Kimbell Royalty Partners(US:KRP)2025-11-06 21:07Company 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]