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SEC filingRevenue increased modestly year-over-year, but net income declined sharply due to the volatility of commodity prices and derivative accounting — reflecting the ongoing challenge of managing earnings stability amid persistent natural gas price weakness in the Permian Basin.
Revenue for the quarter totaled $1.4 billion, an increase of 85.0% compared to the prior-year period. This growth was driven by additional production from wells placed online or acquired since the first quarter of 2025. These oil volume increases were partially offset by normal production declines across existing wells — a dynamic that underscores the importance of sustained development activity to maintain output. The increase in oil production reflects execution against our capital program, while higher NGL and natural gas volumes sold contributed meaningfully to revenue, even as pricing pressures persisted.
Throughout 2025 and 2026, natural gas prices in the Permian Basin have been adversely impacted by low demand resulting from pipeline capacity constraints, maintenance events, and elevated production levels. This environment contributed to significant pricing volatility, which directly affected realized revenue and earnings. Operating income declined 7.4% year-over-year to $467.2 million. This decrease was primarily attributable to higher NGL and natural gas volumes sold, which increased plant processing fees and gathering costs. At the same time, LOE per Boe decreased — a result of increased production volumes with only a limited increase in nominal LOE, demonstrating continued progress on cost efficiency.
Net income declined sharply to $43.6 million, representing an 86.8% decrease versus the prior-year quarter. Diluted EPS fell to $0.05, down 88.6% year-over-year. This pronounced decline highlights the sensitivity of bottom-line results to non-cash items, particularly derivative gains and losses under mark-to-market accounting, as well as the broader impact of commodity price swings. Our future cash flows remain subject to a number of variables, including oil and natural gas prices, which have been and will likely continue to be volatile.
Net cash provided by operating activities totaled $815.1 million, supporting disciplined capital allocation. While this represents a decline from $898.0 million in the prior-year quarter, it remained sufficient to fund core operational and strategic priorities without drawing on debt facilities. Management has emphasized that achieving investment-grade ratings supports reduced interest expense, improved access to capital markets, and enhanced liquidity — reinforcing the strength of the balance sheet and long-term financial flexibility. Pricing for oil, NGLs, and natural gas has been volatile and unpredictable, and we expect this volatility to continue in the future.