Kimbell Royalty Partners Announces Record Second Quarter 2023 Results
Record Q2 2023 Run-Rate Daily Production; Post-MB Minerals Acquisition Production Exceeded 18,000 Boe/d (6:1) for First Time Including a Full-Quarter of Acquired Production
Record Market Share of
Increase in Borrowing Base and Elected Commitment on Secured Revolving Credit Facility to
Superior Five-Year Annual PDP Decline Rate of
Announces Q2 2023 Cash Distribution of
FORT WORTH, Texas, Aug. 2, 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 125,000 gross wells across 28 states, today announced financial and operating results for the quarter ended June 30, 2023.
Second Quarter 2023 Highlights
- Record Q2 2023 run-rate daily production of 17,573 barrels of oil equivalent ("Boe") per day (6:1)
- Includes 45 days of production from the Company's
$140.8 million - Including a full Q2 2023 impact of the Acquired Production, the revenues of which will be received by the Company, run-rate production was 18,554 Boe per day (6:1)
- Q2 2023 oil, natural gas and NGL revenues of
$57.0 million 0.8% from Q1 2023, primarily attributable to a decline in realized commodity prices - Q2 2023 net income of approximately
$17.8 million $13.5 million $28.9 million $23.3 million - Q2 2023 consolidated Adjusted EBITDA of
$45.0 million $42.3 million - As of June 30, 2023, Kimbell's major properties2 had 6.86 net drilled but uncompleted wells ("DUCs") and net permitted locations on its acreage (3.89 net DUCs and 2.97 net permitted locations), compared to an estimated 4.9 net wells needed to maintain flat production
- Announced a Q2 2023 cash distribution of
$0.39 75% of cash available for distribution; implies a9.9% annualized yield based on the August 1, 2023 closing price of$15.71 25% of its cash available for distribution to repay a portion of the outstanding borrowings under Kimbell's revolving credit facility - On June 13, 2023, Kimbell amended and extended its secured revolving credit facility through June 7, 2027 and increased borrowing base and elected commitments from
$350 million $400 million 14% - Conservative Balance Sheet with Net Debt to Trailing Twelve Month Consolidated Adjusted EBITDA of 1.1x
- Kimbell affirms its financial and operational guidance ranges for 2023 previously disclosed in its May 18, 2023 press release
________________________ |
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 |
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 record quarter and continue to build on last quarter's momentum with the recently closed MB Minerals royalty acquisition. The Company's production mix materially shifted towards oil in the second quarter, with oil now representing
"As we look forward in 2023 and beyond, we remain bullish about the
Second 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 second quarter 2023 average realized price per Bbl of oil was
During the second quarter of 2023, the Company's total revenues were
Total second quarter 2023 consolidated Adjusted EBITDA was
In the second quarter of 2023, G&A expense was
On June 13, 2023, Kimbell amended its existing credit agreement to, among other things, increase the borrowing base and elected commitment amount from
As of June 30, 2023, Kimbell had approximately
As of June 30, 2023, Kimbell had outstanding 65,507,635 common units and 20,853,618 Class B units. As of August 2, 2023, Kimbell had outstanding 65,507,635 common units and 20,853,618 Class B units.
