Kimbell Royalty Partners has signed a deal worth around $231m with an undisclosed party to acquire certain mineral and royalty interests in the Midland Basin, US.
Located in Mabee Ranch, the assets to be acquired span 869 net royalty acres across 68,049 gross acres. They are primarily situated in Martin County (63%) and Andrews County (37%).
As of 1 October 2024, the effective date of acquisition, the assets are estimated to produce 1,842 barrels of oil equivalent per day (boe/d). This production includes 1,125 barrels per day (bbl/d) of oil, 410bbl/d of natural gas liquids (NGLs), and 1,842 thousand cubic feet per day (Mcf/d) of natural gas.
Kimbell Royalty Partners, which is listed on the New York Stock Exchange (NYSE), has the option to fund the acquisition entirely in cash. Alternatively, the oil and gas mineral and royalty company can fund the acquisition through a combination of $207m in cash and 1.4 million common units of its limited partnership, valued at $24m.
The transaction is expected to increase Kimbell Royalty Partners’ liquids weighting from 48% to 51% of its daily production mix. The company will also enhance its development pipeline, adding 16% to its total net drilled but uncompleted (DUC) wells and permitted locations inventory, which will grow to 9.06 net wells.
In the Permian Basin, the net DUC and permitted location inventory is projected to rise by 28%, to 5.55 net wells.
The assets include 875 producing wells operated by Tier 1 exploration and production companies such as ConocoPhillips, Diamondback, and ExxonMobil.
Kimbell Royalty Partners estimates total proved reserves of 11.5 million barrels of oil equivalent (MMBoe), valuing the acquisition at $20.13 per proved Boe.
Upon completion of the deal, its portfolio will expand to over 17 million gross acres and 130,000 gross wells, supported by 92 active rigs.
Kimbell Royalty Partners chairman and CEO Bob Ravnaas said: “The acquired assets are located on one of the largest family-owned tracts in the heart of the Midland Basin, and enhance Kimbell’s Permian footprint with excellent reservoir quality, near-term cash flow and long-term production growth.
“Headlined by proved developed producing (PDP) production from approximately 875 gross producing wells, excellent rig activity and line of sight wells, premier E&P operators, and substantial undeveloped drilling inventory, the Acquisition is expected to be immediately accretive to distributable cash flow per unit, with accelerated accretion anticipated in future years.”
Citigroup acted as Kimbell Royalty Partners’ exclusive financial adviser for the deal, with White & Case serving as legal counsel. TPH&Co., the energy division of Perella Weinberg Partners, provided financial advice to the seller, with legal counsel from MLT Aikins and Vinson & Elkins.
The transaction is expected to close in Q1 2025, subject to regulatory and customary approvals.
