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Mach Natural Resources LP

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Mach Natural Resources LP AI Insights

Informational only. Not investment advice.
As of 2025-12-09

Snapshot

  • Dividend yield of 18.5% TTM ($2.27/share) vs industry median $0.30 - 7.6x higher payout signals MLP distribution focus[Dividends Paid Per Share TTM]
  • Trading at 0.79x book value (P/B) with 18.3% ROE TTM - rare value/quality combo vs industry median ROE of 7.7%[Price to Book Ratio]
  • Impairment of $90.4M (TTM) is 1.7x industry median - asset writedowns signal reserve quality concerns[Impairment of Capital Assets]

Watch Triggers

  • Free Cash Flow TTM: Falls below $250M (current: $292M)Distribution coverage drops below 1.0x - would force distribution cut
  • Debt to Equity: Rises above 0.75 (current: 0.59)Signals balance sheet stress; may trigger covenant concerns
  • Impairment of Capital Assets: Exceeds $150M annualized (current: $90M)Reserve quality deterioration accelerating

Bull Case

Operating margin 28.6% TTM vs industry median 18% with FCF yield of 18.9% ($292M FCF / $1.55B market cap) - exceptional cash returns

Operating Margin TTMFree Cash Flow TTM

P/E of 7.2x vs industry median 12x and P/B of 0.79x - 40% discount on earnings, 21% discount to book value

PE RatioPrice to Book Ratio

Bear Case

EPS declined 38% over 3 years while net debt of $1.09B is 2.5x EBITDA (normalized $124M) - leverage amplifies commodity risk

EPS Growth 3YNet DebtNormalized EBITDA

CFO TTM only $106M vs $512M cash flow - 79% gap suggests working capital/timing issues; $540M net investing outflows

Cash Flow From Continuing Operating ActivitiesCash Flow TTM

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

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Forward Thesis

Distribution sustainability at risk if oil prices decline - 134% payout ratio vs FCF unsustainable

1-3ymed
  • FCF TTM $292M vs dividends paid ~$287M leaves no margin
  • Debt/equity 0.59 limits borrowing capacity
  • EPS declined 38% over 3 years
FCF TTM: $292M, Dividends: $2.27 x 126.5M unitsEPS Growth 3Y: -37.9%Interest expense TTM: $71.4M (25% of operating income)

Valuation Context

Caveats

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