Kimbell Royalty Partners (KRP) Valuation Update - Aug 4

[dan_s]

I have updated my forecast/valuation model for KRP and posted it to the EPG website.

My valuation stays at $21.50/Class A unit. Q2 production exceed my forecast, but the gas-to-oil ratio increased. KRP's production mix is now approximately 51% natural gas, 31.5% crude oil and 17.5% NGLs.

KRP and all of our minerals companies have very low cash expenses, so they generate a lot of free cash flow.

KRP is a minerals partnership that has elected to be taxed as a C-Corp. It pays out ~75% of operating cash flow each quarter. Based on my updated forecast the cash distributions based on 2024 results should total approximately $1.76/unit for annualized yield of 11.2% based on the August 2 closing price of $15.75.

TipRanks: "In a report released 8/2/2024, Neal Dingmann from Truist Financial maintained a Buy rating on Kimbell Royalty Partners, with a price target of $23.00." According to TipRanks, Dingmann is a 5-star analyst with an average return of 10.2% and a 63.93% success rate. Dingmann covers the Energy sector, focusing on stocks such as APA, Coterra Energy, and Conocophillips.