Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 27, 2023 | |
Document Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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 | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001657788 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Units | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 73,851,458 | |
Class B | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 20,847,295 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 39,528,859 | $ 24,635,718 |
Oil, natural gas and NGL receivables | 61,320,286 | 46,993,711 |
Derivative assets | 1,489,189 | |
Accounts receivable and other current assets | 2,855,653 | 3,562,912 |
Total current assets | 105,193,987 | 75,192,341 |
Property and equipment, net | 681,285 | 953,781 |
Oil and natural gas properties | ||
Oil and natural gas properties, using full cost method of accounting ($338,840,127 and $207,695,343 excluded from depletion at September 30, 2023 and December 31, 2022, respectively) | 2,048,160,125 | 1,465,985,718 |
Less: accumulated depreciation, depletion and impairment | (772,711,451) | (712,716,951) |
Total oil and natural gas properties, net | 1,275,448,674 | 753,268,767 |
Right-of-use assets, net | 2,274,148 | 2,525,323 |
Derivative assets | 134,841 | 754,786 |
Loan origination costs, net | 6,051,974 | 3,004,104 |
Total assets | 1,389,784,909 | 1,076,746,299 |
Current liabilities | ||
Accounts payable | 3,186,244 | 1,210,337 |
Other current liabilities | 10,541,101 | 4,909,510 |
Derivative liabilities | 1,418,027 | 12,646,720 |
Total current liabilities | 15,145,372 | 18,766,567 |
Operating lease liabilities, excluding current portion | 1,977,931 | 2,236,361 |
Derivative liabilities | 1,527,330 | 432,142 |
Long-term debt | 310,400,000 | 233,015,911 |
Other liabilities | 229,167 | 322,917 |
Total liabilities | 329,279,800 | 263,336,623 |
Commitments and contingencies (Note 17) | ||
Mezzanine equity: | ||
Series A preferred units (325,000 units and zero units issued and outstanding as of September 30, 2023 and December 31, 2022, respectively) | 314,028,929 | |
Redeemable non-controlling interest in Kimbell Tiger Acquisition Corporation | 236,900,000 | |
Kimbell Royalty Partners, LP unitholders' equity: | ||
Common units (73,851,458 units and 64,231,833 units issued and outstanding as of September 30, 2023 and December 31, 2022, respectively) | 695,096,257 | 601,841,776 |
Class B units (20,847,295 and 15,484,400 units issued and outstanding as of September 30, 2023 and December 31, 2022, respectively) | 1,042,365 | 774,220 |
Total Kimbell Royalty Partners, LP unitholders' equity | 696,138,622 | 602,615,996 |
Non-controlling interest (deficit) in OpCo | 50,337,558 | (26,106,320) |
Total unitholders' equity | 746,476,180 | 576,509,676 |
Total liabilities, mezzanine equity and unitholders' equity | $ 1,389,784,909 | 1,076,746,299 |
Consolidated variable interest entities | ||
Oil and natural gas properties | ||
Cash | 390,850 | |
Investments held in trust | 240,621,146 | |
Prepaid expenses | 35,201 | |
Current liabilities | ||
Other current liabilities | 512,725 | |
Deferred underwriting commissions | $ 8,050,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Oil and natural gas properties excluded from depletion | $ 338,840,127 | $ 207,695,343 |
Temporary equity, issued (in units) | 325,000 | 0 |
Temporary equity, outstanding (in units) | 325,000 | 0 |
Common units, issued (in units) | 73,851,458 | 64,231,833 |
Common units, outstanding (in units) | 73,851,458 | 64,231,833 |
Class B units, issued (in units) | 20,847,295 | 15,484,400 |
Class B units, outstanding (in units) | 20,847,295 | 15,484,400 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | $ 69,237,603 | $ 73,867,992 | $ 183,635,976 | $ 217,543,364 |
Lease bonus and other income | 2,543,240 | 171,702 | 5,021,766 | 2,039,154 |
(Loss) gain on commodity derivative instruments, net | (4,576,570) | (1,116,722) | 6,215,265 | (40,194,369) |
Total revenues | 67,204,273 | 72,922,972 | 194,873,007 | 179,388,149 |
Costs and expenses | ||||
Production and ad valorem taxes | 4,986,878 | 4,518,580 | 14,669,037 | 13,542,285 |
Depreciation and depletion expense | 23,060,163 | 11,326,791 | 60,280,666 | 33,359,915 |
Marketing and other deductions | 3,508,500 | 3,068,244 | 9,177,998 | 10,639,314 |
General and administrative expense | 10,358,674 | 7,482,814 | 26,562,100 | 21,938,249 |
General and administrative expense consolidated variable interest entities | 527,634 | 927,699 | 1,857,593 | |
Total costs and expenses | 41,914,215 | 26,924,063 | 111,617,500 | 81,337,356 |
Operating income | 25,290,058 | 45,998,909 | 83,255,507 | 98,050,793 |
Other income (expense) | ||||
Equity income in affiliate | 23,727 | 3,658,460 | ||
Interest expense | (6,680,661) | (3,667,534) | (18,485,183) | (9,868,679) |
Loss on extinguishment of debt | (480,244) | |||
Other income (expense) | 76,873 | (180,765) | 4,043,530 | |
Net income before income taxes | 18,609,397 | 43,620,231 | 67,618,006 | 97,396,881 |
Income tax expense (benefit) | 128,359 | (224,883) | 2,440,399 | 1,850,357 |
Net income | 18,481,038 | 43,845,114 | 65,177,607 | 95,546,524 |
Distribution and accretion on Series A preferred units | (1,040,572) | (1,040,572) | ||
Net income and distributions and accretion on Series A preferred units attributable to non-controlling interests | (3,839,401) | (5,493,117) | (13,700,261) | (11,975,886) |
Distribution on Class B units | (20,854) | (8,211) | (67,939) | (34,032) |
Net income attributable to common units of Kimbell Royalty Partners, LP | $ 13,580,211 | $ 38,343,786 | $ 50,368,835 | $ 83,536,606 |
Net income per unit attributable to common units of Kimbell Royalty Partners, LP | ||||
Net income per unit attributable to common units (basic) (in dollar per share) | $ 0.20 | $ 0.69 | $ 0.80 | $ 1.26 |
Net income per unit attributable to common units (diluted) (in dollar per share) | $ 0.19 | $ 0.59 | $ 0.78 | $ 1 |
Weighted average number of common units outstanding | ||||
Weighted average number of common units outstanding Basic (in units) | 68,540,786 | 55,434,641 | 64,807,590 | 52,302,235 |
Weighted average number of common units outstanding Diluted (in units) | 94,969,077 | 65,543,412 | 85,739,813 | 65,397,463 |
Consolidated variable interest entities | ||||
Other income (expense) | ||||
Interest earned on marketable securities in trust account | $ 1,188,256 | $ 3,508,691 | $ 1,512,777 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN UNITHOLDERS' EQUITY - USD ($) | Common Units | Class B Common Units | Non-controlling Interest in Opco | Non-controlling Interest in TGR | Total |
Unitholders' capital, beginning balance at Dec. 31, 2021 | $ 328,717,841 | $ 880,579 | $ 19,251,361 | $ 348,849,781 | |
Unitholders' capital, beginning balance (in units) at Dec. 31, 2021 | 47,162,773 | 17,611,579 | |||
Increase (Decrease) in Unitholders' Capital | |||||
Costs associated with equity offering | $ (325,508) | (325,508) | |||
Conversion of Class B units to common units | $ 161,424,103 | $ (467,896) | (161,424,103) | (467,896) | |
Conversion of Class B units to common units (in units) | 9,357,919 | (9,357,919) | |||
Restricted units repurchased for tax withholding | $ (3,344,828) | (3,344,828) | |||
Restricted units repurchased for tax withholding (in units) | (193,604) | ||||
Unit-based compensation | $ 2,194,342 | 2,194,342 | |||
Unit-based compensation (in units) | 963,835 | ||||
Distributions to unitholders | $ (17,450,226) | (6,516,284) | (23,966,510) | ||
Distribution on Class B units | (17,610) | (17,610) | |||
Proceeds from issuance of TGR public warrants | $ 11,500,000 | 11,500,000 | |||
Accretion of redeemable non-controlling interest in Kimbell Tiger Acquisition Corporation | (16,325,799) | (2,351,988) | $ (11,500,000) | (30,177,787) | |
Net income | 7,348,567 | 1,058,677 | 8,407,244 | ||
Unitholders' capital, ending balance at Mar. 31, 2022 | $ 462,220,882 | $ 412,683 | (149,982,337) | 312,651,228 | |
Unitholders' capital, ending balance (in units) at Mar. 31, 2022 | 57,290,923 | 8,253,660 | |||
Unitholders' capital, beginning balance at Dec. 31, 2021 | $ 328,717,841 | $ 880,579 | 19,251,361 | 348,849,781 | |
Unitholders' capital, beginning balance (in units) at Dec. 31, 2021 | 47,162,773 | 17,611,579 | |||
Increase (Decrease) in Unitholders' Capital | |||||
Net income | 95,546,524 | ||||
Unitholders' capital, ending balance at Sep. 30, 2022 | $ 485,063,162 | $ 410,579 | (148,629,318) | 336,844,423 | |
Unitholders' capital, ending balance (in units) at Sep. 30, 2022 | 57,331,833 | 8,211,579 | |||
Unitholders' capital, beginning balance at Mar. 31, 2022 | $ 462,220,882 | $ 412,683 | (149,982,337) | 312,651,228 | |
Unitholders' capital, beginning balance (in units) at Mar. 31, 2022 | 57,290,923 | 8,253,660 | |||
Increase (Decrease) in Unitholders' Capital | |||||
Conversion of Class B units to common units | $ 722,952 | $ (2,104) | (722,952) | (2,104) | |
Conversion of Class B units to common units (in units) | 42,081 | (42,081) | |||
Forfeiture of restricted units | $ (19,813) | (19,813) | |||
Forfeiture of restricted units (in units) | (1,171) | ||||
Unit-based compensation | $ 2,949,491 | 2,949,491 | |||
Distributions to unitholders | (26,945,962) | (3,859,442) | (30,805,404) | ||
Distribution on Class B units | (8,211) | (8,211) | |||
Accretion of redeemable non-controlling interest in Kimbell Tiger Acquisition Corporation | (1,519,432) | (217,627) | (1,737,059) | ||
Net income | 37,870,074 | 5,424,092 | 43,294,166 | ||
Unitholders' capital, ending balance at Jun. 30, 2022 | $ 475,269,981 | $ 410,579 | (149,358,266) | 326,322,294 | |
Unitholders' capital, ending balance (in units) at Jun. 30, 2022 | 57,331,833 | 8,211,579 | |||
Increase (Decrease) in Unitholders' Capital | |||||
Unit-based compensation | $ 2,981,903 | 2,981,903 | |||
Distributions to unitholders | (31,532,508) | (4,764,169) | (36,296,677) | ||
Distribution on Class B units | (8,211) | (8,211) | |||
Net income | 38,351,997 | 5,493,117 | 43,845,114 | ||
Unitholders' capital, ending balance at Sep. 30, 2022 | $ 485,063,162 | $ 410,579 | (148,629,318) | 336,844,423 | |
Unitholders' capital, ending balance (in units) at Sep. 30, 2022 | 57,331,833 | 8,211,579 | |||
Unitholders' capital, beginning balance at Dec. 31, 2022 | 602,615,996 | ||||
Unitholders' capital, beginning balance at Dec. 31, 2022 | $ 601,841,776 | $ 774,220 | (26,106,320) | $ 576,509,676 | |
Unitholders' capital, beginning balance (in units) at Dec. 31, 2022 | 64,231,833 | 15,484,400 | 64,231,833 | ||
Increase (Decrease) in Unitholders' Capital | |||||
Restricted units repurchased for tax withholding | $ (4,851,962) | $ (4,851,962) | |||
Restricted units repurchased for tax withholding (in units) | (279,662) | ||||
Unit-based compensation | $ 3,170,000 | 3,170,000 | |||
Unit-based compensation (in units) | 998,162 | ||||
Distributions to unitholders | $ (31,176,160) | (7,436,615) | (38,612,775) | ||
Distribution on Class B units | (15,484) | (15,484) | |||
Net income | 23,336,120 | 5,563,418 | 28,899,538 | ||
Unitholders' capital, ending balance at Mar. 31, 2023 | $ 592,304,290 | $ 774,220 | (27,979,517) | 565,098,993 | |
Unitholders' capital, ending balance (in units) at Mar. 31, 2023 | 64,950,333 | 15,484,400 | |||
Unitholders' capital, beginning balance at Dec. 31, 2022 | 602,615,996 | ||||
Unitholders' capital, beginning balance at Dec. 31, 2022 | $ 601,841,776 | $ 774,220 | (26,106,320) | $ 576,509,676 | |
Unitholders' capital, beginning balance (in units) at Dec. 31, 2022 | 64,231,833 | 15,484,400 | 64,231,833 | ||
Increase (Decrease) in Unitholders' Capital | |||||
Net income | $ 65,177,607 | ||||
Unitholders' capital, ending balance at Sep. 30, 2023 | 696,138,622 | ||||
Unitholders' capital, ending balance at Sep. 30, 2023 | $ 695,096,257 | $ 1,042,365 | 50,337,558 | $ 746,476,180 | |
Unitholders' capital, ending balance (in units) at Sep. 30, 2023 | 73,851,458 | 20,847,295 | 73,851,458 | ||
Unitholders' capital, beginning balance at Mar. 31, 2023 | $ 592,304,290 | $ 774,220 | (27,979,517) | $ 565,098,993 | |
