TXO Partners, L.P 10-K/A for FY2025
TXO Partners, L.P. (TXO)
About this 10-K/A
TXO Partners, L.P filed this 10-K/A on March 26, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $401.01M
- up 41.8% from $282.81M a year earlier
- Net loss
- $21.62M
- compared with net income of $23.5M a year earlier
- Diluted EPS
- -$0.43
- compared with $0.65 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) |
(Zip Code) |
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 |
NYSE Texas |
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes ☐
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.
Indicate by check mark whether the registrant has submitted electronically 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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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.
Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The aggregate market value of the common units held by non-affiliates of the registrant, based on the closing price of the common units on the New York Stock Exchange on June 30, 2025, was $
The registrant had
DOCUMENTS INCORPORATED BY REFERENCE
None.
Auditor Name:
Explanatory Note
TXO Partners, L.P. ("TXO Partners") is filing this Amendment No. 1 on Form 10-K/A (this "Amendment") to its Annual Report on Form 10-K for the year ended December 31, 2025, which was originally filed with the Securities and Exchange Commission (the "SEC") on February 26, 2026 (the "Original Filing"). This Amendment is being filed solely to include KPMG LLP's (Firm ID: 185) location on the Report of Independent Registered Public Accounting Firm (the "Audit Report"). The signed Audit Report was received by TXO Partners prior to the Original Filing, but the location was inadvertently omitted from the Original Filing. No other changes have been made to the Original Filing.
This Amendment does not, and does not purport to, amend, update or restate the information in the Original Filing or reflect any events that have occurred after the Original Filing was made. Information in the Original Filing not affected by this Amendment remains unchanged and reflects the disclosures made at the time as of which the Original Filing was made. Pursuant to Rule 12b-15 of the Securities Exchange Act of 1934, as amended, this Amendment contains the complete text of Item 8. Financial Statements and Supplementary Data, certifications of the Company’s Principal Executive Officer and Principal Financial Officer required under Items 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, each dated as of the date of this Amendment, as well as updated inline XBRL exhibits.
Item 8. Financial Statements and Supplementary Data
1
Report of Independent Registered Public Accounting Firm
To the Unitholders and Board of Directors
TXO Partners, L.P. and TXO Partners GP, LLC:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of TXO Partners, L.P. and subsidiaries (the Partnership) as of December 31, 2025 and 2024, the related consolidated statements of operations, partners’ capital, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles
Basis for Opinion
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ KPMG LLP
We have served as the Partnership’s auditor since 2012.
Fort Worth, Texas
February 26, 2026
2
TXO PARTNERS, L.P.
Consolidated Balance Sheets
(in thousands)
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December 31, |
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December 31, |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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Accounts receivable, net |
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Derivative fair value |
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Other |
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Total Current Assets |
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Property and Equipment, at cost—successful efforts method: |
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Proved properties |
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Unproved properties |
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Other |
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Total Property and Equipment |
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Accumulated depreciation, depletion and amortization |
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Net Property and Equipment |
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Other Assets: |
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Note receivable from related party |
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Derivative fair value |
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Other assets |
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Total Other Assets |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND PARTNERS’ CAPITAL |
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Current Liabilities: |
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Accounts payable |
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$ |
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$ |
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Deferred payment |
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Accrued liabilities |
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Derivative fair value |
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Asset retirement obligation, current portion |
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Other current liabilities |
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Total Current Liabilities |
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Long-term Debt |
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Other Liabilities: |
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Asset retirement obligation |
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Derivative fair value |
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Other liabilities |
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Total Other Liabilities |
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Partners’ Capital: |
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Partners’ capital |
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TOTAL LIABILITIES AND PARTNERS’ CAPITAL |
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$ |
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$ |
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See accompanying notes to consolidated financial statements.
3
TXO PARTNERS, L.P.
Consolidated Statements of Operations
(in thousands)
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Year Ended December 31, |
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2025 |
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2024 |
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2023 |
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REVENUES |
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Oil and condensate |
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$ |
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$ |
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$ |
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Natural gas liquids |
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Gas |
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Total Revenues |
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EXPENSES |
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Production |
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Exploration |
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Taxes, transportation and other |
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Depreciation, depletion, and amortization |
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Impairment of long-lived assets |
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Accretion of discount in asset retirement obligation |
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General and administrative |
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Total Expenses |
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OPERATING LOSS |
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OTHER INCOME (EXPENSE) |
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Other income |
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Interest income |
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Interest expense |
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Other Income |
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NET (LOSS) INCOME |
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$ |
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$ |
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$ |
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NET (LOSS) INCOME PER COMMON UNIT |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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WEIGHTED AVERAGE COMMON UNITS OUTSTANDING |
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Basic |
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Diluted |
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See accompanying notes to consolidated financial statements.
4
TXO PARTNERS, L.P.
