Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 30, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity Registrant Name | Kimbell Royalty Partners, LP | |
Entity File Number | 001-38005 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-5505475 | |
Entity Address, Address Line One | 777 Taylor Street, Suite 810 | |
Entity Address, City or Town | Fort Worth | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 76102 | |
City Area Code | 817 | |
Local Phone Number | 945-9700 | |
Title of 12(b) Security | Common Units Representing Limited Partner Interests | |
Trading Symbol | KRP | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Central Index Key | 0001657788 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Units | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 38,948,023 | |
Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 20,779,781 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 12,347,689 | $ 14,204,250 |
Oil, natural gas and NGL receivables | 16,039,385 | 19,170,762 |
Commodity derivative assets | 687,933 | |
Accounts receivable and other current assets | 946,937 | 76,868 |
Total current assets | 29,334,011 | 34,139,813 |
Property and equipment, net | 1,166,660 | 1,327,057 |
Investment in affiliate (equity method) | 4,707,165 | 2,952,264 |
Oil and natural gas properties | ||
Oil and natural gas properties, using full cost method of accounting ($235,028,364 and $275,041,784 excluded from depletion at September 30, 2020 and December 31, 2019, respectively) | 1,148,983,401 | 1,033,355,017 |
Less: accumulated depreciation, depletion and impairment | (523,403,235) | (328,913,425) |
Total oil and natural gas properties, net | 625,580,166 | 704,441,592 |
Right-of-use assets, net | 3,194,116 | 3,399,634 |
Commodity derivative assets | 116,568 | |
Loan origination costs, net | 1,469,266 | 2,217,126 |
Total assets | 665,451,384 | 748,594,054 |
Current liabilities | ||
Accounts payable | 995,574 | 1,207,736 |
Other current liabilities | 5,842,811 | 4,231,579 |
Commodity derivative liabilities | 992,299 | |
Total current liabilities | 7,830,684 | 5,439,315 |
Operating lease liabilities, excluding current portion | 2,919,194 | 3,124,416 |
Commodity derivative liabilities | 2,699,576 | |
Long-term debt | 169,700,653 | 100,135,477 |
Total liabilities | 183,150,107 | 108,699,208 |
Commitments and contingencies (Note 16) | ||
Mezzanine equity: | ||
Series A preferred units (55,000 and 110,000 units issued and outstanding as of September 30, 2020 and December 31, 2019, respectively) | 42,050,637 | 74,909,732 |
Unitholders' equity: | ||
Common units (38,948,023 units issued and outstanding as of September 30, 2020 and 23,518,652 units issued and outstanding as of December 31, 2019) | 325,048,170 | 282,549,841 |
Class B units (20,779,181 units issued and outstanding as of September 30, 2020 and 25,557,606 units issued and outstanding as of December 31, 2019) | 1,038,989 | 1,277,880 |
Total unitholders' equity | 326,087,159 | 283,827,721 |
Noncontrolling interest | 114,163,481 | 281,157,393 |
Total equity | 440,250,640 | 564,985,114 |
Total liabilities, mezzanine equity and unitholders' equity | $ 665,451,384 | $ 748,594,054 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Oil and natural gas properties excluded from depletion | $ 235,028,364 | $ 275,041,784 |
Temporary equity, issued (in units) | 55,000 | 110,000 |
Temporary equity, outstanding (in units) | 55,000 | 110,000 |
Common units, issued (in units) | 38,948,023 | 23,518,652 |
Common units, outstanding (in units) | 38,948,023 | 23,518,652 |
Class B units, issued (in units) | 20,779,781 | 25,557,606 |
Class B units, outstanding (in units) | 20,779,781 | 25,557,606 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
(Loss) gain on commodity derivative instruments, net | $ (5,897,646) | $ 2,506,815 | $ 193,995 | $ 270,607 |
Total revenues | 18,444,163 | 32,978,851 | 67,194,568 | 82,862,661 |
Costs and expenses | ||||
Production and ad valorem taxes | 1,840,607 | 2,236,405 | 4,916,858 | 5,757,742 |
Depreciation and depletion expense | 10,704,945 | 15,098,107 | 36,002,109 | 37,690,558 |
Impairment of oil and natural gas properties | 22,237,131 | 34,880,071 | 158,698,835 | 65,828,980 |
Marketing and other deductions | 2,511,919 | 2,332,010 | 6,692,850 | 5,938,093 |
General and administrative expense | 6,110,846 | 5,694,534 | 19,500,306 | 17,248,399 |
Total costs and expenses | 43,405,448 | 60,241,127 | 225,810,958 | 132,463,772 |
Operating loss | (24,961,285) | (27,262,276) | (158,616,390) | (49,601,111) |
Other income (expense) | ||||
Equity income in affiliate | 292,803 | (80,896) | 460,360 | (80,896) |
Interest expense | (1,603,006) | (1,468,419) | (4,689,907) | (4,332,633) |
Other expense | (100,000) | (100,000) | ||
Net loss before income taxes | (26,371,488) | (28,811,591) | (162,945,937) | (54,014,640) |
(Benefit from) provision for income taxes | (694,864) | 102,997 | (694,864) | 610,798 |
Net loss | (25,676,624) | (28,914,588) | (162,251,073) | (54,625,438) |
Distribution and accretion on Series A preferred units | (1,577,968) | (3,469,584) | (6,232,620) | (10,408,752) |
Net loss and distributions and accretion on Series A preferred units attributable to noncontrolling interests | 9,482,090 | 16,146,535 | 63,429,454 | 33,398,555 |
Distribution on Class B units | (23,141) | (23,414) | (71,089) | (71,042) |
Net loss attributable to common units | $ (17,795,643) | $ (16,261,051) | $ (105,125,328) | $ (31,706,677) |
Net loss attributable to common units | ||||
Net loss attributable to common units per unit (basic) (in dollar per share) | $ (0.50) | $ (0.73) | $ (3.13) | $ (1.53) |
Net loss attributable to common units per unit (diluted) (in dollar per share) | $ (0.50) | $ (0.73) | $ (3.13) | $ (1.53) |
Weighted average number of common units outstanding | ||||
Weighted average number of common units outstanding Basic (in units) | 35,423,112 | 22,399,748 | 33,540,977 | 20,715,633 |
Weighted average number of common units outstanding Diluted (in units) | 35,423,112 | 22,399,748 | 33,540,977 | 20,715,633 |
Oil, natural gas and NGL revenues | ||||
Revenue | $ 24,325,893 | $ 29,531,138 | $ 66,686,729 | $ 80,278,506 |
Lease bonus and other income | ||||
Revenue | $ 15,916 | $ 940,898 | $ 313,844 | $ 2,313,548 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN UNITHOLDERS' EQUITY - USD ($) | Springbok AcquisitionLimited PartnersCommon Units | Springbok AcquisitionLimited PartnersClass B Common Units | Springbok AcquisitionNon Controlling Interest | Springbok Acquisition | Limited PartnersCommon Units | Limited PartnersClass B Common Units | Non Controlling Interest | Total |
Unitholders' capital, beginning balance at Dec. 31, 2018 | $ 299,821,901 | $ 972,663 | $ 291,932,233 | $ 592,726,797 | ||||
Unitholders' capital, beginning balance (in units) at Dec. 31, 2018 | 18,056,487 | 19,453,258 | ||||||
Increase (Decrease) in Unitholders' Capital | ||||||||
Units issued for Acquisition | $ 470,000 | 171,550,000 | 172,020,000 | |||||
Units issued for Acquisition (in units) | 9,400,000 | |||||||
Conversion of Class B units to common units | $ 23,507,402 | $ (71,946) | (23,507,402) | (71,946) | ||||
Conversion of Class B units to common units (in units) | 1,438,916 | (1,438,916) | ||||||
Unit-based compensation | $ 1,770,410 | 1,770,410 | ||||||
Distributions to unitholders | (7,798,161) | (7,205,737) | (15,003,898) | |||||
Distribution and accretion on Series A preferred units | (1,441,938) | (2,027,646) | (3,469,584) | |||||
Distribution on Class B units | (23,814) | (23,814) | ||||||
Net loss | (2,221,500) | (3,123,863) | (5,345,363) | |||||
Unitholders' capital, ending balance at Mar. 31, 2019 | $ 313,614,300 | $ 1,370,717 | 427,617,585 | 742,602,602 | ||||
Unitholders' capital, ending balance (in units) at Mar. 31, 2019 | 19,495,403 | 27,414,342 | ||||||
Unitholders' capital, beginning balance at Dec. 31, 2018 | $ 299,821,901 | $ 972,663 | 291,932,233 | 592,726,797 | ||||
Unitholders' capital, beginning balance (in units) at Dec. 31, 2018 | 18,056,487 | 19,453,258 | ||||||
Increase (Decrease) in Unitholders' Capital | ||||||||
Net loss | (54,625,438) | |||||||
Unitholders' capital, ending balance at Sep. 30, 2019 | $ 341,969,430 | $ 1,169,413 | 310,744,268 | 653,883,111 | ||||
Unitholders' capital, ending balance (in units) at Sep. 30, 2019 | 23,520,219 | 23,388,258 | ||||||
Unitholders' capital, beginning balance at Mar. 31, 2019 | $ 313,614,300 | $ 1,370,717 | 427,617,585 | 742,602,602 | ||||
Unitholders' capital, beginning balance (in units) at Mar. 31, 2019 | 19,495,403 | 27,414,342 | ||||||
Increase (Decrease) in Unitholders' Capital | ||||||||
Conversion of Class B units to common units | $ 63,540,000 | $ (180,000) | (63,540,000) | (180,000) | ||||
Conversion of Class B units to common units (in units) | 3,600,000 | (3,600,000) | ||||||
Restricted units used for tax withholding | $ (21,036) | (21,036) | ||||||
Restricted units used for tax withholding (in units) | (1,268) | |||||||
Unit-based compensation | $ 2,112,764 | 2,112,764 | ||||||
Distributions to unitholders | (8,545,299) | (8,811,307) | (17,356,606) | |||||
Distribution and accretion on Series A preferred units | (1,708,157) | (1,761,427) | (3,469,584) | |||||
Distribution on Class B units | (23,814) | (23,814) | ||||||
Net loss | (10,026,403) | (10,339,084) | (20,365,487) | |||||
Unitholders' capital, ending balance at Jun. 30, 2019 | $ 358,942,355 | $ 1,190,717 | 343,165,767 | 703,298,839 | ||||
Unitholders' capital, ending balance (in units) at Jun. 30, 2019 | 23,094,135 | 23,814,342 | ||||||
Increase (Decrease) in Unitholders' Capital | ||||||||
Conversion of Class B units to common units | $ 6,641,087 | $ (21,304) | (6,641,087) | (21,304) | ||||
Conversion of Class B units to common units (in units) | 426,084 | (426,084) | ||||||
Unit-based compensation | $ 1,809,752 | 1,809,752 | ||||||
Distributions to unitholders | (9,162,713) | (9,633,877) | (18,796,590) | |||||
Distribution and accretion on Series A preferred units | (1,739,672) | (1,729,912) | (3,469,584) | |||||
Distribution on Class B units | (23,414) | (23,414) | ||||||
Net loss | (14,497,965) | (14,416,623) | (28,914,588) | |||||
Unitholders' capital, ending balance at Sep. 30, 2019 | $ 341,969,430 | $ 1,169,413 | 310,744,268 | 653,883,111 | ||||
Unitholders' capital, ending balance (in units) at Sep. 30, 2019 | 23,520,219 | 23,388,258 | ||||||
Unitholders' capital, beginning balance at Dec. 31, 2019 | $ 282,549,841 | $ 1,277,880 | 281,157,393 | $ 564,985,114 | ||||
Unitholders' capital, beginning balance (in units) at Dec. 31, 2019 | 23,518,652 | 25,557,606 | 23,518,652 | |||||
Increase (Decrease) in Unitholders' Capital | ||||||||
Common units issued | $ 73,601,668 | $ 73,601,668 | ||||||
