Business Context and Reporting Period
This Form 8-K Current Report, filed on December 28, 2018, covers events occurring on December 20, 2018, for Kimbell Royalty Partners, LP. The filing details the completion of a previously announced acquisition (the "Dropdown") of mineral interests and subsidiary equity from Rivercrest Capital Partners LP, Kimbell Art Foundation, Cupola Royalty Direct, LLC, and Rivercrest Royalties Holdings II, LLC.
Key Financial Metrics and Transaction Details
The filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures for the reporting period. The primary financial data relates to the transaction consideration:
- Consideration: 6,500,000 Opco Common Units and an equal number of Class B Units.
- Additional Payment: Sellers paid $0.05 per Class B Unit issued at closing.
- Exchangeability: Opco Common Units and Class B Units are exchangeable for an equal number of Common Units.
- Pro Forma Data: Not included in this filing; expected within 71 calendar days.
Material Changes
The material change reported is the expansion of the Partnership's asset base through the Dropdown. The transaction involved the acquisition of overriding royalty, royalty, and other mineral interests, as well as all limited liability company interests of a subsidiary of Rivercrest Royalties Holdings II, LLC. Certain sellers are affiliates of the Partnership's General Partner and members of its Board of Directors.
Guidance, Outlook, and Agreements
Registration Rights Agreement: The Partnership entered into an agreement to prepare a shelf registration statement for the resale of Common Units issuable upon conversion of the Opco Common Units and Class B Units. The Partnership agreed to file this statement within 30 days and use reasonable best efforts to have it become effective within 180 days of execution.
Unregistered Sales: The issuance of Opco Common Units and Class B Units was conducted as a private placement exempt from registration requirements under Section 4(a)(2) of the Securities Act of 1933.
Financial Statements: Financial statements for the acquired business (Rivercrest Royalties Holdings II, LLC) are not included in this report and will be filed within 71 calendar days.
Investor Verification Checklist
- Verify the total valuation of the Dropdown by calculating the market value of the 6,500,000 Opco Common Units and Class B Units issued.
- Monitor the filing of the financial statements for Rivercrest Royalties Holdings II, LLC, due within 71 days of this report.
- Review the upcoming pro forma financial information to assess the impact of the acquisition on the Partnership's financial position.
- Confirm the timeline for the effectiveness of the Shelf Registration Statement for the resale of the Registrable Securities.
- Assess the potential dilution impact on existing unitholders upon the exchange of Opco Common Units and Class B Units for Common Units.