Consolidated Statements of Cash Flows
(in thousands)
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Year Ended December 31, |
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2025 |
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2024 |
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2023 |
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OPERATING ACTIVITIES |
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Net (loss) income |
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$ |
( |
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$ |
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$ |
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Adjustments to reconcile net income (loss) to net cash provided by |
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Depreciation, depletion, and amortization |
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Impairment of long-lived assets |
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Accretion of discount in asset retirement obligation |
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Derivative fair value (gain) loss |
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Net cash received from (paid to) counterparties |
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Non-cash incentive compensation |
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Other non-cash items |
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Changes in operating assets and liabilities(a) |
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Cash Provided by Operating Activities |
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INVESTING ACTIVITIES |
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Proceeds from sale of property and equipment |
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Proved property acquisitions |
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Development costs |
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Unproved property acquisitions |
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( |
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( |
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( |
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Other property additions |
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( |
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( |
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Cash Used by Investing Activities |
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( |
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FINANCING ACTIVITIES |
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Proceeds from long-term debt |
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Payments on long-term debt |
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( |
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( |
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Net proceeds from initial public offering |
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Net proceeds from public offering |
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Debt issuance costs |
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( |
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Proceeds from sale of units to cover withholding taxes |
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Withholding taxes paid on vesting of restricted units |
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( |
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( |
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Distributions |
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( |
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( |
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( |
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Cash Provided by (Used by) Financing Activities |
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( |
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
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Cash and Cash Equivalents, beginning of period |
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Cash and Cash Equivalents, end of period |
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$ |
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$ |
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$ |
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(a) Changes in Operating Assets and Liabilities |
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Accounts receivable |
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$ |
( |
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$ |
( |
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$ |
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Other assets |
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( |
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( |
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Current liabilities |
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( |
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Other operating liabilities |
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( |
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( |
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( |
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$ |
( |
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$ |
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$ |
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See accompanying notes to consolidated financial statements.
5
TXO PARTNERS, L.P.
Consolidated Statements of Partners’ Capital
(in thousands)
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Series 5 Preferred |
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Common Units |
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Total |
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Units |
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$ |
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Units |
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$ |
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$ |
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Balances December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Net proceeds from initial public offering |
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— |
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— |
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Expensing of unit awards |
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— |
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— |
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— |
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Distributions to unitholders |
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— |
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— |
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— |
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( |
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( |
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Conversion of Series 5 preferred to |
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( |
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( |
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Balances December 31, 2023 |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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Net proceeds from sale of units |
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— |
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— |
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Units issued in acquisition of oil and gas |
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— |
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— |
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Proceeds from sale of units to cover |
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— |
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— |
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— |
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Withholding taxes paid on vesting of |
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— |
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— |
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— |
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( |
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( |
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Expensing of unit awards |
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— |
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— |
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Distributions to unitholders |
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— |
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— |
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— |
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( |
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( |
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Balances December 31, 2024 |
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$ |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Net proceeds from sale of units |
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— |
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— |
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Proceeds from sale of units to cover |
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— |
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— |
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— |
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Withholding taxes paid on vesting of |
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— |
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— |
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— |
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( |
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( |
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Expensing of unit awards |
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— |
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— |
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Distributions to unitholders |
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— |
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— |
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— |
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( |
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( |
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Balances December 31, 2025 |
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$ |
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$ |
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$ |
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See accompanying notes to consolidated financial statements.
6
TXO PARTNERS, L.P.
Notes to Consolidated Financial Statements
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 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 board of directors is made up of nine directors, each of whom was appointed by MorningStar Oil & Gas, LLC (“MSOG”), as the sole member of our General Partner. Pursuant to applicable provisions of the Delaware Revised Uniform Limited Partnership Act (the “Delaware Act”) and the limited partnership agreement, the partners have no liability for the debts, obligations and liabilities of TXO Partners, except as expressly required in the limited partnership agreement or the Delaware Act. 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. TXO Partners owns
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.
In accordance with oil and gas accounting guidance, we account for our undivided interest in our investment in the joint venture using the proportionate consolidation method. Under this method, we consolidate our proportionate share of assets, liabilities, revenues and expenses of the joint venture. As discussed above, we own
The accompanying consolidated financial statements include the financial statements of TXO Partners, its wholly-owned subsidiaries and our undivided interests in the joint venture. All significant intercompany balances and transactions have been eliminated in consolidation.
Reorganization and Public Listing of Common Units
In January 2023, we completed a series of reorganization transactions in conjunction with publicly listing our common units on the New York Stock Exchange. These included the following transactions (the Reorganization Transactions):
As a result of these transactions, the capital structure has been reflected as if the new number of units had been in place for all periods presented.
7
Basis of Presentation
The accounts of TXO Partners are presented in the accompanying financial statements. These financial statements have been prepared in accordance with U.S. GAAP.
