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UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
August 1, 2024
Kimbell Royalty Partners, LP
(Exact name of
registrant as specified in its charter)
| Delaware |
|
1-38005 |
|
47-5505475 |
(State
or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(I.R.S.
Employer
Identification No.) |
|
777 Taylor Street, Suite 810
Fort Worth, Texas |
|
76102 |
| (Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including
area code: (817) 945-9700
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see
General Instruction A.2):
| ¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to 12(b) of the Act:
| Title
of each class: |
Trading
symbol(s): |
Name
of each exchange on which
registered: |
| Common
Units Representing Limited Partnership Interests |
KRP |
New
York Stock Exchange |
Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of
the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ¨
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02. |
Results of Operations and Financial Condition. |
On August 1, 2024, Kimbell
Royalty Partners, LP (the “Partnership”) issued a news release announcing its second quarter 2024 financial and operating
results. A copy of the news release is attached hereto, furnished as Exhibit 99.1 and incorporated in this Item 2.02 by reference.
| Item 7.01. |
Regulation FD Disclosure. |
Also on August 1, 2024,
the Partnership posted an updated investor presentation on its website. The presentation, titled “Fall 2024 Investor Presentation,”
may be found at http://www.kimbellrp.com under the “Events and Presentations” section under the “Investor Relations”
tab on the Partnership’s website. Investors should note that the Partnership announces financial information in filings with the
Securities and Exchange Commission, press releases and public conference calls as well as on its website.
The information contained
in Item 2.02, Item 7.01 and the accompanying Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section,
nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange
Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in
such filing.
| Item 9.01. |
Financial Statements and Exhibits. |
(d) Exhibits
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| KIMBELL ROYALTY PARTNERS, LP |
|
| |
|
| By: |
Kimbell Royalty GP, LLC, |
|
| |
its general partner |
|
| By: |
/s/ Matthew S. Daly |
|
| |
Matthew S. Daly |
|
| |
Chief Operating Officer |
|
Date: August 1, 2024
Exhibit 99.1
NEWS RELEASE
Kimbell Royalty
Partners Announces Second Quarter 2024 Results
Q2 2024 Run-Rate
Daily Production of 24,110 Boe/d (6:1) Exceeds Mid-Point of Guidance
Activity
on Acreage Remains Robust with 91 Active Rigs Drilling Representing 16%1 Market
Share of U.S. Land Rig Count
Record Low Cash
G&A per BOE Below Low-End of Guidance
Announces Q2
2024 Cash Distribution of $0.42 per Common Unit
FORT
WORTH, Texas, August 1, 2024 – 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 June 30, 2024.
Second
Quarter 2024 Highlights
| · | Q2
2024 run-rate daily production of 24,110 barrels of oil equivalent (“Boe”) per
day (6:1) |
| · | Q2
2024 oil, natural gas and NGL revenues of $77.0 million |
| · | Q2
2024 net income of approximately $15.2 million and net income attributable to common units
of approximately $8.4 million |
| · | Q2
2024 consolidated Adjusted EBITDA of $65.8 million |
| · | Record
low cash G&A per BOE of $2.34 in Q2 2024, below low-end of guidance reflecting operational
discipline and positive operating leverage |
| · | As
of June 30, 2024, Kimbell’s major properties2
had 7.96 net drilled but uncompleted wells (“DUCs”) and net permitted
locations on its acreage (3.82 net DUCs and 4.14 net permitted locations) compared to an
estimated 5.8 net wells needed to maintain flat production |
| · | As
of June 30, 2024, Kimbell had 91 rigs actively drilling on its acreage, representing
16.3% market share of all land rigs drilling in the continental United States as of such
time |
| · | Announced
a Q2 2024 cash distribution of $0.42 per common unit, reflecting a payout ratio of 75% of
cash available for distribution; implies a 10.2% annualized yield based on the July 31,
2024 closing price of $16.48 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 0.9x |
| · | Kimbell
affirms its financial and operational guidance ranges for 2024 previously disclosed in its
Q4 2023 earnings release |
1 Based on Kimbell rig count of 91 and Baker Hughes U.S.
land rig count of 560 as of June 30, 2024.
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.
