Kimbell Royalty Partners Enters Purchase Agreement for Acquisition in Permian Basin

Kimbell Royalty Partners, LP (NYSE:KRP) has recently disclosed the signing of a purchase and sale agreement with Boren Minerals to acquire oil and natural gas mineral and royalty interests situated in the Permian Basin. The total purchase price for these assets amounts to approximately $231 million, subject to customary adjustments. The agreement affords Kimbell the flexibility to settle the consideration either fully in cash or through a blend of cash amounting to $207 million and the issuance of 1,433,915 common units of limited partnership interests in Kimbell.

Within the Purchase Agreement, both parties have made various representations, warranties, and covenants. These include commitments by Boren to continue its operations in the usual course between the agreement’s execution and the closing date and provisions for indemnification against losses resulting from breaches of representations and warranties.

To ensure the completion of the Acquisition, preset customary closing conditions must be met or waived as outlined in the Purchase Agreement. The deal is projected to conclude in the first quarter of 2025, with an effective date beginning on October 1, 2024.

Kimbell projects beneficial outcomes from the acquisition, expecting an approximate 8% increase in daily net production and an improved commodity mix. The Acquired Assets consist of 6,953 net royalty acres along with 875 gross producing wells in the Permian Basin. The transaction is anticipated to bolster Kimbell’s operational capacity and further balance its commodity mix, subsequently reducing general and administrative expenses by approximately 7% per barrel of oil equivalent.

It is essential to note that Reserve engineering, a crucial part of estimating underground oil and gas accumulations, poses inherent complexities and uncertainties. Proved reserves for the acquired assets will be evaluated by Ryder Scott Company, L.P., with estimates varying across different periods.

Moreover, Rock Royalty Partners will enter into a registration rights agreement with Boren if Common Units are issued as payment. This agreement mandates actions such as filing a shelf registration statement for resales and committing to keep the registration statement effective during the holding periods of the Registrable Securities.

The news of the Purchase Agreement was officially disclosed by Kimbell Royalty Partners on January 7, 2025, indicating a step towards enhancing their assets and strategic positioning in the energy sector.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Kimbell Royalty Partners’s 8K filing here.