KRP Kimbell Royalty Partners

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K/A

(Amendment No. 1) 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (date of earliest event reported): September 13, 2023

 

 

Kimbell Royalty Partners, LP

(Exact name of registrant as specified in its charter)

 

 

Delaware		1-38005		47-5505475
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

777 Taylor Street, Suite 810 Fort Worth, Texas		76102
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code:(817) 945-9700

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to 12(b) of the Act:

 

Title of each class:	Trading symbol(s):	Name of each exchange on which registered:
Common Units Representing Limited Partnership Interests	KRP	New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

Introductory Note

 

As reported in a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission by Kimbell Royalty Partners, LP, a Delaware limited partnership (“Kimbell”), on September 14, 2023 (the “Original Form 8-K”), on September 13, 2023 Kimbell completed its previously announced acquisition (the “Acquisition”) of all of the issued and outstanding membership interests of Cherry Creek Minerals LLC, a Colorado limited liability company (the “Acquired Company”), pursuant to a securities purchase agreement by and among Kimbell, Kimbell Royalty Operating, LLC, a Delaware limited liability company, and LongPoint Minerals II, LLC, a Colorado limited liability company.

 

This amendment is filed to provide the historical financial statements of LongPoint Minerals II, LLC, the consolidating parent company of the Acquired Company, and the pro forma financial information of Kimbell giving effect to the Acquisition, as required by Item 9.01 of Form 8-K. Except as set forth below, the Original Form 8-K is unchanged.

 

Item 9.01.

Financial Statements and Exhibits.

 

(a) Financial Statements of Business Acquired.

 

The audited historical financial statements of LongPoint Minerals II, LLC, as of and for the year ended December 31, 2022 and 2021, and the unaudited interim financial statements of LongPoint Minerals II, LLC, as of June 30, 2023 and December 31, 2022 and for the six months ended June 30, 2023, and 2022, together with the related notes to such financial statements, are filed as Exhibits 99.1 and 99.2 hereto, respectively, and incorporated by reference herein.

 

(b) Pro Forma Financial Information.

 

The following unaudited pro forma financial information of Kimbell giving effect to the Acquisition is filed as Exhibit 99.3 hereto and incorporated by reference herein:

 

●

unaudited pro forma condensed combined balance sheet as of June 30, 2023;

 

●

unaudited pro forma condensed statement of operations for the six months ended June 30, 2023; and

 

●

unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022.

 

(d) Exhibits.

 

Number		Description
23.1		Consent of Deloitte & Touche LLP
99.1		Audited historical financial statements of LongPoint Minerals II, LLC, as of and for the years ended December 31, 2022 and December 31, 2021 (incorporated by reference to Exhibit 99.2 to Kimbell Royalty Partners, LP’s Current Report on Form 8-K filed on August 2, 2023)
99.2		Unaudited interim financial statements of LongPoint Minerals II, LLC, as of June 30, 2023 and for the six months ended June 30, 2023 and June 30, 2022
99.3		Unaudited pro forma condensed combined financial statements of Kimbell Royalty Partners, LP
104		Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

KIMBELL ROYALTY PARTNERS, LP
By:	Kimbell Royalty GP, LLC,
	its general partner
By:	/s/ Matthew S. Daly
	Matthew S. Daly
	Chief Operating Officer

 

Date: September 27, 2023

 

 

Exhibit 23.1

 

CONSENT OF INDEPENDENT AUDITORS

 

We consent to the incorporation by reference in Registration Statement Nos. 333-226425, 333-229417, 333-230986, 333-236341, 333-238330, 333-269264, and 333-272307 on Form S-3 and Registration Statement Nos. 333-217986, 333-228678, and 333-265288 on Form S-8 of Kimbell Royalty Partners, LP of our report dated March 21, 2023, relating to the financial statements of LongPoint Minerals II, LLC, incorporated by reference in this Current Report on Form 8-K of Kimbell Royalty Partners, LP dated September 27, 2023.

 

/s/ Deloitte & Touche LLP

 

Denver, Colorado

September 27, 2023

 

 

 

Exhibit 99.2

 

 

LongPoint Minerals II, LLC and Subsidiary

Unaudited Consolidated Financial Statements
as of June 30, 2023 and December 31, 2022

and for the six months ended June 30, 2023 and 2022

 

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

PAGE

 

Consolidated Balance Sheets – June 30, 2023 and December 31, 2022	2
Consolidated Statements of Operations – For the Six Months Ended June 30, 2023 and 2022	3
Consolidated Statements of Members’ Equity – For the Six Months Ended June 30, 2023 and 2022	4
Consolidated Statements of Cash Flows – For the Six Months Ended June 30, 2023 and 2022	5
Notes to Consolidated Financial Statements	6

 

 

LONGPOINT MINERALS II, LLC AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

 

		June 30, 2023				December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents		$	13,717			$	16,453
Accrued oil and gas sales and other			6,649				11,516
Prepaid expenses and other current assets			29				30
Total current assets			20,395				27,999
Property and Equipment, at cost:
Oil and gas, on the basis of full cost method of accounting:
Proved properties			306,503				297,164
Unproved properties			326,878				336,217
Accumulated depletion			(39,777	)			(34,500	)
Total oil and gas properties, net			593,604				598,881
Total Assets		$	613,999			$	626,880
LIABILITIES AND MEMBERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses		$	1,925			$	1,664
Commitments and Contingencies (Note 3)
Members’ Equity:
Members’ equity, net of placement fees of $13,893 for both periods			612,074				625,216
Total Liabilities and Members’ Equity		$	613,999			$	626,880

 

See accompanying notes to these consolidated financial statements.

 

 

LONGPOINT MINERALS II, LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands)

 

		For the Six Months Ended June 30,
		2023				2022
Revenues:
Oil and gas sales		$	32,745			$	45,078
Lease bonuses			16,862				16,390
Total revenues			49,607				61,468
Operating Expenses:
Transportation and transmission			1,109				1,342
Severance and other taxes			1,996				2,819
Depletion			5,277				4,730
General and administrative			2,207				2,207
Total operating expenses			10,589				11,098
Operating income			39,018				50,370
Other (Expense) Income:
Financing costs			(466	)			-
Other income, net			284				544
Total other (expense) income, net			(182	)			544
Income Before texas margin tax			38,836				50,914
Texas margin tax expense			170				152
Net income		$	38,666			$	50,762

 

See accompanying notes to these consolidated financial statements.

