TXO Partners' Third-Quarter Revenue Reverses After Hedge Losses
Cash available for distribution turned negative at $2.7 million as development costs reached $39.0 million.
TXO Partners, L.P. (TXO) reported third-quarter revenue of $55.1 million, a $95.8 million sequential drop from $150.9 million in the second quarter, after a $61.0 million year-over-year increase in that prior period.
The independent oil and natural gas partnership posted a $32.1 million net loss, reversing $60.8 million of net income in the second quarter. Operating results flipped to a $38.6 million operating loss from $57.7 million of operating income.
Hedging was the swing. The company recorded net hedging losses of $57.9 million in the three months ended September 30, 2026, including $39.4 million of unrealized losses and $22.4 million of realized losses, after net hedging gains of $1.6 million in the second quarter. Revenue decreased $68.3 million due to the change in results from hedging activity, from net gains of $10.3 million a year earlier to those net losses.
Oil and condensate revenue collapsed to $29.8 million from $130.8 million in the prior quarter. Oil sales were 1,088 MBbls, and the average oil price excluding derivatives was $84.20 a barrel versus $97.28 a barrel. Including realized derivatives, the oil price was $63.62 a barrel.
Natural gas revenue rose to $15.0 million from $9.4 million on 5,227 MMcf of sales, with the average gas price excluding derivatives at $2.14 a Mcf versus $1.06 a Mcf. NGL revenue was $10.2 million on 373 MBbls sold at $27.39 a barrel excluding derivatives.
Production volumes fell to 2,332 MBoe, or 25 MBoe a day, from 2,596 MBoe, or 29 MBoe a day, in the second quarter. The company attributed a 293 MBoe year-over-year decline primarily to the sale of Cross Timbers Energy assets and natural decline in the San Juan Basin, partially offset by increased production in the Williston Basin and Permian Basin.
Adjusted EBITDAX declined to $41.3 million from $55.0 million in the prior quarter. Cash available for distribution turned negative at $2.7 million from $34.6 million, as development costs rose to $39.0 million from $15.2 million.
Production expenses were $43.7 million, or $18.73 a Boe. The company said Cross Timbers sales cut costs $10.9 million, largely offset by Williston production and higher maintenance. Taxes, transportation and other were $18.4 million, or $7.90 a Boe. Depreciation, depletion and amortization was $24.2 million, or $10.39 a Boe; the company cited higher-rate Williston DD&A of $5.6 million, partly offset by Cross Timbers sales and San Juan declines. General and administrative expenses were $3.9 million, or $1.69 a Boe, attributed to lower professional fees.
Other income was $11.7 million, driven by $4.1 million of higher CO2 and plant income from the absence of third-party pipeline disruptions and $2.0 million of lease bonus on term lease assignment. Interest expense was $5.5 million.
In July 2026 the company began winding down Cross Timbers Energy and received an initial $95.0 million distribution, using part of it to pay the $70.0 million deferred White Rock Energy payment due July 31, 2026, with the remainder applied to Credit Facility debt.
The company said it expects crude oil and natural gas markets to remain volatile, with revenue, profitability and future growth highly dependent on commodity prices.
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