Kimbell Royalty Partners(US:KRP)2023-08-02 20:19Financial Data and Key Metrics Changes - Kimbell Royalty Partners reported oil, natural gas, and NGL revenues of $57 million, a decrease of 0.8% from the first quarter primarily due to a decline in realized commodity prices [13] - The second quarter net income was approximately $17.8 million, and total consolidated adjusted EBITDA was $45 million [17] - The Q2 2023 distribution of $0.39 represents an increase of 11% from Q1, demonstrating a commitment to enhancing unitholder value [9][18] Business Line Data and Key Metrics Changes - The production mix shifted towards oil, which represented 33% on a 6:1 basis, up from 29% in the first quarter [5] - Record run rate daily production surpassed 18,000 BOE per day, with a significant contribution from the MB Minerals acquisition [12] - The second quarter run rate production was 18,145 BOE per day, an increase of 3.3% from Q1 2023, with approximately 54% from natural gas and 46% from liquids [13][14] Market Data and Key Metrics Changes - Kimbell's market share of all land rigs drilling in the Continental United States reached a record 13.8%, up from 12.8% [15][38] - The Permian Basin production grew by 48% quarter-over-quarter, reflecting a full quarter of the MB Minerals acquisition [6] Company Strategy and Development Direction - The company plans to continue executing its strategy to drive growth through organic development and a disciplined acquisition strategy [10] - Kimbell remains bullish about the long-term prospects in the fragmented U.S. oil and natural gas royalty sector [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial position and the long horizon for continued growth and opportunities to enhance shareholder value [21] - The company reiterated its guidance for Q3 and Q4, with a midpoint production target of 19,000 BOE per day [26] Other Important Information - Kimbell amended and extended its secured revolving credit facility through June 2027, increasing the borrowing base from $350 million to $400 million [12][20] - The company has paid down approximately $108.6 million of outstanding borrowings under its secured revolving credit facility since May 2020 [18] Q&A Session Summary Question: Growth trajectory based on improving net DUC and permit inventory - Management acknowledged the positive trend in net DUCs and permits but emphasized a conservative approach to guidance [24][25] Question: Resilience of Haynesville rig activity despite lower gas prices - Management attributed the resilience to the quality of their legacy Haynesville asset and a lower PDP decline rate compared to others [28][30] Question: Future of the Tiger Acquisition Corp. pursuit - Management indicated that while the specific pursuit under Tiger has concluded, they remain interested in building an operating company or partnering with another operator [32][33] Question: Insights on the Eagle Ford and Permian rig counts - Management confirmed that the Permian rig count increased by 5 rigs quarter-over-quarter, contributing to a higher market share [37][38] Question: Potential for C-corp conversion and index exposure - Management expressed satisfaction with the current structure but remains open to any developments that could benefit the company and unitholders [40][41]