Core Insights - Kimbell Royalty Partners reported a strong operational performance with 88 active rigs, representing a 17% market share of the U.S. land rig count, despite a 7% decline in overall U.S. land rig activity [1][3][4] - The company announced a cash distribution of $0.38 per common unit for Q2 2025, reflecting a 10.3% annualized yield based on the closing price on August 6, 2025 [4][8] - Kimbell's financial results for Q2 2025 included total revenues of $86.5 million and net income of approximately $26.7 million, with a consolidated Adjusted EBITDA of $63.8 million [10][11][35] Operational Performance - The active rig count on Kimbell's acreage decreased by only 2% quarter over quarter, while the overall U.S. land rig count dropped by 7% [3] - The company experienced a 9% increase in net DUCs (drilled but uncompleted wells) quarter over quarter, primarily driven by the Permian Basin [3][8] - Kimbell's average daily production for Q2 2025 was 25,355 barrels of oil equivalent (Boe) per day, with approximately 47% from natural gas and 53% from liquids [16] Financial Highlights - Kimbell's Q2 2025 revenues from oil, natural gas, and NGLs totaled $74.7 million, with a net income attributable to common units of approximately $2.0 million [10][35] - The company reported cash G&A (general and administrative) expenses of $9.6 million, with cash G&A per BOE at $2.36, reflecting operational discipline [12][35] - As of June 30, 2025, Kimbell had approximately $462.1 million in debt, with a net debt to trailing twelve-month consolidated Adjusted EBITDA ratio of approximately 1.6x [13][36] Distribution and Debt Management - The Board of Directors approved a cash distribution payment of 75% of cash available for distribution for Q2 2025, amounting to $0.38 per common unit [6][33] - Kimbell plans to allocate the remaining 25% of cash available for distribution to pay down approximately $13.6 million of outstanding borrowings under its secured revolving credit facility [6][33] - The distribution is expected to be considered a return of capital, enhancing after-tax returns for unitholders [4][7]

Group 1 - Kimbell Royalty (KRP) has surpassed resistance at the 200-day moving average, indicating a long-term bullish trend [1] - KRP shares have increased by 5.8% over the past four weeks, and the stock is currently rated as Zacks Rank 2 (Buy) [2] - Positive earnings estimate revisions support the bullish outlook, with no estimates decreasing and two increasing in the past two months [2] Group 2 - The combination of the technical indicator and positive earnings revisions suggests that KRP should be considered for a watchlist [3]

Group 1 - Kimbell Royalty (KRP) shares have increased by 4.4% over the past four weeks, closing at $14.6, with a mean price target of $18.6 indicating a potential upside of 27.4% [1] - The average price targets range from a low of $12.00 to a high of $24.00, with a standard deviation of $4.98, suggesting variability in analyst estimates [2] - Analysts show a consensus that KRP will report better earnings than previously estimated, which historically correlates with stock price increases [4][11] Group 2 - The Zacks Consensus Estimate for KRP's current year earnings has risen by 45.9% over the last 30 days, with two estimates moving higher and no negative revisions [12] - KRP holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While consensus price targets may not be reliable for predicting the extent of KRP's gains, they can provide guidance on the direction of price movement [14]

Core Viewpoint - Kimbell Royalty (KRP) shares have increased by 3.9% recently, with a mean price target of $18.6 suggesting a potential upside of 30.7% from the current price of $14.23 [1] Price Targets and Analyst Estimates - The mean estimate consists of five short-term price targets with a standard deviation of $4.98, indicating variability among analysts [2] - The lowest estimate is $12.00, suggesting a 15.7% decline, while the highest estimate is $24.00, indicating a potential increase of 68.7% [2] - Analysts' price targets can often mislead investors, as empirical research shows they rarely indicate actual stock price movements [7][10] Earnings Estimates and Analyst Agreement - Analysts have shown increasing optimism regarding KRP's earnings, with a strong consensus on higher EPS estimates, which correlates with potential stock price increases [11] - Over the past 30 days, one estimate has increased, leading to a 34.4% rise in the Zacks Consensus Estimate for the current year [12] - KRP holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] Conclusion on Price Movement - While the consensus price target may not be a reliable measure of KRP's potential gains, the direction indicated by these targets appears to be a useful guide for investors [14]

