Kimbell Royalty Partners(US:KRP)2024-05-02 21:20Financial Data and Key Metrics Changes - The company reported total revenues of $87.5 million for Q1 2024, marking a 4.2% increase compared to Q4 2023, which is the highest quarterly revenue in its history [29] - Run rate production was 24,678 BOE per day, reflecting 1.4% organic growth from Q4 2023 and 5.6% organic growth on an annualized basis [29] - Net income for Q1 was approximately $9.3 million, with net income attributable to common units at approximately $3.2 million or $0.04 per common unit [30] - Consolidated adjusted EBITDA reached a record of $74.1 million, up approximately 7.4% from the previous quarter [30] Business Line Data and Key Metrics Changes - The company maintained a flat rig count at 98 rigs between Q4 and Q1, representing approximately 16.3% market share of all land rigs drilling in the Continental United States [29] - The Haynesville basin saw a 3% organic production increase quarter-over-quarter, while the Permian basin grew by 5% [17][29] Market Data and Key Metrics Changes - The company affirmed its 2024 guidance, maintaining a daily production midpoint of 24,000 BOE per day, indicating confidence in continued robust development [31] - The company noted a conservative balance sheet with a net debt to trailing 12-months consolidated adjusted EBITDA ratio of 1x [31] Company Strategy and Development Direction - The company is focused on long-term growth and enhancing unitholder value, with a positive outlook for the royalties and mineral space [32] - The management expressed interest in M&A opportunities, particularly in the Permian basin, while noting a relatively muted start to the year for M&A activity [35] Management Comments on Operating Environment and Future Outlook - Management indicated that activity levels are in line with expectations, with no evidence of a dramatic slowdown in operations [22][24] - The company remains optimistic about industry trends and overall demand for energy, which supports its growth strategy [32] Other Important Information - A cash distribution of $0.49 per common unit was announced for Q1, representing a 14% increase compared to the previous quarter [45] - Approximately 79% of the distribution will be considered a return of capital, enhancing after-tax returns for common unitholders [38] Q&A Session Summary Question: What is the perspective on the M&A market and opportunities? - Management noted that most opportunities of scale are in the Permian, with expectations for larger deals, around $100 million-plus, to be consummated later in the year [35] Question: Is there any change anticipated in the cash distribution payout level? - Management confirmed that they do not anticipate any changes to the 75% payout ratio [11] Question: What is the outlook for production guidance and activity levels? - Management stated that production guidance remains unchanged, with activity levels slightly above the midpoint of guidance [22][24]