KRP - Earnings call 4 2023 | Kimbell Royalty Partners, LP

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Operator

And welcome to the Kimbell Royalty Partners Fourth Quarter Earnings Conference Call. [Operator Instructions] Conference is being recorded.

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

You may begin.

Rick Black

good and operator, you, morning, everyone. Thank the financial and to ended December Kimbell fourth Royalty review to on XXXX. call conference XX, operational XXXX Partners quarter Welcome results the for can call be on This Events page kimbellrp.com. section Presentations the and being also webcast the accessed the audio is through link IR of of and XXXX. recorded call only speaks Information as of on this today, February XX,

reading. as replay any So information may transcript accurate advised listening be any of that time-sensitive of be date please longer the or no

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

making to earnings statements uncertain nature, their are Actual results materially. that which statements. forward-looking as may the control. forward our are call, today's part company's today's will differ We release refer be for of disclosure by on and of outside looking Please

and Securities These the in company's detailed the and are risks with uncertainties Exchange filings Commission. and other factors

nearest today's Management measures at non-GAAP publicly refer including the adjusted Bob? will can Officer. and available earnings of for over Reconciliations Bob to Executive the Ravnaas, to forward-looking also no statements. And be Partners' cash end release. like Kimbell call found measures, distribution. EBITDA the and with update Chief to any GAAP to or assumes revise now Kimbell obligation turn that, I to would Chairman Royalty

Bob Ravnaas

morning. you call morning, and us Rick, appreciate on this good you, Thank joining We the everyone.

Financial Officer; Matt our senior Rhynsburger, management Controller. and President Daly, of our me With and including team, our Operating members Davis several Blayne our Chief today Ravnaas, Officer; Chief are

per largest in leading announce are and flow production, another for terms our to unit active In rig substantially bolstered as pleased which inventory. very to permits our and basin count, XXXX, Permian to the distributable acquisition date, was we cash accretive common DUCs, the completed record acquisition immediately Kimbell. We year of undrilled

the credit elected borrowing capital increased liquidity $XXX In revolving and base addition, million, on our commitments to and structure. we further enhancing conservative our facility

the We quarterly in year with XXXX report down quarter fourth on to during paid and common third advantage reflected number approximately growth pleased due of and ended the that a high Permian to tax also that a strong coming our out wells $X.XX sequential significant distributions unit $XX.X paid quarter interest per in over facility. We are very credit the Haynesville. million we online organic

momentum U.S. rig XX XXXX, to drilling we expect near continue actively in record that through operational as given progress our with this We count the remains rigs highs

to to Turning to as reflect IPO, of BOE day an growth. from production increase now X,XXX have production XX,XXX is BOE our our per grown day, growth now per XXX%. we remarkable on It since

As to our trillion. our as we in in market natural the size acquisition role nearly gas and evidenced U.S. the fragmented $X total to by estimate significant a sector, of and continue activity royalty XXXX, oil be the we consolidator expect highly major

have a the Canada fit actively We acquisitions. large-scale will resources, only entities that of are this acquisition there and handful seek in are believe past, the our in stated profile. that still we the complete and stages multi-basin out the and I've network U.S. that to expertise As in within consolidation of public technical infrastructure, financial early targets

in value the very expand are excited come. unitholder to to and We the opportunities deliver years about for future

I'll Davis to and the now over turn Matt. call

Davis Ravnaas

revenues well with new to fourth reiterating Kimbell like start I'd as that beginning operating a quarter and from with several strong a company. quarter we records $XX.X of results an everyone. quarter, for expressed. financial setting million, third by record to XX.X% the and fourth was morning, and the NGL compared by our financial good the and reviewing This as of the increase Bob gas metrics. I'll as sentiment for XXXX a start our oil, great Bob, Thanks, year of finished in very natural

record for QX we XXXX marked Kimbell. run day quarter, X.X% another production fourth production daily QX BOE record from for milestone on X:X rate significant basis, generated Run that was XX,XXX production. growth at a organic rate which the reflected In per a XXXX

minor XXX Kimbell's major gross permitted December X.XX of As acreage. net or DUCs Not or we X.XX on XX, could XX%. and estimate add XXXX, an gross including properties XXX our properties, had which locations additional net

