Infinity Natural Resources (NYSE:INR) reported record production and adjusted EBITDAX in the third quarter of 2026, as higher oil output and increased use of its midstream system helped offset rising costs.
The company now expects full-year production at the high end of its initial guidance range and development capital spending at the low end, President and CEO Zack Arnold said on the earnings call. Both expectations remain within the original ranges.
Third-quarter oil production rose 79% from a year earlier to approximately 14,000 barrels per day. Total production averaged nearly 432 million cubic feet equivalent per day, double the prior-year level. Adjusted EBITDAX was nearly $138 million, supported by higher volumes and a favorable oil mix, Arnold said.
Midstream utilization helps lower costs
Executive Vice President and CFO Cary Baetz said controllable cash costs fell 8.2% sequentially to $1.45 per thousand cubic feet equivalent, while gathering, processing and transportation expenses per unit declined 12%. Adjusted EBITDAX per unit was $3.47, down from $3.62 in the second quarter.
Utilization of Infinity’s midstream system increased to approximately 35% from 29% in the second quarter, Baetz said. Arnold said about 70% of gross operated natural gas volumes already flow through the system, which has approximately 1 billion cubic feet per day of throughput capacity.
Infinity also expects its firm transportation capacity on the REX pipeline to improve natural gas realizations relative to local in-basin prices. Most of the company’s Ohio gas and more than half of its total gas production are sold into markets served by the pipeline, Arnold said.
During the question-and-answer session, Baetz estimated that the contract was providing a net price improvement of roughly 15% to 25% versus in-basin sales after transportation costs. He cautioned that the gap could narrow as in-basin differentials change. Arnold said Infinity can use the capacity for its own volumes or work with gas marketers to fill shortfalls, and expects to maximize its usage in 2027.
Guidance and development plans
Infinity narrowed its 2026 production guidance to an average of 355 million to 375 million cubic feet equivalent per day. It expects development capital expenditures, including drilling, completion and midstream spending, of $450 million to $475 million.
Arnold said the company shifted development toward oil and away from gas earlier in the year in response to oil prices. That change affected the timing of wells coming online: early-quarter turn-in-lines contributed throughout the third quarter, while fourth-quarter additions are expected toward the end of the period and will require time to ramp up.
“Anything that you’re seeing in a Q4 dip is just related to timing,” Arnold said, adding that individual well results continue to meet or exceed expectations.
For 2027, Baetz said investors could model a year broadly similar to 2026, while emphasizing that the budget remains under development. He said the company expects efficiencies to offset most service-cost inflation. Arnold identified diesel and stimulation costs as pressures and said Infinity is evaluating dual-fuel use on drilling rigs and frac fleets.
Ohio acquisition and Utica development
Arnold said Infinity expects to exceed its previously announced $25 million in 2026 cost and capital savings associated with its Ohio acquisition. Savings have come from using existing pads and infrastructure, redesigning wellbores and connecting the company’s water withdrawals to the acquired delivery system.
The company eliminated the need to construct two pads under the previous development plan, Arnold said. At one location, it drilled two U-turn wells from an existing pad instead of building a new pad and drilling four shorter wells. Infinity has also increased water and sand per foot in some completions on the acquired Utica assets, while seeking to execute the work faster than the prior operator, he said.
Separately, Infinity completed stimulation of a deep dry gas Utica well in mid-October and plans to bring it online. Baetz said the outlook for 2027 gas prices will influence the timing of subsequent wells. He said the opportunity includes approximately 66 locations, including the well already drilled.
Acquisition strategy and balance sheet
Infinity ended the quarter with net leverage of 1.1 times, approximately $900 million in liquidity and no borrowings outstanding under its revolving credit facility, Baetz said. The company’s borrowing base was reaffirmed in its fall bank redetermination.
Arnold said Infinity remains interested in acquisitions across the basin, including both oil and gas assets, but will evaluate opportunities conservatively. Deals should add long-term value and support production, inventory depth or midstream utilization, he said. Development remains the company’s first capital priority, followed by acquisitions and leasing.
About Infinity Natural Resources (NYSE:INR)
Infinity Natural Resources is an independent energy company focused on acquiring, developing and producing oil and natural gas. Its operations are concentrated in the Appalachian Basin, where it produces natural gas, natural gas liquids and oil from formations including the Utica and Marcellus shale. Based in Morgantown, West Virginia, the company’s assets are located in the Appalachian region, including Ohio and Pennsylvania. Infinity was founded in 2017, and Zack Arnold serves as its president and chief executive officer.
