Kimbell Royalty Partners, LP (KRP)

Kimbell Royalty Partners, LP (KRP) Energy Operations & Outlook

Kimbell Royalty Partners, LP, based in Fort Worth, Texas, focuses on acquiring and owning mineral and royalty interests in U.S. oil and natural gas properties. With holdings in approximately 122,000 gross wells across 28 states, including significant assets in the Permian Basin, Kimbell operates as a general partner in the energy sector.

What Is the Investment Thesis for KRP?

Kimbell Royalty Partners, LP presents an investment opportunity centered on its extensive portfolio of mineral and royalty interests in U.S. oil and gas properties. The company's diversified asset base, spanning 28 states and including approximately 122,000 gross wells, mitigates risk associated with regional downturns. Kimbell's focus on royalty interests provides a stable revenue stream without direct exposure to capital expenditure. The company's high gross margin of 94.2% and a profit margin of 22.7% indicate efficient operations. A dividend yield of 10.79% offers investors substantial income potential. Growth catalysts include strategic acquisitions to expand its asset base and increased drilling activity on its existing acreage. Potential risks include commodity price volatility and regulatory changes impacting the oil and gas industry. With a beta of 0.27, Kimbell exhibits lower volatility compared to the broader market.

Based on FMP financials and quantitative analysis

KRP Key Highlights

• Market Cap of $1.44B, reflecting substantial investor confidence in Kimbell Royalty Partners.
• P/E ratio of 18.5, indicating a reasonable valuation relative to earnings.
• Gross Margin of 94.2%, showcasing efficient management of royalty interests.
• Dividend Yield of 10.79%, providing a significant income stream for investors.
• Interests in approximately 122,000 gross wells, demonstrating a diversified asset base.

Who Are KRP's Competitors?

KRP is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are KRP's Key Strengths?

• Diversified asset base across multiple states and basins.
• High gross margin due to royalty-based business model.
• Experienced management team with expertise in mineral rights acquisition.
• Strong dividend yield providing attractive income potential.

What Are KRP's Weaknesses?

• Exposure to commodity price volatility.
• Dependence on operators' drilling and production decisions.
• Limited control over operational activities on its acreage.
• Potential for regulatory changes impacting the oil and gas industry.

What Could Drive KRP Stock Higher?

• Potential acquisitions of additional mineral and royalty interests to expand the company's asset base.
• Increased drilling activity by operators on Kimbell's acreage, leading to higher royalty revenue.
• Favorable commodity price environment supporting increased production and profitability.

What Are the Key Risks for KRP?

• Insider selling — insiders were net sellers of roughly $4.6M recently.
• Decline in commodity prices reducing royalty revenue and profitability.
• Regulatory changes impacting oil and gas production, such as increased taxes or environmental regulations.
• Dependence on operators' drilling and production decisions, which are subject to market conditions and capital availability.

What Are the Growth Opportunities for KRP?

• Strategic Acquisitions: Kimbell can pursue accretive acquisitions of mineral and royalty interests to expand its asset base and increase revenue. The market for mineral rights is fragmented, providing opportunities to consolidate holdings and achieve economies of scale. Successful acquisitions can enhance Kimbell's production profile and diversify its geographic footprint. The timeline for acquisitions depends on market conditions and available capital, but ongoing consolidation in the industry suggests continuous opportunities.
• Increased Drilling Activity: Higher oil and gas prices incentivize operators to increase drilling activity on Kimbell's acreage, leading to increased royalty revenue. The Permian Basin, where Kimbell has significant holdings, is a key driver of U.S. oil and gas production. Technological advancements in drilling techniques, such as horizontal drilling and hydraulic fracturing, enhance production rates. The timeline for increased drilling activity is dependent on commodity prices and operator investment decisions.
• Organic Growth: Kimbell can pursue organic growth by leasing its undeveloped mineral rights to operators for exploration and production. This generates upfront lease bonus payments and future royalty revenue. Identifying and developing strategic partnerships with operators can accelerate the development of Kimbell's undeveloped acreage. The timeline for organic growth depends on the availability of capital and the willingness of operators to invest in new projects.
• Expansion into New Basins: Kimbell can expand its geographic footprint by acquiring mineral and royalty interests in new oil and gas basins. Diversifying into different regions reduces exposure to regional downturns and regulatory changes. Identifying basins with favorable geology and attractive economics is crucial for successful expansion. The timeline for expansion depends on market conditions and available capital.
• Optimizing Existing Assets: Kimbell can optimize its existing assets by working with operators to improve production techniques and enhance recovery rates. This involves collaborating with operators to implement advanced technologies, such as enhanced oil recovery (EOR) methods. Optimizing existing assets can increase royalty revenue without requiring significant capital investment. The timeline for optimization depends on the willingness of operators to adopt new technologies.

What Opportunities Does KRP Have?

• Strategic acquisitions of mineral and royalty interests.
• Increased drilling activity on its existing acreage.
• Expansion into new oil and gas basins.
• Optimization of existing assets through enhanced recovery methods.

What Threats Does KRP Face?

