Kimbell Royalty Partners, LP Q1 FY2025 earnings call

• Reported record first quarter metrics including oil, natural gas, NGL revenues, consolidated adjusted EBITDA, and cash available for distribution.
• Completed a highly attractive and accretive acquisition in the Permian Basin on 01/17/2025.
• Increased borrowing base and elected commitments on credit facility from $550 million to $625 million on 05/01/2025.
• Redeemed 50% of Series A cumulative convertible preferred units on 05/07/2025, simplifying capital structure and reducing cost of capital.
• 90 rigs actively drilling on acreage at quarter-end, 16% market share in Lower 48; permitting remained strong, with an old property permitting 17 additional wells.
• Line of sight wells above maintenance level, with 5-year annual average PDP decline rate of 14% requiring 6.5 net wells annually to maintain flat production.
• Declared first quarter distribution of 47¢ per common unit, up 17.5% from Q4 2024, with ~70% expected to be return of capital, enhancing after-tax return.

During the first quarter of 2025, Kimbell Royalty Partners achieved record oil, natural gas, and NGL revenues, totaling $90 million. Consolidated adjusted EBITDA was a new record at $75.5 million, and cash available for distribution was also at a record. Oil, natural gas, and NGL revenues contributed to these record figures, with the company reporting a first quarter run rate production of 25,841 BOE per day.

• Affirmed financial and guidance ranges for 2025.
• Confident in achieving 2025 goals due to robust rig activity on acreage, especially in Permian, and line of sight wells exceeding maintenance well count.
• Expect to continue as a major consolidator in the US oil and natural gas royalty sector.

• Forward-looking statements are uncertain and outside company's control; actual results may differ materially from forward-looking statements. Refer to earnings release and SEC filings for detailed risks and uncertainties.

Q: Good morning, folks. Thank you for taking our questions. Regarding M&A, especially on natural gas, and interest in doing deals where equity can be used accretively to buy assets that delever the business.

A: Yeah. Great question, Tim. Always looking at M&A opportunities... I'd be surprised if we weren't able to execute on some sort of M&A on that front over the next six to eighteen months.

Q: Related to natural gas, with debt up and contango in gas strip, thoughts on hedging with higher debt?

A: We run stress tests internally... we still like that 20% hedging level. We think that it protects us even in a very draconian pricing environment.

Q: With regard to your attractive tax structure, how much runway do you have where your distributions can be conveyed on a tax-friendly basis?

A: That is a great question... The runway on that is hard to predict. Because it depends on so many different variables, production, oil and gas prices, which we can't predict. But it is considerable. In the foreseeable future, we see no near-term end to that runway.

Q: On NGL and natural gas realizations, what drove the beat and trend through the balance of '25?

A: I would use this quarter's numbers as a goalpost for the rest of the year... We've seen that pretty much in every basin across our portfolio and improvement. In both NGL and natural gas differentials.

Q: Update on net DUCs since March 31?

A: We disclosed we had 4.67 net DUCs at 03/31/2025. Activity remains very solid. I wouldn't say there's a trend one way or the other. Most of the DUCs are in the Permian, but spread throughout other major basins.