Technical Analysis - Kimbell Royalty (KRP) has recently reached a key level of support and has overtaken the 20-day moving average, indicating a short-term bullish trend [1] - The 20-day simple moving average (SMA) is a popular tool among traders as it smooths out price fluctuations and can signal trend reversals more effectively than longer-term averages [2] Performance Metrics - KRP has moved 8.4% higher over the last four weeks, suggesting potential for further gains [4] - The company currently holds a Zacks Rank 2 (Buy), indicating positive market sentiment [4] Earnings Estimates - There have been two upward revisions in KRP's earnings estimates for the current fiscal year, with no downward revisions, leading to an increased consensus estimate [4][5] - The combination of positive technical factors and earnings estimate revisions may attract investor interest for potential gains in the near future [5]

Core Viewpoint - Kimbell Royalty (KRP) is positioned as a strong investment opportunity due to its improving earnings outlook and analysts' increasing earnings estimates [1][3] Earnings Estimate Revisions - The trend of rising earnings estimate revisions reflects growing analyst optimism about Kimbell Royalty's earnings prospects, which is expected to positively impact its stock price [2] - For the current quarter, Kimbell Royalty is projected to earn $0.12 per share, marking a +9.09% increase from the previous year [6] - Over the last 30 days, the Zacks Consensus Estimate for Kimbell Royalty has risen by 25%, with one estimate moving higher and no negative revisions [6] - For the full year, the expected earnings are $0.55 per share, indicating an +83.33% year-over-year change [7] - The current year's estimate revisions show a positive trend, with one estimate increasing and no negative revisions [7] Zacks Rank and Performance - Kimbell Royalty currently holds a Zacks Rank 2 (Buy), indicating favorable conditions for investment based on earnings estimate revisions [8] - Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have historically outperformed the S&P 500 [8] - The stock has appreciated by 6.1% over the past four weeks due to strong estimate revisions, suggesting potential for further upside [9]

Core Viewpoint - Kimbell Royalty (KRP) shows potential for further upside, with a mean price target of $18.6 indicating a 27.3% upside from its current price of $14.61, following an 11.7% gain over the past four weeks [1] Price Targets and Analyst Estimates - The mean estimate consists of five short-term price targets with a standard deviation of $4.98, indicating variability among analysts; the lowest estimate is $12.00 (17.9% decline), while the highest is $24.00 (64.3% increase) [2] - A low standard deviation suggests a high degree of agreement among analysts regarding the stock's price movement direction, although it does not guarantee the stock will reach the average target [9] Earnings Estimates and Market Sentiment - Analysts have shown increasing optimism about KRP's earnings prospects, with a strong consensus in revising EPS estimates higher, which correlates with potential stock price increases [11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has risen by 34.1%, with one estimate moving higher and no negative revisions [12] - KRP holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, indicating strong potential for near-term upside [13] Caution on Price Targets - While price targets are often sought after by investors, they can mislead; empirical research shows that they rarely indicate actual stock price movements [7][10] - Analysts may set overly optimistic price targets due to business incentives, which can inflate expectations [8]

