Kimbell Royalty Partners, LP (KRP): BCG Matrix [11-2024 Updated]
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Kimbell Royalty Partners, LP (KRP) Bundle
In the dynamic landscape of the energy sector, Kimbell Royalty Partners, LP (KRP) stands out with its diverse portfolio of mineral and royalty interests. As of Q3 2024, the company showcases a mix of Stars driving growth, Cash Cows ensuring stable cash flow, Dogs reflecting challenges in certain areas, and Question Marks posing strategic uncertainties. This blog post delves into each quadrant of the Boston Consulting Group Matrix, providing a clear snapshot of KRP's business performance and future potential. Discover how these insights can inform investment decisions and strategic planning.
Background of Kimbell Royalty Partners, LP (KRP)
Kimbell Royalty Partners, LP is a Delaware limited partnership established in 2015, focused on owning and acquiring mineral and royalty interests in oil and natural gas properties across the United States. The company has opted to be taxed as a corporation for federal income tax purposes in the U.S.
The primary business model of Kimbell involves receiving a share of revenues from the production of oil, natural gas, and associated natural gas liquids (NGLs) derived from the acreage underlying its interests. Notably, Kimbell is not responsible for funding drilling, completion, lease operating expenses, or costs associated with the abandonment of wells at the end of their productive life. Its core objective is to provide increasing cash distributions to unitholders through acquisitions from third parties, sponsors, and contributing parties, alongside organic growth through the development of properties owned by working interest owners.
As of September 30, 2024, Kimbell Royalty Partners owned mineral and royalty interests in approximately 12.2 million gross acres and overriding royalty interests in about 4.7 million gross acres. Roughly 54% of its total acreage is situated in the Permian Basin and the Mid-Continent regions. Over 99% of the acreage associated with these interests was leased to working interest owners, indicating a strong operational presence in major oil-producing areas. Furthermore, Kimbell’s interests encompass over 129,000 gross wells, with more than 50,000 wells located within the Permian Basin alone.
The company operates in 28 states across all significant onshore basins in the continental U.S., which highlights its extensive footprint in the oil and gas sector. The following table summarizes Kimbell's ownership in various U.S. basins and producing regions as of September 30, 2024:
- Permian Basin: 3,336,729 gross acres, 50,604 wells
- Mid-Continent: 5,868,926 gross acres, 20,898 wells
- Terryville/Cotton Valley/Haynesville: 1,428,907 gross acres, 16,297 wells
- Appalachian Basin: 741,354 gross acres, 3,929 wells
- Bakken/Williston Basin: 1,640,077 gross acres, 5,358 wells
- Eagle Ford: 624,148 gross acres, 4,277 wells
- DJ Basin/Rockies/Niobrara: 74,152 gross acres, 12,556 wells
- Other: 3,232,560 gross acres, 15,444 wells
This diverse asset base positions Kimbell Royalty Partners as a significant player in the energy sector, leveraging its extensive mineral and royalty interests to generate revenue and distribute cash to its investors.
Kimbell Royalty Partners, LP (KRP) - BCG Matrix: Stars
Strong Revenue Growth
Kimbell Royalty Partners, LP reported total revenues of $83.8 million in Q3 2024, marking an increase from $67.2 million in Q3 2023. This growth indicates a strong market presence and effective operational strategies within the company.
Adjusted EBITDA
The adjusted EBITDA attributable to KRP rose to $53.5 million in Q3 2024, compared to $43.5 million in Q3 2023. This increase reflects improved profitability and operational efficiency.
Mineral and Royalty Interests
KRP has significant mineral and royalty interests, encompassing over 12.2 million gross acres, primarily located in high-yield areas such as the Permian Basin. This extensive portfolio supports its position as a market leader.
Production Rates
The company achieved an average daily production rate of approximately 8,683 Boe/d in the Permian Basin. This high production level contributes significantly to KRP's revenue generation and market share.
Net Income
Kimbell Royalty Partners reported a positive net income of $25.8 million for Q3 2024, showcasing operational efficiency and effective cost management.
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenues | $83.8 million | $67.2 million | +24.5% |
| Adjusted EBITDA | $53.5 million | $43.5 million | +23.1% |
| Mineral and Royalty Interests | 12.2 million gross acres | N/A | N/A |
| Average Daily Production | 8,683 Boe/d | N/A | N/A |
| Net Income | $25.8 million | N/A | N/A |
Kimbell Royalty Partners, LP (KRP) - BCG Matrix: Cash Cows
Consistent cash distributions to unitholders
Cash available for distribution at $44.2 million in Q3 2024.
Established market presence and stable revenue streams from mineral and royalty interests
Total revenues for Q3 2024 were $83.8 million, up from $67.2 million in Q3 2023.
| Revenue Source | Q3 2024 ($ million) | Q3 2023 ($ million) |
|---|---|---|
| Oil, Natural Gas and NGL Revenues | 71.1 | 69.2 |
| Lease Bonus and Other Income | 3.2 | 2.5 |
| Gain (Loss) on Commodity Derivative Instruments, Net | 9.6 | (4.6) |
| Total Revenues | 83.8 | 67.2 |
Strong operating income
Operating income for Q3 2024 was $34.2 million, compared to $25.3 million in Q3 2023.