Liquidity
Our primary sources of liquidity are cash provided by operating activities, borrowings under our credit facility and equity raised from partners. Short-term liquidity needs are provided by borrowings under our Credit Facility. We believe that we have a sufficient combination of resources and operating flexibility to ensure that we meet our current obligations and our future debt covenants for at least the next 12 months from the date of issuance of these financial statements. See Note 4.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from these estimates, and changes in these estimates are recorded when known. Significant items subject to such estimates and assumptions include the following:
Property and Equipment
We follow the successful efforts method of accounting, capitalizing costs of successful exploratory wells and expensing costs of unsuccessful exploratory wells. Exploratory geological and geophysical costs are expensed as incurred. All developmental costs are capitalized. We generally pursue acquisition and development of proved reserves as opposed to exploration activities. All of the proved property costs reflected in the accompanying balance sheet are from TXO Partners, our wholly-owned subsidiary, MorningStar Operating LLC, and our
Depreciation, depletion, and amortization (DD&A) of proved producing properties is computed on the unit-of-production method based on estimated proved oil and gas reserves. Other property and equipment is generally depreciated using the straight-line method over estimated useful lives which range from to
If conditions indicate that proved properties may be impaired, the carrying value of property is compared to management’s future estimated pre-tax undiscounted cash flow from properties generally aggregated on a field-level basis. If impairment is necessary, the asset carrying value is written down to fair value, typically a discounted present value of estimated future cash flows. Cash flow pricing estimates are based on estimated reserves and production information and pricing assumptions that management believes are reasonable. As a result of the Cross Timbers Transactions, we evaluated the recoverability of the Cross Timbers oil and gas assets and recorded an impairment of long-lived assets of $
8
increased costs as well as a change in our development plans to reduce the duration of the proved undeveloped reserves from
Costs of retired, sold or abandoned properties that constitute a part of an amortization base are charged or credited, net of proceeds, to accumulated depreciation, depletion, and amortization unless doing so significantly affects the unit-of-production amortization rate, in which case a gain or loss is recognized currently. Gains or losses from the disposal of other properties are recognized in the current period.
Asset Retirement Obligation
If the fair value for asset retirement obligation can be reasonably estimated, the liability is recognized in the period when it is incurred. Oil and gas producing companies incur this liability upon acquiring or drilling a well. The retirement obligation is recorded as a liability at its estimated present value at the asset’s inception, with an offsetting increase to proved properties on the balance sheet. Periodic accretion of discount of the estimated liability is recorded as an expense in the statements of operations. See Note 7.
Cash and Cash Equivalents
Cash equivalents are considered to be all highly liquid investments having an original maturity of three months or less.
Fair Value of Financial Instruments
Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, use of unobservable prices or inputs are used to estimate the current fair value, often using an internal valuation model. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the item being valued.
Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities are as follows:
Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level III—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
Income Taxes
TXO Partners is a limited partnership treated as a partnership for federal income tax purposes, with income tax liabilities and/or benefits of the Partnership passed through to the partners. As such, we are not a taxable entity for federal income tax purposes and we do not directly pay federal income tax.
For state tax purposes, we are subject to the Revised Texas Franchise Tax (commonly referred to as the "Texas Margin Tax"). Although the Texas Margin Tax is not considered a traditional state income tax, it has the characteristics of an income tax since it is determined by applying a tax rate to a base that considers our Texas-sourced revenues and expenses. Due to immateriality, income taxes related to the Texas margin tax have been included in general and administrative expenses on the statement of operations and no deferred tax amounts were calculated.
Derivatives
We opportunistically use derivatives to hedge against changes in cash flows related to product price, as opposed to their use for trading purposes. We record all derivatives on the balance sheet at fair value. We generally determine the fair value of futures
9
contracts and swap contracts based on the difference between the derivative’s fixed contract price and the underlying market price at the determination date. See Note 9.
We do not designate these derivative contracts as cash flow hedges. Changes in the fair value of commodity price derivatives are recognized currently in earnings. Realized and unrealized gains and losses on commodity derivatives are recognized in oil and gas revenues. Settlements of derivatives are included in cash flows from operating activities.
Revenue Recognition
Oil, gas and natural gas liquids revenues are recognized upon the satisfaction of the performance obligation which occurs at the point in time when control of the product transfers to a customer, in an amount that reflects the consideration to which the Partnership expects to be entitled in exchange for the product. See Note 13 for further discussion.
Loss Contingencies
When management determines that it is probable that an asset has been impaired or a liability has been incurred, we accrue our best estimate of the loss if it can be reasonably estimated. Any legal costs related to litigation are expensed as incurred.
Unit-Based Compensation
We recognize compensation related to all unit-based awards in the financial statements based on their estimated grant-date fair value. We estimate expected forfeitures and we recognize compensation expense only for those awards expected to vest. Compensation expense is amortized on a straight-line basis over the estimated service period. All compensation is recognized by the time the award vests. See Note 12.
Segments
We evaluated how TXO Partners is organized and managed and have identified only
Significant Purchasers
Our production is sold to various purchasers, based on their credit rating and the location of our production.
Customer |
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2025 |
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2024 |
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2023 |
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Customer A |
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Customer B |
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Customer C |
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Customer D |
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Earnings per Common Unit
We report basic earnings per unit, which excludes the effect of potentially dilutive securities, and diluted earnings per common unit, which includes the effect of all potentially dilutive securities unless their impact is antidilutive. See Note 11.
In February 2026, Cross Timbers executed agreements to dispose of certain of the oil and gas assets owned by Cross Timbers pursuant to purchase and sale agreements with multiple private buyers. We anticipate realizing about $
10
second quarter of 2026, subject to customary closing conditions. There can be no assurance that all of the conditions to closing any or all of the Cross Timbers Transactions will be satisfied.