Unitholders' capital, beginning balance (in units) at Mar. 31, 2023 | 64,950,333 | 15,484,400 | |||
Increase (Decrease) in Unitholders' Capital | |||||
Common units issued for acquisition | $ 8,654,900 | $ 268,461 | 83,383,956 | 92,307,317 | |
Common units issued for acquisition (in units) | 557,302 | 5,369,218 | |||
Unit-based compensation | $ 3,289,740 | 3,289,740 | |||
Distributions to unitholders | (22,732,617) | (5,349,476) | (28,082,093) | ||
Distribution on Class B units | (31,601) | (31,601) | |||
Accretion of redeemable noncontrolling interest in Kimbell Tiger Acquisition Corporation and write-off of deferred underwriting commissions | 1,192,969 | 379,768 | 1,572,737 | ||
Net income | 13,499,589 | 4,297,442 | 17,797,031 | ||
Unitholders' capital, ending balance at Jun. 30, 2023 | $ 596,177,270 | $ 1,042,681 | 54,732,173 | 651,952,124 | |
Unitholders' capital, ending balance (in units) at Jun. 30, 2023 | 65,507,635 | 20,853,618 | |||
Increase (Decrease) in Unitholders' Capital | |||||
Common units issued for equity offering | $ 110,711,383 | 110,711,383 | |||
Common units issued for equity offering (in units) | 8,337,500 | ||||
Conversion of Class B units to common units | $ 101,105 | $ (316) | (101,105) | (316) | |
Conversion of Class B units to common units (in units) | 6,323 | (6,323) | |||
Unit-based compensation | $ 3,325,891 | 3,325,891 | |||
Distributions to unitholders | (28,799,603) | (8,132,911) | (36,932,514) | ||
Distribution and accretion on Series A preferred units | (811,497) | (229,075) | (1,040,572) | ||
Distribution on Class B units | (20,854) | (20,854) | |||
Net income | 14,412,562 | 4,068,476 | 18,481,038 | ||
Unitholders' capital, ending balance at Sep. 30, 2023 | 696,138,622 | ||||
Unitholders' capital, ending balance at Sep. 30, 2023 | $ 695,096,257 | $ 1,042,365 | $ 50,337,558 | $ 746,476,180 | |
Unitholders' capital, ending balance (in units) at Sep. 30, 2023 | 73,851,458 | 20,847,295 | 73,851,458 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 65,177,607 | $ 95,546,524 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and depletion expense | 60,280,666 | 33,359,915 |
Amortization of right-of-use assets | 251,175 | 237,839 |
Amortization of loan origination costs | 1,414,074 | 1,381,717 |
Loss on extinguishment of debt | 480,244 | |
Equity income in affiliate | (3,658,460) | |
Cash distribution from affiliate | 3,770,651 | |
Forfeiture of restricted units | (19,813) | |
Unit-based compensation | 9,785,631 | 8,125,736 |
Gain on derivative instruments, net of settlements | (11,002,749) | (1,271,103) |
Changes in operating assets and liabilities: | ||
Oil, natural gas and NGL receivables | (14,326,575) | (11,240,327) |
Accounts receivable and other current assets | 707,259 | 455,642 |
Accounts payable | 1,014,264 | 63,161 |
Other current liabilities | 5,631,591 | 3,099,504 |
Operating lease liabilities | (258,430) | (241,314) |
Net cash provided by operating activities | 114,958,713 | 128,005,890 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (107,420) | (118,614) |
Purchase of oil and natural gas properties | (490,135,551) | (443,977) |
Proceeds from trust of variable interest entity | 930,850 | |
Cash distribution from affiliate | 3,465,376 | |
Net cash used in investing activities | (246,113,134) | (233,997,215) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from the issuance of Series A preferred units, net of issuance costs | 313,950,000 | |
Proceeds from equity offering, net of issuance costs | 110,711,383 | |
Costs associated with equity offering | (325,508) | |
Contributions from Class B unitholders | 268,461 | |
Redemption of Class B contributions on converted units | (316) | (470,000) |
Distributions to common unitholders | (82,708,380) | (75,928,696) |
Distribution to OpCo unitholders | (20,919,002) | (15,139,895) |
Distribution on Class B units | (67,939) | (34,032) |
Borrowings on long-term debt | 201,084,089 | 43,200,000 |
Repayments on long-term debt | (123,700,000) | (56,400,000) |
Payment of loan origination costs | (4,942,188) | (435,141) |
Restricted units repurchased for tax withholding | (4,851,962) | (3,344,828) |
Net cash provided by financing activities | 145,656,712 | 116,045,612 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 14,502,291 | 10,054,287 |
CASH AND CASH EQUIVALENTS, beginning of period | 25,026,568 | 7,052,414 |
CASH AND CASH EQUIVALENTS, end of period | 39,528,859 | 17,106,701 |
Supplemental cash flow information: | ||
Cash paid for interest | 16,920,473 | 8,032,309 |
Cash paid for taxes | 3,067,374 | |
Non-cash investing and financing activities: | ||
Units issued in exchange for oil and natural gas properties | 92,038,856 | |
Noncash deemed distribution to Series A preferred units | 78,929 | |
Recognition of tenant improvement asset | 93,750 | 93,751 |
Consolidated variable interest entities | ||
Changes in operating assets and liabilities: | ||
Interest earned on marketable securities in trust account | (3,508,691) | (1,512,777) |
Other assets and liabilities | (687,353) | (91,005) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash paid for transaction costs | 31,553 | |
Cash received from investments held in trust | 243,167,434 | |
Investment in marketable securities | (236,900,000) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from initial public offering of Kimbell Tiger Operating Company | 227,585,000 | |
Payment of underwriting commissions with equity offering of Kimbell Tiger Operating Company, net of adjustments | (2,661,288) | |
Redemption of Kimbell Tiger Acquisition Corporation equity units | (243,167,434) | |
CASH AND CASH EQUIVALENTS, end of period | 551,979 | |
Non-cash investing and financing activities: | ||
Reduction of deferred underwriting commission associated with redemption of Kimbell Tiger Acquisition Corporation equity units | $ (8,050,000) | |
Deferred underwriting commissions | $ 8,050,000 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 |
Reconciliation of Cash and Cash Equivalents and Cash Held at Consolidated Variable Interest Entities to the Consolidated Statements of Cash Flows | ||
Cash and cash equivalents | $ 39,528,859 | $ 17,106,701 |
Consolidated variable interest entities | ||
Reconciliation of Cash and Cash Equivalents and Cash Held at Consolidated Variable Interest Entities to the Consolidated Statements of Cash Flows | ||
Cash and cash equivalents | 551,979 | |
Non-Consolidated Variable Interest Entity Primary Beneficiary | ||
Reconciliation of Cash and Cash Equivalents and Cash Held at Consolidated Variable Interest Entities to the Consolidated Statements of Cash Flows | ||
Cash and cash equivalents | $ 39,528,859 | $ 16,554,722 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2023 | |
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” or “OpCo” 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. 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 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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 (the “SEC”). As a result, the accompanying unaudited interim consolidated financial statements do not include all disclosures required for complete annual financial statements prepared in conformity with GAAP. Accordingly, the accompanying unaudited interim 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, 2022 (the “2022 Form 10-K”), 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 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 accompanying unaudited interim consolidated financial statements include the accounts of the Partnership and its consolidated subsidiaries. All material intercompany balances and transactions are eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. Use of Estimates 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 Russia / Ukraine Conflict and Conflict in the Middle East In February 2022, Russia invaded Ukraine and is still engaged in active armed conflict against the country. In October 2023, armed active conflict began in the Middle East and is still active. These conflicts and the sanctions imposed in response have led to regional instability and caused dramatic fluctuations in global financial markets and have increased the level of global economic and political uncertainty, including uncertainty about world-wide oil supply and demand, which in turn has increased volatility in commodity prices. To date, the Partnership has not experienced a material impact to operations or the consolidated financial statements as a result of these conflicts; however, the Partnership will continue to monitor for events that could materially impact them. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
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 2022 Form 10-K, as well as the items noted below. There have been no substantial changes in such policies or the application of such policies during the three and nine months ended September 30, 2023 . Consolidation The Partnership analyzes whether it has a variable interest in an entity and whether that entity is a variable interest entity (“VIE”) to determine whether it is required to consolidate those entities. The Partnership performs the variable interest analysis for all entities in which it has a potential variable interest, which primarily consist of all entities with respect to which the Partnership serves as the sponsor, general partner or managing member, and general partner entities not wholly owned by the Partnership. If the Partnership has a variable interest in the entity and the entity is a VIE, it will also analyze whether the Partnership is the primary beneficiary of this entity and whether consolidation is required. In evaluating whether it has a variable interest in the entity, the Partnership reviews the equity ownership and the extent to which it absorbs risk created and distributed by the entity, as well as whether the fees charged to the entity are customary and commensurate with the level of effort required to provide services. Fees received by the Partnership are not variable interests if (i) the fees are compensation for services provided and are commensurate with the level of effort required to provide those services, (ii) the service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm’s length and (iii) the Partnership’s other economic interests in the VIE held directly and indirectly through its related parties, as well as economic interests held by related parties under common control, where applicable, would not absorb more than an insignificant amount of the entity’s losses or receive more than an insignificant amount of the entity’s benefits. Evaluation of these criteria requires judgment. For entities determined to be VIEs, the Partnership must then evaluate whether it is the primary beneficiary of such VIEs. To make this determination, the Partnership evaluates its economic interests in the entity specifically determining if the Partnership has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (the “benefits”). When making the determination on whether the benefits received from an entity are significant, the Partnership considers the total economics of the entity, and analyzes whether the Partnership’s share of the economics is significant. The Partnership utilizes qualitative factors, and, where applicable, quantitative factors, while performing the analysis. VIEs of which the Partnership is the primary beneficiary have been included in the Partnership’s consolidated financial statements. The portion of the consolidated subsidiaries owned by third parties and any related activity is eliminated through non-controlling interests in the consolidated balance sheets and income (loss) attributable to non-controlling interests in the consolidated statements of operations. Investments Held in Trust by Consolidated Variable Interest Entities Investments held in trust represent funds raised by TGR (as defined in Note 4), a consolidated special purpose acquisition company, through the TGR IPO (as defined in Note 4). These funds were held in an actively-traded money market