Business Context and Reporting Period
Company: Kimbell Royalty Partners, LP
Filing Type: Form 8-K (Current Report)
Date of Report: May 29, 2018 (Earliest event reported: May 28, 2018)
Context: The Partnership announced the execution of definitive agreements to acquire certain subsidiaries of Haymaker Minerals & Royalties, LLC and Haymaker Resources, LP. These subsidiaries own oil and gas mineral and royalty interests. The transaction is subject to conditions contained in the agreements.
Key Financial Metrics
This filing is a current report regarding a material event and does not contain periodic financial statements. Consequently, specific values for revenue, profit, cash flow, margins, debt, and liquidity are not provided in this document.
Material Changes
- Acquisition Activity: Entered into definitive agreements to acquire oil and gas mineral and royalty interests from Haymaker Minerals & Royalties, LLC and Haymaker Resources, LP.
- Corporate Structure: The filing references forward-looking statements regarding an "election to change to a taxable entity," indicating a potential material change in the Partnership's tax status.
Guidance, Outlook, and Risks
Outlook and Commentary: Management has issued forward-looking statements regarding the expected benefits of the proposed acquisition and the election to change to a taxable entity. The Partnership does not undertake an obligation to update these statements.
Risks and Contingencies: The filing highlights several material risks, including:
- Transaction Risks: The acquisition may not close if conditions are not satisfied, financing is not obtained, or anticipated benefits are not realized.
- Market Risks: Low or declining oil and natural gas prices could reduce proved reserve values, cause operators to delay drilling, or reduce production levels, adversely impacting cash flow.
- Operational Risks: Risks inherent in drilling and production, such as fire, explosion, blowouts, pipe failure, and environmental hazards.
- Regulatory Risks: Delays in receiving drilling permits, government approvals, or third-party consents.
- Hedging Risks: Risks related to the Partnership's hedging activities.
Investor Verification Checklist
- Verify the specific terms and conditions of the definitive agreements with Haymaker Minerals & Royalties, LLC and Haymaker Resources, LP (refer to Exhibit 99.1).
- Confirm the status and implications of the election to change to a taxable entity.
- Review the financing arrangements required to fund the acquisition.
- Assess the impact of current oil and natural gas price volatility on the Partnership's cash flow and the acquired assets.
- Examine the detailed risk factors in the Partnership's most recent Form 10-K.