In July 2025, we completed the acquisition of certain oil and gas assets from White Rock Energy, LLC, which are located in the Elm Coulee field in Montana and North Dakota for cash consideration of $
In the statements of operations, we recorded $
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 $
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 $
In the statements of operations, we recorded $
During 2023, we completed multiple acquisitions of producing properties primarily in the Permian Basin of New Mexico for approximately $
Pro forma financial information (Unaudited)
The following unaudited pro forma financial information represents a summary of the condensed consolidated results of operations for the years ended December 31, 2025 and 2024, assuming the WRE Acquisition, EMEP Acquisition and KFOC Acquisition had been completed as of January 1, 2024. 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.
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Twelve Months Ended December 31, |
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(in thousands) |
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2025 |
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2024 |
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Total revenue |
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$ |
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$ |
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Net income |
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$ |
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$ |
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We earned management fees from the joint venture of $
Since the purpose of the management fees is to share costs between the various entities, the management fees from the joint venture are included as a reduction of general and administrative expenses in our statements of operations.
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We occupy a building owned by MorningStar Capital LLC, a limited liability company owned by the Chairman of the Board. In lieu of paying rent, we paid property taxes and paid for repairs and maintenance on behalf of MorningStar Capital LLC of $
(in thousands) |
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December 31, |
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December 31, |
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November 2021 TXO Partners Credit Facility, at |
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$ |
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$ |
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TXO Partners Loan, |
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$ |
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$ |
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Total Long-term Debt |
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$ |
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$ |
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November 2021 Credit Facility
On July 31, 2025, we entered into Amendment No. 5 and Borrowing Base Agreement (“Amendment No. 5”) 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. 5 extended the maturity date of the Credit Facility to August 30, 2029, increased the borrowing base from $
Redetermination of the borrowing base under the credit facility, is based primarily on reserve reports that reflect commodity prices at such time, occurs semi-annually, in March and September, as well as upon requested interim redeterminations, by the lenders at their sole discretion. We also have the right to request 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 the joint venture 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
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
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unused amount of the lesser of: (i) the maximum commitment amount of the lenders and (ii) the then-effective borrowing base. The weighted average interest rate on credit facility borrowings was
September 2016 Loan
On September 30, 2016, TXO Partners entered into an unsecured loan agreement with the joint venture (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 5). The loan matures on November 29, 2029, but is automatically extended should our Credit Facility be extended. In all instances, this loan will mature
As of December 31, 2025 and 2024, we, through our
The note receivable is treated as a non-current asset, since the joint venture 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 joint venture MMC.
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 or safety 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.
Commodity Commitments
During 2025, 2024 and 2023, we entered into futures contracts and swap agreements that effectively fixed crude oil, NGL and natural gas prices on a portion of our production. See Note 9.
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.
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2025 |
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2024 |
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Asset retirement obligation, January 1 |
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$ |
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$ |
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Revisions in the estimated cash flows (1) |
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Liability incurred upon acquiring and drilling wells |
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Liability settled upon plugging and abandoning wells |
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( |
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( |
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Accretion of discount expense |
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Asset retirement obligation, December 31 |
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Less current portion |
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( |
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Asset retirement obligation, long term |
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$ |
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$ |
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We opportunistically 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 9).
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 December 31, 2025 and 2024.
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Asset (Liability) |
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December 31, |
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December 31, |
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Carrying |
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Fair |
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Carrying |
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Fair |
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Note receivable from related party |
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$ |
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$ |
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$ |
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$ |
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Long-term debt |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
( |
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Derivative asset |
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$ |
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$ |
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$ |
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$ |
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Derivative liability |
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$ |
( |
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$ |
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$ |
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$ |
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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
The fair value of our note receivable from related party (Note 5), net derivative asset (liability) (Note 9) and our long-term debt (Note 4) is measured using Level II 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 notes 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, including our own 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.
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Fair Value Measurements |
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December 31, |
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December 31, |
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(in thousands) |
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Significant |
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Significant |
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Note receivable from related party |
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$ |
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$ |
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Long-term debt |
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$ |
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Derivative asset |
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Derivative liability |
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$ |
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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 crude oil, natural gas liquids and natural gas properties, asset retirement obligations and other long-lived assets that are written down to fair value when they are impaired.
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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. We record any impairments to accumulated depreciation, depletion and amortization on the balance sheets. The fair value of the proved properties is measured based on a combination of the income and market approaches. These inputs are categorized as Level 3 in the fair value hierarchy. We recorded an impairment of long-lived assets of $
Commodity Price Hedging Instruments
We periodically enter into futures contracts, energy swaps, options, 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 9.