 

 

LONGPOINT MINERALS II, LLC AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY

(unaudited, in thousands)

 

		CLASS A				CLASS B				Total
Balances, January 1, 2022		$	2,288			$	627,537			$	629,825
Net income			178				50,584				50,762
Members’ distributions			(106	)			(30,065	)			(30,171	)
Balances, June 30, 2022		$	2,360			$	648,056			$	650,416
Balances, January 1, 2023		$	2,272			$	622,944			$	625,216
Net income			135				38,531				38,666
Members’ distributions			(181	)			(51,627	)			(51,808	)
Balances, June 30, 2023		$	2,226			$	609,848			$	612,074

 

See accompanying notes to these consolidated financial statements.

 

 

LONGPOINT MINERALS II, LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

		For the Six Months Ended June 30,
		2023				2022
Cash Flows from Operating Activities:
Net income		$	38,666			$	50,762
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion			5,277				4,730
Effect of changes in current assets and liabilities:
Accrued oil and gas sales, and other			4,867				(4,789	)
Prepaid expenses and other current assets			1				(33	)
Accounts payable and accrued expenses			261				590
Net cash provided by operating activities			49,072				51,260
Cash Flows from Financing Activities:
Member distributions			(51,808	)			(30,171	)
Net cash used in financing activities			(51,808	)			(30,171	)
Net (Decrease) Increase In Cash and Cash Equivalents			(2,736	)			21,089
Cash and Cash Equivalents, beginning of period			16,453				13,790
Cash and Cash Equivalents, end of period		$	13,717			$	34,879

 

See accompanying notes to these consolidated financial statements.

 

 

LONGPOINT MINERALS II, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1.	Business and Summary of Significant Accounting Policies:

 

Business – LongPoint Minerals II, LLC and its wholly owned subsidiary, Cherry Creek Minerals, LLC (collectively, the “Company” or “LongPoint II”) is a Colorado Limited Liability Company focused on acquiring mineral and royalty interests primarily in the Mid-Continent and Permian Basins.

 

LongPoint II does not have employees but rather entered into a “Services Agreement” with LongPoint Operating, LLC (“LongPoint Operating”) to provide all requisite management, technical and administrative support services. LongPoint Operating is a holding company which is owned by the Chief Executive Officer of LongPoint II. LongPoint Operating has entered into a Services Agreement with FourPoint Energy, LLC (“FourPoint”) to provide the services required under the LongPoint II/ LongPoint Operating Services Agreement. FourPoint employs the necessary people to perform the services required under the Services Agreement. During the six months ended June 30, 2023 and 2022, LongPoint II was assessed an agreed upon balance of General and Administrative costs by FourPoint as payment for the services provided.

 

Use of Estimates in the Preparation of Financial Statements – The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

These consolidated interim financial statements (the “financial statements)” reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary to present fairly the financial position and results of operations for the respective interim periods. Certain information and note disclosures normally included in the Company's annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted from these financial statements, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Results of operations for any interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These financial statements should be read in conjunction with the annual consolidated financial statements and notes thereto for the year ended December 31, 2022. Except as disclosed herein, there have been no material changes to the information disclosed in the notes to the consolidated annual financial statements for the year ended December 31, 2022.

 

Significant Accounting Policies – For a description of LongPoint II’s significant accounting policies, see Note 1 of the consolidated financial statements included in the Company’s 2022 audited financial statements. There have been no changes to the policies or the application of such policies during the six months ended June 30, 2023.

 

 

LONGPOINT MINERALS II, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Principles of Consolidation – The accompanying financial statements are consolidated and include the accounts of the Company and its subsidiary. All intercompany amounts have been eliminated in consolidation.

 

Disaggregation of Income

 

The following table disaggregates the Company’s total oil and gas sales by product type:

 

		FOR THE SIX MONTHS ENDED JUNE 30,
		2023				2022
Gas sales		$	6,090			$	12,193
Oil Sales			20,620				24,823
Natural gas liquids sales			6,035				8,062
Oil and gas sales		$	32,745			$	45,078

 

Concentrations of Credit Risk – The Company regularly has cash in a single financial institution which exceeds federal depository insurance limits. The Company places such deposits with high credit quality institutions and has not experienced any credit losses. The Company is subject to credit risk related to oil and gas receivables due from operators related to sale of hydrocarbons produced from properties in which LongPoint II owns a mineral or overriding royalty interest. For the six-month period ended June 30, 2023, 17% of LongPoint II’s oil and gas revenues related to the operations of CP Exploration III Operating LLC. No other operators provided more than 10% of the Company’s revenues during the period. For the six months ended June 30, 2022, 12%, 12%, 10% and 10% of LongPoint II’s oil and gas revenues related to the operations of Continental Resources Inc., Anadarko E&P Onshore LLC (a subsidiary of Occidental Petroleum Corporation), CP Exploration III Operating LLC and EOG Resources, Inc., respectively. No other operators provided more than 10% of the Company’s revenues during the period.

 

Fair Value of Financial Instruments – The Company’s financial instruments consist of cash equivalents and trade payables. The carrying value of these financial instruments are considered to be representative of their fair market value, due to the short-term maturity of these instruments.

 

Accounting for Oil and Gas Operations – The Company uses the full cost method of accounting for its oil and gas properties. Under this method, all costs related to acquisition, exploration and development of oil and gas properties are capitalized to the full cost pool. The Company’s oil and gas properties are comprised of only mineral and overriding royalty interests, as such, the Company has not incurred any exploration or development costs. Proceeds from the disposition of oil and gas properties are accounted for as adjustments to the full cost pool, with no gain or loss recognized unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. Any impairments of unproved properties are charged to the full cost pool when impaired.

 

 

LONGPOINT MINERALS II, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Depletion of capitalized costs of oil and gas properties is provided for using the units of production method based upon estimates of proved oil and gas reserves. In calculating depletion, the volume of proved oil and gas reserves and production is converted into a common unit of measure at the energy equivalent conversion rate of six thousand cubic feet of natural gas to one barrel of oil. Depletion expense for the six-month periods ended June 30, 2023 and 2022 was $5.3 million ($5.93 per barrel of oil equivalent) and $4.7 million ($6.18 per barrel of oil equivalent), respectively.

