Kimbell Royalty Partners Announces Record First Quarter 2023 Results
Record Q1 2023 Run-Rate Daily Production
Record Rig Count of 94 Active Rigs Drilling
Conservative Balance Sheet with Net Debt to Trailing Twelve Month Consolidated Adjusted EBITDA of 1.0x
Previously announced MB Minerals Acquisition expected to close in Q2 2023
Announces Q1 2023 Cash Distribution of
FORT WORTH, Texas, May 3, 2023 /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 124,000 gross wells across 28 states, today announced financial and operating results for the quarter ended March 31, 2023.
First Quarter 2023 Highlights
- Record Q1 2023 run-rate daily production of 17,014 barrels of oil equivalent ("Boe") per day (6:1)
- Does not include any days of production from the Company's recently announced
$143.1 million - Q1 2023 oil, natural gas and NGL revenues of
$57.4 million 10.9% from Q4 2022, primarily attributable to a decline in realized commodity prices - Q1 2023 net income of approximately
$28.9 million $23.3 million $35.2 million $28.4 million - Q1 2023 consolidated Adjusted EBITDA of
$42.3 million $46.2 million - Q1 2023 realized natural gas prices of
$3.16 19% above Henry Hub during due to premium prices received across several basins, including the DJ Basin and Bakken - As of March 31, 2023, Kimbell's major properties1 had 6.74 net drilled but uncompleted wells ("DUCs") and net permitted locations on its acreage (3.55 net DUCs and 3.19 net permitted locations), compared to an estimated 4.5 net wells needed to maintain flat production
- As of March 31, 2023, Kimbell had a record 94 rigs actively drilling on its acreage, up from 92 rigs in Q4 2022 and representing
12.8% 2 market share of all rigs drilling in the continentalUnited States as of such time - Announced a Q1 2023 cash distribution of
$0.35 75% of cash available for distribution; implies a9.0% annualized yield based on the May 2, 2023 closing price of$15.63 25% of its cash available for distribution to repay a portion of the outstanding borrowings under Kimbell's revolving credit facility
______________________________________ |
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 |
2 Based on Kimbell rig count of 94 and Baker Hughes |
Robert Ravnaas, Chairman and Chief Executive Officer of Kimbell Royalty GP, LLC, Kimbell's general partner (the "General Partner"), commented, "We are very pleased with another strong quarter and continue to build on last year's momentum with the recently announced Midland Basin royalty acquisition, which is expected to close later this month. With our last two acquisitions, the Company's production mix is expected to materially shift towards oil, and the Permian leads all categories in terms of production, inventory, rig count and line-of-sight wells. Even in the face of low natural gas prices in the first quarter of 2023, the rig count on our acreage in the Haynesville increased quarter over quarter led by private operators, which is a testament to the quality of our acreage in this area. In addition, we realized natural gas prices that were substantially higher than Henry Hub across several basins during Q1 2023, which highlights the strength of our diversified royalty model. Finally, our rig count has never been higher for Kimbell, which gives us confidence that we will continue our operational momentum in 2023."
First Quarter 2023 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
Kimbell expects that approximately
Financial Highlights
Kimbell's first quarter 2023 average realized price per Bbl of oil was
During the first quarter of 2023, the Company's total revenues were
Total first quarter 2023 consolidated Adjusted EBITDA was
In the first quarter of 2023, G&A expense was
As of March 31, 2023, Kimbell had approximately
As of March 31, 2023, Kimbell had outstanding 64,950,333 common units and 15,484,400 Class B units. As of May 3, 2023, Kimbell had outstanding 64,950,333 common units and 15,484,400 Class B units.