The fair value of our derivatives contracts consists of the following:
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Asset Derivatives |
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Liability Derivatives |
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December 31, |
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December 31, |
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(in thousands) |
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2025 |
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2024 |
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2025 |
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2024 |
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Derivatives not designated as hedging instruments: |
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Crude oil futures and differential swaps |
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$ |
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$ |
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$ |
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$ |
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Natural gas liquids futures |
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$ |
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$ |
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$ |
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$ |
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Natural gas futures, collars and basis swaps |
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$ |
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$ |
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$ |
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$ |
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Total |
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$ |
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$ |
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$ |
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Derivative fair value (gain) loss, included as part of the related revenue line on the consolidated statements of operations, comprises the following realized and unrealized components:
(in thousands) |
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2025 |
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2024 |
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2023 |
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Net cash (received from) paid to counterparties |
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$ |
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$ |
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$ |
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Non-cash change in derivative fair value |
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$ |
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$ |
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$ |
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Derivative fair value (gain) loss |
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$ |
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$ |
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$ |
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Concentrations of Credit Risk
Our receivables are from a diverse group of companies including major energy companies, pipeline 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.
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 enter futures contracts, energy swaps, options 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 crude oil or natural gas sales. When actual commodity prices exceed the ceiling price provided by these contracts we
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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.
Production Period |
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Bbls |
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Weighted |
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January 2026 - June 2026 |
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$ |
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July 2026 - September 2026 |
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$ |
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October 2026 - December 2026 |
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$ |
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January 2027 - June 2027 |
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$ |
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July 2027 - December 2027 |
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$ |
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Net settlement gains on oil futures and sell basis swap contracts in 2025 and losses in 2024 and 2023 increased oil revenues by $
Natural Gas Liquids
We have entered into natural gas liquids futures contracts and swap agreements for ethane 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.
Production Period |
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Gallons per Day |
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Weighted Average |
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Ethane |
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January 2027 - March 2027 |
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$ |
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Net settlement gains in 2024 and 2023 on NGL futures contracts and swap agreements increased NGL revenues $
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.
Production Period |
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MMBtu |
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Weighted |
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January 2026 - March 2026 |
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$ |
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April 2026 - September 2026 |
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$ |
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October 2026 - December 2026 |
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$ |
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January 2027 - March 2027 |
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$ |
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April 2027 - December 2027 |
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$ |
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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.
Production Period |
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MMBtu |
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Weighted |
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March 2026 - March 2028 |
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$ |
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————————————————
Partners’ Units
On May 15, 2025, we completed an underwritten public offering for the sale of approximately
On June 28, 2024, we completed an underwritten public offering for the sale of
On August 30, 2024, as part of the consideration paid in the EMEP Acquisition, we issued
Distributions
During 2025, we paid $
2025 |
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Distribution per Unit |
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Payment Date |
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Fourth Quarter, 2024 |
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$ |
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March 21, 2025 |
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First Quarter, 2025 |
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$ |
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May 23, 2025 |
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Second Quarter, 2025 |
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$ |
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August 22, 2025 |
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Third Quarter, 2025 |
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$ |
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November 21, 2025 |
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During 2024, we paid $
2024 |
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Distribution per Unit |
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Payment Date |
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Fourth Quarter, 2023 |
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$ |
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March 28, 2024 |
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First Quarter, 2024 |
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$ |
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May 29, 2024 |
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Second Quarter, 2024 |
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$ |
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August 27, 2024 |
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Third Quarter, 2024 |
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$ |
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November 22, 2024 |
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During 2023, we paid $
2023 |
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Distribution per Unit |
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Payment Date |
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First Quarter, 2023 |
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$ |
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May 30, 2023 |
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Second Quarter, 2023 |
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$ |
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August 25, 2023 |
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Third Quarter, 2023 |
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$ |
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November 27, 2023 |
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During 2023, we paid
Our fourth quarter distribution of $
The determination of the amount of future distributions on the Common Units, if any, to be declared and paid is at the sole discretion of the General Partner and will depend on our financial condition, earnings and cash flow from operations, the level of debt outstanding, the level of our capital expenditures, our future business prospects and other matters the General Partner deems relevant.
The following represents basic and diluted earnings (loss) per Common Unit upon the Reorganization (See Note 1) and corresponding issuance of
(in thousands, except per unit data) |
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|
Net (loss) |
|
|
Units |
|
|
(Loss) Income |
|
|||
2025 |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|||
Diluted |
|
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||
2024 |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
$ |
|
|
|
|
|
$ |
|
|||
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|||
Diluted |
|
|
$ |
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
2023 |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|||
Diluted |
|
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
All restricted units, totaling
Unit Incentive Plans
At the time of the public offering in January 2023, we adopted a new long-term incentive plan. Under the 2023 Long-Term Incentive Plan (the "LTIP"), the general partner may issue long-term equity-based awards to directors, officers and employees of our general partner or its affiliates, or to any consultants, affiliates of our general partner or other individuals who perform services for us. The LTIP provides for the grant, from time to time at the discretion of the Board or any delegate thereof, of cash awards, unit awards, restricted units, phantom units, unit options, unit appreciation rights, distribution equivalent rights and other unit-based awards. As of December 31, 2025,
18
In January 2026, the Compensation Committee of the Board (the "Compensation Committee") approved grants of
Additionally, in January 2026, the Compensation Committee approved grants of
In conjunction with the announcement that Brent W. Clum and Gary D. Simpson were named Co-Chief Executive Officers of the General Partner, effective April 1, 2025, on March 31, 2025, the Compensation Committee granted the following awards, effective April 1, 2025, to each of Mr. Clum and Mr. Simpson: (i)
In January 2025, the Compensation Committee approved grants of
Additionally, in January 2025, the Compensation Committee approved grants of
In January 2024, the Compensation Committee approved grants of
Additionally, in January 2024, the Compensation Committee approved grants of
In connection with the offering, the Board approved grants of
19
units will be settled in common units and distribution equivalents will be paid to holders of outstanding phantom units, including unvested phantom units.