Part I [Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) For the first quarter of 2025, the company reported a significant increase in net income to $25.9 million, up from $9.3 million in the prior-year period, driven by higher natural gas revenues and the absence of property impairment charges. Total assets grew to $1.33 billion, primarily due to the $230.4 million Boren Acquisition, which was funded through an equity offering and increased debt. Cash flow from operations decreased to $54.2 million from $69.0 million year-over-year Consolidated Balance Sheets Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $35,627,785 | $34,168,424 | | Total current assets | $99,380,622 | $85,267,081 | | Total oil and natural gas properties, net | $1,216,414,461 | $1,024,822,208 | | **Total assets** | **$1,325,867,709** | **$1,119,914,763** | | Total current liabilities | $16,522,371 | $12,745,863 | | Long-term debt | $298,996,274 | $239,159,776 | | **Total liabilities** | **$322,201,380** | **$256,420,228** | | **Total unitholders' equity** | **$687,269,543** | **$547,492,392** | Consolidated Statements of Operations Consolidated Statements of Operations Highlights (Unaudited) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Oil, natural gas and NGL revenues | $89,951,203 | $87,499,509 | | Total revenues | $84,208,766 | $82,233,944 | | Depreciation and depletion expense | $31,118,095 | $38,166,806 | | Impairment of oil and natural gas properties | $0 | $5,963,575 | | Operating income | $33,576,732 | $17,560,837 | | **Net income** | **$25,853,195** | **$9,336,939** | | **Net income attributable to common units** | **$17,862,084** | **$3,168,956** | | **Basic EPS** | **$0.20** | **$0.04** | | **Diluted EPS** | **$0.20** | **$0.04** | Consolidated Statements of Cash Flows Consolidated Cash Flow Highlights (Unaudited) | Cash Flow Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$54,152,677** | **$69,045,616** | | Net cash used in investing activities | ($222,949,985) | ($91,368) | | Net cash provided by (used in) financing activities | $170,256,669 | ($60,267,298) | | **Net increase in cash and cash equivalents** | **$1,459,361** | **$8,686,950** | - Investing activities in Q1 2025 were dominated by a **$222.6 million** purchase of oil and natural gas properties[21](index=21&type=chunk) - Financing activities in Q1 2025 included **$163.6 million** in net proceeds from an equity offering and net borrowings of **$59.8 million** on long-term debt[21](index=21&type=chunk) Notes to Consolidated Financial Statements - The Partnership's business model is to own and acquire mineral and royalty interests in oil and natural gas properties, entitling it to revenue from production without the obligation to fund drilling, completion, or operating expenses[23](index=23&type=chunk) Disaggregated Revenue (Q1 2025 vs Q1 2024) | Revenue Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Oil revenue | $51,934,492 | $61,627,873 | | Natural gas revenue | $25,637,994 | $14,554,573 | | NGL revenue | $12,378,717 | $11,317,063 | | **Total** | **$89,951,203** | **$87,499,509** | - On January 17, 2025, the Partnership completed the Boren Acquisition of mineral and royalty interests in the Midland Basin for approximately **$230.4 million**[40](index=40&type=chunk) - The Partnership did not record an impairment on oil and gas properties in Q1 2025, compared to a **$6.0 million** impairment in Q1 2024 which was attributed to a decline in the 12-month average commodity prices[53](index=53&type=chunk) - Subsequent to the quarter end, on May 1, 2025, the Partnership increased its credit facility's borrowing base to **$625.0 million** and on May 7, 2025, redeemed **50%** of its outstanding Series A preferred units for **$182.3 million**[100](index=100&type=chunk)[102](index=102&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 2.9% year-over-year increase in Q1 2025 oil, gas, and NGL revenues to significantly higher natural gas prices, which offset a 9.6% decrease in realized oil prices and an 8.1% decline in total production volumes. The company completed the $230.4 million Boren Acquisition and a $163.6 million equity offering. Adjusted EBITDA remained stable at $75.5 million, while cash available for distribution to common unitholders increased to $57.2 million. The company's liquidity is primarily sourced from operating cash flow and its revolving credit facility, which was expanded subsequent to the quarter Overview and Recent Developments - As of March 31, 2025, the Partnership owned interests in approximately **17.0 million gross acres** across **28 states**, with ownership in over **131,000 gross wells**[112](index=112&type=chunk)[113](index=113&type=chunk) - In January 2025, the company completed a **$163.6 million** equity offering to partially fund the Boren Acquisition, which added properties in the Midland Basin[116](index=116&type=chunk)[117](index=117&type=chunk) - A quarterly cash distribution of **$0.47 per common unit** was declared for Q1 2025[118](index=118&type=chunk) Results of Operations - Oil, natural gas, and NGL revenues increased by **$2.5 million** (**2.9%**) in Q1 2025 compared to Q1 2024, primarily due to a **97.4% increase** in the average realized price of natural gas, which offset lower production volumes and a **9.6% decrease** in realized oil prices[146](index=146&type=chunk)[148](index=148&type=chunk) Production Data (Q1 2025 vs Q1 2024) | Product | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Oil (Bbls) | 749,744 | 804,589 | | Natural gas (Mcf) | 6,618,953 | 7,413,069 | | NGLs (Bbls) | 442,187 | 458,247 | | **Combined (Boe)** | **2,295,090** | **2,498,348** | - Depreciation and depletion expense decreased by **$7.1 million** to **$31.1 million** in Q1 2025, mainly due to a lower depletable base following impairments recorded in 2024[153](index=153&type=chunk) - No impairment was recorded in Q1 2025, in contrast to a **$6.0 million** impairment charge in Q1 2024, which was caused by a decline in the 12-month average commodity prices[155](index=155&type=chunk) Non-GAAP Financial Measures Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net income | $25,853,195 | $9,336,939 | | **Consolidated Adjusted EBITDA** | **$75,533,036** | **$74,113,012** | | Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $65,387,425 | $57,933,362 | | **Cash available for distribution on common units** | **$57,159,352** | **$48,877,514** | Liquidity and Capital Resources - Primary sources of liquidity are cash from operations and financing activities. The company's credit facility borrowing base was increased to **$550.0 million** in December 2023[160](index=160&type=chunk) - The Board of Directors allocated **25%** of cash available for distribution from Q1 2025 (**$16.9 million**) to repay outstanding borrowings under the secured revolving credit facility[162](index=162&type=chunk) - Cash from operations decreased to **$54.2 million** in Q1 2025 from **$69.0 million** in Q1 2024, impacted by changes in commodity prices and production volumes[167](index=167&type=chunk) - As of March 31, 2025, the outstanding balance on the secured revolving credit facility was **$299.0 million**[68](index=68&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is commodity price volatility for oil, natural gas, and NGLs, which it mitigates through the use of fixed-price swap derivative contracts. It also faces interest rate risk on its variable-rate debt, with a hypothetical 1% rate increase projected to raise annual interest expense by approximately $3.0 million. Counterparty credit risk is managed by evaluating the financial standing of its derivative counterparties, who are also lenders under its credit facility - The main market risk exposure is the pricing of oil, natural gas, and NGLs. The company uses commodity derivative contracts, specifically fixed-price swaps, to reduce price volatility[182](index=182&type=chunk)[183](index=183&type=chunk) - The company is exposed to interest rate risk on its **$299.0 million** of outstanding debt. A **1%** increase in interest rates would result in an approximate **$3.0 million** increase in annual interest expense[188](index=188&type=chunk)[189](index=189&type=chunk) - Counterparty risk on derivative contracts is present. As of March 31, 2025, the company had **seven counterparties**, all of whom are also lenders under its secured revolving credit facility[186](index=186&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. No material changes to internal control over financial reporting occurred during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[191](index=191&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[192](index=192&type=chunk) Part II – Other Information [Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any legal, environmental, or other commitments or contingencies that would materially affect its financial condition, results of operations, or liquidity as of March 31, 2025 - Management is not aware of any legal proceedings that would have a material effect on the Partnership's financial condition or operations[98](index=98&type=chunk)[194](index=194&type=chunk) [Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section supplements the risk factors from the 2024 Form 10-K, specifically highlighting the potential adverse effects of changes in U.S. trade policy and tariffs. Such changes could lead to market volatility, increased costs, and limited access to capital, which may materially impact the business and its results - The report supplements previous risk disclosures, emphasizing that changes in U.S. trade policy, including tariffs and trade restrictions, could have a material adverse effect on the business and results of operations[196](index=196&type=chunk)[197](index=197&type=chunk) - Potential impacts from trade policy changes include financial market volatility, declining consumer confidence, inflation, and increased volatility in commodity prices, which could increase costs of capital and limit access to financing[198](index=198&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities) In February 2025, the company issued a total of 32,580 common units in two separate transactions to existing OpCo unitholders in exchange for an equal number of OpCo common units and Class B units. These issuances were exempt from registration under Section 4(a)(2) of the Securities Act. Additionally, 315,276 common units were withheld to satisfy tax obligations related to vested restricted units - In February 2025, the Partnership issued a combined **32,580 common units** to OpCo unitholders in exchange for OpCo common units and Class B units, in transactions exempt from registration under Section 4(a)(2) of the Securities Act[200](index=200&type=chunk)[201](index=201&type=chunk) - During Q1 2025, **315,276 common units** were withheld to satisfy tax-withholding obligations related to the vesting of restricted units[202](index=202&type=chunk)