fund, which invested in U.S. Treasury securities. Investments held in trust are classified as trading securities and are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in other income (expense)—interest earned on marketable securities in trust account on the accompanying unaudited interim consolidated statements of operations. The estimated fair values of investments held in the trust account are determined using quoted prices in an active market and therefore are classified in Level 1 of the fair value hierarchy, as described in Note 6— Fair Value Measurements. Redeemable Non-Controlling Interest Redeemable non-controlling interests represent the shares of Class A common stock of TGR, par value $0.0001 per share (the “Class A common stock”) sold in the TGR IPO that were redeemable for cash by the public TGR shareholders that would have been concurrent with TGR’s initial business combination or in the event of TGR’s failure to complete a business combination or a tender offer. The redeemable non-controlling interests were initially recorded at their original issue price, net of issuance costs and the initial fair value of separately traded warrants. As of June 30, 2023, the shares had been redeemed in full. New Accounting Pronouncements In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-01, “Leases (Topic 842): Common Control Arrangements.” This update requires that (i) entities determine whether a related party arrangement between entities under common control is a lease and (ii) that leasehold improvements have an amortization period consistent with the shorter of the remaining lease term and the useful life of the improvements, which is an approach that is largely consistent with legacy guidance. This update is effective for financial statements issued for fiscal years beginning after December 15, 2023, including interim periods within that fiscal year. 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. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 9 Months Ended |
Sep. 30, 2023 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | NOTE 3—REVENUE FROM CONTRACTS WITH CUSTOMERS The Partnership has the right to receive revenues from oil, natural gas and NGL sales obtained by the operator of the wells in which the Partnership owns a mineral or royalty interest. Revenue is recognized at the point control of the product is transferred to the purchaser. Virtually all of the pricing provisions in the Partnership’s contracts are tied to a market index. The Partnership’s oil, natural gas and NGL sales contracts are generally structured whereby the producer of the properties in which the Partnership owns a mineral or royalty interest sells the Partnership’s proportionate share of oil, natural gas and NGL production to the purchaser and the Partnership collects its percentage royalty based on the revenue generated by the sale of the oil, natural gas and NGL. In this scenario, the Partnership recognizes revenue when control transfers to the purchaser at the wellhead or at the gas processing facility based on the Partnership’s percentage ownership share of the revenue, net of any deductions for gathering and transportation. The following table disaggregates the Partnership’s oil, natural gas, and NGL revenues for the following periods: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Oil revenue $ 50,777,614 $ 32,044,316 $ 123,587,783 $ 100,384,497 Natural gas revenue 12,339,244 35,517,230 43,528,008 94,412,132 NGL revenue 6,120,745 6,306,446 16,520,185 22,746,735 Total Oil, natural gas and NGL revenues $ 69,237,603 $ 73,867,992 $ 183,635,976 $ 217,543,364 |
ACQUISITIONS, JOINT VENTURE AND
ACQUISITIONS, JOINT VENTURE AND SPECIAL PURPOSE ACQUISITION COMPANY | 9 Months Ended |
Sep. 30, 2023 | |
ACQUISITIONS, JOINT VENTURE AND SPECIAL PURPOSE ACQUISITION COMPANY | |
ACQUISITIONS, JOINT VENTURE AND SPECIAL PURPOSE ACQUISITION COMPANY | NOTE 4 — ACQUISITIONS, JOINT VENTURE AND SPECIAL PURPOSE ACQUISITION COMPANY Acquisitions On September 13, 2023, the Partnership completed the acquisition of all issued and outstanding membership interests of Cherry Creek Minerals LLC pursuant to a securities purchase agreement with LongPoint Minerals II, LLC (the “LongPoint Acquisition”) in a cash transaction valued at approximately $455.0 million. The Partnership funded the cash transaction with borrowings under its secured revolving credit facility and net proceeds from the Preferred Unit Transaction (as defined in Note 10—Preferred Units). The adjusted purchase price of the LongPoint Acquisition includes the total cash consideration of $455.0 million, transactional costs of $7.4 million and less $16.6 million of post-effective net oil, natural gas and NGL revenues earned prior to the closing date. The LongPoint Acquisition was accounted for as an asset acquisition and the allocation of the purchase price was $198.2 million to proved properties and $247.6 million to unevaluated properties. On May 17, 2023, the Partnership completed the acquisition of certain mineral and royalty assets held by MB Minerals, L.P. and certain of its affiliates (the “MB Minerals Acquisition”). The aggregate consideration for the MB Minerals Acquisition consisted of (i) approximately $48.8 million in cash and (ii) the issuance of (a) 5,369,218 OpCo Common Units and an equal number of Class B units representing limited partnership interests in the Partnership (“Class B Units”) and (b) 557,302 common units. The Partnership funded the cash payment of the purchase price with borrowings under its secured revolving credit facility. The assets acquired in the MB Minerals Acquisition are located in Howard and Borden Counties, Texas. The MB Minerals Acquisition was accounted for as an asset acquisition and the allocation of the purchase price was $60.8 million to proved properties and $74.9 million to unevaluated properties. On December 15, 2022, Hatch Royalty LLC (the “Hatch Acquisition”). Joint Venture On June 19, 2019, the Partnership entered into 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 was 49.3%. During the year ended December 31, 2022, the Joint Venture completed the sale of its royalty, mineral and overriding interests and similar non-cost bearing interests in oil and gas properties for a total purchase price of $15.0 million. Net proceeds distributed to the Partnership were $6.5 million during the year ended December 31, 2022, the majority of which was used to repay debt on the Partnership’s secured revolving credit facility. The Joint Venture was dissolved on November 1, 2022. Special Purpose Acquisition Company On February 8, 2022, the Partnership announced the $230 million initial public offering of its special purpose acquisition company, Kimbell Tiger Acquisition Corporation (NYSE: TGR). Kimbell Tiger Acquisition Corporation (“TGR”) was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Kimbell Tiger Acquisition Sponsor, LLC (“TGR Sponsor”), which was a subsidiary of the Partnership, and was created to assist TGR in sourcing, analyzing and consummating acquisition opportunities for that initial business combination. TGR Sponsor and TGR were consolidated in the financial statements of the Partnership beginning in the year ended December 31, 2021. On July 29, 2021, TGR, the Partnership’s recently dissolved special purpose acquisition company and subsidiary, consummated its initial public offering (the “TGR IPO”). Under the terms of TGR’s governing documents, TGR had until May 8, 2023 to complete a business combination, subject to TGR Sponsor’s option to extend such deadline by three months up to two times. On May 22, 2023, as a result of TGR’s inability to consummate an initial business combination on or prior to May 8, 2023, and pursuant to the terms of its organizational documents, TGR redeemed all of its outstanding shares of Class A common stock included as part of the units issued in its initial public offering. The Class A common stock was redeemed on June 22, 2023 and the Partnership completed the dissolution and deconsolidation of TGR (along with TGR Sponsor) on June 30, 2023 in accordance with the terms of its organizational documents. The net non-cash impact of the deconsolidation of TGR was $1.6 million, which is included in the accompanying consolidated balance sheet as of September 30, 2023 |
DERIVATIVES
DERIVATIVES | 9 Months Ended |
Sep. 30, 2023 | |
DERIVATIVES | |
DERIVATIVES | NOTE 5 — DERIVATIVES Commodity 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, 2023, 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’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 scheduled trading day for the first nearby month futures contract corresponding to the relevant contract period. Settlement for oil derivative contracts occurs in the succeeding month and natural gas derivative contracts are settled in the production month. Changes in the fair values of the Partnership’s commodity derivative instruments are recognized as gains or losses in the current period and are presented on a net basis within revenue in the accompanying unaudited interim consolidated statements of operations. Interest Rate Swaps On January 27, 2021, the Partnership entered into an interest rate swap with Citibank, N.A., New York (“Citibank”) risk exposure, as the interest rate swap effectively converted a portion of the Partnership’s secured revolving credit facility from a floating to a fixed rate. Changes in the fair values of the Partnership’s interest rate swaps were recognized as gains or losses in the current period and were presented on a net basis within other income in the accompanying unaudited interim consolidated statements of operations. The Partnership has not designated any of its derivative contracts as hedges for accounting purposes. Changes in the fair value consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Beginning fair value of derivative instruments $ 2,776,238 $ (38,741,643) $ (12,324,076) $ (26,624,646) (Loss) gain on commodity derivative instruments, net (4,576,570) (1,022,399) 6,215,265 (35,456,734) Net cash paid on settlements of derivative instruments 479,005 14,410,499 4,787,484 36,727,837 Ending fair value of derivative instruments $ (1,321,327) $ (25,353,543) $ (1,321,327) $ (25,353,543) The following table presents the fair value of the Partnership’s derivative contracts for the periods indicated: September 30, December 31, Classification Balance Sheet Location 2023 2022 Assets: Current assets Derivative assets $ 1,489,189 $ — Long-term assets Derivative assets 134,841 754,786 Liabilities: Current liabilities Derivative liabilities (1,418,027) (12,646,720) Long-term liabilities Derivative liabilities (1,527,330) (432,142) $ (1,321,327) $ (12,324,076) As of September 30, 2023, 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 October 2023 - December 2023 146,464 $ 76.42 $ 63.00 $ 88.05 January 2024 - December 2024 568,926 $ 79.04 $ 69.30 $ 85.34 January 2025 - September 2025 417,154 $ 71.10 $ 64.35 $ 77.01 Natural Gas Price Swaps Notional Weighted Average Range (per MMBtu) Volumes (MMBtu) Fixed Price (per MMBtu) Low High October 2023 - December 2023 1,317,624 $ 3.22 $ 3.03 $ 3.28 January 2024 - December 2024 5,285,182 $ 3.97 $ 3.06 $ 4.48 January 2025 - September 2025 3,861,611 $ 3.86 $ 3.50 $ 4.37 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 6—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 interim consolidated balance sheets approximated fair value as of September 30, 2023 and December 31, 2022 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, 2023 and 2022. The estimated fair values of investments held in the trust account are determined using quoted prices in an active market and therefore are classified in Level 1 of the fair value hierarchy. 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, 2023 Assets Commodity derivative contracts $ — $ 1,624,030 $ — $ — $ 1,624,030 Liabilities Commodity derivative contracts $ — $ (2,945,357) $ — $ — $ (2,945,357) December 31, 2022 Assets Commodity derivative contracts $ — $ 754,786 $ — $ — $ 754,786 Assets of consolidated variable interest entities: Investments held in trust $ 240,621,146 $ — $ — $ — $ 240,621,146 Liabilities Commodity derivative contracts $ — $ (13,078,862) $ — $ — $ (13,078,862) |
