1,006 $4,371 $13,434 $97,179 
v3.24.3
Debt (Tables)
9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Schedule of Long-Term Debt
(in thousands)September 30,
2024
December 31,
2023
Credit Facility, 9.0% at September 30, 2024 and 8.6% at December 31, 2023
$148,000 $21,000 
September 2016 Loan, 8.6% at September 30, 2024 and 8.7% at December 31, 2023
$7,100 $7,100 
Total Long-term Debt$155,100 $28,100 
v3.24.3
Asset Retirement Obligation (Tables)
9 Months Ended
Sep. 30, 2024
Asset Retirement Obligation Disclosure [Abstract]  
Schedule of Changes in Asset Retirement Obligation The following is a summary of changes in TXO Partners’ asset retirement obligation activity for the nine months ended September 30, 2024:
(in thousands)
Asset retirement obligation, January 1$153,972 
Liability incurred upon acquiring and drilling wells18,408 
Liability settled upon plugging and abandoning wells(1,059)
Accretion of discount expense8,491 
Asset retirement obligation, September 30179,812 
Less current portion(1,750)
Asset retirement obligation, long term$178,062 
v3.24.3
Fair Value (Tables)
9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Schedule of Estimated Fair Values and Carrying Values of Other Financial Instruments The following are estimated fair values and carrying values of our other financial instruments at each of these dates:
Asset (Liability)
September 30, 2024December 31, 2023
(in thousands)Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Note receivable from related party$7,131 $7,131 $7,131 $7,131 
Long-term debt$(155,100)$(155,100)$(28,100)$(28,100)
Derivative asset$7,074 $7,074 $6,052 $6,052 
Derivative liability$(8,614)$(8,614)$(4,045)$(4,045)
Schedule of Fair Value Measurements and the Level Within the Fair Value Hierarchy
The following table summarizes our fair value measurements and the level within the fair value hierarchy in which the fair value measurements fall.
Fair Value Measurements
September 30, 2024December 31, 2023
(in thousands)Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Note receivable from related party$7,131 $— $7,131 $— 
Long-term debt$(155,100)$— $(28,100)$— 
Derivative asset$7,074 $— $6,052 $— 
Derivative liability$(8,614)$— $(4,045)$— 
Schedule of Fair Value of Derivative Contracts
The fair value of our derivatives contracts consists of the following:
Asset DerivativesLiability Derivatives
(in thousands)September 30,
2024
December 31,
2023
September 30,
2024
December 31,
2023
Derivatives not designated as hedging instruments:
Crude oil futures and differential swaps$5,694 $— $— $(3,163)
Natural gas liquids futures$— $477 $— $— 
Natural gas futures, collars and basis swaps$1,380 $5,575 $(8,614)$(882)
Total$7,074 $6,052 $(8,614)$(4,045)
Schedule of Fair Value of Derivative Gain (Loss) Included Earnings
Derivative fair value (gain) loss, included as part of the related revenue line on the consolidated income statements, comprises the following realized and unrealized components:
Three Months Ended September 30,Nine Months Ended
September 30,
(in thousands)2024202320242023
Net cash (received from) paid to counterparties$(6)$3,448 $(2,278)$81,642 
Non-cash change in derivative fair value$549 $1,571 $3,547 $(84,858)
Derivative fair value (gain) loss$543 $5,019 $1,269 $(3,216)
v3.24.3
Commodity Sales Commitments (Tables)
9 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Derivative Instruments
We have entered into crude oil futures contracts and swap agreements that effectively fix prices for the production and periods shown below. Prices to be realized for hedged production may be less than these fixed prices because of location, quality and other adjustments. See Note 9.
Production PeriodBbls per DayWeighted Average
Sell Basis
Price per Bbl (a)
October 2024 - September 20262,000 $70.49 
We have entered into natural gas futures contracts and swap agreements that effectively fix prices for the production and periods shown below. Prices to be realized for hedged production may be less than these fixed prices because of location, quality and other adjustments. See Note 9.
Production PeriodMMBtu per DayWeighted Average
NYMEX
Price per MMBtu
October 2024 - March 202650,000$3.21 
April 2026 - September 202635,000 $3.25 
We have entered sell basis swap agreements that effectively fix the basis adjustment for the San Juan Basin delivery location for the production and periods shown below.
