Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the Kimbell Royalty Partners Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Rick Black, Investor Relations. Thank you.

You may begin.

Rick Black

good and operator, you, morning, everyone. Thank the financial and to ended XX, Kimbell second Royalty review to June call conference XXXX. operational XXXX Partners quarter Welcome results the for also Events & page accessed is This can of IR Presentations webcast link the audio of be call on through being section the kimbellrp.com. the and any this no only please of as on that any listening longer advised the be accurate replay time-sensitive today, of August recorded reading. Information may transcript of call speaks information be as so X, or XXXX date

provisions are I future that Reform Litigation would expectations also statements considered the made like XXXX. for of or historical Act harbor made to performance, financial remind in the you today's facts, statements Private discussion not events to forward-looking of Securities statements including are or future pursuant that safe

We The statements will today's the press forward-looking disclosures on by their reported outside results statements. are refer for call, our today's actual company's Please may which in of be uncertain materially. to and forward-looking nature, control. release as making earnings differ

including statements. to other Reconciliations cash available EBITDA forward-looking measures factors earnings found also can described the in refer detail Management be the the nearest uncertainties non-GAAP Exchange filings for and distribution. with to end Kimbell measures, no the or obligation any update revise These in GAAP assumes at release. company's today's of to publicly Securities will are and and risks and Commission. adjusted

Executive Kimbell Bob? I Partners' would now like Chief call Bob turn to Officer. Realty to the Chairman and over Ravnaas,

Bob Ravnaas

our Officer; Operating Daly, this are Chief call We our Rick, including joining and on you Controller. BlayneRhynsburger, several senior morning. Officer; Matt the Financial Davis team, me you, our and morning, Ravnaas, With Chief everyone. today President management our and appreciate Thank good members of us

recently with another continue Royalty MB QX momentum our from pleased to and very and quarter build closed record the Minerals are We acquisition.

up from XX% which land overall quarter. first U.S. XX% remains QX Activity basis, rig a shifted in acreage towards lower in on mix X:X materially Notably, a oil, our the count. production represented our despite resilient

inventory, now sight In Permian of to in XX.X%. rig have count and ever quarter-over-quarter leads Production by line share MB XX% acquisition quarter the with most acquisitions, production, grew same a terms the the After by count all overall fact, land XX% the market of rig count of we categories wells. in U.S. the at full Permian giving of recent Minerals Permian reflecting during the effect increasing Basin our rig highest X period. the

that maintain and quarter X-year we year. estimated the are pleased wells production. rate we report are superior track net for annually And meet on only right decline our maintain flat annual that targets we to a to a had Overall, an very PDP XX% to of X.X requires great

Our increase QX unitholder an of enhancing QX from to XX% commitment ongoing and of XXXX value. $X.XX distribution our and demonstrates represents focus

strategy that As growth, of year we a on our organic method at disciplined head to proven Kimbell. is both execute as we and out both continue through development well acquisition strategy our to into XXXX, the towards half looking the drive will and as consistent second

We from also decline PDP locations. drilling with benefiting expect coupled with rates to our diverse continue portfolio upside low

royalty We and bright space and sector, major believe this role natural the a Kimbell U.S. very in are in will about prospects it. many for to extend come. for and fragmented the opportunities As the consolidator oil remain future highly gas long-term we our years bullish in

financials detail our I'll Davis to to the more we now the in call before open questions. over turn to review call

Davis Ravnaas

MB including and new generated a on per daily XX,XXX record X:X the the Bob, the a BOE production Minerals very Thanks, day good in performed a rate surpassing over of company and acquisition. morning, well everyone. for basis, quarter milestone Kimbell of full run quarter second

and are XX%. we pleased increase increased to from million through that borrowing revolving June XXXX also base secured extended and commitments credit the an facility $XXX an We of million, and amended elected have our report $XXX to

affirming disclosed release. full was in year also that XXth XXXX press May previously We guidance our our are

the in by decrease beginning reviewing financial X.X% start with $XX of first NGL the prices. due gas from I'll our commodity to primarily and results natural million, second a from quarter, revenues a oil, of quarter decline realized

per on XXXX Second period recognized to prior day, per rate X:X again, production. quarter, of was XXX of quarter per daily which XX,XXX and a XX,XXX the production BOE run during BOE average consisted day basis, BOE day production related

attributable quarter production into QX prior came pay The was this status period during to that production past recognized XXXX.

