FORT WORTH, Texas, April 12, 2023 /PRNewswire/ — Kimbell Royalty Partners, LP (NYSE: KRP) (“Kimbell” or the “Company”), a leading owner of oil and gas mineral and royalty interests in approximately 16 million gross acres in 28 states, today announced that it has agreed to acquire mineral and royalty interests (“acquired assets”) from MB Minerals, L.P., a subsidiary of Sabalo Holdings, LLC (a portfolio company of EnCap Investments), in a cash and unit transaction valued at approximately $143.1 million5, subject to purchase price adjustments and other customary closing adjustments (the “Acquisition”). The purchase price for the Acquisition is comprised of $48.8 million in cash (approximately 34% of the total consideration), approximately 5.4 million newly issued common units of Kimbell Royalty Operating, LLC valued at $85.4 million, and approximately 0.6 million newly issued common units of Kimbell Royalty Partners, LP valued at $8.9 million.
For the next twelve months, Kimbell estimates that, as of April 1, 2023, the acquired assets will produce approximately 1,901 Boe/d (1,459 Bbl/d of oil, 219 Bbl/d of NGLs, and 1,338 Mcf/d of natural gas) (6:1). The acquired assets are concentrated in northern Howard County and southern Borden County. The Acquisition is expected to close in the second quarter of 2023, subject to customary closing conditions, and the effective date is expected to be April 1, 2023.
Asset Highlights: Significant development activity across acreage provides line of sight to substantial near-term production
- Approximately 806 Net Royalty Acres (6,445 NRA normalized to 1/8th) on approximately 60,000 gross unit acres located in Northern Midland Basin
- High-interest contiguous footprint with 1.55% average unit Net Revenue Interest
- High confidence in established operator spacing and well performance in de-risked zones in the Spraberry and Wolfcamp
- Management estimates 5.3 MMBoe in total proved reserves, reflecting a purchase price of approximately $26.97 per total proved Boe
- 97% of estimated first year cash flow from PDP and PDNP wells
- 3 active rigs on the acreage as of March 31, 2023
- Mineral and Overriding Royalty ownership in over 100 horizontal DSUs, 100% Held-By-Production
- Over 300 total producing wells
- Liquids-focused asset base expected to strengthen Kimbell’s oil weighting from 29% to 34% of daily production mix
Kimbell Continues Its Role as a Leading Consolidator in the U.S. Oil and Gas Royalty Sector
Assuming the Acquisition is consummated as described in this news release, Kimbell is expected to have over 16 million gross acres, over 125,000 gross wells and a total of 97 active rigs on its properties, which represents approximately 13%6 of the total active land rigs drilling in the continental United States. In addition, over 97% of all rigs in the continental United States are located in counties where Kimbell is expected to hold mineral interest positions following the consummation of the Acquisition.
Advisors
White & Case LLP and Kelly Hart & Hallman LLP acted as legal counsel to Kimbell. TenOaks Energy Advisors served as exclusive financial advisor and Bracewell LLP served as legal advisor to MB Minerals, L.P.
About Kimbell Royalty Partners
Kimbell (NYSE: KRP) is a leading oil and gas mineral and royalty company based in Fort Worth, Texas. Kimbell owns mineral and royalty interests in over 16 million gross acres in 28 states and in every major onshore basin in the continental United States, including ownership in more than 124,000 gross wells with over 48,000 wells in the Permian Basin. To learn more, visit http://www.kimbellrp.com.