FORT WORTH, Texas, May 13,
2019 /PRNewswire/ -- Kimbell Royalty Partners, LP
(NYSE: KRP), a leading owner of oil and natural gas mineral and
royalty interests in more than 92,000 gross producing wells across
28 states, today announced the expected favorable federal income
tax treatment of its future earnings and distributions paid to
Kimbell common unitholders for at least the next seven years
(through at least the year 2025).
The company expects that:
- for the next seven years (2019 to 2025), the company will pay
no material federal income taxes (less than 5% of estimated pre-tax
distributable cash flow);
- for the next four years (2019 to 2022), substantially all
distributions paid to common unitholders will not be taxable
dividend income; and
- for 2023 through 2025, less than 25% of distributions paid to
common unitholders will be taxable dividend income.
Distributions in excess of the amount taxable as dividend income
will reduce an investor's tax basis in its units, or produce
capital gain to the extent they exceed an investor's tax
basis. The reduced tax basis will increase an investor's
capital gain when it sells its units.
"This is a significant development for the company to be able to
now provide this new level of tax detail. This favorable tax
treatment significantly enhances the after-tax return from the
distributions paid to our common unitholders for years to come,"
said Davis Ravnaas, President and
Chief Financial Officer of Kimbell Royalty Partners' general
partner. "We have spent a considerable amount of time working
with our advisors in order to optimize the after-tax return to our
common unitholders as we have grown the company significantly over
the last two years. We are pleased with this outcome for our
common unitholders and believe that this favorable tax treatment
further strengthens the investment case for the company along with
our world class mineral and royalty asset base, recent record
operating results and significant free cash flow generation."
This expected favorable tax treatment is the result of certain
non-cash expenses (principally depletion) substantially offsetting
the company's taxable income and tax "earnings and profits."
The company's estimates of the tax treatment of company
earnings and distributions are based upon assumptions regarding the
capital structure and earnings of our operating company, the
capital structure of the company and the amount of the earnings of
our operating company allocated to the company. Many factors
may impact these estimates, including changes in drilling and
production activity, commodity prices, future acquisitions or
changes in the business, economic, regulatory, legislative,
competitive or political environment in which the company
operates. These estimates are based on current tax law and
tax reporting positions that we have adopted and with which the
Internal Revenue Service could disagree. These estimates are
not fact and should not be relied upon as being necessarily
indicative of future results, and no assurances can be made
regarding these estimates. Investors are encouraged to
consult with their tax advisor on this matter.
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. All
statements in this news release concerning federal income tax
treatment of future earnings and distributions are forward-looking
statements. These forward-looking statements involve numerous risks
and uncertainties, many of which are beyond our control, including
(but not limited to) risks relating to drilling and production
activity, commodity prices, future acquisitions or changes in the
business, economic, regulatory, legislative, competitive or
political environment in which the company operates and the
securities markets generally. When considering these
forward-looking statements, you should keep in mind the risk
factors and other cautionary statements in our filings with the
Securities and Exchange Commission (SEC), available at the SEC's
website at www.sec.gov. Except as required by law, Kimbell
Royalty Partners undertakes no obligation and does not intend to
update these forward-looking statements to reflect events or
circumstances occurring after this news release. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this news
release.
Contact:
Rick Black
Dennard Lascar Investor
Relations
krp@dennardlascar.com
(713) 529-6600
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SOURCE Kimbell Royalty Partners, LP