FORT WORTH, Texas, May 9,
2019 /PRNewswire/ -- Kimbell Royalty Partners, LP
(NYSE: KRP) ("Kimbell Royalty Partners" or "Kimbell"), a leading
owner of oil and natural gas mineral and royalty interests in over
92,000 gross producing wells across 28 states, today announced
financial and operating results for the first quarter ended
March 31, 2019. Q1 2019
revenue, consolidated net loss and consolidated adjusted EBITDA
shown below only reflect seven days of production and operating
activities from the Phillips assets.
First Quarter 2019 Highlights
- Q1 2019 distribution of $0.37 per common unit;
implies an annualized yield of 9.1% based on the May 8, 2019 closing price of $16.30 per common unit
- Q1 2019 average daily production of 11,958 barrels of oil
equivalent ("Boe") per day(1), up 228% from Q1
2018, with total Q1 2019 production of
902,877(2) Boe, consisting of
226,601 barrels ("Bbls") of oil, 3,336,723 thousand cubic feet
("Mcf") of natural gas and 120,155 Bbls of natural gas liquids
("NGLs")
- Reaffirms guidance for 2019 that was initiated in the company's
March 25, 2019 press release
- Q1 2019 oil, natural gas and NGL revenues of $22.8
million, up 111% from Q1 2018
- Q1 2019 consolidated net loss (including non-controlling
interest) of $5.3 million compared to a net loss of
$52.8 million (included a non-cash
impairment expense of $54.8 million)
in Q1 2018
- Q1 2019 consolidated adjusted EBITDA (as defined and reconciled
below) of $16.1 million, up 111%, from $7.6 million in Q1 2018
- Kimbell expects that substantially all of the Q4 2018 and Q1
2019 distributions to a common unitholder will not constitute
taxable dividend income and instead will generally result in
non-taxable reductions to the tax basis of the unitholder's common
units
Robert Ravnaas, chairman and
chief executive officer of Kimbell Royalty Partners' general
partner commented, "We are excited to announce our record
first quarter 2019 average daily production of 11,958
Boe/d(1). The Phillips assets are
performing above our expectations and we anticipate many years of
additional development across this newly acquired mineral
position. With our first quarter distribution of 37 cents per common unit, which will be paid on
May 13, 2019, we will have paid out
$3.27 per common unit in
distributions in just over two years since our IPO, which is 18% of
our IPO price. Our balance sheet remains conservative at
approximately 1.1x debt to consolidated adjusted EBITDA (reflecting
a full quarter of the Phillips assets) and deal flow is strong as
we continue to evaluate a number of transactions across the
minerals space."
We continue to experience the best of both worlds from our
broad, stable and diverse portfolio of assets, featuring organic
growth from our recently acquired assets, coupled with the
stability of one of the industry's lowest PDP decline rate from
Kimbell's legacy assets."
First Quarter 2019 Distribution
On April 26, 2019, Kimbell
announced a cash distribution of $0.37 per common unit, a 7.5% reduction as
compared to the fourth quarter of 2018 primarily due to a 9.4%
reduction in realized prices between quarters. Kimbell
expects substantially all of this distribution will not constitute
taxable dividend income and instead will generally result in a
non-taxable reduction to the tax basis of a unitholder's common
units. The reduced tax basis will increase a unitholder's
capital gain (or decrease a unitholder's capital loss) when the
unitholder sells its units.
Financial Highlights
Total first quarter 2019 revenues increased 65% from the first
quarter of last year to $17.9
million. First quarter 2019 net loss attributable to
common units was $3.7 million, or
$0.21 per common unit, compared to
net loss attributable to common units of $52.8 million (included a non-cash impairment
expense of $54.8 million) in the
first quarter of last year.
Total first quarter 2019 consolidated adjusted EBITDA was
$16.1 million, versus $7.6 million in the first quarter of last year
(consolidated adjusted EBITDA is a non-GAAP financial
measure. Please see a reconciliation to the nearest GAAP
financial measures at the end of this news release).
During the first quarter 2019, average realized price per Bbl for
oil was $50.89, natural gas per Mcf
was $2.68, and NGLs per Bbl was
$19.70.
Kimbell recorded a $2.8 million
non-cash impairment expense in the first quarter of 2019 as a
result of its full-cost ceiling analysis during the quarter.
This non-cash impairment expense is not expected to impact the cash
flow available for distribution generated by Kimbell nor its
liquidity or ability to make acquisitions in the future.
