Kimbell Royalty Partners, LP - 10-Q Summary (Q3 2025)
Business Context and Reporting Period
This report covers the quarterly period ended September 30, 2025. Kimbell Royalty Partners, LP is a Delaware limited partnership owning mineral and royalty interests in oil and natural gas properties across the United States. The Partnership is taxed as a corporation. As of the reporting date, the Partnership owned interests in approximately 12.3 million gross acres and 4.7 million gross acres of overriding royalty interests, with significant exposure to the Permian Basin and Mid-Continent regions.
Key Financial Metrics
| Metric | Q3 2025 | Q3 2024 | YTD 2025 | YTD 2024 |
|---|---|---|---|---|
| Total Revenue | $80.6 million | $83.8 million | $251.4 million | $242.6 million |
| Net Income | $22.3 million | $25.8 million | $74.8 million | $50.3 million |
| Net Income (Common Units) | $17.0 million | $17.4 million | $36.9 million | $29.0 million |
| EPS (Diluted) | $0.19 | $0.22 | $0.41 | $0.38 |
| Operating Cash Flow (YTD) | $189.2 million | $194.3 million | - | - |
| Long-Term Debt | $448.5 million | $239.2 million (Dec 2024) | - | - |
| Cash and Equivalents | $40.0 million | $34.2 million (Dec 2024) | - | - |
Production Data (Q3 2025): Total production was 2,348,775 Boe (25,530 Boe/d), an increase of 7% compared to Q3 2024. Average realized prices were $64.42/Bbl for oil, $2.67/Mcf for natural gas, and $21.36/Bbl for NGLs.
Material Changes vs. Prior Period
- Acquisitions: Completed the Boren Acquisition in January 2025 for approximately $230.4 million, adding mineral and royalty interests in the Midland Basin. This drove increased production volumes and revenues.
- Capital Structure:
- Issued 11.5 million common units in a public offering (January 2025) for net proceeds of $163.6 million.
- Redeemed 50% of Series A preferred units (162,500 units) in May 2025 for $182.3 million, recognizing a $24.0 million deemed dividend.
- Increased borrowing base on the revolving credit facility to $625.0 million. Outstanding debt rose to $448.5 million to fund acquisitions and the preferred unit redemption.
- Revenue Mix: Oil, natural gas, and NGL revenues increased YTD by 2.5% to $241.5 million, driven by higher natural gas prices and volumes, partially offset by lower oil prices.
- Derivatives: Recorded a net gain of $3.4 million in Q3 2025 on commodity derivatives, compared to $9.6 million in Q3 2024.
Guidance, Outlook, and Risks
- Distributions: The Board declared a quarterly cash distribution of $0.35 per common unit for Q3 2025, payable November 24, 2025. The Board intends to continue allocating a portion of cash available for distribution to repay outstanding borrowings.
- Outlook: Management expects to pursue further acquisitions to grow the asset base. The Partnership is not obligated to fund drilling costs, relying on organic growth from working interest owners.
- Risks:
- Commodity Price Volatility: Exposure to fluctuations in oil and natural gas prices, though partially hedged via fixed-price swaps through September 2027.
- Geopolitical Factors: Ongoing conflicts in Ukraine and the Middle East create uncertainty in global supply and demand.
- Regulatory/Tax: The "One Big Beautiful Bill Act" (enacted July 2025) reduced corporate tax rates and modified interest expense limitations, resulting in a tax benefit for the quarter.
Investor Verification Checklist
- Verify the impact of the Boren Acquisition on future production growth and reserve replacement rates.
- Confirm the Debt to EBITDAX ratio compliance given the increased debt load ($448.5M) and the covenant limit of 3.5x.
- Review the hedging program details (fixed price swaps) to understand price protection levels for 2026-2027.
- Assess the sustainability of the $0.35 distribution relative to Adjusted EBITDA and debt service requirements.
- Monitor the Series A preferred unit redemption status and remaining obligations (162,500 units outstanding).