Production
Second quarter 2023 average daily production was 18,145 Boe per day (6:1), which consisted of 572 Boe per day related to prior period production recognized in Q2 2023, and 17,573 Boe per day of run-rate production. The 17,573 Boe per day of run-rate production was composed of approximately
Operational Update
As of June 30, 2023, Kimbell's major properties had 767 gross (3.89 net) DUCs and 734 gross (2.97 net) permitted locations on its acreage. In addition, as of June 30, 2023, Kimbell had 90 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 | 462 | 388 | 2.27 | 1.47 | ||
Eagle Ford | 43 | 61 | 0.39 | 0.47 | ||
Haynesville | 105 | 27 | 0.81 | 0.49 | ||
Mid-Continent | 76 | 49 | 0.14 | 0.10 | ||
Bakken | 68 | 175 | 0.23 | 0.20 | ||
Appalachia | 5 | 12 | 0.01 | 0.03 | ||
Rockies | 8 | 22 | 0.04 | 0.21 | ||
Total | 767 | 734 | 3.89 | 2.97 | ||
(1) These figures pertain only to Kimbell's major properties and do not include possible additional DUCs and permits from | ||||||
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 June 30, 2023:
Fixed Price Swaps as of June 30, 2023 | |||||
Weighted Average | |||||
Volumes | Fixed Price | ||||
Oil | Nat Gas | Oil | Nat Gas | ||
BBL | MMBTU | $/BBL | $/MMBTU | ||
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 | |
2Q 2025 | 99,918 | 917,098 | $ 64.35 | $ 3.53 | |
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 second 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 August 9, 2023 by dialing 201-612-7415 and using the conference ID 13735459#. 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 August 2, 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) | ||
June 30, | ||
2023 | ||
Assets: | ||
Current assets | ||
Cash and cash equivalents | $ | 20,779 |
Oil, natural gas and NGL receivables | 45,006 | |
Derivative assets | 1,795 | |
Accounts receivable and other current assets | 3,136 | |
Total current assets | 70,716 | |
Property and equipment, net | 772 | |
Oil and natural gas properties | ||
Oil and natural gas properties (full cost method) | 1,602,200 | |
Less: accumulated depreciation, depletion and impairment | (749,746) | |
Total oil and natural gas properties, net | 852,454 | |
Right-of-use assets, net | 2,358 | |
Derivative assets | 1,580 | |
Loan origination costs, net | 6,308 | |
Total assets | $ | 934,188 |
Liabilities and unitholders' equity: | ||
Current liabilities | ||
Accounts payable | $ | 1,370 |
Other current liabilities | 8,341 | |
Derivative liabilities | 428 | |
Total current liabilities | 10,139 | |
Operating lease liabilities, excluding current portion | 2,066 | |
Derivative liabilities | 171 | |
Long-term debt | 269,600 | |
Other liabilities | 260 | |
Total liabilities | 282,236 | |
Commitments and contingencies | ||
Kimbell Royalty Partners, LP unitholders' equity: | ||
Common units | 596,177 | |
Class B units | 1,043 | |
Total Kimbell Royalty Partners, LP unitholders' equity | 597,220 | |
Noncontrolling interest in OpCo | 54,732 | |
Total equity | 651,952 | |
Total liabilities, mezzanine equity and unitholders' equity | $ | 934,188 |
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 | ||||
June 30, 2023 | June 30, 2022 | ||||
Revenue | |||||
Oil, natural gas and NGL revenues | $ | 56,982 | $ | 78,592 | |
Lease bonus and other income | 2,041 | 1,213 | |||
Gain (loss) on commodity derivative instruments, net | 1,729 | (7,094) | |||
Total revenues | 60,752 | 72,711 | |||
Costs and expenses | |||||
Production and ad valorem taxes | 5,405 | 5,003 | |||
Depreciation and depletion expense | 19,657 | 11,274 | |||
Marketing and other deductions | 2,908 | 4,063 | |||
General and administrative expenses | 7,925 | 7,866 | |||
Consolidated variable interest entities related: | |||||
General and administrative expenses | 219 | 591 | |||
Total costs and expenses | 36,114 | 28,797 | |||