 

Impairment of Oil and Gas Properties – In accordance with the full cost method of accounting, the net capitalized costs of oil and gas properties are subject to a ceiling. The cost center ceiling is defined as the sum of (a) estimated future net revenues, discounted at 10% per annum, from proved reserves, based on the simple average of the commodity prices posted on the first day of each month in the respective year, adjusted for existing contracts, (b) the cost of properties not being amortized, and (c) the lower of cost or fair market value of unproved properties included in the cost being amortized. If the net book value exceeds the ceiling, the book balance of the properties are written down to the ceiling via an impairment charge. No impairment to proved properties was recorded for the six months ended June 30, 2023 or 2022.

 

Recently Adopted Accounting Standards - In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. In May 2019, ASU 2016-13 was subsequently amended by ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses and ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief. ASU 2016-13, as amended, applies to trade receivables, financial assets and certain other instruments that are not measured at fair value through net income. This ASU replaces the currently required incurred loss approach with an expected loss model for instruments measured at amortized cost. The Company adopted this update effective January 1, 2023. The adoption of this update did not have a material impact on its financial position, results of operations or liquidity since it does not have a history of, or material exposure to, credit losses.

 

2.	Sale of Cherry Creek Minerals, LLC:

 

In May 2023, the Committee of Managers launched a process to market the mineral and royalty assets of LongPoint II for sale. As a result of the marketing process, in July 2023 the Committee of Managers informed management that it had selected an offer from a bidder for total cash consideration of $455.0 million for all of the issued and outstanding membership interests of Cherry Creek Minerals, LLC. Cherry Creek Minerals, LLC holds all of the mineral and royalty interests of the Company. The purchase agreement with respect to the transaction was executed in early August 2023 and the transaction closed on September 13, 2023. The total consideration of $455.0 million is below the carrying amount of Company which indicates that the Company will record a loss on the sale of Cherry Creek Minerals, LLC during the third quarter of 2023.

 

 

LONGPOINT MINERALS II, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

3.	Commitments and Contingencies:

 

Legal Proceedings - The Company may from time to time be involved in various legal actions arising in the normal course of business or from activities associated with properties prior to their acquisition by the Company. In the opinion of management, the Company’s liability, if any, in these pending actions would not have a material adverse effect on the financial position, results of operations or cash flows of the Company.

 

Lease Commitments – The Company is not subject to any lease commitments. As of June 30, 2023, all leases incurred in the ordinary course of business were held by FourPoint and LongPoint II receives the benefit of such leases under the “Services Agreement” with LongPoint Operating.

 

4.	Members’ Capital:

 

Capitalization and Distributions – LongPoint II is a Colorado limited liability company with membership interests owned by a group of investor members (the “Investor Members”) and LongPoint Holdings, LLC, a Colorado limited liability company (“Holdings”).

 

During the six months ended June 30, 2023 and 2022, the Company made distributions to the Investor Members and Holdings of $51.1 million and $29.4 million, respectively.

 

The state of Oklahoma requires operators to withhold 5% of all production revenues associated with royalty interests held by non-residents of Oklahoma to be offset against state income taxes. Similarly, the state of New Mexico requires operators to withhold 4.9% of all production revenues associated with all interests held by non-residents. As LongPoint II is not subject to income taxes as a limited liability company, the tax liability associated with the operations of LongPoint II is the responsibility of the Investor Members and Holdings. As such, the balance of the state withholdings has been reflected as an equity distribution. The total distributions attributable to state withholdings in the six months ended June 30, 2023 and 2022 were $0.7 million and $0.8 million, respectively.

 

5.	Related Party Transactions:

 

LongPoint II incurred total fees of $1.7 million related to the Services Agreement with LongPoint Operating during each six-month period ended June 30, 2023 and 2022. These fees are reflected in “General and administrative” line in the statements of operations. At June 30, 2023 and December 31, 2022, $0.4 million and $0.3 million, respectively, was due to LongPoint Operating and is reflected in “Accounts payable and accrued expenses” in the accompanying balance sheets.

 

 

LONGPOINT MINERALS II, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NorthPoint, an entity owned by an officer of the Company, owns or has certain rights to (i) third party software, (ii) propriety information and data and (iii) furniture, fixtures and equipment and other personal property located at the current office space utilized by FourPoint Energy. The Company has entered into a Usage Agreement with NorthPoint for the use of these assets. LongPoint incurred $0.2 million of fees related to the Usage Agreement in both of the six-month periods ended June 30, 2023 and 2022. No balance was due to NorthPoint at June 30, 2023 and December 31, 2022.

 

6.	Subsequent Events:

 

The Company has evaluated events through September 27, 2023, the date these financial statements were issued. Other than what has been disclosed in the notes to the financial statements, no additional subsequent events of a material nature have been identified.

 

 

Exhibit 99.3

 

KIMBELL ROYALTY PARTNERS, LP

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

On December 15, 2022 (the “Closing Date”), Kimbell Royalty Partners, LP, a Delaware limited partnership (“Kimbell” or the “Partnership”) and Kimbell Royalty Operating, LLC, a Delaware limited liability company (“OpCo” and, together with Kimbell, the “Buyer Parties”), completed the previously announced acquisition (the “Hatch Acquisition”) of mineral and royalty interests pursuant to a purchase and sale agreement (the “PSA”), dated November 3, 2022, by and among the Buyer Parties and Hatch Royalty LLC, a Delaware limited liability company (“Hatch”). The aggregate consideration paid to Hatch for the acquired assets consisted of (i) approximately $150.4 million in cash, subject to purchase price adjustments and other customary closing adjustments and (ii) the issuance of 7,272,821 common units representing limited liability company interests in Opco (“Opco units”) and an equal number of Class B units representing limited partner interests in Kimbell (“Class B units”). The Opco units, together with the Class B units, are exchangeable for an equal number of common units representing limited partner interests in Kimbell (“Common Units”). The total valuation of 7,272,821 Common Units for approximately $120.3 million is based on a closing price of $16.54. The cash consideration of the purchase price was funded from the issuance of 6,900,000 Common Units on November 8, 2022 for $116.9 million and increased borrowings under Kimbell’s existing revolving credit facility on December 13, 2022.

