Kimbell Royalty Partners Announces Third Quarter 2024 Results
Q3 2024 Run-Rate Daily Production of 23,846 Boe/d (6:1)
Activity on Acreage Remains Robust with 90 Active Rigs Drilling Representing 16%1 Market Share of U.S. Land Rig Count
Net Drilled But Uncompleted Wells ("DUCs") Increased by 34% Quarter Over Quarter Led by the Permian Basin
Record Lease Bonuses Confirming Increased Operator Activity
Announces Q3 2024 Cash Distribution of $0.41 per Common Unit
FORT WORTH, Texas, Nov. 7, 2024 /PRNewswire/ -- Kimbell Royalty Partners, LP (NYSE:KRP) ("Kimbell" or the "Company"), a leading owner of oil and natural gas mineral and royalty interests in over 129,000 gross wells across 28 states, today announced financial and operating results for the quarter ended September 30, 2024.
Third Quarter 2024 Highlights
Q3 2024 run-rate daily production of 23,846 barrels of oil equivalent ("Boe") per day (6:1)
Q3 2024 oil, natural gas and NGL revenues of $71.1 million
Q3 2024 net income of approximately $25.8 million and net income attributable to common units of approximately $17.4 million
Q3 2024 consolidated Adjusted EBITDA of $63.1 million
As of September 30, 2024, Kimbell's major properties2 had 7.84 net DUCs and net permitted locations on its acreage (5.13 net DUCs and 2.71 net permitted locations) compared to an estimated 5.8 net wells needed to maintain flat production
As of September 30, 2024, Kimbell had 90 rigs actively drilling on its acreage, representing 16% market share of all land rigs drilling in the continental United States as of such time
Announced a Q3 2024 cash distribution of $0.41 per common unit, reflecting a payout ratio of 75% of cash available for distribution; implies a 10.0% annualized yield based on the November 6, 2024 closing price of $16.38 per common unit; Kimbell intends to utilize the remaining 25% of its cash available for distribution to repay a portion of the outstanding borrowings under Kimbell's revolving credit facility
Conservative Balance Sheet with Net Debt to Trailing Twelve Month Consolidated Adjusted EBITDA of 0.8x
Kimbell affirms its financial and operational guidance ranges for 2024 previously disclosed in its Q4 2023 earnings release
Robert Ravnaas, Chairman and Chief Executive Officer of Kimbell Royalty GP, LLC, Kimbell's general partner (the "General Partner"), commented, "Activity on Kimbell's acreage remained strong with 90 rigs actively drilling on our acreage, which represents 16% market share of all rigs drilling in the lower 48. In addition, lease bonuses during the quarter were the highest in Kimbell's history and reflect increased operator interest in developing Kimbell's acreage. Line-of-site wells continue to be well above the number of wells needed to maintain flat production, giving us confidence in the resilience of our production as we wrap-up 2024. More specifically, the number of net DUCs increased by 34% quarter over quarter to 5.1 net DUCs, the second highest level in Kimbell's history, led by the Permian Basin.
"We are pleased to declare the Q3 2024 distribution of 41 cents per common unit. We estimate that approximately 100% percent of this distribution is expected to be considered return of capital and not subject to dividend taxes, further enhancing the after-tax return to our common unitholders."
Third Quarter 2024 Distribution and Debt Repayment
Today, the Board of Directors of the General Partner (the "Board of Directors") approved a cash distribution payment to common unitholders of 75% of cash available for distribution for the third quarter of 2024, or $0.41 per common unit. The distribution will be payable on November 25, 2024 to common unitholders of record at the close of business on November 18, 2024. Kimbell plans to utilize the remaining 25% of cash available for distribution for the third quarter of 2024 to pay down a portion of the outstanding borrowings under its secured revolving credit facility. Since May 2020 (excluding the expected upcoming pay-down from the remaining 25% of Q3 2024 projected cash available for distribution), Kimbell has paid down approximately $179.0 million of outstanding borrowings under its secured revolving credit facility by allocating a portion of its cash available for distribution for debt pay-down.