Production PeriodMMBtu per DayWeighted Average
Sell Basis
Price per MMBtu(a)
October 2024 - December 202420,000$(0.25)
November 2024 - December 202430,000 $0.70 
January 2025 - December 202550,000$(0.01)
_________________________________
(a)Reductions or additions to NYMEX gas price for delivery location
v3.24.3
Earnings per Unit (Tables)
9 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
Schedule of Earnings per Unit
The following represents basic and diluted earnings per Common Unit for the three and nine months ended September 30, 2024 and 2023:

(in thousands, except per unit data)Net incomeUnitsIncome per Unit
Three Months Ended September 30, 2024
Basic$203 39,272 $0.01
Dilutive effect of phantom units— 556 
Diluted$203 39,828 $0.01
Three Months Ended September 30, 2023
Basic$8,479 30,750 $0.28
Dilutive effect of phantom units— 535 
Diluted$8,479 31,285 $0.27
Nine Months Ended September 30, 2024
Basic$13,278 33,762 $0.39
Dilutive effect of phantom units— 579 
Diluted$13,278 34,340 $0.39
Nine Months Ended September 30, 2023
Basic$89,742 30,102 $2.98
Dilutive effect of phantom units— 539 
Diluted$89,742 30,640 $2.93
v3.24.3
Partners’ Capital (Tables)
9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Schedule Of Partners Capital Distribution The following is a summary of distributions paid in 2024:
PeriodDistribution per UnitPayment Date
Fourth Quarter 2023$0.58 3/28/2024
First Quarter 2024$0.65 5/29/2024
Second Quarter 2024$0.57 8/27/2024
v3.24.3
Revenue from Contracts with Customers (Tables)
9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Schedule of Disaggregation of Revenue See table below for the reconciliation of revenue from contracts with customers and derivative gains and losses.
Three Months Ended September 30, 2024
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$50,417 $7,194 $11,663 $69,274 
Unrealized gain (loss) on derivatives5,694 — (6,243)(549)
Realized gain (loss) on derivatives— 
Total revenues$56,111 $7,195 $5,425 $68,731 
Three Months Ended September 30, 2023
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$47,085 $6,086 $21,722 $74,893 
Unrealized gain (loss) on derivatives(8,848)(465)7,742 (1,571)
Realized gain (loss) on derivatives(2,945)(175)(328)(3,448)
Total Revenues$35,292 $5,446 $29,136 $69,874 
Nine Months Ended September 30, 2024
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$133,726 $20,370 $40,651 $194,747 
Unrealized gain (loss) on derivatives8,857 (477)(11,927)(3,547)
Realized gain (loss) on derivatives$(5,639)$474 $7,443 $2,278 
Total revenues$136,944 $20,367 $36,167 $193,478 
Nine Months Ended September 30, 2023
Oil and
condensate
Natural gas
liquids
Natural gasTotal
Revenues
(in thousands)
Revenue from customers$136,567 $21,223 $127,739 $285,529 
Unrealized gain (loss) on derivatives1,048 157 83,653 84,858 
Realized gain (loss) on derivatives(5,011)222 (76,853)(81,642)
Total revenues$132,604 $21,602 $134,539 $288,745 
v3.24.3
Employee Benefit Plans (Tables)
9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Schedule of Nonvested Phantom Units
The following summarizes the status of nonvested phantom units as of September 30, 2024:

(in thousands, except per unit amounts)Weighted Average Grant Date Fair ValueNumber of Units
Nonvested at January 1, 2024$20.00 535,000 
    Grants$18.62 208,875 
    Vestings$20.00 (188,332)
Nonvested at September 30, 2024$19.48 555,543 
v3.24.3
Accrued Liabilities (Tables)
9 Months Ended
Sep. 30, 2024
Payables and Accruals [Abstract]  
Schedule of Accrued Liabilities
Accrued liabilities consist of the following at September 30, 2024 and December 31, 2023:
September 30,
2024
December 31,
2023
Accrued production expenses$19,841 $17,443 
Accrued capital expenditures$5,545 $676 
Accrued bonuses$3,619 $— 
Accrued ad valorem taxes$3,048 $2,177 
Accrued severance taxes$2,400 $2,828 
Other accrued liabilities$159 $238 
Total accrued liabilities$34,612 $23,362 
v3.24.3
Organization and Summary of Significant Accounting Policies (Details)
Sep. 30, 2024
representative
vote
Related Party Transaction [Line Items]  
Representative voting interests, percentage | vote 1
Representative  
Related Party Transaction [Line Items]  
Number of representatives 6
Unincorporated Joint Venture | Representative  