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

On administrative and the million, which $X.X cash were million expense side, was expense. G&A general expenses fourth $X.X of quarter

million $X.X acquired the approximately of impact the BOE third integration-related and with expenses $X.XX. per production, was associated cash Excluding G&A quarter

Total a was was million quarter Fourth from $XX.X million $XX $X.X million XX% fourth adjusted compared consolidated net as to quarter. which million approximately income net approximately and income attributable was record quarter. common was approximately last $XX.X of EBITDA million, quarter respectively, $XX.X units up at last from to

consolidated a under of distribution, we reconciliation announced of cash will distribution a adjusted outstanding for unitholders news cash portion for distribution payment of XX% be down to distribution $X.XX our the equates used quarter. This a represents common facility. find Kimbell's available to cash for EBITDA at pay the revolving that and common borrowings fourth of XX% available release. Today, of both cash and will secured the remaining per You to credit a unit the end

liquidity. our to Moving now sheet balance and

credit $XXX the with As on December commitments connection $XXX to secured from the X, in million redetermination. aggregate and we fall a reminder, borrowing increased million revolving our base under facility

secured approximately debt facility. million XX, revolving credit we $XXX.X in an outstanding had December under At XXXX, our

sheet with as debt We secured XX. of approximately revolving capacity net credit EBITDA undrawn maintain under XX-months trailing Kimbell conservative December and facility balance to adjusted million a $XXX.X continue consolidated to of had X.Xx. its

flexibility. our We are and expanding financial comfortable the our of financial very position, strong with syndicate our support bank

its about the robust includes confident as very continued We releasing for of the rigs given We per number on our the guidance, well acreage prospects XXXX drilling midpoint operators about at as are day. also XX,XXX and hearing development and are XXXX, their feel horizon daily actively BOE production which the very continued Permian. industry to enhance company a our we growth in from We commentary for activity remain as development value. long especially in our we bullish expected about opportunities several of see shareholder

organization dedicated and I'd to hard-working, stakeholders. growth the like all of incredibly continually for thank driving at Kimbell the here talented for and our enhancing value team

addition, with In success. to financial best institutions and and these the that the partnerships company's business, advisers contribute work in appreciate we greatly the we

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

Operator

from Dingmann Securities. Truist Neal with Our Instructions] comes [Operator question first

Neal Dingmann

about for thinking and year area. just talk activity and You focus you're what all this

Sorry question guys, [indiscernible] a I nice think quarter. I My around... was on mute. is

Davis Ravnaas

be you Neal, Operator? on might mute.

Operator

the while we bring back next Neal in. to We Okay. them can wait and question for go

Our next from Rezvan KeyBanc. question is Tim with

Jonathan Mardini

This is John Tim. Mardini on for

that early just in -- You is now you mentioned why that earlier of your the in talk and opportunities you're the in industry seeing about confident? the you're press release you're consolidation Can stages about expand. what you marketplace excited mentioned earlier to so

Davis Ravnaas

say M&A sector before surprise smaller We're been are to an offices That's the Continues Happy IPO involved year that Sure. driving rolled recently, that was that do Last for would amongst by in volume. us larger entire more to and that. seen are even teams. every the across enormous year year surprised that, within we've family up positive. to our minerals. the consolidation of since minerals. Most we've getting particularly consolidation, deals is into portfolios. a lot increasingly trend being seeing a I

the Nearly groups those contact in We're with regularly exit constantly. future. to plan a new point groups. are in all some meeting them have We of at

so done that's continue in grow to will getting see look minimis, if think And a one. to believe single this trend been continue, market continue to we at overall public like that we captured de of public just We seller still the from will size. think pipeline. It's robust things companies, I digits as being the will the and it's space, mean continue that's but deals low it that overall positive as ourselves, larger institutional you market a continue. why buyers the specifically by tough companies we benefit it

we So think inevitable it's consolidation just continues. that

Jonathan Mardini

No, that's great.

