Kimbell Royalty Partners, LP Common Units (NYSE:KRP) Q4 2024 Earnings Conference Call February 27, 2025 11:00 AM ET Company Participants Rick Black – Investor Relations Bob Ravnaas – Chairman and Chief Executive Officer Davis Ravnaas – President and Chief Financial Officer Blayne Rhynsburger – Controller Conference Call Participants Jack Wilson – Truist Securities Jon Mardini – KeyBanc Capital Markets Noah Hungness – Bank of America Derrick Whitfield – Texas Capital Paul Diamond – Citi Operator Thank you. G ...

Core Viewpoint - Kimbell Royalty (KRP) reported a quarterly loss of $0.10 per share, missing the Zacks Consensus Estimate of $0.19, and showing a significant decline from earnings of $0.14 per share a year ago, resulting in an earnings surprise of -152.63% [1] Financial Performance - The company posted revenues of $66.72 million for the quarter ended December 2024, which was 16.93% below the Zacks Consensus Estimate and a decrease from $99.2 million in the same quarter last year [2] - Over the last four quarters, Kimbell Royalty has surpassed consensus EPS estimates only once [2] Stock Performance - Kimbell Royalty shares have declined approximately 3.8% since the beginning of the year, contrasting with the S&P 500's gain of 1.3% [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.23 for the coming quarter and $1.01 for the current fiscal year, alongside expected revenues of $86.41 million and $364.26 million respectively [7] - The estimate revisions trend for Kimbell Royalty is currently favorable, leading to a Zacks Rank 1 (Strong Buy), indicating expected outperformance in the near future [6] Industry Context - The Oil and Gas - Royalty Trust - United States industry is currently ranked in the top 1% of over 250 Zacks industries, suggesting a strong performance potential compared to lower-ranked industries [8]

Production and Operational Performance - Q4 2024 average daily production reached 25,946 Boe per day, marking the first time production exceeded 25,000 Boe/d in Kimbell's history[5]. - The company achieved a 23% increase in total production compared to 2023, driven by a $455 million acquisition that closed in Q3 2023[7]. - As of December 31, 2024, Kimbell had 91 active rigs drilling, representing a 16% market share of the U.S. land rig count[10]. - Kimbell initiated 2025 operational guidance with an estimated daily production mid-point of 25,500 Boe/d, projecting a range of 24,000 to 27,000 Boe/d[10]. - Kimbell's 2025 guidance estimates net production between 24.0 Mboe/d and 27.0 Mboe/d, with oil production expected to account for 31% to 35% of net production[27]. Financial Performance - Total revenues for Q4 2024 were $69.1 million, with a net loss of approximately $39.3 million primarily due to a non-cash ceiling test impairment expense of $56.2 million[5][15]. - Kimbell Royalty Partners reported total revenues of $66.715 million for Q4 2024, a decrease of 32.7% compared to $99.196 million in Q4 2023[36]. - The company experienced a net loss of $39.259 million in Q4 2024, compared to a net income of $17.828 million in Q4 2023, reflecting a significant decline in profitability[36]. - For the full year 2024, Kimbell's oil, natural gas, and NGL revenues increased to $304.606 million, up 13.8% from $267.585 million in 2023[38]. - Adjusted EBITDA for Q4 2024 was $59,776,000, down from $68,993,000 in Q4 2023, with Adjusted EBITDA attributable to Kimbell Royalty Partners, LP at $50,684,000[49][47]. Cash Distribution and Debt Management - Kimbell's Q4 2024 cash distribution was announced at $0.40 per common unit, reflecting a payout ratio of 75% of cash available for distribution[10][12]. - The company plans to maintain a payout ratio of 75% of projected cash available for distribution, with 25% allocated to pay down outstanding borrowings[27]. - The cash available for distribution per common unit outstanding decreased to $0.44 in Q4 2024 from $0.57 in Q4 2023[49][47]. - Kimbell's long-term debt as of December 31, 2024, was $239,160,000, with a net debt of $214,160,000[49]. - The net debt to trailing twelve-month consolidated Adjusted EBITDA ratio was 0.8x as of December 31, 2024[49]. Asset and Reserve Management - Proved developed reserves increased by approximately 3% year-over-year to over 67 MMBoe as of December 31, 2024[24]. - Kimbell's total assets as of December 31, 2024, were reported at $1.119 billion, with total liabilities amounting to $256.420 million[34]. - The company reported an impairment of oil and natural gas properties totaling $62.119 million for the year ended December 31, 2024[38]. Pricing and Market Conditions - The average realized price per barrel of oil in Q4 2024 was $69.35, while the average price for natural gas was $1.88 per Mcf[14]. - Kimbell has a hedging strategy in place, with fixed price swaps for oil averaging $71.55 per barrel in Q1 2025[26]. - Kimbell's production and ad valorem taxes were 7.0% of oil, natural gas, and NGL revenues, indicating a stable tax burden relative to revenue[27].