our Our production from day, quarter of rate of X.X% Minerals comprised production was acquisition, by an record oil received and be that's QX for was from BOE from XX% approximately from XXXX increase the from the production a XX,XXX XX% second record per of will of impact XX% XXXX XX% the natural day. days run And run approximately rate of was daily -- Minerals which gas XX setting BOE at XX,XXX and liquids. full per including revenues MB MB QX company, NGLs,

on Kimbell's -- as XXX net acreage. As as gross X.XX wells properties but drilled of had gross June net X.XX and well and XXX XXX XX, its uncompleted permits major XXXX,

we minor to inventory. could data the properties, an This our XX% estimate add does permit DUC include and not additional which

exited all XX States new United a and the acreage, drilling approximately represents actively drilling quarter the rigs rigs our we land In Continental record. on share XX.X%, addition, market in our with of

Unit-based $X.XX $X.XX and per quarter, second $X.X $X.XX BOE, expense expense Kimbell million or million administrative per On cash a the was in $X.X BOE. BOE. general side, the per were is noncash of the G&A million which expenses quarter, in $X.X G&A expense was compensation for or which

income quarter was $XX adjusted consolidated net second quarter million. Second million. $XX.X approximately was Total EBITDA

second consolidated our cash at You the distribution we of release. for quarter. per and EBITDA end adjusted $X.XX common will unit find distribution both Today, available announced cash a of the reconciliation news for a of

XX% $XXX.X QX be used under a its Kimbell available the paid borrowings paydown. has million under credit will revolving credit upcoming down by for XX% borrowings outstanding down to approximately cash payment, pay Since of distribution, facility a allocating the to distribution of of represents and available for portion May This facility. common secured remaining unitholders cash for Kimbell's its payment outstanding excluding distribution XXXX, of secured revolving debt of portion a this cash

$XXX borrowing credit our liquidity. XXXX. Moving amount amended extend June to existing On sheet now to and commitment balance other our million things, and to, and on secured elected increase base to XX, the from among $XXX June we revolver million agreement maturity the the

revolving had and facility. million XX, we $XXX.X our debt of June As approximately secured outstanding under credit

with EBITDA of trailing XX-months to conservative adjusted a consolidated maintain to net continue approach debt X.Xx. We

the million revolving capacity of our we are bank credit approximately very syndicate financial under flexibility. With $XXX.X undrawn in with our financial our position, comfortable strong our expanding support and secured facility,

We long are a horizon enhance very to we opportunities bullish about continued see industry growth shareholder and our our company for and as value.

ready operator, we are that, With for now questions.

Operator

with first Instructions] [Operator question Our Derrick comes Stifel. from of line Whitfield the

Derrick Whitfield

your With the the your I trajectory. XX permit to DUC improving focus see months? net your performance, over X on oil do of on my question, Based to you growth first how production trajectory and strong volumes wanted and next QX inventory

Davis Ravnaas

try we Always Derrick, hard and with to answer be our to question, that conservative guidance.

acreage we trend DUCs positive on continues net the what's of to that have that permits flat, ratio a our to correct direction. in to keep required relative You're it to

model, is We like amongst the aren't weighting oil improve. the that very might views there right don't months increase and be. take X business that control. X that mix further to lack owners, of on development our weaknesses continues But We one weaknesses as of the to developmental of what them. mineral You're many of cadence of to one

we've Bob to conservative how guidance, anybody we would like Matt certainly So take. be we're may Andrew, you're in about correct thinking this. or reiterated but that too

Matthew Daly

as would oil as were and I mean, in and correct. X.XX just completions permits QX the start flat. say prices are to we you prices QX some is higher I so may curve to I well. the Yes. get gas above into and with good, net that, the see at mean contango DUCs gas DUCs accelerated X.X stay in year-end well that's

some see as you So that well. may of

So BOE of with I our we and stand has QX, for which Davis, but day. -- XX,XXX by a QX production of would per agree guidance midpoint

Derrick Whitfield

at looking particularly resilient Haynesville guys quality, lower What company public activity despite gas do some been Any resiliency the prices. your the exposure, ledger, has side you then of rig could combination gas And Great. share? X? of acreage you attribute the to that thoughts

Davis Ravnaas

-- to position see that declines be legacy in We're production and just I But picked wouldn't given core reporting frankly, And question. I disappointing the to just folks. more Great that everybody that -- of lot think point. on fact that Yes. Haynesville resilient it I it is from to hit else frankly, first incredible you use our Haymaker to, XXXX pleased your continue surprised in That would with would that other of will seeing were basin. word positively be a we production up than the I the seems we're kind is probably argue an attribute mean, asset. should back surprise. we we

decline our people, a have too. other lot we think I of position rate a lower on PDP Haynesville to relative

require I folks drilling flush quite production have as doesn't on higher that decline should balance, Well, we outperform, will rates. much. hyper the So with more it newer say,

a continues a amount We directly but in still got that I to decline, privates, our to nice activity. of a yesterday attribute resilience mix. right, down, balance mix have kind on spot asked to a so public healthy and except privates I'm and call, mix the would and between our in publics of as not we kind we're with question far So shift lower up sure say between healthy and PDP a specific of