 

Additionally, on August 2, 2023, Kimbell entered into a securities purchase agreement (the “ Purchase Agreement”) with LongPoint Minerals II, LLC (“LongPoint”) to acquire all of the issued and outstanding membership interests of Cherry Creek Minerals, LLC, a Colorado limited liability company (the “Acquired Company”) and a wholly owned subsidiary of LongPoint for a total purchase price of $455.0 million in cash, subject to customary adjustments (the “Acquisition” and together with the Hatch Acquisition, the “Acquisitions”). The aggregate consideration paid to LongPoint for the acquired assets consists of (i) approximately $130.0 million in cash funded through borrowings under our revolving credit facility, and subject to purchase price adjustments and other customary closing adjustments and (ii) the private placement of 325,000 Series A Convertible Preferred Units (the “Preferred Units”) to Apollo Global Securities, LLC (“Apollo”) for gross proceeds of $325.0 million, pursuant to the Preferred Unit purchase agreement, dated as of August 2, 2023, by and among Kimbell and Apollo. The Operating Company used the net proceeds of this offering for the repayment of outstanding borrowings under our revolving credit facility

 

The following unaudited pro forma condensed combined financial statements (the “pro forma financial statements”) present (i) our unaudited pro forma balance sheet as of June 30, 2023, (ii) our unaudited pro forma statement of operations for the six months ended June 30, 2023, and (iii) our unaudited pro forma statement of operations for the year ended December 31, 2022. The pro forma balance sheet as of June 30, 2023 assumes that the Acquisition occurred on June 30, 2023. There were no pro forma adjustments for the Hatch Acquisition as of June 30, 2023 as the financial position is included in the consolidated balance sheet of Kimbell. as of December 31, 2022. The pro forma statement of operations for the six months ended June 30, 2023 and for the year ended December 31, 2022 give pro forma effect to the Acquisitions, as if they had occurred on January 1, 2022, the beginning of the earliest period presented.

 

The pro forma adjustments related to the Acquisitions and the related financing for the LongPoint transaction are based on preliminary estimates, accounting judgments and currently available information and assumptions that management believes are reasonable and are subject to change. Accordingly, these pro forma adjustments are preliminary and have been made solely for the purpose of providing these pro forma financial statements, and do not include the effects of synergies as a result of the Acquisitions. Differences between these preliminary estimates and the final fair value of assets acquired may occur and these differences could be material. The differences, if any, could have a material impact on the accompanying pro forma financial statements and our future results of operations. The pro forma financial statements have been derived from and should be read together with:

 

●

the accompanying notes to the unaudited pro forma financial statements;

●

our historical audited consolidated financial statements and the related notes contained in the Partnership’s Annual Report on Form 10-K as of and for the year ended December 31, 2022, filed on February 23, 2023;

●

our historical unaudited consolidated financial statements and related notes contained in the Partnership’s Quarterly Report on Form 10-Q as of and for the six months ended June 30, 2023 filed on August 2, 2023;

●

the statement of revenues and direct operating expenses of Hatch Royalty LLC and related notes for the period ended December 15, 2022;

●

the historical unaudited consolidated financial statements and related notes of LongPoint as of and for the six months ended June 30,2023; and

 

 

●

the historical audited consolidated financial statements and related notes of LongPoint as of and for the year ended December 31, 2022

 

The pro forma financial statements also include the pro forma effects of the redemption of Kimbell Tiger Acquisition Corporation ("TGR"), a special purpose acquisition company incorporated in Delaware on April 9, 2021 that was previously a consolidated subsidiary of Kimbell. On May 22, 2023, TGR redeemed all of its outstanding shares of Class A common stock (the “TGR Redemption”), which were issued in connection with its initial public offering. A total of 23,002,500 shares were redeemed at a price of $10.57 per share, resulting in a cash payment of approximately $243.2 million to the holders of Class A common stock. As TGR was a consolidated subsidiary of Kimbell, the shares of Class A common stock issued by TGR were classified within redeemable non-controlling interest on the consolidated balance sheet of Kimbell.

 

The pro forma statement of operations for the six months ended June 30, 2023 and for the year ended December 31, 2022 give pro forma effect to the TGR Redemption, as if it occurred on January 1, 2022, the beginning of the earliest period presented. Management of Kimbell believes that TGR was not material to the financial position or results of operations of Kimbell because, among other things, TGR accounted for zero percent of Kimbell’s consolidated total revenues and the proceeds from TGR’s initial public offering were held in trust for the benefit of TGR’s public stockholders and not available to Kimbell. Nevertheless, Kimbell is including the effects of the TGR redemption within the pro forma statement of operations to provide a more complete presentation of Kimbell’s results of operations as of the dates shown herein. There are no pro forma adjustments to the balance sheet as of June 30, 2023 related to the TGR Redemption as it occurred prior to the pro forma balance sheet date of June 30, 2023.

 

These pro forma financial statements are for information purposes only and do not purport to represent what the Partnership’s financial position and results of operations would have been had the Acquisitions occurred on the dates indicated. These pro forma financial statements should not be used to project the Partnership’s financial performance for any future period. A number of factors may affect the results.

 

 

KIMBELL ROYALTY PARTNERS, LP
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

 

