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
Net Drilled But Uncompleted Wells ("DUCs") Increased by 34% Quarter Over Quarter Led by the
Record Lease Bonuses Confirming Increased Operator Activity
Announces Q3 2024 Cash Distribution of
FORT WORTH, Texas,
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 continentalUnited 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 theNovember 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
"We are pleased to declare the Q3 2024 distribution of
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
Kimbell expects that approximately 100% of its third quarter 2024 distribution should not constitute dividends for
Financial Highlights
Kimbell's third quarter 2024 average realized price per Bbl of oil was
During the third quarter of 2024, the Company's total revenues were
Total third quarter 2024 consolidated Adjusted EBITDA was
In the third quarter of 2024, G&A expense was
As of
As of
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
|
Basin |
Gross DUCs as of |
Gross Permits as of |
|
Net Permits as of |
|
Permian |
457 |
349 |
2.62 |
1.71 |
|
|
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
|
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
Presentation
On
About
Kimbell (NYSE: KRP) is a leading oil and gas mineral and royalty company based in
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
Contact:
krp@dennardlascar.com
(713) 529-6600
– Financial statements follow –
|
Condensed Consolidated Balance Sheet (Unaudited, in thousands) |
||
|
|
||
|
|
|
|
|
|
2024 |
|
|
Assets: |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
34,706 |
|
Oil, natural gas and NGL receivables |
|
48,975 |
|
Derivative assets |
|
6,818 |
|
Accounts receivable and other current assets |
|
1,671 |
|
Total current assets |
|
92,170 |
|
Property and equipment, net |
|
361 |
|
Oil and natural gas properties |
|
|
|
Oil and natural gas properties (full cost method) |
|
2,048,712 |
|
Less: accumulated depreciation, depletion and impairment |
|
(936,054) |
|
Total oil and natural gas properties, net |
|
1,112,658 |
|
Right-of-use assets, net |
|
1,929 |
|
Derivative assets |
|
1,763 |
|
Loan origination costs, net |
|
5,790 |
|
Total assets |
$ |
1,214,671 |
|
Liabilities and unitholders' equity: |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
6,865 |
|
Other current liabilities |
|
10,875 |
|
Total current liabilities |
|
17,740 |
|
Operating lease liabilities, excluding current portion |
|
1,605 |
|
Derivative liabilities |
|
2 |
|
Long-term debt |
|
252,160 |
|
Other liabilities |
|
104 |
|
Total liabilities |
|
271,611 |
|
Commitments and contingencies |
|
|
|
Mezzanine equity: |
|
|
|
Series A preferred units |
|
315,608 |
|
|
|
|
|
Common units |
|
531,294 |
|
Class B units |
|
726 |
|
|
|
532,020 |
|
Non-controlling interest in OpCo |
|
95,432 |
|
Total unitholders' equity |
|
627,452 |
|
Total liabilities, mezzanine equity and unitholders' equity |
$ |
1,214,671 |
|
Condensed Consolidated Statements of Operations (Unaudited, in thousands, except per-unit data and unit counts) |
|||||
|
|
|||||
|
|
Three Months Ended |
|
Three Months Ended |
||
|
|
|
|
|
||
|
Revenue |
|
|
|
|
|
|
Oil, natural gas and NGL revenues |
$ |
71,069 |
|
$ |
69,238 |
|
Lease bonus and other income |
|
3,163 |
|
|
2,543 |
|
Gain (loss) on commodity derivative instruments, net |
|
9,553 |
|
|
(4,577) |
|
Total revenues |
|
83,785 |
|
|
67,204 |
|
Costs and expenses |
|
|
|
|
|
|
Production and ad valorem taxes |
|
4,347 |
|
|
4,986 |
|
Depreciation and depletion expense |
|
32,155 |
|
|
23,060 |
|
Marketing and other deductions |
|
3,607 |
|
|
3,509 |
|
General and administrative expense |
|
9,472 |
|
|
10,359 |
|
Total costs and expenses |
|
49,581 |
|
|
41,914 |
|
Operating income |
|
34,204 |
|
|
25,290 |
|
Other expense |
|
|
|
|
|
|
Interest expense |
|
(6,492) |
|
|
(6,681) |
|
Net income before income taxes |
|
27,712 |
|
|
18,609 |
|
Income tax expense |
|
1,907 |
|
|
128 |
|
Net income |
|
25,805 |
|
|
18,481 |
|
Distribution and accretion on Series A preferred units |
|
(5,296) |
|
|
(1,041) |
|
Net income attributable to non-controlling interests |
|
(3,119) |
|
|
(3,839) |
|
Distributions on Class B units |
|
(15) |
|
|
(21) |
|
Net income attributable to common units of |
$ |
17,375 |
|
$ |
13,580 |
|
|
|
|
|
|
|
|
Basic |
$ |
0.22 |
|
$ |
0.20 |
|