Company Overview - Kimbell Royalty (KRP) is expected to report earnings for the quarter ended December 2024, with a consensus estimate of $0.19 per share, reflecting a year-over-year increase of +35.7% despite a revenue decline of 19% to $80.31 million [3][12]. Earnings Expectations - The stock price may increase if the actual earnings exceed expectations in the upcoming report scheduled for February 27 [2]. - The consensus EPS estimate has been revised 9.52% higher in the last 30 days, indicating a more optimistic outlook from analysts [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP for Kimbell Royalty is +24.32%, suggesting a strong likelihood of beating the consensus EPS estimate [11]. - A positive Earnings ESP combined with a Zacks Rank of 1 (Strong Buy) enhances the predictive power for an earnings beat, with historical data showing a nearly 70% success rate for such combinations [8]. Historical Performance - In the last reported quarter, Kimbell Royalty had an earnings surprise of +4.76%, reporting $0.22 per share against an expectation of $0.21 [12]. - Over the past four quarters, the company has only surpassed consensus EPS estimates once [13]. Industry Context - Sitio Royalties (STR), another player in the oil and gas royalty trust sector, is expected to report a significant year-over-year decline in EPS of -88.4%, with revenues projected to increase by 1.6% to $151.67 million [17]. - Sitio Royalties has an Earnings ESP of 7.69% and a Zacks Rank of 2 (Buy), indicating a likelihood of beating the consensus EPS estimate [18].

Acquisition Details - Kimbell Royalty Partners LP (KRP) has acquired mineral and royalty interests in the Midland Basin for approximately $230 million, with the final purchase amount subject to post-closing adjustments [1] - The acquired assets produced approximately 1,842 barrels of oil equivalent per day (Boe/d) as of October 1, 2024, including 1,125 barrels of oil per day (Bbls/d), 410 Bbls/d of NGLs, and 1,842 thousand cubic feet per day of natural gas (Mcf/d) [2] - The assets are located under the Mabee Ranch in the Midland Basin, primarily in Martin County (63% of interests) and Andrews County (37% of interests) [3] Future Production Estimates - For full-year 2025, Kimbell expects production from the acquired assets to remain at approximately 1,842 Boe/d, with a mix of 1,104 Bbls/d of oil, 424 Bbls/d of NGLs, and 1,881 Mcf/d of natural gas [4] Financing Structure - Kimbell financed the acquisition through a combination of an underwritten public offering of common units and borrowed funds under its revolving credit facility [2] Company Overview - Kimbell Royalty Partners LP holds mineral and royalty interests across 28 states in the United States [4] Market Position - KRP currently holds a Zacks Rank 3 (Hold), while other energy sector stocks like Sunoco LP and Equinor ASA have higher rankings, indicating stronger market positions [5]