		As of June 30, 2023
										Transaction Account Adjustment
		Historical Kimbell				Historical LongPoint				Removal of LongPoint to effectuate the Asset Acquisition						Long Point						Pro Forma Combined
Assets
Current assets
Cash and cash equivalents		$	20,779,119			$	13,717,000			$	(13,717,000	)		3		$	(1,497,874	)		4a,b,c		$	19,281,245
Oil, natural gas and NGL receivables			45,006,388				6,649,000				(6,649,000	)		3			-						45,006,388
Derivatives			1,794,888				-				-						-						1,794,888
Accounts receivable and other current assets			3,135,807				29,000				(29,000	)		3			10,872,589			4c			14,008,396
Total current assets			70,716,202				20,395,000				(20,395,000	)					9,374,715						80,090,917
Property and equipment, net			771,872				-				-						-						771,872
Oil and natural gas properties:
Oil and natural gas properties, using full cost method of accounting ($125,601,085 excluded from depletion at June 30, 2023)			1,602,199,705				633,381,000				(633,381,000	)		3			445,625,285			4c			2,047,824,990
Less: accumulated depreciation, depletion and impairment			(749,745,922	)			(39,777,000	)			39,777,000			3			-						(749,745,922	)
Total oil and natural gas properties, net			852,453,783				593,604,000				(593,604,000	)					445,625,285						1,298,079,068
Right-of-use assets, net			2,357,665				-				-						-						2,357,665
Derivative assets			1,580,439				-				-						-						1,580,439
Loan origination costs, net			6,308,398				-				-						-						6,308,398
Total assets		$	934,188,359			$	613,999,000			$	(613,999,000	)				$	455,000,000					$	1,389,188,359
Liabilities, mezzanine equity and unitholders' equity
Current liabilities:
Accounts payable		$	1,369,894			$	1,925,000			$	(1,925,000	)		3		$	-					$	1,369,894
Other current liabilities			8,340,805				-				-						-						8,340,805
Derivative liabilities			428,560				-				-						-						428,560
Total current liabilities			10,139,259				1,925,000				(1,925,000	)					-						10,139,259
Operating lease liabilities, excluding current portion			2,066,030				-				-						-						2,066,030
Derivative liabilities			170,529				-				-						-						170,529
Long-term debt			269,600,000				-				-						140,500,000			4b			410,100,000
Other liabilities			260,417				-				-						-						260,417
Total liabilities			282,236,235				1,925,000				(1,925,000	)					140,500,000						422,736,235
Commitments and contingencies
Mezzanine equity:			-				-				-						-						-
Series A preferred Units (325,000 units issued and outstanding as of June 30, 2023)			-				-				-						314,500,000			4a			314,500,000
Kimbell Royalty Partners, LP unitholders' equity:							-				-
Common units (65,507,635 units issued and outstanding as of June 30, 2023)			596,177,270				-				-						-						596,177,270
Class B units (20,853,618 units issued and outstanding as of June 30, 2023)			1,042,681				-				-						-						1,042,681
Total Kimbell Royalty Partners, LP unitholders' equity			597,219,951				-				-						-						597,219,951
Members Equity			-				612,074,000				(612,074,000	)		3			-						-
Non-controlling deficit in OpCo			54,732,173				-				-						-						54,732,173
Total equity			651,952,124				610,074,000				(612,074,000	)					-						651,952,124
Total liabilities, mezzanine equity and unitholders' equity		$	934,188,359			$	613,999,000			$	(613,999,000	)				$	455,000,000					$	1,389,188,359

 

See accompanying notes to the unaudited pro forma financial statements

 

 

KIMBELL ROYALTY PARTNERS, LP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

  

		Six Months Ended June 30, 2023
										Transaction Accounting Adjustment
		Historical Kimbell				Historical LongPoint				Removal of LongPoint to effectuate the Asset Acquisition						LongPoint						TGR Redemption						Pro Forma Combined
Revenue:
Oil, natural gas and NGL revenues		$	114,398,373			$	32,745,000			$	(32,745,000	)		3		$	32,745,000			6a		$	-					$	147,143,373
Lease bonus and other income			2,478,526				16,862,000				(16,862,000	)		3			16,862,000			6a			-						19,340,526
Gain on commodity derivative instruments, net			10,791,835				-				-						-						-						10,791,835
Total revenues			127,668,734				49,607,000				(49,607,000	)					49,607,000						-						177,275,734
Costs and expenses
Production and ad valorem taxes			9,682,159				3,105,000				(3,105,000	)		3			3,105,000			6a			-						12,787,159
Depreciation and depletion expense			37,220,503				5,277,000				(5,277,000	)		3			10,992,733			6b			-						48,213,236
Marketing and other deductions			5,669,498				2,207,000				(2,207,000	)		3			855,874			6a			-						6,525,372
General and administrative expense			16,203,426				-				-						-						-						16,203,426
Consolidated variable interest entities related:
General and administrative expense			927,699				-				-						-						(927,699	)		7			-
Total costs and expenses			69,703,285				10,589,000				(10,589,000	)					14,953,607						(927,699	)					83,729,193
Operating Income			57,965,449				39,018,000				(39,018,000	)					34,653,393						927,699						93,546,541
Other income (expense)
Equity income in affiliate			-				-				-						-						-						-
Interest expense			(11,804,522	)			(466,000	)			466,000			3			(5,936,106	)		6c			-						(17,740,628	)
Loss on extinguishment of debt			(480,244	)																									(480,244	)
Other (expense) income			(180,765	)			284,000				(284,000	)		3			-						-						(180,765	)
Consolidated variable interest entities related:
Interest earned on marketable securities in trust account			3,508,691				-				-						-						(3,508,691	)		7			-
Net income before income taxes			49,008,609				38,836,000				(38,836,000	)					28,717,287						(2,580,992	)					75,144,904
Income tax expense			2,312,040				170,000				(170,000	)		3			1,354,773			6d			(121,761	)		7			3,545,052
Net Income			46,696,569				38,666,000				(38,666,000	)					27,362,514						(2,459,231	)					71,599,852
Net income and distributions and accretion on Series A preferred units attributable to noncontrolling interests in OpCo			(9,860,860	)			-				-						-						-						(9,860,860	)
Distribution on Class B units			(47,085	)			-				-						-						-						(47,085	)
Net income attributable to common units of Kimbell Royalty Partners, LP		$	36,788,624			$	38,666,000			$	(38,666,000	)				$	27,362,514					$	(2,459,231	)				$	61,691,907
Net Income per unit attributable to common units of Kimbell Royalty Partners LP
Basic		$	0.61																									$	1.15
Diluted		$	0.59																									$	1.01
Weighted average number of common units outstanding
Basic			62,910,053																										62,910,053
Basic			81,263,101																										81,588,101

 

See accompanying notes to the unaudited pro forma financial statements

 

 

KIMBELL ROYALTY PARTNERS, LP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

 