Related Party Transaction [Line Items]  
Number of representatives 3
TXO Energy Partners | Representative  
Related Party Transaction [Line Items]  
Number of representatives 3
Unincorporated Joint Venture  
Related Party Transaction [Line Items]  
Ownership percentage (as percent) 50.00%
Cross Timbers Energy  
Related Party Transaction [Line Items]  
Related party, ownership interest (as percent) 5.00%
v3.24.3
Related Party Transactions (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Related Party | Management Fees | Cross Timbers Energy        
Related Party Transaction [Line Items]        
Management fee revenues $ 1.4 $ 1.8 $ 3.7 $ 4.6
v3.24.3
Acquisitions - Narrative (Details) - USD ($)
$ in Thousands, shares in Millions
1 Months Ended 3 Months Ended 9 Months Ended
Aug. 30, 2024
Aug. 31, 2024
Sep. 30, 2024
Sep. 30, 2024
Business Acquisition [Line Items]        
Liability incurred upon acquiring and drilling wells       $ 18,408
EMEP Acquisition        
Business Acquisition [Line Items]        
Payments for Asset Acquisitions   $ 241,800    
Asset acquisition, consideration transferred, equity interests issued, shares (in shares) 2.5 2.5    
Asset acquisition, consideration transferred, equity interest issued and issuable $ 50,000 $ 50,000    
Proved oil and gas property, successful effort method   312,200    
Other properties   600    
Current assets, other   300    
Assets, other   1,000    
Current liabilities, other   5,400    
Asset retirement obligation   16,800    
Pro forma information, revenue of acquiree since acquisition date, actual     $ 8,800 8,800
Pro forma information, earnings or Loss of acquiree since acquisition date, actual     $ 3,700 $ 3,700
KFOC Acquisition        
Business Acquisition [Line Items]        
Payments to acquire productive assets   18,200    
Purchase price allocation included proved properties   19,800    
Liability incurred upon acquiring and drilling wells   $ 1,600    
v3.24.3
Acquisitions - Schedule of Unaudited Pro Forma Financial Information (Details) - EMEP Acquisition - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Business Acquisition [Line Items]        
Total revenue $ 84,882 $ 83,098 $ 242,763 $ 344,203
Net income $ 1,006 $ 4,371 $ 13,434 $ 97,179
v3.24.3
Debt - Schedule of Long-Term Debt (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Debt Instrument [Line Items]    
Total Long-term Debt $ 155,100 $ 28,100
September 2016 Loan | Unsecured Debt    
Debt Instrument [Line Items]    
Interest rate, stated percentage 8.60% 8.70%
Total Long-term Debt $ 7,100 $ 7,100
Secured Debt | November 2021 Credit Facility | Line of Credit    
Debt Instrument [Line Items]    
Interest rate, stated percentage 9.00% 8.60%
Total Long-term Debt $ 148,000 $ 21,000
v3.24.3
Debt - Narrative (Details)
Nov. 01, 2021
USD ($)
request
Sep. 30, 2016
Sep. 30, 2024
USD ($)
Aug. 30, 2024
USD ($)
Aug. 29, 2024
USD ($)
Dec. 31, 2023
USD ($)
Debt Instrument [Line Items]            
Covenant, hedge threshold minimum, period, scenario one 24 months          
Covenant, hedge threshold minimum, period, scenario two 12 months          
September 2016 Loan | Unsecured Debt | LIBOR            
Debt Instrument [Line Items]            
Basis spread on variable rate   3.25%        
Contingent maturity, term   91 days        
Secured Debt | November 2021 Credit Facility | Line of Credit            
Debt Instrument [Line Items]            
Maximum borrowing capacity       $ 275,000,000 $ 165,000,000  
Debt issuance costs, gross     $ 6,200,000 $ 3,100,000   $ 3,000,000.0
Accumulated amortization, debt issuance costs     $ 2,200,000     $ 1,500,000
Debt instrument, borrowing base redetermination period 6 months          
Debt instrument, borrowing base redetermination, number of requests per year | request 2          
Covenant, leverage ratio, minimum 1.0          
Covenant, indebtedness to EBITDAX ratio, maximum 3.0          
Unrestricted cash and cash equivalents, maximum $ 15,000,000.0          
Covenant, leverage ratio threshold, scenario one 0.75          
Covenant, hedge threshold minimum, scenario one 0.50          
Covenant, line of credit threshold 0.20          
Covenant, hedge threshold minimum, scenario two 0.35          
