Kimbell Royalty Partners, LP (KRP)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 headline revenue was $66.7M with oil, gas and NGL revenues of $69.1M; reported net loss of $(39.3)M and diluted EPS of $(0.48) driven by a non-cash ceiling test impairment of $56.2M .
• Consolidated Adjusted EBITDA was $59.8M; cash available for distribution per common unit was $0.44, and the Board declared a $0.40 distribution (75% payout) with ~100% expected to be return of capital .
• Run-rate production was 24,082 Boe/d (6:1) in Q4, or 25,946 Boe/d including the full-quarter impact of Midland Basin “Mabee Ranch” assets (effective 10/1/24; closed 1/17/25); 2025 guidance initiated at a record midpoint of 25,500 Boe/d .
• Leverage remains conservative at ~0.8x net debt/TTM consolidated Adjusted EBITDA; debt outstanding was ~$239.2M with $310.8M of revolver availability at 12/31/24 .
• Street consensus from S&P Global for Q4 2024 EPS/revenue was unavailable due to access limits, so beats/misses vs. estimates cannot be assessed; however, management emphasized a conservative guidance framework and continued rig/DUC momentum into 2025 .

What Went Well and What Went Wrong

• What Went Well

  • Record operational scale: Q4 run-rate production reached 24,082 Boe/d and would be 25,946 Boe/d including the full-quarter contribution from the Midland Basin acquisition (effective date in Q4) .
  • Strong activity backdrop: 87–91 rigs operating on Kimbell acreage (15–16% U.S. land rig share); DUC+permit inventory remains above maintenance needs, supporting resiliency into 2025 .
  • Conservative capital and distributions: 75% payout maintained; ~100% of Q4 distribution estimated as ROC; net debt/TTM Adj. EBITDA ~0.8x; management reiterates long-term role as consolidator in large, fragmented royalty market .

• What Went Wrong

  • GAAP loss on impairment: A $56.2M non-cash ceiling test impairment (price-driven) resulted in a $(39.3)M net loss and $(0.48) diluted EPS for Q4 .
  • Sequential revenue softness: Total revenue fell to $66.7M from $83.8M in Q3 as derivative results turned negative and combined realized price/volumes moderated QoQ .
  • Estimate benchmarking unavailable: We could not retrieve S&P Global consensus to quantify beats/misses; investors lack a standard yardstick for quarterly surprise analysis this period (tool access limitation noted) .

Financial Results

KPIs and Operating Metrics

• Production and Mix

  Metric	Q2 2024	Q3 2024	Q4 2024
  Run-Rate Production (Boe/d, 6:1)	24,110	23,846	24,082
  Run-Rate incl. Acquired Production (Boe/d)	—	—	25,946
  Mix: Gas (%)	51%	52%	~50%
  Mix: Oil (%)	32%	30%	31%
  Mix: NGLs (%)	17%	18%	19%

• Realized Prices

  Metric	Q2 2024	Q3 2024	Q4 2024
  Oil ($/Bbl)	$79.99	$74.19	$69.35
  Gas ($/Mcf)	$1.81	$1.71	$1.88
  NGLs ($/Bbl)	$25.05	$21.46	$21.47
  Combined ($/Boe)	$35.14	$31.57	$31.04

• Activity and Inventory

  Metric	Q2 2024	Q3 2024	Q4 2024
  Rigs on Acreage	91	90	87; incl. acquisition: 91
  Net DUCs	3.82	5.13	4.80
  Net Permits	4.14	2.71	2.41

• Balance Sheet and Leverage

  Metric	Q2 2024	Q3 2024	Q4 2024
  Long-Term Debt ($M)	$265.8	$252.2	$239.2
  Net Debt ($M)	$240.8	$227.2	$214.2
  Net Debt/TTM Adj. EBITDA (x)	0.9x	0.8x	0.8x
  Liquidity (Undrawn RCF) ($M)	$284.2	$297.8	$310.8

Notes: Q4 2024 GAAP loss reflects a $56.2M non-cash impairment (primarily commodity price driven), which depresses EPS and net income; Adjusted EBITDA removes impairment and derivative mark-to-market effects .

Guidance Changes

Management noted FY25 midpoint production is roughly in line with Q4 exit run-rate including the acquired Midland Basin volumes, reflecting a conservative initial posture .

