Newsletter Nov 25, 2025

MARKET PULSE
Quarterly Earnings Round 2 — What the Latest E&P Results Tell Us

As the second wave of quarterly earnings rolls in, U.S. E&Ps continue to reinforce the same themes we highlighted last week: capital discipline, stronger-than-expected well performance, steady production guidance, and a focus on free cash flow rather than growth for growth’s sake.

Across the board, companies are holding capex flat, tightening operating costs, and driving more production out of fewer rigs — all while returning capital to shareholders. Below is a snapshot of the most meaningful updates from the last two weeks.

Company Highlights From the Latest Earnings Releases

• Marathon Oil Delivered strong oil volumes and reiterated a “returns-first” framework even amid lower pricing.

  • Continued share repurchases and disciplined capex.

• Expand Energy Gave a bullish gas demand outlook tied to LNG growth.

  • Held capex at the low end of guidance while improving well productivity in the Haynesville and Marcellus.

• EQT Corporation Beat production guidance and lowered operating costs.

  • Reinforced a strategy focused on scale, efficiency, and expanding margins.

• Range Resources Delivered consistent results with strong cash margins, driven by improved NGL realizations.

  • Reinforced its strategy of low-decline, low-cost gas inventory.

• Matador Resources Posted higher-than-expected Delaware Basin volumes.

  • Capex held flat despite service cost inflation — strong operational execution.

• Permian Resources Announced record quarterly production and increased free cash flow forecasts for 2025.

  • Continued to emphasize low-cost Delaware Basin growth.

• Diamondback Energy Reaffirmed forward capex discipline while maintaining strong oil volumes.

  • Positioned itself for continued consolidation — a theme playing out across the Permian.

    

Takeaway for Royalty Investors

This quarter’s messaging is consistent: flat-to-modest growth on tight budgets, better well performance, and strong free cash flow. For royalty owners, that environment supports stable production, predictable distributions, and less volatility — especially as larger operators consolidate acreage and streamline development plans.

ROYALTY SPOTLIGHT 
What Makes a High-Quality Mineral Interest?

1. Strong Operator Presence
High-quality minerals sit in development units controlled by capable, well-capitalized operators. Companies like EOG, Devon, SM Energy, Diamondback, and Aethon consistently demonstrate superior drilling results, cost control, and development pace — critical ingredients for reliable royalty income.

2. Multi-Zone / Multi-Well Inventory
The best mineral positions include stacked pay zones and room for dozens of future wells. This builds long-term visibility: even as older wells decline, new pads or recompletions refresh the cash flow stream.

3. Attractive Basin Economics
Premium minerals live where well economics stay competitive through the cycle — low breakevens, strong pressures, and consistent EURs. Plays like the Permian, Western Haynesville, and Appalachia continue to outperform.

4. Active Development Environment
A high-quality mineral interest is located where drilling is happening today. Proximity to rigs, frac crews, and infrastructure often signals sustained value.

By focusing on these fundamentals, PetroPeak acquires mineral interests that generate durable, predictable income — positioning our investors at the most advantageous point in the energy value chain.

BASIN FOCUS
Portfolio High-Grading and the Rebirth of Exploration

Across the oil and gas sector, companies are making bold moves to reshape their portfolios — not for sheer volume growth, but to position themselves for the next decade of returns. Recent M&A, strategic divestitures, and renewed exploration spending all point to the same emerging trend: a systematic high-grading of assets as operators concentrate capital on their most advantaged basins.

A&D Activity Signals Strategic Recalibration

The most notable example is the SM Energy–Civitas all-stock merger, creating a multi-basin independent with scale across the Permian and DJ. Rather than expanding into new terrains, the combined company now controls deeper inventory in high-margin zones — exactly the type of repositioning that supports durable free cash flow and steady development programs.

Similarly, Baytex Energy’s divestiture of its Eagle Ford assets marks a decisive shift toward its Canadian growth engines in the Montney and Duvernay. By offloading mature South Texas production, Baytex frees capital for long-cycle, liquids-rich drilling that better aligns with its cost structure and long-term outlook.

Exploration Isn’t Dead — It’s Quietly Reemerging

In a recent Hart Energy interview, executives from Exxon and Chevron emphasized that exploration will take a larger share of future capital budgets, reversing a decade-long decline. Both companies have hinted at growing exploration commitments offshore Guyana, Africa, and the Gulf of Mexico — not to chase frontier risk, but because high-return barrels increasingly lie outside crowded shale basins.