Covenant, leverage ratio threshold, scenario two 0.50          
Covenant, line of credit threshold, scenario two 0.667          
Covenant, production hedge, maximum 0.90          
Unused capacity, commitment fee percentage 0.50%          
Secured Debt | November 2021 Credit Facility | Line of Credit | Minimum | SOFR            
Debt Instrument [Line Items]            
Basis spread on variable rate 3.00%          
Secured Debt | November 2021 Credit Facility | Line of Credit | Minimum | ABR            
Debt Instrument [Line Items]            
Basis spread on variable rate 2.00%          
Secured Debt | November 2021 Credit Facility | Line of Credit | Maximum | SOFR            
Debt Instrument [Line Items]            
Basis spread on variable rate 4.00%          
Secured Debt | November 2021 Credit Facility | Line of Credit | Maximum | ABR            
Debt Instrument [Line Items]            
Basis spread on variable rate 3.00%          
v3.24.3
Note Receivable from Related Party (Details)
$ in Millions
9 Months Ended
Sep. 30, 2024
USD ($)
d
Sep. 30, 2023
USD ($)
Dec. 31, 2023
USD ($)
Related Party Transaction [Line Items]      
Number of business days | d 2    
Related Party      
Related Party Transaction [Line Items]      
Note receivable | $ $ 7.1   $ 7.1
Interest income | $ $ 0.3 $ 0.3  
Cross Timbers Energy | Related Party      
Related Party Transaction [Line Items]      
Related party, ownership interest (as percent) 5.00%   5.00%
Number of business days | d 2    
v3.24.3
Asset Retirement Obligation (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]          
Balance at beginning of period     $ 153,972    
Liability incurred upon acquiring and drilling wells     18,408    
Liability settled upon plugging and abandoning wells     (1,059)    
Accretion of discount expense $ 2,926 $ 2,185 8,491 $ 6,462  
Balance at end of period 179,812   179,812    
Less current portion (1,750)   (1,750)   $ (1,750)
Asset retirement obligation, long term $ 178,062   $ 178,062   $ 152,222
v3.24.3
Fair Value - Schedule of Estimated Fair Values and Carrying Values of Other Financial Instruments (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Carrying Amount    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Note receivable from related party $ 7,131 $ 7,131
Long-term debt (155,100) (28,100)
Derivative asset 7,074 6,052
Derivative liability (8,614) (4,045)
Fair Value    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Note receivable from related party 7,131 7,131
Long-term debt (155,100) (28,100)
Derivative asset 7,074 6,052
Derivative liability $ (8,614) $ (4,045)
v3.24.3
Fair Value - Narrative (Details)
Sep. 30, 2024
d
Fair Value Measurement Inputs and Valuation Techniques [Line Items]  
Number of business days 2
Discount Rate  
Fair Value Measurement Inputs and Valuation Techniques [Line Items]  
Oil and gas properties, measurement input (as percent) 0.10
v3.24.3
Fair Value - Schedule of Fair Value Measurements and the Level Within the Fair Value Hierarchy (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Significant Other Observable Inputs (Level 2)    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Note receivable from related party $ 7,131 $ 7,131
Long-term debt (155,100) (28,100)
Derivative asset 7,074 6,052
Derivative liability (8,614) (4,045)
Significant Unobservable Inputs (Level 3)    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Note receivable from related party 0 0
Long-term debt 0 0
Derivative asset 0 0
Derivative liability $ 0 $ 0
v3.24.3
Fair Value - Schedule of Fair Value of Derivative Contracts (Details) - Not Designated as Hedging Instrument - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Derivative asset $ 7,074 $ 6,052
Derivative liability (8,614) (4,045)
Crude oil futures and differential swaps    
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Derivative asset 5,694 0
Derivative liability 0 (3,163)
Natural gas liquids futures    
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Derivative asset 0 477
Derivative liability 0 0
Natural gas futures, collars and basis swaps    
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Derivative asset 1,380 5,575
Derivative liability $ (8,614) $ (882)
v3.24.3