Financial Data and Key Metrics Changes - Kimbell Royalty Partners reported record revenues for oil, natural gas, and NGL totaling $90 million for Q1 2025, marking a new record for the company [10] - Consolidated adjusted EBITDA reached $75.5 million, also a new record, reflecting strong operational performance [10] - The company declared a cash distribution of $0.47 per common unit, an increase of 17.5% from Q4 2024, with approximately 70% of this distribution expected to be considered a return of capital [7][11] Business Line Data and Key Metrics Changes - The company achieved a first quarter run rate production of 25,841 BOE per day, including contributions from acquired production [10] - General and administrative expenses for Q1 were $9.6 million, with cash G&A expenses at $2.52 per BOE [10] Market Data and Key Metrics Changes - Kimbell Royalty Partners maintained a market share of approximately 16% of all rigs drilling in the Lower 48 states, with 90 rigs actively drilling on its acreage [6][10] - The company noted strong permitting activity, including the permitting of 17 additional wells in Martin County, Texas, demonstrating the strength of its diversified asset portfolio [6] Company Strategy and Development Direction - The company aims to continue its role as a major consolidator in the U.S. oil and natural gas royalty sector, which is estimated to be over $700 billion in size [15] - Kimbell Royalty Partners plans to maintain a conservative balance sheet with a target net debt to EBITDA ratio of approximately 1.5 times, while continuing to pursue M&A opportunities [26][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving its goals for 2025 despite current economic volatility and uncertainty impacting commodity prices [7][14] - The company highlighted that its diversified portfolio and low PDP decline rate position it well to outperform many competitors in the upstream space [27] Other Important Information - The company increased its borrowing base and elected commitments on its credit facility from $550 million to $625 million as of May 1, 2025 [5][12] - Kimbell Royalty Partners redeemed 50% of its Series A cumulative convertible preferred units on May 7, 2025, simplifying its capital structure and reducing its cost of capital [5][13] Q&A Session Summary Question: Interest in M&A activity - Management acknowledged ongoing interest in M&A opportunities, particularly in the natural gas sector, despite challenges in transacting due to high valuations [20][22] Question: Target debt levels and leverage management - The company aims to maintain leverage at approximately 1.5 times EBITDA while continuing to pay down debt and redeem preferred units periodically [26][51] Question: Trends in production volumes - Management reaffirmed guidance for 2025, indicating no current evidence of a slowdown in drilling activity, with strong lease bonus payments expected [44][68] Question: Tax structure and distribution runway - The company has a considerable tax shield, allowing for a significant portion of distributions to be classified as return of capital, with no near-term end to this advantage anticipated [45][46] Question: NGL and natural gas realizations - Management noted stronger than expected realizations for NGL and natural gas, attributing improvements across the entire portfolio [62] Question: Update on net DUCs - The company reported 4.67 net DUCs at the end of Q1, with no significant trends indicating a slowdown in activity [65][67]