OIL AND NATURAL GAS PROPERTIES
OIL AND NATURAL GAS PROPERTIES | 9 Months Ended |
Sep. 30, 2023 | |
OIL AND NATURAL GAS PROPERTIES | |
OIL AND NATURAL GAS PROPERTIES | NOTE 7—OIL AND NATURAL GAS PROPERTIES Oil and natural gas properties consist of the following: September 30, December 31, 2023 2022 Oil and natural gas properties Proved properties $ 1,709,319,998 $ 1,258,290,375 Unevaluated properties 338,840,127 207,695,343 Less: accumulated depreciation, depletion and impairment (772,711,451) (712,716,951) Total oil and natural gas properties $ 1,275,448,674 $ 753,268,767 The net capitalized costs of proved oil and natural gas properties are subject to a full-cost ceiling limitation for which the costs are not allowed to exceed their related estimated future net revenues discounted at 10%. To the extent capitalized costs of evaluated oil and natural gas properties, net of accumulated depreciation, depletion, amortization and impairment, exceed estimated discounted future net revenues of proved oil and natural gas reserves, the excess capitalized costs are charged to expense. 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. Costs associated with unevaluated properties are excluded from the full cost pool until a determination as to the existence of proved developed producing reserves is able to be made. 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 did not record an impairment on its oil and natural gas properties for the three or nine months ended September 30, 2023 or 2022. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2023 | |
LEASES | |
LEASES | NOTE 8—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 interim consolidated balance sheets. Short term operating lease liabilities are included in other current liabilities. The weighted average remaining lease term as of September 30, 2023 is 5.64 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 leases was 6.75% for the nine months ended September 30, 2023. 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 interim consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022. The total operating lease expense recorded for both the three months ended September 30, 2023 and 2022 was $0.1 million and $0.4 million for both the nine months ended September 30, 2023 and 2022. Currently, the most substantial contractual arrangements that the Partnership has classified as operating leases are the main office spaces used for operations. Future minimum lease commitments as of September 30, 2023 were as follows: Total 2023 2024 2025 2026 2027 Thereafter Operating leases $ 2,834,748 $ 122,075 $ 488,725 $ 497,033 $ 507,648 $ 511,917 $ 707,350 Less: Imputed Interest (514,749) Total $ 2,319,999 |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2023 | |
LONG-TERM DEBT. | |
LONG-TERM DEBT | NOTE 9—LONG-TERM DEBT On June 13, 2023, the Partnership entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”), which amended and restated the Partnership’s existing Credit Agreement, dated as of January 11, 2017 (as amended on July 12, 2018, December 8, 2020, June 7, 2022 and December 15, 2022). On July 24, 2023, the Partnership entered into Amendment No. 1 (the “First Amendment”) to the A&R Credit Agreement. The amendment amended the A&R Credit Agreement to, among other things, (i) decrease the frequency of and increase the threshold for excess cash determinations from $30.0 million to $50.0 million, and (ii) permit the Partnership to issue certain preferred equity interests. The A&R Credit Agreement provides for, among other things, (i) a senior secured reserve-based revolving credit facility in an aggregate maximum principal amount of up to $750.0 million with an initial borrowing base of $400.0 million and an initial aggregate elected commitments amount of up to $400.0 million, including a sub-facility for the issuance of letters of credit of up to $10.0 million, and (ii) an extension of the maturity date of the A&R Credit Agreement to June 7, 2027. The bears interest at a rate equal to, at the Partnership’s election, either (a) the Secured Overnight Financing Rate (as defined in the A&R Credit Agreement) plus an applicable margin that varies from 2.75% to 3.75% per annum or (b) a base rate plus an applicable margin that varies from 1.75% to 2.75% per annum, based on borrowing base utilization. The is guaranteed by certain of the Partnership’s material subsidiaries and is collateralized by substantially all assets, including the oil and natural gas properties of such subsidiaries, including mortgages on at least 75% of the PV-9 of the proved reserves constituting borrowing base properties as set forth on the Partnership’s most recent reserve report. The borrowing base will be redetermined semi-annually on or about May 1 and November 1 of each year by the Lenders, with one interim unscheduled redetermination available to each of the Partnership and a group of certain Lenders between scheduled redeterminations during each calendar year. The first scheduled redetermination will be on or around November 1, 2023. Customary borrowing base reductions and mandatory prepayments are required under the A&R Credit Agreement in connection with certain sales of certain types of borrowing base properties, sales of equity interests in guarantor subsidiaries owning such properties, certain debt issuances or certain types of swap terminations. In addition, Cash Balance (as defined in the First Amendment) above $50.0 million is required to be applied weekly to prepay loans (without a commitment reduction) if not otherwise reduced to zero in a manner permitted by the A&R Credit Agreement. The Partnership is required to pay a commitment fee of 0.50% per annum on the average daily unused portion of the current aggregate commitments under the . The Partnership is also required to pay customary letter of credit and fronting fees. The A&R Credit Agreement requires the Partnership to maintain as of the last day of each fiscal quarter: (i) a Debt to EBITDAX Ratio (as defined in the A&R Credit Agreement) of not more than 3.5 and (ii) a ratio of current assets to current liabilities of not less than 1.0 , each beginning with the fiscal quarter ending September 30, 2023. The A&R Credit Agreement also contains customary affirmative and negative covenants, including, among other things, as to compliance with laws (including environmental laws and anti-corruption laws), delivery of quarterly and annual financial statements and borrowing base certificates, conduct of business, maintenance of property, maintenance of insurance, entry into certain derivatives contracts, restrictions on the incurrence of liens, indebtedness, asset dispositions, restricted payments, and other customary covenants. These covenants are subject to a number of limitations and exceptions. Additionally, the A&R Credit Agreement contains customary events of default and remedies for credit facilities of this nature. If the Partnership does not comply with the financial and other covenants in the A&R Credit Agreement, the Lenders may, subject to customary cure rights, require immediate payment of all amounts outstanding under the A&R Credit Agreement and any outstanding unfunded commitments may be terminated. In connection with the A&R Credit Agreement Partnership’s existing credit agreement &R Credit Agreement During the nine months ended September 30, 2023, the Partnership borrowed an additional $201.1 million under the secured revolving credit facility and repaid approximately $123.7 million of the outstanding borrowings. As of September 30, 2023, the Partnership’s outstanding balance was $310.4 million. The Partnership was in compliance with all covenants included in the secured revolving credit facility as of September 30, 2023. As of September 30, 2023, borrowings under the secured revolving credit facility bore interest at SOFR plus a margin of 3.50% or the ABR (as defined in the Amended Credit Agreement) plus a margin of 2.50%. For the three and nine months ended September 30, 2023, the weighted average interest rate on the Partnership’s outstanding borrowings was 8.64% and 8.56%, respectively. |
PREFERRED UNITS
PREFERRED UNITS | 9 Months Ended |
Sep. 30, 2023 | |
PREFERRED UNITS | |
PREFERRED UNITS | NOTE 10—PREFERRED UNITS On August 2, 2023, the Partnership entered into a Series A preferred unit purchase agreement with certain funds managed by affiliates of Apollo (NYSE: APO) (collectively, the “Series A Purchasers”) to issue and sell up to 400,000 Series A Cumulative Convertible Preferred Units representing limited partner interests in the Partnership (the “Series A preferred units”). On September 13, 2023, in connection with the closing of the LongPoint Acquisition, the Partnership completed the private placement of 325,000 Series A preferred units to the Series A Purchasers for $1,000 per Series A preferred unit, resulting in gross proceeds to the Partnership of $325.0 million (the “Preferred Unit Transaction”). The Partnership used the net proceeds from the Preferred Unit Transaction to purchase 325,000 preferred units of the Operating Company (“OpCo preferred units”). The Operating Company in turn used the net proceeds to fund a portion of the LongPoint Acquisition. The Series A preferred units rank senior to the Partnership’s common units with respect to distribution rights and rights upon liquidation. 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 6.0% per annum plus accrued and unpaid distributions. The Partnership has the right, in any four non-consecutive quarters, to elect not to pay such quarterly distribution in cash and instead have the unpaid distribution amount added to the liquidation preference at the rate of 10.0% per annum. If the Partnership makes such an election in consecutive quarters or if the Partnership fails to pay in full, in cash and when due, any distribution owed to the Series A preferred units or otherwise materially breaches its obligations to the holders of the Series A preferred units, the distribution rate will increase to 20.0% per annum until the accumulated distributions are paid in full in cash, or any such material breach is cured, as applicable. Each holder of Series A preferred units has the right to share in any special distributions by the Partnership of cash, securities or other property pro rata with the common units on an as-converted basis, subject to customary adjustments. The Partnership cannot declare or make any distributions, redemptions, or repurchases on any junior securities, including any of their common units, prior to paying the quarterly distribution payable to the Series A preferred units, including any previously accrued and unpaid distributions. Beginning with the earlier of (i) the second anniversary of the original issuance date and (ii) immediately prior to a liquidation of the Partnership, the Series A Purchasers may, at any time (but not more often than once per quarter), elect to convert all or any portion of their Series A preferred units into a number of common units determined by multiplying the number of Series A preferred units to be converted by the then-applicable conversion rate, provided that (a) any conversion is for an amount of common units with an aggregate value of at least $10.0 million or such lesser amount that covers all of the holders’ remaining Series A preferred units and (b) the closing price of the common units is at least 130% of the conversion price of $15.07, subject to certain anti-dilution adjustments (the “Conversion Price”) for 20 trading days during the 30-trading day period immediately preceding the conversion notice. At any time on or after the second anniversary of the original issuance date, the Partnership will have the option to convert all or any portion of the Series A preferred units into a number of common units determined by the then-applicable conversion rate, provided that (i) any conversion is for an amount of common units with an aggregate value of at least $10.0 million or such lesser amount that covers all of the holders’ Series A preferred units, (ii) the common units are listed for, or admitted to, trading on a national securities exchange, (iii) the closing price of the common units is at least 160% of the Conversion Price for 20 trading days during the 30-trading day period immediately preceding the conversion notice and (iv) the Partnership has an effective registration statement on file with the SEC covering resales of the underlying common units to be received by the holders of Series A preferred units upon such conversion. The Series A preferred units are redeemable at the option of the Series A Purchasers after seven years. The Series A preferred units may be redeemed by the Partnership at any time or in the event of a change of control. 