your so opportunity Permian the clearly organic is growth And today.

what you cycle stock operators builds Are the on bit, normal and or of times. any and in proceeding is activity terms rate? this can activity saying You expand but talked seeing a from you about at little just you're still

Davis Ravnaas

question. Good Yes.

we feel than near-term have today the better acreage. ever So catalyst we about on our for development

maintain DUCs net on and permits have of we profile. production So asset compared needed X.X our to X.X flat to

not we being in been grow. That to recently. aware that but ample the suggest volumes to everybody for particularly that have So only happening keep space what's of flat, is here opportunity production gas said, natural them would

nice pivoted last the acquisitions necessarily not over deliberately, that benefited correct You're Basin have from really but and X have just we some Permian the we years. pivoted, in

less few years growth dependent for become a on we're the ago. versus companies our So Haynesville specifically increasingly were where oil-weighted, we our

a I the ground kind now, good a positive more in to a natural space, wish natural extent to gas here. gas of in of I right the think that's price back accommodates gas these theirs drilling given maybe some just would the on that until certain be place and rein operators and keep dynamics our the acreage

But some flat we a production think be as keep the to growing theme, going Permian production. that are general will producers

DUCs relative of acreage the to PDP by better have will grow maintenance evidence than level. the our producers think our average decline I will, of just number we

Permian the have Haynesville the about smaller about we today, is good a the that still feel but Haynesville. So good feel position

there. have of ducts a lot We

overall, of direction good about the So feel company. the

a environment with you side over is in no development. conservative even to what pinpoint volatile more think see always, assets as gas but oil particularly like is be, guidance developmental challenging on to a view growth owner like what exactly in our we're mineral control on a natural recently. today such and in going It's always the the just I

don't conservative feel guide, our the unduly near good for horizon in We assets them. think it So though. a confident it's term very in conservative feel about and

Operator

Whitfield Derrick next comes Stifel. from Our with question

Derrick Whitfield

I Given thoughts the on the ask impacts M&A X across the Permian could to on business? considerable last we've the months. wanted your Haynesville and over have it your witnessed

Davis Ravnaas

reaction approach a that growth. to more That's great disciplined that is to we'll a see Immediate question.

I that for maintain companies I think those their will be ability basis growth on So to consolidated say confident will guess, about if a combined levels. I'd to we production had feel more --

prior our of you'll tend that event see see increases growth quickly some hyperbolic on and years, think happen of sort the material prices. unless, to see pretty that what shale macro gas of we I oil that acreage. course, of is We less

sheets, it markets, But access investment-grade [indiscernible] overall, rather We view all operator. support liquidity ratings, folks question time. have the of we stock, with more capital we'd that developed balance stronger to And as a wonderful things our healthy all by assets in consolidation. with we're absolutely that get their those

consolidation ongoing will ultimately everyone ourselves the on else. that that, and story We operator believe owners continue like to benefit mineral side

Derrick Whitfield

Makes on for sense. I And follow-up, specifically then LongPoint. my more to focus wanted

collection more Now onboarded are you cetera. collection or to that speaking you've I'm seeing ground these by opportunities. and opportunities operate under assets, payment, et game

Davis Ravnaas

asking, misunderstanding the acquisition the just you clarify, seeing Sorry, are question? to more I'm mineral opportunities are on Or small-scale front? we

Derrick Whitfield

got it. No, you've That's correct.

the where payment they were LongPoint? So opportunities mineral onboarded opportunities? more you've in-house? assets revenue collection, then seeing that just collection on operated new And under through now assets situations Are secondarily, just you got you've the based any

Davis Ravnaas

cash and a Yes. to phenomenal ease to supportive organized LongPoint getting just well and the pickup game. of, team we where frankly, necessarily asset. smaller seeing the getting a have incredibly Great question. integrated very with the the Not were been at go. all integrate happy Very M&A it have needs and in us which They to fully able

what We that's continues -- fact coming it, clearing was the continue I that the new ground acquisitions. smaller more made of to space, more is the prices money just more attention price think into to in. be constantly And done coming smaller disappointed kind by speaking be and the acquisitions, more expensive. earlier deals, teams game there to for to I

just pricing a finance seems been opportunities better more that from smaller packages of corporate Candidly, counter perspective, than couple over efficient having standpoint. from seen some totally we've a to anybody ones, counterproductive of the intuitive counterintuitively or have pricing larger larger the which years last

be say happy So believe increase volumes. it's And an wouldn't I asset to the how value. But we to in deal going in increase smaller continue that to that has necessarily production overall, been that continue to with led deal just developed.

number of of virtue properties on permits the over the next by of the DUCs couple Just and years.