Common units issued for equity offering (in units) | 5,000,000 | |||||||
Conversion of Class B units to common units | $ 75,578,037 | $ (245,678) | (75,578,037) | (245,678) | ||||
Conversion of Class B units to common units (in units) | 4,913,559 | (4,913,559) | ||||||
Redemption of Series A preferred units | $ (16,150,018) | (9,697,873) | (25,847,891) | |||||
Unit-based compensation | $ 2,107,587 | 2,107,587 | ||||||
Unit-based compensation (in units) | 946,638 | |||||||
Distributions to unitholders | $ (11,122,088) | (9,616,966) | (20,739,054) | |||||
Distribution and accretion on Series A preferred units | (1,922,344) | (1,154,340) | (3,076,684) | |||||
Distribution on Class B units | (24,807) | (24,807) | ||||||
Net loss | (37,353,883) | (22,430,516) | (59,784,399) | |||||
Unitholders' capital, ending balance at Mar. 31, 2020 | $ 367,263,993 | $ 1,032,202 | 162,679,661 | 530,975,856 | ||||
Unitholders' capital, ending balance (in units) at Mar. 31, 2020 | 34,378,849 | 20,644,047 | ||||||
Unitholders' capital, beginning balance at Dec. 31, 2019 | $ 282,549,841 | $ 1,277,880 | 281,157,393 | $ 564,985,114 | ||||
Unitholders' capital, beginning balance (in units) at Dec. 31, 2019 | 23,518,652 | 25,557,606 | 23,518,652 | |||||
Increase (Decrease) in Unitholders' Capital | ||||||||
Net loss | $ (162,251,073) | |||||||
Unitholders' capital, ending balance at Sep. 30, 2020 | $ 325,048,170 | $ 1,038,989 | 114,163,481 | $ 440,250,640 | ||||
Unitholders' capital, ending balance (in units) at Sep. 30, 2020 | 38,948,023 | 20,779,781 | 38,948,023 | |||||
Unitholders' capital, beginning balance at Mar. 31, 2020 | $ 367,263,993 | $ 1,032,202 | 162,679,661 | $ 530,975,856 | ||||
Unitholders' capital, beginning balance (in units) at Mar. 31, 2020 | 34,378,849 | 20,644,047 | ||||||
Increase (Decrease) in Unitholders' Capital | ||||||||
Units issued for Acquisition | $ 13,257,174 | $ 124,857 | $ 14,758,062 | $ 28,140,093 | ||||
Units issued for Acquisition (in units) | 2,224,358 | 2,497,134 | ||||||
Restricted units used for tax withholding | $ (6,259) | (6,259) | ||||||
Restricted units used for tax withholding (in units) | (1,018) | |||||||
Forfeiture of restricted units | $ (106,245) | (106,245) | ||||||
Forfeiture of restricted units (in units) | (14,166) | |||||||
Unit-based compensation | $ 2,534,198 | 2,534,198 | ||||||
Distributions to unitholders | (6,234,957) | (3,934,000) | (10,168,957) | |||||
Distribution and accretion on Series A preferred units | (966,609) | (611,359) | (1,577,968) | |||||
Distribution on Class B units | (23,141) | (23,141) | ||||||
Net loss | (47,038,901) | (29,751,149) | (76,790,050) | |||||
Unitholders' capital, ending balance at Jun. 30, 2020 | $ 328,679,253 | $ 1,157,059 | 143,141,215 | 472,977,527 | ||||
Unitholders' capital, ending balance (in units) at Jun. 30, 2020 | 36,588,023 | 23,141,181 | ||||||
Increase (Decrease) in Unitholders' Capital | ||||||||
Conversion of Class B units to common units | $ 16,487,288 | $ (118,070) | (16,487,288) | (118,070) | ||||
Conversion of Class B units to common units (in units) | 2,361,400 | (2,361,400) | ||||||
Forfeiture of restricted units | $ (12,614) | (12,614) | ||||||
Forfeiture of restricted units (in units) | (1,400) | |||||||
Unit-based compensation | $ 2,446,329 | 2,446,329 | ||||||
Distributions to unitholders | (4,756,443) | (3,008,356) | (7,764,799) | |||||
Distribution and accretion on Series A preferred units | (1,028,981) | (548,987) | (1,577,968) | |||||
Distribution on Class B units | (23,141) | (23,141) | ||||||
Net loss | (16,743,521) | (8,933,103) | (25,676,624) | |||||
Unitholders' capital, ending balance at Sep. 30, 2020 | $ 325,048,170 | $ 1,038,989 | $ 114,163,481 | $ 440,250,640 | ||||
Unitholders' capital, ending balance (in units) at Sep. 30, 2020 | 38,948,023 | 20,779,781 | 38,948,023 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (162,251,073) | $ (54,625,438) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and depletion expense | 36,002,109 | 37,690,558 |
Impairment of oil and natural gas properties | 158,698,835 | 65,828,980 |
Amortization of right-of-use assets | 205,518 | 88,058 |
Amortization of loan origination costs | 808,534 | 783,961 |
Equity income in affiliate | (460,360) | 80,896 |
Forfeiture of restricted units | (118,859) | |
Unit-based compensation | 7,088,114 | 5,692,926 |
Loss on commodity derivative instruments, net of settlements | 4,496,376 | 878,255 |
Changes in operating assets and liabilities: | ||
Oil, natural gas and NGL receivables | 3,131,377 | 5,270,397 |
Accounts receivable and other current assets | (870,069) | (389,839) |
Accounts payable | (212,162) | (399,679) |
Other current liabilities | 1,611,232 | 3,198,198 |
Operating lease liabilities | (205,222) | (117,312) |
Net cash provided by operating activities | 47,924,350 | 63,979,961 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (50,737) | (829,724) |
Purchase of oil and natural gas properties | (87,488,292) | (1,192,432) |
Deposits on oil and natural gas properties | (986,000) | |
Investment in affiliate | (1,751,951) | (2,965,933) |
Cash distribution from affiliate | 457,410 | |
Net cash used in investing activities | (88,833,570) | (5,974,089) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from equity offering | 73,601,668 | |
Contributions from Class B unitholders | 470,000 | |
Redemption of Class B contributions on converted units | (363,747) | (73,250) |
Issuance costs paid on Series A preferred units | (717,612) | |
Redemption on Series A preferred units | (61,089,600) | |
Distributions to common unitholders | (22,113,488) | (25,506,173) |
Distribution to OpCo unitholders | (16,559,322) | (25,650,921) |
Distribution and accretion on Series A preferred units | (3,850,006) | (5,775,000) |
Distribution on Class B units | (71,089) | (71,042) |
Borrowings on long-term debt | 157,065,176 | 3,951,933 |
Repayments on long-term debt | (87,500,000) | |
Payment of loan origination costs | (60,674) | (88,776) |
Restricted units used for tax withholding | (6,259) | (21,036) |
Net cash provided by (used in) financing activities | 39,052,659 | (53,481,877) |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1,856,561) | 4,523,995 |
CASH AND CASH EQUIVALENTS, beginning of period | 14,204,250 | 15,773,987 |
CASH AND CASH EQUIVALENTS, end of period | 12,347,689 | 20,297,982 |
Supplemental cash flow information: | ||
Cash paid for interest | 3,928,101 | 3,572,952 |
Non-cash investing and financing activities: | ||
Right-of-use assets obtained in exchange for operating lease liabilities | 3,554,159 | |
Units issued in exchange for oil and natural gas properties | 28,140,093 | 171,550,000 |
Non-cash deemed distribution to Series A preferred units | 2,382,614 | 4,633,752 |
Non-cash effect of Series A preferred unit redemption | $ 25,847,891 | |
Redemption of Class B contributions on converted units in accounts payable | $ 200,000 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | Unless the context otherwise requi res, references to “Kimbell Royalty Partners, LP,” the “Partnership,” or like terms refer to Kimbell Royalty Partners, LP and its subsidiaries. References to the “Operating Company” refer to Kimbell Royalty Operating, LLC. References to the “General Partner” refer to Kimbell Royalty GP, LLC. References to “Kimbell Operating” refer to Kimbell Operating Company, LLC, a wholly owned subsidiary of the General Partner. References to the “Sponsors” refer to affiliates of the Partnership’s founders, Ben J. Fortson, Robert D. Ravnaas, Brett G. Taylor and Mitch S. Wynne, respectively. References to the “Contributing Parties” refer to all entities and individuals, including certain affiliates of the Sponsors, that contributed, directly or indirectly, certain mineral and royalty interests to the Partnership. NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION Organization Kimbell Royalty Partners, LP is a Delaware limited partnership formed in 2015 to own and acquire mineral and royalty interests in oil and natural gas properties throughout the United States. Effective as of September 24, 2018, the Partnership has elected to be taxed as a corporation for United States federal income tax purposes. As an owner of mineral and royalty interests, the Partnership is entitled to a portion of the revenues received from the production of oil, natural gas and associated natural gas liquids (“NGL”) from the acreage underlying its interests, net of post-production expenses and taxes. The Partnership is not obligated to fund drilling and completion costs, lease operating expenses or plugging and abandonment costs at the end of a well’s productive life. The Partnership’s primary business objective is to provide increasing cash distributions to unitholders resulting from acquisitions from third parties, its Sponsors and the Contributing Parties and from organic growth through the continued development by working interest owners of the properties in which it owns an interest. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. As a result, the accompanying unaudited interim condensed consolidated financial statements do not include all disclosures required for complete annual financial statements prepared in conformity with GAAP. Accordingly, the accompanying unaudited interim condensed consolidated financial statements and related notes should be read in conjunction with the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2019, which contains a summary of the Partnership’s significant accounting policies and other disclosures. In the opinion of management of the General Partner, the unaudited interim condensed consolidated financial statements contain all adjustments necessary to fairly present the financial position and results of operations for the interim periods in accordance with GAAP and all adjustments are of a normal recurring nature. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. Preparation of the Partnership’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and notes. Actual results could differ from those estimates. Segment Reporting The Partnership operates in a single reportable COVID-19 Pandemic and Impact on Global Demand for Oil and Natural Gas The global spread of coronavirus (“COVID-19”) created significant volatility, uncertainty, and economic disruption during the first nine months of 2020. On March 11, 2020, the World Health Organization (the “WHO”) declared the ongoing COVID-19 outbreak a pandemic and recommended containment and mitigation measures worldwide. The pandemic has reached more than 200 countries and has resulted in widespread adverse impacts on the global economy, the Partnership’s oil, natural gas, and NGL operators and other parties with whom the Partnership has business relations, including a significant reduction in the global demand for oil and natural gas. This significant decline in demand accelerated following the announcement of price reductions and production increases in March 2020 by members of the Organization of Petroleum Exporting Countries (“OPEC”) and other foreign, oil-exporting countries, raising concerns about global storage capacity. The resulting supply and demand imbalance has led to a significantly weaker outlook for oil and gas producers and is having a disruptive impact on the oil and natural gas industry. The Partnership has modified certain business practices (including those related to employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences) to conform to government restrictions and best practices encouraged by the Centers for Disease Control and Prevention, the WHO and other governmental and regulatory authorities. In mid-March, the Partnership restricted access to its offices to only essential employees, and directed the remainder of its employees to work from home to the extent possible. Beginning in mid-May, the Partnership opened its offices to employees on a voluntary basis, with employees having the option to work from the office or from home. These restrictions have had minimal impact on the Partnership’s operations to date and have allowed the Partnership to maintain the engagement and connectivity of its personnel, as well as minimize the number of employees in the office. The ultimate impacts of COVID-19 and the volatility currently being experienced in the oil and natural gas markets on the Partnership’s business, cash flows, liquidity, financial condition and results of operations will depend on future developments, including, among others, the ultimate geographic spread of the virus, the consequences of governmental and other measures designed to prevent the spread of the virus, the development of effective treatments, the duration of the outbreak, actions taken by members of OPEC and other foreign, oil-exporting countries, governmental authorities and other thirds parties, workforce availability, and the timing and extent to which normal economic and operating conditions resume. For additional discussion regarding the risks associated with the COVID-19 pandemic and actions announced by OPEC and other foreign, oil-exporting countries, see Part I, Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 1A Risk Factors. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant Accounting Policies For a description of the Partnership’s significant accounting policies, see Note 2 of the consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2019, as well as the items noted below. There have been no substantial changes in such policies or the application of such policies during the nine months ended September 30, 2020, other than those discussed below in Recently Adopted Accounting Pronouncements. New Accounting Pronouncements Recently Adopted Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement.” This update modifies the fair value measurement disclosure requirements specifically related to Level 3 fair value measurements and transfers between levels. The Partnership adopted this update on January 1, 2020 and applied it prospectively. The adoption of this update did not have a material impact on the Partnership’s results of operations for the three and nine months ended September 30, 2020. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard replaced the currently required incurred loss approach with an expected loss model for instruments measured at amortized cost. The Partnership adopted this update using the modified retrospective approach, effective January 1, 2020. The adoption of this update did not have a material impact on the Partnership’s results of operations for the three and nine months ended September 30, 2020. Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” that is expected to reduce cost and complexity related to accounting for income taxes. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Partnership is currently evaluating the impact of the adoption of this update, but does not believe it will have a material impact on its financial position, results of operations or liquidity. |
ACQUISITIONS AND JOINT VENTURES
ACQUISITIONS AND JOINT VENTURES | 9 Months Ended |
Sep. 30, 2020 | |
ACQUISITIONS AND JOINT VENTURES | |
ACQUISITIONS AND JOINT VENTURES | NOTE 3 — ACQUISITIONS AND JOINT VENTURES Acquisitions On March 25, 2019, the Partnership acquired all of the equity interests in subsidiaries of PEP I Holdings, LLC, PEP II Holdings, LLC and PEP III Holdings, LLC that own oil and natural gas mineral and royalty interests (the “Phillips Acquisition”). The aggregate consideration for the Phillips Acquisition consisted of 9,400,000 common units of the Operating Company (“OpCo common units”) and an equal number of Class B units representing limited partner interests of the Partnership (“Class B units”) On September 20, 2019, the Partnership agreed to acquire various mineral and royalty interests in Oklahoma for an aggregate purchase price of approximately $9.9 million. The acquisition closed on November 6, 2019. The Partnership funded the payment of the purchase price with borrowings under its secured revolving credit facility. The assets acquired consisted of approximately 279,680 gross acres and 186 net royalty acres. On April 17, 2020, the Partnership and the Operating Company completed the acquisition of all of the equity interests in Springbok Energy Partners, LLC and Springbok Energy Partners II, LLC (the “Springbok Acquisition”). The aggregate consideration for the Springbok Acquisition consisted of (i) approximately $95.0 million in cash, which was funded by borrowings under the Partnership’s secured revolving credit facility, (ii) the issuance of 2,224,358 common units and (iii) the issuance of 2,497,134 OpCo common units and an equal number of Class B units Joint Ventures The Partnership has partial ownership in a joint venture (the “Joint Venture”) with Springbok SKR Capital Company, LLC and Rivercrest Capital Partners, LP, a related party. The Partnership’s ownership in the Joint Venture is 49.3% and its total capital commitment will not exceed $15.0 million. The Joint Venture is managed by Springbok Operating Company, LLC. While certain members of Springbok Operating Company, LLC are affiliated with the entities acquired as part of the Springbok Acquisition, none of the assets held by the Joint Venture were included in the Springbok Acquisition. The purpose of the Joint Venture is to make direct or indirect investments in royalty, mineral and overriding royalty interests and similar non-cost bearing interests in oil and gas properties, excluding leasehold or working interests. The Partnership currently utilizes the equity method of accounting for its investment in the Joint Venture. As of September 30, 2020, the Partnership had paid approximately $4.7 million under its capital commitment. In October 2020, the Partnership paid a capital contribution of $0.1 million, bringing the total amount paid under its capital commitment to approximately $4.8 million. |
DERIVATIVES
DERIVATIVES | 9 Months Ended |
Sep. 30, 2020 | |
DERIVATIVES | |
DERIVATIVES | NOTE 4 — DERIVATIVES The Partnership’s ongoing operations expose it to changes in the market price for oil and natural gas. To mitigate the inherent commodity price risk associated with its operations, the Partnership uses oil and natural gas commodity derivative financial instruments. From time to time, such instruments may include variable-to-fixed-price swaps, costless collars, fixed-price contracts, and other contractual arrangements. The Partnership enters into oil and natural gas derivative contracts that contain netting arrangements with each counterparty. As of September 30, 2020, the Partnership’s commodity derivative contracts consisted of fixed price swaps, under which the Partnership receives a fixed price for the contract and pays a floating market price to the counterparty over a specified period for a contracted volume. The Partnership hedges its daily production based on the amount of debt and/or preferred equity as a percent of its enterprise value. As of September 30, 2020, these economic hedges constituted approximately 33% of daily oil and natural gas production. The Partnership’s oil fixed price swap transactions are settled based upon the average daily prices for the calendar month of the contract period, and its natural gas fixed price swap transactions are settled based upon the last day settlement of the first nearby month futures contract of the contract period. Settlement for oil derivative contracts occurs in the succeeding month and natural gas derivative contracts are settled in the production month. The Partnership has not designated any of its derivative contracts as hedges for accounting purposes. The Partnership records all derivative contracts at fair value. Changes in the fair values of the Partnership’s derivative instruments are recognized as gains or losses in the current period and are presented on a net basis in the accompanying unaudited condensed consolidated statements of operations. Changes in fair value consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Beginning fair value of commodity derivative instruments $ 2,881,223 $ 1,665,887 $ 804,501 $ 4,227,946 (Loss) gain on commodity derivative instruments (5,897,646) 2,506,815 193,995 270,607 Net cash received on settlements of derivative instruments (675,452) (823,011) (4,690,371) (1,148,862) Ending fair value of commodity derivative instruments $ (3,691,875) $ 3,349,691 $ (3,691,875) $ 3,349,691 The following table presents the fair value of the Partnership’s derivative contracts as of September 30, 2020 and December 31, 2019: September 30, December 31, Classification Balance Sheet Location 2020 2019 Assets: Current asset Commodity derivative assets $ — $ 687,933 Long-term asset Commodity derivative assets — 116,568 Liabilities: Current liability Commodity derivative liabilities (992,299) — Long-term liability Commodity derivative liabilities (2,699,576) — $ (3,691,875) $ 804,501 As of September 30, 2020, the Partnership’s open commodity derivative contracts consisted of the following: Oil Price Swaps Notional Weighted Average Range (per Bbl) Volumes (Bbl) Fixed Price (per Bbl) Low High September 2020 - December 2020 178,974 $ 41.36 $ 32.21 $ 50.65 January 2021 - December 2021 535,455 $ 44.26 $ 34.95 $ 56.10 January 2022 - September 2022 391,164 $ 40.70 $ 35.65 $ 43.52 Natural Gas Price Swaps Notional Weighted Average Range (per MMBtu) Volumes (MMBtu) Fixed Price (per MMBtu) Low High