txo-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


o			TRANSITION 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)


Delaware			32-0368858
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Units	TXO	New 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 filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	x

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 41,367,625 common units as of May 1, 2025.


			Page
Part I - Financial Information
Item 1. Financial Statements			1
Consolidated Balance Sheets			1
Consolidated Statements of Operations			2
Consolidated Statements of Cash Flows			3
Consolidated Statements of Partners’ Capital			4
Notes to Financial Statements			5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3. Quantitative and Qualitative Disclosures About Market Risk			28
Item 4. Controls and Procedures			29

Part II - Other Information
Item 1. Legal Proceedings			31
Item 1A. Risk Factors			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			31
Item 3. Defaults Upon Senior Securities			31
Item 4. Mine Safety Disclosures			31
Item 5. Other Information			31
Item 6. Exhibits			32
Signatures			33


	March 31, 2025		December 31, 2024
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	10,842	$	7,305
Accounts receivable, net	38,485		39,689
Derivative fair value	18,849		6,412
Other	13,404		11,041
Total Current Assets	81,580		64,447
Property and Equipment, at cost – successful efforts method:
Proved properties	1,918,025		1,912,624
Unproved properties	18,759		18,706
Other	85,608		85,425
Total Property and Equipment	2,022,392		2,016,755
Accumulated depreciation, depletion and amortization	(1,086,727)		(1,065,364)
Net Property and Equipment	935,665		951,391
Other Assets:
Note receivable from related party	7,131		7,131
Derivative fair value	2,289		2,065
Other	6,640		5,807
Total Other Assets	16,060		15,003
TOTAL ASSETS	$	1,033,305	$	1,030,841
LIABILITIES AND PARTNERS’ CAPITAL
Current Liabilities:
Accounts payable	$	19,782	$	18,217
Accrued liabilities	31,743		38,927
Derivative fair value	25,632		5,846
Asset retirement obligation, current portion	3,000		2,000
Other current liabilities	1,795		1,347
Total Current Liabilities	81,952		66,337

Long-term Debt	162,100		157,100
Other Liabilities:
Asset retirement obligation	190,393		188,904
Derivative fair value	8,489		8,022
Other liabilities	1,638		1,062
Total Other Liabilities	200,520		197,988
Commitments and Contingencies
Partners’ Capital:
Partners’ capital	588,733		609,416
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	1,033,305	$	1,030,841


TXO PARTNERS, L.P. Consolidated Statements of Operations (Unaudited)


	Three months ended March 31,
	2025		2024
REVENUES
Oil and condensate	$	64,995	$	38,034
Natural gas liquids	8,562		6,502
Natural gas	10,768		22,903
Total Revenues	84,325		67,439
EXPENSES
Production	42,271		33,083
Exploration	73		123
Taxes, transportation and other	17,881		15,573
Depreciation, depletion and amortization	21,429		10,517
Accretion of discount in asset retirement obligation	3,813		2,784
General and administrative	2,441		2,654
Total Expenses	87,908		64,734
OPERATING (LOSS) INCOME	(3,583)		2,705
OTHER INCOME (EXPENSE)
Other income	9,517		8,413
Interest income	103		125
Interest expense	(3,621)		(976)
Total Other Income	5,999		7,562
NET INCOME	$	2,416	$	10,267

NET INCOME PER COMMON UNIT
Basic	$0.06		$0.33
Diluted	$0.06		$0.33

WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
Basic	41,083		30,800
Diluted	41,814		31,425


	Three months ended March 31,
	2025		2024
OPERATING ACTIVITIES
Net income	$	2,416	$	10,267
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	21,429		10,517
Accretion of discount in asset retirement obligation	3,813		2,784
Derivative fair value (gain) loss	9,487		1,054
Net cash paid to derivative counterparties	(1,896)		(396)
Non-cash incentive compensation	2,131		1,141
Other non-cash items	258		241
Changes in operating assets and liabilities (a)	(7,028)		(411)
Cash Provided by Operating Activities	30,610		25,197
INVESTING ACTIVITIES
Proved property acquisition final settlement	1,755		—
Development costs	(8,291)		(2,835)
Unproved property acquisitions	(53)		(37)
Other property and asset additions	(254)		(143)
Cash Used by Investing Activities	(6,843)		(3,015)
FINANCING ACTIVITIES
Proceeds from long-term debt	36,000		10,000
Payments on long-term debt	(31,000)		(12,000)
Proceeds from sale of units to cover withholding taxes	1,215		187
Withholding taxes paid on vesting of restricted units	(1,151)		(851)
Debt issuance costs	—		(2)
Distributions	(25,294)		(19,451)
Cash Used by Financing Activities	(20,230)		(22,117)
INCREASE IN CASH AND CASH EQUIVALENTS	3,537		65
Cash and Cash Equivalents, beginning of period	7,305		4,505
Cash and Cash Equivalents, end of period	$	10,842	$	4,570