Operator

Neal Dingmann from next question comes Our Truist Securities. with

Neal Dingmann

well. It And Nice noise apologize I'm certainly the M&A. to on as seems the I at you opportunity. for will It the like strategically there. continue you'll continue of to believe me first just assets look of wondering know or most office. you My accretive. quarter. is see to prior your just ample tons your sounds question all background there's you also successful all target the on I at heels recent out Permian mostly deals deal

So think things approaching I'm you wondering how this about just year?

Davis Ravnaas

when question. business, ours last to the commodity of the get. Yes. more we to the this precluding individual this harder at or that's of yourself buy but I X restriction It's basin, opposed can some you're think even think as make enough it to us makes just X Again, years X having what totality to difficult XX hard from one X common very county what of a exceptions, to possible I in Excellent not even you life Strength buy It's of counties restrict out we buy. It's basin. what's looking or that with geographic restriction business. minerals. we yourself over on when a it competitive focusing challenging more questions doing be a your on played or money is even

the looking returns acquisitions at for So that, is to our our to first the consistent present past, strategy with opportunities believe best that assets we're job investors. and we generate as And our those risk-adjusted foremost, where agnostic when find themselves. in

Permian in in been years, so that has it happened the of just really the There's of hot. couple a space. last So lot exits been

us. others, from excellent have then with Acquisition X, going for We with our the ago Haymaker Haynesville an X obviously that. But basin benefited and back years

be keep these to to acquire. nature, makes basins possible cyclical as the the sense tend opportunistically for on minds to there as and and our be like in try open us most we to So what

that to years. that's last I that year. We're year in being right thought us. seeing that. to But particularly year start surprises that that slow the We've XXXX over and now not to active will quiet us. of going interesting couple are something trend this year, mean history. frankly, same we up at So seen company's this ended huge necessarily was I say most -- We not time last a be our the packages

change things So can quickly.

you'll gas on folks minerals until I sit of natural lot going see a is think to the the hands obvious. holding are prices that their state what improve to

more perhaps the an oil-weighted it balance had I of looks say guess I'd addressable at if the So year to looks more this point, from that than gas. -- perspective

add So I'll that context. just

Neal Dingmann

see holding you all look I DUCs that. to question wondering at rig Understood. describe activity net all you is the remainder the quite count how just the specifically. you nearly really besides be would year X overall all second way on attractive, And like well, is the your of Obviously, for what up but you seems about? operators expectations sort and locations talked it, the permitted of can

Davis Ravnaas

earlier. of I repeat bit said excellent. not what Yes, And kind to a of little

on the the Permian specifically. at maintain think I what they balance, is from side on oil to least hearing volumes, want that we're production operators in

a bit I gas bag. the natural side, little a think mixed of seeing we're on

see and Some price environment. less an a bit again, on on gas some front to think the couple then natural our all CapEx, very of side. But Permian. well on Ford, XX% see a in operators the say, diversified now the incredibly sense we're growth so I that Haynesville, But about the last feel of may forth. good base running with after in the oil-weighted which of oil when less of operators XX% roughly, confident maintenance asset the are weighted, obviously, XX% production gas headlines we replace the so little Williston ability oil let's in our Mid-Con, and X% natural this over weighted or in cutting acreage production production pretty makes the in in just we we cutting about the guidance, days Eagle rigs the right X% of And of

to growth I the a that what are just their to on slight quite to we they're barrels. our to lower amounts we're of production depending feel So going going maybe And I that with level, ability replace operators last large look development but overall maintenance we that again, about happened see programs. the will volumes, X assets years relative because disproportionate perhaps think number would good in with what -- a have of is overall. DUCs guarantee But that we what's declined on think that, basis our to and hearing expect production is production portfolio feel asset acquired relative to that drilling maintain XX very confident we've on can't on you'll we growth going near-term