Kimbell
Royalty Partners, LP – News Release
Page 2
Robert Ravnaas,
Chairman and Chief Executive Officer of Kimbell Royalty GP, LLC, Kimbell’s general partner (the “General Partner”),
commented, “Kimbell’s active rig count remains strong with our market share of U.S. land rigs actively drilling remaining
at 16%, which includes 91 rigs led by the Permian Basin with 47 rigs drilling at the end of Q2 2024. Furthermore, our 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 progress through 2024. Finally, cash G&A per BOE was at a record low during the quarter, well below the low-end of guidance
reflecting operational discipline and positive operating leverage.
“We are pleased
to declare the Q2 2024 distribution of 42 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.”
Second 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 second quarter of 2024, or $0.42 per
common unit. The distribution will be payable on August 19, 2024 to common unitholders of record at the close of business on August 12,
2024. Kimbell plans to utilize the remaining 25% of cash available for distribution for the second 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 Q2 2024 projected cash available for distribution), Kimbell has paid down approximately $165.4 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 second 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
second quarter 2024 average realized price per Bbl of oil was $79.99, per Mcf of natural gas was $1.81, per Bbl of NGLs was $25.05 and
per Boe combined was $35.14.
Kimbell
Royalty Partners, LP – News Release
Page 3
During the second
quarter of 2024, the Company’s total revenues were $76.6 million, net income was approximately $15.2 million and net income attributable
to common units was approximately $8.4 million, or $0.11 per common unit.
Total second quarter
2024 consolidated Adjusted EBITDA was $65.8 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 second quarter of 2024, G&A expense was $10.2 million, $5.1 million of which was Cash G&A expense, or $2.34 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 second quarter of 2024, which is a non-cash G&A expense,
was $5.1 million or $2.33 per Boe. This increase in unit-based compensation relative to the first quarter of 2024, was primarily related
to the accelerated vesting of restricted units following the passing of a director of Kimbell’s Board of Directors as previously
announced during the second quarter of 2024.
As of June 30,
2024, Kimbell had approximately $265.8 million in debt outstanding under its secured revolving credit facility, had net debt to second
quarter 2024 trailing twelve month consolidated Adjusted EBITDA of approximately 0.9x and was in compliance with all financial covenants
under its secured revolving credit facility. Kimbell had approximately $284.2 million in undrawn capacity under its secured revolving
credit facility as of June 30, 2024.
As of June 30,
2024, Kimbell had outstanding 80,969,651 common units and 14,524,120 Class B units. As of August 1, 2024, Kimbell had outstanding
80,969,651 common units and 14,524,120 Class B units.
Production
Second
quarter 2024 run-rate average daily production was 24,110 Boe per day (6:1), which was composed
of approximately 51% from natural gas (6:1) and approximately 49% from liquids (32% from oil and 17% from NGLs).
Operational
Update
As of June 30,
2024, Kimbell’s major properties had 762 gross (3.82 net) DUCs and 672 gross (4.14 net) permitted locations on its acreage. In
addition, as of June 30, 2024, Kimbell had 91 rigs actively drilling on its acreage, which represents an approximate 16.3% market
share of all land rigs drilling in the continental United States as of such time.
Kimbell
Royalty Partners, LP – News Release
Page 4
| Basin | |
Gross
DUCs as of
June 30, 2024(1) | | |
Gross
Permits as of
June 30, 2024(1) | | |
Net
DUCs as of
June 30, 2024(1) | | |
Net
Permits as of
June 30, 2024(1) | |
| Permian | |
| 417 | | |
| 416 | | |
| 1.93 | | |
| 2.44 | |
| Eagle Ford | |
| 98 | | |
| 58 | | |
| 0.50 | | |
| 0.34 | |
| Haynesville | |
| 53 | | |
| 20 | | |
| 0.33 | | |
| 0.38 | |
| Mid-Continent | |
| 130 | | |
| 64 | | |
| 0.89 | | |
| 0.70 | |
| Bakken | |
| 55 | | |
| 102 | | |
| 0.10 | | |
| 0.23 | |
| Appalachia | |
| 5 | | |
| 3 | | |
| 0.01 | | |
| 0.01 | |
| Rockies | |
| 4 | | |
| 9 | | |
| 0.06 | | |
| 0.04 | |
| Total | |
| 762 | | |
| 672 | | |
| 3.82 | | |
| 4.14 | |
(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 June 30, 2024:
| Fixed
Price Swaps as of June 30, 2024 | |
| | | |
| | |
| | |
Weighted Average | |
| | | |
Volumes | | |
Fixed Price | |
| | | |
Oil | | |
Nat Gas | | |
Oil | | |
Nat Gas | |
| | | |
BBL | | |
MMBTU | | |
$/BBL | | |
$/MMBTU | |
| 3Q
2024 | | |
| 142,508 | | |
| 1,328,940 | | |
$ | 76.88 | | |
$ | 3.96 | |
| 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 | |
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 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 August 9, 2024 by dialing 201-612-7415 and using
the conference ID 13746561#. 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.
