Texas-based oil and gas mineral and royalty company Kimbell Royalty Partners has agreed to acquire certain mineral and royalty interests held by a private seller, for a total of around $455m.
The interests are located in the Permian Basin and Mid-Continent, with 49% interests concentrated in the Delaware Basin, 10% in Midland Basin and 41% in the Mid-Continent.
The Board of Directors of Kimbell’s general partner and the seller’s governing body, both approved the acquisition.
It is expected to be completed in the third quarter of this year, with an effective date of 1 June 2023, subject to customary closing conditions.
Kimbell intends to fund the acquisition through a private placement of 6% Series A cumulative convertible preferred units and borrowings under its $400m revolving credit facility.
Kimbell general partner, chairman and chief executive officer Bob Ravnaas said: “The acquisition represents the largest transaction in company history and is expected to significantly enhance Kimbell’s positions in the best-performing, highest-growth oil and gas basins in the Lower 48.
“The targeted portfolio of mineral and royalty interests complements our disciplined approach to M&A, combining excellent reservoir quality, near-term cash flow and long-term production growth.
“We expect the Acquisition to be immediately accretive to distributable cash flow per unit, with accelerated accretion anticipated in future years, and look forward to continuing our role as a major consolidator in the oil and natural gas royalty sector.”
Upon completion of the transaction, Kimbell will have more than 17 million gross acres, 129,000 gross wells and a total of 100 active rigs on its properties.
The acquired acreage represents around 15% of the total active land rigs drilling in the continental US.
Kimbell estimates that the acquired assets produce around 4,840Boe/d, comprising 1,619Bbl/d of oil, 1,227Bbl/d of NGLs, and 11,964Mcf/d of natural gas in the 6:1 ratio, as of 1 June 2023.
Also, the company estimates that the assets will produce around 5,049Boe/d, including 1,682Bbl/d of oil, 1,312Bbl/d of NGLs, and 12,327Mcf/d of natural gas, for the full year 2024.
Citigroup and Truist Securities served as co-financial advisors, while White & Case and Kelly Hart & Hallman served as legal counsel to Kimbell.
RBC Capital Markets served as the exclusive financial advisor, and Bracewell served as the legal advisor to the seller.