Meanwhile, Continental Resources made headlines by securing a 90% concession in Argentina’s Vaca Muerta play, one of the world’s most promising unconventional resources. The move highlights a willingness among top-tier operators to look beyond the U.S. for scalable, long-life assets.

Is This the Start of a New Trend?

Yes — and the drivers are clear:

• Inventory depth is shrinking in many North American shale basins.

• Returns are increasingly tied to quality, not quantity of drilling locations.

• Global LNG expansion is influencing capital allocation toward gas-rich and international plays.

• Investors are rewarding companies for capital discipline and strategic repositioning, not rig count growth.

This makes A&D and exploration more selective — and more meaningful — than in the last cycle. Companies aren’t buying scale for scale’s sake; they’re buying (or selling) better rocks, longer runways, and higher-margin development paths.

The Royalty Edge

For royalty owners, this shift is constructive. As operators focus on their highest-quality acreage, the wells drilled on those minerals are more economic, more resilient at lower prices, and more likely to generate reliable royalty income over time. High-graded portfolios mean high-graded drilling schedules — and royalty owners benefit directly from that discipline.

INVESTOR ADVANTAGE 
Why Operator Portfolio High-Grading Benefits Royalty Owners

As consolidation reshapes the oil and gas sector, operators are becoming far more selective about where they spend capital. Whether through mergers like SM–Civitas, divestitures such as Baytex exiting the Eagle Ford, or major commitments like Continental’s Vaca Muerta concession, one theme is unmistakable: companies are high-grading their portfolios — focusing capital only on their most productive, highest-return acreage.

For royalty owners, this shift is more than a corporate strategy—it’s an income advantage.

When operators optimize their portfolios, capital naturally flows toward the strongest drilling locations:

• Lower breakevens

• Higher EURs

• Thicker, more continuous reservoirs

• Better takeaway access

• More predictable development schedules

This means that the wells most likely to be drilled — and re-developed — sit on the highest-quality rock. And royalties tied to top-tier acreage directly benefit from this concentration of capital.

In a high-graded portfolio, operators rarely waste dollars on marginal wells. Instead, they drill locations that maximize free cash flow, production stability, and operational efficiency — all of which support consistent, resilient royalty payments.

This trend becomes even more powerful during periods of commodity volatility. When prices soften, operators typically retreat to core locations first. That means royalty owners positioned in these high-graded core areas often see continued drilling and steady cash flow, even as less competitive acreage goes quiet.

At PetroPeak, our acquisition strategy is built for exactly this environment: we target mineral interests in basins and DSUs where leading operators are focusing their capital today and where their future drilling inventory remains deepest.

Because when operators high-grade, royalty owners get the benefit of their best wells — not their last ones.

LOOKING AHEAD 
Positioning Your Portfolio for 2026

As we approach year-end, many investors begin reassessing their portfolios — trimming underperformers, locking in gains, and reallocating to assets better positioned for the year ahead. With volatility still elevated in equities and interest rates uncertain, 2025 is closing out as a year where alternative income streams became more valuable than ever.

Looking into 2026, adding real, asset-backed cash flow through oil and gas royalties can strengthen a portfolio with:

• Passive, inflation-resistant income

• Low correlation to public markets

• Exposure to America’s most productive energy basins

• Tax advantages, including depletion allowance

As operators continue to high-grade drilling plans and consolidate around their best acreage, royalty owners stand to benefit from more efficient development and more stable long-term production.

If you’re evaluating ways to rebalance before year-end, this is the perfect time to explore how royalty ownership can add durable, high-quality income to your strategy — and set up a stronger, more resilient 2026.

Ways to Connect with Us:
Email: [email protected] 
Website: www.petropeakinvest.com
Schedule a Call: Book a time here
Follow us on LinkedIn and socials: PetroPeak Investments LLC, @petropeakinvest

Whether you’re exploring royalties for the first time or looking to deepen your exposure, PetroPeak can guide you through every step — from understanding the asset class to participating in high-quality, cash-flowing deals.

Because at PetroPeak, it’s about more than just investing. It’s about building long-term income you can count on.

Newsletter Subscribe