|
Grant Date |
|
|
Number of |
|
||
Outstanding at December 31, 2022 |
$ |
|
|
|
|
||
Grants |
$ |
|
|
|
|
||
Forfeitures |
$ |
|
|
|
( |
) |
|
Outstanding at December 31, 2023 |
$ |
|
|
|
|
||
Vesting |
$ |
|
|
|
( |
) |
|
Grants |
$ |
|
|
|
|
||
Outstanding at December 31, 2024 |
$ |
|
|
|
|
||
Vesting |
$ |
|
|
|
( |
) |
|
Grants |
$ |
|
|
|
|
||
Outstanding at December 31, 2025 |
$ |
|
|
|
|
||
We recognized non-cash restricted unit compensation expense of $
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 9, the Partnership recognizes the impact of derivative gains and losses as a component of revenue.
|
|
Year-Ended December 31, 2025 |
|
|||||||||||||
|
|
Oil and |
|
|
Natural gas |
|
|
Natural gas |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Revenue from customers |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unrealized gain (loss) on derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized gain (loss) on derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Year Ended December 31, 2024 |
|
|||||||||||||
|
|
Oil and |
|
|
Natural gas |
|
|
Natural gas |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Revenue from customers |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unrealized gain (loss) on derivatives |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Realized gain (loss) on derivatives |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Total Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Year Ended December 31, 2023 |
|
|||||||||||||
|
|
Oil and |
|
|
Natural gas |
|
|
Natural gas |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Revenue from customers |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unrealized gain (loss) on derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized gain (loss) on derivatives |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Total Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
20
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 or at the outlet of a gathering system under market-sensitive contracts at an index price, net of pricing differentials. The Partnership recognizes revenue upon the satisfaction of the performance obligation which occurs at the point in time when control of the product transfers to a customer, in an amount that reflects the consideration to which the Partnership expects to be entitled in exchange for the product.
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.
Accrued liabilities consist of the following at December 31, 2025 and 2024:
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Accrued production expenses |
|
$ |
|
|
$ |
|
||
Accrued capital expenditures |
|
$ |
|
|
$ |
|
||
Accrued bonuses |
|
$ |
|
|
$ |
|
||
Accrued ad valorem taxes |
|
$ |
|
|
$ |
|
||
Accrued severance taxes |
|
$ |
|
|
$ |
|
||
Other accrued liabilities |
|
$ |
|
|
$ |
|
||
Total accrued liabilities |
|
$ |
|
|
$ |
|
||
21
We have
The Partnership's Chief Operating Decision Maker ("CODM") is a group of executives, including the Co-Chief Executive Officer and the Co-Chief Executive Officer and Chief Financial Officer. The CODM assesses performance for the E&P segment and decides how to allocate resources based on cash provided by operations which is also reported on the statement of cash flows as consolidated cash provided by operations. The measure of segment assets is reported on the balance sheet as total consolidated assets.
The CODM uses net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the E&P segment or to pay distributions.
Selected financial information related to our
(in thousands) |
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
REVENUES |
|
|
|
|
|
|
|
|
|
|||
Oil and condensate |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Natural gas liquids |
|
|
|
|
|
|
|
|
|
|||
Gas |
|
|
|
|
|
|
|
|
|
|||
Total Revenues |
|
|
|
|
|
|
|
|
|
|||
EXPENSES |
|
|
|
|
|
|
|
|
|
|||
Production |
|
|
|
|
|
|
|
|
|
|||
Exploration |
|
|
|
|
|
|
|
|
|
|||
Taxes, transportation and other |
|
|
|
|
|
|
|
|
|
|||
Depreciation, depletion, and amortization |
|
|
|
|
|
|
|
|
|
|||
Impairment of long-lived assets |
|
|
|
|
|
|
|
|
|
|||
Accretion of discount in asset retirement obligation |
|
|
|
|
|
|
|
|
|
|||
General and administrative |
|
|
|
|
|
|
|
|
|
|||
Total Expenses |
|
|
|
|
|
|
|
|
|
|||
OPERATING LOSS |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
OTHER INCOME |
|
|
|
|
|
|
|
|
|
|||
Other income |
|
|
|
|
|
|
|
|
|
|||
SEGMENT (LOSS) INCOME FROM OPERATIONS |
|
|
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation: |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other Expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
NET (LOSS) INCOME |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
CASH PROVIDED BY OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|||
The statement of cash flows excludes the following non-cash transactions:
22
Interest payments totaled $
We have evaluated subsequent events through the date the financial statements were available to be issued. See Notes 2 and 12.
