10-Q · May 4, 2026
TXO Partners posted a notable decline in Q1 2026 revenue to $28.3 million, down 66% year-over-year, primarily due to increased losses on hedging activities totaling $91.3 million. The company reported a substantial net…
Earnings analysis · 10-Q
TXO earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
TXO delivered a sharp Q2 recovery, with revenue up 68% year over year to $150.9 million and operating income of $57.7 million versus a $3.7 million loss; the calculated operating margin improved to 38.2% from -4.1%. The…
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TXO delivered a sharp Q2 recovery, with revenue up 68% year over year to $150.9 million and operating income of $57.7 million versus a $3.7 million loss; the calculated operating margin improved to 38.2% from -4.1%. The turnaround was driven by Williston production and a 58% increase in unhedged oil prices, alongside lower per-Boe production and G&A costs. Liquidity improved through Cross Timbers asset-sale proceeds and lower debt, although the first half still recorded an $80.2 million hedging loss and management identifies continued commodity-price, inflation, and variable-rate debt risks.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Operating margin
- 38.22%
What stood out
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Revenue sharply rebounds to $150.9M
Q2 revenue rose $61.0 million, or 68%, year over year to $150.9 million from $89.9 million. Sequentially, revenue rebounded from $28.3 million in Q1, aided by higher oil pricing, Williston volumes and favorable quarterly derivative marks.
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Profitability turns materially positive
Operating income was $57.7 million, versus a $3.7 million operating loss a year earlier; the resulting operating margin was 38.2%, versus -4.1% in Q2 2025. Net income was $60.8 million, compared with a $0.1 million loss.
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Williston acquisition drives volume growth
Production increased 228 MBoe year over year to 2,596 MBoe in Q2. Williston acquisitions added 492 MBoe, partly offset by 201 MBoe lost through the Cross Timbers sale and natural declines in the San Juan and Permian basins.
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Cash generation and distribution capacity improve
Operating cash flow increased to $49.1 million in Q2 from $26.9 million a year earlier. Development costs were $15.2 million, while management's Cash Available for Distribution rose to $34.6 million from $18.8 million.
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Liquidity and working capital improve
Credit Facility debt declined to $263.0 million at June 30 from $284.0 million at December 31, while availability increased to $147.0 million from $126.0 million. Net working capital improved to positive $22.1 million from negative $71.8 million.
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Asset-sale proceeds support capital structure
The partnership declared a $0.40-per-unit Q2 distribution. It also realized $100.3 million of six-month property-sale proceeds; after quarter-end, it received a $95.0 million Cross Timbers distribution, used $70.0 million for the deferred White Rock payment, and applied the remainder to debt reduction.
What to watch
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No risk-factor update; hedge volatility remains
There were no material changes to risk factors versus the 2025 10-K. However, commodity-hedge exposure remains substantial: derivative contracts were a net $17.2 million liability at June 30, and a hypothetical 10% commodity-price move would change fair value by approximately $29.2 million.
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First-half hedge losses remain a drag
Despite Q2's $1.6 million net hedging gain, first-half hedging activity produced $80.2 million of net losses, including $44.3 million of realized losses. This materially limited the benefit of higher production and a 27% increase in unhedged oil prices.
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Leverage and floating-rate interest exposure
Variable-rate Credit Facility borrowings were $263.0 million at June 30 and carried a 7.4% weighted-average rate in the first half. A 1% rate change would alter annual interest expense by approximately $2.6 million; Q2 interest expense was $5.6 million, up 117% year over year.
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Gas-price weakness and cost inflation
Natural-gas pricing remains a headwind: the Q2 unhedged natural-gas price fell 47% to $1.06 per Mcf from $1.99 per Mcf, reducing quarterly revenue by $6.3 million. Management expects commodity markets to remain volatile and expects continuing inflationary cost pressure.
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Capex and distribution depend on cash flow
The company expects about $80.0 million of 2026 development spending after incurring $33.1 million in the first half. Management notes it may reduce capex and/or distributions if operating cash flow does not meet expectations, and the $0.40 quarterly distribution may vary materially or be zero.
Management's outlook
The 10-Q provides no revenue or EPS guidance. Management expects to spend approximately $80.0 million on 2026 drilling, completion, recompletion and facilities costs and expects, based on current commodity prices and drilling results, to fund distributions, debt obligations and the 2026 development program from operating cash flow and Credit Facility borrowings.
Earlier filings 4
10-K · February 26, 2026
TXO's 2025 10-K highlights material reserve and production growth following the 2025 WRE acquisition (total proved reserves 129,110.1 MBoe) and a higher PV-10 ($1,158.9 million). Management plans a ~ $70 million 2026…
10-Q · August 6, 2024
TXO reported Q2 revenue of $57,308 (thousands), down from $60,472 in Q2 2023 and down vs Q1 2024, while recording an operating loss of $(10,107) and a small positive net income of $2,808 (diluted EPS $0.09). The balance…
10-K · March 5, 2024
TXO presents a distribution-first strategy focused on acquiring and optimizing long-lived, low-decline conventional oil, gas and NGL assets concentrated in the Permian and San Juan basins. As of December 31, 2023 it…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.