Kimbell expects that approximately 100% of its third quarter 2024 distribution should not constitute dividends for U.S. federal income tax purposes, but instead are estimated to constitute non-taxable reductions to the basis of each distribution recipient's ownership interest in Kimbell common units. The reduced tax basis will increase unitholders' capital gain (or decrease unitholders' capital loss) when unitholders sell their common units. The Form 8937 containing additional information may be found at www.kimbellrp.com under "Investor Relations" section of the site. Kimbell currently believes that the portion that constitute dividends for U.S. federal income tax purposes will be considered qualified dividends, subject to holding period and certain other conditions, which are subject to a tax rate of 0%, 15% or 20% depending on the income level and tax filing status of a unitholder for 2024. Kimbell believes these estimates are reasonable based on currently available information, but they are subject to change.
Financial Highlights
Kimbell's third quarter 2024 average realized price per Bbl of oil was $74.19, per Mcf of natural gas was $1.71, per Bbl of NGLs was $21.46 and per Boe combined was $31.57.
During the third quarter of 2024, the Company's total revenues were $83.8 million, net income was approximately $25.8 million and net income attributable to common units was approximately $17.4 million, or $0.22 per common unit.
Total third quarter 2024 consolidated Adjusted EBITDA was $63.1 million (consolidated Adjusted EBITDA is a non-GAAP financial measure. Please see a reconciliation to the nearest GAAP financial measures at the end of this news release).
In the third quarter of 2024, G&A expense was $9.5 million, $5.6 million of which was Cash G&A expense, or $2.57 per BOE (Cash G&A and Cash G&A per Boe are non-GAAP financial measures. Please see definition under Non-GAAP Financial Measures in the Supplemental Schedules included in this news release). Unit-based compensation in the third quarter of 2024, which is a non-cash G&A expense, was $3.8 million or $1.75 per Boe.
As of September 30, 2024, Kimbell had approximately $252.2 million in debt outstanding under its secured revolving credit facility, had net debt to third quarter 2024 trailing twelve month consolidated Adjusted EBITDA of approximately 0.8x and was in compliance with all financial covenants under its secured revolving credit facility. Kimbell had approximately $297.8 million in undrawn capacity under its secured revolving credit facility as of September 30, 2024.
As of September 30, 2024, Kimbell had outstanding 80,969,651 common units and 14,524,120 Class B units. As of November 7, 2024, Kimbell had outstanding 80,969,651 common units and 14,524,120 Class B units.
Production
Third quarter 2024 run-rate average daily production was 23,846 Boe per day (6:1), which was composed of approximately 52% from natural gas (6:1) and approximately 48% from liquids (30% from oil and 18% from NGLs).
Operational Update
As of September 30, 2024, Kimbell's major properties had 831 gross (5.13 net) DUCs and 527 gross (2.71 net) permitted locations on its acreage. In addition, as of September 30, 2024, Kimbell had 90 rigs actively drilling on its acreage, which represents an approximate 15.9% market share of all land rigs drilling in the continental United States as of such time.
Basin
Gross DUCs as of September 30, 2024(1)
Gross Permits as of September 30, 2024(1)
Net DUCs as ofSeptember 30, 2024(1)
Net Permits as of September 30, 2024(1)
Permian
457
349
2.62
1.71
Eagle Ford
100
32
0.63
0.13
Haynesville
50
10
0.54
0.13
Mid-Continent
131
54
1.04
0.43
Bakken
79
75
0.20
0.28
Appalachia
5
3
0.02
0.01
Rockies
9
4
0.08
0.02
Total
831
527
5.13
2.71
(1) These figures pertain only to Kimbell's major properties and do not include possible additional DUCs and permits from Kimbell's minor properties, which generally have a net revenue interest of 0.1% or below and are time consuming to quantify but, in the estimation of Kimbell's management, could add an additional 15% to Kimbell's net inventory.
