Kimbell Royalty Partners ((KRP)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Kimbell Royalty Partners was marked by a largely positive sentiment, underscored by strong cash flow, an increase in rig count and market share, and a favorable financial position. The company announced a return of capital to shareholders and reaffirmed its guidance for 2025. However, some concerns were noted regarding the decline in the Mid-Continent region and potential challenges in the Permian Basin.
Strong Cash Flow and Debt Reduction
Kimbell Royalty Partners reported robust cash flow, which facilitated continued debt paydown and a reduction in cash G&A cost per BOE. Notably, the cash G&A per BOE was below the low end of guidance, showcasing positive operating leverage and financial discipline.
Increased Rig Count and Market Share
The company saw an increase in its market share of U.S. land rigs, rising by 1% to 17%. Despite a 7% drop in the overall U.S. land rig count, Kimbell’s rig count only decreased by 2%, with notable increases in the Permian Basin and Haynesville regions.
Distribution Announcement
Kimbell announced a $0.38 distribution per common unit, with nearly 100% expected to be considered a return of capital. This move is set to enhance the after-tax return for common unitholders, reflecting the company’s commitment to shareholder value.
Financial Position and Liquidity
As of June 30, 2025, Kimbell maintained a strong financial position with $462 million in debt and $163 million in undrawn capacity under its secured revolving credit facility. The borrowing base was increased from $550 million to $625 million, providing additional financial flexibility.
Affirmation of Financial and Operational Guidance
The company reaffirmed its financial and operational guidance for 2025, expressing confidence in continued robust development. This affirmation underscores Kimbell’s strategic focus and operational resilience.
Mid-Continent Region Decline
The Mid-Continent region experienced a decline in drilling activity, contrasting with the growth observed in other areas like the Permian and Haynesville. This decline poses a challenge that the company will need to address moving forward.
Challenges in Permian Basin
Concerns were raised about potential oil production declines in the Permian Basin, a key focus area for Kimbell. The company will need to navigate these challenges to maintain its growth trajectory.
Forward-Looking Guidance
Kimbell Royalty Partners provided a comprehensive update on its financial and operational performance, highlighting a total revenue of $75 million and a run rate production of 25,355 BOE per day. The company emphasized its strong financial position and ongoing opportunities for growth and asset expansion, reaffirming its 2025 guidance.
In summary, Kimbell Royalty Partners’ earnings call reflected a positive outlook, with strong cash flow, increased market share, and a solid financial position. While challenges in the Mid-Continent and Permian Basin regions were noted, the company’s reaffirmation of its 2025 guidance and strategic focus on growth provide a promising outlook for the future.