Operator

with Our Diamond next Citi. Paul question comes from

Paul Diamond

get I quickly ideal are -- opportunities on -- you're that those to and further scale for more makes want kind of of of talk the in looking of you conversation Or an kind kind future? market for the of a like the as guys it need really seeing at? sits sense it maintaining just you to? go to there before the now, is certain seeing family Is offices to to those right deals things touch kind level the guys where growth. Are that do

Davis Ravnaas

assets assets addressed a not for balance not I I important and flow on flow something right? to that Yes. for buy the institutional a accretive other to that that upside obviously, buyers. say obviously And year characteristic of today, immediately has at flow size out dilutive until waiting then you a the specific buy the today, flow sign cash larger cash the and appealing most ability the something asset haven't be or of the that as But We're Xx making to portfolio I'd way. cash wouldn't accretion per XXx cash of say it's are replace more our be necessarily flow question. going that's the could question the is unit. inventory. Great dilutive of scale there asset gotten it's reason one. runs to -- in at it ourselves making it's where declining in X enough just to if a without cash to the that's then

make make say know is do folks the balance working assets them that continue asset is inventory, day, to to money. so the about out us right going together that pay and to we and hard from them of And cash they they a the -- to We think reason a us putting or solid buy about the with the portfolios, gone that's returns what we try are that to is And we with what think going need you're win-win drilling [indiscernible] want to them every the that is of And lot that buy somebody they when try outcomes. we're justify they and mineral there to we do repeat us -- believe quality want So exit together, the we're because we that together money. do. as to process have want. focus price be that say putting of deals flow putting that before. delivering diligence to know that And the because can we like they're to folks we going through and we've title on from sellers that in

that anything it's really was candidly, that to been just work. as amount deals. surprised they if are we've is that It of as to from just money or the wouldn't that's seems public a not relevant from a think today bit those And for see priced like companies, $XX alluding to attracts the incredible a size say is us try not put then that and looks put $XX that expectation of tough asset some for us, aspect, relevant. is deals million attention that for just mathematical people what also of us. and million. out million sense can range, been the to just an $XX that perspective find X make make to a we're like where under maybe ourselves of but other it's bring just size But to. And going $XXX to under a deal, them pricing I us to just some it you'll million So I size together just just and outbid on trying little sense I buyers

to of smaller have So by are. the opportunities deals how be surprised continue the competitive continue to be been larger by pleased some how and priced attractively

So...

Paul Diamond

sense. Good. Makes perfect

follow-up. about about line expectation maybe... the DUCs is the existing that just permits Just on [indiscernible] DUCs guidance I similar more Should If existing you turned markets it and normal, of production an increased some of that expectation progressing the versus as XX% more just through? growth. a permits might quick year. like as of seeing I kind in think that in XX% math volatility Or have a XX%, in there the level And -- this going of be an and

Davis Ravnaas

that. I way you think I framed it's like that bit And a little both. of the

speaking, XXX% XX historically let's the expect to over it, to closer it's DUCs call So be XX net XX of close probably to but months, we our months. next, to completed

don't on historical have permits, me. averages but front you On of disagree what me in have reasonable there. I framed to I the permit don't been that it with the exactly just percentage side, sounds that

maybe this that overpromising there starts guidance. don't to gas be sense over like that turn be our rather to something we oil but that want DUCs shareholders. I environment what if needed to can't want driving and We net us think we that to flat we'd permits that environment, at, to you're it price or ratio on you're natural market guidance our conservative, unduly the this and on guarantee I little we maintenance production to at Are looks say conservative a what think and given conservative. just in production. from bit this this level put perhaps a is being that want we makes of to out acreage look year, on is seeing unduly maintain our volatility don't

us And XX of tow for what, unduly guidance that's you is of so being mind, natural also gas -- line to see was, what not $X.XX a realistic that be keeping ago. couple trying and obviously, in I days trying but that months giving think conservative to the the next

guidance, it's I going something control So obviously, their be providing right mineral that's environment, be assets. think tough that's to for that but a specifically developmental tough now over have to any owner, doesn't

