Kimbell Royalty Partners(US:KRP)2025-02-27 21:02Asset and Reserve Information - As of December 31, 2024, the company owned mineral and royalty interests in approximately 12.2 million gross acres, with 54% located in the Permian Basin and Mid-Continent[87] - The estimated proved oil, natural gas, and NGL reserves attributable to the company's interests were 67,541 MBoe, with 49.6% classified as liquids (29.6% oil and 20.0% NGLs)[88] - The company holds a total of 12,220,516 gross acres and 101,340 net acres across various basins, with an average leasing percentage of 99.0%[108] - The company has significant mineral interests in the Permian Basin (3,003,486 gross acres), Mid-Continent (3,663,657 gross acres), and Terryville/Cotton Valley/Haynesville (1,301,662 gross acres) with high leasing percentages[108] - The Bakken/Williston Basin is noted as one of the largest oil developments in the U.S., with the company holding 1,214,446 gross acres[108] - The Appalachian Basin, which includes the Marcellus and Utica plays, has 434,116 gross acres under the company's interest[108] - The company has a well count of 129,363 across various basins, with the Permian Basin having the highest count at 50,604 wells[113] - The company’s overriding royalty interests (ORRIs) total 4,726,337 gross acres, with a producing percentage of 99.6%[111] - The Eagle Ford shale formation is highlighted for its economic productivity, with the company holding 476,193 gross acres[108] - The company’s mineral interests in the Illinois Basin are fully leased at 100%[108] Production and Revenue - For the year ended December 31, 2024, revenues were generated 71% from oil sales, 16% from natural gas sales, and 13% from NGL sales[92] - Oil and condensate production increased to 2,836,913 Bbls in 2024, up 18.6% from 2,392,622 Bbls in 2023[126] - Natural gas production rose to 27,586,460 Mcf in 2024, a 17.5% increase from 23,384,021 Mcf in 2023[126] - Average daily production reached 24,868 Boe/d in 2024, compared to 20,265 Boe/d in 2023, reflecting a 22.5% growth[126] - The average price for oil was $75.48 per Bbl and for natural gas was $2.13 per MMBtu as of December 31, 2024[123] - The top purchaser accounted for approximately 9.1%, 6.7%, and 11.3% of the company's oil, natural gas, and NGL revenues for the years ended December 31, 2024, 2023, and 2022, respectively[531] Financial Performance - Net income for 2024 was $11,069,736, a significant decrease from $83,005,570 in 2023 and $130,794,286 in 2022[541] - Adjusted EBITDA for 2024 reached $262,832,363, up from $212,059,364 in 2023, indicating a growth of approximately 23.9% year-over-year[541] - Cash available for distribution on common units was $180,665,429 in 2024, compared to $140,781,292 in 2023, reflecting an increase of about 28.4%[541] - Depreciation and depletion expense increased to $135,123,177 in 2024 from $96,477,003 in 2023, marking a rise of approximately 40.1%[541] - Interest expense for 2024 was $26,696,018, slightly higher than $25,950,600 in 2023[541] - Impairment of oil and natural gas properties significantly rose to $62,118,433 in 2024 from $18,220,173 in 2023[541] - Unit-based compensation increased to $16,384,668 in 2024, compared to $13,111,522 in 2023, representing a growth of about 24.5%[541] - Net cash provided by operating activities for 2024 was $250,916,075, up from $174,267,667 in 2023, indicating a growth of approximately 43.8%[542] - Cash distribution on Series A preferred units increased to $16,223,494 in 2024 from $4,551,746 in 2023[542] - The company reported a loss (gain) on derivative instruments of $12,211,660 in 2024, compared to a gain of $(26,371,058) in 2023[542] Capital Structure and Financing - The company has a $550.0 million secured revolving credit facility and repaid $56.5 million in outstanding borrowings during the year, impacting cash available for distribution[96] - The company has total borrowings of $239.2 million under its secured revolving credit facility as of December 31, 2024[532] - A 1% increase in interest rates would result in an additional $2.4 million in annual interest expense[532] - The company has entered into commodity derivative contracts to mitigate price volatility, with counterparties being unrelated third parties[525] Regulatory and Compliance Challenges - The company faces intense competition in the oil and natural gas industry, impacting its ability to acquire additional properties[133] - Regulatory and environmental compliance costs are increasing, which may adversely affect the company's operations and financial condition[138] - The EPA and Army Corps of Engineers issued a final rule in December 2022 that restored many elements of the 2015 WOTUS definition, which may lead to increased compliance costs and monitoring for facilities[143] - The Supreme Court's decision in Sackett v. EPA in May 2023 clarified federal jurisdiction under the Clean Water Act, potentially impacting compliance costs for the company[145] - The implementation of the final methane rule in May 2024 may increase compliance costs for oil and natural gas producers, affecting production from the company's mineral interests[148] - The Inflation Reduction Act, signed in August 2022, includes hundreds of billions of dollars in incentives for renewable energy and imposes a federal fee on GHG emissions, which could accelerate the transition away from fossil fuels[152] - The company faces potential financial challenges as certain financial institutions restrict investments in oil and natural gas activities due to climate change concerns[153] - Increased regulatory scrutiny on hydraulic fracturing could lead to additional permitting requirements and increased operational costs for the company[161] - The company is subject to extensive regulations from federal, state, and local authorities, which may increase operational costs and delay projects[162] - The availability and cost of transportation significantly affect the sales of oil and natural gas, with federal regulations governing interstate transportation impacting the company's operations[164] Workforce and Management - The company has approximately 28 employees, with women representing 36% of the workforce[181] - The company recognizes the importance of attracting and retaining qualified employees in a competitive marketplace[180] - The company has a management services agreement with Kimbell Operating for operational services, with compensation indirectly paid by the company[179] Capital Efficiency - The average unit cost per Boe decreased to $2.24 in 2024 from $2.76 in 2023, indicating improved cost efficiency[126] - The average estimated yearly decline rate for proved developed producing (PDP) reserves is 13.2% during the initial five years[89] - The company benefits from continued development of its properties without the need for additional capital investment, leveraging technological advances and third-party producer interest[99] - The company maintains a conservative capital structure, requiring a supermajority vote for certain actions, ensuring long-term financial flexibility[98]