Operating income | 24,638 | 43,914 | |||
Other income (expense) | |||||
Equity income in affiliate | — | 3,385 | |||
Interest expense | (6,341) | (3,323) | |||
Loss on extinguishment of debt | (480) | — | |||
Other (expense) income | (181) | 898 | |||
Consolidated variable interest entities related: | |||||
Interest earned on marketable securities in trust account | 1,070 | 223 | |||
Net income before income taxes | 18,706 | 45,097 | |||
Income tax expense | 909 | 1,803 | |||
Net income | 17,797 | 43,294 | |||
Net income attributable to noncontrolling interests | (4,297) | (5,424) | |||
Distributions on Class B units | (32) | (8) | |||
Net income attributable to common units of Kimbell Royalty Partners, LP | $ | 13,468 | $ | 37,862 | |
Basic | $ | 0.24 | $ | 0.66 | |
Diluted | $ | 0.23 | $ | 0.55 | |
Weighted average number of common units outstanding | |||||
Basic | 63,274,492 | 55,424,930 | |||
Diluted | 82,959,981 | 65,543,669 | |||
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, loss on extinguishment of debt, 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 | |||||
Three Months Ended | Three Months Ended | ||||
June 30, 2023 | June 30, 2022 | ||||
Reconciliation of net cash provided by operating activities | |||||
to Adjusted EBITDA and cash available for distribution | |||||
Net cash provided by operating activities | $ | 31,519 | $ | 40,423 | |
Interest expense | 6,341 | 3,323 | |||
Income tax expense | 909 | 1,803 | |||
Amortization of right-of-use assets | (84) | (79) | |||
Amortization of loan origination costs | (493) | (459) | |||
Loss on extinguishment of debt | (480) | — | |||
Forfeiture of restricted units | — | 20 | |||
Unit-based compensation | (3,290) | (2,949) | |||
Gain on derivative instruments, net of settlements | 2,600 | 6,564 | |||
Changes in operating assets and liabilities: | |||||
Oil, natural gas and NGL revenues receivable | 9,071 | 12,039 | |||
Accounts receivable and other current assets | 87 | (176) | |||
Accounts payable | (450) | 341 | |||
Other current liabilities | (3,176) | (1,396) | |||
Operating lease liabilities | 85 | 80 | |||
Consolidated variable interest entities related: | |||||
Interest earned on marketable securities in Trust Account | 1,070 | 223 | |||
Other assets and liabilities | 995 | (63) | |||
Consolidated EBITDA | $ | 44,704 | $ | 59,694 | |
Add: | |||||
Unit-based compensation | 3,290 | 2,949 | |||
Loss on extinguishment of debt | 480 | — | |||
Gain on derivative instruments, net of settlements | (2,600) | (6,564) | |||
Cash distribution from affiliate | — | 432 | |||
Equity income in affiliate | — | (3,385) | |||
Consolidated variable interest entities related: | |||||
Interest earned on marketable securities in Trust Account | (1,070) | (223) | |||
General and administrative expenses | 219 | 591 | |||
Consolidated Adjusted EBITDA | $ | 45,023 | $ | 53,494 | |
Adjusted EBITDA attributable to noncontrolling interest | (10,872) | (6,702) | |||
Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 34,151 | $ | 46,792 | |
Adjustments to reconcile Adjusted EBITDA to cash available | |||||
for distribution | |||||
Less: | |||||
Cash interest expense | 4,442 | 2,442 | |||
Cash income tax expense | — | 2,043 | |||
Distributions on Class B units | 32 | 8 | |||
Cash available for distribution on common units | $ | 29,677 | $ | 42,299 | |
Kimbell Royalty Partners, LP Supplemental Schedules (Unaudited, in thousands, except for per-unit data and unit counts) | ||||
Three Months Ended | ||||
June 30, 2023 | ||||
Net income | $ | 17,797 | ||
Depreciation and depletion expense | 19,657 | |||
Interest expense | 6,341 | |||
Income tax expense | 909 | |||
Consolidated EBITDA | $ | 44,704 | ||
Unit-based compensation | 3,290 | |||
Loss on extinguishment of debt | 480 | |||
Gain on derivative instruments, net of settlements | (2,600) | |||