Diluted |
$ |
0.22 |
|
$ |
0.19 |
|
Weighted average number of common units outstanding |
|
|
|
|
|
|
Basic |
|
78,977,450 |
|
|
68,540,786 |
|
Diluted |
|
116,414,205 |
|
|
94,969,077 |
Supplemental Schedules
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA, Cash G&A and Cash G&A per Boe are used as supplemental non-GAAP financial measures by management and external users of Kimbell's financial statements, such as industry analysts, investors, lenders and rating agencies. Kimbell believes Adjusted EBITDA is useful because it allows us to more effectively evaluate Kimbell's operating performance and compare the results of Kimbell's operations period to period without regard to its financing methods or capital structure. In addition, management uses Adjusted EBITDA to evaluate cash flow available to pay distributions to Kimbell's unitholders. Kimbell defines Adjusted EBITDA as net income (loss), net of depreciation and depletion expense, interest expense, income taxes, impairment of oil and natural gas properties, non-cash unit-based compensation, loss on extinguishment of debt, unrealized gains and losses on derivative instruments and operational impacts of variable interest entities, which include general and administrative expense and interest income. Adjusted EBITDA is not a measure of net income (loss) or net cash provided by operating activities as determined by GAAP. Kimbell excludes the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within Kimbell's industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Adjusted EBITDA should not be considered an alternative to net income, oil, natural gas and natural gas liquids revenues, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Kimbell's computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Kimbell expects that cash available for distribution for each quarter will generally equal its Adjusted EBITDA for the quarter, less cash needed for debt service and other contractual obligations, tax obligations, and fixed charges and reserves for future operating or capital needs that the Board of Directors may determine is appropriate.
Kimbell believes Cash G&A and Cash G&A per Boe are useful metrics because they isolate cash costs within overall G&A expense and measure cash costs relative to overall production, which is a widely utilized metric to evaluate operational performance within the energy sector. Cash G&A is defined as general and administrative expenses less unit-based compensation expense. Cash G&A per Boe is defined as Cash G&A divided by total production for a period. Cash G&A should not be considered an alternative to G&A expense presented in accordance with GAAP. Kimbell's computations of Cash G&A and Cash G&A per Boe may not be comparable to other similarly titled measures of other companies.
|
|
|||||
|
|
|||||
|
|
Three Months Ended |
|
Three Months Ended |
||
|
|
|
|
|
||
|
Reconciliation of net cash provided by operating activities |
|
|
|
|
|
|
to Adjusted EBITDA and cash available for distribution |
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
62,417 |
|
$ |
36,387 |
|
Interest expense |
|
6,492 |
|
|
6,681 |
|
Income tax expense |
|
1,907 |
|
|
128 |
|
Amortization of right-of-use assets |
|
(87) |
|
|
(84) |
|
Amortization of loan origination costs |
|
(532) |
|
|
(405) |
|
Unit-based compensation |
|
(3,830) |
|
|
(3,326) |
|
Gain (loss) on derivative instruments, net of settlements |
|
7,066 |
|
|
(4,098) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Oil, natural gas and NGL revenues receivable |
|
(4,243) |
|
|
16,314 |
|
Accounts receivable and other current assets |
|
(719) |
|
|
(280) |
|
Accounts payable |
|
(310) |
|
|
(855) |
|
Other current liabilities |
|
(1,899) |
|
|
(2,200) |
|
Operating lease liabilities |
|
97 |
|
|
88 |
|
Consolidated EBITDA |
$ |
66,359 |
|
$ |
48,350 |
|
Add: |
|
|
|
|
|
|
Unit-based compensation |
|
3,830 |
|
|
3,326 |
|
(Gain) loss on derivative instruments, net of settlements |
|
(7,066) |
|
|
4,098 |
|
Consolidated Adjusted EBITDA |
$ |
63,123 |
|
$ |
55,774 |
|
Adjusted EBITDA attributable to non-controlling interest |
|
(9,601) |
|
|
(12,279) |
|
Adjusted EBITDA attributable to |
$ |
53,522 |
|
$ |
43,495 |
|
|
|
|
|
|
|
|
Adjustments to reconcile Adjusted EBITDA to cash available |
|
|
|
|
|
|
for distribution |
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
