Relative to prior 2023 guidance issued with Q4 2022 earnings release, Kimbell expects:
- Record daily production, which at its midpoint for Q2 2023 and Q3-Q4 2023 guidance is a 7% and 10% increase, respectively, over the midpoint of prior 2023 guidance
- Increase in oil production mix with Permian leading all categories including revenue, production, DUCs, permits and PUDs
- Reduction in expected cash G&A per Boe, reflecting positive operating leverage
FORT WORTH, Texas, May 18, 2023 /PRNewswire/ -- Kimbell Royalty Partners, LP (NYSE: KRP) ("Kimbell" or the "Company"), a leading owner of oil and gas mineral and royalty interests in over 16 million gross acres in 28 states, today announced updated 2023 guidance. The revised guidance is in connection with the previously announced closing of the purchase of mineral and royalty interests held by MB Minerals, L.P., a subsidiary of Sabalo Holdings, LLC (a portfolio company of EnCap Investments), in a cash and unit transaction valued at approximately $140.8 million1 (the "Acquisition"). Kimbell is entitled to all cash flow from production attributable to the Acquisition beginning on and after the effective date of April 1, 2023. Revenues and certain other operating statistics under generally accepted accounting principles ("GAAP") will be recorded for the Acquisition beginning on the closing date of May 17, 2023.
2023 Guidance
Below is Kimbell's updated guidance for the full year of 2023. The guidance for the second quarter of 2023 reflects only 45 days of production and operating statistics from the Acquisition following the closing based on management estimates, while the remaining quarters of 2023 reflect full quarters of production and operating statistics from the Acquisition based on management estimates:
Kimbell Royalty | ||||
Partners LP | ||||
Q2 2023 | ||||
Net Production - Mboe/d (6:1) | 17.5 | - | 19.3 | |
Oil Production - % of Net Production | 30 % | - | 34 % | |
Natural Gas Production - % of Net Production | 52 % | - | 56 % | |
Natural Gas Liquids Production - % of Net Production | 12 % | - | 16 % | |
Unit Costs ($/boe) | ||||
Marketing and other deductions | $1.60 | - | $2.40 | |
Depreciation and depletion expense | $10.00 | - | $14.00 | |
G&A | ||||
Cash G&A | $2.85 | - | $3.05 | |
Non-Cash G&A | $1.90 | - | $2.30 | |
Production and ad valorem taxes - % of Oil, Natural Gas and NGL Revenues | 7.0 % | - | 9.0 % | |
Payout Ratio (1) | 75 % | |||
Q3 and Q4 2023 | ||||
Net Production - Mboe/d (6:1) | 18.1 | - | 19.9 | |
Oil Production - % of Net Production | 32 % | - | 36 % | |
Natural Gas Production - % of Net Production | 50 % | - | 54 % | |
Natural Gas Liquids Production - % of Net Production | 12 % | - | 16 % | |
Unit Costs ($/boe) | ||||
Marketing and other deductions | $1.60 | - | $2.40 | |
Depreciation and depletion expense | $10.00 | - | $14.00 | |
G&A | ||||
Cash G&A | $2.80 | - | $3.00 | |
Non-Cash G&A | $1.80 | - | $2.20 | |
Production and ad valorem taxes - % of Oil, Natural Gas and NGL Revenues | 7.0 % | - | 9.0 % | |
Payout Ratio (1) | 75 % | |||
(1) The Company intends to pay out 75% of its projected cash available for distribution in quarterly | ||||
distributions and utilize 25% of projected cash available for distribution to pay down a portion of the | ||||
outstanding borrowings under its secured revolving credit facility each quarter. | ||||
About Kimbell Royalty Partners
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 over 16 million gross acres in 28 states and in every major onshore basin in the continental United States, including ownership in more than 125,000 gross wells with over 48,000 wells in the Permian Basin. To learn more, visit http://www.kimbellrp.com.
Forward-Looking Statements
This news release includes forward-looking statements. These forward-looking statements, which include statements regarding the anticipated benefits of the Acquisition and operational data with respect to the Acquisition, involve risks and uncertainties, including risks that the anticipated benefits of the Acquisition are not realized; risks relating to Kimbell's integration of the Acquisition assets; and risks relating to Kimbell's business, prospects for growth and acquisitions and the securities markets generally. 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 Securities and Exchange Commission ("SEC"). These include risks inherent in oil and natural gas drilling and production activities, including risks with respect to low or declining 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 assets acquired in the Acquisition; and other risks described in Kimbell's Annual Report on Form 10-K and other filings with 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.
Contact:
Rick Black
Dennard Lascar Investor Relations
krp@dennardlascar.com
(713) 529-6600
1 Purchase price reflects Kimbell's $15.53 / unit closing price as of 5/17/2023.
SOURCE Kimbell Royalty Partners, LP