October 2020 - December 2020 1,735,672 $ 2.54 $ 2.45 $ 2.63 January 2021 - December 2021 6,886,090 $ 2.54 $ 2.33 $ 2.85 January 2022 - September 2022 4,973,953 $ 2.43 $ 2.23 $ 2.70 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 5—FAIR VALUE MEASUREMENTS The Partnership measures and reports certain assets and liabilities on a fair value basis and has classified and disclosed its fair value measurements using the levels of the fair value hierarchy noted below. The carrying values of cash, oil, natural gas and NGL receivables, accounts receivable and other current assets and current and long-term liabilities included in the unaudited condensed consolidated balance sheets approximated fair value as of September 30, 2020 and December 31, 2019 due to their short-term duration and variable interest rates that approximate prevailing interest rates as of each reporting period. As a result, these financial assets and liabilities are not discussed below. ● Level 1— Unadjusted quoted market prices for identical assets or liabilities in active markets. ● Level 2—Quoted prices for similar assets or liabilities in non-active markets, or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. ● Level 3—Measurement based on prices or valuations models that require inputs that are both unobservable and significant to the fair value measurement (including the Partnership’s own assumptions in determining fair value). Assets and liabilities that are measured at fair value are classified based on the lowest level of input that is significant to the fair value measurement. The Partnership’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Partnership recognizes transfers between fair value hierarchy levels as of the end of the reporting period in which the event or change in circumstances causing the transfer occurred. The Partnership did not have any transfers between Level 1, Level 2 or Level 3 fair value measurements during the three and nine months ended September 30, 2020 and 2019. The Partnership’s commodity derivative instruments are classified within Level 2. The fair values of the Partnership’s oil and natural gas fixed price swaps are based upon inputs that are either readily available in the public market, such as oil and natural gas futures prices, volatility factors and discount rates, or can be corroborated from active markets. The following tables summarize the Partnership’s assets and liabilities measured at fair value on a recurring basis by the fair value hierarchy: Fair Value Measurements Using Level 1 Level 2 Level 3 Effect of Counterparty Netting Total September 30, 2020 Assets Commodity derivative contracts $ — $ — $ — $ — $ — Liabilities Commodity derivative contracts $ — $ (3,691,875) $ — $ — $ (3,691,875) December 31, 2019 Assets Commodity derivative contracts $ — $ 804,501 $ — $ — $ 804,501 Liabilities Commodity derivative contracts $ — $ — $ — $ — $ — |
OIL AND NATURAL GAS PROPERTIES
OIL AND NATURAL GAS PROPERTIES | 9 Months Ended |
Sep. 30, 2020 | |
OIL AND NATURAL GAS PROPERTIES | |
OIL AND NATURAL GAS PROPERTIES | NOTE 6—OIL AND NATURAL GAS PROPERTIES Oil and natural gas properties consist of the following: September 30, December 31, 2020 2019 Oil and natural gas properties Proved properties $ 913,955,037 $ 758,313,233 Unevaluated properties 235,028,364 275,041,784 Less: accumulated depreciation, depletion and impairment (523,403,235) (328,913,425) Total oil and natural gas properties $ 625,580,166 $ 704,441,592 Costs associated with unevaluated properties are excluded from the full cost pool until a determination as to the existence of proved reserves is able to be made. The Partnership assesses all unevaluated properties on a periodic basis for possible impairment. The Partnership assesses properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: economic and market conditions; operators’ intent to drill; remaining lease term; geological and geophysical evaluations; operators’ drilling results and activity; the assignment of proved reserves; and the economic viability of operator development if proved reserves are assigned. During any period in which these factors indicate an impairment, all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to amortization and to the full cost ceiling test. The Partnership transferred $48.6 million to the full cost pool in the first quarter of 2020 as a result of this impairment assessment. The transfer resulted in an additional ceiling test impairment expense for the nine months ended September 30, 2020 equal to the amount of the transfer. There were no additional impairments to unevaluated properties in the second or third quarters of 2020. After evaluating certain external factors in the first quarter of 2020, including a significant decline in oil and natural gas prices, as well as longer-term commodity price outlooks, in each case related to reduced demand for oil and natural gas as a result of COVID-19, the announcement of price reductions and production increases in March 2020 by members of OPEC and other foreign, oil-exporting countries, and other supply factors, the Partnership determined that significant drilling uncertainty existed regarding its proved undeveloped (“PUD”) reserves that were included in its total estimated proved reserves as of December 31, 2019, as well as its unevaluated oil and natural gas properties. Specifically, with respect to the Partnership’s PUD reserves (which accounted for approximately 6.1% of total estimated proved reserves as of December 31, 2019), the Partnership determined that it did not have reasonable certainty as to the timing of the development of the PUD reserves and, therefore, recorded an impairment on such properties for the three months ended March 31, 2020. In addition, the Partnership does not intend to book PUD reserves going forward. As a result of its full cost ceiling analysis, the Partnership recorded an impairment on its oil and natural gas properties of $22.2 million and $158.7 million during the three and nine months ended September 30, 2020, respectively. The impairment can primarily be attributed to the decline in the 12-month average price of oil and natural gas as a result of the continued impact of the external factors mentioned above. The Partnership recorded an impairment on its oil and natural gas properties of $34.9 million and $65.8 million during the three and nine months ended September 30, 2019, respectively, primarily due to a decline in the 12-month average price of oil and natural gas. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2020 | |
LEASES | |
LEASES | NOTE 7—LEASES Substantially all of the Partnership’s leases are long-term operating leases with fixed payment terms and will terminate in June 2029. The Partnership’s right-of-use (“ROU”) operating lease assets represent its right to use an underlying asset for the lease term, and its operating lease liabilities represent its obligation to make lease payments. ROU operating lease assets and operating lease liabilities are included in the accompanying unaudited condensed consolidated balance sheets. Short term operating lease liabilities are included in other current liabilities. The weighted average remaining lease term as of September 30, 2020 is 8.60 years. Both the ROU operating lease assets and liabilities are recognized at the present value of the remaining lease payments over the lease term and do not include lease incentives. The Partnership’s leases do not provide an implicit rate that can readily be determined; therefore, the Partnership used a discount rate based on its incremental borrowing rate, which is determined by the information available in the secured revolving credit facility. The incremental borrowing rate reflects the estimated rate of interest that the Partnership would pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. The weighted average discount rate used for the operating lease was 6.75% for the nine months ended September 30, 2020. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administrative expense in the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019. The total operating lease expense recorded for the three and nine months ended September 30, 2020 was $0.1 million and $0.4 million, respectively. Currently, the most substantial contractual arrangements that the Partnership has classified as operating leases are the main office spaces used for operations. In July 2019, the Partnership became the lessee in several other related lease agreements for additional office space. In addition, the Partnership was involved in the construction and design of the underlying assets. Future minimum lease commitments as of September 30, 2020 were as follows: Total 2020 2021 2022 2023 2024 Thereafter Operating leases $ 4,271,715 $ 122,003 $ 480,025 $ 478,837 $ 480,579 $ 486,323 $ 2,223,948 Less: Imputed Interest (1,078,012) Total $ 3,193,703 |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2020 | |
LONG-TERM DEBT. | |
LONG-TERM DEBT | NOTE 8—LONG-TERM DEBT The Partnership maintains a secured revolving credit facility that is secured by substantially all of its assets, the Operating Company’s assets and the assets of their wholly owned subsidiaries. Availability under the secured revolving credit facility equals the lesser of the aggregate maximum commitments of the lenders and the borrowing base. Total commitments under the secured revolving credit facility are set at $225.0 million, and the borrowing base is set at $300.0 million. The secured revolving credit facility permits aggregate commitments under the secured revolving credit facility to be increased to up to $500.0 million, subject to the limitations of the Partnership’s borrowing base and the satisfaction of certain conditions and the procurement of additional commitments from new or existing lenders. The borrowing base will be redetermined semiannually on or about May 1 and November 1 of each year based on the value of the oil and natural gas properties of the Partnership, the Operating Company and their wholly owned subsidiaries. In connection with the May 1, 2020 redetermination under the secured revolving credit facility, the borrowing base was reaffirmed at $300.0 million and total commitments will remain at $225.0 million. The borrowing base was reaffirmed in May, in part, because the assets acquired in the Springbok Acquisition provided support to the Partnership’s existing, pre-acquisition borrowing base. The November borrowing base redetermination is currently being conducted and is expected to be finalized by the end of November 2020. The secured revolving credit facility matures on February 8, 2022. The Partnership intends to request from its lenders an amendment to extend the term