Favorable tax treatment as a corporation
Income tax expense for Q3 2024 was $1.9 million, reflecting effective cash flow management.
Proven ability to maintain distributions even during market fluctuations
Net income attributable to common units for Q3 2024 was $17.4 million, up from $13.6 million in Q3 2023.
| Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income | $25.8 million | $18.5 million |
| Net Income per Unit (Basic) | $0.22 | $0.20 |
| Weighted Average Common Units Outstanding | 78.98 million | 68.54 million |
Kimbell Royalty Partners, LP (KRP) - BCG Matrix: Dogs
Declining performance in certain regions, with lower production rates in non-core areas.
As of Q3 2024, Kimbell Royalty Partners has reported lower production rates in non-core regions, leading to a decrease in overall operational efficiency. The production volumes for oil were 660,789 Bbls, while natural gas production stood at 6,793,748 Mcf, reflecting challenges in maintaining output levels in these areas compared to previous periods.
High general and administrative expenses at $9.5 million for Q3 2024, impacting overall profitability.
Kimbell Royalty Partners incurred general and administrative expenses totaling $9.5 million in Q3 2024. This expenditure has significantly impacted profitability, contributing to the challenges faced by the company in managing its cost structure effectively.
Increased interest expenses, totaling $6.5 million in Q3 2024, reducing net income margins.
Interest expenses for Kimbell Royalty Partners increased to $6.5 million in Q3 2024, up from previous periods. This rise in interest obligations has further squeezed net income margins, with net income attributable to common units reported at $17.4 million.
Limited growth potential in mature areas without significant new discoveries or acquisitions.
The company’s mature operational areas show limited growth potential, particularly in the absence of significant new discoveries or acquisitions. The total revenues from oil, natural gas, and NGL for Q3 2024 were $71.1 million, reflecting a modest increase from $69.2 million in Q3 2023. However, the growth is insufficient to offset the declining performance in non-core regions.
Non-controlling interest impacting overall equity and returns to common unit holders.
The non-controlling interest as of September 30, 2024, was reported at $95.4 million, which has a direct impact on the overall equity structure and returns to common unit holders. Total unitholders’ equity stood at $627.5 million, indicating the financial strain imposed by non-controlling interests.
| Financial Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| General and Administrative Expenses | $9.5 million | $10.4 million |
| Interest Expenses | $6.5 million | $6.7 million |
| Net Income | $17.4 million | $13.6 million |
| Total Revenues | $71.1 million | $69.2 million |
| Non-controlling Interest | $95.4 million | $157.2 million |
| Total Unitholders' Equity | $627.5 million | $714.0 million |
Kimbell Royalty Partners, LP (KRP) - BCG Matrix: Question Marks
Recent fluctuations in oil and gas prices affecting revenue predictability.
The average prices received for oil, natural gas, and natural gas liquids (NGL) during the nine months ended September 30, 2024, were:
| Product | Average Price (2024) | Average Price (2023) | Change (%) |
|---|---|---|---|
| Oil (Bbl) | $77.24 | $76.17 | +1.4% |
| Natural Gas (Mcf) | $1.89 | $2.66 | -28.9% |
| NGL (Bbl) | $23.68 | $23.67 | +0.04% |
These price fluctuations have introduced significant uncertainty regarding revenue predictability, impacting the financial performance of KRP's operations.
High levels of debt at approximately $252.2 million, raising concerns about financial leverage.
Kimbell Royalty Partners reported total liabilities of $271.6 million as of September 30, 2024, which includes a debt level of approximately $252.2 million. This high level of debt raises concerns regarding financial leverage and the ability to service this debt in a fluctuating market environment .
Uncertainty surrounding future acquisitions and organic growth opportunities in a competitive market.
The competitive landscape poses challenges for KRP, as the company seeks to identify and capitalize on future acquisitions and organic growth opportunities. The market dynamics are complex, and the firm must navigate these uncertainties to enhance its market share.
Need for strategic initiatives to increase production from uncompleted wells (831 DUCs as of September 2024).
As of September 2024, KRP had 831 drilled but uncompleted (DUC) wells. The strategic focus must be on completing these wells to boost production significantly, which could lead to improved revenue streams in a high-growth market.
Exploration of new markets or technologies required to diversify revenue streams.
KRP must explore new markets and innovative technologies to diversify its revenue streams. The current reliance on traditional oil and gas revenues is insufficient to ensure long-term sustainability, especially given the volatility in energy prices and the competitive market conditions.
In summary, Kimbell Royalty Partners, LP (KRP) presents a mixed portfolio within the BCG Matrix framework. The company's Stars thrive on robust revenue growth and operational efficiency, while the Cash Cows provide stable cash distributions despite market fluctuations. However, Dogs reveal challenges in underperforming regions and rising expenses, and Question Marks highlight uncertainties tied to debt and market dynamics. To enhance its position, KRP must leverage its strengths while addressing the weaknesses and exploring new opportunities for growth.
Updated on 16 Nov 2024
Resources:
- Kimbell Royalty Partners, LP (KRP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Kimbell Royalty Partners, LP (KRP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Kimbell Royalty Partners, LP (KRP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.