(a) Changes in Operating Assets and Liabilities
Accounts receivable	$	1,195	$	2,100
Other current assets	(1,914)		(1,071)
Current liabilities	(4,475)		(1,087)
Other operating liabilities	(1,834)		(353)
	$	(7,028)	$	(411)


	Common Units
	Units	$
Balances, December 31, 2024	40,913	$	609,416
Net income	—	2,416
Proceeds from sale of units to cover withholding taxes	—	1,215
Withholding taxes paid on vesting of restricted units	—	(1,151)
Expensing of unit awards	254	2,131
Distributions to unitholders	—	(25,294)
Balances, March 31, 2025	41,167	$	588,733


	Common Units
	Units		$
Balances, December 31, 2023	30,750		$	473,798
Net income	—		10,267
Proceeds from sale of units to cover withholding taxes	—		827
Withholding taxes paid on vesting of restricted units	—		(851)
Expensing of unit awards	188		1,141
Distributions to unitholders	—		(19,451)
Balances, March 31, 2024	$	30,938	$	465,731


(in thousands)	Three Months Ended March 31, 2024

Total revenue	$	83,153
Net income	$	7,773


	(in thousands)
Asset retirement obligation, January 1	$	190,904
Liability settled upon plugging and abandoning wells	(1,324)
Accretion of discount expense	3,813
Asset retirement obligation, March 31	193,393
Less current portion	(3,000)
Asset retirement obligation, long term	$	190,393


	Asset (Liability)
	March 31, 2025				December 31, 2024
(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	$	(162,100)	$	(162,100)	$	(157,100)	$	(157,100)
Derivative asset	$	21,138	$	21,138	$	8,477	$	8,477
Derivative liability	$	(34,121)	$	(34,121)	$	(13,868)	$	(13,868)


Production Period	Bbls per Day	Weighted Average NYMEX Price per Bbl
April 2025—December 2025	6,000	$	67.39
January 2026—June 2026	3,000	$	70.57
July 2026—September 2026	2,000	$	70.49
October 2026—December 2026	375	$	64.16


Production Period	Gallons per Day	Weighted Average NGL OPIS Price per Gallon
Ethane
January 2027— March 2027	14,700	$	0.29


Production Period	MMBtu per Day	Weighted Average NYMEX Price per MMBtu
April 2025—March 2026	50,000	$	3.21
April 2026—September 2026	35,000	$	3.25
October 2026—December 2026	42,500	$	3.90
January 2027—March 2027	42,500	$	4.36


Production Period	MMBtu per Day	Weighted Average Sell Basis Price per MMBtu(a)
April 2025—December 2025	50,000	$	(0.01)


	Fair Value Measurements
	March 31, 2025				December 31, 2024
(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	$	(162,100)	$	—	$	(157,100)	$	—
Derivative asset	$	21,138	$	—	$	8,477	$	—
Derivative liability	$	(34,121)	$	—	$	(13,868)	$	—


	Asset Derivatives				Liability Derivatives
(in thousands)	March 31, 2025		December 31, 2024		March 31, 2025		December 31, 2024
Derivatives not designated as hedging instruments:
Crude oil futures and differential swaps	$	5,773	$	2,730	$	(24)	$	(52)
Natural gas liquids futures	$	—	$	—	$	(13)	$	—
Natural gas futures, collars and basis swaps	$	15,365	$	5,747	$	(34,084)	$	(13,816)
Total	$	21,138	$	8,477	$	(34,121)	$	(13,868)


	(in thousands, except per unit data)	Net income		Units	Income per Unit
2025
	Basic	$	2,416	41,083	$0.06
	Dilutive effect of phantom units	—		731
	Diluted	$	2,416	41,814	$0.06

2024
	Basic	$	10,267	30,800	$0.33
	Dilutive effect of phantom units	—		625
	Diluted	$	10,267	31,425	$0.33


	For the Three Months Ended March 31, 2025
	Oil and condensate		Natural gas liquids		Natural gas		Total Revenues

	(in thousands)
Revenue from customers	$	61,838	$	8,575	$	23,399	$	93,812
Unrealized gain (loss) on derivatives	3,071		(13)		(10,649)		(7,591)
Realized gain (loss) on derivatives	86		—		(1,982)		(1,896)
Total revenues	$	64,995	$	8,562	$	10,768	$	84,325


	March 31, 2025		December 31, 2024
Accrued production expenses	$	21,629	$	22,818
Accrued capital expenditures	$	3,983	$	5,401
Accrued ad valorem taxes	$	2,513	$	3,056
Accrued severance taxes	$	1,986	$	2,567
Accrued bonuses	$	1,329	$	4,841
Other accrued liabilities	$	303	$	244
Total accrued liabilities	$	31,743	$	38,927

SEC Form 10-Q filed by TXO Partners L.P.