of the secured revolving credit facility beyond the current maturity date prior to March 31, 2021. The secured revolving credit facility contains various affirmative, negative and financial maintenance covenants. These covenants limit the Partnership’s ability to, among other things, incur or guarantee additional debt, make distributions on, or redeem or repurchase, common units, make certain investments and acquisitions, incur certain liens or permit them to exist, enter into certain types of transactions with affiliates, merge or consolidate with another company and transfer, sell or otherwise dispose of assets. The secured revolving credit facility also contains covenants requiring the Partnership to maintain the following financial ratios or to reduce the Partnership’s indebtedness if the Partnership is unable to comply with such ratios: (i) a Debt to EBITDAX Ratio (as defined in the secured revolving credit facility) of not more than 4.0 1.0 During the three and nine months ended September 30, 2020, the Partnership borrowed an additional $0.5 million and $157.1 million under the secured revolving credit facility and repaid approximately $2.5 million and $87.5 million of the outstanding borrowings, respectively. As of September 30, 2020, the Partnership’s outstanding balance was $169.7 million. The Partnership was in compliance with all covenants included in the secured revolving credit facility as of September 30, 2020. As of September 30, 2020, borrowings under the secured revolving credit facility bore interest at LIBOR plus a margin of 2.50% or Prime Rate (as defined in the secured revolving credit facility) plus a margin of 1.50%. For the nine months ended September 30, 2020, the weighted average interest rate on the Partnership’s outstanding borrowings was 3.38%. |
PREFERRED UNITS
PREFERRED UNITS | 9 Months Ended |
Sep. 30, 2020 | |
PREFERRED UNITS | |
PREFERRED UNITS | NOTE 9—PREFERRED UNITS In July 2018, the Partnership completed the private placement of 110,000 Series A preferred units to certain affiliates of Apollo Capital Management, L.P. (the “Series A Purchasers”) for $1,000 per Series A preferred unit, resulting in gross proceeds to the Partnership of $110.0 million. Until the conversion of the Series A preferred units into common units or their redemption, holders of the Series A preferred units are entitled to receive cumulative quarterly distributions equal to 7.0% per annum plus accrued and unpaid distributions. In connection with the issuance of the Series A preferred units, the Partnership granted holders of the Series A preferred units board observer rights beginning on the third anniversary of the original issuance date, and board appointment rights beginning the fourth anniversary of the original issuance date and in the case of events of default with respect to the Series A preferred units. The Series A preferred units are convertible by the Series A Purchasers after two years at a 30% discount to the issue price, subject to certain conditions. The Partnership may redeem the Series A preferred units at any time. The Series A preferred units may be redeemed for a cash amount per Series A preferred unit equal to the product of (a) the number of outstanding Series A preferred units multiplied by (b) the greatest of (i) an amount (together with all prior distributions made in respect of such Series A preferred unit) necessary to achieve the Minimum IRR (as defined below), (ii) an amount (together with all prior distributions made in respect of such Series A preferred unit) necessary to achieve a return on investment equal to 1.2 referred unit and (iii) the Series A issue price plus accrued and unpaid distributions. For purposes of the , “Minimum IRR” means as of any measurement date: (a) prior to the fifth anniversary of the July 12, 2018 (the “Series A Issuance Date”), a 13.0% internal rate of return with respect to the Series A preferred units; (b) on or after the fifth anniversary of the Series A Issuance Date and prior to the sixth anniversary of the Series A Issuance Date, a 14.0% internal rate of return with respect to the Series A preferred units; and (c) on or after the sixth anniversary of the Series A Issuance Date, a 15.0% internal rate of return with respect to the Series A preferred units. On February 12, 2020, the Partnership completed the redemption of 55,000 Series A preferred units, representing 50% of the then-outstanding Series A preferred units. The Series A preferred units were redeemed at a price of $1,110.72 per Series A preferred unit for an aggregate redemption price of $61.1 million. As the consideration transferred by the Partnership to redeem the Series A preferred units was greater than 50% of the carrying value of the Series A preferred units as of the redemption date and 50% of the original intrinsic value of the beneficial conversion feature, a deemed dividend distribution of $5.7 million was taken directly to unitholders’ equity and non-controlling interest during the nine months ended September 30, 2020. The following table summarizes the changes in the number of the Series A preferred units: Series A Preferred Units Balance at December 31, 2019 110,000 Redemption of Series A preferred units (55,000) Balance at September 30, 2020 55,000 |
UNITHOLDERS' EQUITY AND PARTNER
UNITHOLDERS' EQUITY AND PARTNERSHIP DISTRIBUTIONS | 9 Months Ended |
Sep. 30, 2020 | |
UNITHOLDERS' EQUITY AND PARTNERSHIP DISTRIBUTIONS | |
UNITHOLDERS' EQUITY AND PARTNERSHIP DISTRIBUTIONS | NOTE 10—UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS The Partnership has issued units representing limited partner interests. As of September 30, 2020, the Partnership had a total of 38,948,023 common units issued In January 2020, the Partnership completed an underwritten public offering of 5,000,000 common units for net proceeds of approximately $73.6 million (the “2020 Equity Offering”). The Partnership used the net proceeds from the 2020 Equity Offering to purchase OpCo common units. The Operating Company in turn used the net proceeds to repay approximately $70.0 million of the outstanding borrowings under the Partnership’s secured revolving credit facility. In connection with the 2020 Equity Offering, certain selling unitholders sold 750,000 common units pursuant to the exercise of the underwriters’ option to purchase additional common units. The Partnership did not receive any proceeds from the sale of the common units by the selling unitholders. The following table summarizes the changes in the number of the Partnership’s common units: Common Units Balance at December 31, 2019 23,518,652 Common units issued for equity offering 5,000,000 Common units issued for Springbok Acquisition 2,224,358 Conversion of Class B units 7,274,959 Common units issued under the LTIP (1) 946,638 Restricted units used for tax withholding (1,018) Forfeiture of restricted units (15,566) Balance at September 30, 2020 38,948,023 (1) Includes restricted units granted to certain employees, directors and consultants under the Kimbell Royalty GP, LLC 2017 Long-Term Incentive Plan (as amended, the “LTIP”) on February 28, 2020. The following table presents information regarding the common unit cash distributions approved by the General Partner’s Board of Directors (the “Board of Directors”) for the periods presented: Amount per Date Unitholder Payment Common Unit Declared Record Date Date Q1 2020 $ 0.17 April 24, 2020 May 4, 2020 May 11, 2020 Q2 2020 $ 0.13 July 24, 2020 August 3, 2020 August 10, 2020 Q3 2020 $ 0.19 October 23, 2020 November 2, 2020 November 9, 2020 Q1 2019 $ 0.37 April 26, 2019 May 6, 2019 May 13, 2019 Q2 2019 $ 0.39 July 26, 2019 August 5, 2019 August 12, 2019 Q3 2019 $ 0.42 October 25, 2019 November 4, 2019 November 11, 2019 The following table summarizes the changes in the number of the Partnership’s Class B units: Class B Units Balance at December 31, 2019 25,557,606 Conversion of Class B units (7,274,959) Class B units issued for Springbok Acquisition 2,497,134 Balance at September 30, 2020 20,779,781 For each Class B unit issued, five cents has been paid to the Partnership as additional consideration (the “Class B Contribution”). Holders of the Class B units, are entitled to receive cash distributions equal to 2.0% per quarter on their respective Class B Contribution, subsequent to distributions on the Series A preferred units but prior to distributions on the common units and OpCo common units. The Class B units and OpCo common units are exchangeable together into an equal number of common units of the Partnership. |
EARNINGS (LOSS) PER UNIT
EARNINGS (LOSS) PER UNIT | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS (LOSS) PER UNIT | |
EARNINGS (LOSS) PER UNIT | NOTE 11—EARNINGS (LOSS) PER UNI T Basic earnings (loss) per unit (“EPU”) is calculated by dividing net income (loss) attributable to common units by the weighted-average number of common units outstanding during the period. Diluted net income (loss) per common unit gives effect, when applicable, to unvested restricted units granted under the Partnership’s LTIP for its employees, directors and consultants and potential conversion of Class B units. The following table summarizes the calculation of weighted average common units outstanding used in the computation of diluted earnings (loss) per unit: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net loss attributable to common units $ (17,795,643) $ (16,261,051) $ (105,125,328) $ (31,706,677) Weighted average number of common units outstanding: Basic 35,423,112 22,399,748 33,540,977 20,715,633 Effect of dilutive securities: Series A preferred units — — — — Class B units — — — — Restricted units — — — — Diluted 35,423,112 22,399,748 33,540,977 20,715,633 Net loss attributable to common units Basic $ (0.50) $ (0.73) $ (3.13) $ (1.53) Diluted $ (0.50) $ (0.73) $ (3.13) $ (1.53) The calculation of diluted net loss per unit for the three and nine months ended September 30, 2020 excludes the conversion of Series A preferred units to common units, the conversion of Class B units to common units and 1,510,396 of unvested restricted units because their inclusion in the calculation would be anti-dilutive. The calculation of diluted net loss per unit for the three and nine months ended September 30, 2019 excludes the conversion of Series A preferred units to common units, the conversion of Class B units to common units and 975,540 unvested restricted units because their inclusion in the calculation would be anti-dilutive. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | NOTE 12—INCOME TAXES In May 2018, the Board of Directors unanimously approved a change of the Partnership’s federal income tax status from that of a pass-through partnership to that of a taxable entity, which became effective on September 24, 2018. Subsequent to the Partnership’s change in tax status, the Partnership’s provision for income taxes is based on the estimated annual effective tax rate plus discrete items. Prior to September 24, 2018, the Partnership was organized as a pass-through entity for income tax purposes. As a result, the Partnership’s partners were responsible for federal and state income or similar taxes on their share of the Partnership’s taxable income with the exception of any entity-level income or similar taxes such as the Texas Franchise Tax. The Partnership recorded a benefit from income taxes of $0.7 million for both the three and nine months ended September 30, 2020. The benefit recorded by the Partnership for the three and nine months ended September 30, 2020 primarily related to the filing of its 2019 federal and state income tax returns in September 2020, which resulted in a true-up of previously recorded income tax expense. |
