Kimbell Royalty Partners acquire Midland basin assets for $143 million
(WO) – Kimbell Royalty Partners, an owner of oil and gas mineral and royalty interests in approximately 16 million gross acres in 28 states, has agreed to acquire mineral and royalty interests from MB Minerals, L.P., a subsidiary of Sabalo Holdings, LLC, in a cash and unit transaction valued at approximately $143.1 million. The purchase price for the acquisition is comprised of $48.8 million in cash (approximately 34% of the total consideration), approximately 5.4 million newly issued common units of Kimbell Royalty Operating, LLC valued at $85.4 million, and approximately 0.6 million newly issued common units of Kimbell Royalty Partners, LP valued at $8.9 million.
For the next twelve months, Kimbell estimates that, as of April 1, 2023, the acquired assets will produce approximately 1,901 bopd (1,459 bpd of oil, 219 bpd of NGLs, and 1,338 MMcf of natural gas.). The acquired assets are concentrated in northern Howard County and southern Borden County. The acquisition is expected to close in the second quarter of 2023, subject to customary closing conditions, and the effective date is expected to be April 1, 2023.
Asset highlights include:
- Significant development activity across acreage provides line of sight to substantial near-term production.
- Approximately 806 Net Royalty Acres (6,445 NRA normalized to 1/8th) on approximately 60,000 gross unit acres located in Northern Midland basin
- High-interest contiguous footprint with 1.55% average unit Net Revenue Interest
- High confidence in established operator spacing and well performance in de-risked zones in the Spraberry and Wolfcamp
- Management estimates 5.3 MMboe in total proved reserves, reflecting a purchase price of approximately $26.97 per total proved boe
- 97% of estimated first year cash flow from PDP and PDNP wells
- 3 active rigs on the acreage as of March 31, 2023
- Mineral and Overriding Royalty ownership in over 100 horizontal DSUs, 100% Held-By-Production
- Over 300 total producing wells
- Liquids-focused asset base expected to strengthen Kimbell's oil weighting from 29% to 34% of daily production mix
Kimbell is expected to have over 16 million gross acres, over 125,000 gross wells and a total of 97 active rigs on its properties, which represents approximately 13%6 of the total active land rigs drilling in the continental United States. In addition, over 97% 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.