General and administrative ("G&A") expenses were
$5.3 million in Q1 2019, of which
$3.6 million was cash G&A
expense.
As of March 31, 2019, Kimbell had
outstanding 19,495,403 common units and 27,414,342 Class B
units. As of May 8, 2019,
Kimbell had outstanding 23,095,403 common units and 23,814,342
Class B units. The change in the mix between units is due to
an exchange of certain Class B units for an equal number of common
units following the first quarter of 2019.
Production
First quarter 2019 average daily production increased 19% from
the Q4 2018 and 228% from Q1 2018, to 11,958 Boe per day (reflects
average daily production during the period from March 25, 2019 through March 31, 2019 after giving effect to the
Phillips acquisition), for total production of 902,877 Boe.
First quarter 2019 average daily production for the full quarter
was 10,032 Boe per day. Production for Q1 2019 was composed
of approximately 38% from liquids (25% from oil and 13% from NGLs)
and 62% from natural gas on a 6:1 basis.
2019 Guidance
Kimbell reaffirms its financial guidance for 2019 that was
initiated in the company's March 25,
2019 press release.
Liquidity
At March 31, 2019, Kimbell's debt
to consolidated adjusted EBITDA was 1.1x (reflecting a full quarter
of the Phillips assets) based on Q1 2019 annualized consolidated
adjusted EBITDA.
At March 31, 2019, Kimbell had
$87.3 million outstanding under its
$200.0 million revolving credit
facility and was in compliance with all related financial
covenants.
Hedging
Kimbell hedges its daily production in a manner that
approximates the amount of debt and/or preferred equity as a
percent of its enterprise value. As of March 31, 2019, Kimbell had hedged daily oil and
natural gas production of approximately 20% of its
production. Please see the supplemental schedule at the end
of this news release for hedging details.
Conference Call
Kimbell Royalty Partners will host a conference call and webcast
today at 11:00 a.m. Eastern Time
(10:00 a.m. Central Time) to discuss
first quarter 2019 results. To access the call live by phone,
dial 201-389-0869 and ask for the Kimbell Royalty Partners call at
least 10 minutes prior to the start time. A telephonic replay
will be available through May 16,
2019 by dialing 201-612-7415 and using the conference ID
13688870#. A webcast of the call will also be available live
and for later replay on Kimbell Royalty Partners' website at
http://kimbellrp.investorroom.com under Events and
Presentations.
About Kimbell Royalty Partners, LP
Kimbell (NYSE: KRP) is an oil and gas mineral and royalty
limited partnership based in Fort Worth,
Texas. Kimbell is managed by its general partner, Kimbell
Royalty GP, LLC. Kimbell owns mineral and royalty interests
in approximately 13 million gross acres in 28 states and in every
major onshore basin in the continental United States, including ownership in more
than 92,000 gross producing wells with over 40,000 wells in the
Permian Basin. To learn more, visit http://www.kimbellrp.com.
Forward-Looking Statements
This news release includes forward-looking statements. These
forward-looking statements involve risks and uncertainties,
including risks and uncertainties relating to the tax treatment of
Kimbell's distributions, Kimbell's business, prospects for growth
and acquisitions and the securities markets generally. Except
as required by law, Kimbell undertakes no obligation and does not
intend to update these forward-looking statements to reflect events
or circumstances occurring after this news release. When
considering these forward-looking statements, you should keep in
mind the risk factors and other cautionary statements in Kimbell's
filings with the Securities and Exchange Commission ("SEC").
These include risks that the anticipated benefits of the Phillips
acquisition are not realized, as well as risks inherent in oil and
natural gas drilling and production activities, including risks
with respect to low or declining prices for oil and natural gas
that could result in downward revisions to the value of proved
reserves or otherwise cause operators to delay or suspend planned
drilling and completion operations or reduce production levels,
which would adversely impact cash flow; risks related to the
impairment of oil and natural gas properties; risks relating to the
availability of capital to fund drilling operations that can be
adversely affected by adverse drilling results, production declines
and declines in oil and natural gas prices; risks regarding
Kimbell's ability to meet financial covenants under its credit
agreement or its ability to obtain amendments or waivers to effect
such compliance; risks relating to Kimbell's hedging activities;
risks of fire, explosion, blowouts, pipe failure, casing collapse,
unusual or unexpected formation pressures, environmental hazards,
and other operating and production risks, which may temporarily or
permanently reduce production or cause initial production or test
results to not be indicative of future well performance or delay
the timing of sales or completion of drilling operations; risks
relating to delays in receipt of drilling permits; risks relating
to unexpected adverse developments in the status of properties;
risks relating to borrowing base redeterminations by Kimbell's
lenders; risks relating to the absence or delay in receipt of
government approvals or third-party consents; risks relating to
acquisitions, dispositions and drop downs of assets; risks relating
to Kimbell's ability to realize the anticipated benefits from and
to integrate acquired assets, including the assets acquired in the
Phillips acquisition; and other risks described in Kimbell's Annual
Report on Form 10-K and other filings with the SEC, available at
the SEC's website at www.sec.gov. You are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date of this news release.
