8-K
Kimbell Royalty Partners, LP (KRP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 6, 2021
Kimbell Royalty Partners, LP
(Exact name of registrant as specified in its charter)
| Delaware | 1-38005 | 47-5505475 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission<br><br> <br>File Number) | (I.R.S. Employer<br><br> <br>Identification No.) |
| 777 Taylor Street, Suite 810<br><br> <br>Fort Worth, Texas | 76102 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (817) 945-9700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to 12(b) of the Act:
| Title of each class: | Trading symbol(s): | Name of each exchange on which registered: |
|---|---|---|
| Common Units Representing Limited Partnership Interests | KRP | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On May 6, 2021, Kimbell Royalty Partners, LP (the “Partnership”) issued a news release announcing its first quarter 2021 financial and operating results. A copy of the news release is attached hereto, furnished as Exhibit 99.1 and incorporated in this Item 2.02 by reference.
| Item 7.01. | Regulation FD Disclosure. |
|---|
Also on May 6, 2021, the Partnership posted an updated investor presentation on its website, as well as a presentation discussing the results of a detailed review of the Partnership’s mineral and royalty interests portfolio. The presentations, titled “Summer 2021 Investor Presentation” and “Portfolio Transparency and Defining Upside Potential,” respectively, may be found at http://www.kimbellrp.com under the “Events and Presentations” section under the “Investor Relations” tab on the Partnership’s website. Investors should note that the Partnership announces financial information in filings with the Securities and Exchange Commission, press releases and public conference calls as well as on its website. The Partnership may use the “Investor Relations” and other sections of its website to communicate with investors and it is possible that the financial and other information posted there could be deemed to be material information.
The information contained in Item 2.02, Item 7.01 and the accompanying Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Number | Description |
|---|---|
| 99.1 | News release issued by Kimbell Royalty Partners, LP dated May 6, 2021. |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KIMBELL ROYALTY PARTNERS, LP | |
|---|---|
| By: | Kimbell Royalty GP, LLC, |
| its general partner | |
| By: | /s/ Matthew S. Daly |
| --- | --- |
| Matthew S. Daly | |
| Chief Operating Officer |
Date: May 6, 2021
Exhibit 99.1
NEWSRELEASE
KimbellRoyalty Partners Announces First Quarter 2021 Results
Releases Detailed Portfolio Review that Includes 10,160 Gross and 68.1 Net (100% NRI)
Upside Locations^1^ and an Estimated 15 Years of Drilling Inventory^2^
Superior Five-Year Average PDP Decline Rate of 12% Requires Only an Estimated 4.5 Net
Wells Annually to Keep Production Flat
Active Rig Count up 26% to 49 Led by the Permian and Haynesville
FORT WORTH, Texas, May 6, 2021 – Kimbell Royalty Partners, LP (NYSE: KRP) (“Kimbell” or the “Company”), a leading owner of oil and natural gas mineral and royalty interests in more than 97,000 gross wells across 28 states, today announced financial and operating results for the quarter ended March 31, 2021.
First Quarter 2021 Highlights
| · | Q1 2021 daily production of 13,721 barrels of<br>oil equivalent (“Boe”) per day (6:1) |
|---|---|
| · | Q1 2021 production was composed of approximately<br>61% from natural gas and approximately 39% from liquids (26% from oil and 13% from natural gas liquids (“NGL”)) (6:1) |
| --- | --- |
| · | Q1 2021 oil, natural gas and NGL revenues of<br>$36.4 million, an increase of 40% from Q4 2020, reflecting improved realized commodity prices |
| --- | --- |
| · | Q1 2021 net income of approximately $537,000<br>and net loss attributable to common units of approximately $704,000; compared to a Q4 2020 net loss of $93.8 million and net loss attributable<br>to common units of $62.2 million |
| --- | --- |
| • | Q1 2021 consolidated Adjusted EBITDA of $26.0 million, an increase<br>of 46% from Q4 2020 |
| --- | --- |
| • | Announced the results of a detailed portfolio review of Kimbell’s<br>13 million gross acres: |
| --- | --- |
| • | Total 10,160 gross and 68.1 net, 100% net revenue interest or<br>NRI, of undrilled locations (includes only major properties and excludes minor properties, which Kimbell estimates could add up to an<br>additional 20% to Kimbell’s net inventory in the aggregate)1 ; |
| --- | --- |
| • | Represents an estimated 15 years of drilling inventory2 |
| --- | --- |
| · | As of March 31, 2021, Kimbell’s major properties<br>had 761 gross (2.20 net) drilled but uncompleted wells (“DUCs”) and 669 gross (2.54 net) permitted locations on its acreage |
| --- | --- |
^1^ These figures include Kimbell’s major properties and do not include locations from Kimbell’s minor properties, which generally include properties with less than a 0.1% net revenue interest and are time consuming to quantify, but in the estimation of Kimbell’s management could add up to an additional 20% to Kimbell’s net inventory in the aggregate.