UNIT-BASED COMPENSATION
UNIT-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2020 | |
UNIT-BASED COMPENSATION | |
UNIT-BASED COMPENSATION | NOTE 13—UNIT-BASED COMPENSATION On September 23, 2018, the General Partner entered into the First Amendment to the LTIP, which increased the number of common units eligible for issuance under the LTIP by 2,500,000 common units for a total of 4,541,600 common units. The Partnership’s LTIP authorizes grants to its employees, directors and consultants. The restricted units issued under the Partnership’s LTIP generally vest in one third installments three Distributions related to the restricted units are paid concurrently with the Partnership’s distributions for common units. The fair value of the Partnership’s restricted units issued under the LTIP to the Partnership’s employees, directors and consultants is determined by utilizing the market value of the Partnership’s common units on the respective grant date. The following table presents a summary of the Partnership’s unvested restricted units. Weighted Weighted Average Average Grant-Date Remaining Fair Value Contractual Units per Unit Term Unvested at December 31, 2019 739,479 $ 18.059 1.335 years Awarded 946,638 11.540 — Vested (160,155) 18.826 — Forfeited (15,566) 14.097 — Unvested at September 30, 2020 1,510,396 $ 13.933 1.909 years |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2020 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 14—RELATED PARTY TRANSACTIONS The Partnership currently has a management services agreement with Kimbell Operating, which has separate services agreements with each of BJF Royalties, LLC (“BJF Royalties”), K3 Royalties, LLC (“K3 Royalties”), Nail Bay Royalties, LLC (“Nail Bay Royalties”) and Duncan Management, LLC (“Duncan Management”), pursuant to which they and Kimbell Operating provide management, administrative and operational services to the Partnership. In addition, under each of their respective services agreements, affiliates of the Partnership’s Sponsors may identify, evaluate and recommend to the Partnership acquisition opportunities and negotiate the terms of such acquisitions. Amounts paid to Kimbell Operating and such other entities under their respective services agreements will reduce the amount of cash available for distribution to the Partnership’s unitholders. During the three and nine months ended September 30, 2020, no monthly services fee was paid to BJF Royalties. During the three months ended September 30, 2020, the Partnership made payments to K3 Royalties, Nail Bay Royalties and Duncan Management in the amount of $30,000, $66,054 and $140,364, respectively. During the nine months ended September 30, 2020, the Partnership made payments to K3 Royalties, Nail Bay Royalties and Duncan Management in the amount of $90,000, $198,162 and $421,092, respectively. Certain consultants who provide services under management services agreements are granted restricted units under the Partnership’s LTIP. |
ADMINISTRATIVE SERVICES
ADMINISTRATIVE SERVICES | 9 Months Ended |
Sep. 30, 2020 | |
ADMINISTRATIVE SERVICES | |
ADMINISTRATIVE SERVICES | NOTE 15—ADMINISTRATIVE SERVICES Management Services Agreement The Partnership relies upon its officers, directors, Sponsors and outside consultants to further its business operations. The Partnership also hires independent contractors and consultants involved in land, technical, regulatory and other disciplines to assist its officers and directors. See Note 14―Related Party Transactions. Transition Services Agreement In connection with the Springbok Acquisition, the Partnership entered into a Transition Services Agreement (the “Transition Services Agreement”) with Springbok Investment Management, LP (“SIM”). Pursuant to the Transition Services Agreement, SIM provided certain administrative services and accounting assistance on a transitional basis for total compensation of $300,000 from April 17, 2020 through June 17, 2020, at which point, the Transition Services Agreement terminated. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 16—COMMITMENTS AND CONTINGENCIES During the normal course of business, the Partnership may experience situations where disagreements occur relating to the ownership of certain mineral or overriding royalty interest acreage. Management is not aware of any legal, environmental or other commitments or contingencies that would have a material effect on the Partnership’s financial condition, results of operations or liquidity as of September 30, 2020. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 17—SUBSEQUENT EVENTS The Partnership has evaluated events that occurred subsequent to September 30, 2020 in the preparation of its condensed consolidated financial statements. Joint Venture In October 2020, in connection with the Joint Venture, the Partnership paid capital contributions of $0.1 million. Distributions On November 4, 2020, the Partnership paid a quarterly cash distribution on the Series A preferred units of approximately $1.0 million for the quarter ended September 30, 2020. On November 4, 2020, the Partnership paid a quarterly cash distribution to each Class B unitholder equal to 2.0% of such unitholder’s respective Class B Contribution, resulting in a total quarterly distribution of $20,780 for the quarter ended September 30, 2020. On October 23, 2020, the Board of Directors declared a quarterly cash distribution of $0.19 per common unit for the quarter ended September 30, 2020. The distribution will be paid on November 9, 2020 to common unitholders and OpCo common unitholders of record as of the close of business on November 2, 2020. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement.” This update modifies the fair value measurement disclosure requirements specifically related to Level 3 fair value measurements and transfers between levels. The Partnership adopted this update on January 1, 2020 and applied it prospectively. The adoption of this update did not have a material impact on the Partnership’s results of operations for the three and nine months ended September 30, 2020. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard replaced the currently required incurred loss approach with an expected loss model for instruments measured at amortized cost. The Partnership adopted this update using the modified retrospective approach, effective January 1, 2020. The adoption of this update did not have a material impact on the Partnership’s results of operations for the three and nine months ended September 30, 2020. Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” that is expected to reduce cost and complexity related to accounting for income taxes. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Partnership is currently evaluating the impact of the adoption of this update, but does not believe it will have a material impact on its financial position, results of operations or liquidity. |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
DERIVATIVES | |
Schedule of changes in fair value of derivative instruments | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Beginning fair value of commodity derivative instruments $ 2,881,223 $ 1,665,887 $ 804,501 $ 4,227,946 (Loss) gain on commodity derivative instruments (5,897,646) 2,506,815 193,995 270,607 Net cash received on settlements of derivative instruments (675,452) (823,011) (4,690,371) (1,148,862) Ending fair value of commodity derivative instruments $ (3,691,875) $ 3,349,691 $ (3,691,875) $ 3,349,691 |
Schedule of derivative contracts | September 30, December 31, Classification Balance Sheet Location 2020 2019 Assets: Current asset Commodity derivative assets $ — $ 687,933 Long-term asset Commodity derivative assets — 116,568 Liabilities: Current liability Commodity derivative liabilities (992,299) — Long-term liability Commodity derivative liabilities (2,699,576) — $ (3,691,875) $ 804,501 |
Schedule of commodity derivative contracts | As of September 30, 2020, the Partnership’s open commodity derivative contracts consisted of the following: Oil Price Swaps Notional Weighted Average Range (per Bbl) Volumes (Bbl) Fixed Price (per Bbl) Low High September 2020 - December 2020 178,974 $ 41.36 $ 32.21 $ 50.65 January 2021 - December 2021 535,455 $ 44.26 $ 34.95 $ 56.10 January 2022 - September 2022 391,164 $ 40.70 $ 35.65 $ 43.52 Natural Gas Price Swaps Notional Weighted Average Range (per MMBtu) Volumes (MMBtu) Fixed Price (per MMBtu) Low High October 2020 - December 2020 1,735,672 $ 2.54 $ 2.45 $ 2.63 January 2021 - December 2021 6,886,090 $ 2.54 $ 2.33 $ 2.85 January 2022 - September 2022 4,973,953 $ 2.43 $ 2.23 $ 2.70 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE MEASUREMENTS | |
Schedule of assets and liabilities measured at fair value on a recurring basis | Fair Value Measurements Using Level 1 Level 2 Level 3 Effect of Counterparty Netting Total September 30, 2020 Assets Commodity derivative contracts $ — $ — $ — $ — $ — Liabilities Commodity derivative contracts $ — $ (3,691,875) $ — $ — $ (3,691,875) December 31, 2019 Assets Commodity derivative contracts $ — $ 804,501 $ — $ — $ 804,501 Liabilities Commodity derivative contracts $ — $ — $ — $ — $ — |
OIL AND NATURAL GAS PROPERTIES
OIL AND NATURAL GAS PROPERTIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
OIL AND NATURAL GAS PROPERTIES | |
Schedule of oil and natural gas properties | September 30, December 31, 2020 2019 Oil and natural gas properties Proved properties $ 913,955,037 $ 758,313,233 Unevaluated properties 235,028,364 275,041,784 Less: accumulated depreciation, depletion and impairment (523,403,235) (328,913,425) Total oil and natural gas properties $ 625,580,166 $ 704,441,592 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