		Year Ended December 31, 2022
																								Transaction Accounting Adjustments
		Historical Kimbell				Historical Hatch 1/1/22 - 9/30/22				Transaction Accounting Adjustments Hatch for the period from 10/1/2022 – 12/15/2022						Pro Forma (excluding LongPoint)				Historical LongPoint				Removal of LongPoint to effectuate the Asset Acquisition						LongPoint						TGR Redemption						Pro Forma Combined
Revenue
Oil, natural gas and NGL revenues		$	281,964,126			$	27,418,110			$	10,007,022			5a		$	319,389,258			$	87,154,000			$	(87,154,000	)		3		$	87,154,000			6a		$	-					$	406,543,258
Lease bonus and other income			3,073,609				553,100				-						3,626,709				16,560,000				(16,560,000	)		3			16,560,000			6a			-						20,186,709
Loss on commodity derivative instruments, net			(36,978,550	)			(1,282,926	)			1,282,926			5f			(36,978,550	)			-				-						-						-						(36,978,550	)
Total revenues			248,059,185				26,688,284				11,289,948						286,037,417				103,714,000				(103,714,000	)					103,714,000						-						389,751,417
Costs and expenses
Production and ad valorem taxes			16,238,814				1,313,756				-						17,552,570				7,922,000				(7,922,000	)		3			7,922,000			6a			-						25,474,570
Depreciation and depletion expense			50,086,414				4,521,809				4,395,024			5b			59,003,247				9,343,000				(9,343,000	)		3			21,649,236			6b			-						80,652,483
Marketing and other deductions			13,383,074				3,612,012				(2,656,309	)		5f			14,338,777				4,413,000				(4,413,000	)		3			2,747,197			6a			-						17,085,974
General and administrative expense			29,128,659				-				-						29,128,659				-				-						-						-						29,128,659
Consolidated variable interest entities related:
General and administrative expense			2,304,445				-				-						2,304,445				-				-						-						(2,304,445	)		7			-
Total costs and expenses			111,141,406				9,447,577				1,738,715						122,327,698				21,678,000				(21,678,000	)					32,318,433						(2,304,445	)					152,341,686
Operating income			136,917,779				17,240,707				9,551,233						163,709,719				82,036,000				(82,036,000	)					71,395,567						2,304,445						237,409,731
Other income (expense)
Equity income in affiliate			2,668,844				-				-						2,668,844				-				-						-						-						2,668,844
Interest expense			(13,818,310	)			(1,604,315	)			(409,318	)		5c			(15,831,943	)			(1,067,000	)			1,067,000			3			(7,418,400	)		6c			-						(23,250,343	)
Other income			4,043,530				-				-						4,043,530				1,147,000				(1,147,000	)		3			-						-						4,043,530
Consolidated variable interest entities related:
Interest earned on marketable securities in trust account			3,721,145				-				-						3,721,145				-				-						-						(3,721,145	)		7			-
Net income before income taxes			133,532,988				15,636,392				9,141,915						158,311,295				82,116,000				(82,116,000	)					63,977,167						(1,416,700	)					220,871,762
Income tax expense			2,738,702				-				508,192			5d			3,246,894				322,000				(322,000	)		3			1,312,143			6d			(29,056	)		7			4,529,981
Net income			130,794,286				15,636,392				8,633,723						155,064,401				81,794,000				(81,794,000	)					62,665,024						(1,387,644	)					216,341,781
Net income and distributions and accretion on Series A preferred units attributable to noncontrolling interests in OpCo			(18,822,552	)			-				(4,714,324	)		5e			(23,536,876	)			-				-						-						-						(23,536,876	)
Distribution on Class B units			(42,243	)			-				-						(42,243	)			-				-						-						-						(42,243	)
Net income attributable to common units		$	111,929,491			$	15,636,392			$	3,919,399					$	131,485,282			$	81,794,000			$	(81,794,000	)				$	62,665,024					$	(1,387,644	)				$	192,762,662
Net Income per unit attributable to common units of Kimbell Royalty Partners LP
Basic		$	1.75													$	2.43																									$	3.56
Diluted		$	1.72													$	2.02																									$	3.25
Weighted average number of common units outstanding
Basic			54,112,595														54,112,595																										54,112,595
Diluted			65,837,017														65,837,017																										66,162,017

  

See accompanying notes to the unaudited pro forma financial statements

 

 

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

1)

Basis of Presentation

 

The pro forma financial statements have been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786, “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaces the existing pro forma adjustment criteria which simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management Adjustments”). As such, only Transaction Accounting Adjustments are presented in the pro forma financial information and notes thereto, without the effect of estimable synergies. The adjustments presented in the pro forma financial statements have been identified and presented to provide relevant information necessary for an understanding of the Acquisitions.

 

The pro forma balance sheet as of June 30, 2023 assumes that the Acquisition occurred on June 30, 2023. The pro forma statement of operations for the six months ended June 30, 2023 gives pro forma effect to the Acquisition and the TGR Redemption as if they occurred on January 1, 2022, the beginning of the earliest period presented. The pro forma statement of operations for the year ended December 31, 2022 gives pro forma effect to the Acquisitions and the TGR Redemption as if they had occurred on January 1, 2022.

 

The pro forma financial statements are not necessarily indicative of what the actual results of operations and financial position would have been had the transaction taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of Kimbell following the transaction.

 

The pro forma basic and diluted earnings per units amounts presented in the unaudited pro forma statement of operations are based on the weighted average number of the Partnerships’ units outstanding, assuming the Acquisitions and the TGR Redemption occurred at the beginning of the earliest period presented.

 

The pro forma adjustments related to the purchase price allocation of the Acquisition are preliminary and are subject to revisions as additional information becomes available. Revisions to the preliminary purchase price allocation of the assets acquired may have a significant impact on the pro forma amounts. The pro forma adjustments related to the Acquisition reflect the fair values of the assets acquired as of the date indicated. The pro forma adjustments do not necessarily reflect the fair values that would have been recorded if the acquisition had occurred on June 30, 2023.

 

 

2)

Estimated Consideration and Preliminary Purchase Price Allocation

 

The Partnership has performed a preliminary valuation analysis of the fair value of the oil and natural gas properties acquired. Using the total consideration for the Acquisition, the Partnership has estimated the allocation to such assets. The Partnership is accounting for the Acquisition as an asset acquisition thus, all transaction costs associated with the Acquisition were capitalized. The following table summarizes the allocation of the preliminary purchase price as of the date indicated:

 

		Estimated Consideration
Cash purchase consideration		$	450,268,125
Add: Transaction costs			6,229,749
Less: Purchase price adjustments			(10,872,589	)
Total estimated purchase price		$	445,625,285

 

		Purchase Price Allocation
Oil and natural gas properties		$	445,625,285
Net assets acquired		$	445,625,285

 

This preliminary purchase price allocation of the assets acquired has been used to prepare the transaction accounting adjustments in the pro forma balance sheet and statements of operations. The final purchase price allocation is expected to be completed when the Partnership files its report on Form 10-Q for the quarter ended September 30, 2023, subsequent to the closing date of the Acquisition and could differ materially from the preliminary allocation used in the transaction accounting adjustments.