Kimbell
Royalty Partners, LP – News Release
Page 5
Presentation
On
August 1, 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.
Kimbell
Royalty Partners, LP – News Release
Page 6
Contact:
Rick Black
Dennard Lascar
Investor Relations
krp@dennardlascar.com
(713) 529-6600
–
Financial statements follow –
Kimbell
Royalty Partners, LP – News Release
Page 7
Kimbell Royalty
Partners, LP
Condensed Consolidated
Balance Sheet
(Unaudited, in
thousands)
| | |
June 30, | |
| | |
2024 | |
| Assets: | |
| | |
| Current assets | |
| | |
| Cash and cash equivalents | |
$ | 30,945 | |
| Oil, natural gas and NGL receivables | |
| 53,218 | |
| Derivative assets | |
| 2,379 | |
| Accounts receivable and other current assets | |
| 2,389 | |
| Total current assets | |
| 88,931 | |
| Property and equipment, net | |
| 444 | |
| Oil and natural gas properties | |
| | |
| Oil and natural gas properties (full cost
method) | |
| 2,048,712 | |
| Less: accumulated depreciation, depletion
and impairment | |
| (903,996 | ) |
| Total oil and natural gas properties, net | |
| 1,144,716 | |
| Right-of-use assets, net | |
| 2,016 | |
| Derivative assets | |
| 412 | |
| Loan origination costs, net | |
| 6,282 | |
| Total assets | |
$ | 1,242,801 | |
| Liabilities and unitholders' equity: | |
| | |
| Current liabilities | |
| | |
| Accounts payable | |
$ | 6,502 | |
| Other current liabilities | |
| 8,977 | |
| Derivative liabilities | |
| 179 | |
| Total current liabilities | |
| 15,658 | |
| Operating lease liabilities, excluding current portion | |
| 1,702 | |
| Derivative liabilities | |
| 1,098 | |
| Long-term debt | |
| 265,760 | |
| Other liabilities | |
| 135 | |
| Total liabilities | |
| 284,353 | |
| Commitments and contingencies | |
| | |
| Mezzanine equity: | |
| | |
| Series A preferred units | |
| 315,213 | |
| Kimbell Royalty Partners, LP unitholders' equity: | |
| | |
| Common units | |
| 722,152 | |
| Class B units | |
| 726 | |
| Total Kimbell Royalty Partners, LP unitholders'
equity | |
| 722,878 | |
| Non-controlling deficit in OpCo | |
| (79,643 | ) |
| Total unitholders' equity | |
| 643,235 | |
| Total liabilities, mezzanine equity and
unitholders' equity | |
$ | 1,242,801 | |
Kimbell
Royalty Partners, LP – News Release
Page 8
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,
2024 | | |
June 30,
2023 | |
| Revenue | |
| | | |
| | |
| Oil, natural gas and NGL revenues | |
$ | 76,959 | | |
$ | 56,982 | |
| Lease bonus and other income | |
| 660 | | |
| 2,041 | |
| (Loss) gain on commodity derivative instruments,
net | |
| (1,046 | ) | |
| 1,729 | |
| Total revenues | |
| 76,573 | | |
| 60,752 | |
| Costs and expenses | |
| | | |
| | |
| Production and ad valorem taxes | |
| 5,577 | | |
| 5,405 | |
| Depreciation and depletion expense | |
| 33,024 | | |
| 19,657 | |
| Marketing and other deductions | |
| 3,828 | | |
| 2,908 | |
| General and administrative expense | |
| 10,252 | | |
| 7,925 | |
| Consolidated variable interest entities
related: | |
| | | |
| | |
| General and administrative expense | |
| — | | |
| 219 | |
| Total costs and expenses | |
| 52,681 | | |
| 36,114 | |
| Operating income | |
| 23,892 | | |
| 24,638 | |
| Other (expense) income | |
| | | |
| | |
| Interest expense | |
| (6,946 | ) | |
| (6,341 | ) |
| Loss on extinguishment of debt | |
| — | | |
| (480 | ) |
| Other expense | |
| — | | |
| (181 | ) |
| Consolidated variable interest entities
related: | |
| | | |
| | |
| Interest earned on marketable securities
in trust account | |
| — | | |
| 1,070 | |
| Net income before income taxes | |
| 16,946 | | |
| 18,706 | |
| Income tax expense | |
| 1,759 | | |
| 909 | |
| Net income | |
| 15,187 | | |
