Greetings, and welcome to the Kimbell Royalty Partners Third Quarter Earnings Conference Call. This conference is being recorded. It is now my pleasure to introduce your host, Rick Black, with Investor Relations. Thank you, Rick. You may begin.

Thank you, operator, and good morning, everyone. Welcome to the Kimbell Royalty Partners conference call to review financial and operational results for the third quarter, which ended September 30, 2025. This call is also being webcast and can be accessed through the audio link on the Events and Presentations page of the IR section of kimbellrp.com. Information recorded on this call speaks only as of today, November 6, 2025. So please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance, are considered forward-looking statements made pursuant to the safe harbor provisions for the Private Securities Litigation Reform Act of 1995. We will be making forward-looking statements as part of today's call, which by their nature are uncertain and outside the company's control. Actual results may differ materially. Please refer to today's earnings press release for our disclosure on forward-looking statements. These factors, as well as other risks and uncertainties, are described in detail in the company's filings with the Securities and Exchange Commission. Management will also refer to non-GAAP measures, including adjusted EBITDA and cash available for distribution. Reconciliations to nearest GAAP measures can be found at the end of today's earnings release. Kimbell assumes no obligation to publicly update or revise any of these forward-looking statements. I would now like to turn the call over to Bob Ravnaas, Kimbell Royalty Partners' Chairman and Chief Executive Officer. Bob?

Thank you, Rick, and good morning, everyone. We appreciate you joining us this morning. With me today are several members of our senior management team, including Davis Ravnaas, our President and Chief Financial Officer; Matt Daly, our Chief Operating Officer; and Blayne Rhynsburger, our Controller. To start off, we are pleased to report solid third quarter results with production increasing organically by approximately 1% over Q2 and exceeding the midpoint of our 2025 guidance. This performance once again demonstrates the resilience of our high-quality, diversified and low decline production base. Despite the current general slowdown among U.S. oil and natural gas operators, for the first 9 months of 2025, our production averaged 25,574 BOE per day, which included a full first quarter of production from the Boren acquisition, also exceeding the midpoint of guidance. This operational success against the backdrop of headwinds within the broader energy sector is the result of the seeds that we planted over the last several years with our targeted M&A strategy across the leading basins in the U.S. Our active rig count remains strong with 86 rigs drilling across our acreage, representing a market share of U.S. land rigs at 16%. In addition, our line-of-site wells continue to be above the number of wells needed to maintain flat production, giving us confidence in our production as we wrap up 2025. Finally, cash G&A per BOE was below the midpoint of guidance, reflecting operational discipline and positive operating leverage. Today, we are also pleased to declare the Q3 2025 distribution of $0.35 per common unit, as we continue to focus on returning value to unitholders. As we approach the end of 2025, we are very grateful to our employees, Board of Directors and advisers for helping us achieve another successful year at Kimbell. We remain excited about our role as a leading consolidator in the oil and natural gas royalty sector and the prospects for Kimbell to generate long-term unitholder value for years to come. And now I'll turn the call over to Davis.

Thanks, Bob, and good morning, everyone. I'll now start by reviewing our financial results for the third quarter. Oil, natural gas and NGL revenues totaled $76.8 million during the third quarter, and run rate production was 25,530 BOE per day. On the expense side, third quarter general and administrative expenses were $10.1 million, $5.9 million of which was cash G&A expense or $2.51 per BOE. Total third quarter consolidated adjusted EBITDA was $62.3 million. You will find a reconciliation of both consolidated adjusted EBITDA and cash available for distribution at the end of our news release. This morning, we announced a cash distribution of $0.35 per common unit for the third quarter. We estimate that approximately 100% of this distribution is expected to be considered a return of capital and not subject to dividend taxes, further enhancing the after-tax return to our common unitholders. This represents a cash distribution payment to common unitholders that equates to 75% of cash available for distribution, and the remaining 25% will be used to pay down a portion of the outstanding borrowings under Kimbell's secured revolving credit facility. Moving now to our balance sheet and liquidity. At September 30, 2025, we had approximately $448.5 million in debt outstanding under our secured revolving credit facility, which represented a net debt to trailing 12 months consolidated adjusted EBITDA of approximately 1.6x. We also had approximately $176.5 million in undrawn capacity under the secured revolving credit facility as of September 30, 2025. We continue to maintain a conservative balance sheet and remain very comfortable with our strong financial position, the support of our expanding bank syndicate and our financial flexibility. Today, we are also reaffirming our financial and operational guidance ranges for 2025. As a reminder, our full 2025 guidance outlook was included in the fourth quarter 2024 earnings release. Even in the face of a general slowdown among U.S. oil and natural gas operators, we remain confident about the prospects for continued development as we wrap up 2025, given the number of rigs actively drilling on our acreage, especially in the Permian as well as our line-of-site wells exceeding our maintenance well count. We continue to believe that the overall demand for U.S. energy will continue to grow over the long term, and we are very well positioned to benefit from this trend for years to come, given our diversified portfolio of high-quality royalty assets across the leading U.S. basins. With that, operator, we are now ready for questions.