Production
First quarter 2023 average daily production was 17,215 Boe per day (6:1), which consisted of 201 Boe per day related to prior period production recognized in Q1 2022, and 17,014 Boe per day of run-rate production. The 17,014 Boe per day of run-rate production was composed of approximately
Operational Update
As of March 31, 2023, Kimbell's major properties had 749 gross (3.55 net) DUCs and 750 gross (3.19 net) permitted locations on its acreage. In addition, as of March 31, 2023, Kimbell had 94 rigs actively drilling on its acreage, which represents an approximate
Basin | Gross DUCs as of | Gross Permits as of | Net DUCs as of | Net Permits as of |
Permian | 416 | 369 | 1.63 | 1.30 |
Eagle Ford | 61 | 70 | 0.48 | 0.74 |
Haynesville | 102 | 39 | 1.04 | 0.50 |
Mid-Continent | 82 | 55 | 0.13 | 0.15 |
Bakken | 73 | 183 | 0.22 | 0.27 |
Appalachia | 7 | 12 | 0.01 | 0.02 |
Rockies | 8 | 22 | 0.04 | 0.21 |
Total | 749 | 750 | 3.55 | 3.19 |
(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 |
Hedging Update
Kimbell maintains a consistent hedging methodology, and hedges out two years on a rolling quarterly basis. The Company's commodity derivative contracts consist of fixed price swaps, under which Kimbell receives a fixed price for the contract and pays a floating market price to the counterparty over a specified period for a contracted volume. Kimbell hedges expected daily production based on the amount of debt as a percent of total enterprise value. These economic hedges constituted approximately
The following provides information concerning Kimbell's hedge book as of March 31, 2023:
Fixed Price Swaps as of March 31, 2023 | ||||
Weighted Average | ||||
Volumes | Fixed Price | |||
Oil | Nat Gas | Oil | Nat Gas | |
BBL | MMBTU | $/BBL | $/MMBTU | |
2Q 2023 | 70,889 | 998,179 | $ 61.16 | $ 2.52 |
3Q 2023 | 72,680 | 1,047,880 | $ 61.70 | $ 3.09 |
4Q 2023 | 67,988 | 995,532 | $ 63.00 | $ 3.28 |
1Q 2024 | 54,509 | 823,186 | $ 76.32 | $ 4.15 |
2Q 2024 | 56,511 | 809,354 | $ 82.40 | $ 4.31 |
3Q 2024 | 48,576 | 785,588 | $ 69.30 | $ 4.45 |
4Q 2024 | 68,448 | 811,164 | $ 70.02 | $ 4.48 |
1Q 2025 | 71,640 | 848,070 | $ 66.31 | $ 4.37 |
2023 Guidance Update
On April 11, 2023, Kimbell announced the signing of a purchase and sale agreement with MB Minerals, L.P. and certain of its affiliates (the "MB Minerals Acquisition") to acquire Midland Basin mineral and royalty assets for approximately
Kimbell management affirms 2023 guidance provided in the Q4 2022 earnings release, and management will provide updated 2023 guidance on or after the closing of the MB Minerals Acquisition.
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 first quarter 2023 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 May 12, 2023 by dialing 201-612-7415 and using the conference ID 13734773#. 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 May 3, 2023, 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
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, 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:
Rick Black
Dennard Lascar Investor Relations
krp@dennardlascar.com
(713) 529-6600
– Financial statements follow –
Kimbell Royalty Partners, LP | ||
Condensed Consolidated Balance Sheet | ||
(Unaudited, in thousands) | ||
March 31, | ||
2023 | ||
Assets: | ||
Current assets | ||
Cash and cash equivalents | $ | 19,077 |
Oil, natural gas and NGL receivables | 35,936 | |
Accounts receivable and other current assets | 3,049 | |
Total current assets | 58,062 | |
Property and equipment, net | 866 | |
Oil and natural gas properties | ||
Oil and natural gas properties (full cost method) | 1,466,268 | |
Less: accumulated depreciation, depletion and impairment | (730,185) | |
Total oil and natural gas properties, net | 736,083 | |
Right-of-use assets, net | 2,442 | |
Derivative assets | 2,456 | |
Loan origination costs, net | 2,488 | |
Assets of consolidated variable interest entities: | ||
Cash | 101 | |
Investments held in trust | 243,060 | |
Prepaid expenses | 80 | |
Total assets | $ | 1,045,638 |
Liabilities and unitholders' equity: | ||
Current liabilities | ||
Accounts payable | $ | 920 |
Other current liabilities | 5,165 | |
Derivative liabilities | 2,056 | |
Total current liabilities | 8,141 | |
Operating lease liabilities, excluding current portion | 2,151 | |
Derivative liabilities | 224 | |
Long-term debt | 223,916 | |
Other liabilities | 292 | |
Liabilities of consolidated variable interest entities: | ||
Other current liabilities | 865 | |
Deferred underwriting commissions | 8,050 | |
Total liabilities | 243,639 | |
Commitments and contingencies | ||
Mezzanine equity: | ||
Redeemable noncontrolling interest in Kimbell Tiger Acquisition Corporation | 236,900 | |
