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IPO Preview Kimbell Production Partners

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A new Mineral Rights Master Limited Partnership is expected to price next week to ride the wave of higher crude and increasing Permian activity.  Kimbell Royalty Partners is a variable distribution MLP which owns mineral rights across 3.7MM gross acres, which produced 3,317 boe/pd in the first six months of 2016. About 44% of the acreage is located in the Permian, and 52.6% of the total production, for the same period, was originated from the Permian, Eagle Ford, Terryville and Bakken basins.  In 2015, 63% of revenues were derived from oil sales, 30% from natural gas, and 7% from natural gas liquids




The Partnership will not have any subordinated units or Incentive Distribution Rights, and plans to distribute all operating cash flows, less reserves, on a quarterly basis.  No cash will be retained for future acquisitions.   The variable distribution policy can result in a quarterly distribution of $0.00.  IPO pricing is expected to be $19 -$21 for 5,000,000 units with a forward annualized yield of 7.25% based upon a 2017  pro rated distribution of $1.45.  Through 2019, the company expects that 30% or less of the aggregate distributions received will be subject to federal income tax.  



Kimbell will join three other publicly traded MLPs which own Mineral Rights, Dorchester Minerals LPBlack Stone Minerals LP and Viper Energy Partners, which have delivered differing results based upon their respective distribution policy, during a period of declining production volumes and weak energy prices. 





With Permian production expected to increase 20% over the next few years, Kimbell Royalty Partners provides investors with a vehicle to benefit from rising cash flows, tempered by limited trading liquidity and wider spreads.



More Details can be found here



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