^2^ Based on the pace of major well completions in 2019, which management believes is a more normalized rate for this calculation compared to 2020, which was impacted by the slowdown resulting from the COVID-19 pandemic.
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| · | As<br>of March 31, 2021, Kimbell had 49 rigs actively drilling on its acreage, an increase of 26% from Q4 2020, which represented 11.8%^3^market share of all rigs drilling in the continental United States as of such time |
|---|---|
| • | Announced a Q1 2021 cash distribution of $0.27 per common unit,<br>an increase of 42% from Q4 2020, reflecting a payout ratio of 75% of cash available for distribution; implies a 9.4% annualized yield<br>based on the May 5, 2021 closing price of $11.51 per common unit; Kimbell intends to utilize the remaining 25% of its cash available<br>for distribution to repay a portion of the outstanding borrowings under Kimbell’s revolving credit facility |
| --- | --- |
| · | Kimbell affirms its financial and operational<br>guidance ranges for 2021 previously disclosed in its Q4 2020 earnings release |
| --- | --- |
Robert Ravnaas, Chairman and Chief Executive Officer of Kimbell’s general partner, commented, “Improved pricing in Q1 21 as compared to Q4 20 was the primary theme of the quarter, with realized oil prices up 37%, realized natural gas prices up 62% and realized NGL prices up 63%. Operators generally appear to be maintaining discipline with their capital expenditure programs with a greater focus on free cash flow generation and distributions to their shareholders.
“During the quarter, production curtailments due to the February 2021 freeze across a large part of the U.S. resulted in approximately 1.2 days of lost production, or 188 Boe/d. With these curtailments behind us and increased activity on our acreage as evidenced by the 26% increase in the rig count on our acreage as compared to year-end 2020, we are optimistic that Kimbell will experience improved production levels on its acreage as we progress through 2021.”
Ravnaas continued, “I am also very pleased to announce the results of our deep dive review into our extensive portfolio and report that as of March 31, 2021, Kimbell had 10,160 gross and 68.1 net (100% NRI) total upside locations. This represents an estimated 15 years of future drilling inventory based on the pace of well completions during 2019. We are using 2019 activity levels for this estimate because we believe 2019 exhibited a more normalized rate compared to 2020, which was impacted by the slowdown resulting from the COVID-19 pandemic. Approximately 80% of the total estimated undrilled net inventory is located in the Permian, Eagle Ford and Haynesville, which have some of the best economic returns and lowest break-even costs in the U.S. In addition, we estimate that Kimbell’s superior five-year average PDP decline rate of only 12% requires only 4.5 net wells each year to keep production flat. I am proud of the skilled and dedicated effort, and the 19 months of hard work, spent by our engineering, land and geological teams to carefully analyze our 13 million gross acres across the U.S. This analysis was reviewed by a leading third party independent international engineering firm, Ryder Scott. These locations also only include Kimbell’s major properties and do not include Kimbell’s minor properties, which generally have less than a 0.1% net revenue interest and are time consuming to quantify, but in our estimation could add up to an additional 20% to Kimbell’s net inventory in the aggregate. We are thrilled with these results and have provided a separate stand-alone presentation on our website that provides further details and transparency (https://kimbellrp.investorroom.com/events-and-presentations).
^3^ Based on Kimbell rig count of 49 and Baker Hughes U.S. land rig count of 416 as of April 1, 2021.
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“We are very optimistic about the future of our industry given rapidly improving fundamentals across the U.S. energy sector. We are also excited about the opportunities to further expand our acreage footprint and deliver compelling value to our unitholders for years to come.”
