Outlook for 14.8%-Yielding Mach Natural Resources LP Bullish
February 5, 2025
Mach Natural Resources Pays Reliable Dividend
In the opening days of his first week in office, President Donald Trump took big steps to reshape the country’s energy policies. This included halting permits for onshore and offshore wind developments and resuming oil drilling leases along the U.S. coastline and in the Arctic. He also declared a national energy emergency, giving him sweeping executive powers to influence the energy sector.
The rollback of green energy policies and focus on domestic and oil and gas production are expected to lead to lower energy costs for Americans.
While energy bulls might see lower energy costs and oil prices as a negative, there is an upside. In 2025 and 2026, oil production is expected to hit an all-time high.
The U.S. Energy Information Administration (EIA) predicts that U.S. crude oil production will hit 13.5 million barrels per day in 2025 and 13.6 million barrels per day in 2026. The benchmark price for West Texas Intermediate is expected to average $70.00 per barrel in 2025 and $62.00 per barrel in 2026. Of course, as we have seen, those predictions can change overnight. (Source: “Short-Term Energy Outlook,” EIA, January 14, 2025.)
While oil prices will continue to face pressure, lower oil prices paired with record production should help ease some of the volatility. One great small oil and gas exploration and production company to keep an eye on right now is Mach Natural Resources LP (NYSE:MNR).
Most investors probably aren’t all that familiar with Mach Natural Resources, but that’s probably because it only went public in October 2023.
Mach Natural Resources is focused on the acquisition, development, and production of oil, natural gas, and natural gas liquid (NGL) reserves in the Anadarko Basin region of Western Oklahoma, Southern Kansas, and the panhandle of Texas. (Source: “Investor Presentation,” Mach Natural Resources LP, November 11, 2024.)
In its transformative 2023, Mach successfully completed the largest initial public offering (IPO) for an exploration and production company since 2017. In December of that year, it closed on the $815.0-million acquisition of Paloma Anadarko Basin Assets in Oklahoma. (Source: “Mach Announces Acquisition of Paloma Assets,” Mach Natural Resources LP, November 13, 2023.)
In October 2024, Mach announced the closing of its acquisitions of certain interest in oil and gas properties in the Anadarko Basin of Kansas and Ardmore Basin of Oklahoma, worth $136.0 million. (Source: “Mach Natural Resources LP Announces Closing of Two Acquisitions,” Mach Natural Resources LP, October 1, 2024.)
The company actually has a long history of exploiting acquisition opportunities. Since its 2017 inception, it has closed 19 acquisitions, totaling $1.9 billion, accumulated approximately 1.1 million net acres, and more than 2,000 horizontal drilling locations.
Additional acquisitions should be on the horizon. Mach recently completed a public offering resulting in net proceeds of $129.0 million.
2025 Revenue Expected to Top $1.0 Billion
Mach Natural Resources hasn’t been around for a long time, but it’s been putting up some impressive numbers.
| Fiscal Year | Revenues |
| 2021 | $392.5 million |
| 2022 | $937.4 million |
| 2023 | $762.3 million |
| 2024 (estimate) | $974.02 million |
| 2025 (estimate) | $1.02 billion |
(Source: “Mach Natural Resources LP (MNR),” Yahoo! Finance, last accessed January 28, 2025.)
| Fiscal Year | Earnings Per Share |
| 2021 | $1.46 |
| 2022 | $5.44 |
| 2023 | $0.72 |
| 2024 (estimate) | $2.38 |
| 2025 (estimate) | $3.05 |
(Source: Yahoo! Finance, op. cit.)
Most recently, in the third quarter, Mach Natural Resources LP averaged total net production of 81.8 thousand barrels of oil equivalent per day (Mboe/d). This consisted of 23% oil, 53% natural gas, and 24% NGLs. (Source: “Mach Natural Resources LP Reports Third Quarter 2024 Results; Declares Quarterly Cash Distribution of $0.60 Per Unit; Provides 2025 Outlook,” Mach Natural Resources LP, November 12, 2024.)
The company’s average realized price for oil was $74.55 per barrel, $1.73 per thousand cubic feet (Mcf) of natural gas, and $22.61 per barrel of NGLs.
Mach reported third-quarter net income of $67.4 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $134.0 million. It also generated net cash provided by operating activities of $111.0 million.
Commenting on the results, Tom L. Ward, Mach’s chief executive officer, said, “Our quarterly results reflect Mach’s discipline to maintain a low leverage profile and consistently deliver cash distributions.”
“Our recent public equity offering highlights our commitment to financing acquisitions that are accretive to our distribution while protecting our fortress balance sheet. We remain on track to finish 2024 strong and carry our momentum and financial strength into next year.”
For 2025, management expects Mach Natural Resources to generate total net production of 78.2–83.1 Mboe/d.
Third Quarter Dividend of $0.60/Unit
Mach has only paid four dividends since going public in October 2023. Because its payout depends on earnings, it will fluctuate. In 2024, the company paid out $0.95 per unit in February, $0.70 per unit in May, and $0.90 per unit in August.
In November 2024, Mach declared a third-quarter dividend of $0.60 per unit, or $2.40 per share, for a forward yield of 14.79%.
MNR Units Outpacing S&P 500 in 2025
MNR units have been doing well since early December, rising more than 20%. Since Mach hasn’t announced anything over that period of time, we can presume that the increase is a result of both investor optimism and the now-former President Joe Biden’s sanctions on Russian oil and gas, which President Trump is expected to maintain.
As of January 28, MNR units are up:
- 9.7% over the last month
- 12.5% over the last three months
- 5.12% year to date
- 18.22% year over year
Despite the big near-term gains, I wouldn’t be surprised to see MNR units give up some ground over the coming weeks. After allowing the stock to make big double-digit gains, the current oil rally is expected to soften amid ongoing market uncertainties, including some involving China.
Lower oil and gas prices will probably result in MNR units slipping lower as well. With that said, the longer-term forecast for the stock remains robust, with Wall Street analysts providing a 12-month target range of $23.60 to $25.00 per share. At current prices, this points to potential gains of 32% to 46%.
Should MNR hit just its average price target of $23.60, this would put it in record territory.
Chart courtesy of StockCharts.com
The Lowdown on Mach Natural Resources LP
Mach Natural Resources is a great energy stock with growing positions in Western Oklahoma, Southern Kansas, and the panhandle of Texas. Thanks to its strong cash position, it is able to provide unitholders with a reliable dividend. In fact, management says its “focus is maximizing cash distributions.” Since its inception, Mach has distributed $962.0 million back to its members through December 10, 2024.
Over the years, the company has achieved strong rates on both return on capital employed and cash return on capital invested, highlighting its focus on cash returns.
Those cash returns are a big bonus to common unitholders and also the 14.46% of shares held by insiders. On top of that, 47 institutions hold a big 72.73% share of outstanding MNR shares. Some of the biggest institutional holders include Goldman Sachs Group Inc, Bank of America Corp, Morgan Stanley, and Citigroup Inc.
