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Kimbell Royalty Partners, LP (KRP)·Q1 2025 Earnings Summary

Executive Summary

  • Record oil, natural gas and NGL revenues ($89.95M), record consolidated Adjusted EBITDA ($75.53M), and record cash available for distribution ($57.16M); Q1 run-rate production 25,501 Boe/d and 90 active rigs (~16% U.S. land rig share) .
  • Beat on EPS and revenue vs consensus, miss on EBITDA: EPS $0.20 vs $0.156*; total revenues $84.21M vs $83.70M*; EBITDA $64.68M vs $69.14M* .
  • Distribution raised to $0.47 per unit (75% payout ratio), implying 15.8% annualized yield based on May 7 close; affirmed full-year 2025 guidance ranges (production mix and unit cost metrics maintained) .
  • Capital structure simplified: redeemed 50% of Series A preferreds (May 7) and increased revolver borrowing base to $625M (May 1); net debt/TTM Adjusted EBITDA ~0.9x at 3/31/25 .
  • Management highlighted improving gas/NGL realizations and robust leasing/rig activity (Permian strength), supporting confidence in 2025 trajectory .

What Went Well and What Went Wrong

What Went Well

  • Record revenue and cash generation: oil, gas & NGL revenues $89.95M; consolidated Adjusted EBITDA $75.53M; cash available for distribution $57.16M .
  • Strategic balance sheet actions: 50% preferred redemption and revolver borrowing base increased to $625M; net debt/TTM Adjusted EBITDA ~0.9x at Q1-end .
  • Management confidence and accretive M&A positioning: “We remain bullish… and our role as a leading consolidator” and expect to continue deal activity in a ~$700B royalty market .

What Went Wrong

  • EBITDA below consensus: consolidated EBITDA $64.68M vs consensus $69.14M*, despite revenue/EPS beats—reflects cost/deduction mix and depletion dynamics in the quarter .
  • Continued derivative losses: loss on commodity derivatives, net, was $(6.05)M, partially offsetting realized price improvements .
  • No upward revision to 2025 guidance despite strong activity—company affirmed prior ranges, reflecting prudence amid commodity volatility .

Financial Results

Quarterly P&L and Cash Metrics (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Oil, Natural Gas & NGL Revenues ($USD Millions)$71.07 $69.08 $89.95
Total Revenues ($USD Millions)$83.79 $66.72 $84.21
Net Income ($USD Millions)$25.81 $(39.26) $25.85
Net Income Attributable to Common ($USD Millions)$17.38 $(37.79) $17.86
Diluted EPS ($USD)$0.22 $(0.48) $0.20
Consolidated Adjusted EBITDA ($USD Millions)$63.12 $59.78 $75.53
Cash Available for Distribution ($USD Millions)$44.23 $41.50 $57.16
Distribution Declared ($/unit)$0.41 $0.40 $0.47
Run-Rate Production (Boe/d)23,846 24,082 25,501
Active Rigs (Count)90 87 90
Net DUCs (Major Properties)5.13 4.80 4.67
Net Permits (Major Properties)2.71 2.41 3.43

Year-over-Year (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025
Oil, Natural Gas & NGL Revenues ($USD Millions)$87.50 $89.95
Total Revenues ($USD Millions)$82.23 $84.21
Net Income ($USD Millions)$9.34 $25.85
Net Income Attributable to Common ($USD Millions)$3.17 $17.86
Diluted EPS ($USD)$0.04 $0.20
Consolidated Adjusted EBITDA ($USD Millions)$74.11 $75.53

Estimates vs Actual (Q1 2025)

MetricConsensus EstimateActual
EPS ($)0.156*0.20
Revenue ($USD Millions)83.70*84.21
EBITDA ($USD Millions)69.14*64.68

Values with * retrieved from S&P Global.

KPIs

KPIQ3 2024Q4 2024Q1 2025
Avg Realized Oil ($/Bbl)$74.19 $69.35 $70.34
Avg Realized Gas ($/Mcf)$1.71 $1.88 $3.68
Avg Realized NGL ($/Bbl)$21.46 $21.47 $26.02
Avg Realized Combined ($/Boe)$31.57 $31.04 $38.61
Cash G&A ($MM)$5.60 $5.60 $5.80
Cash G&A ($/Boe)$2.57 $2.53 $2.52
Net Debt / TTM Adj. EBITDA (x)0.8x 0.8x 0.9x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Production (Mboe/d, 6:1)FY 202524.0 – 27.0 Affirmed Maintained
Oil % of Net ProductionFY 202531% – 35% Affirmed Maintained
Natural Gas % of Net ProductionFY 202546% – 50% Affirmed Maintained
NGL % of Net ProductionFY 202517% – 21% Affirmed Maintained
Marketing & Other Deductions ($/boe)FY 2025$1.40 – $2.20 Affirmed Maintained
Depreciation & Depletion ($/boe)FY 2025$13.00 – $20.00 Affirmed Maintained
Cash G&A ($/boe)FY 2025$2.45 – $2.65 Affirmed Maintained
Non-Cash G&A ($/boe)FY 2025$1.40 – $1.80 Affirmed Maintained
Production & Ad Valorem Taxes (% of oil/gas/NGL revenues)FY 20257% – 9% Affirmed Maintained
Payout RatioFY 202575% 75% (Q1 distribution raised to $0.47) Maintained payout; distribution up

