Q2 2026 Kimbell Royalty Partners LP Earnings Call Transcript
Key Points
- Record quarterly performance with oil, natural gas, and NGL revenues exceeding $100 million for the first time, along with record net income, adjusted EBITDA, and cash available for distribution.
- Successful closing of the Mesa Royalties acquisition and announcement of a second drop-down acquisition, expected to add meaningful production and drive cash flow growth.
- Increased Q2 2026 distribution to $0.47 per common unit, up 15% from Q1, reflecting a strong annualized tax-advantaged yield of approximately 13%.
- Robust drilling activity on acreage with 91 rigs at quarter end, representing a 16% market share of U.S. land rigs, and a 23% quarter-over-quarter increase in Permian rig count.
- Conservative balance sheet with net debt to adjusted EBITDA of 1.4 times, increased borrowing base to $660 million, and opportunistic unit repurchases of 500,000 units at an average price of $14.70.
- Lease bonus revenue saw a significant uptick due to improved commodity prices and renewed interest in deeper zones, with expectations for continued activity.
- Strong line-of-sight on future production with DUC and permit backlog above maintenance levels, supporting confidence in continued development.
- Active A&D market with over $360 million in acquisitions announced in the last 90 days, positioning Kimbell as a leading consolidator in the fragmented royalty sector.
- High competition in the Permian basin, with bids on large packages often exceeding Kimbell's valuations by nearly two times, limiting acquisition opportunities.
- Mid-Continent rig count declined by 24% quarter-over-quarter due to disappointing natural gas prices, impacting activity in that region.
- Haynesville production decreased by 11% quarter-over-quarter, reflecting reduced capital allocation by operators in response to low gas prices.
- Geopolitical volatility, particularly in the Middle East, has caused oil price fluctuations, creating uncertainty in the market.
- The company is over 70% drawn on its credit facility, and while leverage is low, it may need to manage liquidity carefully with upcoming acquisitions.
- Guidance for 2026 has not been updated to reflect recent acquisitions, leaving investors without a clear pro forma outlook until the drop-down closes.
- The company faces challenges in quantifying its full inventory due to the vast and fragmented nature of its interests, which may limit visibility into future growth.
Greetings and welcome to the Kimbell Royalty Partners second quarter of 2026 earnings call.
(Operator Instructions)
As a reminder, this conference is being recorded. Iâd now like to turn the call over to your host, Zach Vaughan, with investor relations. Thank you. You may begin.
Thank you, operator. Good morning, everyone. Welcome to the Kimbell Royalty Partners conference call to review financial and operational results for the second quarter, which ended June 30th, 2026. This call is also being webcast and can be accessed through the audio link on the Events and Presentations page of the IR section of kimbellrp.com. Information recorded on this call speaks only as of today, August 7th, 2026, so please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. I would also like to remind you that the statements made in todayâs discussion that are not historical facts, including statements of
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