| 17,797 | |
| Distribution and accretion on Series A
preferred units | |
| (5,243 | ) | |
| — | |
| Net income attributable to non-controlling
interests | |
| (1,513 | ) | |
| (4,297 | ) |
| Distributions on Class B units | |
| (21 | ) | |
| (32 | ) |
| Net income attributable to common units of Kimbell Royalty
Partners, LP | |
$ | 8,410 | | |
$ | 13,468 | |
| | |
| | | |
| | |
| Basic | |
$ | 0.11 | | |
$ | 0.24 | |
| Diluted | |
$ | 0.11 | | |
$ | 0.23 | |
| Weighted average number of common units outstanding | |
| | | |
| | |
| Basic | |
| 74,834,777 | | |
| 63,274,492 | |
| Diluted | |
| 116,593,560 | | |
| 82,959,981 | |
Kimbell
Royalty Partners, LP – News Release
Page 9
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, 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.
Kimbell
Royalty Partners, LP – News Release
Page 10
Kimbell Royalty Partners, LP
Supplemental Schedules
(Unaudited, in thousands)
| | |
Three Months Ended | | |
Three Months Ended | |
| | |
June 30, 2024 | | |
June 30, 2023 | |
| Reconciliation of net cash provided by operating activities to Adjusted EBITDA and cash available for distribution | |
| | | |
| | |
| Net cash provided by operating activities | |
$ | 62,883 | | |
$ | 31,519 | |
| Interest expense | |
| 6,946 | | |
| 6,341 | |
| Income tax expense | |
| 1,759 | | |
| 909 | |
| Amortization of right-of-use assets | |
| (87 | ) | |
| (84 | ) |
| Amortization of loan origination costs | |
| (530 | ) | |
| (493 | ) |
| Loss on extinguishment of debt | |
| — | | |
| (480 | ) |
| Unit-based compensation | |
| (5,109 | ) | |
| (3,290 | ) |
| (Loss) Gain on derivative instruments, net of settlements | |
| (3,796 | ) | |
| 2,600 | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Oil, natural gas and NGL revenues receivable | |
| (1,486 | ) | |
| 9,071 | |
| Accounts receivable and other current assets | |
| (460 | ) | |
| 87 | |
| Accounts payable | |
| 353 | | |
| (450 | ) |
| Other current liabilities | |
| (3,651 | ) | |
| (3,176 | ) |
| Operating lease liabilities | |
| 94 | | |
| 85 | |
| Consolidated variable interest entities related: | |
| | | |
| | |
| Interest earned on marketable securities in Trust Account | |
| — | | |
| 1,070 | |
| Other assets and liabilities | |
| — | | |
| 995 | |
| Consolidated EBITDA | |
$ | 56,916 | | |
$ | 44,704 | |
| Add: | |
| | | |
| | |
| Unit-based compensation | |
| 5,109 | | |
| 3,290 | |
| Loss on extinguishment of debt | |
| — | | |
| 480 | |
| Loss (Gain) on derivative instruments, net of settlements | |
| 3,796 | | |
| (2,600 | ) |
| Consolidated variable interest entities related: | |
| | | |
| | |
| Interest earned on marketable securities in Trust Account | |
| — | | |
| (1,070 | ) |
| General and administrative expense | |
| — | | |
| 219 | |
| Consolidated Adjusted EBITDA | |
$ | 65,821 | | |
$ | 45,023 | |
| Adjusted EBITDA attributable to non-controlling interest | |
| (10,011 | ) | |
| (10,872 | ) |
| Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | |
$ | 55,810 | | |
$ | 34,151 | |
| | |
| | | |
| | |
| Adjustments to reconcile Adjusted EBITDA to cash available for distribution | |
| | | |
| | |
| Less: | |
| | | |
| | |
| Cash interest expense | |
| 5,620 | | |
| 4,442 | |
| Cash distributions on Series A preferred units | |
| 4,111 | | |
| — | |
| Distributions on Class B units | |
| 21 | | |
| 32 | |
| Cash available for distribution on common units | |
$ | 46,058 | | |
$ | 29,677 | |
Kimbell
Royalty Partners, LP – News Release
Page 11
Kimbell Royalty Partners, LP
Supplemental Schedules
(Unaudited, in thousands, except for per-unit
data and unit counts)
| | |
Three Months Ended | |
| | |
June 30, 2024 | |
