Kimbell Royalty Q2 Earnings Call Highlights

Record second-quarter performance: Kimbell Royalty reported record oil, natural gas and NGL revenue of $103 million, adjusted EBITDA of $84.9 million and average production of 25,830 BOE per day, aided by the Mesa Royalties acquisition. Distribution and balance-sheet discipline: The company raised its quarterly distribution 15% to $0.47 per common unit, allocating 75% of cash available for distribution to investors and 25% to debt repayment. Net debt remained conservative at approximately 1.4 times trailing adjusted EBITDA, while Kimbell also repurchased 500,000 common units. Growth through acquisitions: Kimbell maintained its 2026 guidance but expects to update it after closing a July 17 drop-down acquisition. Management remains active in acquisitions, favoring diversified, multi-basin portfolios over expensive Permian-only packages.

Kimbell Royalty NYSE: KRP reported record second-quarter results, supported by higher production, contributions from acquisitions and record oil, natural gas and NGL revenue. The company also raised its quarterly common-unit distribution by 15% from the first quarter while maintaining its 2026 guidance ahead of an expected update following the close of a separate drop-down acquisition later in August. Chairman and Chief Executive Officer Bob Ravnaas said the company set quarterly records for oil, natural gas and NGL revenue, net income, adjusted EBITDA, lease bonuses, average daily production and cash available for distribution. Kimbell closed its previously announced Mesa Royalties acquisition in June, and Bob Ravnaas said the acquired assets had begun contributing to results.

“Production during the quarter grew both organically and through acquisitions,” Bob Ravnaas said, adding that the company had announced more than $360 million in acquisitions over the previous 90 days. He said Kimbell sees the transition of U.S. oil and gas royalties from private to public ownership as still being in its early stages.

Revenue, Production and Distribution President and Chief Financial Officer Davis Ravnaas said second-quarter oil, natural gas and NGL revenue totaled a record $103 million, including nine days of production contribution from the Mesa acquisition. Average daily production reached 25,830 barrels of oil equivalent per day, while run-rate output rose to 26,967 BOE per day after the Mesa acquisition closed. Consolidated adjusted EBITDA was a record $84.9 million, according to the company. General and administrative expense totaled $10.2 million, including $5.9 million of cash G&A expense, or $2.50 per BOE. Davis Ravnaas said that figure was below the midpoint of Kimbell’s guidance range.

Kimbell declared a second-quarter cash distribution of $0.47 per common unit, up 15% from the prior quarter. The distribution represents 75% of cash available for distribution, with the remaining 25% designated for debt repayment under the company’s secured revolving credit facility. The company estimates that approximately 47% of the distribution will be treated as return of capital and not subject to dividend taxes. Bob Ravnaas said the distribution represented an annualized tax-advantaged yield of about 13%, based on the prior day’s closing price.

Balance Sheet and Capital Allocation Before the end of the quarter, Kimbell increased the borrowing base and aggregate commitments under its secured revolving credit facility to $660 million from $625 million. At June 30, the company had $478.7 million of debt outstanding and $181.3 million of undrawn capacity. Net debt to trailing 12-month consolidated adjusted EBITDA stood a...