Consolidated variable interest entities related: | ||||
Interest earned on marketable securities in Trust Account | (1,070) | |||
General and administrative expenses | 219 | |||
Consolidated Adjusted EBITDA | $ | 45,023 | ||
Adjusted EBITDA attributable to noncontrolling interest | (10,872) | |||
Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 34,151 | ||
Adjustments to reconcile Adjusted EBITDA to cash available | ||||
for distribution | ||||
Less: | ||||
Cash interest expense | 4,442 | |||
Distributions on Class B units | 32 | |||
Cash available for distribution on common units | $ | 29,677 | ||
Common units outstanding on June 30, 2023 | 65,507,635 | |||
Cash available for distribution per common unit outstanding | $ | 0.45 | ||
Common units outstanding on August 14, 2023 Record Date | 65,507,635 | |||
Second quarter 2023 distribution declared (1) | $ | 0.39 | ||
(1) The difference between the declared distribution and the cash available for distribution is primarily attributable | ||||
Kimbell Royalty Partners, LP Supplemental Schedules (Unaudited, in thousands, except for per-unit data and unit counts) | ||||
Three Months Ended | ||||
June 30, 2022 | ||||
Net income | $ | 43,294 | ||
Depreciation and depletion expense | 11,274 | |||
Interest expense | 3,323 | |||
Income tax expense | 1,803 | |||
Consolidated EBITDA | $ | 59,694 | ||
Unit-based compensation | 2,949 | |||
Gain on commodity derivative instruments, net of settlements | (6,564) | |||
Cash distribution from affiliate | 432 | |||
Equity income in affiliate | (3,385) | |||
Consolidated variable interest entities related: | ||||
Interest earned on marketable securities in Trust Account | (223) | |||
General and administrative expenses | 591 | |||
Consolidated Adjusted EBITDA | $ | 53,494 | ||
Adjusted EBITDA attributable to noncontrolling interest | (6,702) | |||
Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 46,792 | ||
Adjustments to reconcile Adjusted EBITDA to cash available | ||||
for distribution | ||||
Less: | ||||
Cash interest expense | 2,442 | |||
Cash income tax expense | 2,043 | |||
Distributions on Class B units | 8 | |||
Cash available for distribution on common units | $ | 42,299 | ||
Common units outstanding on June 30, 2022 | 57,331,833 | |||
Cash available for distribution per common unit outstanding | $ | 0.74 | ||
Common units outstanding on August 15, 2022 Record Date | 57,331,833 | |||
Second quarter 2022 distribution declared (1) | $ | 0.55 | ||
(1) The difference between the declared distribution and the cash available for distribution is primarily attributable to | ||||
Kimbell Royalty Partners, LP | ||||
Three Months Ended | ||||
June 30, 2023 | ||||
Net income | $ | 17,797 | ||
Depreciation and depletion expense | 19,657 | |||
Interest expense | 6,341 | |||
Income tax expense | 909 | |||
Consolidated EBITDA | $ | 44,704 | ||
Unit-based compensation | 3,290 | |||
Loss on extinguishment of debt | 480 | |||
Gain on derivative instruments, net of settlements | (2,600) | |||
Consolidated variable interest entities related: | ||||
Interest earned on marketable securities in Trust Account | (1,070) | |||
General and administrative expenses | 219 | |||
Consolidated Adjusted EBITDA | $ | 45,023 | ||
Q3 2022 - Q1 2023 Consolidated Adjusted EBITDA (1) | 176,276 | |||
Trailing Twelve Month Consolidated Adjusted EBITDA | $ | 221,299 | ||
Long-term debt (as of 6/30/23) | 269,600 | |||
Cash and cash equivalents (as of 6/30/23) | (20,779) | |||
Net debt (as of 6/30/23) | $ | 248,821 | ||
Net Debt to Trailing Twelve Month Consolidated Adjusted EBITDA | 1.1x | |||
(1) Consolidated Adjusted EBITDA for each of the quarters ended September 30, 2022, December 31, 2022 and March 31, 2023 | ||||
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SOURCE Kimbell Royalty Partners, LP