| Net income | |
$ | 15,187 | |
| Depreciation and depletion expense | |
| 33,024 | |
| Interest expense | |
| 6,946 | |
| Income tax expense | |
| 1,759 | |
| Consolidated EBITDA | |
$ | 56,916 | |
| Unit-based compensation | |
| 5,109 | |
| Loss on derivative instruments, net of settlements | |
| 3,796 | |
| Consolidated Adjusted EBITDA | |
$ | 65,821 | |
| Adjusted EBITDA attributable to non-controlling interest | |
| (10,011 | ) |
| Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | |
$ | 55,810 | |
| | |
| | |
| Adjustments to reconcile Adjusted EBITDA to cash available for distribution | |
| | |
| Less: | |
| | |
| Cash interest expense | |
| 5,620 | |
| Cash distributions on Series A preferred units | |
| 4,111 | |
| Distributions on Class B units | |
| 21 | |
| Cash available for distribution on common units | |
$ | 46,058 | |
| | |
| | |
| Common units outstanding on June 30, 2024 | |
| 80,969,651 | |
| | |
| | |
| Common units outstanding on August 12, 2024 Record Date | |
| 80,969,651 | |
| | |
| | |
| Cash available for distribution per common unit outstanding | |
$ | 0.57 | |
| | |
| | |
| Second quarter 2024 distribution declared (1) | |
$ | 0.42 | |
(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.
Kimbell
Royalty Partners, LP – News Release
Page 12
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 expense | |
| 219 | |
| Consolidated Adjusted EBITDA | |
$ | 45,023 | |
| Adjusted EBITDA attributable to non-controlling 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 | |
| | |
| | |
| Common units outstanding on August 14, 2023 Record Date | |
| 65,507,635 | |
| | |
| | |
| Cash available for distribution per common unit outstanding | |
$ | 0.45 | |
| | |
| | |
| Second quarter 2023 distribution declared (1) | |
$ | 0.39 | |
(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 cash flows received from the Q2 2023 Acquired
Production after the effective date of April 1, 2023, but prior to the closing date of May 17, 2023, to pay outstanding borrowings under
its credit facility and to distribute the additional cash flows to common unitholders. Revenues, production and other financial and operating
results from the Q2 2023 acquisition are reflected in Kimbell's condensed consolidated financial statements from May 17, 2023 onward.
Kimbell
Royalty Partners, LP – News Release
Page 13
Kimbell Royalty Partners, LP
Supplemental Schedules
(Unaudited, in thousands)
| | |
Three Months Ended | |
| | |
June 30, 2024 | |
| Net income | |
$ | 15,187 | |
| Depreciation and depletion expense | |
| 33,024 | |
| Interest expense | |
| 6,946 | |
| Income tax expense | |
| 1,759 | |
| Consolidated EBITDA | |
$ | 56,916 | |
| Unit-based compensation | |
| 5,109 | |
| Loss on derivative instruments, net of settlements | |
| 3,796 | |
| Consolidated Adjusted EBITDA | |
$ | 65,821 | |
| | |
| | |
| Q3 2023 - Q1 2024 Consolidated Adjusted EBITDA (1) | |
| 210,598 | |
| Trailing Twelve Month Consolidated Adjusted EBITDA | |
$ | 276,419 | |
| | |
| | |
| Long-term debt (as of 6/30/24) | |
| 265,760 | |
| Cash and cash equivalents (as of 6/30/24) (2) | |
| (25,000 | ) |
| Net debt (as of 6/30/24) | |
$ | 240,760 | |
| | |
| | |
| Net Debt to Trailing Twelve Month Consolidated Adjusted EBITDA | |
| 0.9 | x |
(1) Consolidated Adjusted EBITDA for each of the quarters ended September 30, 2023, December 31, 2023 and March 31, 2024 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 Q3 2023 acquisition that closed in September 2023 in accordance with Kimbell's secured revolving credit facility.
(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 $25 million.
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