Fort Worth, Texas-based Kimbell Royalty Partners LP has agreed to acquire mineral and royalty interests from an undisclosed seller on Nov. 9 in an all-cash transaction valued at approximately $57 million, subject to purchase price adjustments and other customary closing adjustments. 

According to Kimbell’s estimates, the seller's royalty assets produced 700 barrels of oil equivalent per day (boe/d), 240 barrels per day (bbl/d) of oil, 123 bbl/d of NGLs and 2,021 Mcf/d of natural gas across a diverse property set with over 26,000 gross producing wells concentrated in the Permian (39%), Midcontinent (31%) and Haynesville (14%) basins. 

The acquisition is expected to increase Kimbell's average daily net production to 14,783 boe/d and bring its total gross well count to over 26,000 producing locations and 5.9 MMboe in total proved reserves. The company currently operates oil and gas mineral and royalty interests in across 13 million gross acres with 123,000 gross wells and a total of 63 active rigs in 28 states.

The acreage is a mix of conventional (62% of PDP reserves) and unconventional (38% of PDP reserves) resources across premier basins in the U.S.

In addition, over 96% 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. The acquisition is expected to strengthen Kimbell's diversified positions in the Permian, Haynesville, and Midcontinent.

 

Kimbell intends to raise the proceeds for the purchase price through a combination of an underwritten public offering of common units and borrowings under its revolving credit facility.

The company expects $90 million of liquidity following transaction close.

"This is a compelling bolt-on acquisition that is expected to be immediately accretive to Kimbell's cash available for distribution per common unit and highlights our competitive advantage in acquiring complex, multi-basin mineral and royalty portfolios,” Bob Ravnaas, chairman and CEO of Kimbell's general partner, said. “The seller's production profile is a natural fit with Kimbell's existing portfolio and is supported by an attractive mix of conventional and unconventional asset positions located in the premier oil and gas basins in the lower 48.”

The board of directors of Kimbell's general partner and the governing bodies of the seller have each unanimously approved the acquisition, which is expected to close in the fourth quarter of 2021, subject to customary closing conditions. The effective date of the acquisition is expected to be Nov. 1.  

In July, Kimbell launched a $200 million SPAC—named Kimbell Tiger Acquisition Corp.—to pursue energy and natural resources space in North America.

Ravnaas continued, “Furthermore, the targeted assets are characterized by an extremely shallow 9% production decline rate, which will enhance Kimbell's best-in-class PDP decline rate. The seller's portfolio also includes an attractive position in the Denver Unit in Gaines County, Texas, which is historically one of the most prolific and stable units in the Permian Basin having already produced over 1 billion barrels of oil. I want to thank our employees and advisors for their disciplined work in getting to this point in the transaction, and looking forward, we will continue to pursue opportunities to expand Kimbell's mineral and royalty interests."