Operator

Our next Grant from question James. comes Raymond with Adkins

Grant Adkins

you So this in Do you that your 'XX? to and affects the is guess on think those the kind but you production does now, macro going do up drilled all really we've don't mentioned be activity kind Appalachia But reductions of necessarily to of gas of see that moving kind you how given kind it side. as into Haynesville. want or assets of operators forward kind right seen from both of I be that some the

Davis Ravnaas

we I'm gas have amount gas not currently. XXXX, DUCs basins that too in worried production because of in of the about just asset or

permits rigs think see that That's to really will of XX% less some Haynesville, acreage. I you'll running only which absent increased able on is drilling our flat, even focused is be now So keep or let's say, are more what alone today. the those that with more the on production our

changed. which relevant of bit to a me our it just than business, is So ago, just years amazes kind a little less portfolio of enjoy has couple for look even how at you the was

be XX our there production here overall on are maintenance operators so going focused what of what production, to the that. that is portion from we're significant XX hearing levels, But are next over less see to months. we obviously, going less Appalachia, to

well So I your don't feel is -- taken. point

activity previous guidance comments that's of our and is we permits and DUCs think good happen of guidance recognition terms needs which our I've activity reflect conservative the production in our that that so. feel realistic natural that fact made the a some predict on maintenance that to difficult of echo that very are volatile into kind view to to low to levels, very does and a prices and about baked I gas and questions, relative at very of therefore, flat. keep But

Grant Adkins

follow-up, is Awesome. to this And shift a a bit. gears little then going

distinct announcement kind where is all expect like tax what year, coming be the that advantage you last there. just was be your shield of a like nontaxable. an like you XX% Can you give The on what going any distribution. to So with your have average pretty -- on to structure for color tax the was

Davis Ravnaas

anything thoughts have that on we Blayne on any Rhynsburger, share that we Controller. Or can do Blayne, now? that?

R. Rhynsburger

Yes.

So rest today just we what used want pricing the then the whatever can doing oil I to just that do take going given it, would to it's you of give we volatility forward, natural tax to pricing. ride would and the I if guidance and prices benchmark say of stopped and going you year. of kind for -- is gas

oil and gas of whatever be. whatever the strip is to So I of going you use natural shield would dictate take whatever then and kind movement that tax be to what is we what's going have for QX and price our of -- to maybe that is benchmark the as a going think

Operator

TD Our Cowen. next question comes from Aaron with Bilkoski

Aaron Bilkoski

can would is thing lot that know activity your quite I sort that I the And around about one focus a there's on that picked But front. a Eagle itself question call M&A. I Ford up it my is on in like of QX. your business replenish I been noticed say this of lot that organically?

X quarter-over-quarter. or it you I driving was have on that? rigs up any what's Do think X color

Davis Ravnaas

an That question, is Aaron. excellent

Matthew Daly

at the is rest There's of the Aaron, operators operator the I public X are Eagle too. the EOG, this that, is Ford interesting. The operators. Ford in Daly. only in noticed Eagle folks Matt all private

rigs Permian but X off rigs Ford. quarter-over-quarter, drop had So the we the we added Eagle had X -- to

that Eagle it's mainly sort see private was there. that to nice Ford So pop but drilling the activity, operators of in

Aaron Bilkoski

Perfect business. the the benefit of I diversified guess royalty that's

Matthew Daly

Exactly.

Operator

to would for over This I to session. management closing our like back the concludes floor remarks. question-and-answer now turn

Bob Ravnaas

this joining you we morning. Thank quarter. speaking call. with And us all look to for forward you next again completes today's This

Operator

gentlemen, does today's conclude your participation. teleconference. and Ladies you for thank This

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

Kimbell Royalty Partners (KRP) 21 Feb 242023 Q4 Earnings call transcript