Company Overview - Kimbell Royalty Partners LP (KRP) is an oil and gas mineral and royalty company with assets across the US, possessing over 14 years of drilling inventory remaining [1] Analyst Background - The analyst has over 10 years of experience researching companies, estimating that they have conducted in-depth research on over 1000 companies across various sectors including commodities like oil, natural gas, gold, and copper, as well as technology and emerging market stocks [1] Investment Focus - The analyst has transitioned from writing a blog to a value investing-focused YouTube channel, where they have researched hundreds of different companies, with a particular interest in metals and mining stocks, while also being comfortable with other industries such as consumer discretionary/staples, REITs, and utilities [1]

Company Operations and Production - As of September 30, 2025, the company owned mineral and royalty interests in approximately 12.3 million gross acres, with 55% located in the Permian Basin and Mid-Continent[101] - Average daily production across all basins as of September 30, 2025, was 158,350 Boe/d, with the Permian Basin contributing 27,799 Boe/d[102] - The company has 806 drilled but uncompleted wells (DUCs) and 651 permitted locations as of September 30, 2025[103] - The company has interests in over 131,000 gross wells, including over 52,000 wells in the Permian Basin[101] - The total number of active rigs operating on the company's acreage decreased from 90 in September 2024 to 86 in September 2025, with notable changes in the Permian Basin increasing from 47 to 51 rigs[115] Financial Performance - The company declared a quarterly cash distribution of $0.35 per common unit for the quarter ended September 30, 2025, to be paid on November 24, 2025[104] - Oil revenue constituted 64% of total revenue for the three months ended September 30, 2025, down from 73% in the same period of 2024, while natural gas revenue increased from 15% to 23%[116] - Adjusted EBITDA for the three months ended September 30, 2025, was $62.27 million, compared to $63.12 million for the same period in 2024[123] - Cash available for distribution on common units was $43.47 million for the three months ended September 30, 2025, slightly down from $44.23 million in 2024[125] - The net income for the three months ended September 30, 2025, was $22.32 million, compared to $25.81 million in the same period of 2024[123] - Total revenues for the nine months ended September 30, 2025 were $251.4 million, an increase of $8.8 million from $242.6 million for the same period in 2024[134] Commodity Prices and Market Conditions - Oil prices ranged from a high of $80.73 to a low of $58.50 per barrel for the nine months ended September 30, 2025, while natural gas prices ranged from $9.86 to $2.65 per MMBtu[111] - The average daily price for oil in Q3 2025 was $65.78 per barrel, compared to $76.43 in Q3 2024[112] - The geopolitical conflicts, including the ongoing situation in Ukraine and the Middle East, have led to increased volatility in commodity prices, although the company has not yet experienced a material impact on operations[107] - The average price received for oil decreased by 17.5% to $64.42 per Bbl, while the average price for natural gas increased by 66.9% to $2.67 per Mcf for the three months ended September 30, 2025 compared to the same period in 2024[139] Acquisitions and Growth Strategy - The company is actively pursuing acquisitions of mineral and royalty interests, which are a key part of its growth strategy[127] - The Boren Acquisition in January 2025 is a material acquisition that may impact the comparability of results for the three and nine months ended September 30, 2025, and 2024[129] Expenses and Financial Management - General and administrative expenses for the three months ended September 30, 2025 were $10.1 million, an increase of $0.6 million compared to $9.5 million for the same period in 2024[147] - Interest expense for the three months ended September 30, 2025 was $9.8 million, an increase from $6.5 million for the same period in 2024, primarily due to an increase in the overall debt balance[148] - Interest expense increased to $25.4 million for the nine months ended September 30, 2025, up from $20.7 million in 2024, due to a higher overall debt balance[163] - The Board of Directors approved the allocation of 25% of available cash for distribution on common units for the repayment of $12.6 million in outstanding borrowings under the secured revolving credit facility[167] Cash Flows and Financial Position - Cash flows provided by operating activities were $189.2 million for the nine months ended September 30, 2025, a decrease of $5.1 million compared to $194.3 million in 2024[172] - Cash flows used in investing activities increased significantly to $223.4 million for the nine months ended September 30, 2025, primarily due to the Boren Acquisition[173] - Cash flows provided by financing activities were $40.0 million for the nine months ended September 30, 2025, compared to cash used of $190.5 million in 2024, driven by proceeds from the 2025 Equity Offering[174] Risk Management and Derivative Contracts - The company has entered into commodity derivative agreements extending through September 2027 to stabilize prices for a portion of its oil and natural gas production[116] - The company has entered into commodity derivative contracts to mitigate exposure to price volatility in oil and natural gas[187] - Changes in fair values of derivative contracts will be recognized as gains and losses in current period earnings, potentially affecting earnings significantly[190] Tax and Regulatory Environment - The company recognized a reduction in current income tax expense due to the enactment of the One Big Beautiful Bill Act, which included a permanent reduction of the corporate tax rate[109] Other Considerations - Inflation has not materially impacted operations from January 1, 2024, to September 30, 2025, but could affect costs and financial position in the future[194] - As of September 30, 2025, there were no off-balance sheet arrangements reported[184] - The company does not control the volumes or methods of sale for oil, natural gas, and NGLs produced from underlying properties[192]

