#United States #Fort Worth #Oil and Gas #Kimbell Royalty #Midland Basin

Kimbell Royalty Partners Makes Strategic Move in Midland Basin

In a significant development for the energy sector, Kimbell Royalty Partners, LP (NYSE: KRP), a prominent player in the field of oil and gas mineral rights, has successfully concluded a $230 million cash acquisition. This transaction marks a pivotal step for Kimbell as it expands its already substantial mineral and royalty interests, now spanning over 17 million acres across 28 states.

Details of the Acquisition

On January 17, 2025, Kimbell announced the closure of its acquisition of mineral and royalty interests from a private seller, termed the “Acquired Assets.” This acquisition is particularly notable given its location in the Midland Basin—a region rich in oil and gas resources, specifically under the historically significant Mabee Ranch.

The funds for this acquisition were procured through a strategic combination of a public offering of common units and borrowing against its revolving credit facility. This diversified funding strategy underscores Kimbell's commitment to maintaining robust financial health while pursuing solid growth opportunities.

Kimbell has also projected significant cash flow from the Acquired Assets, which have been producing since October 1, 2024. Early estimates suggest an impressive production rate of approximately 1,842 barrels of oil equivalent per day (Boe/d), with contributions from oil, natural gas liquids (NGLs), and natural gas. The breakdown includes around 1,125 barrels per day of oil, 410 barrels per day of NGLs, and 1,842 thousand cubic feet per day of natural gas.

Looking forward, Kimbell anticipates that these production levels will continue into 2025, estimating the same daily output—an indicator of the area's potential for sustained productivity and revenue generation.

Strategic Significance

Kimbell Royalty Partners has effectively positioned itself as a leader in the mineral and royalty sector, particularly within the Permian Basin—one of the most productive oil regions in the U.S. Ownership of the Acquired Assets, which are primarily located in Martin and Andrews counties, aligns seamlessly with Kimbell's strategic vision of enhancing its operational footprint in key areas.

This acquisition not only bolsters Kimbell's asset portfolio but also intends to enhance its revenue stream moving forward. Moreover, the deal aligns with the company’s ongoing strategy to maximize shareholder value through strategic acquisitions of high-quality oil and gas reserves.

As Kimbell continues to grow, its ability to integrate and manage these acquired assets will be crucial. The company recognizes the inherent risks associated with oil and gas exploration and production, including market volatility and operational challenges. Nevertheless, Kimbell remains optimistic about the long-term benefits of this acquisition.

Conclusion

In summary, Kimbell Royalty Partners' acquisition of Midland Basin mineral and royalty interests is poised to strengthen its market position while potentially delivering substantial financial returns. Through careful strategic planning and execution, Kimbell aims to ensure that this investment pays dividends for years to come, reinforcing its status as a frontrunner in the oil and gas sector. Kimbell's commitment to operational excellence and shareholder value remains unwavering as they navigate the complexities of the energy landscape.