Kimbell Royalty Partners Reports Unprecedented Third Quarter 2026 Performance
Kimbell Royalty Partners, LP (NYSE: KRP), a major player in the oil and natural gas mineral and royalty sector, achieved unprecedented results in its third quarter of 2026 ending on September 30. The company reported record daily production figures of 27,565 barrels of oil equivalent per day (Boe/d) for the quarter, underscoring a period of robust operational performance. This surge can be attributed to various strategic acquisitions, including a noteworthy $221.2 million drop-down acquisition that significantly boosted the company's production capabilities beginning June 1, 2026.
During this quarter, Kimbell's revenues from oil, natural gas, and natural gas liquids (NGLs) climbed to $96.9 million. Once the contributions from the acquired production of the month were factored in, total revenues surpassed $104.6 million. The net income attributable to common units was approximately $12.4 million, translating to earnings of $0.12 per unit, while the company's net income reached about $17.3 million.
The quarter also reflected an impressive consolidated Adjusted EBITDA of $80.4 million, which further complemented Kimbell’s operational metrics. Following the acquisition, for the duration of the reported quarter, an adjusted EBITDA marked at $87.5 million showcased the mettle of Kimbell's business model, indicating a healthy trajectory amidst an evolving market landscape.
Kimbell has also made significant strides in its capital strategy. Notably, on October 16, 2026, the company announced its decision to redeem half of its remaining Series A Cumulative Convertible Preferred Units. This move is expected to streamline its capital structure, with post-redemption figures projecting the outstanding preferred units to be less than 3% of Kimbell’s $2.8 billion enterprise value. The timing of this redemption aligns well with Kimbell's initiative to boost its overall growth capacity and reduce the cost of capital, indicating an acute focus on shareholder value maximization.
The partnership has also seen enhancements in its borrowing base and revolving credit commitments. A recent increase from $660 million to $750 million in the secured revolver serves to further solidify its financial underpinning, allowing the company to pursue further growth initiatives without compromising financial health.
Operationally, Kimbell has been firing on all cylinders with a record number of active drilling rigs. As of the end of Q3, the company had 93 active rigs drilling, cementing a market share of approximately 16% of all land rigs operating across the United States. This expansion reflects Kimbell's commitment to optimize its asset utilization and drive production growth across its extensive land holdings, which span 28 states and encompass more than 137,000 gross wells.
In terms of distributions, Kimbell announced a cash distribution of $0.45 per common unit, aptly reflecting a payout ratio of 75% of cash available for distribution. This announcement indicates a strong annualized yield of 10.7% based on the closing price of $16.88 per common unit as of October 30, 2026. Notably, approximately 76% of this distribution is projected to be classified as a return of capital for tax purposes, enhancing the after-tax return for unitholders and further showcasing Kimbell’s attractive investment proposition in the energy space.
"We are pleased to report another outstanding quarter for Kimbell, which included record production, an increase in our rig count, and record line-of-sight wells," said Robert Ravnaas, Chairman and CEO of Kimbell Royalty GP, LLC. Looking ahead, the company remains optimistic about the future direction of the U.S. oil and gas market, particularly in key areas like the Permian Basin.
As Kimbell Royalty Partners navigates through this dynamic landscape, it remains poised to generate significant long-term value for its investors. With its firm commitment to operational excellence and strategic capital allocation, Kimbell is well-positioned to face the challenges ahead while capitalizing on opportunities as they arise.
During this quarter, Kimbell's revenues from oil, natural gas, and natural gas liquids (NGLs) climbed to $96.9 million. Once the contributions from the acquired production of the month were factored in, total revenues surpassed $104.6 million. The net income attributable to common units was approximately $12.4 million, translating to earnings of $0.12 per unit, while the company's net income reached about $17.3 million.
The quarter also reflected an impressive consolidated Adjusted EBITDA of $80.4 million, which further complemented Kimbell’s operational metrics. Following the acquisition, for the duration of the reported quarter, an adjusted EBITDA marked at $87.5 million showcased the mettle of Kimbell's business model, indicating a healthy trajectory amidst an evolving market landscape.
Kimbell has also made significant strides in its capital strategy. Notably, on October 16, 2026, the company announced its decision to redeem half of its remaining Series A Cumulative Convertible Preferred Units. This move is expected to streamline its capital structure, with post-redemption figures projecting the outstanding preferred units to be less than 3% of Kimbell’s $2.8 billion enterprise value. The timing of this redemption aligns well with Kimbell's initiative to boost its overall growth capacity and reduce the cost of capital, indicating an acute focus on shareholder value maximization.
The partnership has also seen enhancements in its borrowing base and revolving credit commitments. A recent increase from $660 million to $750 million in the secured revolver serves to further solidify its financial underpinning, allowing the company to pursue further growth initiatives without compromising financial health.
Operationally, Kimbell has been firing on all cylinders with a record number of active drilling rigs. As of the end of Q3, the company had 93 active rigs drilling, cementing a market share of approximately 16% of all land rigs operating across the United States. This expansion reflects Kimbell's commitment to optimize its asset utilization and drive production growth across its extensive land holdings, which span 28 states and encompass more than 137,000 gross wells.
In terms of distributions, Kimbell announced a cash distribution of $0.45 per common unit, aptly reflecting a payout ratio of 75% of cash available for distribution. This announcement indicates a strong annualized yield of 10.7% based on the closing price of $16.88 per common unit as of October 30, 2026. Notably, approximately 76% of this distribution is projected to be classified as a return of capital for tax purposes, enhancing the after-tax return for unitholders and further showcasing Kimbell’s attractive investment proposition in the energy space.
"We are pleased to report another outstanding quarter for Kimbell, which included record production, an increase in our rig count, and record line-of-sight wells," said Robert Ravnaas, Chairman and CEO of Kimbell Royalty GP, LLC. Looking ahead, the company remains optimistic about the future direction of the U.S. oil and gas market, particularly in key areas like the Permian Basin.
As Kimbell Royalty Partners navigates through this dynamic landscape, it remains poised to generate significant long-term value for its investors. With its firm commitment to operational excellence and strategic capital allocation, Kimbell is well-positioned to face the challenges ahead while capitalizing on opportunities as they arise.
Topics Energy）
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