 

3)

Removal of Historical LongPoint to Effectuate the Asset Acquisition

 

As the Partnership determined the Acquisition will be accounted for as an asset acquisition in accordance with U.S. GAAP, the historical account balances of LongPoint have been eliminated. Incremental activity related to the transaction, including the acquisition of the oil and natural gas properties and the incremental revenues, direct operating costs and interest expense, have been reflected as accounting transaction adjustments within the pro forma financial statements.

 

4)

Transaction Accounting Adjustments – Balance Sheet

 

The unaudited pro forma condensed combined balance sheet has been adjusted to reflect the assets acquired from the Acquisition and has been prepared for informational purposes only.

 

(a)

Represents the proceeds from Kimbell’s issuance of 325,000 Preferred Units to Apollo, net of equity issuance costs, to fund the acquisition.

 

(b)

Represents the increase of $140.5 million of borrowings under the Partnership’s revolving credit facility to fund the Acquisition, including the issuance costs associated with the Preferred Units.

 

(c)

Reflects the consideration transferred and preliminary purchase price allocation for the Acquisition consisting of:

 

●

The total consideration paid to LongPoint of $450.3 million funded by (i) the $325.0 million of 325,000 Preferred Units which were issued net of equity issuance costs of $10.5 million; (ii) borrowings under the Partnership’s revolving credit facility of $130.0 million; (iii) net of closing adjustments and acquired cash which reduced the total consideration paid to LongPoint by $4.7 million;

●

The estimated $445.6 million fair value of the proved oil and natural gas properties acquired based on the preliminary purchase price allocation;

●

The $6.2 million of transaction costs; and

●

Purchase price adjustments of $10.9 million relate to revenues directly attributable to the assets acquired and received by LongPoint following the effective date of the Acquisition.

 

5)

Hatch Transaction Accounting Adjustments – Statement of Operations

 

The unaudited pro forma statement of operations has been adjusted to reflect the assets acquired from the Hatch Acquisition for the year ended December 31, 2022 and has been prepared for informational purposes only. The results of operations and financial position of Hatch are included in the consolidated financial statements of Kimbell after December 15, 2023, the Closing Date of the Hatch Acquisition.

 

 

(a)

Represents the historical royalty income derived from the acquired mineral and royalty interests for the period October 1, 2022, through December 15, 2022, totaling $10.0 million:

 

(b)

Represents the increase in depletion expense computed on a unit of production basis following the preliminary purchase price allocation to proved oil and natural gas properties, as if the Hatch Acquisition was consummated on January 1, 2022. Of the $261.1 million estimated fair value of proved oil and natural gas properties acquired, only $56.4 million were subject to depletion in the period presented.

 

(c)

Represents the increase to interest expense resulting from the interest on the additional borrowings under the Partnership’s existing credit facility that was used to finance the acquisition. The Partnership’s credit facility bears interest at SOFR plus a margin of 3.5% or the ABR plus a margin of 2.50%. The unaudited pro forma condensed combined statement of operations for the period ended December 15, 2022, used the weighted average interest of 5.28% on the net outstanding borrowings of $40 million. A 1/8 of a percent point increase or decrease in the benchmark rate would not have a material impact on the pro forma interest expense in the period presented.

 

(d)

Reflects estimated incremental income tax provision associated with the Partnership’s historical statement of operations, using an effective tax rate of approximately 2.05% on net earnings from the Hatch Acquisition.

 

(e)

Reflects the impact of the net income attributable to the non-controlling interests in OpCo as a result of Kimbell’s public offering of Common Units and the Hatch Acquisition. The net income attributable to the non-controlling interests in OpCo was 19% for the period ended December 15, 2022.

 

(f)

Reflects the removal of certain historical activity related to Hatch that is unrelated to the acquired oil and gas properties, including:

 

●

approximately $1.3 million loss on commodity derivatives; and

●

approximately $2.7 million of marketing and other deductions.

 

6)

LongPoint Transaction Accounting Adjustments – Statement of Operations

 

The unaudited pro forma statement of operations has been adjusted to reflect the assets acquired from the Acquisition and has been prepared for informational purposes only.

 

(a)

Represents the historical royalty income, lease bonus and extension income derived from the acquired mineral and royalty interests, and operating expenses including:

 

●

Approximately $32.7 million of oil and natural gas revenues and $16.9 million of lease bonus and other income for the six months ended June 30, 2023;

●

Approximately $87.1 million of oil and natural gas revenues and $16.6 million of lease bonus and other income for the year ended December 31, 2022;

●

Approximately $3.1 million and $7.9 million of production related expenses and taxes for the six months ended June 30, 2023 and year ended December 31, 2022; and

●

Approximately $0.9 million and $2.7 million of direct marketing expenses for the six months ended June 30, 2023 and year ended December 31, 2022.

 

(b)

Represents the increase in depletion expense computed on a unit of production basis following the preliminary purchase price allocation to proved oil and natural gas properties, as if the Acquisition was consummated on January 1, 2022. Of the $462.0 million estimated fair value of proved oil and natural gas properties acquired, only $198.4 million were subject to depletion in the periods presented.

 

(c)

Represents the increase to interest expense resulting from the interest on the additional borrowings under the Partnership’s existing credit facility that were used to finance the acquisition and preferred issuance costs. The Partnership’s credit facility bears interest at SOFR plus a margin of 3.5% or the ABR plus a margin of 2.50%. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2023 and for the year ended December 31, 2022 each used the weighted average interest of 8.52% and 5.28% respectively, on the net outstanding borrowings of $140.5 million. A 1/8 of a percent point increase or decrease in the benchmark rate would not have a material impact on the pro forma interest expense in each period presented.

 

(d)

For the year ended December 31, 2022, reflects estimated incremental income tax provision associated with the Partnership’s historical statement of operations, using an effective tax rate of approximately 2.05% on net earnings from the Acquisition. For the six months ended June 30, 2023, the Partnership’s effective tax rate is approximately 4.72% and it is applied to the Partnership’s net earnings from the Acquisition for calculating the incremental income tax provision.