1 Reflects average daily production during the period
from March 25, 2019 through
March 31, 2019 after giving effect to
the Phillips acquisition. Kimbell was entitled to the cash
flows from the Phillips assets as of January
1, 2019 even though the acquisition closed on March 25, 2019.
2 Includes production attributable to the assets
acquired in the Phillips acquisition for the period from
March 25, 2019 through March 31, 2019 on a 6:1 basis.
Contact:
Rick Black
Dennard Lascar Investor
Relations
krp@dennardlascar.com
(713) 529-6600
– Financial statements follow –
|
|
Kimbell Royalty
Partners, LP
|
Condensed
Consolidated Balance Sheet
|
(Unaudited, in
thousands)
|
|
|
March
31,
|
|
2019
|
Assets:
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$
|
13,544
|
Oil, natural gas and
NGL receivables
|
|
21,471
|
Commodity derivative
assets
|
|
30
|
Other current
assets
|
|
543
|
Total current
assets
|
|
35,588
|
Property and
equipment, net
|
|
755
|
Oil and natural gas
properties
|
|
|
Oil and natural gas
properties (full cost method)
|
|
987,149
|
Less: accumulated
depreciation, depletion and accretion
|
|
(120,853)
|
Total oil and natural
gas properties
|
|
866,296
|
Right-of-use assets,
net
|
|
598
|
Loan origination
costs, net
|
|
2,921
|
Total
assets
|
$
|
906,158
|
Liabilities,
mezzanine equity and unitholders' equity:
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
$
|
1,164
|
Other current
liabilities
|
|
3,246
|
Total current
liabilities
|
|
4,410
|
Commodity derivative
liabilities
|
|
967
|
Lease
liabilities
|
|
593
|
Long-term
debt
|
|
87,310
|
Total
liabilities
|
|
93,280
|
Commitments and
contingencies
|
|
|
Mezzanine
equity:
|
|
|
Series A preferred
units
|
|
70,276
|
Unitholders'
Equity:
|
|
|
Common
units
|
|
300,579
|
Class B
units
|
|
1,371
|
Total unitholders'
equity
|
|
301,950
|
Noncontrolling
interest
|
|
440,652
|
Total
equity
|
|
742,602
|
Total liabilities,
mezzanine equity, and equity
|
$
|
906,158
|
|
|
|
Kimbell Royalty
Partners, LP
|
Condensed
Consolidated Statements of Operations
|
(Unaudited, in
thousands, except per-unit data and unit count)
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
March 31,
2018
|
Revenue
|
|
|
|
|
|
Oil, natural
gas and NGL revenues
|
$
|
22,833
|
|
$
|
10,808
|
Lease bonus
and other income
|
|
84
|
|
|
368
|
Loss on
commodity derivative instruments
|
|
(4,970)
|
|
|
(285)
|
Total
revenues
|
|
17,947
|
|
|
10,891
|
Costs and
expenses
|
|
|
|
|
|
Production and
ad valorem taxes
|
|
1,597
|
|
|
816
|
Depreciation,
depletion and accretion expenses
|
|
10,281
|
|
|
4,456
|
Impairment of
oil and natural gas properties
|
|
2,802
|
|
|
54,753
|
Marketing and
other deductions
|
|
1,857
|
|
|
570
|
General and
administrative expenses
|
|
5,333
|
|
|
2,771
|
Total
costs and expenses
|
|
21,870
|
|
|
63,366
|
Operating
loss
|
|
(3,923)
|
|
|
(52,475)
|
Other
expense
|
|
|
|
|
|
Interest
expense
|
|
1,423
|
|
|
350
|
Net
loss
|
|
(5,346)
|
|
|
(52,825)
|
Distribution
and accretion on Series A preferred units
|
|
(3,470)
|
|
|
—
|
Net loss
attributable to noncontrolling interests
|
|
5,152
|
|
|
—
|
Distributions
on Class B units
|
|
(23)
|
|
|
—
|
Net loss
attributable to common units
|
$
|
(3,687)
|
|
$
|
(52,825)
|
|
|
|
|
|
|
Basic
|
$
|
(0.21)
|
|
$
|
(3.23)
|
Diluted
|
$
|
(0.21)
|
|
$
|
(3.23)
|
Weighted average
number of common units outstanding
|
|
|
|
|
|
Basic
|
|
17,971,300
|
|
|
16,345,117
|
Diluted
|
|
17,971,300
|
|
|