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 times with respect to such Series A p 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 , a 12.0% internal rate of return with respect to the Series A preferred units; (b) on or after the fifth anniversary of the original issuance date and prior to the sixth anniversary of the original issuance date, a 13.0% internal rate of return with respect to the Series A preferred units; and (c) on or after the sixth anniversary of the original issuance date, a 14.0% internal rate of return with respect to the Series A preferred units. 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 fifth anniversary of the original issuance date, board appointment rights beginning on the sixth anniversary of the original issuance date, and in the case of events of default with respect to the Series A preferred units, the right to appoint two members of the board beginning on the seventh anniversary of the original issuance date. The terms of the Series A preferred units contain covenants preventing the Partnership from taking certain actions without the approval of the holders of 66 2 / 3 |
UNITHOLDERS' EQUITY AND PARTNER
UNITHOLDERS' EQUITY AND PARTNERSHIP DISTRIBUTIONS | 9 Months Ended |
Sep. 30, 2023 | |
UNITHOLDERS' EQUITY AND PARTNERSHIP DISTRIBUTIONS | |
UNITHOLDERS' EQUITY AND PARTNERSHIP DISTRIBUTIONS | NOTE 11—UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS The Partnership has issued units representing limited partner interests. As of September 30, 2023, the Partnership had a total of 73,851,458 common units issued and outstanding In November 2022, the Partnership completed an underwritten public offering of 6,900,000 common units for net proceeds of approximately $116.1 million (the “2022 Equity Offering”). The Partnership used the net proceeds from the 2022 Equity Offering to purchase OpCo common units. Kimbell Royalty Operating, LLC (the “Operating Company”) in turn used the net proceeds to repay approximately $116.0 million of the outstanding borrowings under the Partnership’s secured revolving credit facility. On August 7, 2023, the Partnership completed an underwritten public offering of 8,337,500 common units for net proceeds of approximately $110.7 million (the “2023 Equity Offering”). The Partnership used the net proceeds from the 2023 Equity Offering to purchase OpCo common units. The Operating Company in turn used the net proceeds to repay approximately $90.0 million of the outstanding borrowings under the Partnership’s secured revolving credit facility. The Operating Company used the remainder of the net proceeds of the 2023 Equity Offering for general corporate purposes. The following table summarizes the changes in the number of the Partnership’s common units: Common Units Balance at December 31, 2022 64,231,833 Common units issued under the A&R LTIP (1) 998,162 Restricted units repurchased for tax withholding (279,662) Common unit issued for acquisition 557,302 Common units issued for equity offering 8,337,500 Conversion of Class B units 6,323 Balance at September 30, 2023 73,851,458 (1) Includes restricted units granted to certain employees and directors under the Amended and Restated Kimbell Royalty GP, LLC 2017 Long-Term Incentive Plan on February 21, 2023. 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 2023 $ 0.35 May 3, 2023 May 15, 2023 May 22, 2023 Q2 2023 $ 0.39 August 2, 2023 August 14, 2023 August 21, 2023 Q3 2023 $ 0.51 November 2, 2023 November 13, 2023 November 20, 2023 Q1 2022 $ 0.47 April 22, 2022 May 2, 2022 May 9, 2022 Q2 2022 $ 0.55 August 3, 2022 August 15, 2022 August 22, 2022 Q3 2022 $ 0.49 November 3, 2022 November 14, 2022 November 21, 2022 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 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 PER COMMON UNIT
EARNINGS PER COMMON UNIT | 9 Months Ended |
Sep. 30, 2023 | |
EARNINGS PER COMMON UNIT | |
EARNINGS PER COMMON UNIT | NOTE 12—EARNINGS PER COMMON UNI T Basic earnings per common unit is calculated by dividing net income attributable to common units by the weighted-average number of common units outstanding during the period. Diluted net income per common unit gives effect, when applicable, to unvested restricted units granted under the Partnership’s A&R LTIP (as defined in Note 12) for its employees, directors and consultants and potential conversion of Series A preferred units and Class B units. The Partnership uses the “if-converted” method to determine the potential dilutive effect of exchanges of outstanding Series A preferred units and Class B units (and corresponding units of Kimbell Royalty Partners, LP), and the treasury stock method to determine the potential dilutive effect of vesting of outstanding restricted units granted under the Partnership’s LTIP. The Partnership does not use the two-class method because the Class B units and the unvested restricted units granted under the Partnership’s A&R LTIP are nonparticipating securities. The following table summarizes the calculation of weighted average common units outstanding used in the computation of diluted earnings per common unit: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income attributable to common units of Kimbell Royalty Partners, LP $ 13,580,211 $ 38,343,786 $ 50,368,835 $ 83,536,606 Net adjustment to accretion of redeemable non-controlling interest in Kimbell Tiger Acquisition Corporation and write-off of deferred underwriting commissions — — 1,572,737 (17,845,231) Net income attributable to common units of Kimbell Royalty Partners, LP after accretion of redeemable non-controlling interest in Kimbell Tiger Acquisition Corporation and write-off of deferred underwriting commissions 13,580,211 38,343,786 51,941,572 65,691,375 Distribution and accretion on Series A preferred units 1,040,572 — 1,040,572 — Net income attributable to non-controlling interests in OpCo and distribution on Class B units 3,860,255 — 13,768,200 — Diluted net income attributable to common units of Kimbell Royalty Partners, LP $ 18,481,038 $ 38,343,786 $ 66,750,344 $ 65,691,375 Weighted average number of common units outstanding: Basic 68,540,786 55,434,641 64,807,590 52,302,235 Effect of dilutive securities: Series A preferred units 4,219,440 — 1,421,936 — Class B units 20,853,412 8,211,579 18,178,773 11,245,161 Restricted units 1,355,439 1,897,192 1,331,514 1,850,067 Diluted 94,969,077 65,543,412 85,739,813 65,397,463 Net income per unit attributable to common units of Kimbell Royalty Partners, LP Basic $ 0.20 $ 0.69 $ 0.80 $ 1.26 Diluted $ 0.19 $ 0.59 $ 0.78 $ 1.00 The calculation of diluted net income per share for the three and nine months ended September 30, 2023 includes the conversion of Series A preferred units to common units and Class B units to common units calculated using the “if-converted” method and units of unvested restricted units calculated using the treasury stock method. The calculation of diluted net income per share for the three and nine months ended September 30, 2022 includes the conversion of all Class B units to common units calculated using the “if-converted” method and units of unvested restricted units calculated using the treasury stock method. |
UNIT-BASED COMPENSATION
UNIT-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2023 | |
UNIT-BASED COMPENSATION | |
UNIT-BASED COMPENSATION | NOTE 13—UNIT-BASED COMPENSATION On May 18, 2022, the Partnership held a special meeting of unitholders of the Partnership (the “Special Meeting”), at which the Partnership’s unitholders voted to approve the Amended and Restated Kimbell Royalty GP, LLC 2017 Long-Term Incentive Plan (the “A&R LTIP”), one third 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 Weighted Weighted Average Average Grant-Date Remaining Fair Value Contractual Units per Unit Term Unvested at December 31, 2022 1,897,192 $ 13.553 1.517 years Awarded 998,162 15.020 — Vested (943,924) 12.602 — Unvested at September 30, 2023 1,951,430 $ 14.763 1.777 years |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 14—INCOME TAXES The Partnership’s provision for income taxes is based on the estimated annual effective tax rate plus discrete items. The Partnership recorded an income tax expense of $0.1 million and an income tax benefit of $0.2 million for the three months ended September 30, 2023 and 2022, respectively, and an income tax expense of $2.4 million and $1.9 million for the nine months ended September 30, 2023 and 2022, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 15—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”) and K3 Royalties, LLC (“K3 Royalties”), 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 on common units to the Partnership’s unitholders. During the three and nine months ended September 30, 2023, no monthly services fee was paid to BJF Royalties. During the three and nine months ended September 30, 2023, the Partnership made payments to K3 Royalties in the amount of $30,000 and $90,000, respectively. The Partnership received $48,038 and $153,133 in reimbursements from Rivercrest Capital Management, LLC for shared operating expenses for the three and nine months ended September 30, 2023, respectively. Commencing on the date of the TGR IPO, TGR agreed to pay the Partnership a total of $25,000 per month for office space utilities, secretarial support and administrative services provided to members of the management team. During the nine months ended September 30, 2023, TGR incurred $50,000 as part of this service agreement. Such fees were eliminated in consolidation. |
ADMINISTRATIVE SERVICES
ADMINISTRATIVE SERVICES | 9 Months Ended |
Sep. 30, 2023 | |
ADMINISTRATIVE SERVICES | |
ADMINISTRATIVE SERVICES | NOTE 16—ADMINISTRATIVE SERVICES Transition Services Agreement On September 13, 2023, in connection with the LongPoint Acquisition and pursuant to the terms of the securities purchase agreement, a transition services agreement (the “Transition Services Agreement”) by and between the Operating Company and FourPoint Energy, LLC (“FourPoint”), the former manager of the acquired assets, became effective. Pursuant to the Transition Services Agreement, FourPoint will provide certain administrative services and accounting assistance on a transitional basis for a monthly service fee of approximately $250,000 for the four-month period ending January 13, 2024, at which point the Transition Services Agreement will automatically renew on a month-to-month basis through January 13, 2025, unless earlier terminated by the Partnership. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 17—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, 2023. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 18—SUBSEQUENT EVENTS The Partnership has evaluated events that occurred subsequent to September 30, 2023 in the preparation of its unaudited interim consolidated financial statements. Distributions On November 2, 2023, the Board of Directors declared a quarterly cash distribution of $0.51 per common unit and OpCo common The Partnership will pay a pro-rated quarterly cash distribution on the Series A preferred units of approximately $1.0 million for the quarter ended September 30, 2023. The Partnership intends to pay the distribution subsequent to November 13, 2023 and prior to the distribution on the common units and OpCo common units. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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 (the “SEC”). As a result, the accompanying unaudited interim consolidated financial statements do not include all disclosures required for complete annual financial statements prepared in conformity with GAAP. Accordingly, the accompanying unaudited interim 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, 2022 (the “2022 Form 10-K”), 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 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 accompanying unaudited interim consolidated financial statements include the accounts of the Partnership and its consolidated subsidiaries. All material intercompany balances and transactions are eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. |
