Kimbell Royalty Partners(KRP) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Highlights Kimbell Royalty Partners reported strong Q2 2025 results with 25,355 Boe/d production, $74.7 million in revenues, $63.8 million Adjusted EBITDA, and a $0.38 cash distribution per common unit, maintaining 88 active rigs | Metric | Value | | :--- | :--- | | Run-Rate Daily Production | 25,355 Boe/d (6:1) | | Oil, Natural Gas & NGL Revenues | $74.7 million | | Net Income | ~$26.7 million | | Consolidated Adjusted EBITDA | $63.8 million | | Cash G&A per BOE | $2.36 | | Active Rigs on Acreage | 88 (17% U.S. market share) | | Q2 2025 Cash Distribution | $0.38 per common unit | - The company announced a Q2 2025 cash distribution of $0.38 per common unit, representing a 75% payout ratio and a 10.3% annualized yield. The remaining 25% of cash available for distribution will be used to repay outstanding borrowings[4] - As of June 30, 2025, Kimbell's major properties had 7.99 net DUCs and permitted locations, exceeding the estimated 6.5 net wells required to maintain flat production[4] Management Commentary and Shareholder Distributions Management emphasized resilient operational performance, including increased U.S. land rig market share and a $0.38 per common unit cash distribution, with remaining cash flow allocated to debt reduction - The CEO emphasized the company's strong operational position, with its market share of U.S. land rigs increasing to 17% and net DUCs growing by 9% quarter-over-quarter, indicating near-term production growth[5] - Cash G&A per BOE was below the low end of guidance, which management attributes to operational discipline and positive operating leverage[5] | Distribution Metric | Value | | :--- | :--- | | Q2 2025 Distribution | $0.38 per common unit | | Payout Ratio | 75% of cash available for distribution | | Debt Paydown | ~$13.6 million (remaining 25%) | | Payment Date | August 25, 2025 | | Record Date | August 18, 2025 | - Kimbell expects approximately 100% of the Q2 2025 distribution to be considered a non-taxable return of capital for U.S. federal income tax purposes, which reduces the unitholder's cost basis[6][7] Financial and Operational Performance Kimbell achieved Q2 2025 revenues of $86.5 million, net income of $26.7 million, 25,355 Boe/d production, maintained 7.99 net DUCs, and managed debt at $462.1 million with a 1.6x leverage ratio Financial Highlights Q2 2025 Realized Prices | Commodity | Average Realized Price | | :--- | :--- | | Oil | $63.48 / Bbl | | Natural Gas | $2.54 / Mcf | | NGLs | $24.10 / Bbl | | Combined | $33.04 / Boe | Q2 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Total Revenues | $86.5 million | | Net Income | ~$26.7 million | | Net Income (to common units) | ~$2.0 million ($0.02/unit) | | Consolidated Adjusted EBITDA | $63.8 million | - As of June 30, 2025, Kimbell had $462.1 million in debt outstanding, with a net debt to TTM consolidated Adjusted EBITDA ratio of approximately 1.6x[11] - The company increased its borrowing base from $550 million to $625 million and redeemed 50% of its Series A Preferred Units to simplify its capital structure[12] Production Q2 2025 Production Breakdown | Metric | Value | | :--- | :--- | | Average Daily Production | 25,355 Boe/d (6:1) | | Production Mix | | |    Natural Gas | 47% | |    Liquids (Oil & NGLs) | 53% | |       Oil | 33% | |       NGLs | 20% | Operational Update - As of June 30, 2025, Kimbell had 88 rigs actively drilling on its acreage, representing an approximate 16.5% market share of all U.S. land rigs[15] DUCs and Permits by Basin (as of June 30, 2025) | Basin | Net DUCs | Net Permits | | :--- | :--- | :--- | | Permian | 3.27 | 2.15 | | Eagle Ford | 0.22 | 0.08 | | Haynesville | 0.35 | 0.13 | | Mid-Continent | 0.78 | 0.39 | | Bakken | 0.36 | 0.10 | | Appalachia | 0.02 | 0.02 | | Rockies | 0.10 | 0.02 | | Total | 5.10 | 2.89 | Hedging Update Kimbell implemented fixed-price oil and natural gas swaps through Q2 2027 to stabilize cash flow by locking in future production prices Fixed Price Swaps as of June 30, 2025 | Period | Oil Volume (BBL) | Nat Gas Volume (MMBTU) | Wtd. Avg. Oil Price ($/BBL) | Wtd. Avg. Nat Gas Price ($/MMBTU) | | :--- | :--- | :--- | :--- | :--- | | 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 | | Full Year 2026 | 605,680 | 5,256,000 | ~$67.70 | ~$3.69 | | Full Year 2027 (H1) | 304,623 | 2,658,528 | ~$62.65 | ~$3.96 | Financial Statements Q2 2025 unaudited financial statements report total assets of $1.28 billion, liabilities of $483.5 million, revenues of $86.5 million, and net income of $26.7 million, driven by derivative gains Condensed Consolidated Balance Sheet Balance Sheet Summary (as of June 30, 2025) | Account | Amount (in thousands) | | :--- | :--- | | Total Current Assets | $88,249 | | Total Assets | $1,284,936 | | Total Current Liabilities | $16,185 | | Long-Term Debt | $462,096 | | Total Liabilities | $483,533 | | Total Unitholders' Equity | $643,008 | Condensed Consolidated Statements of Operations Statement of Operations Summary (Three Months Ended June 30) | Account (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $86,548 | $76,573 | | Operating Income | $37,786 | $23,892 | | Net Income | $26,672 | $15,187 | | Net Income Attributable to Common Units | $2,007 | $8,410 | | Diluted EPS | $0.02 | $0.11 | Supplemental Schedules (Non-GAAP Reconciliations) This section defines and reconciles non-GAAP measures, showing Q2 2025 Consolidated Adjusted EBITDA of $63.8 million, $47.1 million cash available for distribution, and a net debt to TTM Adjusted EBITDA ratio of 1.6x Definition of Non-GAAP Measures - Adjusted EBITDA is used by management to evaluate operating performance and cash flow available for distributions, excluding items like depreciation, interest, taxes, and unrealized derivative gains/losses[28] - Cash G&A and Cash G&A per Boe are used to measure cash costs relative to production, providing a metric for operational efficiency[29] Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution Q2 2025 Reconciliation Summary (in thousands) | Metric | Value | | :--- | :--- | | Net Income | $26,672 | | Consolidated Adjusted EBITDA | $63,844 | | Adjusted EBITDA (attributable to KRP) | $55,268 | | Cash Available for Distribution (on common units) | $47,121 | | Cash Available per Common Unit | $0.50 | | Declared Distribution per Common Unit | $0.38 | - The difference between cash available for distribution ($0.50/unit) and the declared distribution ($0.38/unit) is due to the company allocating 25% of cash to repay debt on its revolving credit facility[33] Net Debt to Trailing Twelve Month Consolidated Adjusted EBITDA Calculation Leverage Ratio Calculation (as of June 30, 2025) | Metric (in thousands) | Value | | :--- | :--- | | Long-Term Debt | $462,096 | | Cash and Cash Equivalents (capped) | ($25,000) | | Net Debt | $437,096 | | Trailing Twelve Month Adj. EBITDA | $279,816 | | Net Debt / TTM Adj. EBITDA | 1.6x |