LEASES | |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | Future minimum lease commitments as of September 30, 2020 were as follows: Total 2020 2021 2022 2023 2024 Thereafter Operating leases $ 4,271,715 $ 122,003 $ 480,025 $ 478,837 $ 480,579 $ 486,323 $ 2,223,948 Less: Imputed Interest (1,078,012) Total $ 3,193,703 |
PREFERRED UNITS (Tables)
PREFERRED UNITS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Series A Preferred Units | |
Preferred units | |
Summary of the changes in the number of the Series A Preferred Units | Series A Preferred Units Balance at December 31, 2019 110,000 Redemption of Series A preferred units (55,000) Balance at September 30, 2020 55,000 |
UNITHOLDERS' EQUITY AND PARTN_2
UNITHOLDERS' EQUITY AND PARTNERSHIP DISTRIBUTIONS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Common units | |
Schedule of distributions approved by the Board of Directors | Amount per Date Unitholder Payment Common Unit Declared Record Date Date Q1 2020 $ 0.17 April 24, 2020 May 4, 2020 May 11, 2020 Q2 2020 $ 0.13 July 24, 2020 August 3, 2020 August 10, 2020 Q3 2020 $ 0.19 October 23, 2020 November 2, 2020 November 9, 2020 Q1 2019 $ 0.37 April 26, 2019 May 6, 2019 May 13, 2019 Q2 2019 $ 0.39 July 26, 2019 August 5, 2019 August 12, 2019 Q3 2019 $ 0.42 October 25, 2019 November 4, 2019 November 11, 2019 |
Common Units | |
Common units | |
Schedule of changes in Partnership's units | Common Units Balance at December 31, 2019 23,518,652 Common units issued for equity offering 5,000,000 Common units issued for Springbok Acquisition 2,224,358 Conversion of Class B units 7,274,959 Common units issued under the LTIP (1) 946,638 Restricted units used for tax withholding (1,018) Forfeiture of restricted units (15,566) Balance at September 30, 2020 38,948,023 (1) Includes restricted units granted to certain employees, directors and consultants under the Kimbell Royalty GP, LLC 2017 Long-Term Incentive Plan (as amended, the “LTIP”) on February 28, 2020. |
Class B | |
Common units | |
Schedule of changes in Partnership's units | Class B Units Balance at December 31, 2019 25,557,606 Conversion of Class B units (7,274,959) Class B units issued for Springbok Acquisition 2,497,134 Balance at September 30, 2020 20,779,781 |
EARNINGS (LOSS) PER UNIT (Table
EARNINGS (LOSS) PER UNIT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS (LOSS) PER UNIT | |
Schedule of earnings (loss) per unit | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net loss attributable to common units $ (17,795,643) $ (16,261,051) $ (105,125,328) $ (31,706,677) Weighted average number of common units outstanding: Basic 35,423,112 22,399,748 33,540,977 20,715,633 Effect of dilutive securities: Series A preferred units — — — — Class B units — — — — Restricted units — — — — Diluted 35,423,112 22,399,748 33,540,977 20,715,633 Net loss attributable to common units Basic $ (0.50) $ (0.73) $ (3.13) $ (1.53) Diluted $ (0.50) $ (0.73) $ (3.13) $ (1.53) |
UNIT-BASED COMPENSATION (Tables
UNIT-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
UNIT-BASED COMPENSATION | |
Schedule of unvested restricted stock activity | Weighted Weighted Average Average Grant-Date Remaining Fair Value Contractual Units per Unit Term Unvested at December 31, 2019 739,479 $ 18.059 1.335 years Awarded 946,638 11.540 — Vested (160,155) 18.826 — Forfeited (15,566) 14.097 — Unvested at September 30, 2020 1,510,396 $ 13.933 1.909 years |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Details) | 9 Months Ended |
Sep. 30, 2020segment | |
Segment Reporting | |
Number of operating units | 1 |
Number of reporting units | 1 |
ACQUISITIONS AND JOINT VENTUR_2
ACQUISITIONS AND JOINT VENTURES (Details) $ in Millions | Sep. 20, 2020USD ($)a | Apr. 20, 2020shares | Apr. 17, 2020USD ($)shares | Jun. 19, 2019USD ($) | Mar. 25, 2019ashares | Oct. 31, 2020USD ($) | Sep. 30, 2020USD ($)aitem |
Phillips Acquisition | |||||||
Acquisitions | |||||||
Gross acres acquired (in acres) | a | 866,528 | ||||||
Net royalty acres acquired (in acres) | a | 12,210 | ||||||
Phillips Acquisition | OpCo Units | |||||||
Acquisitions | |||||||
Business Acquisition issuance of common units | shares | 9,400,000 | ||||||
Phillips Acquisition | Class B | |||||||
Acquisitions | |||||||
Business Acquisition issuance of common units | shares | 9,400,000 | ||||||
Springbok SKR Capital Company, LLC and Rivercrest Capital Partners, LP. | |||||||
Acquisitions | |||||||
Joint Venture contributions | $ 0.1 | $ 4.7 | |||||
Joint Venture contributions to date | 4.8 | ||||||
Ownership interest (as a percent) | 49.30% | ||||||
Springbok SKR Capital Company, LLC and Rivercrest Capital Partners, LP. | Maximum | |||||||
Acquisitions | |||||||
Purchase price units value | $ 15 | ||||||
Springbok Energy Partners, LLC and Springbok Energy Partners II, LLC | |||||||
Acquisitions | |||||||
Purchase price cash, gross | $ 95 | ||||||
Net royalty acres acquired (in acres) | a | 2,160 | ||||||
Springbok Energy Partners, LLC and Springbok Energy Partners II, LLC | Minimum | |||||||
Acquisitions | |||||||
The number of operators acquired | item | 90 | ||||||
Springbok Energy Partners, LLC and Springbok Energy Partners II, LLC | OpCo Units | |||||||
Acquisitions | |||||||
Business Acquisition issuance of common units | shares | 2,497,134 | ||||||
Springbok Energy Partners, LLC and Springbok Energy Partners II, LLC | Class B Common Units | |||||||
Acquisitions | |||||||
Business Acquisition issuance of common units | shares | 2,497,134 | ||||||
Springbok Energy Partners, LLC and Springbok Energy Partners II, LLC | Common Units | |||||||
Acquisitions | |||||||
Business Acquisition issuance of common units | shares | 2,224,358 | ||||||
Oklahoma Property Acquisition | |||||||
Acquisitions | |||||||
Purchase price cash, gross | $ 9.9 | ||||||
Gross acres acquired (in acres) | a | 279,680 | ||||||
Net royalty acres acquired (in acres) | a | 186 | ||||||
Subsequent Event | Springbok SKR Capital Company, LLC and Rivercrest Capital Partners, LP. | |||||||
Acquisitions | |||||||
Capital contributions paid to joint venture. | $ 0.1 |
DERIVATIVES (Details)
DERIVATIVES (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)$ / bblMMBbls | Dec. 31, 2019USD ($) | |
Derivatives | ||||||
Daily oil and natural gas production before Phillips acquisition hedged (as a percent) | 33.00% | |||||
Change in fair values of derivative instruments | ||||||
Beginning fair value of commodity derivative instruments | $ | $ 2,881,223 | $ 1,665,887 | $ 804,501 | $ 4,227,946 | ||
(Loss) gain on commodity derivative instruments, net | $ | (5,897,646) | 2,506,815 | 193,995 | 270,607 | ||
Net cash received on settlements of derivative instruments | $ | (675,452) | (823,011) | (4,690,371) | (1,148,862) | ||
Ending fair value of commodity derivative instruments | $ | (3,691,875) | 3,349,691 | (3,691,875) | 3,349,691 | ||
Assets: | ||||||
Current asset | $ | $ 687,933 | |||||
Long-term asset | $ | 116,568 | |||||
Liabilities: | ||||||
Current liability | $ | $ (992,299) | |||||
Long-term liability | $ | (2,699,576) | |||||
Derivative assets (liabilities) | $ | $ (3,691,875) | $ 3,349,691 | $ (3,691,875) | $ 3,349,691 | $ (3,691,875) | $ 804,501 |
Oil Price Swaps - September 2020 - December 2020 | ||||||
Derivatives | ||||||
Notional Volumes | MMBbls | 178,974 | |||||
Weighted Average Fixed Price | 41.36 | |||||
Oil Price Swaps - January 2021 - December 2021 | ||||||
Derivatives | ||||||
Notional Volumes | MMBbls | 535,455 | |||||
Weighted Average Fixed Price | 44.26 | |||||
Oil Price Swaps - January 2022 - September 2022 | ||||||
Derivatives | ||||||
Notional Volumes | MMBbls | 391,164 | |||||
Weighted Average Fixed Price | 40.70 | |||||
Natural Gas Price Swaps - October 2020 - December 2020 | ||||||
Derivatives | ||||||
Notional Volumes | MMBbls | 1,735,672 | |||||
Weighted Average Fixed Price | 2.54 | |||||
Natural Gas Price Swaps - January 2021 - December 2021 | ||||||
Derivatives | ||||||
Notional Volumes | MMBbls | 6,886,090 | |||||
Weighted Average Fixed Price | 2.54 | |||||
Natural Gas Price Swaps - January 2022 - September 2022 | ||||||
Derivatives | ||||||
Notional Volumes | MMBbls | 4,973,953 | |||||
Weighted Average Fixed Price | 2.43 | |||||
Minimum | Oil Price Swaps - September 2020 - December 2020 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 32.21 | |||||
Minimum | Oil Price Swaps - January 2021 - December 2021 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 34.95 | |||||
Minimum | Oil Price Swaps - January 2022 - September 2022 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 35.65 | |||||
Minimum | Natural Gas Price Swaps - October 2020 - December 2020 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 2.45 | |||||
Minimum | Natural Gas Price Swaps - January 2021 - December 2021 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 2.33 | |||||
Minimum | Natural Gas Price Swaps - January 2022 - September 2022 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 2.23 | |||||
Maximum | Oil Price Swaps - September 2020 - December 2020 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 50.65 | |||||
Maximum | Oil Price Swaps - January 2021 - December 2021 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 56.10 | |||||
Maximum | Oil Price Swaps - January 2022 - September 2022 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 43.52 | |||||
Maximum | Natural Gas Price Swaps - October 2020 - December 2020 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 2.63 | |||||
Maximum | Natural Gas Price Swaps - January 2021 - December 2021 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 2.85 | |||||
Maximum | Natural Gas Price Swaps - January 2022 - September 2022 | ||||||
Derivatives | ||||||
Weighted Average Fixed Price | 2.70 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Commodity Contract - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commodity derivative contracts assets | $ 804,501 | |
Commodity derivative contracts liabilities | $ (3,691,875) | |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commodity derivative contracts assets | $ 804,501 | |
Commodity derivative contracts liabilities | $ (3,691,875) |
OIL AND NATURAL GAS PROPERTIE_2
OIL AND NATURAL GAS PROPERTIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
OIL AND NATURAL GAS PROPERTIES | ||||||
Proved properties | $ 913,955,037 | $ 913,955,037 | $ 758,313,233 | |||
Unevaluated properties | 235,028,364 | 235,028,364 | 275,041,784 | |||
Less: accumulated depreciation, depletion, and impairment | (523,403,235) | (523,403,235) | (328,913,425) | |||
Total oil and natural gas properties, net | 625,580,166 | 625,580,166 | $ 704,441,592 | |||
Transfer to full cost pool | $ 48,600,000 | |||||
