Kimbell Royalty NYSE: KRP reported first-quarter results that management said reflected stronger-than-expected production, continued drilling activity across its mineral and royalty acreage and a higher quarterly distribution to common unitholders.
Chairman and Chief Executive Officer Bob Ravnaas said production exceeded the midpoint of the company’s guidance, supported by what he described as a “high quality, diversified, and low decline production base.” Kimbell had 85 rigs drilling across its acreage at quarter-end, representing 16% of U.S. land rigs, he said.
The company declared a first-quarter 2026 distribution of $0.41 per common unit, an 11% increase from the fourth quarter of 2025. Ravnaas said the payout represented an annualized tax-advantaged yield of approximately 11% based on the prior day’s closing price.
Revenue, Production and EBITDA
President and Chief Financial Officer Davis Ravnaas said Kimbell generated $82.9 million in oil, natural gas and NGL revenue during the first quarter. Run-rate production totaled 25,522 barrels of oil equivalent per day, above the midpoint of the company’s guidance.
First-quarter general and administrative expenses totaled $9.4 million, including $5.3 million of cash G&A, or $2.31 per BOE. Davis Ravnaas said the cash G&A figure was “well below” the company’s guidance range and reflected “continued operational discipline and positive operating leverage.”
Consolidated adjusted EBITDA for the quarter was $68 million. The company also affirmed its financial and operational guidance ranges for 2026, which were initially included in its fourth-quarter 2025 earnings release.
Distribution and Capital Allocation
Davis Ravnaas said approximately 72% of the first-quarter distribution is expected to be classified as return of capital and not subject to dividend taxes, enhancing after-tax returns for common unitholders. The distribution represented 75% of cash available for distribution, while the remaining 25% will be used to reduce borrowings under Kimbell’s secured revolving credit facility.
Kimbell also repurchased and canceled 500,000 common units during the quarter for an aggregate purchase price of approximately $7.3 million, at an average price of $14.60 per unit.
Davis Ravnaas said the repurchase reflected management’s confidence in the business and its view that the units were trading below intrinsic value. In response to a question from KeyBanc Capital Markets analyst Tim Rezvan, he said future buybacks would be weighed against debt reduction using the 25% portion of free cash not allocated to distributions.
“We do not intend to divert the 75% payout to our dividends for repurchases,” Davis Ravnaas said. “It would be a trade-off between debt paydown and repurchases of our stock with the 25% component of our free cash.”
Balance Sheet and Liquidity
As of March 31, Kimbell had approximately $440.9 million of debt outstanding under its secured revolving credit facility. Davis Ravnaas said that represented net debt to trailing 12-month consolidated adjusted EBITDA of approximately 1.6 times.
The company also had approximately $184.1 million of undrawn capacity under the facility at the end of the quarter. Management said it remained comfortable with Kimbell’s financial position and flexibility.
Drilling Activity and Commodity Price Outlook
Management said higher oil prices could support a modest increase in activity across Kimbell’s oil-weighted basins during the remainder of 2026. Bob Ravnaas said operators may accelerate completion of drilled but uncompleted wells, or DUCs, to capture improved pricing while gradually increasing rig counts.
He noted that oil prices had been volatile because of macro uncertainty related to the Middle East conflict, but said they remained elevated compared with historical levels and that the current forward strip was supportive of incremental activity.
During the question-and-answer session, Davis Ravnaas said Kimbell was seeing activity beyond the Permian Basin, including an uptick in the Bakken “for the first time in a while,” as well as activity in the Eagle Ford and Mid-Continent. Still, he said Kimbell expects the majority of increased activity to occur in the Permian.
Asked by Texas Capital analyst Nick Armato whether the company saw upside to its full-year outlook, Davis Ravnaas said he believed increased activity was possible given the rise in oil prices. He said some operators were taking a wait-and-see approach, while others appeared more aggressive, particularly private operators.
On development timing, Davis Ravnaas said Kimbell has historically seen DUCs come online within about six months on average, while permits typically convert over a period of up to a year. He said those timelines can accelerate in higher-price environments, along with permitting activity. He also noted that Kimbell’s net DUC and permit inventory does not include minor properties, which could add up to 20% to inventory.
M&A Market Remains Active but Volatile
Kimbell reiterated that it continues to evaluate acquisition opportunities in the fragmented U.S. oil and natural gas royalty sector, which Davis Ravnaas estimated exceeds $850 billion in size.
In response to a question about the M&A market, Davis Ravnaas said there were “a couple of packages in the market now” and that Kimbell tries to review every sizable acquisition opportunity. He said there was “nothing imminent to report.”
He added that higher oil prices may make sellers more willing to transact, but volatility has complicated dealmaking because some sellers have a more bullish view of future oil prices than potential buyers. He said a larger volume of transactions may occur once volatility declines and buyers and sellers have more alignment on pricing expectations.
Bob Ravnaas closed the call by saying Kimbell remains bullish on the U.S. royalty industry and its role as a consolidator, citing the company’s diversified portfolio across leading U.S. basins and expectations for long-term demand growth for U.S. energy.
About Kimbell Royalty NYSE: KRP
Kimbell Royalty Partners LP NYSE: KRP is a mineral and royalty company focused on acquiring and managing oil and natural gas royalty interests in the United States. As a master limited partnership, Kimbell Royalty generates fee-like revenues by collecting royalties and overriding royalty interests on production volumes, without directly bearing the capital or operating costs of drilling and completion activities. The partnership's business model emphasizes steady cash flows and limited downside exposure to commodity price fluctuations.
The company's asset portfolio spans multiple onshore basins, with a core concentration in Texas and New Mexico.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Kimbell Royalty, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Kimbell Royalty wasn't on the list.
While Kimbell Royalty currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
With the proliferation of data centers and electric vehicles, the electric grid will only get more strained. Download this report to learn how energy stocks can play a role in your portfolio as the global demand for energy continues to grow.
Get This Free Report