Use of Estimates | Use of Estimates 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 | Segment Reporting The Partnership operates in a single reportable |
Consolidation | Consolidation The Partnership analyzes whether it has a variable interest in an entity and whether that entity is a variable interest entity (“VIE”) to determine whether it is required to consolidate those entities. The Partnership performs the variable interest analysis for all entities in which it has a potential variable interest, which primarily consist of all entities with respect to which the Partnership serves as the sponsor, general partner or managing member, and general partner entities not wholly owned by the Partnership. If the Partnership has a variable interest in the entity and the entity is a VIE, it will also analyze whether the Partnership is the primary beneficiary of this entity and whether consolidation is required. In evaluating whether it has a variable interest in the entity, the Partnership reviews the equity ownership and the extent to which it absorbs risk created and distributed by the entity, as well as whether the fees charged to the entity are customary and commensurate with the level of effort required to provide services. Fees received by the Partnership are not variable interests if (i) the fees are compensation for services provided and are commensurate with the level of effort required to provide those services, (ii) the service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm’s length and (iii) the Partnership’s other economic interests in the VIE held directly and indirectly through its related parties, as well as economic interests held by related parties under common control, where applicable, would not absorb more than an insignificant amount of the entity’s losses or receive more than an insignificant amount of the entity’s benefits. Evaluation of these criteria requires judgment. For entities determined to be VIEs, the Partnership must then evaluate whether it is the primary beneficiary of such VIEs. To make this determination, the Partnership evaluates its economic interests in the entity specifically determining if the Partnership has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (the “benefits”). When making the determination on whether the benefits received from an entity are significant, the Partnership considers the total economics of the entity, and analyzes whether the Partnership’s share of the economics is significant. The Partnership utilizes qualitative factors, and, where applicable, quantitative factors, while performing the analysis. VIEs of which the Partnership is the primary beneficiary have been included in the Partnership’s consolidated financial statements. The portion of the consolidated subsidiaries owned by third parties and any related activity is eliminated through non-controlling interests in the consolidated balance sheets and income (loss) attributable to non-controlling interests in the consolidated statements of operations. |
Investments Held in Trust by Consolidated Variable Interest Entities | Investments Held in Trust by Consolidated Variable Interest Entities Investments held in trust represent funds raised by TGR (as defined in Note 4), a consolidated special purpose acquisition company, through the TGR IPO (as defined in Note 4). These funds were held in an actively-traded money market fund, which invested in U.S. Treasury securities. Investments held in trust are classified as trading securities and are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in other income (expense)—interest earned on marketable securities in trust account on the accompanying unaudited interim consolidated statements of operations. The estimated fair values of investments held in the trust account are determined using quoted prices in an active market and therefore are classified in Level 1 of the fair value hierarchy, as described in Note 6— Fair Value Measurements. |
Redeemable Non-Controlling Interest | Redeemable Non-Controlling Interest Redeemable non-controlling interests represent the shares of Class A common stock of TGR, par value $0.0001 per share (the “Class A common stock”) sold in the TGR IPO that were redeemable for cash by the public TGR shareholders that would have been concurrent with TGR’s initial business combination or in the event of TGR’s failure to complete a business combination or a tender offer. The redeemable non-controlling interests were initially recorded at their original issue price, net of issuance costs and the initial fair value of separately traded warrants. As of June 30, 2023, the shares had been redeemed in full. |
New Accounting Pronouncements | New Accounting Pronouncements In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-01, “Leases (Topic 842): Common Control Arrangements.” This update requires that (i) entities determine whether a related party arrangement between entities under common control is a lease and (ii) that leasehold improvements have an amortization period consistent with the shorter of the remaining lease term and the useful life of the improvements, which is an approach that is largely consistent with legacy guidance. This update is effective for financial statements issued for fiscal years beginning after December 15, 2023, including interim periods within that fiscal year. 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. |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
Schedule of disaggregation of revenues | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Oil revenue $ 50,777,614 $ 32,044,316 $ 123,587,783 $ 100,384,497 Natural gas revenue 12,339,244 35,517,230 43,528,008 94,412,132 NGL revenue 6,120,745 6,306,446 16,520,185 22,746,735 Total Oil, natural gas and NGL revenues $ 69,237,603 $ 73,867,992 $ 183,635,976 $ 217,543,364 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
DERIVATIVES | |
Schedule of changes in fair value of derivative instruments | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Beginning fair value of derivative instruments $ 2,776,238 $ (38,741,643) $ (12,324,076) $ (26,624,646) (Loss) gain on commodity derivative instruments, net (4,576,570) (1,022,399) 6,215,265 (35,456,734) Net cash paid on settlements of derivative instruments 479,005 14,410,499 4,787,484 36,727,837 Ending fair value of derivative instruments $ (1,321,327) $ (25,353,543) $ (1,321,327) $ (25,353,543) |
Schedule of derivative contracts | September 30, December 31, Classification Balance Sheet Location 2023 2022 Assets: Current assets Derivative assets $ 1,489,189 $ — Long-term assets Derivative assets 134,841 754,786 Liabilities: Current liabilities Derivative liabilities (1,418,027) (12,646,720) Long-term liabilities Derivative liabilities (1,527,330) (432,142) $ (1,321,327) $ (12,324,076) |
Schedule of commodity derivative contracts | Oil Price Swaps Notional Weighted Average Range (per Bbl) Volumes (Bbl) Fixed Price (per Bbl) Low High October 2023 - December 2023 146,464 $ 76.42 $ 63.00 $ 88.05 January 2024 - December 2024 568,926 $ 79.04 $ 69.30 $ 85.34 January 2025 - September 2025 417,154 $ 71.10 $ 64.35 $ 77.01 Natural Gas Price Swaps Notional Weighted Average Range (per MMBtu) Volumes (MMBtu) Fixed Price (per MMBtu) Low High October 2023 - December 2023 1,317,624 $ 3.22 $ 3.03 $ 3.28 January 2024 - December 2024 5,285,182 $ 3.97 $ 3.06 $ 4.48 January 2025 - September 2025 3,861,611 $ 3.86 $ 3.50 $ 4.37 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 Assets Commodity derivative contracts $ — $ 1,624,030 $ — $ — $ 1,624,030 Liabilities Commodity derivative contracts $ — $ (2,945,357) $ — $ — $ (2,945,357) December 31, 2022 Assets Commodity derivative contracts $ — $ 754,786 $ — $ — $ 754,786 Assets of consolidated variable interest entities: Investments held in trust $ 240,621,146 $ — $ — $ — $ 240,621,146 Liabilities Commodity derivative contracts $ — $ (13,078,862) $ — $ — $ (13,078,862) |
OIL AND NATURAL GAS PROPERTIES
OIL AND NATURAL GAS PROPERTIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
OIL AND NATURAL GAS PROPERTIES | |
Schedule of oil and natural gas properties | September 30, December 31, 2023 2022 Oil and natural gas properties Proved properties $ 1,709,319,998 $ 1,258,290,375 Unevaluated properties 338,840,127 207,695,343 Less: accumulated depreciation, depletion and impairment (772,711,451) (712,716,951) Total oil and natural gas properties $ 1,275,448,674 $ 753,268,767 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
LEASES | |
Schedule of future minimum lease commitments | Total 2023 2024 2025 2026 2027 Thereafter Operating leases $ 2,834,748 $ 122,075 $ 488,725 $ 497,033 $ 507,648 $ 511,917 $ 707,350 Less: Imputed Interest (514,749) Total $ 2,319,999 |
UNITHOLDERS' EQUITY AND PARTN_2
UNITHOLDERS' EQUITY AND PARTNERSHIP DISTRIBUTIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Common units | |
Schedule of distributions approved by the Board of Directors | Amount per Date Unitholder Payment Common Unit Declared Record Date Date Q1 2023 $ 0.35 May 3, 2023 May 15, 2023 May 22, 2023 Q2 2023 $ 0.39 August 2, 2023 August 14, 2023 August 21, 2023 Q3 2023 $ 0.51 November 2, 2023 November 13, 2023 November 20, 2023 Q1 2022 $ 0.47 April 22, 2022 May 2, 2022 May 9, 2022 Q2 2022 $ 0.55 August 3, 2022 August 15, 2022 August 22, 2022 Q3 2022 $ 0.49 November 3, 2022 November 14, 2022 November 21, 2022 |
Common Units | |
Common units | |
Schedule of changes in Partnership's units | Common Units Balance at December 31, 2022 64,231,833 Common units issued under the A&R LTIP (1) 998,162 Restricted units repurchased for tax withholding (279,662) Common unit issued for acquisition 557,302 Common units issued for equity offering 8,337,500 Conversion of Class B units 6,323 Balance at September 30, 2023 73,851,458 (1) Includes restricted units granted to certain employees and directors under the Amended and Restated Kimbell Royalty GP, LLC 2017 Long-Term Incentive Plan on February 21, 2023. |
EARNINGS PER COMMON UNIT (Table
EARNINGS PER COMMON UNIT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
EARNINGS PER COMMON UNIT | |
Schedule of earnings per common unit | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income attributable to common units of Kimbell Royalty Partners, LP $ 13,580,211 $ 38,343,786 $ 50,368,835 $ 83,536,606 Net adjustment to accretion of redeemable non-controlling interest in Kimbell Tiger Acquisition Corporation and write-off of deferred underwriting commissions — — 1,572,737 (17,845,231) Net income attributable to common units of Kimbell Royalty Partners, LP after accretion of redeemable non-controlling interest in Kimbell Tiger Acquisition Corporation and write-off of deferred underwriting commissions 13,580,211 38,343,786 51,941,572 65,691,375 Distribution and accretion on Series A preferred units 1,040,572 — 1,040,572 — Net income attributable to non-controlling interests in OpCo and distribution on Class B units 3,860,255 — 13,768,200 — Diluted net income attributable to common units of Kimbell Royalty Partners, LP $ 18,481,038 $ 38,343,786 $ 66,750,344 $ 65,691,375 Weighted average number of common units outstanding: Basic 68,540,786 55,434,641 64,807,590 52,302,235 Effect of dilutive securities: Series A preferred units 4,219,440 — 1,421,936 — Class B units 20,853,412 8,211,579 18,178,773 11,245,161 Restricted units 1,355,439 1,897,192 1,331,514 1,850,067 Diluted 94,969,077 65,543,412 85,739,813 65,397,463 Net income per unit attributable to common units of Kimbell Royalty Partners, LP Basic $ 0.20 $ 0.69 $ 0.80 $ 1.26 Diluted $ 0.19 $ 0.59 $ 0.78 $ 1.00 |