• Decline in commodity prices reducing royalty revenue.
• Increased regulatory scrutiny of oil and gas production.
• Competition from other royalty companies and mineral rights aggregators.
• Shift towards renewable energy sources reducing demand for fossil fuels.

What Are KRP's Competitive Advantages?

• Diversified Asset Base: Kimbell's extensive portfolio of mineral and royalty interests across 28 states reduces its exposure to regional downturns.
• Non-Operating Model: Kimbell's focus on royalty interests minimizes its capital expenditure and operational risks.
• Scalable Business Model: Kimbell can grow its business through acquisitions and organic growth without significant capital investment.

What Does KRP Do?

Kimbell Royalty Partners, LP was founded in 2013 and is headquartered in Fort Worth, Texas. The company operates as a general partner focused on acquiring and managing mineral and royalty interests in oil and natural gas properties within the United States. Kimbell's business model centers around aggregating a diverse portfolio of producing and undeveloped mineral rights, allowing them to generate revenue from the production of oil and gas by operators on their acreage. As of December 31, 2021, Kimbell reported owning mineral and royalty interests in approximately 11.4 million gross acres and overriding royalty interests in approximately 4.7 million gross acres. Their assets span across 28 states, including significant holdings in the Permian Basin, one of the most prolific oil and gas regions in the U.S. The company has interests in approximately 122,000 gross wells, with approximately 46,000 wells located in the Permian Basin. Kimbell's strategy involves partnering with numerous operators, rather than directly engaging in drilling or production activities, which provides diversification and reduces operational risk. By focusing on royalty interests, Kimbell receives a percentage of revenue from production without incurring the capital expenditures associated with exploration and development. This model allows Kimbell to scale its operations through acquisitions and organic growth, positioning itself as a key player in the mineral and royalty sector of the energy industry.

What Products and Services Does KRP Offer?

• Acquires mineral and royalty interests in oil and natural gas properties.
• Owns mineral and royalty interests in approximately 11.4 million gross acres.
• Owns overriding royalty interests in approximately 4.7 million gross acres.
• Has interests in approximately 122,000 gross wells.
• Receives royalty payments from oil and gas production on its acreage.
• Partners with numerous operators to develop its mineral rights.

How Does KRP Make Money?

• Acquires mineral and royalty interests in oil and gas properties.
• Generates revenue from royalty payments based on production volumes and commodity prices.
• Partners with operators who bear the capital expenditure and operational risks of drilling and production.

What Industry Does KRP Operate In?

Kimbell Royalty Partners, LP operates within the oil and gas exploration and production industry, which is characterized by cyclical trends driven by commodity prices, technological advancements, and regulatory changes. The industry is currently experiencing increased demand due to global economic recovery, but faces pressure from environmental concerns and the transition to renewable energy sources. Kimbell's focus on mineral and royalty interests positions it as a non-operating participant, reducing its exposure to capital expenditure and operational risks. Competitors in this space include other royalty companies and mineral rights aggregators. The market is fragmented, with opportunities for consolidation and strategic acquisitions.

Who Are KRP's Key Customers?

• Oil and gas operators who lease mineral rights from Kimbell.
• Investors seeking exposure to the oil and gas industry through royalty income.
• Other royalty companies and mineral rights aggregators.

How Kimbell Royalty Partners, LP Is Valued

Kimbell Royalty Partners, LP carries a market capitalization of $1.44B, placing it in the small-cap category. Relative to its peer group, KRP's quantitative score of 94/100 is above the peer average of 65/100.

Company Profile

Kimbell Royalty Partners, LP operates in the Oil & Gas Exploration & Production industry within the Energy sector. It is headquartered in Fort Worth, US. The company is led by CEO Robert Dean Ravnaas. KRP has traded publicly since 2017.

ROE 11%Key Financial Metrics

Return on equity for Kimbell Royalty Partners, LP stands at 10.7%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 6.2%, showing how much profit it generates from its asset base. KRP trades at a trailing price-to-earnings ratio of 18.48, roughly in line with the Energy sector average of ~17x. Its free cash flow yield is 16.8%, a gauge of the cash the business throws off relative to its market value. A current ratio of 5.12 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 5.5%, the inverse of the P/E and a quick read on earnings relative to price.

F-Score 5/9Financial Health

Kimbell Royalty Partners, LP's Piotroski F-Score is 5/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of 2.46 places it in the grey zone, a middle ground that warrants monitoring.

FY2026 estForward Outlook

Wall Street analysts project Kimbell Royalty Partners, LP revenue of about $363.6M for fiscal 2026, with EPS near $0.77. The estimate reflects 4 contributing analysts.

Net buyingInsider Activity

Over the past six months, Kimbell Royalty Partners, LP insiders filed 30 SEC Form 4 transactions — 19 sales and 11 purchases. On net that is roughly 478K shares acquired (about $4.6M) — insiders putting money in tends to read as conviction.

KRP Financials

KRP Latest News

KRP Analyst Consensus

KRP MoonshotScore

Kimbell Royalty Partners, LP Energy Stock: Key Questions Answered

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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