Business Context and Reporting Period
This Form 8-K filing by Kimbell Royalty Partners, LP reports a material acquisition event dated April 21, 2017. The Partnership, an emerging growth company, operates in the Mid-Continent region, focusing on royalty interests in oil and natural gas properties.
Key Financial Metrics and Transaction Details
- Acquisition Cost: $15.9 million.
- Assets Acquired: 1.1 million gross acres (6,700 net royalty acres) of overriding royalty interests in the Anadarko Basin from Maxus Energy Corporation.
- Production Volume: Estimated average daily production of approximately 272 net Boe/d (6:1) for the first quarter of 2017.
- Reserves: Total proved reserves of 1,873 MBoe (6:1) as of April 1, 2017.
- Reserve Composition: 74% natural gas, 16% natural gas liquids, and 10% oil.
- Funding Source: The transaction was funded through the Partnership's credit facility.
Material Changes
The primary material change is the expansion of the Partnership's asset base in the Anadarko Basin, specifically in the Texas panhandle and Northwest Oklahoma. The acquired assets are substantially all held by production, adding over 2,600 producing wells across 32 counties in five states (Texas, Oklahoma, Louisiana, Wyoming, and New Mexico) to the existing portfolio. Since 2014, 145 wells have been drilled on the acquired interest.
Outlook and Risks
Management commentary highlights the strategic addition of assets with multiple stacked pay zones. The filing does not provide specific forward-looking guidance, updated liquidity ratios, or detailed risk factors beyond the standard disclosure of the transaction. The reliance on the credit facility for funding implies an increase in leverage, though specific debt covenants or liquidity impacts are not detailed in this text.
Investor Verification Checklist
- Verify the impact of the $15.9 million drawdown on the Partnership's total available credit facility capacity.
- Confirm the accuracy of the 1,873 MBoe proved reserves estimate and the 6:1 gas-to-oil ratio used in calculations.
- Review the specific terms of the credit facility to assess interest rate exposure and maturity dates.
- Assess the production decline rates for the 2,600 producing wells included in the acquisition.