UNIT-BASED COMPENSATION (Tables
UNIT-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2022 1,897,192 $ 13.553 1.517 years Awarded 998,162 15.020 — Vested (943,924) 12.602 — Unvested at September 30, 2023 1,951,430 $ 14.763 1.777 years |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Segment Reporting | |
Number of operating units | 1 |
Number of reporting units | 1 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Feb. 08, 2022 $ / shares |
Kimbell Tiger Acquisition Corporation | Class A | |
Common Stock par value (in dollars per share) | $ 0.0001 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue from External Customer [Line Items] | ||||
Total revenue | $ 69,237,603 | $ 73,867,992 | $ 183,635,976 | $ 217,543,364 |
Oil revenue | ||||
Revenue from External Customer [Line Items] | ||||
Total revenue | 50,777,614 | 32,044,316 | 123,587,783 | 100,384,497 |
Natural gas revenue | ||||
Revenue from External Customer [Line Items] | ||||
Total revenue | 12,339,244 | 35,517,230 | 43,528,008 | 94,412,132 |
NGL revenue | ||||
Revenue from External Customer [Line Items] | ||||
Total revenue | $ 6,120,745 | $ 6,306,446 | $ 16,520,185 | $ 22,746,735 |
ACQUISITIONS, JOINT VENTURE A_2
ACQUISITIONS, JOINT VENTURE AND SPECIAL PURPOSE ACQUISITION COMPANY - Acquisitions (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 13, 2023 USD ($) | May 22, 2023 USD ($) | May 17, 2023 USD ($) shares | May 08, 2023 item | Dec. 15, 2022 USD ($) a shares | Feb. 08, 2022 USD ($) $ / shares | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) shares | Dec. 31, 2022 USD ($) | Jun. 19, 2019 | |
Acquisitions | ||||||||||
Common units sold to public | $ 110,711,383 | |||||||||
Assets | 1,389,784,909 | $ 1,389,784,909 | $ 1,076,746,299 | |||||||
Liabilities | $ 329,279,800 | $ 329,279,800 | 263,336,623 | |||||||
Purchase and sale agreement | Royalty, mineral and overriding interests | ||||||||||
Acquisitions | ||||||||||
Total purchase price | 15,000,000 | |||||||||
Net proceeds realized | $ 6,500,000 | |||||||||
Kimbell Tiger Acquisition Corporation | IPO | ||||||||||
Acquisitions | ||||||||||
Common units sold to public | $ 230,000,000 | |||||||||
Springbok SKR Capital Company, LLC and Rivercrest Capital Partners, LP. | ||||||||||
Acquisitions | ||||||||||
Ownership interest (as a percent) | 49.30% | |||||||||
Kimbell Tiger Acquisition Corporation | ||||||||||
Acquisitions | ||||||||||
Redemption of equity in variable interest entity | $ 1,600,000 | |||||||||
Period for each business combination extension | 3 months | |||||||||
Number of business combination extensions | item | 2 | |||||||||
Common Units | ||||||||||
Acquisitions | ||||||||||
Common units issued for equity offering (in units) | shares | 8,337,500 | |||||||||
Class A | Kimbell Tiger Acquisition Corporation | ||||||||||
Acquisitions | ||||||||||
Common Stock par value (in dollars per share) | $ / shares | $ 0.0001 | |||||||||
LongPoint Minerals II, LLC | ||||||||||
Acquisitions | ||||||||||
Purchase price cash, gross | $ 455,000,000 | |||||||||
Transactional costs | 7,400,000 | |||||||||
Post-effective net oil, natural gas and NGL revenues earned prior to the closing date | 16,600,000 | |||||||||
Acquisition asset allocation | ||||||||||
Proved properties | 198,200,000 | |||||||||
Unevaluated properties | $ 247,600,000 | |||||||||
MB Minerals, L.P. and certain of its affiliates | ||||||||||
Acquisition asset allocation | ||||||||||
Proved properties | $ 60,800,000 | |||||||||
Unevaluated properties | 74,900,000 | |||||||||
Hatch Royalties, LLC | ||||||||||
Acquisitions | ||||||||||
Purchase price cash, gross | $ 150,400,000 | |||||||||
Gross acres acquired (in acres) | a | 230,000 | |||||||||
Net royalty acres acquired (in acres) | a | 889 | |||||||||
Acquisition asset allocation | ||||||||||
Proved properties | $ 56,400,000 | |||||||||
Unevaluated properties | $ 204,700,000 | |||||||||
Hatch Royalties, LLC | OpCo Units | ||||||||||
Acquisitions | ||||||||||
Business Acquisition issuance of common units | shares | 7,272,821 | |||||||||
MB Minerals, L.P. | ||||||||||
Acquisitions | ||||||||||
Purchase price cash, gross | $ 48,800,000 | |||||||||
MB Minerals, L.P. | OpCo Units | ||||||||||
Acquisitions | ||||||||||
Business Acquisition issuance of common units | shares | 5,369,218 | |||||||||
MB Minerals, L.P. | Class B Common Units | ||||||||||
Acquisitions | ||||||||||
Business Acquisition issuance of common units | shares | 557,302 |
DERIVATIVES (Details)
DERIVATIVES (Details) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2023 USD ($) $ / bbl MMBbls | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) $ / bbl MMBbls | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | May 17, 2022 | Jan. 27, 2021 USD ($) | |
Change in fair values of derivative instruments | |||||||
Beginning fair value of commodity derivative instruments | $ | $ 2,776,238 | $ (38,741,643) | $ (12,324,076) | $ (26,624,646) | |||
(Loss) gain on commodity derivative instruments, net | $ | (4,576,570) | (1,022,399) | 6,215,265 | (35,456,734) | |||
Net cash paid on settlements of derivative instruments | $ | 479,005 | 14,410,499 | 4,787,484 | 36,727,837 | |||
Ending fair value of commodity derivative instruments | $ | (1,321,327) | (25,353,543) | (1,321,327) | (25,353,543) | |||
Assets: | |||||||
Current assets | $ | 1,489,189 | 1,489,189 | |||||
Long-term assets | $ | 134,841 | 134,841 | $ 754,786 | ||||
Liabilities: | |||||||
Current liability | $ | (1,418,027) | (1,418,027) | (12,646,720) | ||||
Long-term liability | $ | (1,527,330) | (1,527,330) | (432,142) | ||||
Derivative assets (liabilities) | $ | $ (1,321,327) | (25,353,543) | $ (1,321,327) | (25,353,543) | $ (12,324,076) | ||
Interest Rate Swap | |||||||
Derivatives | |||||||
Derivative, Notional Amount | $ | $ 150,000,000 | ||||||
Unwind notional amount (as a percent) | 50% | ||||||
Change in fair values of derivative instruments | |||||||
Gain on interest rate swap | $ | $ 3,400,000 | $ 6,400,000 | |||||
Oil Price Swaps - October 2023 - December 2023 | |||||||
Derivatives | |||||||
Notional Volumes | MMBbls | 146,464 | 146,464 | |||||
Weighted Average Fixed Price | 76.42 | 76.42 | |||||
Oil Price Swaps - January 2024 - December 2024 | |||||||
Derivatives | |||||||
Notional Volumes | MMBbls | 568,926 | 568,926 | |||||
Weighted Average Fixed Price | 79.04 | 79.04 | |||||
Oil Price Swaps - January 2025 - September 2025 | |||||||
Derivatives | |||||||
Notional Volumes | MMBbls | 417,154 | 417,154 | |||||
Weighted Average Fixed Price | 71.10 | 71.10 | |||||
Natural Gas Price Swaps - October 2023 - December 2023 | |||||||
Derivatives | |||||||
Notional Volumes | MMBbls | 1,317,624 | 1,317,624 | |||||
Weighted Average Fixed Price | 3.22 | 3.22 | |||||
Natural Gas Price Swaps - January 2024 - December 2024 | |||||||
Derivatives | |||||||
Notional Volumes | MMBbls | 5,285,182 | 5,285,182 | |||||
Weighted Average Fixed Price | 3.97 | 3.97 | |||||
Natural Gas Price Swaps - January 2025 - September 2025 | |||||||
Derivatives | |||||||
Notional Volumes | MMBbls | 3,861,611 | 3,861,611 | |||||
Weighted Average Fixed Price | 3.86 | 3.86 | |||||
Minimum | Oil Price Swaps - October 2023 - December 2023 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 63 | 63 | |||||
Minimum | Oil Price Swaps - January 2024 - December 2024 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 69.30 | 69.30 | |||||
Minimum | Oil Price Swaps - January 2025 - September 2025 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 64.35 | 64.35 | |||||
Minimum | Natural Gas Price Swaps - October 2023 - December 2023 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 3.03 | 3.03 | |||||
Minimum | Natural Gas Price Swaps - January 2024 - December 2024 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 3.06 | 3.06 | |||||
Minimum | Natural Gas Price Swaps - January 2025 - September 2025 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 3.50 | 3.50 | |||||
Maximum | Oil Price Swaps - October 2023 - December 2023 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 88.05 | 88.05 | |||||
Maximum | Oil Price Swaps - January 2024 - December 2024 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 85.34 | 85.34 | |||||
Maximum | Oil Price Swaps - January 2025 - September 2025 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 77.01 | 77.01 | |||||
Maximum | Natural Gas Price Swaps - October 2023 - December 2023 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 3.28 | 3.28 | |||||
Maximum | Natural Gas Price Swaps - January 2024 - December 2024 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 4.48 | 4.48 | |||||
Maximum | Natural Gas Price Swaps - January 2025 - September 2025 | |||||||
Derivatives | |||||||
Weighted Average Fixed Price | 4.37 | 4.37 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Commodity Derivative contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative contracts assets | $ 1,624,030 | $ 754,786 |
Derivative contracts liabilities | (2,945,357) | (13,078,862) |
Commodity Derivative contract | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative contracts assets | 1,624,030 | 754,786 |
Derivative contracts liabilities | $ (2,945,357) | (13,078,862) |
Assets Held In Trust | Consolidated variable interest entities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative contracts assets | 240,621,146 | |
Assets Held In Trust | Level 1 | Consolidated variable interest entities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative contracts assets | $ 240,621,146 |
OIL AND NATURAL GAS PROPERTIE_2
OIL AND NATURAL GAS PROPERTIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
OIL AND NATURAL GAS PROPERTIES | |||||
Proved properties | $ 1,709,319,998 | $ 1,709,319,998 | $ 1,258,290,375 | ||
Unevaluated properties | 338,840,127 | 338,840,127 | 207,695,343 | ||
Less: accumulated depreciation, depletion, and impairment | (772,711,451) | (772,711,451) | (712,716,951) | ||
Total oil and natural gas properties, net | 1,275,448,674 | $ 1,275,448,674 | $ 753,268,767 | ||
Net revenues discounting percentage at future | 10% | ||||
Impairment of oil and natural gas properties | $ 0 | $ 0 | $ 0 | $ 0 |
LEASES (Details)
LEASES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
LEASES | ||||
Operating lease weighted average remaining lease term | 5 years 7 months 20 days | 5 years 7 months 20 days | ||
Operating lease weighted average discount rate (as a percent) | 6.75% | 6.75% | ||
Operating lease expense | $ 100,000 | $ 100,000 | $ 400,000 | $ 400,000 |
2023 | 122,075 | 122,075 | ||
2024 | 488,725 | 488,725 | ||
2025 | 497,033 | 497,033 | ||
2026 | 507,648 | 507,648 | ||
2027 | 511,917 | 511,917 | ||
Thereafter | 707,350 | 707,350 | ||
Total operating leases | 2,834,748 | 2,834,748 | ||
Less Imputed Interest | (514,749) | (514,749) | ||
Total | $ 2,319,999 | $ 2,319,999 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Jun. 13, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Jul. 24, 2023 | Jul. 23, 2023 | |
Long-term debt | ||||||
Minimum percentage of proved reserves constituting borrowings based properties (as a percent) | 75% | 75% | ||||
Amortization of Debt Issuance Costs | $ 1,414,074 | $ 1,381,717 | ||||
Debt extinguishment | 500,000 | |||||
Borrowings of debt | 201,084,089 | 43,200,000 | ||||
Repayment of debt | 123,700,000 | $ 56,400,000 | ||||
Revolving credit facility | ||||||
Long-term debt | ||||||
Revolving credit facility outstanding | $ 310,400,000 | $ 310,400,000 | ||||
Excess cash determinations | $ 50,000,000 | $ 30,000,000 | ||||
Interest rate on outstanding borrowings (as a percent) | 8.64% | 8.56% | ||||
Borrowings of debt | $ 201,100,000 | |||||
Revolving credit facility | Prime | ||||||
