Kimbell Royalty Partners to buy oil and gas royalty assets in US

Kimbell Royalty Partners has signed an agreement to acquire certain oil and gas royalty assets in the US from affiliated sellers in a $107.8m drop-down transaction.

The acquisition comprises royalty interests with more than 70% of production from the Eagle Ford Shale, Permian Basin, Appalachian Basin and Bakken Formation resource plays.

Under the terms of the agreement, Kimbell will offer 6.5 million newly issued units in Kimbell Royalty Operating to the sellers.

The transaction, which is set to add around 1,190boe/d of production, will give the company around 16,700 net royalty acres.

Following the completion of the purchase, Kimbell’s total net royalty acre position will increase to 131,900 net royalty acres across the continental US.

Kimbell general partner Kimbell Royalty GP president and CEO Bob Ravnaas said: “We believe this large and diversified minerals package not only enhances our existing high-quality portfolio but also adds significantly to Kimbell’s future distributable cash flow and production.

“With the majority of the reserves classified as proved undeveloped and the recent active drilling on many of the properties, we are confident that the assets will prove to be a significant driver of growth for the company for years to come.”

Ravnaas added that the company has more than doubled its net royalty acreage footprint across the US since last February through transactions, including the current drop-down deal.

During the period, the company’s daily production has increased by more than three times.

Kimbell expects the transaction to be immediately accretive to distributable cash flow per unit. The package is also said to offer significant upside potential from future development.

The completion of the acquisition is anticipated to take place next month.

The company’s portfolio includes an ownership interest in more than 84,000 gross producing wells, with over 38,000 of these wells located in the Permian Basin.