All of our operations are directly related to oil and gas producing activities located in the United States 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.
Costs Incurred Related to Oil and Gas Producing Activities
The following table summarizes costs incurred whether such costs are capitalized or expensed for financial reporting purposes for each year:
(in thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Acquisition of proved properties, net |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Acquisition of unproved properties |
|
|
|
|
|
|
|
|
|
|||
Development |
|
|
|
|
|
|
|
|
|
|||
Asset retirement obligation incurred upon acquisition |
|
|
|
|
|
|
|
|
|
|||
Total costs incurred |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Proved Reserves
Our proved oil and gas reserves have been estimated by independent petroleum engineers. Proved reserves are those quantities of oil and natural gas, which, by analysis of geoscience and engineering data can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs and under existing economic conditions, operating methods, and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain. Proved developed reserves are the quantities expected to be recovered through existing wells with existing equipment and operating methods in which the cost of the required equipment is relatively minor compared with the cost of a new well. Due to the inherent uncertainties and the limited nature of reservoir data, such estimates are subject to change as additional information becomes available. The reserves actually recovered and the timing of production of these reserves may be substantially different from the original estimate. Revisions result primarily from new information obtained from development drilling and production history and from changes in economic factors. Proved reserves exclude volumes deliverable to others under production payments or retained interests.
Standardized Measure
The standardized measure of discounted future net cash flows and changes in such cash flows are prepared using assumptions required by the Financial Accounting Standards Board. Such assumptions include the use of 12-month average prices for oil and gas, based on the first-day-of-the-month price for each month in the period, and year end costs for estimated future development and production expenditures to produce year-end estimated proved reserves. Discounted future net cash flows are calculated using a
Estimated well abandonment costs, net of salvage values, are deducted from the standardized measure using year-end costs and discounted at the
The standardized measure does not represent management’s estimate of our future cash flows or the value of proved oil and natural gas reserves. Probable and possible reserves, which may become proved in the future, are excluded from the calculations.
23
Furthermore, prices used to determine the standardized measure are influenced by supply and demand as effected by recent economic conditions as well as other factors and may not be the most representative in estimating future revenues or reserve data.
Proved Reserves |
|
Oil |
|
|
Natural Gas |
|
|
Gas |
|
|
Oil |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Extensions, additions and discoveries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revisions |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Production |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Purchase in place |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Extensions, additions and discoveries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revisions |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Production |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Purchase in place |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Extensions, additions and discoveries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revisions |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Production |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Purchase in place |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proved Developed Reserves |
|
Oil |
|
|
Natural Gas |
|
|
Gas |
|
|
Oil |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proved Undeveloped Reserves |
|
Oil |
|
|
Natural Gas |
|
|
Gas |
|
|
Oil |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
In 2025, the
In 2024, the
24
In 2023, the
Standardized Measure of Discounted Future |
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
(in thousands) |
|
|
|
|
|
|
|
|
|
|||
Future cash inflows |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Future costs: |
|
|
|
|
|
|
|
|
|
|||
Production |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Development |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Future income tax |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Future net cash flows |
|
|
|
|
|
|
|
|
|
|||
10% annual discount |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Standardized measure |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Changes in Standardized Measure of |
|
For the Year |
|
|||||||||||||
|
|
2025 |
|
|
|
|
2024 |
|
|
|
|
2023 |
|
|||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Standardized measure, beginning of period |
|
$ |
|
|
|
|
$ |
|
|
|
|
$ |
|
|||
Revisions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Prices and costs |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
( |
) |
Quantity estimates |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
( |
) |
Income tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Future development costs |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
( |
) |
|
Accretion of discount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Production rates and other |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
|
|
Net revisions |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
( |
) |
Additions and discoveries |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
( |
) |
Production |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
( |
) |
Development costs |
|
|
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Purchases in place |
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Net change |
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( |
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Standardized measure, December 31 |
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$ |
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(a) |
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$ |
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(b) |
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$ |
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Price and cost revisions are primarily the net result of changes in prices, based on beginning of year reserve estimates. Quantity estimate revisions are primarily the result of the extended economic life of proved reserves and proved undeveloped reserve additions attributable to increased development activity.