Financial Data and Key Metrics Changes - The company reported record revenues for oil, natural gas, and NGL totaling $90 million for Q1 2025, which includes contributions from acquired production [10] - Consolidated adjusted EBITDA reached a new record of $75.5 million for the quarter [10] - The cash distribution for Q1 2025 was declared at $0.47 per common unit, reflecting a 17.5% increase from Q4 2024 [7][11] Business Line Data and Key Metrics Changes - The company achieved a first quarter run rate production of 25,841 BOE per day, including contributions from acquired production [10] - General and administrative expenses for Q1 were reported at $9.6 million, with cash G&A expenses at $2.52 per BOE [10] Market Data and Key Metrics Changes - The company maintained a market share of approximately 16% of all rigs drilling in the Lower 48 states, with 90 rigs actively drilling on its acreage [5][10] - The company noted strong permitting activity, including the recent permitting of 17 additional wells in Martin County, Texas [5] Company Strategy and Development Direction - The company aims to continue its role as a major consolidator in the U.S. oil and natural gas royalty sector, which is estimated to be over $700 billion in size [14] - The company plans to maintain a conservative balance sheet and leverage ratio of approximately 1.5 times EBITDA while pursuing M&A opportunities [24][50] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2025 goals despite broader economic volatility and its impact on commodity prices [7][14] - The company highlighted a strong production profile and ongoing acquisition activity as key factors for future growth [14][29] Other Important Information - The company increased its borrowing base from $550 million to $625 million on May 1, 2025, and redeemed 50% of the Series A cumulative convertible preferred units on May 7, 2025 [4][12] Q&A Session Summary Question: Interest in M&A activity - Management acknowledged ongoing interest in M&A opportunities but noted challenges in transacting on natural gas deals due to competitive pricing [20][21] Question: Debt management and targets - The company aims to maintain a leverage ratio of approximately 1.5 times and plans to continue paying down debt while managing its capital structure [24][50] Question: Natural gas hedging strategy - Management stated that they are comfortable with a 20% hedging level, which they believe protects against price volatility while maintaining flexibility [34][36] Question: Production trends and guidance - Management reaffirmed guidance for 2025, indicating no current evidence of a slowdown in drilling activity [41][43] Question: Tax structure and distribution runway - The company has a considerable tax shield, allowing for a significant portion of distributions to be classified as return of capital, enhancing after-tax returns for unitholders [44][45] Question: Long-term capital structure and preferred units - Management plans to continue paying down debt and redeeming preferred units periodically while maintaining a conservative leverage ratio [50][52]