First Quarter 2021 Distribution and Debt Repayment
On April 23, 2021, the Board of Directors of Kimbell Royalty GP, LLC, Kimbell’s general partner (the “Board of Directors”), approved a cash distribution payment to common unitholders of 75% of cash available for distribution for the first quarter of 2021, or $0.27 per common unit. The distribution will be payable on May 10, 2021 to common unitholders of record at the close of business on May 3, 2021. Kimbell plans to utilize the remaining 25% of cash available for distribution for the first quarter of 2021 to pay down a portion of the outstanding borrowings under its secured revolving credit facility. Since May 2020 (excluding the expected upcoming pay down from the remaining 25% of Q1 2021 projected cash available for distribution), Kimbell has paid down approximately $25.0 million of outstanding borrowings under its secured revolving credit facility by allocating a portion of its cash available for distribution for debt pay down.
Kimbell expects that substantially all of its first quarter 2021 distribution will not constitute taxable dividend income and instead will generally result in a non-taxable reduction to the tax basis of unitholders’ common units. The reduced tax basis will increase unitholders’ capital gain (or decrease unitholders’ capital loss) when unitholders sell their common units. Furthermore, Kimbell expects that substantially all distributions paid to common unitholders from 2021 through 2023 will not be taxable dividend income and less than 25% of distributions paid to common unitholders for the subsequent two years (2024 to 2025) will be taxable dividend income.
Financial Highlights
Kimbell’s first quarter 2021 average realized price per Bbl of oil was $54.52, per Mcf of natural gas was $3.31, per Bbl of NGLs was $24.45 and per Boe combined was $29.45.
During the first quarter of 2021, the Company’s total revenues were $22.4 million, net income was approximately $537,000 and net loss attributable to common units was approximately $704,000, or $0.02 per common unit.
Total first quarter 2021 consolidated Adjusted EBITDA was $26.0 million (consolidated Adjusted EBITDA is a non-GAAP financial measure. Please see a reconciliation to the nearestGAAP financial measures at the end of this news release).
In the first quarter of 2021, G&A expense was $6.8 million, $4.1 million of which was Cash G&A expense, or $3.32 per Boe (Cash G&A and CashG&A per Boe are non-GAAP financial measures. Please see definition under Non-GAAP Financial Measures at end of this news release). Unit-based compensation in the first quarter of 2021, which is a non-cash G&A expense, was $2.7 million or $2.18 per Boe.
In spite of further stabilization in the oil and natural gas markets and improved differentials and commodity prices, Kimbell believes that the ongoing COVID-19 outbreak and potential supply/demand imbalances in the oil and natural gas markets could have an adverse effect on Kimbell’s business, production, cash flows, financial condition and results of operations during 2021.
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As of March 31, 2021, Kimbell had approximately $168.5 million in debt outstanding under its secured revolving credit facility, had net debt to first quarter 2021 trailing twelve month consolidated Adjusted EBITDA of approximately 2.2x and was in compliance with all financial covenants under its secured revolving credit facility. Kimbell had approximately $96.5 million in undrawn capacity under its secured revolving credit facility as of March 31, 2021.
As of March 31, 2021, Kimbell had outstanding 39,769,896 common units and 20,779,781 Class B units. As of May 6, 2021, Kimbell had outstanding 39,748,270 common units and 20,779,781 Class B units.
Production
First quarter 2021 average daily production was 13,721 Boe per day (6:1), composed of approximately 61% from natural gas (6:1) and approximately 39% from liquids (26% from oil and 13% from NGLs). Due to curtailments related to the freeze in February 2021, Kimbell lost approximately 1.2 days of production, or 188 Boe per day (6:1) during Q1 2021.
Operational Update
As of March 31, 2021, Kimbell’s major properties had 761 gross (2.20 net) DUCs and 669 gross (2.54 net) permitted locations on its acreage. In addition, as of March 31, 2021, Kimbell had 49 rigs actively drilling on its acreage, which represents an approximate 11.8% market share of all land rigs drilling in the continental United States as of such time.
| Basin | Gross DUCs as of March 31, 2021^(1)^ | Gross Permits as of March 31, 2021^(1)^ | Net DUCs as of March 31, 2021^(1)^ | Net Permits as of March 31, 2021^(1)^ | ||||
|---|---|---|---|---|---|---|---|---|
| Permian | 308 | 258 | 0.68 | 0.74 | ||||
| Eagle Ford | 61 | 73 | 0.45 | 0.56 | ||||
| Haynesville | 65 | 31 | 0.35 | 0.04 | ||||
| Mid-Continent | 102 | 65 | 0.34 | 0.08 | ||||
| Bakken | 154 | 174 | 0.25 | 0.71 | ||||
| Appalachia | 19 | 36 | 0.06 | 0.12 | ||||
| Rockies | 52 | 32 | 0.07 | 0.29 | ||||
| Total | 761 | 669 | 2.20 | 2.54 |
^(1)^These figures pertain only to Kimbell's major properties and do not include possible additional DUCs and permits from Kimbell's minor properties, which generally have a net revenue interest of 0.1% or below and are time consuming to quantify but, in the estimation of Kimbell's management could add an additional 20% to Kimbell's net inventory.
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Results of Detailed Portfolio Review
Kimbell completed a detailed review of its portfolio, which as of March 31, 2021, identified 10,160 gross and 68.1 net (100% NRI) total upside drilling locations, which represents an estimated 15 years of drilling inventory based on the pace of major well completions during 2019, which management believes is a more normalized level given the pandemic in 2020. These locations only include Kimbell’s major properties and do not include Kimbell’s minor properties, which generally have less than a 0.1% net revenue interest and are time consuming to quantify, but in the estimation of Kimbell’s management could add up to an additional 20% to Kimbell’s net inventory in the aggregate. This analysis was reviewed by a leading third party independent international engineering firm, Ryder Scott.
Approximately 80% of the total estimated undrilled net inventory is located the Permian, Eagle Ford and Haynesville, which have some of the best economic returns and lowest break-even costs in the U.S. In addition, Kimbell’s superior five-year average PDP decline rate of only 12% requires only an estimated 4.5 net wells each year to keep production flat.
| Basin | Gross Locations as of March 31, 2021^(1)^ | Net Locations as of March 31, 2021^(1)^ | Avg. Gross Horizontal Wells/DSU^(2)^ | |||
|---|---|---|---|---|---|---|
| Permian | 3,017 | 19.20 | 12.0 | |||
| Eagle Ford | 1,846 | 17.28 | 6.9 | |||
| Haynesville | 1,309 | 17.04 | 5.9 | |||
| Mid-Continent | 1,489 | 6.38 | 6.8 | |||
| Bakken | 2,042 | 4.51 | 8.5 | |||
| Appalachia | 247 | 2.17 | 7.6 | |||
| Rockies | 210 | 1.56 | 10.5 | |||
| Total | 10,160 | 68.14 | 8.3 |
^(1)^ Locations include permits, proven undeveloped (PUD), probable, and possible (per SPE-PRMS reserve definitions based on interenal reserves database as of March 31, 2021). In addition, these figures pertain only to Kimbell's major properties and do not include additional locations from Kimbell's minor properties, which generally have a net revenue interest of 0.1% or below and are time consuming to quantify, but in the estimation of Kimbell's management, could add an additional 20% to Kimbell's net inventory in the aggregate.
^(2)^ Gross horizontal wells per drilling spacing unit (“DSU”) from internal reserves database as of March 31, 2021. DSUs vary in size.
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Hedging Update
The following provides information concerning Kimbell’s hedge book as of March 31, 2021:
| Fixed Price Swaps as of March 31, 2021 | ||||||
|---|---|---|---|---|---|---|
| Weighted Average | ||||||
| Volumes | Fixed Price | |||||
| Oil | Nat Gas | Oil | Nat Gas | |||
| BBL | MMBTU | /BBL | /MMBTU | |||
| 2Q 2021 | 133,497 | 1,716,806 | ||||
| 3Q 2021 | 134,964 | 1,735,672 | ||||
| 4Q 2021 | 134,964 | 1,735,672 | ||||
| 1Q 2022 | 132,030 | 1,697,940 | ||||
| 2Q 2022 | 119,938 | 1,516,697 | ||||
| 3Q 2022 | 139,196 | 1,759,316 | ||||
| 4Q 2022 | 109,388 | 1,383,496 | ||||
| 1Q 2023 | 91,854 | 1,204,308 |
All values are in US Dollars.
Conference Call
Kimbell Royalty Partners will host a conference call and webcast today at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) to discuss first quarter 2021 results. To access the call live by phone, dial 201-389-0869 and ask for the Kimbell Royalty Partners call at least 10 minutes prior to the start time. A telephonic replay will be available through May 13, 2021 by dialing 201-612-7415 and using the conference ID 13717951#. A webcast of the call will also be available live and for later replay on Kimbell’s website at http://kimbellrp.investorroom.com under the Events and Presentations tab.
Presentation
On May 6, 2021, Kimbell posted an updated investor presentation and supplemental presentation its website. The presentations may be found at http://kimbellrp.investorroom.com under the Events and Presentations tab. Information on Kimbell’s website does not constitute a portion of this news release.
About Kimbell Royalty Partners, LP
Kimbell (NYSE: KRP) is a leading oil and gas mineral and royalty company based in Fort Worth, Texas. Kimbell owns mineral and royalty interests in over 13 million gross acres in 28 states and in every major onshore basin in the continental United States, including ownership in more than 97,000 gross wells with over 41,000 wells in the Permian Basin. To learn more, visit http://www.kimbellrp.com.
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Forward-Looking Statements
This news release includes forward-lookingstatements, in particular statements relating to Kimbell’s financial, operating and production results and prospects for growth,drilling inventory, growth potential, identified locations and all other estimates and predictions resulting from Kimbell’s portfolioreview, the tax treatment of Kimbell's distributions, future natural gas and other commodity prices, changes to supply and demand foroil, natural gas and NGLs and the recent COVID-19 outbreak and its impacts on Kimbell and on the oil and gas industry. These and otherforward-looking statements involve risks and uncertainties, including risks that the anticipated benefits of acquisitions are not realized,risks relating to the COVID-19 outbreak, and uncertainties relating to Kimbell’s business, prospects for growth and acquisitionsand the securities markets generally, as well as risks inherent in oil and natural gas drilling and production activities, includingrisks with respect to low or declining prices for oil and natural gas that could result in downward revisions to the value of provedreserves or otherwise cause operators to delay or suspend planned drilling and completion operations or reduce production levels, whichwould adversely impact cash flow, risks related to the impact of COVID-19 on the global economy and Kimbell’s business, risks relatingto the impairment of oil and natural gas properties, risks relating to the availability of capital to fund drilling operations that canbe adversely affected by adverse drilling results, production declines and declines in oil and natural gas prices, risks relating toKimbell’s ability to meet financial covenants under its credit agreement or its ability to obtain amendments or waivers to effectsuch compliance, risks relating to Kimbell’s hedging activities, risks of fire, explosion, blowouts, pipe failure, casing collapse,unusual or unexpected formation pressures, environmental hazards, and other operating and production risks, which may temporarily orpermanently reduce production or cause initial production or test results to not be indicative of future well performance or delay thetiming of sales or completion of drilling operations, risks relating to delays in receipt of drilling permits, risks relating to unexpectedadverse developments in the status of properties, risks relating to borrowing base redeterminations by Kimbell’s lenders, risksrelating to the absence or delay in receipt of government approvals or third-party consents, risks relating to acquisitions, dispositionsand drop downs of assets, risks relating to Kimbell's ability to realize the anticipated benefits from and to integrate acquired assets,including the Springbok assets, risks relating to tax matters, and other risks described in Kimbell's Annual Report on Form 10-K andother filings with the Securities and Exchange Commission (the “SEC”), available at the SEC's website at www.sec.gov. Youare cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this news release.Except as required by law, Kimbell undertakes no obligation and does not intend to update these forward-looking statements to reflectevents or circumstances occurring after this news release. When considering these forward-looking statements, you should keep in mindthe risk factors and other cautionary statements in Kimbell's filings with the SEC.
Contact:
Rick Black
Dennard Lascar Investor Relations
krp@dennardlascar.com
(713) 529-6600
– Financial statements follow –
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Kimbell Royalty Partners, LP
Condensed Consolidated Balance Sheet
(Unaudited, in thousands)
| March 31, | |||
|---|---|---|---|
| 2021 | |||
| Assets: | |||
| Current assets | |||
| Cash and cash equivalents | $ | 8,124 | |
| Oil, natural gas and NGL receivables | 24,768 | ||
| Accounts receivable and other current assets | 1,558 | ||
| Total current assets | 34,450 | ||
| Property and equipment, net | 2,112 | ||
| Investment in affiliate (equity method) | 5,048 | ||
| Oil and natural gas properties | |||
| Oil and natural gas properties (full cost method) | 1,149,588 | ||
| Less: accumulated depreciation, depletion and impairment | (635,786 | ) | |
| Total oil and natural gas properties, net | 513,802 | ||
| Right-of-use assets, net | 3,071 | ||
| Derivative assets | 697 | ||
| Loan origination costs, net | 4,800 | ||
| Total assets | $ | 563,980 | |
| Liabilities, mezzanine equity and unitholders' equity: | |||
| Current liabilities | |||
| Accounts payable | $ | 1,043 | |
| Other current liabilities | 3,673 | ||
| Derivative liabilities | 11,112 | ||
| Total current liabilities | 15,828 | ||
| Operating lease liabilities, excluding current portion | 2,797 | ||
| Derivative liabilities | 8,540 | ||
| Long-term debt | 168,534 | ||
| Total liabilities | 195,699 | ||
| Commitments and contingencies | |||
| Mezzanine equity: | |||
| Series A preferred units | 43,282 | ||
| Unitholders' equity: | |||
| Common units | 251,263 | ||
| Class B units | 1,039 | ||
| Total unitholders' equity | 252,302 | ||
| Noncontrolling interest | 72,697 | ||
| Total equity | 324,999 | ||
| Total liabilities, mezzanine equity and unitholders' equity | $ | 563,980 |
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Kimbell Royalty Partners, LP
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per-unit dataand unit counts)
| Three Months Ended | Three Months Ended | |||||
|---|---|---|---|---|---|---|
| March 31, 2021 | March 31, 2020 | |||||
| Revenue | ||||||
| Oil, natural gas and NGL revenues | $ | 36,369 | $ | 25,585 | ||
| Lease bonus and other income | 186 | 229 | ||||
| (Loss) gain on commodity derivative instruments, net | (14,136 | ) | 10,133 | |||
| Total revenues | 22,419 | 35,947 | ||||
| Costs and expenses | ||||||
| Production and ad valorem taxes | 2,432 | 1,622 | ||||
| Depreciation and depletion expense | 7,911 | 13,271 | ||||
| Impairment of oil and natural gas properties | — | 70,925 | ||||
| Marketing and other deductions | 3,295 | 2,131 | ||||
| General and administrative expenses | 6,797 | 6,524 | ||||
| Total costs and expenses | 20,435 | 94,473 | ||||
| Operating income (loss) | 1,984 | (58,526 | ) | |||
| Other income (expense) | ||||||
| Equity income in affiliate | 185 | 163 | ||||
| Interest expense | (2,095 | ) | (1,421 | ) | ||
| Other income | 463 | — | ||||
| Net income (loss) before income taxes | 537 | (59,784 | ) | |||
| Provision for income taxes | — | — | ||||
| Net income (loss) | 537 | (59,784 | ) | |||
| Distribution and accretion on Series A preferred units | (1,578 | ) | (3,077 | ) | ||
| Net loss attributable to noncontrolling interests | 358 | 23,585 | ||||
| Distributions on Class B units | (21 | ) | (25 | ) | ||
| Net loss attributable to common units | $ | (704 | ) | $ | (39,301 | ) |
| Basic | $ | (0.02 | ) | $ | (1.29 | ) |
| Diluted | $ | (0.02 | ) | $ | (1.29 | ) |
| Weighted average number of common units outstanding | ||||||
| Basic | 37,693,469 | 30,528,819 | ||||
| Diluted | 37,693,469 | 30,528,819 |
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Kimbell Royalty Partners, LPSupplemental Schedules
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA and Cash G&A are used as a supplemental non-GAAP financial measures by management and external users of Kimbell’s financial statements, such as industry analysts, investors, lenders and rating agencies. Kimbell believes Adjusted EBITDA is useful because it allows us to more effectively evaluate Kimbell’s operating performance and compare the results of Kimbell’s operations period to period without regard to its financing methods or capital structure. In addition, management uses Adjusted EBITDA to evaluate cash flow available to pay distributions to Kimbell’s unitholders. Kimbell defines Adjusted EBITDA as net income (loss) before interest expense, non-cash unit-based compensation, unrealized gains and losses on derivative instruments, cash distributions from affiliate, equity income from affiliates, impairment of oil and natural gas properties, income taxes and depreciation and depletion expense, and adjusted for distributions from equity investments. Adjusted EBITDA is not a measure of net income (loss) or net cash provided by operating activities as determined by GAAP. Kimbell excludes the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within Kimbell’s industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Adjusted EBITDA should not be considered an alternative to net income, oil, natural gas and natural gas liquids revenues, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Kimbell’s computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Kimbell expects that cash available for distribution for each quarter will generally equal its Adjusted EBITDA for the quarter, less cash needed for debt service and other contractual obligations, tax obligations, and fixed charges and reserves for future operating or capital needs that the Board of Directors may determine is appropriate.
Kimbell believes Cash G&A and Cash G&A per Boe are useful metrics because they isolate cash costs within overall G&A expense and measure cash costs relative to overall production, which is a widely utilized metric to evaluate operational performance within the energy sector. Cash G&A is defined as general and administrative expenses less unit-based compensation expense. Cash G&A per Boe is defined as Cash G&A divided by total production for a period. Cash G&A should not be considered an alternative to G&A expense presented in accordance with GAAP. Kimbell’s computations of Cash G&A and Cash G&A per Boe may not be comparable to other similarly titled measures of other companies.
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Kimbell Royalty Partners, LP – News Release
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Kimbell Royalty Partners, LP
Supplemental Schedules
(Unaudited, in thousands)
| Three Months Ended | Three Months Ended | |||||
|---|---|---|---|---|---|---|
| March 31, 2021 | March 31, 2020 | |||||
| Reconciliation of net cash provided by operating activities to Adjusted EBITDA | ||||||
| Net cash provided by operating activities | $ | 15,481 | $ | 20,788 | ||
| Interest expense | 2,095 | 1,421 | ||||
| Provision for income taxes | — | — | ||||
| Impairment of oil and natural gas properties | — | (70,925 | ) | |||
| Amortization of right-of-use assets | (72 | ) | (67 | ) | ||
| Amortization of loan origination costs | (371 | ) | (266 | ) | ||
| Equity income in affiliate | 185 | 163 | ||||
| Unit-based compensation | (2,692 | ) | (2,107 | ) | ||
| (Loss) gain on derivative instruments, net of settlements | (12,674 | ) | 8,979 | |||
| Changes in operating assets and liabilities: | ||||||
| Oil, natural gas and NGL revenues receivable | 7,215 | (4,913 | ) | |||
| Accounts receivable and other current assets | 584 | 509 | ||||
| Accounts payable | (154 | ) | 450 | |||
| Other current liabilities | 1,092 | 809 | ||||
| Operating lease liabilities | 71 | 67 | ||||
| Consolidated EBITDA | $ | 10,760 | $ | (45,092 | ) | |
| Add: | ||||||
| Impairment of oil and natural gas properties | — | 70,925 | ||||
| Unit-based compensation | 2,692 | 2,107 | ||||
| Loss (gain) on commodity derivative instruments, net of settlements | 12,674 | (8,979 | ) | |||
| Cash distribution from affiliate | 55 | 18 | ||||
| Equity income in affiliate | (185 | ) | (163 | ) | ||
| Consolidated Adjusted EBITDA | $ | 25,996 | $ | 18,816 | ||
| Adjusted EBITDA attributable to noncontrolling interest | (8,921 | ) | (7,059 | ) | ||
| Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 17,075 | $ | 11,757 |
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Kimbell Royalty Partners, LP – News Release
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Kimbell Royalty Partners, LP
Supplemental Schedules
(Unaudited, in thousands, except for per-unitdata and unit counts)
| Three Months Ended | |||
|---|---|---|---|
| March 31, 2021 | |||
| Net income | $ | 537 | |
| Depreciation and depletion expense | 7,911 | ||
| Interest expense | 2,095 | ||
| Provision for income taxes | — | ||
| Cash distribution from affiliate | 217 | ||
| Consolidated EBITDA | $ | 10,760 | |
| Unit-based compensation | 2,692 | ||
| Loss on derivative instruments, net of settlements | 12,674 | ||
| Cash distribution from affiliate | 55 | ||
| Equity income in affiliate | (185 | ) | |
| Consolidated Adjusted EBITDA | $ | 25,996 | |
| Adjusted EBITDA attributable to noncontrolling interest | (8,921 | ) | |
| Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 17,075 | |
| Adjustments to reconcile Adjusted EBITDA to cash available for distribution | |||
| Cash interest expense | 1,099 | ||
| Cash distributions on Series A preferred units | 632 | ||
| Restricted units repurchased for tax withholding | 607 | ||
| Distributions on Class B units | 21 | ||
| Cash available for distribution on common units | $ | 14,716 | |
| Common units outstanding on March 31, 2021 | 39,769,896 | ||
| Cash available for distribution per common unit outstanding | $ | 0.37 | |
| Common units outstanding on May 3, 2021 Record Date | 39,748,270 | ||
| First quarter 2021 distribution declared ^(1)^ | $ | 0.27 |
(1) The difference between the declared distribution and the cash available for distribution is primarily attributable to Kimbell allocating 25% of cash available for distribution to pay outstanding borrowings under its revolving credit facility.
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Kimbell Royalty Partners, LP – News Release
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Kimbell Royalty Partners, LP
Supplemental Schedules
(Unaudited, in thousands, except for per-unitdata and unit counts)
| Three Months Ended | |||
|---|---|---|---|
| March 31, 2020 | |||
| Net loss | $ | (59,784 | ) |
| Depreciation and depletion expense | 13,271 | ||
| Interest expense | 1,421 | ||
| Consolidated EBITDA | $ | (45,092 | ) |
| Impairment of oil and natural gas properties | 70,925 | ||
| Unit-based compensation | 2,107 | ||
| Gain on commodity derivative instruments, net of settlements | (8,979 | ) | |
| Cash distribution from affiliate | 18 | ||
| Equity income in affiliate | (163 | ) | |
| Consolidated Adjusted EBITDA | $ | 18,816 | |
| Adjusted EBITDA attributable to noncontrolling interest | (7,059 | ) | |
| Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 11,757 | |
| Adjustments to reconcile Adjusted EBITDA to cash available | |||
| for distribution | |||
| Cash interest expense | 704 | ||
| Cash distributions on Series A preferred units | 1,203 | ||
| Distributions on Class B units | 25 | ||
| Cash available for distribution on common units | $ | 9,825 | |
| Common units outstanding on March 31, 2020 | 34,378,849 | ||
| Cash available for distribution per common unit outstanding | $ | 0.29 | |
| Common units outstanding on May 4, 2020 Record Date | 36,602,811 | ||
| First quarter 2020 distribution declared ^(1)^ | $ | 0.17 |
(1) The difference between the declared distribution and the cash available for distribution is primarily attributable to Kimbell allocating 50% of cash available for distribution to pay outstanding borrowings under its credit facility. Additionally, Kimbell utilized cash flows received from the Springbok acquisition after the effective date of October 1, 2019, but prior to the closing date of April 17, 2020 to pay outstanding borrowings under its credit facility. Revenues, production and other financial and operating results from the Springbok acquisition will be reflected in Kimbell's condensed consolidated financial statements from April 17, 2020 onward. ****
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Kimbell Royalty Partners, LP – News Release
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| Kimbell Royalty Partners, LP |
|---|
| Supplemental Schedules |
| (Unaudited, in thousands) |
| Three Months Ended | |||
|---|---|---|---|
| March 31, 2021 | |||
| Net income | $ | 537 | |
| Depreciation and depletion expense | 7,911 | ||
| Interest expense | 2,095 | ||
| Provision for income taxes | — | ||
| Cash distribution from affiliate | 217 | ||
| Consolidated EBITDA | $ | 10,760 | |
| Unit-based compensation | 2,692 | ||
| Loss on derivative instruments, net of settlements | 12,674 | ||
| Cash distribution from affiliate | 55 | ||
| Equity income in affiliate | (185 | ) | |
| Consolidated Adjusted EBITDA | $ | 25,996 | |
| Q2 2020 - Q4 2020 Consolidated Adjusted EBITDA ^(1)^ | 47,356 | ||
| Trailing Twelve Month Consolidated Adjusted EBITDA | $ | 73,352 | |
| Long-term debt (as of 3/31/21) | 168,534 | ||
| Cash and cash equivalents (as of 3/31/21) | (8,124 | ) | |
| Net debt (as of 3/31/21) | $ | 160,410 | |
| Net Debt to Trailing Twelve Month Consolidated Adjusted EBITDA | 2.2 | x |
(1) Consolidated Adjusted EBITDA for each of the quarters ended June 30, 2020, September 30, 2020 and December 31, 2020 was previously reported in a news release relating to the applicable quarter, and the reconciliation of net loss to consolidated Adjusted EBITDA for each quarter is included in the applicable news release. This also includes the pro forma results from the Springbok acquisition that closed in April 2020 in accordance with the credit agreement.
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