Financial Data and Key Metrics Changes - Kimbell Royalty Partners reported total revenues of $76.8 million for Q3 2025, with adjusted EBITDA of $62.3 million [8][9] - Production averaged 25,574 BOE per day, reflecting a 1% organic increase over Q2 2025 [4][5] - Cash G&A expenses were $5.9 million, equating to $2.51 per BOE, which was below the midpoint of guidance [8][9] Business Line Data and Key Metrics Changes - The company’s production base is diversified and low-decline, with a strong performance despite a general slowdown in the U.S. oil and natural gas sector [4][5] - The active rig count remains strong at 86 rigs, representing a 16% market share of U.S. land rigs [5] Market Data and Key Metrics Changes - The company noted a favorable environment for natural gas, with prices above $4, which is expected to contribute positively to production growth [16][42] - The Mid-Continent and Haynesville areas have shown acceleration in activity, benefiting from a higher gas cut [16][42] Company Strategy and Development Direction - Kimbell aims to be a leading consolidator in the oil and natural gas royalty sector, focusing on long-term unit holder value [6] - The company maintains a conservative balance sheet with a net debt to trailing 12 months consolidated adjusted EBITDA of approximately 1.6 times [9] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining flat or slightly increasing production despite industry challenges, citing strong rig activity and a diversified portfolio [10][32] - The company is optimistic about the long-term demand for U.S. energy and its position to benefit from this trend [10] Other Important Information - A cash distribution of $0.35 per common unit was declared for Q3 2025, with approximately 100% expected to be a return of capital [8][9] - The company reaffirmed its financial and operational guidance ranges for 2025 [9] Q&A Session Summary Question: Insights on macro conditions and production stability - Management highlighted steady production from their portfolio and noted that rig activity has remained relatively flat, providing confidence in maintaining production levels [12][13] Question: Activity in Mid-Continent and Haynesville - Management reported strong activity in the Mid-Continent, benefiting from higher gas prices, and emphasized the importance of a diversified portfolio [16] Question: Marketing and other deductions expense fluctuations - Management indicated that the recent increase in marketing costs was due to production growth in the Mid-Continent and suggested a return to historical averages in a normalized environment [17] Question: Maintenance level for production stability - Management confirmed that the maintenance level of 6.5 wells is due for an update and is expected to decrease, enhancing confidence in production maintenance [21][24] Question: M&A landscape and opportunities - Management noted that the removal of competitors from the market could create opportunities, but emphasized a disciplined approach to M&A, focusing on larger, more impactful acquisitions [25][26] Question: Growth potential in gas demand - Management expressed caution about making multi-year projections but acknowledged the potential for significant growth in natural gas production if favorable market conditions materialize [41][42] Question: Organic mineral acquisition opportunities - Management stated that they prefer larger, more mature acquisitions rather than small ground game acquisitions, focusing on building relationships for future opportunities [46][47]

