• Revenue: $69.1 million for oil, natural gas, and NGO revenues during the quarter, excluding acquired production.
• Production: Record run rate production of 25,946 BOE per day, including acquired production.
• Adjusted EBITDA: $59.8 million for the fourth quarter, excluding acquired production.
• General and Administrative Expenses: $9.4 million total, with $5.6 million as cash G&A expense or $2.53 per BOE.
• Cash Distribution: $0.40 per common unit for the fourth quarter, with approximately 100% expected to be considered return of capital.
• Debt Outstanding: $239.2 million under the secured revolving credit facility as of December 31, 2024.
• Net Debt to EBITDA Ratio: Approximately 0.8 times.
• Undrawn Credit Facility Capacity: $310.8 million as of December 30, 2024.
• 2025 Production Guidance: Record high daily production guidance of 25,500 BOE per day at the midpoint.
• Rig Activity: 91 rigs actively drilling, representing 16% market share of all land rigs in the continental U.S.

• Warning! GuruFocus has detected 4 Warning Signs with KRP.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kimbell Royalty Partners LP (NYSE:KRP) reported substantial growth in production, revenue, and EBITDA for the year 2024.
• The company successfully closed a $230 million acquisition and completed a primary equity offering, enhancing its financial position.
• KRP's drilling activity remains strong, with 91 rigs actively drilling, representing a 16% market share in the lower 48 states.
• The company announced a cash distribution of $0.40 per common unit for the fourth quarter, with 100% expected to be considered return of capital.
• KRP maintains a conservative balance sheet with a net debt to trailing 12 months consolidated adjusted EBITDA of approximately 0.8 times.

Negative Points

• The company's 2025 guidance implies flat growth, which may not meet some investors' expectations for higher growth.
• KRP's general and administrative expenses were $9.4 million for the fourth quarter, which could be seen as relatively high.
• There is uncertainty regarding the impact of potential regulatory changes under the new administration.
• The company plans to redeem only half of its preferred shares in May, leaving a significant portion still outstanding.
• KRP faces competition in the M&A space, particularly in larger deals, which could impact its ability to acquire new assets.

Q & A Highlights

Q: Are there any particular basins where you're seeing an abundance of opportunity to add acreage? A: We continue to look across the United States without targeting one specific basin. The Permian Basin remains a significant area for consolidation, but we are seeing opportunities across various regions.

Q: Have potential regulatory changes from the new administration affected your operations? A: No, the new administration has been supportive of increased domestic energy output, which benefits us as a mineral owner across our diverse footprint.

Q: Can you explain why the 2025 guidance is below the pro forma fourth-quarter run rate? A: Our guidance implies likely growth, with the midpoint reflecting flat growth for the year. We prefer to be conservative with our guidance, and our line of sight inventory is stronger than ever, with significant activity in the Permian Basin.

Q: Do you still plan to redeem a portion of your preferred shares in the second quarter? A: Yes, we plan to take out about half of the Apollo preferred shares in May. This will not affect our acquisition framework or timeline.

Q: How do you plan to pay down the remaining preferred shares after May? A: We will use 25% of our cash flow to pay down debt on our revolver and continue to draw down on it to incrementally take out portions of the preferred shares in the future.

Q: Does the more constructive natural gas backdrop change your focus on gas stations? A: No, we focus on acquiring high-quality properties at reasonable prices, regardless of commodity price movements. We remain impartial and agnostic to commodity prices.

Q: How does the competitive landscape for M&A in the Permian affect your business? A: While operators sometimes compete for large packages, we haven't seen much competition in the $50 to $300 million range. Consolidation tends to be a net positive, leading to more efficient operations and better outcomes for mineral owners.

Q: How should we think about your M&A opportunities as you grow larger? A: We focus on larger acquisitions, typically $100 million plus, to avoid increasing leverage over time. The mineral space is consolidating, leading to larger deals, and we expect this trend to continue.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.