Fair Value - Schedule of Fair Value of Derivative Gain (Loss) Included Earnings (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Fair Value Disclosures [Abstract]        
Net cash (received from) paid to counterparties $ (6) $ 3,448 $ (2,278) $ 81,642
Non-cash change in derivative fair value 549 1,571 3,547 (84,858)
Derivative fair value (gain) loss $ 543 $ 5,019 $ 1,269 $ (3,216)
v3.24.3
Commodity Sales Commitments - Narrative (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Derivative [Line Items]        
Realized gain (loss) on derivatives $ 6 $ (3,448) $ 2,278 $ (81,642)
Unrealized gain (loss) on derivatives (549) (1,571) (3,547) 84,858
Crude Oil        
Derivative [Line Items]        
Realized gain (loss) on derivatives 0 (2,900) (5,600) (5,000)
Unrealized gain (loss) on derivatives 5,700 (8,800) 8,900 1,000
Natural gas liquids        
Derivative [Line Items]        
Realized gain (loss) on derivatives 0 (200) 500 200
Unrealized gain (loss) on derivatives 0 (500) (500) 200
Gas        
Derivative [Line Items]        
Realized gain (loss) on derivatives 0 (300) 7,400 (76,900)
Unrealized gain (loss) on derivatives $ (6,200) $ 7,700 $ (11,900) $ 83,700
v3.24.3
Commodity Sales Commitments - Schedule of Notional Amounts of Outstanding Derivative Positions (Details) - Designated as Hedging Instrument
Sep. 30, 2024
MMBTU / d
bbl / d
$ / bbl
$ / MMBTU
October 2024 - September 2026  
Derivative Instruments and Hedging Activities Disclosures [Line Items]  
MMBtu per Day | bbl / d 2,000
Weighted average NYMEX price per unit (in dollars per share) | $ / bbl 70.49
October 2024 - March 2026  
Derivative Instruments and Hedging Activities Disclosures [Line Items]  
MMBtu per Day | MMBTU / d 50,000
Weighted average NYMEX price per unit (in dollars per share) | $ / MMBTU 3.21
April 2026 - September 2026  
Derivative Instruments and Hedging Activities Disclosures [Line Items]  
MMBtu per Day | MMBTU / d 35,000
Weighted average NYMEX price per unit (in dollars per share) | $ / MMBTU 3.25
October 2024 - December 2024  
Derivative Instruments and Hedging Activities Disclosures [Line Items]  
MMBtu per Day | MMBTU / d 20,000
Weighted average NYMEX price per unit (in dollars per share) | $ / MMBTU (0.25)
November 2024 - December 2024  
Derivative Instruments and Hedging Activities Disclosures [Line Items]  
MMBtu per Day | MMBTU / d 30,000
Weighted average NYMEX price per unit (in dollars per share) | $ / MMBTU 0.70
January 2025 - December 2025  
Derivative Instruments and Hedging Activities Disclosures [Line Items]  
MMBtu per Day | MMBTU / d 50,000
Weighted average NYMEX price per unit (in dollars per share) | $ / MMBTU (0.01)
v3.24.3
Earnings per Unit (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Net income        
Basic $ 203 $ 8,479 $ 13,278 $ 89,742
Dilutive effect of phantom units 0 0 0 0
Diluted $ 203 $ 8,479 $ 13,278 $ 89,742
Units        
Basic (in shares) 39,272 30,750 33,762 30,102
Effect of dilutive securities (in shares) 556 535 579 539
Diluted (in shares) 39,828 31,285 34,340 30,640
Income per Unit        
Basic (in dollars per share) $ 0.01 $ 0.28 $ 0.39 $ 2.98
Diluted (in dollars per share) $ 0.01 $ 0.27 $ 0.39 $ 2.93
v3.24.3
Partners’ Capital - Narrative (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
1 Months Ended 3 Months Ended 9 Months Ended
Aug. 30, 2024
Jul. 02, 2024
Jun. 28, 2024
Aug. 31, 2024
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Nov. 05, 2024
Jun. 30, 2024
Mar. 31, 2024
Dec. 31, 2023
Capital Unit [Line Items]                        
Distribution (in dollars per share)                   $ 0.57 $ 0.65 $ 0.58
Sale of stock, number of shares issued in transaction (in shares)   975 6,500                  
Sale of stock, price per share (in dollars per share)   $ 20.00 $ 20.00                  
Sale of stock, estimated consideration received per transaction   $ 18,700 $ 122,500                  
EMEP Acquisition                        
Capital Unit [Line Items]                        
Asset acquisition, consideration transferred, equity interests issued, shares (in shares) 2,500     2,500                
Asset acquisition, consideration transferred, equity interest issued and issuable $ 50,000     $ 50,000                