Cash interest expense |
|
5,123 |
|
|
4,645 |
|
Cash distributions on Series A preferred units |
|
4,156 |
|
|
750 |
|
Distributions on Class B units |
|
15 |
|
|
21 |
|
Cash available for distribution on common units |
$ |
44,228 |
|
$ |
38,079 |
|
Supplemental Schedules (Unaudited, in thousands, except for per-unit data and unit counts) |
||
|
|
||
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
25,805 |
|
Depreciation and depletion expense |
|
32,155 |
|
Interest expense |
|
6,492 |
|
Income tax expense |
|
1,907 |
|
Consolidated EBITDA |
$ |
66,359 |
|
Unit-based compensation |
|
3,830 |
|
Gain on derivative instruments, net of settlements |
|
(7,066) |
|
Consolidated Adjusted EBITDA |
$ |
63,123 |
|
Adjusted EBITDA attributable to non-controlling interest |
|
(9,601) |
|
Adjusted EBITDA attributable to |
$ |
53,522 |
|
|
|
|
|
Adjustments to reconcile Adjusted EBITDA to cash available |
|
|
|
for distribution |
|
|
|
Less: |
|
|
|
Cash interest expense |
|
5,123 |
|
Cash distributions on Series A preferred units |
|
4,156 |
|
Distributions on Class B units |
|
15 |
|
Cash available for distribution on common units |
$ |
44,228 |
|
|
|
|
|
Common units outstanding on |
|
80,969,651 |
|
|
|
|
|
Common units outstanding on |
|
80,969,651 |
|
|
|
|
|
Cash available for distribution per common unit outstanding |
$ |
0.55 |
|
|
|
|
|
Third quarter 2024 distribution declared (1) |
$ |
0.41 |
|
|
|
(1) The difference between the declared distribution and the cash available for distribution is primarily attributable to Kimbell allocating 25% of cash available for distribution to pay outstanding borrowings under its secured revolving credit facility. |
|
Supplemental Schedules (Unaudited, in thousands, except for per-unit data and unit counts) |
||
|
|
||
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
18,481 |
|
Depreciation and depletion expense |
|
23,060 |
|
Interest expense |
|
6,681 |
|
Income tax expense |
|
128 |
|
Consolidated EBITDA |
$ |
48,350 |
|
Unit-based compensation |
|
3,326 |
|
Loss on derivative instruments, net of settlements |
|
4,098 |
|
Consolidated Adjusted EBITDA |
$ |
55,774 |
|
Adjusted EBITDA attributable to non-controlling interest |
|
(12,279) |
|
Adjusted EBITDA attributable to |
$ |
43,495 |
|
|
|
|
|
Adjustments to reconcile Adjusted EBITDA to cash available |
|
|
|
for distribution |
|
|
|
Less: |
|
|
|
Cash interest expense |
|
4,645 |
|
Cash distributions on Series A preferred units |
|
750 |
|
Distributions on Class B units |
|
21 |
|
Cash available for distribution on common units |
$ |
38,079 |
|
|
|
|
|
Common units outstanding on |
|
73,851,458 |
|
|
|
|
|
Common units outstanding on |
|
73,851,458 |
|
|
|
|
|
Cash available for distribution per common unit outstanding |
$ |
0.52 |
|
|
|
|
|
Third quarter 2023 distribution declared (1) |
$ |
0.51 |
|
|
||
|
(1) The difference between the declared distribution and the cash available for distribution is primarily attributable to Kimbell allocating 25% of cash available for distribution to pay outstanding borrowings under its secured revolving credit facility. Additionally, Kimbell utilized approximately |
|
|
||
|
|
||
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
25,805 |
|
Depreciation and depletion expense |
|
32,155 |
|
Interest expense |
|
6,492 |
|
Income tax expense |
|
1,907 |
|
Consolidated EBITDA |
$ |
66,359 |
|
Unit-based compensation |
|
3,830 |
|
Gain on derivative instruments, net of settlements |
|
(7,066) |
|
Consolidated Adjusted EBITDA |
$ |
63,123 |
|
|
|
|
|
Q4 2023 - Q2 2024 Consolidated Adjusted EBITDA (1) |
|
208,927 |
|
Trailing Twelve Month Consolidated Adjusted EBITDA |
$ |
272,050 |
|
|
|
|
|
Long-term debt (as of 9/30/24) |
|
252,160 |
|
Cash and cash equivalents (as of 9/30/24) (2) |
|
(25,000) |
|
Net debt (as of 9/30/24) |
$ |
227,160 |
|
|
|
|
|
Net Debt to Trailing Twelve Month Consolidated Adjusted EBITDA |
|
0.8x |
|
|
|
(1) Consolidated Adjusted EBITDA for each of the quarters ended |
|
(2) In accordance with Kimbell's secured revolving credit facility, the maximum deduction of cash and cash equivalents to be included in the net debt calculation for compliance purposes is |
_______________________________
1 Based on Kimbell rig count of 90 and Baker Hughes
2 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.
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