Core Viewpoint - Kimbell Royalty Partners has successfully completed the acquisition of mineral and royalty interests valued at approximately $230 million, enhancing its asset portfolio and expected production capacity [1][2]. Group 1: Acquisition Details - The acquisition involves mineral and royalty interests from a private seller, with a purchase price of around $230 million, funded through a public offering and borrowings [1]. - The acquisition was finalized on January 17, 2025, and Kimbell will receive cash flow from production attributable to the acquired assets starting from October 1, 2024 [1]. - The acquired assets are located under the historic Mabee Ranch in the Midland Basin, primarily in Martin County (63%) and Andrews County (37%) [2]. Group 2: Production Estimates - As of October 1, 2024, the acquired assets produced approximately 1,842 Boe/d, consisting of 1,125 Bbl/d of oil, 410 Bbl/d of NGLs, and 1,842 Mcf/d of natural gas [2]. - For the full year 2025, Kimbell estimates production from the acquired assets to be approximately 1,842 Boe/d, with a slight adjustment in oil and NGL production [2]. Group 3: Company Overview - Kimbell Royalty Partners is a prominent oil and gas mineral and royalty company based in Fort Worth, Texas, owning interests in over 17 million gross acres across 28 states [3]. - The company has ownership in more than 130,000 gross wells, with over 51,000 wells located in the Permian Basin [3].

FORT WORTH, Texas, Jan. 7, 2025 /PRNewswire/ -- Kimbell Royalty Partners, LP (NYSE: KRP) ("Kimbell") today announced the pricing of its upsized public offering of 10,000,000 common units representing limited partner interests, at a public offering price of $14.90 per common unit. The total gross proceeds of the offering, before underwriters' discounts and estimated offering expenses, will be approximately $149.0 million. Kimbell has granted the underwriters an option to purchase up to 1,500,000 additional c ...

Core Viewpoint - Kimbell Royalty Partners, LP has announced an acquisition of mineral and royalty interests valued at approximately $231 million, enhancing its position in the Midland Basin and expected to be immediately accretive to cash flow per unit [2][4][6]. Acquisition Details - The acquisition involves a cash and unit transaction, with Kimbell having the option to pay $207 million in cash and approximately 1.4 million common units valued at $24 million [2]. - The acquired assets are expected to produce approximately 1,842 Boe/d as of October 1, 2024, with a production mix of 60% oil, 17% natural gas, and 23% NGL [3][6]. - The effective date of the acquisition is anticipated to be October 1, 2024, with closing expected in the first quarter of 2025 [3]. Production and Financial Impact - The acquisition is projected to generate an estimated $30.9 million of cash flow at strip pricing as of January 3, 2025, reflecting a transaction multiple of approximately 7.5x [6]. - Kimbell expects to increase daily production by approximately 8% and decrease cash G&A per Boe by approximately 7% following the acquisition [6]. - The acquisition is expected to add 1.22 net DUCs and net permitted locations, increasing Kimbell's current major net well inventory by approximately 16% [6]. Strategic Positioning - The acquired assets are located under the Mabee Ranch in the Midland Basin, with a high interest position and significant production potential from approximately 875 gross producing wells [4][7]. - Kimbell's total acreage will exceed 17 million gross acres, with over 130,000 gross wells and 92 active rigs post-acquisition, representing approximately 16% of the total active land rigs in the continental U.S. [8]. - The acquisition is expected to strengthen Kimbell's liquids weighting from 48% to 51% of the daily production mix [12]. Operational Highlights - The acquired assets are operated by premier E&P operators, including ConocoPhillips, Diamondback Energy, and ExxonMobil, ensuring high-quality reservoir development [4][12]. - Kimbell maintains a conservative balance sheet with expected pro forma net leverage of approximately 1.0x following the transaction [6].

Core Viewpoint - Kimbell Royalty Partners, LP will release its fourth quarter 2024 financial results on February 27, 2025, and will declare its distribution concurrently with the earnings release [1]. Company Overview - Kimbell Royalty Partners is a prominent oil and gas mineral and royalty company based in Fort Worth, Texas, owning interests in approximately 17 million gross acres across 28 states [3]. - The company has ownership in over 129,000 gross wells, with more than 50,000 wells located in the Permian Basin [3]. Financial Communication - A conference call will be held on the same day as the earnings release at 10:00 a.m. Central (11:00 a.m. Eastern), which will be broadcast live over the Internet [1]. - Investors can access the conference call by phone or via the webcast on Kimbell's Investor Relations website [2].

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