Hedging Update
The following provides information concerning Kimbell's hedge book as of September 30, 2024:
Fixed Price Swaps as of September 30, 2024
Weighted Average
Volumes
Fixed Price
Oil
Nat Gas
Oil
Nat Gas
BBL
MMBTU
$/BBL
$/MMBTU
4Q 2024
141,588
1,332,712
$ 74.60
$ 4.19
1Q 2025
140,400
1,289,520
$ 71.55
$ 4.32
2Q 2025
140,686
1,310,127
$ 67.64
$ 3.52
3Q 2025
136,068
1,261,964
$ 74.20
$ 3.74
4Q 2025
146,372
1,291,680
$ 68.26
$ 3.68
1Q 2026
146,880
1,296,000
$ 70.38
$ 4.07
2Q 2026
148,512
1,310,400
$ 70.78
$ 3.33
3Q 2026
150,144
1,324,800
$ 66.60
$ 3.42
Conference Call
Kimbell Royalty Partners will host a conference call and webcast today at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) to discuss third quarter 2024 results. To access the call live by phone, dial 201-389-0869 and ask for the Kimbell Royalty Partners call at least 10 minutes prior to the start time. A telephonic replay will be available through November 14, 2024 by dialing 201-612-7415 and using the conference ID 13748350#. A webcast of the call will also be available live and for later replay on Kimbell's website at http://kimbellrp.investorroom.com under the Events and Presentations tab.
Presentation
On November 7, 2024, Kimbell posted an updated investor presentation on its website. The presentation may be found at http://kimbellrp.investorroom.com under the Events and Presentations tab. Information on Kimbell's website does not constitute a portion of this news release.
About Kimbell Royalty Partners, LP
Kimbell (NYSE:KRP) is a leading oil and gas mineral and royalty company based in Fort Worth, Texas. Kimbell owns mineral and royalty interests in approximately 17 million gross acres in 28 states and in every major onshore basin in the continental United States, including ownership in more than 129,000 gross wells. To learn more, visit http://www.kimbellrp.com.
Forward-Looking Statements
This news release includes forward-looking statements, in particular statements relating to Kimbell's financial, operating and production results and prospects for growth (including financial and operational guidance), drilling inventory, growth potential, identified locations and all other estimates and predictions resulting from Kimbell's portfolio review, the tax treatment of Kimbell's distributions, changes in Kimbell's capital structure, future natural gas and other commodity prices and changes to supply and demand for oil, natural gas and NGLs. These and other forward-looking statements involve risks and uncertainties, including risks that the anticipated benefits of acquisitions are not realized and uncertainties relating to Kimbell's business, prospects for growth and acquisitions and the securities markets generally, as well as risks inherent in oil and natural gas drilling and production activities, including risks with respect to potential declines in prices for oil and natural gas that could result in downward revisions to the value of proved reserves or otherwise cause operators to delay or suspend planned drilling and completion operations or reduce production levels, which would adversely impact cash flow, risks relating to the impairment of oil and natural gas properties, risks relating to the availability of capital to fund drilling operations that can be adversely affected by adverse drilling results, production declines and declines in oil and natural gas prices, risks relating to Kimbell's ability to meet financial covenants under its credit agreement or its ability to obtain amendments or waivers to effect such compliance, risks relating to Kimbell's hedging activities, risks of fire, explosion, blowouts, pipe failure, casing collapse, unusual or unexpected formation pressures, environmental hazards, and other operating and production risks, which may temporarily or permanently reduce production or cause initial production or test results to not be indicative of future well performance or delay the timing of sales or completion of drilling operations, risks relating to delays in receipt of drilling permits, risks relating to unexpected adverse developments in the status of properties, risks relating to borrowing base redeterminations by Kimbell's lenders, risks relating to the absence or delay in receipt of government approvals or third-party consents, risks relating to acquisitions, dispositions and drop downs of assets, risks relating to Kimbell's ability to realize the anticipated benefits from and to integrate acquired assets, including the Acquired Production, risks relating to tax matters and other risks described in Kimbell's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission (the "SEC"), available at the SEC's website at www.sec.gov. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Except as required by law, Kimbell undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this news release. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Kimbell's filings with the SEC.
Contact:
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