Company Overview - Kimbell is presented as a pure play mineral company with an attractive annualized cash distribution yield of 105%[6] - The company possesses a diversified, high-quality asset base and an attractive tax structure[9] - Kimbell has interests in over 131000 gross wells across over 17 million gross acres in the US[13] - Since its IPO in 2017, Kimbell has completed over $20 billion in M&A transactions[13] Financial Highlights - Q3 2025 oil, natural gas and NGL revenues reached $768 million[18, 22, 26] - Q3 2025 consolidated Adjusted EBITDA was $623 million[18, 20, 26] - Net income for Q3 2025 was approximately $223 million, with $170 million attributable to common units[18, 20, 26] - The company's Net Debt to TTM Consolidated Adjusted EBITDA stood at 16x[16, 20, 26] Asset Portfolio and Operations - Kimbell estimates it has over 14 years of drilling inventory remaining[15] - The company's acreage has 86 active rigs drilling, representing approximately 16% market share of the U S land rig count[20, 26] - Kimbell identified 11510 gross / 7771 net total upside locations on major properties as of December 31, 2024[40]

Production and Operational Performance - Q3 2025 run-rate daily production reached 25,530 Boe/d, exceeding the midpoint of guidance[4] - The company maintained an active rig count of 86, representing approximately 16% market share of U.S. land rigs[4] - Kimbell's production increased organically by approximately 1% from Q2 to Q3 2025, demonstrating resilience amid industry headwinds[5] - Kimbell's major properties had 7.07 net DUCs and net permitted locations, exceeding the estimated 6.5 net wells needed to maintain flat production[4] - Cash G&A per BOE was $2.51 in Q3 2025, below the midpoint of guidance, indicating operational discipline[4] - Kimbell Royalty Partners, LP's cash G&A per Boe is a key metric for evaluating operational performance within the energy sector[30] Financial Performance - Q3 2025 total revenues amounted to $80.6 million, with net income of approximately $22.3 million[10] - Total revenues for Q3 2025 were $80,620,000, a decrease of 3% from $83,785,000 in Q3 2024[27] - Oil, natural gas, and NGL revenues increased to $76,807,000 in Q3 2025, up from $71,069,000 in Q3 2024, representing a growth of 8%[27] - Net income for Q3 2025 was $22,323,000, compared to $25,805,000 in Q3 2024, reflecting a decline of 13%[27] - Adjusted EBITDA attributable to Kimbell Royalty Partners, LP for Q3 2025 was $53,903,000, slightly up from $53,522,000 in Q3 2024[32] - Consolidated EBITDA for Q3 2024 was $66,359,000, compared to $59,891,000 for Q3 2025, indicating a decrease of about 9.7%[36][38] Cash Distribution and Debt Management - Kimbell announced a cash distribution of $0.35 per common unit for Q3 2025, reflecting a payout ratio of 75% of cash available for distribution[4] - The cash distribution declared for Q3 2025 was $0.35 per common unit, while cash available for distribution per common unit was $0.47[34] - The company plans to utilize 25% of cash available for distribution to repay approximately $12.6 million of outstanding borrowings[8] - Long-term debt as of September 30, 2025, stood at $448,496,000[25] - Net debt to trailing twelve month consolidated Adjusted EBITDA was approximately 1.6x as of September 30, 2025[13] - The company allocated 25% of cash available for distribution to pay outstanding borrowings under its secured revolving credit facility[36] Year-over-Year Comparisons - Net income for the three months ended September 30, 2024, was $25,805,000, while for the same period in 2025, it decreased to $22,323,000, reflecting a year-over-year decline of approximately 9.6%[36][38] - Cash available for distribution on common units was $43,469,000 for Q3 2025, compared to $44,228,000 in Q3 2024[32] - Cash available for distribution on common units for Q3 2024 was $44,228,000, resulting in a cash distribution per common unit of $0.55, while the declared distribution was $0.41[36] Expenses and Losses - The cash interest expense for Q3 2024 was $5,123,000, which increased to $9,782,000 in Q3 2025, reflecting a significant rise of approximately 91.5%[36][38] - The company reported a depreciation and depletion expense of $32,155,000 for Q3 2024, slightly decreasing to $31,043,000 in Q3 2025[36][38] - The gain on derivative instruments for Q3 2024 was a loss of $7,066,000, while for Q3 2025, it was a loss of $1,793,000, indicating a reduction in losses year-over-year[36][38] Shareholder Metrics - The weighted average number of common units outstanding increased to 91,170,092 in Q3 2025 from 78,977,450 in Q3 2024[27] - The cash distribution to Series A preferred unitholders for Q3 2024 was $4,156,000, while the distribution to Class B unitholders was minimal at $15,000[36]