Our first question comes from Tim Rezvan with KeyBanc Capital Markets.

First, I wanted to ask a little bit on the macro given your visibility across a number of basins. We did see the line-of-site wells come down a bit. It looks like 7.07 is the lowest since the middle of 2023, yet you've been able to hold production flat throughout the year. So can you talk about kind of what you're seeing across your footprint? There was a large Permian operator this morning talking about seeing a slowdown. What gives you confidence that you can kind of stay flat or grow a little bit despite the line-of-site reduction and what others are saying in the industry?

Sure. Sure. Yes. Thanks, Tim. Well, I think first, what I'd say is we're very proud of this quarter. I think we delivered exactly what we've consistently told investors, which is to expect steady production from our portfolio. So we'll see certain areas in certain basins that are up quarter-over-quarter, certain areas in basins that are down quarter-over-quarter. We're very encouraged by our rig activity. It's been relatively flat over the course of the year. Our market share is relatively flat over the course of the year of the entire U.S. rig fleet. I would say that the DUC inventory goes up and down quarter-over-quarter. We had a nice drawdown this quarter, and we'll probably expect to see the benefits of those DUCs coming online next quarter. So I wouldn't draw any major conclusions on a Permian slowdown. If anything, we're seeing most of our operators indicating that they want to keep production relatively flat. So I think that's encouraging. We're paying a 10% dividend right now, waiting for oil and gas prices on the environment, the macro environment to ultimately improve. All of that is return of capital this quarter. So we think we're delivering a very consistent, steady yield that has massive tax advantages. And again, we continue to see good rig activity across the acreage, and the DUC and permit inventory should go up and down over time. I'm not seeing any major trends here that things are slowing down in a material way.

Okay. Okay. That's helpful. And then if I could dig in a little more. People think that you've expanded in the Permian quite a bit, but you have a lot of Mid-Con and Haynesville exposure. You see an acceleration there. Can you talk in those areas, what you're seeing specifically?

Yes. Thank you for bringing that up. This really underscores the advantages of a diversified portfolio. I'm somewhat surprised by how active the Mid-Con has been from quarter to quarter, clearly benefiting from a higher gas cut in those regions. In this macro environment, we have relatively low oil prices and gas prices now exceeding $4, which is encouraging. We would likely anticipate a larger contribution to our production growth from the Mid-Con, Haynesville, and other areas within our portfolio, assuming all else remains constant. This approach is intentional. The goal is to maintain a balanced portfolio that enables us to achieve steady, consistent results, regardless of fluctuations in oil and gas prices.

Okay. Okay. That's great context. And if I could sneak one last one in, really more of a modeling question. The marketing and other deductions expense item, it was abnormally low last quarter. It seems to have been abnormally high this quarter. Can you talk about what's happened there? Is that just sort of a timing issue with something? And should we continue to expect that at that roughly $1.80 per BOE level going forward?

Yes, great question. Nothing gets past you, Tim. I love that. I would say for modeling purposes, somewhere in between those levels makes sense. We saw tremendous production growth in the Mid-Con, which has higher marketing costs. And so I think that kind of biased that line item a little bit higher this quarter. We would expect in a more normalized environment something closer to our historical average, if that makes sense.

Our next question comes from the line of Paul Diamond with Citi.

Just want to touch quickly, you guys have that 6.5 net DUC and permits or net DUC and net permits kind of run rate to hold production steady. And with the efficiency you've seen across the space as part of a larger macro, is that being pressured down at all? Or is it pretty stable at that 6.50?

Great question. I believe we update that once a year based on our portfolio observations. As our portfolio matures, it's evident that as higher decline wells decrease in production, their decline rate also lessens. Consequently, the number of wells needed to maintain production should generally reduce over time. We'll provide that guidance at the right moment, likely along with full year guidance for next year. Matt, do you want to add anything about how we've approached this historically? Feel free to go ahead.

No, I agree with that. I mean, it modestly went up with the Boren acquisition from 5.8 wells to 6.5. But yes, you're right, Davis. We do that once a year, and it will likely slightly go down a little bit.

Yes, Paul, I'm glad you mentioned that because we are currently at a maintenance level of 6.5, which is now 9 to 10 months overdue for an update. It's a significant task for us to complete that update. Therefore, we would anticipate that the maintenance level will decrease, which boosts our confidence regarding the maintenance level difference in relation to the DUC and permit inventory needed to maintain or increase production rates. Overall, I feel optimistic about our position and the upcoming opportunities for growth in maintenance production, especially in this current environment.

