Kimbell Royalty Partners (KRP) Q4 Results - Feb 21

[dan_s]

KRP is a partnership that has elected to be taxed as a C-Corp. (no K-1).

Fourth Quarter 2023 Highlights

Record Q4 2024 run-rate daily production of 24,332 barrels of oil equivalent ("Boe") per day (6:1) < Beat my forecast of 23,500 Boepd.
Record Q4 2023 oil, natural gas and NGL revenues of $83.9 million, an increase of 21.2% from Q3 2023
Q4 2023 net income of approximately $17.8 million and net income attributable to common units of approximately $9.8 million, as compared to $18.5 million and $13.6 million, respectively, from Q3 2023
Record Q4 2023 consolidated Adjusted EBITDA of $69.0 million, an increase of 23.7% from Q3 2023

As of December 31, 2023, Kimbell's major properties had 8.38 net drilled but uncompleted wells ("DUCs") and net permitted locations on its acreage (4.55 net DUCs and 3.83 net permitted locations) compared to an estimated 5.8 net wells needed to maintain flat production

As of December 31, 2023, Kimbell had 98 rigs actively drilling on its acreage, down 1 rig from Q3 2023 and representing 16.3% market share of all rigs drilling in the continental United States as of such time

On December 8, 2023, the borrowing base and aggregate commitments on Kimbell's secured revolving credit facility were increased from $400 million to $550 million in connection with its Fall redetermination

Announced a Q4 2023 cash distribution of $0.43 per common unit, reflecting a payout ratio of 75% of cash available for distribution; implies a 11.2% annualized yield based on the February 20, 2024 closing price of $15.38 per common unit; Kimbell intends to utilize the remaining 25% of its cash available for distribution to repay a portion of the outstanding borrowings under Kimbell's revolving credit facility < KRP has one of the highest dividend yields in our High Yield Income Portfolio.

Initiated full year 2024 guidance with estimated daily production at its mid-point projected at 24,000 Boe/d for the year

Today, the Board of Directors of the General Partner (the "Board of Directors") approved a cash distribution payment to common unitholders of 75% of cash available for distribution for the fourth quarter of 2023, or $0.43 per common unit. The distribution will be payable on March 20, 2024 to common unitholders of record at the close of business on March 13, 2024.

Kimbell expects that approximately 93% of its fourth quarter 2023 distribution should not constitute dividends for U.S. federal income tax purposes, but instead are estimated to constitute non-taxable reductions to the basis of each distribution recipient's ownership interest in Kimbell common units. The reduced tax basis will increase unitholders' capital gain (or decrease unitholders' capital loss) when unitholders sell their common units.

[dan_s]

KRP closed at $15.38 on February 21.

My updated current valuation for KRP is $20 per share, which is TipRanks' consensus price target per four analyst that have price targets from $17 to $22 per share,

Based on my 2024 forecast, KRP's 2024 dividends should be approximately $1.74/share for annualized dividend yield of 11.3% based on the Feb 21 closing price.

[dan_s]

My updated forecast/valuation model for KRP has been posted to the EPG website under the High Yield tab.