Kimbell Royalty Partners’ Earnings Call Highlights Growth

Kimbell Royalty Partners ((KRP)) has held its Q3 earnings call. Read on for the main highlights of the call.

Kimbell Royalty Partners’ recent earnings call conveyed a generally positive sentiment, emphasizing steady production growth and robust financial performance. The company demonstrated strategic capital distribution and maintained a conservative approach to managing its balance sheet. However, the call also acknowledged challenges in the broader energy market and fluctuating production costs.

Solid Production Increase

Kimbell Royalty Partners reported a solid increase in production, with a 1% organic growth over the previous quarter. This achievement surpassed the midpoint of their 2025 guidance, with an average production of 25,574 BOE per day for the first nine months of the year.

Strong Financial Performance

The company showcased strong financial results, with oil, natural gas, and NGL revenues totaling $76.8 million in the third quarter. The total consolidated adjusted EBITDA reached $62.3 million, reflecting the company’s solid financial standing.

Distribution and Return of Capital

Kimbell declared a Q3 2025 distribution of $0.35 per common unit, with nearly 100% expected to be a return of capital. This move is aimed at enhancing after-tax returns for investors.

Conservative Balance Sheet

The company maintained a conservative balance sheet, with a net debt to trailing 12 months consolidated adjusted EBITDA ratio of approximately 1.6x. Additionally, there was $176.5 million in undrawn capacity under the credit facility.

Stable Rig Activity

Kimbell’s active rig count remained robust, with 86 rigs drilling across its acreage, representing a 16% market share of U.S. land rigs.

General Slowdown in U.S. Oil and Natural Gas

Despite Kimbell’s solid performance, the company noted a general slowdown among U.S. oil and natural gas operators, which presents ongoing challenges in the industry.

Fluctuating Production Costs

The company experienced fluctuating production costs, with marketing and other deductions expenses unusually high at $1.80 per BOE, attributed to higher production growth in the Mid-Con region.

Forward-Looking Guidance

Kimbell Royalty Partners reaffirmed its financial and operational guidance for 2025. The company expects continued production growth, maintaining a net debt to trailing 12 months consolidated adjusted EBITDA ratio of approximately 1.6x. The active rig count is anticipated to remain strong, with significant undrawn capacity under its secured revolving credit facility.

In conclusion, Kimbell Royalty Partners’ earnings call highlighted a positive outlook with steady production growth and strong financial performance. The company remains committed to strategic capital distribution and conservative balance sheet management, despite challenges in the broader energy market and fluctuating production costs.