Kimbell Royalty Partners' 2025 Q2 Earnings Call: Contradictions in M&A Strategy, Permian Focus, and Gas Growth Expectations

M&A strategy and priority, focus on the Permian Basin, natural gas growth expectations, M&A market conditions, and lease bonus trends are the key contradictions discussed in Kimbell Royalty Partners' latest 202



Strong Cash Flow and Debt Repayment:
- Kimbell Royalty Partners reported robust cash flow and continued debt paydown, with a net debt to trailing 12-month consolidated adjusted EBITDA ratio of approximately 1.6x.
- This was a result of solid operational performance and disciplined financial management.

Rig Count and Market Share Stability:
- The company's rig count remained robust, with a 2% decrease to 88 rigs actively drilling on its acreage, compared to a 7% drop in the overall U.S. land rig count.
- This stability was attributed to the quality and diversification of the company's asset portfolio.

Permian Basin and Haynesville Activity:
- The Permian Basin saw a 4-rig increase, while the Haynesville experienced a 5-rig increase, bucking the broader trend of decreased drilling activity.
- The increase in activity in these regions was driven by operator interest in existing royalty positions and lower costs relative to other basins.

G&A Costs and Efficiency:
- Cash G&A costs per BOE came in below the low end of guidance, reflecting operator discipline and positive operating leverage.
- This efficiency was achieved through a focus on maintaining a consistent personnel level and optimizing acquisition strategies.