I all, there, chip corridors mean good years a nice of is most on got and a perform. Anybody that to kind thing. of that? for and just business years very it's continues just very an and operators, else inventory just the to great part, They're exciting it's And want asset that's obviously we've which asset.

Matthew Daly

has in the into, QX, I the in the in count so. Haynesville future, low there, increase the gas from going a which And even pointed relatively the these mainly But economics mean, of Haynesville. mid-Xs as gas large into the slightly hedge in rig down the the are lot count went to contango able you Davis activity by we so strong. in in pretty Xs out, said, remains And are folks I curve, the a rig increase in QX, with rigs mean, had X then operating because prices. -- again, robust as QX,

Derrick Whitfield

closed I And think opportunity dissolve symbiotic the if in. chapter pursuit? relationship? still should longer consider Tiger could a one more we you With that an in to fully E&P QX, there's decision the pursue Acquisition mineral term regard Or to and your on maybe squeeze Corp. do to

Davis Ravnaas

that. operating in which asking or yet. to we interested The the still really which idea your just the work another our stack first with of lack for Kimbell developmental company you alongside but was No, concluded, partnering operating own to that Yes, is under Thank its insight. company great building are form, question. form question, very address realize, to idea Tiger well, in not is has

be where also either joint bid a transparency owns a can with would and and/or be have revenue interest appropriately an override more It where net cadence out actually wonderful partner working a relationship on acquisitions the carved interest. the operator ownership that situation we high have then also just development have mineral interest to working where could an owns but

we of a that merit we love So and to would it's do. the think lot something still has idea

So final coffin the means. I by on any put that the on wouldn't nail

Operator

the Our James. Raymond comes question line next of with Lamar Trafford from

Trafford Lamar

similar I XQ total. Derrick's relatively how fell question. very specifically kind a to quarter-over-quarter quarter-over-quarter saw all ask there? decrease of about XQ rig Obviously, of U.S. kind on at from rigs And all wanted if saw to you to smaller piggyback relatively I to off want to and the the you Permian levels

Matthew Daly

take I'll were quarter-over-quarter. Basin. mean, the X that. is by of Yes. XX Permian went I in rig We out This Matt. the rigs the count had up Permian rigs XX

company. market share up from XX.X% share market The XX.X%, correct. highest ever you're for As to the went the

rigs, public see count, went to gas due X count on not X all Oxy our basins, are a Permian Haynesville Diamondback the has rig those We rigs. XX% of Ford up ExxonMobil operators, surprisingly in the major specifically, quarter-over-quarter. rigs, Eagle But in The drop we're X did of has companies. Overall, has the rig prices. X low

terms have is of it up. During XX% sort activity Permian share companies. now happy in public strong -- as come private rig But operators. that companies show dropped XX% the of to again, leading very, very actually the was very see here. went pandemic, count And and with back modestly the the market running some

just quality the our So the acreage. shows it resilience and of

Trafford Lamar

pops point been to slightly the C-corp of off standpoint. on that. I I'd this has shells conversion, one love talking specifically guys, And late as and topic. exposure The index potential to in color Great. appreciate partnership get from

Davis Ravnaas

Yes.

you to of we C-corp, converted a couple know, a So for purposes as years tax ago.

I for our always we positive would development. happy anything to are we have company unitholders, very we and quickly but that and structure, makes very in consider structure the our and think I decisions a that's make been us sense our that place with very allows easily. believe

And exponentially. helped think last made have that M&A company really acquisitions several just the grown are on success helps the that of I front. explain frankly, years a really We've and over us good the number

but with our of aware structure, happy that So phenomenon. certainly

Operator

Ravnaas hand remarks. like I'd Bob There further for are over the call no closing queue. in back to the questions to

Bob Ravnaas

this We report results. when third we call. look morning, thank for us today's speaking you joining we This and quarter forward you to again all completes with

Operator

conclude teleconference. Ladies and Thank you your gentlemen, this does today's participation. for

disconnect this may and have a at You day. lines time, your wonderful

Kimbell Royalty Partners (KRP) 2 Aug 232023 Q2 Earnings call transcript