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024)Previous Mentions (Q-1: Q4 2024)Current Period (Q1 2025)Trend
M&A appetiteRobust pipeline; Permian consolidation backdrop Focus on $100M+ deals, equity mix to avoid leverage creep Expect accretive M&A in 6–18 months; consolidator in ~$700B market Steady/increasing focus
Leverage/PreferredsConservative leverage (~0.8x) Plan to redeem ~50% preferreds in May, maintain ~1.5x target Redeemed 50% preferreds; target ~1.5x; continue deleveraging Deleveraging in progress
Hedging approachNot emphasizedHedging program consistent~20% hedged; methodical layering; evaluate adding gas hedges Stable methodology
Activity/rigs90 rigs; 16% share 91 rigs including acquired; 16% share 90 rigs; ~16% share; strong permits/DUCs Stable/high
RealizationsOil $74.19/bbl; gas $1.71/mcf; NGL $21.46/bbl Oil $69.35; gas $1.88; NGL $21.47 Oil $70.34; gas $3.68; NGL $26.02; improved differentials broadly Improving (gas/NGL)
Lease bonus activityRecord lease bonuses —Q2 likely second-highest lease bonuses ever; Permian-driven Strong/up

Management Commentary

  • “We are beginning 2025 with several new milestones… records for oil, natural gas and NGL revenues, consolidated adjusted EBITDA and cash available for distribution for Q1 2025.” — CEO Robert Ravnaas .
  • “Borrowing base… increased from $550 million to $625 million… and [we] redeemed 50% of the Series A… further simplifying our capital structure and reducing our cost of capital.” — CEO .
  • “We remain bullish about the U.S. oil and natural gas royalty industry, our role as a leading consolidator… and the prospects for Kimbell to generate long-term unitholder value.” — CEO .
  • “Total first quarter consolidated adjusted EBITDA was $75.5 million… a new record… we announced a cash distribution of $0.47 per common unit.” — CFO Davis Ravnaas .
  • “We feel that 20% hedge level is a good place to be… we have a very methodical formulaic approach to layering on hedges.” — CFO .

Q&A Highlights

  • M&A pipeline and financing: management sees accretive deals likely in 6–18 months; favors larger transactions financed with equity to maintain/deleverage balance sheet .
  • Leverage target and preferred redemption path: operate around ~1.5x net debt/TTM Adjusted EBITDA; redeemed 50% of preferreds and will continue ratable redemptions absent a large equity-financed deal .
  • Hedging stance amidst gas contango: maintain ~20% hedge coverage, methodical rather than price-timing; board evaluated adding gas hedges given strip .
  • Volumes/DUC trend: reaffirmed 2025 guidance; DUCs quantified quarterly; activity strong across basins, with Permian leading .
  • Realizations/differentials: NGL and gas realizations improved across the portfolio; Q1 levels seen as more representative than seasonally weak Q4 .

Estimates Context

  • Q1 2025 results vs consensus: EPS beat ($0.20 vs $0.156*), revenue beat ($84.21M vs $83.70M*), EBITDA miss ($64.68M vs $69.14M*) .
  • Potential estimate adjustments: stronger realized gas/NGL prices and robust Permian activity support raising revenue/EPS; EBITDA modeling may need updates for deductions/depletion and cash G&A cadence .

Values with * retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue/EPS beat driven by improved gas/NGL realizations and acquired Midland Basin production; EBITDA miss warrants a closer look at cost/deduction assumptions in models .
  • Distribution raised to $0.47 with continued 75% payout policy; yield metrics remain attractive with tax-advantaged characterization (estimated ~70% ROC in Q1) .
  • Balance sheet flexibility improved: revolver base to $625M, 50% preferred redemption completed; net debt/TTM Adj. EBITDA ~0.9x at quarter-end .
  • Activity indicators strong: 90 rigs, high DUC/permit inventory and accelerating lease bonuses (Permian), supporting stable-to-improving 2025 production trajectory .
  • M&A optionality: management expects accretive deals in coming quarters with preference for equity mix to preserve leverage and distributions—watch for catalysts .
  • Guidance affirmed despite strong Q1, signaling prudence amidst commodity volatility; upside exists if improved differentials persist and activity remains robust .
  • Trading lens: near-term positive bias on income/yield and execution; monitor EBITDA conversion, hedge posture, and cadence of further preferred redemptions as incremental drivers .