16,345,117
|
Kimbell Royalty Partners,
LP
Supplemental Schedules
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA is used as a supplemental non-GAAP financial
measure by management and external users of our financial
statements, such as industry analysts, investors, lenders and
rating agencies. We believe Adjusted EBITDA is useful because
it allows us to more effectively evaluate our operating performance
and compare the results of our operations period to period without
regard to our financing methods or capital structure. In
addition, management uses Adjusted EBITDA to evaluate cash flow
available to pay distributions to our unitholders. We define
Adjusted EBITDA as net income (loss) before interest expense, net
of capitalized interest, non-cash unit-based compensation,
unrealized gains and losses on commodity derivative instruments,
impairment of oil and natural gas properties, income taxes and
depreciation, depletion and accretion expense. Adjusted
EBITDA is not a measure of net income (loss) or net cash provided
by operating activities as determined by GAAP. We exclude the
items listed above from net income (loss) in arriving at Adjusted
EBITDA because these amounts can vary substantially from company to
company within our industry depending upon accounting methods and
book values of assets, capital structures and the method by which
the assets were acquired. Certain items excluded from
Adjusted EBITDA are significant components in understanding and
assessing a company's financial performance, such as a company's
cost of capital and tax structure, as well as historic costs of
depreciable assets, none of which are components of Adjusted
EBITDA. Adjusted EBITDA should not be considered an
alternative to net income, oil, natural gas and natural gas liquids
revenues, net cash provided by operating activities or any other
measure of financial performance or liquidity presented in
accordance with GAAP. Our computations of Adjusted EBITDA may
not be comparable to other similarly titled measures of other
companies. We expect that cash available for distribution for
each quarter will generally equal our Adjusted EBITDA for the
quarter, less cash needed for debt service and other contractual
obligations and fixed charges and reserves for future operating or
capital needs that the board of directors may determine is
appropriate.
|
|
Kimbell Royalty
Partners, LP
|
Supplemental
Schedules
|
(Unaudited, in
thousands)
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
March 31,
2018
|
Reconciliation of
net cash provided by operating activities to Adjusted EBITDA
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
15,812
|
|
$
|
7,294
|
Interest
expense
|
|
1,423
|
|
|
350
|
Impairment of
oil and natural gas properties
|
|
(2,802)
|
|
|
(54,753)
|
Amortization
of right-of-use assets
|
|
(11)
|
|
|
—
|
Amortization
of loan origination costs
|
|
(258)
|
|
|
(16)
|
Unit-based
compensation
|
|
(1,770)
|
|
|
(669)
|
Change in fair
value of open commodity derivative instruments
|
|
(5,166)
|
|
|
(212)
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
Oil, natural gas and NGL revenues receivable
|
|
(1,294)
|
|
|
(233)
|
Other receivables
|
|
492
|
|
|
135
|
Accounts payable
|
|
692
|
|
|
(379)
|
Other current liabilities
|
|
(777)
|
|
|
464
|
Lease liabilities
|
|
17
|
|
|
—
|
Consolidated
EBITDA
|
$
|
6,358
|
|
$
|
(48,019)
|
Add:
|
|
|
|
|
|
Impairment of
oil and natural gas properties
|
|
