Kimbell Royalty Partners(US:KRP)2024-08-01 20:01Financial Data and Key Metrics Changes - The company reported oil, natural gas, and NGL revenues totaling $77 million for Q2 2024, with a run rate production of 24,110 BOE per day [7] - Net income for the second quarter was approximately $15.2 million, with net income attributable to common units at approximately $8.4 million or $0.11 per common unit [8] - Total consolidated adjusted EBITDA for Q2 was $65.8 million, with a cash distribution of $0.42 per common unit, representing 75% of cash available for distribution [8] Business Line Data and Key Metrics Changes - The company maintained a robust rig count of 91 rigs actively drilling, representing a 16% market share of all land rigs in the Continental United States [5][7] - General and administrative expenses for Q2 were $10.2 million, with cash G&A expenses at $5.1 million or $2.34 per BOE, marking a record low cash G&A per BOE [7] Market Data and Key Metrics Changes - The company reported a 5% increase in production in Oklahoma, capturing approximately 50% of all rigs in the state [13] - The company has a strong position in the Mid-Continent region, bolstered by recent acquisitions [13] Company Strategy and Development Direction - The company is focused on returning value to unitholders while maintaining a conservative balance sheet, with a net debt to trailing 12-month consolidated adjusted EBITDA ratio of 0.9x [9] - The company affirmed its 2024 guidance, projecting daily production at a midpoint of 24,000 BOE per day, with confidence in continued robust development [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the gas market, noting difficulties in finding attractive gas assets due to depressed pricing [20] - The company remains open to acquisitions across all basins, despite a disappointing year for M&A activity [22][23] Other Important Information - The company plans to redeem about half of its preferred shares in the next 3 to 6 months, aiming to maintain a debt-to-EBITDA ratio of less than 1.5x [14] - The company experienced an increase in common units outstanding due to the conversion of a shareholder from OpCo into common units [15][16] Q&A Session Summary Question: Why not revisit guidance given production is outpacing expectations? - Management acknowledged the valid point and indicated they would reconsider guidance internally, noting the variability of drilling outcomes [11] Question: Update thoughts on addressing preferred shares as 2025 approaches? - Management plans to redeem about half of the preferred shares in the next 3 to 6 months to improve the balance sheet [14] Question: Are there actionable dislocations in pricing between gas and oil assets? - Management expressed disappointment in the gas market, noting challenges in acquiring gas assets due to low prices and high demand for LNG exports [20] Question: What other basins are being considered for acquisitions? - Management stated they are looking at every basin and are open to acquisitions, although M&A activity has been slow this year [22][23]