Kimbell Royalty Partners’ Earnings Call Highlights Growth

Kimbell Royalty Partners ((KRP)) has held its Q4 earnings call. Read on for the main highlights of the call.

Kimbell Royalty Partners’ recent earnings call painted a picture of robust growth and strategic success. The company reported substantial increases in production and revenue, alongside successful acquisitions, underscoring a strong financial position. Despite some concerns over administrative expenses and potential regulatory challenges, the overall sentiment was overwhelmingly positive, buoyed by record high production guidance for 2025.

Substantial Growth in Key Metrics

Kimbell Royalty Partners showcased impressive growth in their key metrics for 2024, reporting a significant increase in production, revenue, and EBITDA. The company achieved a record run-rate production of 25,946 BOE per day, highlighting their operational efficiency and market strength.

Successful Acquisitions and Financial Position

The company successfully closed a $230 million acquisition and conducted a primary equity offering, maintaining a conservative balance sheet. Their net debt to trailing twelve-month consolidated adjusted EBITDA stands at approximately 0.8 times, reflecting prudent financial management.

Strong Drilling Activity and Market Share

Kimbell’s strong drilling activity is evident with 91 rigs actively drilling, capturing a 16% market share of all rigs in the Lower 48 states. This positions the company as a significant player in the industry, particularly in the Permian Basin.

Tax-Advantaged Distributions

In 2024, Kimbell paid out $1.75 per common unit in tax-advantaged quarterly distributions, providing attractive returns to its investors while maintaining fiscal responsibility.

Record High Production Guidance for 2025

Looking ahead, Kimbell introduced a record high production guidance for 2025, with expected production at its midpoint at 25,500 BOE per day. This reflects the company’s confidence in its operational capabilities and market conditions.

General and Administrative Expenses

The fourth quarter saw general and administrative expenses totaling $9.4 million, with $5.6 million as cash G&A expense, translating to $2.53 per BOE. While notable, these expenses are managed within the broader context of the company’s financial strategy.

Potential Regulatory Challenges

The company discussed potential regulatory changes under the new administration. However, no immediate impact is anticipated, allowing Kimbell to continue its strategic focus without significant disruption.

Forward-Looking Guidance

Kimbell Royalty Partners provided comprehensive guidance for 2025, emphasizing stability and potential growth. With a record run-rate production and strategic use of cash distributions, the company aims to reduce outstanding borrowings while maintaining a conservative balance sheet. Their focus remains on strategic acquisitions and strong drilling activities, particularly in the Permian Basin.

In conclusion, Kimbell Royalty Partners’ earnings call reflected a strong performance with substantial growth across key metrics. The company’s strategic acquisitions, robust drilling activities, and forward-looking guidance underscore a promising outlook, despite some concerns over administrative expenses and regulatory challenges. Investors can look forward to continued stability and growth as Kimbell navigates the evolving market landscape.