- Expected to be immediately accretive to distributable cash flow per unit, with estimated acceleration of accretion in 2024 and 2025
- Targeted oil and gas mineral and royalty interests located in core positions of the Permian and Mid-Con basins, with over 4,000 gross producing wells on over 1 million gross acres
- Permian represents approximately 64% of reserve value, with approximately 36% in Mid-Continent1
- Anticipated NTM average production of approximately 4,765 Boe per day (33% oil, 41% natural gas, 26% NGL), generating an estimated $64.3 million of cash flow at strip pricing as of July 26, 2023 (reflects transaction multiple of approximately 7.1x)2
- Expected to increase daily production by over 26% and expected to decrease cash G&A per Boe by approximately 20%3
- Following the transaction, Kimbell expects to maintain a peer-leading five-year decline rate of approximately 14%
- Expected to add 2.56 net DUCs and net permitted locations (“net wells”), an approximate 37% increase in Kimbell’s current major net well line of site inventory
- Following the transaction, Kimbell expects net wells needed to maintain flat production to modestly increase from 4.9 net wells to 5.8 net wells
- In addition to net wells, the Seller portfolio is expected to add an estimated 16.63 net upside locations, increasing Kimbell’s major undrilled inventory by approximately 25%
- Builds upon existing Permian Basin position, which remains Kimbell’s leading basin in terms of production, active rig count, DUCs, permits and undrilled inventory
- Maintains conservative balance sheet metrics with expected pro forma net leverage4 of approximately 1.0x following transaction close
FORT WORTH, Texas, Aug. 2, 2023 /PRNewswire/ — Kimbell Royalty Partners, LP (NYSE:KRP) (“Kimbell” or the “Company”), a leading owner of oil and gas mineral and royalty interests in approximately 16 million gross acres in 28 states, today announced that it has agreed to acquire mineral and royalty interests (the “acquired assets”) held by a private seller (“Seller”) in a cash transaction valued at approximately $455 million, subject to purchase price adjustments and other customary closing adjustments (the “Acquisition”). Kimbell intends to fund the purchase price through a private placement of 6.00% Series A Cumulative Convertible Preferred Units (“Preferred Units”) to fund managed by affiliates of Apollo (NYSE:APO) (“Apollo”) and borrowings under the Company’s $400 million revolving credit facility. The final mix of funding will be determined at closing.
Kimbell estimates that, as of June 1, 2023, the acquired assets produce approximately 4,840 Boe/d (1,619 Bbl/d of oil, 1,227 Bbl/d of NGLs, and 11,964 Mcf/d of natural gas) (6:1).5 For the full year 2024, Kimbell estimates that the acquired assets will produce approximately 5,049 Boe/d (1,682 Bbl/d of oil, 1,312 Bbl/d of NGLs, and 12,327 Mcf/d of natural gas) (6:1). The Seller’s acreage is located in the Permian Basin and Mid-Continent, with high interest locations concentrated in the Delaware Basin (49%), Midland Basin (10%) and Mid-Continent (41%). The Board of Directors of Kimbell’s general partner and the governing body of the Seller have each approved the Acquisition, which is expected to close in the third quarter of 2023, subject to customary closing conditions. The effective date of the Acquisition is expected to be June 1, 2023.
Bob Ravnaas, Chairman and Chief Executive Officer of Kimbell’s general partner, said, “The Acquisition represents the largest transaction in company history, and is expected to significantly enhance Kimbell’s positions in the best-performing, highest-growth oil and gas basins in the Lower 48. The targeted portfolio of mineral and royalty interests complements our disciplined approach to M&A, combining excellent reservoir quality, near-term cash flow and long-term production growth. We expect the Acquisition to be immediately accretive to distributable cash flow per unit, with accelerated accretion anticipated in future years, and look forward to continuing our role as a major consolidator in the oil and natural gas royalty sector. Thanks to the Kimbell team, and our advisors, for their remarkable work on this transaction.”