2,802
|
|
|
54,753
|
Unit-based
compensation
|
|
1,770
|
|
|
669
|
Change in fair
value of open commodity derivative instruments
|
|
5,166
|
|
|
212
|
Consolidated Adjusted
EBITDA
|
$
|
16,096
|
|
$
|
7,615
|
Adjusted EBITDA
attributable to non-controlling interest
|
|
(9,407)
|
|
|
—
|
Adjusted EBITDA
attributable to Kimbell Royalty Partners LP
|
$
|
6,689
|
|
$
|
7,615
|
|
|
|
Kimbell Royalty
Partners, LP
|
Supplemental
Schedules
|
(Unaudited, in
thousands)
|
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
|
|
Net
loss
|
$
|
(5,346)
|
Depreciation,
depletion and accretion expenses
|
|
10,281
|
Interest
expense
|
|
1,423
|
Consolidated
EBITDA
|
$
|
6,358
|
Impairment of
oil and natural gas properties
|
|
2,802
|
Unit-based
compensation
|
|
1,770
|
Change in fair
value of open commodity derivative instruments
|
|
5,166
|
Consolidated Adjusted
EBITDA
|
$
|
16,096
|
Adjusted EBITDA
attributable to non-controlling interest
|
|
(9,407)
|
Adjusted EBITDA
attributable to Kimbell Royalty Partners LP
|
$
|
6,689
|
|
|
|
Adjustments to
reconcile Adjusted EBITDA to cash available
|
|
|
for
distribution
|
|
|
Cash interest
expense
|
|
624
|
Cash
distributions on Series A preferred units
|
|
800
|
Cash
distributions on Class B units
|
|
23
|
Cash available for
distribution on common units
|
$
|
5,242
|
|
|
|
Common units
outstanding on March 31, 2019
|
|
19,495,403
|
|
|
|
Cash available for
distribution per common unit outstanding
|
$
|
0.27
|
|
|
|
Common units
outstanding on May 6, 2019 Record Date
|
|
23,095,403
|
|
|
|
First quarter 2019
distribution declared(1)
|
$
|
0.37
|
(1)
|
The difference
between the declared distribution and the cash available for
distribution is primarily attributable to the acquisition of the
Phillips assets being effective on January 1, 2019, but only
reflected in the condensed consolidated financial statements from
March 25, 2019 onward.
|
|
|
|
Kimbell Royalty
Partners, LP
|
Supplemental
Schedules
|
(Unaudited, in
thousands)
|
|
|
Three Months
Ended
|
|
March 31,
2018
|
|
|
|
Net
loss
|
$
|
(52,825)
|
Depreciation,
depletion and accretion expenses
|
|
4,456
|
Interest
expense
|
|
350
|
EBITDA
|
$
|
(48,019)
|
Impairment of
oil and natural gas properties
|
|
54,753
|
Unit-based
compensation
|
|
669
|
Unrealized
loss on commodity derivative instruments
|
|
212
|
Adjusted
EBITDA
|
$
|
7,615
|
|
|
|
Adjustments to
reconcile Adjusted EBITDA to cash available for
distribution
|
|
|
Cash interest
expense
|
|
475
|
Cash available for
distribution
|
$
|
7,140
|
|
|
|
Limited partner
units outstanding(1)
|
|
16,834,984
|
|
|
|
Cash available for
distribution per common unit outstanding
|
$
|
0.42
|
|
|
|
(1)
As of first quarter 2018 distribution record date of May 7,
2018.
|
|
|
|
Kimbell Royalty
Partners, LP
|
Supplemental
Schedules
|
(Unaudited)
|
|
Fixed Price Swaps as of March 31,
2019
|
|
|
|
Weighted
Average
|
|
Volumes
|
Fixed
Price
|
|
Oil
|
Nat
Gas
|
Oil
|
Nat
Gas
|
|
BBL
|
MMBTU
|
$/BBL
|
$/MMBTU
|
2Q 2019
|
55,874
|
962,143
|
$
61.47
|
$
2.74
|
3Q 2019
|
56,488
|
972,716
|
$
61.47
|
$
2.74
|
4Q 2019
|
56,488
|
972,716
|
$
61.47
|
$
2.74
|
1Q 2020
|
55,874
|
962,143
|
$
60.22
|
$
2.89
|
2Q 2020
|
55,874
|
962,143
|
$
60.68
|
$
2.51
|
3Q 2020
|
56,304
|
829,288
|
$
50.45
|
$
2.53
|
4Q 2020
|
56,304
|
829,288
|
$
50.65
|
$
2.63
|
1Q 2021
|
51,570
|
726,030
|
$
56.10
|
$
2.85
|
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SOURCE Kimbell Royalty Partners, LP