Kimbell to purchase several oil and gas royalty assets in US

Kimbell Royalty Partners has reached an agreement to buy several oil and gas royalty assets from EnCap Investments in a 100% equity transaction worth $151.3m.

The proposed acquisition will give oil and natural gas mineral and royalty interests controlled by EnCap through Phillips Energy Partners, Phillips Energy Partners II and Phillips Energy Partners III to Kimbell.

The transaction comprises royalty interests with more than 64% of production from the Eagle Ford Shale, Permian Basin, Haynesville Shale and Powder River Basin.

It will add around 1,600Boe/d of production to Kimbell’s portfolio. There are currently 17 rigs are drilling on the acreage.

Kimbell will have access to a liquids-focused asset base that generates 77% of revenue from oil and natural gas liquids.

The company will acquire 12,200 net royalty acres. Following the closure of the transaction, the firm’s aggregate net royalty acre position will increase by 9% to 144,100 net royalty acres across the continental US.

Kimbell Royalty Partners general partner CEO Bob Ravnaas said: “Like the Haymaker acquisition and the recent dropdown transaction, we believe this acquisition is an excellent fit with our existing portfolio of mineral and royalty assets. We expect not only immediate cash flow accretion in the near term, but also additional future development from an outstanding list of leading operators.

“Furthermore, this acquisition kicks off what we believe will be another year of consolidation within the oil and gas mineral and royalty space in the US. After giving effect to this transaction, we have nearly quadrupled our production since our IPO and will have royalty interests in approximately 95,000 wells across the US.”

Under the agreement, the transaction consideration comprises 9.4 million newly issued units in Kimbell Royalty Operating.

Subject to certain closing conditions, completion of the transaction is expected to take place next month.