Earnings Call Themes & Trends

Management Commentary

• “Including a full quarter effect from this acquisition in Q4 2024… production exceeded 25,000 Boe/d for the first time in Kimbell’s history… we are initiating 2025 operational guidance with expected record high mid-point daily production” .
• “We continue to maintain a conservative balance sheet with net debt to trailing 12-month consolidated Adjusted EBITDA of approximately 0.8x” .
• On FY25 guidance posture: “We like to be conservative… our exit run-rate, including the acquired production, we’re almost dead on the midpoint of our 2025 guidance” .
• On M&A scale: “Our focus is on $100 million-plus deals… the opportunity set available to us has grown… as the mineral space continues to consolidate” .

Q&A Highlights

• Guidance calibration: Management framed FY25 midpoint as prudent versus Q4 exit run-rate including acquired volumes; growth is “likely” but guide set conservatively .
• Preferred redemption roadmap: Targeting ~half redemption in May; subsequent redemptions to be more ratable using 25% CAD plus revolver capacity, potentially accelerated with delevering, equity-accretive M&A .
• M&A focus and basins: Remain basin-agnostic but valuation-sensitive; prefer $100M+ packages; Permian remains deepest pipeline; expect continued industry consolidation to favor mineral owners .
• Costs: Marketing/other deductions guidance refined lower due to operator practices and commodity price effects; management views current range as more representative .
• Macro/regulatory: No adverse impacts noted; new administration seen as supportive of domestic energy output .

Estimates Context

• We attempted to retrieve S&P Global (Capital IQ) consensus for Q4 2024 EPS and revenue but were unable to access the data due to request limits; as a result, we cannot quantify beats/misses versus Street estimates this quarter .
• Implications: Absent consensus benchmarks, investors should focus on underlying drivers—non-cash impairment impact on GAAP EPS, stable Adjusted EBITDA, robust activity indicators (rigs/DUCs), and conservative yet record-high production guidance.

Key Takeaways for Investors

• Core performance was resilient ex-impairment: Adjusted EBITDA of $59.8M with stable cash G&A per Boe ($2.53) supports continued distributions under a 75% payout policy despite a GAAP loss driven by non-cash impairment .
• Operational runway intact: 87–91 rigs and DUC+permit inventory above maintenance levels underpin FY25 midpoint production of 25.5 Mboe/d (record), with Permian-led activity momentum .
• Balance sheet optionality: ~0.8x net debt/TTM Adj. EBITDA and >$300M revolver availability provide capacity for planned preferred redemption and selective, larger-scale M&A .
• Growth vector from Midland Basin: Mabee Ranch assets (effective 10/1/24; closed 1/17/25) already lift run-rate to ~25.9 Mboe/d, enhancing oil mix and near-term cash flow .
• Watch the cadence of preferred redemptions and deal flow: Execution on May redemption, subsequent ratable redemptions, and $100M+ accretive acquisitions are the likely stock catalysts into 2025 .
• Commodity sensitivity remains: Realized oil prices fell sequentially Q2→Q4, reinforcing the importance of hedge posture and operator activity; impairment underscores GAAP volatility versus cash metrics .
• Distribution quality: Management expects ~100% of Q4 distribution to be return of capital (tax-advantaged), a supportive feature for total return investors .

Additional Supporting Details

• Q4 Distribution: $0.40 per unit (75% payout), payable 3/25/25; approx. 100% expected ROC; Company using remaining 25% of CAD for debt reduction .
• 2025 Guidance (select): Production 24–27 Mboe/d; oil 31–35%; gas 46–50%; NGLs 17–21%; marketing/other $1.40–$2.20/Boe; DD&A $13–$20/Boe; cash G&A $2.45–$2.65/Boe; taxes 7–9% of hydrocarbon revenue; 75% payout .
• Acquisition and Financing: ~$230M Midland Basin mineral/royalty acquisition (effective 10/1/24; closed 1/17/25); upsized equity offering of 10M common units at $14.90 to support balance sheet and deal funding .

References:

• Q4 2024 press release: results, distribution, guidance, activity/inventory, leverage .
• Q4 2024 earnings call: prepared remarks and Q&A on guidance, preferred redemption, costs, M&A posture .
• Q3 2024 press release/call and Q2 2024 press release/call: trend analysis on production, Adj. EBITDA, cash G&A, rigs/DUCs, distribution .