Group 1 - The energy market shows potential for price recovery, but Kimbell Royalty Partners (KRP) is identified as a company to hold off on buying due to concerns about its competitiveness and financial stability [1] - The analysis suggests that while oil prices may recover, KRP's current position does not warrant immediate investment [1] Group 2 - The article emphasizes the importance of combining macro-economic analysis with real-world trading experience to identify profitable investment opportunities [1] - The goal is to build a balanced portfolio of U.S. securities, focusing on undervalued investments capable of yielding high returns [1]

Core Viewpoint - Kimbell Royalty (KRP) is anticipated to report a year-over-year decline in earnings due to lower revenues in its upcoming earnings report for the quarter ended September 2025, with the consensus outlook indicating potential impacts on its near-term stock price [1][2]. Earnings Expectations - The consensus estimate for Kimbell Royalty's quarterly earnings is $0.13 per share, reflecting a year-over-year decrease of 40.9%. Revenues are projected to be $79.57 million, down 5% from the same quarter last year [3]. - The consensus EPS estimate has been revised 25% higher in the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP (Expected Surprise Prediction) model suggests that the Most Accurate Estimate matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, which complicates predictions of an earnings beat [8][12]. - A positive Earnings ESP is generally a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3, with historical data showing a nearly 70% success rate for this combination [10]. Historical Performance - In the last reported quarter, Kimbell Royalty was expected to post earnings of $0.14 per share but only achieved $0.02, resulting in a surprise of -85.71%. Over the past four quarters, the company has beaten consensus EPS estimates twice [13][14]. Investment Considerations - Kimbell Royalty does not currently appear to be a compelling candidate for an earnings beat, and investors are advised to consider other factors when making investment decisions ahead of the earnings release [17].

Group 1 - Kimbell Royalty Partners (NYSE: KRP) provides investors with direct exposure to U.S. oil and gas production, offering cash flow without operational complexities [1] - The company is positioned as a simple investment vehicle in the energy sector, appealing to those seeking stable and growing dividends [1] - The analyst has a long position in KRP shares, indicating confidence in the company's performance and potential for wealth creation [1] Group 2 - The analyst emphasizes a background in both equity and real estate markets, highlighting experience in sourcing over $100 million in commercial real estate investments [1] - The focus on correlation across asset classes and sectors, along with a degree in Economics and a minor in Applied Mathematics, supports the analytical approach to investment strategies [1] - The article aims to provide timely analyses and strategies for investors looking to enhance their portfolios, reflecting a commitment to sharing market insights [1]

Core Viewpoint - Kimbell Royalty Partners, LP will release its third quarter 2025 financial results on November 6, 2025, before market opens, and will declare its distribution concurrently [1]. Group 1: Financial Results Announcement - Kimbell Royalty Partners will announce its third quarter 2025 financial results on November 6, 2025 [1]. - The company will declare its third quarter 2025 distribution at the same time as the earnings release [1]. - A conference call is scheduled for the same day at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss the results [1]. Group 2: Company Overview - Kimbell Royalty Partners is a leading oil and gas mineral and royalty company based in Fort Worth, Texas [3]. - The company owns mineral and royalty interests in over 17 million gross acres across 28 states and in every major onshore basin in the continental United States [3]. - Kimbell has ownership in more than 131,000 gross wells [3].

Group 1 - The article promotes a portfolio strategy that generates income without the need for selling assets, aiming to simplify retirement investing [1][3] - It emphasizes the importance of community and education in investing, suggesting that individuals should not invest alone [3] - The service offers features such as model portfolios, buy/sell alerts, and regular market updates to support investors [3] Group 2 - The article mentions the presence of contributors who support the investment service, indicating a collaborative approach to investment recommendations [5] - It highlights the monitoring of investment positions and the issuance of alerts to members, ensuring active management of portfolios [5]