Kimbell Royalty Partners(US:KRP)2021-05-09 17:17Financial Data and Key Metrics Changes - The company reported a cash distribution of $0.27, which is an increase of 42% compared to the fourth quarter of 2020 [6][22] - Realized oil prices increased by 37%, natural gas prices by 62%, and NGL prices by 63% [7][22] - First quarter consolidated adjusted EBITDA was $26 million, reflecting a 46% increase compared to the prior quarter [28] - Net income for the first quarter was approximately $537,000, with a net loss attributable to common units of approximately $704,000 or $0.02 per common unit [29] Business Line Data and Key Metrics Changes - The first quarter average daily production was 13,721 BOE per day, with approximately 61% from natural gas and 39% from liquids [25] - The company had 761 gross and 2.2 net drilled but uncompleted wells, as well as 669 gross or 2.54 net permits on its acreage [27] Market Data and Key Metrics Changes - The rig count increased by 26% compared to the end of the fourth quarter of 2020, with 49 active rigs at the end of Q1 2021 [26] - The company held approximately 12% market share of all rigs drilling in the lower 48 states at that time [27] Company Strategy and Development Direction - The company aims to be a major consolidator in the fragmented U.S. oil and gas royalty sector, focusing on assembling a high-quality, low PDP decline, and diversified royalty portfolio [18] - The company has identified 10,160 gross and 68.1 net undrilled upside locations, representing an estimated 15 years of future drilling inventory [10][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future of the industry due to rapidly improving fundamentals across the U.S. energy sector [19] - The company remains focused on sustainability and growth, with a vision to deliver compelling value to unitholders for years to come [18][19] Other Important Information - The company has paid down approximately $25 million in debt since May 2020 by allocating a portion of its cash flow to debt repayment [22] - The company’s liquidity position was strong, with $96.5 million of undrawn capacity under its secured credit facility as of the end of the first quarter [31] Q&A Session Summary Question: Comments on hedging strategy and exposure to commodity prices - Management explained that the decrease in hedges is due to an increase in enterprise value, allowing for more exposure to commodity prices [38][39] Question: Discussion on inventory analysis and upside potential - Management confirmed that the inventory analysis was conservative and highlighted additional upside potential in various formations [41][42] Question: Insights on asset base and third-party assessment - Management indicated that the third-party assessment generally aligned with their views, with minor adjustments made based on feedback [52][54] Question: Consideration of share buybacks or divestitures - Management stated that they prefer to focus on consolidating assets rather than divesting, and emphasized the importance of paying down debt over buying back stock [62][65] Question: Timeline for achieving leverage targets - Management mentioned plans to pay down preferred shares next quarter and continue reducing debt to achieve a leverage target below 2x [71][73]