TXO Partners Reports 66% Revenue Decline in Q1 2026 Amid Increased Expenses

TXO Partners, L.P. reported a significant decline in financial performance for the first quarter of 2026, with total revenues falling to $28.3 million, a decrease of 66% from $84.3 million in the same period of 2025. The drop in revenue was primarily driven by substantial losses from hedging activities, which amounted to $91.3 million, compared to $9.5 million in the previous year. The company also experienced a decrease in average selling prices for natural gas and natural gas liquids, contributing to the overall revenue decline. Despite these challenges, production volumes increased by 577 MBoe, largely due to the acquisition of assets in the Williston Basin.

In terms of expenses, TXO Partners reported a total of $105.8 million for the first quarter of 2026, up from $87.9 million in the prior year, marking a 20% increase. This rise was attributed to higher production costs, which increased by 13% to $47.7 million, and a significant jump in depreciation, depletion, and amortization expenses, which rose 35% to $28.8 million. General and administrative expenses also saw a notable increase of 97%, reaching $4.8 million, primarily due to higher personnel costs.

Strategically, TXO Partners has been active in asset management, executing three purchase and sale agreements through its joint venture, Cross Timbers Energy, to sell oil and gas properties for a total consideration of approximately $200 million. The first two transactions have already closed, yielding net proceeds of approximately $39 million, which the company plans to use to fulfill a deferred payment obligation of $70 million due in July 2026. The third transaction is expected to close by the end of the second quarter of 2026, pending customary conditions.

Operationally, the company reported a weighted average of 55,090 common units outstanding for the first quarter of 2026, compared to 41,083 in the same period of 2025. The increase in unit count reflects the company's ongoing efforts to manage its capital structure. Despite the challenges faced in the current fiscal period, TXO Partners remains focused on optimizing its asset base and managing costs effectively. The company anticipates that cash flows from its long-lived properties will support its capital expenditures and distribution commitments moving forward.

Looking ahead, TXO Partners acknowledges the volatility in the oil and natural gas markets, which is influenced by various external factors, including geopolitical events and economic conditions. The company plans to continue its practice of entering into commodity derivative contracts to mitigate price fluctuations and maintain stable cash flows. Management remains cautious but optimistic about the potential for recovery in commodity prices and is committed to executing its strategic initiatives to enhance shareholder value.