 

 

7)

Redemption of Kimbell Tiger Acquisition Corporation

 

On May 22, 2023, as a result of TGR’s inability to consummate an initial business combination, TGR redeemed all of its outstanding shares of Class A common stock included as part of the units issued in its initial public offering. Following such redemption, TGR (along with TGR’s Sponsor, Kimbell Tiger Acquisition Sponsor, LLC) was dissolved in accordance with the terms of its organizational documents. There are no pro forma adjustments to the balance sheet as the TGR Redemption occurred prior to the pro forma balance sheet date of June 30, 2023. The unaudited pro forma condensed combined statement of operations reflects the TGR redemption as if it occurred on January 1, 2022. The pro forma adjustments include:

 

●

The derecognition of general and administrative expense of approximately $0.9 million and $2.3 million for the six and twelve months ended June 30, 2023 and December 31, 2022;

●

The derecognition of interest expense on marketable securities of approximately $3.5 million and $3.7 million for the six and twelve months ended June 30, 2023 and December 31, 2022; and through equity

●

The derecognition of income tax benefit of approximately $0.1 million for the six months ended June 30, 2023.

 

8)

Pro Forma Net Income per Common Unit

 

Pro forma net income per Common Unit is determined by dividing the pro forma net income attributable to common unitholders by the number of Common Units reflected in the unaudited condensed pro forma financial statements. All Common Units were assumed to have been outstanding since the beginning of the periods presented. The calculation of diluted net income per Common Unit for the six months ended June 30, 2023 and year ended December 31, 2022 includes Preferred Units on Series A, Common Units issuable upon the exchange of the outstanding Class B Units, and the unvested restricted units issuable upon vesting.

 

9)

Supplemental Pro Forma Oil and Natural Gas Reserve Information

 

The following unaudited supplemental pro forma oil and natural gas reserve tables present how the combined oil and natural gas reserves and standardized measure information of the Company and Acquisition may have appeared had the Acquisition occurred on January 1, 2022. The supplemental pro forma combined oil and natural gas reserves and standardized measure information are for illustrative purposes only. Numerous uncertainties are inherent in estimating quantities and values of proved reserves including future rates of production, exploration and development expenditures, commodity prices, and service costs which may affect the reserve volumes attributable to the Properties and the standardized measure of discounted future net cash flows.

 

The following tables provide a summary of the changes in estimated proved reserves for the year ended December 31, 2022, as well as pro forma proved developed as of the beginning and end of the year, giving effect to the Acquisition as if it had occurred on January 1, 2022.

 

Estimated Pro Forma Combined Quantities of Proved Reserves

 

		Crude Oil and Condensate (MBbls)
		Kimbell				LongPoint				Pro Forma
Net proved reserves at December 31, 2021			12,511				2,314				14,825
Revisions of previous estimates			(58	)			449				391
Purchase of minerals in place			1,328				-				1,328
Production			(1,426	)			(469	)			(1,895	)
Net proved reserves at December 31, 2022			12,355				2,294				14,649
Net Proved Developed Reserves
December 31, 2021			12,511				2,314				14,825
December 31, 2022			12,355				2,294				14,649

 

		Natural Gas (MMcf)
		Kimbell				LongPoint				Pro Forma
Net proved reserves at December 31, 2021			157,764				23,714				181,478
Revisions of previous estimates			17,119				6,782				23,901
Purchase of minerals in place			5,726				-				5,726
Production			(20,311	)			(3,875	)			(24,186	)
Net proved reserves at December 31, 2022			160,298				26,621				186,919
Net Proved Developed Reserves
December 31, 2021			157,764				23,714				181,478
December 31, 2022			160,298				26,621				186,919

 

 

		Natural Gas Liquids (MBbls)
		Kimbell				LongPoint				Pro Forma
Net proved reserves at December 31, 2021			6,669				2,240				8,909
Revisions of previous estimates			759				785				1,544
Purchase of minerals in place			707				-				707
Production			(747	)			(386	)			(1,133	)
Net proved reserves at December 31, 2022			7,388				2,639				10,027
Net Proved Developed Reserves
December 31, 2021			6,669				2,240				8,909
December 31, 2022			7,388				2,639				10,027

 

		Total (Mboe)
		Kimbell				LongPoint				Pro Forma
Net proved reserves at December 31, 2021			45,474				8,506				53,980
Revisions of previous estimates			3,554				2,365				5,919
Purchase of minerals in place			2,989				-				2,989
Production			(5,558	)			(1,502	)			(7,060	)
Net proved reserves at December 31, 2022			46,459				9,369				55,828
Net Proved Developed Reserves
December 31, 2021			45,474				8,506				53,980
December 31, 2022			46,459				9,369				55,828

 

Pro Forma Combined Standardized Measure of Discounted Future Net Cash Flows

 

(in thousands)		Kimbell				LongPoint				Pro Forma
Future cash inflows		$	2,253,273			$	469,705			$	2,722,978
Future production costs			(161,676	)			(35,733	)			(197,409	)
Future state margin taxes			(76,322	)			(15,853	)			(92,175	)
Future net cash flows			2,015,275				418,119				2,433,394
Less 10% annual discount to reflect estimated timing of cash flows			(1,110,980	)			(201,647	)			(1,312,627	)
Standard measure of discounted future net cash flows		$	904,295			$	216,472			$	1,120,767

 

Pro Forma Combined Changes in the Standardized Measure of Discounted Future Net Cash Flows

 

(in thousands)		Kimbell				LongPoint				Pro Forma
Standardized measure, beginning of year		$	526,615			$	138,265			$	664,880
Sales, net of production costs			(252,597	)			(76,814	)			(329,411	)
Net changes of prices and production costs related to future production			365,427				64,584				430,011
Revisions or previous quantity estimates, net of related costs			71,776				54,646				126,422
Net changes in state margin taxes			(15,266	)			(3,035	)			(18,301	)
Accretion of discount			44,280				13,826				58,106
Purchases of reserves in place, less related costs			77,719				-				77,719
Timing differences and other			86,341				25,000				111,341
Standardized measure – end of year		$	904,295			$	216,472			$	1,120,767

 

 

v3.23.3

Cover	Sep. 13, 2023
Cover [Abstract]
Document Type	8-K/A
Amendment Flag	false
Document Period End Date	Sep. 13, 2023
Entity File Number	1-38005
Entity Registrant Name	Kimbell Royalty Partners, LP
Entity Central Index Key	0001657788
Entity Tax Identification Number	47-5505475
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	777 Taylor Street
Entity Address, Address Line Two	Suite 810
Entity Address, City or Town	Fort Worth
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	76102
City Area Code	817
Local Phone Number	945-9700
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Units Representing Limited Partnership Interests
Trading Symbol	KRP
Security Exchange Name	NYSE
Entity Emerging Growth Company	false

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