Average realized oil prices used in the estimation of proved reserves and calculation of the standardized measure were $
25
$
26
Part IV
Item 15. Exhibits, Financial Statement Schedules
3.1 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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Description of Common Units (incorporated by reference to Exhibit 4.1 to Annual Report on Form 10-K filed on March 31, 2023) |
10.1# |
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Credit Agreement, among MorningStar Partners, L.P., the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, dated November 1, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1/A filed on January 18, 2023) |
10.2# |
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Amendment No. 1 to the Credit Agreement and Borrowing Base Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1/A filed on January 18, 2023) |
10.3# |
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Amendment No. 2 to the Credit Agreement (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed on August 8, 2023) |
10.4 |
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Amendment No. 3 to the Credit Agreement (incorporated by reference to Exhibit 10.4 to Annual Report on Form 10-K filed on March 5, 2024) |
10.5^ |
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Amendment No. 4 to the Credit Agreement (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on August 30, 2024) |
10.6 |
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Amendment No. 5 and Borrowing Base Agreement, dated July 31, 2025, among TXO Partners, LP., the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to Form 8-K filed August 5, 2025) |
10.7 |
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TXO Partners GP, LLC 2023 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed on January 31, 2023) |
10.8 |
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Form of 2023 Long-Term Incentive Plan Phantom Unit Agreement (Directors) (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K filed on January 31, 2023) |
10.9 |
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Form of 2023 Long-Term Incentive Plan Phantom Unit Agreement (Executives) (incorporated by reference to Exhibit 10.5 to Current Report on Form 8-K filed on January 31, 2023) |
10.10#^ |
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Limited Liability Company Agreement of Cross Timbers Energy, LLC, dated as of June 13, 2013, by and among XTO Energy Inc., XH LLC, HHE Energy Company and TXO Partners, L.P. (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1/A filed on January 18, 2023) |
10.11 |
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Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on January 31, 2023) |
10.12 |
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Registration Rights Agreement, dated as of August 30, 2024, among TXO Partners, L.P., EMEP Acquisitions, LLC, and VR4-ELM, LP (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on August 30, 2024)
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27
10.13 |
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TXO Partners GP, LLC Executive Severance Plan (incorporated by reference to Exhibit 10.13 to Annual Report on Form 10-K filed on February 26, 2026) |
19.1# |
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Insider Trading Policies and Procedures (incorporated by reference to Exhibit 19.1 to Annual Report on Form 10-K filed on March 4, 2025) |
21.1 |
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List of Subsidiaries of TXO Partners, L.P. (incorporated by reference to Exhibit 21.1 to Annual Report on Form 10-K filed on February 26, 2026) |
23.1 |
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Consent of Cawley, Gillespie & Associates (incorporated by reference to Exhibit 23.1 to Annual Report on Form 10-K filed on February 26, 2026) |
23.2 |
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Consent of KPMG LLP (incorporated by reference to Exhibit 23.2 to Annual Report on Form 10-K filed on February 26, 2026) |
31.1* |
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31.2* |
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32.1** |
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Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 |
32.2** |
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Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 |
97.0 |
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TXO Partners, L.P. Policy for Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97.0 to Annual Report on Form 10-K filed on March 5, 2024) |
99.1 |
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Report of Cawley, Gillespie & Associates of reserves as of December 31, 2025 (incorporated by reference to Exhibit 99.1 to Annual Report on Form 10-K filed on February 26, 2026) |
* Filed herewith.
** Furnished herewith.
# The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
^ Portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1933, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fort Worth, State of Texas, on March 25, 2026.
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TXO Partners, L.P. |
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By: |
TXO Partners GP, LLC, its general partner |
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By: |
/s/ Brent W. Clum |
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Name: Brent W. Clum Title: Co-Chief Executive Officer and Chief Financial Officer |
Pursuant to the requirements of the Securities Act of 1933, as amended, this report has been signed below by the following persons in the capacities and the dates indicated.
Name |
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Title |
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Date |
/s/ Bob R. Simpson |
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Chairman |
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March 25, 2026 |
Bob R. Simpson |
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/s/ Brent W. Clum |
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Co-Chief Executive Officer, Chief Financial Officer and Director (principal financial officer) |
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Brent W. Clum |
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March 25, 2026 |
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/s/ Gary D. Simpson |
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Co-Chief Executive Officer and Director (principal executive officer) |
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Gary D. Simpson |
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March 25, 2026 |
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/s/ Scott T. Agosta |
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Chief Accounting Officer (principal accounting officer) |
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Scott T. Agosta |
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March 25, 2026 |
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/s/ Phillip R. Kevil |
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Director |
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Phillip R. Kevil |
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March 25, 2026 |
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/s/ Keith A. Hutton |
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Director |
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Keith A. Hutton |
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March 25, 2026 |
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/s/ Rick J. Settle |
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Director |
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Rick J. Settle |
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March 25, 2026 |
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/s/ J. Luther King, Jr. |
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Director |
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J. Luther King, Jr. |
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March 25, 2026 |
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/s/ William H. Adams III |
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Director |
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William H. Adams III |
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March 25, 2026 |
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/s/ Lawrence S. Massaro |
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Director |
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Lawrence S. Massaro |
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March 25, 2026 |
29
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gary D. Simpson, certify that:
Date: March 25, 2026 |
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By: |
/s/ Gary D. Simpson |
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Gary D. Simpson |
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Co-Chief Executive Officer TXO Partners GP, LLC, its general partner |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Brent W. Clum, certify that:
Date: March 25, 2026 |
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By: |
/s/ Brent W. Clum |
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|
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Brent W. Clum |
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|
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Co-Chief Executive Officer and Chief Financial Officer TXO Partners GP, LLC, its general partner |
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:
Date: March 25, 2026 |
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By: |
/s/ Gary D. Simpson |
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|
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Gary D. Simpson |
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Co-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.
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:
Date: March 25, 2026 |
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By: |
/s/ Brent W. Clum |
|
|
|
Brent W. Clum |
|
|
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Co-Chief Executive Officer 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.