Subsequent Event                        
Capital Unit [Line Items]                        
Distribution (in dollars per share)                 $ 0.58      
Common Stock                        
Capital Unit [Line Items]                        
Distributions to unitholders         $ 21,953 $ 14,761 $ 61,590 $ 33,662        
v3.24.3
Partners’ Capital - Schedule of Partners Capital Distribution (Details) - $ / shares
Jun. 30, 2024
Mar. 31, 2024
Dec. 31, 2023
Equity [Abstract]      
Distribution (in dollars per share) $ 0.57 $ 0.65 $ 0.58
v3.24.3
Revenue from Contracts with Customers (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Disaggregation of Revenue [Line Items]        
Revenue from customers $ 69,274 $ 74,893 $ 194,747 $ 285,529
Unrealized gain (loss) on derivatives (549) (1,571) (3,547) 84,858
Realized gain (loss) on derivatives 6 (3,448) 2,278 (81,642)
Total revenues 68,731 69,874 193,478 288,745
Oil and condensate        
Disaggregation of Revenue [Line Items]        
Revenue from customers 50,417 47,085 133,726 136,567
Unrealized gain (loss) on derivatives 5,694 (8,848) 8,857 1,048
Realized gain (loss) on derivatives 0 (2,945) (5,639) (5,011)
Total revenues 56,111 35,292 136,944 132,604
Natural gas liquids        
Disaggregation of Revenue [Line Items]        
Revenue from customers 7,194 6,086 20,370 21,223
Unrealized gain (loss) on derivatives 0 (465) (477) 157
Realized gain (loss) on derivatives 1 (175) 474 222
Total revenues 7,195 5,446 20,367 21,602
Gas        
Disaggregation of Revenue [Line Items]        
Revenue from customers 11,663 21,722 40,651 127,739
Unrealized gain (loss) on derivatives (6,243) 7,742 (11,927) 83,653
Realized gain (loss) on derivatives 5 (328) 7,443 (76,853)
Total revenues $ 5,425 $ 29,136 $ 36,167 $ 134,539
v3.24.3
Employee Benefit Plans - Narrative (Details) - USD ($)
$ in Millions
1 Months Ended 9 Months Ended
Jan. 31, 2024
Sep. 30, 2024
Sep. 30, 2023
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Number of shares authorized (in shares) 208,875    
Share-based payment arrangement, expense   $ 4.6 $ 2.5
Deferred compensation expense   10.8  
2024   1.6  
2025   6.1  
2026   2.9  
2027   $ 0.2  
Weighted average remaining contractual term   1 year 8 months 12 days  
Phantom Share Units (PSUs) | Employee      
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Award vesting period 3 years    
Phantom Share Units (PSUs) | Nonemployee      
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Award vesting period 1 year    
Performance Shares      
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Number of shares authorized (in shares) 159,475    
Performance Shares | Share-Based Payment Arrangement, Tranche One      
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Award vesting rights, percentage 50.00%    
Performance Shares | Share-Based Payment Arrangement, Tranche Two      
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]      
Award vesting rights, percentage 50.00%    
v3.24.3
Employee Benefit Plans - Schedule of Nonvested Phantom Units (Details) - Phantom Share Units (PSUs)
9 Months Ended
Sep. 30, 2024
$ / shares
shares
Weighted Average Grant Date Fair Value  
Nonvested at beginning of period (in dollars per share) | $ / shares $ 20.00
Grants (in dollars per share) | $ / shares 18.62
Vestings (in dollars per share) | $ / shares 20.00
Nonvested at end of period (in dollars per share) | $ / shares $ 19.48
Number of Units  
Nonvested at beginning of period (in shares) | shares 535,000
Grants (in shares) | shares 208,875
Vestings (in shares) | shares (188,332)
Nonvested at end of period (in shares) | shares 555,543
v3.24.3
Accrued Liabilities (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Payables and Accruals [Abstract]    
Accrued production expenses $ 19,841 $ 17,443
Accrued capital expenditures 5,545 676
Accrued bonuses 3,619 0
Accrued ad valorem taxes 3,048 2,177
Accrued severance taxes 2,400 2,828
Other accrued liabilities 159 238
Total accrued liabilities $ 34,612 $ 23,362
v3.24.3
Supplemental Cash Flow Information (Details) - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Interest payments $ 3.5 $ 2.5
Income tax payments $ 1.9 $ 1.1

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