Long-term debt | ||||||
Margin (as a percent) | 2.50% | |||||
Revolving credit facility | SOFR | ||||||
Long-term debt | ||||||
Margin (as a percent) | 3.50% | |||||
Revolving credit facility | Maximum | ||||||
Long-term debt | ||||||
Debt to EBITDAX ratio | 350% | 350% | ||||
Revolving credit facility | Minimum | ||||||
Long-term debt | ||||||
Current assets to current liabilities ratio | 100% | 100% | ||||
Standby and/or commercial letters of credit | ||||||
Long-term debt | ||||||
Revolving credit facility maximum borrowings | $ 10,000,000 | |||||
Senior Secured Reserve Based Revolving Credit Facility | ||||||
Long-term debt | ||||||
Revolving credit facility maximum borrowings | 750,000,000 | |||||
Borrowing base | 400,000,000 | |||||
Initial aggregate elected commitments amount | 400,000,000 | |||||
Minimum cash balance required to be applied weekly to prepay loans | 50,000,000 | |||||
Reduced cash balance as permitted by agreement | $ 0 | |||||
Commitment fees (as a percent) | 0.50% | |||||
Senior Secured Reserve Based Revolving Credit Facility | Maximum | SOFR | ||||||
Long-term debt | ||||||
Margin (as a percent) | 3.75% | |||||
Senior Secured Reserve Based Revolving Credit Facility | Maximum | Base Rate | ||||||
Long-term debt | ||||||
Margin (as a percent) | 2.75% | |||||
Senior Secured Reserve Based Revolving Credit Facility | Minimum | SOFR | ||||||
Long-term debt | ||||||
Margin (as a percent) | 2.75% | |||||
Senior Secured Reserve Based Revolving Credit Facility | Minimum | Base Rate | ||||||
Long-term debt | ||||||
Margin (as a percent) | 1.75% |
PREFERRED UNITS - Other (Detail
PREFERRED UNITS - Other (Details) | 3 Months Ended | |||
Sep. 13, 2023 USD ($) D item $ / shares shares | Aug. 02, 2023 shares | Sep. 30, 2023 USD ($) shares | Dec. 31, 2022 shares | |
Preferred units | ||||
Temporary equity, issued (in units) | 325,000 | 0 | ||
Liquidation preference rate (in percentage) | 10% | |||
Increased distribution rate | 20% | |||
Series A preferred units deemed distributions | $ | $ 1,040,572 | |||
Temporary equity, outstanding (in units) | 325,000 | 0 | ||
Series A Preferred Units | ||||
Preferred units | ||||
The period after issuance securities become convertible | 7 years | |||
Percentage of cash distributions per annum | 6% | |||
Number of members of board | item | 2 | |||
Ownership required to grant the approval | 66.67% | |||
Ratio of return on investment to preferred units | 1.2 | |||
Series A Preferred Units | Series A Issuance Date | ||||
Preferred units | ||||
Minimum internal rate of return (as percent) | 12% | |||
Series A Preferred Units | On or after the fifth anniversary of the Series A Issuance Date and prior to the sixth anniversary | ||||
Preferred units | ||||
Minimum internal rate of return (as percent) | 13% | |||
Series A Preferred Units | On or after the sixth anniversary | ||||
Preferred units | ||||
Minimum internal rate of return (as percent) | 14% | |||
Series A Preferred Units | Minimum | The Partnership | ||||
Preferred units | ||||
Aggregate value of common units to be issued for preferred units | $ | $ 10,000,000 | |||
Percentage of closing price to the conversion price | 160% | |||
Threshold trading days for transfer, assign or sale of units preceding the conversion notice | D | 20 | |||
Threshold consecutive trading days for transfer, assign or sale of units preceding the conversion notice | D | 30 | |||
Affiliates of Apollo Capital Management, L.P. | LongPoint Minerals II, LLC | ||||
Preferred units | ||||
Series A preferred units issued | 325,000 | |||
Affiliates of Apollo Capital Management, L.P. | Series A Preferred Units | Kimbell Royalty Operating, LLC | ||||
Preferred units | ||||
Temporary equity, issued (in units) | 325,000 | |||
Affiliates of Apollo Capital Management, L.P. | Series A Preferred Units | LongPoint Minerals II, LLC | ||||
Preferred units | ||||
Share price (in dollars per unit) | $ / shares | $ 1,000 | |||
Proceeds from the issuance of preferred units | $ | $ 325,000,000 | |||
Affiliates of Apollo Capital Management, L.P. | Series A Preferred Stock | ||||
Preferred units | ||||
Series A preferred units issued | 400,000 | |||
Series A Purchasers | Minimum | ||||
Preferred units | ||||
Percentage of closing price to the conversion price | 130% | |||
Conversion price of units | $ / shares | $ 15.07 | |||
Series A Purchasers | Series A Preferred Units | Minimum | ||||
Preferred units | ||||
Aggregate value of common units to be issued for preferred units | $ | $ 10,000,000 | |||
Threshold trading days for transfer, assign or sale of units preceding the conversion notice | D | 20 | |||
Threshold consecutive trading days for transfer, assign or sale of units preceding the conversion notice | D | 30 |
UNITHOLDERS' EQUITY AND PARTN_3
UNITHOLDERS' EQUITY AND PARTNERSHIP DISTRIBUTIONS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Aug. 07, 2023 | Nov. 30, 2022 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Common units | |||||||||||
Units issued (in units) | 73,851,458 | 73,851,458 | 64,231,833 | ||||||||
Units outstanding (in units) | 73,851,458 | 73,851,458 | 64,231,833 | ||||||||
Repayment of debt | $ 123,700,000 | $ 56,400,000 | |||||||||
Capital rollforward | |||||||||||
Unitholders' capital, beginning balance (in units) | 64,231,833 | 64,231,833 | |||||||||
Unitholders' capital, ending balance (in units) | 73,851,458 | 73,851,458 | |||||||||
Cash distributions declared and paid (in dollars per unit) | $ 0.51 | $ 0.39 | $ 0.35 | $ 0.49 | $ 0.55 | $ 0.47 | |||||
Common Units | |||||||||||
Common units | |||||||||||
Units issued (in units) | 73,851,458 | 73,851,458 | |||||||||
Units outstanding (in units) | 73,851,458 | 73,851,458 | 64,231,833 | ||||||||
Capital rollforward | |||||||||||
Unitholders' capital, beginning balance (in units) | 64,231,833 | 64,231,833 | |||||||||
Common units issued under the A&R LTIP (in units) | 998,162 | ||||||||||
Restricted units repurchased for tax withholding (in units) | (279,662) | ||||||||||
Common unit issued for acquisition (in units) | 557,302 | ||||||||||
Common units issued for equity offering (in units) | 8,337,500 | ||||||||||
Conversion of Class B Units (in units) | 6,323 | ||||||||||
Unitholders' capital, ending balance (in units) | 73,851,458 | 73,851,458 | |||||||||
Class B | |||||||||||
Capital rollforward | |||||||||||
Cash distributions (as a percent) | 2% | ||||||||||
Class B Common Units | |||||||||||
Common units | |||||||||||
Units outstanding (in units) | 20,847,295 | 20,847,295 | |||||||||
Capital rollforward | |||||||||||
Unitholders' capital, ending balance (in units) | 20,847,295 | 20,847,295 | |||||||||
Additional consideration paid per unit (in dollars per unit) | $ 0.05 | ||||||||||
Public Offering | |||||||||||
Common units | |||||||||||
Units issued (in units) | 8,337,500 | 6,900,000 | |||||||||
Proceeds from equity offering | $ 110,700,000 | $ 116,100,000 | |||||||||
Repayment of debt | $ 90,000,000 | $ 116,000,000 |
EARNINGS PER COMMON UNIT (Detai
EARNINGS PER COMMON UNIT (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings per unit | ||||
Net income attributable to common units of Kimbell Royalty Partners, LP | $ 13,580,211 | $ 38,343,786 | $ 50,368,835 | $ 83,536,606 |
Net adjustment to accretion of redeemable non-controlling interest in Kimbell Tiger Acquisition Corporation and write-off of deferred underwriting commissions | (1,572,737) | 17,845,231 | ||
Net income attributable to common units of Kimbell Royalty Partners, LP after accretion of redeemable non-controlling interest in Kimbell Tiger Acquisition Corporation and write-off of deferred underwriting commissions | 13,580,211 | 38,343,786 | 51,941,572 | 65,691,375 |
Distribution and accretion on Series A preferred units | 1,040,572 | 1,040,572 | ||
Diluted net income attributable to common units of Kimbell Royalty Partners, LP | $ 18,481,038 | $ 38,343,786 | $ 66,750,344 | $ 65,691,375 |
Weighted average number of common units outstanding Basic (in units) | 68,540,786 | 55,434,641 | 64,807,590 | 52,302,235 |
Weighted average number of common units outstanding Diluted (in units) | 94,969,077 | 65,543,412 | 85,739,813 | 65,397,463 |
Net income per unit attributable to common units (basic) (in dollar per share) | $ 0.20 | $ 0.69 | $ 0.80 | $ 1.26 |
Net income per unit attributable to common units (diluted) (in dollar per share) | $ 0.19 | $ 0.59 | $ 0.78 | $ 1 |
Series A Preferred Units | ||||
Earnings per unit | ||||
Distribution and accretion on Series A preferred units | $ 1,040,572 | $ 1,040,572 | ||
Class B | ||||
Earnings per unit | ||||
Net income attributable to non-controlling interests in OpCo and distribution on Class B units | $ 3,860,255 | $ 13,768,200 | ||
Restricted Units | ||||
Earnings per unit | ||||
Weighted average number of common units outstanding (in units) | 1,355,439 | 1,897,192 | 1,331,514 | 1,850,067 |
Series A Preferred Units | ||||
Earnings per unit | ||||
Weighted average number of common units outstanding (in units) | 4,219,440 | 1,421,936 | ||
Class B Common Units | ||||
Earnings per unit | ||||
Weighted average number of common units outstanding (in units) | 20,853,412 | 8,211,579 | 18,178,773 | 11,245,161 |
UNIT-BASED COMPENSATION (Detail
UNIT-BASED COMPENSATION (Details) - Long-Term Incentive Plan - $ / shares | 9 Months Ended | 12 Months Ended | |
May 18, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | |
Unit-based compensation | |||
Additional common units authorized for issuance | 3,700,000 | ||
Vesting period | 3 years | ||
Authorized issuance of units | 8,241,600 | ||
First Anniversary | |||
Unit-based compensation | |||
Vesting percent | 33.30% | ||
Second Anniversary | |||
Unit-based compensation | |||
Vesting percent | 33.30% | ||
Third Anniversary | |||
Unit-based compensation | |||
Vesting percent | 33.30% | ||
Restricted Units | |||
Unvested Units | |||
Unvested at beginning of period (in units) | 1,897,192 | ||
Awarded (in units) | 998,162 | ||
Vesting (in units) | (943,924) | ||
Unvested at end of period (in units) | 1,951,430 | 1,897,192 | |
Unvested Weighted Average Grant-Date Fair Value | |||
Unvested at beginning of period (in dollars per unit) | $ 13.553 | ||
Awarded (in dollars per unit) | 15.020 | ||
Vesting (in dollars per unit) | 12.602 | ||
Unvested at end of period (in dollars per unit) | $ 14.763 | $ 13.553 | |
Weighted Average Remaining Contractual Term | |||
Unvested contractual term, at end of period | 1 year 9 months 9 days | 1 year 6 months 6 days |
INCOME TAXES - (Details)
INCOME TAXES - (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
INCOME TAXES | ||||
Income tax expense (benefit) | $ 128,359 | $ (224,883) | $ 2,440,399 | $ 1,850,357 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Related Party Transactions | ||||
Total revenue | $ 67,204,273 | $ 72,922,972 | $ 194,873,007 | $ 179,388,149 |
Related Party | ||||
Related Party Transactions | ||||
Due from related parties | 25,000 | 25,000 | ||
Total revenue | 50,000 | 50,000 | ||
Related Party | BJF Royalties | ||||
Related Party Transactions | ||||
Payments made to related parties | 0 | 0 | ||
Related Party | K3 Royalties | ||||
Related Party Transactions | ||||
Payments made to related parties | 30,000 | 90,000 | ||
Related Party | Rivercrest Capital Management, LLC | ||||
Related Party Transactions | ||||
Related party expense reimbursement received | $ 48,038 | $ 153,133 |
ADMINISTRATIVE SERVICES (Detail
ADMINISTRATIVE SERVICES (Details) | Sep. 13, 2023 USD ($) |
LongPoint Acquisition | |
Transition Service Agreement amount of administrative services to be received | $ 250,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Millions | Nov. 13, 2023 | Nov. 02, 2023 |
Common Units | ||
Subsequent events | ||
Cash distributions declared (in dollars per unit) | $ 0.51 | |
Forecast | Series A Preferred Stock | ||
Subsequent events | ||
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared | $ 1 | |
Operating Company | ||
Subsequent events | ||
Cash distributions declared (in dollars per unit) | $ 0.51 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |