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): November 5, 2020
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 November 5, 2020, Kimbell Royalty Partners, LP (the “Partnership”) issued a news release announcing its third quarter 2020 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 November 5, 2020, the Partnership posted an updated investor presentation on its website. The presentation, titled “Winter 2020 Investor Presentation,” 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 November 5, 2020. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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<br> ROYALTY PARTNERS, LP | |
|---|---|
| By: | Kimbell Royalty GP, LLC, its general partner |
| By: | /s/ Matthew S. Daly |
| Matthew S. Daly | |
| Chief Operating Officer |
Date: November 5, 2020
Exhibit 99.1
NEWSRELEASE
KimbellRoyalty Partners Announces Third Quarter 2020 Results
Well-Positionedto Benefit from Improving Natural Gas Fundamentals
FORTWORTH, Texas, November 5, 2020 – 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 96,000 gross wells across 28 states, today announced financial and operating results for the quarter ended September 30, 2020.
ThirdQuarter 2020 Highlights
| · | Q3<br> 2020 daily production of 14,160 barrels of oil equivalent (“Boe”) per day<br> (6:1) |
|---|---|
| · | Q3<br> 2020 production was composed of approximately 59% from natural gas and approximately<br> 41% from liquids (28% from oil and 13% from natural gas liquids (“NGL”))<br> (6:1) |
| --- | --- |
| · | Q3<br> 2020 oil, natural gas and NGL revenues of $24.3 million, an increase of 45% from Q2 2020,<br> reflecting improved realized commodity prices |
| --- | --- |
| · | Q3<br> 2020 realized hedging gains of approximately $675,000; substantial portion of projected<br> oil and natural gas production hedged through Q3 2022 |
| --- | --- |
| · | Q3<br> 2020 net loss of $25.7 million and Q3 2020 net loss attributable to common units of $17.8<br> million. The Q3 2020 net loss amount was primarily due to a non-cash ceiling test impairment<br> expense of $22.2 million related to continued substantial weakness in commodity prices |
| --- | --- |
| · | Q3<br> 2020 consolidated Adjusted EBITDA of $17.1 million |
| --- | --- |
| · | As<br> of September 30, 2020, Kimbell’s major properties had 794 gross (2.62 net) drilled<br> but uncompleted wells (“DUCs”) and 573 gross (1.84 net) permitted locations<br> on its acreage |
| --- | --- |
| · | As<br> of September 30, 2020, Kimbell had 30 rigs actively drilling on its acreage, which represented<br> 12.0%^1^ market share of all rigs drilling in the continental United States<br> as of such time |
| --- | --- |
| · | Announced<br> a Q3 2020 cash distribution of $0.19 per common unit, reflecting a payout ratio of 75%<br> of cash available for distribution; implies a 12.4% annualized yield based on the November<br> 4, 2020 closing price of $6.11 per common unit; Kimbell intends to utilize the remaining<br> 25% of its cash available for distribution to repay a portion of the outstanding borrowings<br> under Kimbell’s revolving credit facility |
| --- | --- |
Robert Ravnaas, Chairman and Chief Executive Officer of Kimbell’s general partner commented, “I am very pleased with our third quarter 2020 results, once again proving the resilience of our business model. Production curtailments, which were put in place by certain operators during the height of the pandemic earlier this year, were largely reversed in the Permian and Eagle Ford during the third quarter of 2020. However, curtailments were still largely in place on our Bakken assets as of the end of the third quarter of 2020. We are hopeful that these will also reverse in the fourth quarter of 2020 given improved differentials and commodity prices.
^1^ Based on Kimbell rig count of 30 and Baker Hughes U.S. land rig count of 251 as of October 2, 2020.
Kimbell Royalty Partners, LP – News Release
Page 2
We are very excited to see the forecasted improvement in natural gas prices both in the fourth quarter of 2020 and full year 2021 based on the futures curve. With approximately 59% of our daily production from natural gas, this price improvement could have a meaningful positive impact on our future cash flows and quarterly distribution payments. To put this in perspective, natural gas prices have averaged $2.02 per Mcf so far this year. The average forecasted natural gas price for full-year 2021 based on the futures curve is $3.03, which if it materializes would be a 50% improvement over 2020 year-to-date natural gas prices. We have a substantial amount of drilling inventory located across the major natural gas basins in the United States, with a concentration in the core areas of the Haynesville and Marcellus. We hope to benefit from this significant natural gas drilling inventory for years to come. “
ThirdQuarter 2020 Distribution and Debt Repayment
On October 23, 2020, 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 third quarter of 2020, or $0.19 per common unit. The distribution will be payable on November 9, 2020 to common unitholders of record at the close of business on November 2, 2020. The Board of Directors will review the distribution policy quarterly. Kimbell plans to utilize the remaining 25% of cash available for distribution for the third quarter of 2020 to pay down a portion of the outstanding borrowings under Kimbell’s revolving credit facility.
Kimbell expects that substantially all of its third quarter 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 2020 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.
FinancialHighlights
Kimbell’s third quarter 2020 average realized price per Bbl of oil was $38.36, per Mcf of natural gas was $1.76, per Bbl of NGLs was $13.42 and per Boe combined was $18.67.
During the third quarter of 2020, the Company’s total revenues were $18.4 million, net loss was $25.7 million and net loss attributable to common units was $17.8 million, or $0.50 per common unit. The net loss during the third quarter of 2020 was primarily due to a $22.2 million non-cash ceiling test impairment expense recorded during the quarter related to the continued substantial weakness in commodity prices. This non-cash ceiling test impairment is not expected to impact the cash flow available for distribution generated by Kimbell or its liquidity or ability to make acquisitions in the future.
Total third quarter 2020 consolidated Adjusted EBITDA was $17.1 million (consolidated Adjusted EBITDA is a non-GAAP financial measure. Please see a reconciliation to the nearest GAAP financial measures at the end of this news release).
Kimbell Royalty Partners, LP – News Release
Page 3
In the third quarter of 2020, G&A expense was $6.1 million, $3.7 million of which was Cash G&A expense, or $2.81 per Boe (Cash G&A and Cash G&A per Boe are non-GAAP financial measures. Please see definition under Non-GAAP FinancialMeasures at end of this news release). Unit-based compensation in the third quarter of 2020, which is a non-cash G&A expense, was $2.4 million or $1.88 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 continue to have an adverse effect on Kimbell’s business, production, cash flows, financial condition and results of operations in the fourth quarter of 2020.
At September 30, 2020, Kimbell had approximately $169.7 million in debt outstanding under its revolving credit facility, total debt to third quarter 2020 trailing twelve month consolidated Adjusted EBITDA of approximately 2.2x and was in compliance with all financial covenants under its revolving credit facility.
At the end of the third quarter, Kimbell had approximately $55.3 million in undrawn capacity (or approximately $130.3 million if aggregate commitments were equal to Kimbell’s current borrowing base, which is $300.0 million). Increases in commitments pursuant to the accordion feature of the revolving credit facility are subject to the satisfaction of certain conditions, including obtaining additional commitments from new or existing lenders.
Production
Third quarter 2020 average daily production was 14,160 Boe per day (6:1), composed of approximately 59% from natural gas (6:1) and approximately 41% from liquids (28% from oil and 13% from NGLs).
OperationalUpdate
As of September 30, 2020, Kimbell’s major properties had 794 gross (2.62 net) DUCs and 573 gross (1.84 net) permitted locations on its acreage. In addition, as of September 30, 2020, Kimbell had 30 rigs actively drilling on its acreage, which represents an approximate 12.0% market share of all land rigs drilling in the continental United States as of such time.
Kimbell Royalty Partners, LP – News Release
Page 4
| Basin | Gross DUCs as of September 30, 2020^(1)^ | Gross Permits as of September 30, 2020^(1)^ | Net DUCs as of September 30, 2020^(1)^ | Net Permits as of September 30, 2020^(1)^ | ||||
|---|---|---|---|---|---|---|---|---|
| Permian | 235 | 201 | 0.75 | 0.61 | ||||
| Mid-Continent | 109 | 70 | 0.23 | 0.07 | ||||
| Haynesville | 61 | 19 | 0.37 | 0.07 | ||||
| Bakken | 150 | 158 | 0.12 | 0.32 | ||||
| Eagle Ford | 98 | 49 | 0.53 | 0.34 | ||||
| Appalachia | 53 | 44 | 0.24 | 0.14 | ||||
| Rockies | 88 | 32 | 0.38 | 0.29 | ||||
| Total | 794 | 573 | 2.62 | 1.84 |
^(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 are time consuming to quantify but, in the experience of Kimbell's management, can be significant in the aggregate.
HedgingUpdate
The following provides information concerning Kimbell’s hedge book as of September 30, 2020:
| Fixed Price Swaps as of September 30, 2020 | ||||||
|---|---|---|---|---|---|---|
| Weighted Average | ||||||
| Volumes | Fixed Price | |||||
| Oil | Nat Gas | Oil | Nat Gas | |||
| BBL | MMBTU | /BBL | /MMBTU | |||
| 4Q 2020 | 134,964 | 1,735,672 | ||||
| 1Q 2021 | 132,030 | 1,697,940 | ||||
| 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 |
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 third quarter 2020 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 November 12, 2020, by dialing 201-612-7415 and using the conference ID 13710674#. 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.
Kimbell Royalty Partners, LP – News Release
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Presentation
On November 5, 2020, Kimbell posted an updated investor presentation on its website. The presentation 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 96,000 gross wells with over 40,000 wells in the Permian Basin. To learn more, visit http://www.kimbellrp.com.
Forward-Looking Statements
Thisnews release includes forward-looking statements, in particular statements relating to Kimbell’s financial, operating andproduction results and prospects for growth, the tax treatment of Kimbell's distributions, future natural gas and other commodityprices, changes to supply and demand for oil, natural gas and NGLs and the recent COVID-19 outbreak and its impacts on Kimbelland on the oil and gas industry. These and other forward-looking statements involve risks and uncertainties, including risks thatthe anticipated benefits of the acquisition of the Springbok assets are not realized, risks relating to Kimbell’s integrationof the Springbok assets, risks relating to the COVID-19 outbreak, and uncertainties relating to Kimbell’s business, prospectsfor growth and acquisitions and the securities markets generally, as well as risks inherent in oil and natural gas drilling andproduction activities, including risks with respect to low or declining prices for oil and natural gas that could result in downwardrevisions to the value of proved reserves or otherwise cause operators to delay or suspend planned drilling and completion operationsor reduce production levels, which would adversely impact cash flow, risks related to the impact of COVID-19 on the global economyand Kimbell’s business, risks relating to the impairment of oil and natural gas properties, risks relating to the availabilityof capital to fund drilling operations that can be adversely affected by adverse drilling results, production declines and declinesin oil and natural gas prices, risks relating to Kimbell’s ability to meet financial covenants under its credit agreementor its ability to obtain amendments or waivers to effect such 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 or permanently reduce production or cause initial production ortest results to not be indicative of future well performance or delay the timing of sales or completion of drilling operations,risks relating to delays in receipt of drilling permits, risks relating to unexpected adverse developments in the status of properties,risks relating to borrowing base redeterminations by Kimbell’s lenders, risks relating to the absence or delay in receiptof government approvals or third-party consents, risks relating to acquisitions, dispositions and drop downs of assets, risksrelating to Kimbell's ability to realize the anticipated benefits from and to integrate acquired assets, including the Springbokassets, risks relating to tax matters, and other risks described in Kimbell's Annual Report on Form 10-K and other filings withthe Securities and Exchange Commission (the “SEC”), available at the SEC's website at www.sec.gov. You are cautionednot to place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Exceptas 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, youshould keep in mind the 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 –
Kimbell Royalty Partners, LP – News Release
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Kimbell Royalty Partners, LP
Condensed Consolidated Balance Sheet
(Unaudited, in thousands)
| September 30, | |||
|---|---|---|---|
| 2020 | |||
| Assets: | |||
| Current assets | |||
| Cash and cash equivalents | $ | 12,348 | |
| Oil, natural gas and NGL receivables | 16,039 | ||
| Accounts receivable and other current assets | 947 | ||
| Total current assets | 29,334 | ||
| Property and equipment, net | 1,167 | ||
| Investment in affiliate (equity method) | 4,707 | ||
| Oil and natural gas properties | |||
| Oil and natural gas properties (full cost method) | 1,148,983 | ||
| Less: accumulated depreciation, depletion and impairment | (523,403 | ) | |
| Total oil and natural gas properties, net | 625,580 | ||
| Right-of-use assets, net | 3,194 | ||
| Loan origination costs, net | 1,469 | ||
| Total assets | $ | 665,451 | |
| Liabilities, mezzanine equity and unitholders' equity: | |||
| Current liabilities | |||
| Accounts payable | $ | 996 | |
| Other current liabilities | 5,843 | ||
| Commodity derivative liabilities | 992 | ||
| Total current liabilities | 7,831 | ||
| Operating lease liabilities, excluding current portion | 2,919 | ||
| Commodity derivative liabilities | 2,699 | ||
| Long-term debt | 169,701 | ||
| Total liabilities | 183,150 | ||
| Commitments and contingencies | |||
| Mezzanine equity: | |||
| Series A preferred units | 42,051 | ||
| Unitholders' equity: | |||
| Common units | 325,048 | ||
| Class B units | 1,039 | ||
| Total unitholders' equity | 326,087 | ||
| Noncontrolling interest | 114,163 | ||
| Total equity | 440,250 | ||
| Total liabilities, mezzanine equity and unitholders' equity | $ | 665,451 |
Kimbell Royalty Partners, LP – News Release
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Kimbell Royalty Partners, LP
Condensed Consolidated Statements ofOperations
(Unaudited, in thousands, except per-unitdata and unit counts)
| Three Months Ended | Three Months Ended | |||||
|---|---|---|---|---|---|---|
| September 30, 2020 | September 30, 2019 | |||||
| Revenue | ||||||
| Oil, natural gas and NGL revenues | $ | 24,326 | $ | 29,531 | ||
| Lease bonus and other income | 16 | 941 | ||||
| (Loss) gain on commodity derivative instruments, net | (5,898 | ) | 2,507 | |||
| Total revenues | 18,444 | 32,979 | ||||
| Costs and expenses | ||||||
| Production and ad valorem taxes | 1,840 | 2,236 | ||||
| Depreciation and depletion expense | 10,705 | 15,098 | ||||
| Impairment of oil and natural gas properties | 22,237 | 34,880 | ||||
| Marketing and other deductions | 2,512 | 2,332 | ||||
| General and administrative expenses | 6,111 | 5,695 | ||||
| Total costs and expenses | 43,405 | 60,241 | ||||
| Operating loss | (24,961 | ) | (27,262 | ) | ||
| Other income (expense) | ||||||
| Equity income (loss) in affiliate | 293 | (81 | ) | |||
| Interest expense | (1,603 | ) | (1,468 | ) | ||
| Other expense | (100 | ) | — | |||
| Net loss before income taxes | (26,371 | ) | (28,811 | ) | ||
| (Benefit from) provision for income taxes | (694 | ) | 103 | |||
| Net loss | (25,677 | ) | (28,914 | ) | ||
| Distribution and accretion on Series A preferred units | (1,578 | ) | (3,470 | ) | ||
| Net loss attributable to noncontrolling interests | 9,482 | 16,146 | ||||
| Distributions on Class B units | (23 | ) | (23 | ) | ||
| Net loss attributable to common units | $ | (17,796 | ) | $ | (16,261 | ) |
| Basic | $ | (0.50 | ) | $ | (0.73 | ) |
| Diluted | $ | (0.50 | ) | $ | (0.73 | ) |
| Weighted average number of common units outstanding | ||||||
| Basic | 35,423,112 | 22,399,748 | ||||
| Diluted | 35,423,112 | 22,399,748 |
Kimbell Royalty Partners, LP – News Release
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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 commodity derivative instruments, 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 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.
Kimbell Royalty Partners, LP – News Release
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KimbellRoyalty Partners, LP
Supplemental Schedules
(Unaudited,in thousands)
| Three Months Ended | Three Months Ended | |||||
|---|---|---|---|---|---|---|
| September 30, 2020 | September 30, 2019 | |||||
| Reconciliation of net cash provided by operating<br> activities to Adjusted EBITDA | ||||||
| Net cash provided by operating activities | $ | 12,379 | $ | 24,835 | ||
| Interest expense | 1,603 | 1,468 | ||||
| (Benefit from) provision for income taxes | (694 | ) | 103 | |||
| Impairment of oil and natural gas properties | (22,237 | ) | (34,880 | ) | ||
| Amortization of right-of-use assets | (70 | ) | (65 | ) | ||
| Amortization of loan origination costs | (276 | ) | (266 | ) | ||
| Equity income (loss) in affiliate | 293 | (81 | ) | |||
| Forfeiture of restricted units | 13 | — | ||||
| Unit-based compensation | (2,446 | ) | (1,810 | ) | ||
| (Loss) gain on commodity derivative instruments, net of settlements | (6,573 | ) | 1,684 | |||
| Changes in operating assets and liabilities: | ||||||
| Oil, natural gas and NGL revenues receivable | 4,273 | (1,938 | ) | |||
| Accounts receivable and other current assets | 559 | 64 | ||||
| Accounts payable | 195 | 11 | ||||
| Other current liabilities | (1,151 | ) | (1,461 | ) | ||
| Operating lease liabilities | 69 | 91 | ||||
| Consolidated EBITDA | $ | (14,063 | ) | $ | (12,245 | ) |
| Add: | ||||||
| Impairment of oil and natural gas properties | 22,237 | 34,880 | ||||
| Unit-based compensation | 2,446 | 1,810 | ||||
| Loss (gain) on commodity derivative instruments, net of settlements | 6,573 | (1,684 | ) | |||
| Cash distribution from affiliate | 211 | — | ||||
| Equity income in affiliate | (293 | ) | — | |||
| Consolidated Adjusted EBITDA | $ | 17,111 | $ | 22,761 | ||
| Adjusted EBITDA attributable to noncontrolling interest | (5,953 | ) | (11,349 | ) | ||
| Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 11,158 | $ | 11,412 |
Kimbell Royalty Partners, LP – News Release
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Kimbell Royalty Partners, LP
Supplemental Schedules
(Unaudited, in thousands, except forper-unit data and unit counts)
| Three Months Ended | |||
|---|---|---|---|
| September 30, 2020 | |||
| Net loss | $ | (25,677 | ) |
| Depreciation and depletion expense | 10,705 | ||
| Interest expense | 1,603 | ||
| Benefit from income taxes | (694 | ) | |
| Consolidated EBITDA | $ | (14,063 | ) |
| Impairment of oil and natural gas properties | 22,237 | ||
| Unit-based compensation | 2,446 | ||
| Loss on commodity derivative instruments, net of settlements | 6,573 | ||
| Cash distribution from affiliate | 211 | ||
| Equity income in affiliate | (293 | ) | |
| Consolidated Adjusted EBITDA | $ | 17,111 | |
| Adjusted EBITDA attributable to noncontrolling interest | (5,953 | ) | |
| Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 11,158 | |
| Adjustments to reconcile Adjusted EBITDA to cash available | |||
| for distribution | |||
| Cash interest expense | 902 | ||
| Cash distributions on Series A preferred units | 628 | ||
| Distributions on Class B units | 23 | ||
| Cash available for distribution on common units | $ | 9,605 | |
| Common units outstanding on September 30, 2020 | 38,948,023 | ||
| Cash available for distribution per common unit outstanding | $ | 0.25 | |
| Common units outstanding on November 2, 2020 Record Date | 38,948,023 | ||
| Third quarter 2020 distribution declared ^(1)^ | $ | 0.19 |
(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.
Kimbell Royalty Partners, LP – News Release
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Kimbell Royalty Partners, LP
Supplemental Schedules
(Unaudited, in thousands, except forper-unit data and unit counts)
| Three Months Ended | |||
|---|---|---|---|
| September 30, 2019 | |||
| Net loss | $ | (28,914 | ) |
| Depreciation and depletion expense | 15,098 | ||
| Interest expense | 1,468 | ||
| Provision for income taxes | 103 | ||
| Consolidated EBITDA | $ | (12,245 | ) |
| Impairment of oil and natural gas properties | 34,880 | ||
| Unit-based compensation | 1,810 | ||
| Gain on commodity derivative instruments, net of settlements | (1,684 | ) | |
| Consolidated Adjusted EBITDA | $ | 22,761 | |
| Adjusted EBITDA attributable to noncontrolling interest | (11,349 | ) | |
| Adjusted EBITDA attributable to Kimbell Royalty Partners, LP | $ | 11,412 | |
| Adjustments to reconcile Adjusted EBITDA to cash available | |||
| for distribution | |||
| Cash interest expense | 612 | ||
| Cash distributions on Series A preferred units | 965 | ||
| Cash income tax expense ^(1)^ | 147 | ||
| Distributions on Class B units | 23 | ||
| Cash reserves ^(1)^ | (147 | ) | |
| Cash available for distribution on common units | $ | 9,812 | |
| Common units outstanding on September 30, 2019 | 23,520,219 | ||
| Cash available for distribution per common unit outstanding | $ | 0.42 | |
| Common units outstanding on November 4, 2019 Record Date | 23,520,219 | ||
| Third quarter 2019 distribution declared | $ | 0.42 |
(1) Reflects cash taxes related to income allocation from the Series A preferred units, which were issued to partially fund the Haymaker acquisition that closed in July 2018. Kimbell had previously retained cash for post-closing costs and expects to have adequate cash reserves set aside to offset future cash taxes related to the Series A preferred units.
Kimbell Royalty Partners, LP – News Release
Page 12
| KimbellRoyalty Partners, LP |
|---|
| Supplemental Schedules |
| (Unaudited, in thousands) |
| Three Months Ended | |||
|---|---|---|---|
| September 30, 2020 | |||
| Net loss | $ | (25,677 | ) |
| Depreciation and depletion expense | 10,705 | ||
| Interest expense | 1,603 | ||
| Benefit from income taxes | (694 | ) | |
| Consolidated EBITDA | $ | (14,063 | ) |
| Impairment of oil and natural gas properties | 22,237 | ||
| Unit-based compensation | 2,446 | ||
| Loss on commodity derivative instruments, net of settlements | 6,573 | ||
| Cash distribution from affiliate | 211 | ||
| Equity income in affiliate | (293 | ) | |
| Consolidated Adjusted EBITDA | $ | 17,111 | |
| Q4 2019 - Q2 2020 Consolidated Adjusted EBITDA ^(1)^ | 61,649 | ||
| Trailing Twelve Month Consolidated Adjusted EBITDA | $ | 78,760 | |
| Long-term debt (as of 9/30/20) | 169,701 | ||
| Debt to Trailing Twelve Month Consolidated Adjusted EBITDA | 2.2 | x |
(1) The consolidated Adjusted EBITDA for each of the quarters ended December 31, 2019, March 31, 2020 and June 30, 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.