Got it. Makes perfect sense. And just circling back on more of a wider M&A landscape. Has the removal of Sitio from that landscape kind of shifted the opportunity set? Or is it kind of too early to tell?

Yes, there have always been a limited number of publicly traded mineral companies. The larger competitive landscape mainly involves private companies. We have been selective and have looked at and made bids on over 200 assets in the past year or so. However, we are pleased to have secured only one asset, Boren, which has been excellent for us. The exit of one or two competitors can be beneficial for us, as it reduces competition. Nevertheless, each company operates differently, and our strategies vary, which means we don't often compete directly with public mineral companies. The main competition comes from private companies that sometimes take a more aggressive approach regarding pricing and development timelines than we do with our acquisitions. We approach these transactions with great care, setting a very high standard for mergers and acquisitions. Typically, we complete between one and three deals per year, as we strive to remain disciplined in this regard.

Our next question comes from the line of Noah Hungness with Bank of America.

Yes, for my first question, I wanted to revisit production and its outlook. I understand it's too early to provide a full-year forecast for 2026. However, based on our estimates, it typically takes 6 to 9 months for any changes in rig activity to impact production levels. This timing suggests that 2026 could be at risk. How do you anticipate production in the first half of 2026 will compare to your guidance for 2025, if you can provide insights that far ahead?

Yes, I would describe it as flat to increasing. There are no signs of a decline in production on our properties. We've received many positive indicators regarding Q4 production so far, which is encouraging. It's still early, and we’ll see how it develops, but I feel quite optimistic about the activity on our acreage. Additionally, we are consistently receiving checks for properties we weren't even aware we owned. We hold interests in hundreds of thousands of acres and wells, which leads to ongoing positive surprises from operators who are drilling in different areas and expanding plays. These benefits are hard for us to quantify. Thus, our metrics are likely overly conservative. In this environment, achieving a 1% quarter-over-quarter organic production growth, without any acquisitions, is quite remarkable. This aligns with our goal of being a reliable company that offers a strong tax-advantaged yield, regardless of fluctuations in oil and gas prices.

Yes. I appreciate that color. For my next question, you guys have continued to build cash on the balance sheet. And I guess I was just wondering, why you build the cash on the balance sheet versus just paying down the revolver?

Yes, pay down the revolver immediately after we pay out the distribution. It's just a timing thing.

Our next question comes from the line of Derrick Whitfield with Texas Pacific Land Corporation.

Yes, I didn't realize you were with Texas Pacific Land Corporation. Did it come across as Texas Pacific? That should have been Texas Capital. That was a miss on the operator, I believe. One of your peers recently announced a multiyear outlook on growth. So while not holding you guys accountable to a number, could you speak to the underlying growth potential of your asset base out of the Haynesville and Mid-Con if we were to see this near 30 Bcf per day inflection of gas demand play out over the next 5 to 6 years?

I appreciate your question and am glad to discuss this analysis. We respect our peers in the industry and commend their business. We take a conservative approach and prefer not to provide multiyear projections for oil and gas production from our properties. The expectations for natural gas prices around $4 or $5 are quite ambitious. If those conditions occur, we would see a significant rise in production across all the gas basins we are involved in. It's important to note that half of our production is natural gas, so we anticipate substantial growth in gas production if the optimistic scenario unfolds, considering favorable macro factors such as electricity demand and the role of natural gas. However, I am cautious about providing projections extending five years or more that would imply dramatic growth. When looking at our position in the Haynesville, the number of counties we have interests in and the upside potential are impressive. Thus, we foresee significant growth in natural gas on our assets in such an environment. Nonetheless, since we do not control operations on our properties or natural gas prices, we prefer to provide guidance on an annual basis, which we believe is a prudent approach.

Makes sense. I mean, it would seem that it would be outsized relative to the U.S. increase in aggregate just because you're getting it from the key basins in which you would see the growth. Is that a fair characterization?

Absolutely. Absolutely. Yes. We fully support that. I totally agree with you.

All right. Terrific. And then for my follow-up, I wanted to go a different direction on M&A. What are your general thoughts on pursuing organic mineral acquisition opportunities similar to the Western Haynesville and a lot of the derivative plays that are coming out of that?

We have a high standard for mergers and acquisitions. Historically, we haven't pursued small acquisitions because they require significant resources and don’t substantially impact our overall production base. Instead, we focus on building relationships with individuals who are assembling portfolios to find the right moment to buy when they are ready to sell. We continuously engage with teams that are developing production in the Western Haynesville. We'll likely wait until those portfolios are ready to contribute positively to our cash flow per share and net asset value. We prefer to see the play developed to a point where it is less risky before we begin to make transactions.

And this now concludes our question-and-answer session. I'd like to turn the floor back over to management for closing comments.

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