Impairment of oil and natural gas properties | $ 22,237,131 | $ 34,880,071 | $ 158,698,835 | $ 65,828,980 | ||
Percent of proved undeveloped reserves of estimated proved reserves (as a percent) | 6.10% |
LEASES (Details)
LEASES (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | |
LEASES | ||
Operating lease weighted average remaining lease term | 8 years 7 months 6 days | 8 years 7 months 6 days |
Operating lease weighted average discount rate (as a percent) | 6.75% | 6.75% |
Operating lease expense | $ 100,000 | $ 400,000 |
Remainder of 2020 | 122,003 | 122,003 |
2021 | 480,025 | 480,025 |
2022 | 478,837 | 478,837 |
2023 | 480,579 | 480,579 |
2024 | 486,323 | 486,323 |
Thereafter | 2,223,948 | 2,223,948 |
Total operating leases | 4,271,715 | 4,271,715 |
Less Imputed Interest | (1,078,012) | (1,078,012) |
Total | $ 3,193,703 | $ 3,193,703 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | May 31, 2019 | Jul. 12, 2018 | Feb. 08, 2017 | |
Long-term debt | ||||||
Borrowings of debt | $ 157,065,176 | $ 3,951,933 | ||||
Repayment of debt | $ 2,500,000 | 87,500,000 | ||||
Revolving credit facility | ||||||
Long-term debt | ||||||
Revolving credit facility maximum borrowings | $ 225,000,000 | $ 225,000,000 | ||||
Revolving credit facility increased maximum borrowing capacity if certain conditions are met | 500,000,000 | |||||
Revolving credit facility outstanding | $ 169,700,000 | $ 169,700,000 | ||||
Interest rate on outstanding borrowings (as a percent) | 3.38% | 3.38% | ||||
Borrowing base | $ 300,000,000 | $ 300,000,000 | ||||
Borrowings of debt | $ 500,000 | $ 157,100,000 | ||||
Repayment of debt | $ 87,500,000 | |||||
Revolving credit facility | LIBOR | ||||||
Long-term debt | ||||||
Variable rate | LIBOR | |||||
Margin (as a percent) | 2.50% | |||||
Revolving credit facility | Prime | ||||||
Long-term debt | ||||||
Variable rate | Prime Rate | |||||
Margin (as a percent) | 1.50% | |||||
Revolving credit facility | Maximum | ||||||
Long-term debt | ||||||
Debt to EBITDAX ratio | 400.00% | |||||
Revolving credit facility | Minimum | ||||||
Long-term debt | ||||||
Current assets to current liabilities ratio | 100.00% |
PREFERRED UNITS - Other (Detail
PREFERRED UNITS - Other (Details) - USD ($) | Feb. 12, 2020 | Jul. 31, 2018 | Sep. 30, 2020 |
Series A Preferred Units | |||
Preferred units | |||
Redemption of Series A preferred units | 55,000 | 55,000 | |
Deemed distribution amount | $ 5,700,000 | ||
Percentage of Series A preferred units redeemed | 50.00% | ||
Unit price (in dollars per unit) | $ 1,110.72 | ||
Series A preferred units redemption price | $ 61,100,000 | ||
Series A Preferred Units | Minimum | |||
Preferred units | |||
Percent of consideration transferred to carrying value of units (as a percent) | 50.00% | ||
Percent of consideration transferred to original intrinsic value of units (as a percent) | 50.00% | ||
Affiliates of Apollo Capital Management, L.P. | |||
Preferred units | |||
Series A preferred units issued | 110,000 | ||
Share price (in dollars per unit) | $ 1,000 | ||
Proceeds from the issuance of preferred units | $ 110,000,000 | ||
Distribution rate (as a percent) | 7.00% | ||
The period after issuance securities become convertible | 2 years | ||
Discount rate to the issue price (as a percent) | $ 30 | ||
Percent of redemption price exceeding invested capital for the Partnership to initiate redemption (as a percent) | 120.00% | ||
Minimum IRR prior to the fifth anniversary of Series A Issuance Date (as a percent) | 13.00% | ||
Minimum IRR on or after the fifth anniversary of Series A Issuance Date (as a percent) | 14.00% | ||
Minimum IRR on or after the sixth anniversary of Series A Issuance Date (as a percent) | 15.00% |
PREFERRED UNITS - Rollforward (
PREFERRED UNITS - Rollforward (Details) - Series A Preferred Units - shares | Feb. 12, 2020 | Sep. 30, 2020 |
Preferred units rollforward | ||
Balance at beginning of period | 110,000 | |
Redemption of Series A preferred units | (55,000) | (55,000) |
Balance at end of period | 55,000 |
UNITHOLDERS' EQUITY AND PARTN_3
UNITHOLDERS' EQUITY AND PARTNERSHIP DISTRIBUTIONS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Jan. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Common units | ||||||||||
Units issued (in units) | 38,948,023 | 23,518,652 | ||||||||
Units outstanding (in units) | 23,518,652 | 38,948,023 | 23,518,652 | 38,948,023 | 38,948,023 | 23,518,652 | ||||
Repayment of debt | $ 2,500,000 | $ 87,500,000 | ||||||||
Capital rollforward | ||||||||||
Unitholders' capital, beginning balance (in units) | 23,518,652 | 23,518,652 | 23,518,652 | |||||||
Unitholders' capital, ending balance (in units) | 38,948,023 | 38,948,023 | ||||||||
Cash distributions declared and paid (in dollars per unit) | $ 0.19 | $ 0.13 | $ 0.17 | $ 0.42 | $ 0.39 | $ 0.37 | ||||
Common Units | ||||||||||
Common units | ||||||||||
Units issued (in units) | 38,948,023 | |||||||||
Units outstanding (in units) | 23,518,652 | 38,948,023 | 23,518,652 | 23,518,652 | 38,948,023 | 23,518,652 | ||||
Capital rollforward | ||||||||||
Unitholders' capital, beginning balance (in units) | 23,518,652 | 23,518,652 | 23,518,652 | |||||||
Common units issued for equity offering (in units) | 5,000,000 | |||||||||
Conversion of Class B Units (in units) | 7,274,959 | |||||||||
Common units issued under the LTIP (in units) | 946,638 | |||||||||
Restricted units used for tax withholding (in units) | (1,018) | |||||||||
Forfeiture of restricted units (in units) | (15,566) | |||||||||
Unitholders' capital, ending balance (in units) | 38,948,023 | 38,948,023 | ||||||||
Class B | ||||||||||
Common units | ||||||||||
Units outstanding (in units) | 25,557,606 | 20,779,781 | 25,557,606 | 25,557,606 | 20,779,781 | 25,557,606 | ||||
Capital rollforward | ||||||||||
Unitholders' capital, beginning balance (in units) | 25,557,606 | 25,557,606 | 25,557,606 | |||||||
Conversion of Class B Units (in units) | (7,274,959) | |||||||||
Unitholders' capital, ending balance (in units) | 20,779,781 | 20,779,781 | ||||||||
Cash distributions (as a percent) | 2.00% | |||||||||
Class B Common Units | ||||||||||
Capital rollforward | ||||||||||
Additional consideration paid per unit (in dollars per unit) | $ 0.05 | |||||||||
Springbok Acquisition | Common Units | ||||||||||
Capital rollforward | ||||||||||
Units issued to acquisition (in units) | 2,224,358 | |||||||||
Springbok Acquisition | Class B | ||||||||||
Capital rollforward | ||||||||||
Units issued to acquisition (in units) | 2,497,134 | |||||||||
Public Offering | ||||||||||
Common units | ||||||||||
Units issued (in units) | 5,000,000 | |||||||||
Proceeds from equity offering | $ 73,600,000 | |||||||||
Repayment of debt | $ 70,000,000 | |||||||||
Underwriters option to purchase additional units | ||||||||||
Common units | ||||||||||
Units issued (in units) | 750,000 |
EARNINGS (LOSS) PER UNIT (Detai
EARNINGS (LOSS) PER UNIT (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings per unit | ||||
Net loss attributable to common units | $ (17,795,643) | $ (16,261,051) | $ (105,125,328) | $ (31,706,677) |
Weighted average number of common units outstanding Basic (in units) | 35,423,112 | 22,399,748 | 33,540,977 | 20,715,633 |
Weighted average number of common units outstanding Diluted (in units) | 35,423,112 | 22,399,748 | 33,540,977 | 20,715,633 |
Net (loss) income attributable to common units per unit (basic) | $ (0.50) | $ (0.73) | $ (3.13) | $ (1.53) |
Net (loss) income attributable to common units per unit (diluted) | $ (0.50) | $ (0.73) | $ (3.13) | $ (1.53) |
Restricted Units | ||||
Earnings per unit | ||||
Anti-dilutive options outstanding | 1,510,396 | 975,540 | 1,510,396 | 975,540 |
INCOME TAXES - (Details)
INCOME TAXES - (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
INCOME TAXES | ||||
(Benefit from) provision for income taxes | $ (694,864) | $ 102,997 | $ (694,864) | $ 610,798 |
UNIT-BASED COMPENSATION (Detail
UNIT-BASED COMPENSATION (Details) - $ / shares | Sep. 23, 2018 | Sep. 30, 2020 | Dec. 31, 2019 |
Unvested Units | |||
Vesting (in units) | (160,155) | ||
Forfeited (in units) | (15,566) | ||
Unvested Weighted Average Grant-Date Fair Value | |||
Vesting (in dollars per unit) | $ 18.826 | ||
Forfeited (in dollars per unit) | $ 14.097 | ||
Long-Term Incentive Plan | |||
Unit-based compensation | |||
Additional common units authorized for issuance | 2,500,000 | ||
Vesting period | 3 years | ||
Authorized issuance of units | 4,541,600 | ||
Long-Term Incentive Plan | First Anniversary | |||
Unit-based compensation | |||
Vesting percent | 33.30% | ||
Long-Term Incentive Plan | Second Anniversary | |||
Unit-based compensation | |||
Vesting percent | 33.30% | ||
Long-Term Incentive Plan | Third Anniversary | |||
Unit-based compensation | |||
Vesting percent | 33.30% | ||
Long-Term Incentive Plan | Restricted Units | |||
Unvested Units | |||
Unvested at beginning of period (in units) | 739,479 | ||
Awarded (in units) | 946,638 | ||
Unvested at end of period (in units) | 1,510,396 | 739,479 | |
Unvested Weighted Average Grant-Date Fair Value | |||
Unvested at beginning of period (in dollars per unit) | $ 18.059 | ||
Awarded (in dollars per unit) | 11.540 | ||
Unvested at end of period (in dollars per unit) | $ 13.933 | $ 18.059 | |
Weighted Average Remaining Contractual Term | |||
Unvested contractual term, at end of period | 1 year 10 months 27 days | 1 year 4 months |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
BJF Royalties | ||
Related Party Transactions | ||
Payments made to related parties | $ 0 | $ 0 |
K3 Royalties | ||
Related Party Transactions | ||
Payments made to related parties | 30,000 | 90,000 |
Nail Bay Royalties | ||
Related Party Transactions | ||
Payments made to related parties | 66,054 | 198,162 |
Duncan Management | ||
Related Party Transactions | ||
Payments made to related parties | $ 140,364 | $ 421,092 |
ADMINISTRATIVE SERVICES (Detail
ADMINISTRATIVE SERVICES (Details) | 3 Months Ended |
Jun. 17, 2020USD ($) | |
Springbok Energy Partners, LLC and Springbok Energy Partners II, LLC | |
Payments Made To Related Parties | $ 300,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Nov. 04, 2020 | Oct. 23, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Subsequent events | ||||
Distributions on Series A redeemable preferred units | $ 3,850,006 | $ 5,775,000 | ||
Distributions to Class B unitholders | $ 71,089 | $ 71,042 | ||
Subsequent Event | ||||
Subsequent events | ||||
Distributions on Series A redeemable preferred units | $ 1,000,000 | |||
Distributions to Class B unitholders | $ 20,780 | |||
Cash distributions declared (in dollars per unit) | $ 0.19 | |||
Subsequent Event | Class B Common Units | ||||
Subsequent events | ||||
Cash distributions (as a percent) | 2.00% |