Kimbell Royalty Partners, LP unitholders' equity: | ||
Common units | 592,305 | |
Class B units | 774 | |
Total Kimbell Royalty Partners, LP unitholders' equity | 593,079 | |
Noncontrolling deficit interest in OpCo | (27,980) | |
Total equity | 565,099 | |
Total liabilities, mezzanine equity and unitholders' equity | $ | 1,045,638 |
Kimbell Royalty Partners, LP | |||||
Condensed Consolidated Statements of Operations | |||||
(Unaudited, in thousands, except per-unit data and unit counts) | |||||
Three Months Ended | Three Months Ended | ||||
March 31, 2023 | March 31, 2022 | ||||
Revenue | |||||
Oil, natural gas and NGL revenues | $ | 57,417 | $ | 65,083 | |
Lease bonus and other income | 437 | 654 | |||
Gain (loss) on commodity derivative instruments, net | 9,062 | (31,983) | |||
Total revenues | 66,916 | 33,754 | |||
Costs and expenses | |||||
Production and ad valorem taxes | 4,277 | 4,021 | |||
Depreciation and depletion expense | 17,564 | 10,759 | |||
Marketing and other deductions | 2,762 | 3,508 | |||
General and administrative expenses | 8,278 | 6,589 | |||
Consolidated variable interest entities related: | |||||
General and administrative expenses | 708 | 739 | |||
Total costs and expenses | 33,589 | 25,616 | |||
Operating income | 33,327 | 8,138 | |||
Other income (expense) | |||||
Equity income in affiliate | — | 249 | |||
Interest expense | (5,463) | (2,878) | |||
Other income | — | 3,069 | |||
Consolidated variable interest entities related: | |||||
Interest earned on marketable securities in trust account | 2,439 | 102 | |||
Net income before income taxes | 30,303 | 8,680 | |||
Income tax expense | 1,403 | 272 | |||
Net income | 28,900 | 8,408 | |||
Net income attributable to noncontrolling interests | (5,564) | (1,059) | |||
Distributions on Class B units | (15) | (18) | |||
Net income attributable to common units of Kimbell Royalty Partners, LP | $ | 23,321 | $ | 7,331 | |
Basic | $ | 0.37 | $ | (0.20) | |
Diluted | $ | 0.36 | $ | (0.20) | |
Weighted average number of common units outstanding | |||||
Basic | 62,541,565 | 45,942,829 | |||
Diluted | 79,757,979 | 45,942,829 | |||
Kimbell Royalty Partners, LP
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, non cash unit based compensation, unrealized gains and losses on derivative instruments, cash distribution from affiliate, equity income (loss) in affiliate, gains and losses on sales of assets 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.
Kimbell Royalty Partners, LP | |||||
Supplemental Schedules | |||||
(Unaudited, in thousands) | |||||
Three Months Ended | Three Months Ended | ||||
March 31, 2023 | March 31, 2022 | ||||
Reconciliation of net cash provided by operating activities | |||||
to Adjusted EBITDA and cash available for distribution | |||||
Net cash provided by operating activities | $ | 47,054 | $ | 36,032 | |
Interest expense | 5,463 | 2,878 | |||
Income tax expense | 1,403 | 272 | |||
Amortization of right-of-use assets | (83) | (78) | |||
Amortization of loan origination costs | (516) | (442) | |||
Equity income in affiliate | — | 249 | |||
Unit-based compensation | (3,170) | (2,194) | |||
Gain (loss) on derivative instruments, net of settlements | 12,500 | (18,681) | |||
Changes in operating assets and liabilities: | |||||
Oil, natural gas and NGL revenues receivable | (11,058) | 6,409 | |||
Accounts receivable and other current assets | (514) | (731) | |||
Accounts payable | 291 | (1,083) | |||
Other current liabilities | (256) | (463) | |||
Operating lease liabilities | 85 | 79 | |||
Consolidated variable interest entities related: | |||||
Interest earned on marketable securities in Trust Account | 2,439 | 102 | |||
Other assets and liabilities | (308) | 353 | |||
Consolidated EBITDA | $ | 53,330 | $ | 22,702 | |
Add: | |||||
Unit-based compensation | 3,170 | 2,194 | |||
(Gain) loss on derivative instruments, net of settlements | (12,500) | 18,681 | |||
Cash distribution from affiliate | — | 43 | |||
Equity income in affiliate | — | (249) | |||
Consolidated variable interest entities related: | |||||
Interest earned on marketable securities in Trust Account | (2,439) | (102) | |||
General and administrative expenses | 708 | 660 | |||
Consolidated Adjusted EBITDA | $ | 42,269 | $ | 43,929 | |
Adjusted EBITDA attributable to noncontrolling interest | (8,137) | (5,532) | |||
Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 34,132 | $ | 38,397 | |
Adjustments to reconcile Adjusted EBITDA to cash available | |||||
for distribution | |||||
Less: | |||||
Cash interest expense | 4,124 | 1,958 | |||
Cash income tax refund | (639) | — | |||
Distributions on Class B units | 15 | 18 | |||
Cash available for distribution on common units | $ | 30,632 | $ | 36,421 | |
Kimbell Royalty Partners, LP | ||
Supplemental Schedules | ||
(Unaudited, in thousands, except for per-unit data and unit counts) | ||
Three Months Ended | ||
March 31, 2023 | ||
Net income | $ | 28,900 |
Depreciation and depletion expense | 17,564 | |
Interest expense | 5,463 | |
Income tax expense | 1,403 | |
Consolidated EBITDA | $ | 53,330 |
Unit-based compensation | 3,170 | |
Gain on derivative instruments, net of settlements | (12,500) | |
Consolidated variable interest entities related: | ||
Interest earned on marketable securities in Trust Account | (2,439) | |
General and administrative expenses | 708 | |
Consolidated Adjusted EBITDA | $ | 42,269 |
Adjusted EBITDA attributable to noncontrolling interest | (8,137) | |
Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 34,132 |
Adjustments to reconcile Adjusted EBITDA to cash available | ||
for distribution | ||
Less: | ||
Cash interest expense | 4,124 | |
Cash income tax refund | (639) | |
Distributions on Class B units | 15 | |
Cash available for distribution on common units | $ | 30,632 |
Common units outstanding on March 31, 2023 | 64,950,333 | |
Cash available for distribution per common unit outstanding | $ | 0.47 |
Common units outstanding on May 15, 2023 Record Date | 64,950,333 | |
First quarter 2023 distribution declared (1) | $ | 0.35 |
(1) The difference between the declared distribution and the cash available for distribution is primarily attributable to Kimbell allocating |
Kimbell Royalty Partners, LP | ||
Supplemental Schedules | ||
(Unaudited, in thousands, except for per-unit data and unit counts) | ||
Three Months Ended | ||
March 31, 2022 | ||
Net income | $ | 8,408 |
Depreciation and depletion expense | 10,759 | |
Interest expense | 2,878 | |
Cash distribution from affiliate | 385 | |
Income tax expense | 272 | |
Consolidated EBITDA | $ | 22,702 |
Unit-based compensation | 2,194 | |
Loss on commodity derivative instruments, net of settlements | 18,681 | |
Cash distribution from affiliate | 43 | |
Equity income in affiliate | (249) | |
Consolidated variable interest entities related: | ||
Interest earned on marketable securities in Trust Account | (102) | |
General and administrative expenses | 660 | |
Consolidated Adjusted EBITDA | $ | 43,929 |
Adjusted EBITDA attributable to noncontrolling interest | (5,532) | |
Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 38,397 |
Adjustments to reconcile Adjusted EBITDA to cash available | ||
for distribution | ||
Less: | ||
Cash interest expense | 1,958 | |
Distributions on Class B units | 18 | |
Cash available for distribution on common units | $ | 36,421 |
Common units outstanding on March 31, 2022 | 57,290,923 | |
Cash available for distribution per common unit outstanding | $ | 0.64 |
Common units outstanding on May 2, 2022 Record Date | 57,331,833 | |
First quarter 2022 distribution declared (1) | $ | 0.47 |
(1) The difference between the declared distribution and the cash available for distribution is primarily attributable to Kimbell allocating |
Kimbell Royalty Partners, LP | ||
Supplemental Schedules | ||
(Unaudited, in thousands) | ||
Three Months Ended | ||
March 31, 2023 | ||
Net income | $ | 28,900 |
Depreciation and depletion expense | 17,564 | |
Interest expense | 5,463 | |
Income tax expense | 1,403 | |
Consolidated EBITDA | $ | 53,330 |
Unit-based compensation | 3,170 | |
Gain on derivative instruments, net of settlements | (12,500) | |
Consolidated variable interest entities related: | ||
Interest earned on marketable securities in Trust Account | (2,439) | |
General and administrative expenses | 708 | |
Consolidated Adjusted EBITDA | $ | 42,269 |
Q2 2022 - Q4 2022 Consolidated Adjusted EBITDA (1) | 172,230 | |
Trailing Twelve Month Consolidated Adjusted EBITDA | $ | 214,499 |
Long-term debt (as of 3/31/23) | 223,916 | |
Cash and cash equivalents (as of 3/31/23) | (19,178) | |
Net debt (as of 3/31/23) | $ | 204,738 |
Net Debt to Trailing Twelve Month Consolidated Adjusted EBITDA | 1.0x | |
(1) Consolidated Adjusted EBITDA for each of the quarters ended June 30, 2022, September 30, 2022 and December 31, 2022 was previously reported in a news release relating to the applicable quarter, and the reconciliation of net income to consolidated Adjusted EBITDA for each quarter is included in the applicable news release. This also includes the trailing twelve months pro forma results from the Q4 2022 acquisition that closed in December 2022 in accordance with Kimbell's secured revolving credit facility. |
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SOURCE Kimbell Royalty Partners, LP
