Kimbell Royalty Partners — Second Quarter 2026 Earnings Summary

Financial Performance

• Total revenues reached $112.5 million, up from $86.5 million in the second quarter of 2025, driven by record oil, natural gas, and NGL revenues of $103.0 million and lease bonus/other income of $3.3 million.
• Net income was approximately $47.3 million compared to $26.7 million in the prior year period; net income attributable to common units was approximately $38.4 million ($0.40 per unit) versus $2.0 million ($0.02 per unit) in the prior year.
• Consolidated Adjusted EBITDA hit a record $84.9 million, an increase from $63.8 million in the second quarter of 2025.
• Cash available for distribution on common units was $59.98 million, compared to $47.1 million in the prior year period.
• General and administrative expense was $10.2 million, with cash G&A at $5.9 million ($2.50 per Boe) and unit-based compensation at $4.3 million ($1.85 per Boe).
• Average realized prices per unit were $94.67 for oil, $2.01 for natural gas, $29.12 for NGLs, and $42.87 per Boe.
• Net debt to trailing twelve-month consolidated Adjusted EBITDA was approximately 1.4x.
• Long-term debt outstanding was $478.7 million as of June 30, 2026, with $181.3 million in undrawn capacity on the secured revolving credit facility.

Guidance and Future Outlook

• Kimbell affirms its previously disclosed financial and operational guidance ranges for 2026.
• The company expects to update guidance upon the closing of the previously announced Drop Down acquisition.
• Run-rate production post-acquisition is 26,967 Boe per day.
• The company anticipates the Drop Down acquisition to close later in the month of the release.

Business Segments and Product Lines

• Second quarter 2026 average daily production was 25,830 Boe per day (6:1 ratio), composed of approximately 53% liquids (33% oil, 20% NGLs) and 47% natural gas.
• Production included 9 days from the $145.9 million Mesa Royalties acquisition, which closed on June 22, 2026.
• As of June 30, 2026, major properties held 1,016 gross (3.98 net) DUCs and 776 gross (3.41 net) permitted locations.
• The Permian Basin held the largest inventory with 716 gross DUCs and 567 gross permits.
• 91 rigs were actively drilling on Kimbell's acreage as of June 30, 2026.

Market and Competitive Landscape

• The 91 active rigs represented approximately 16% market share of all land rigs drilling in the continental United States.
• Kimbell is described as a leading consolidator in the U.S. oil and natural gas royalty industry, having announced over $360 million in acquisitions over the last 90 days.
• The company owns mineral and royalty interests in approximately 135,000 gross wells across 28 states.

Risks and Challenges

• Forward-looking statements highlight risks including declines in oil and natural gas prices, which could lead to downward revisions in proved reserves or cause operators to delay drilling.
• Risks include potential impairment of oil and natural gas properties, borrowing base redeterminations by lenders, and the ability to meet financial covenants.
• Operational risks include fire, explosion, blowouts, pipe failure, and environmental hazards.
• Risks related to the integration of acquired assets and the realization of anticipated benefits from acquisitions are noted.
• Changes in U.S. trade policy and tariffs are identified as potential risks.

Management Commentary and Tone

• Robert Ravnaas, Chairman and CEO, described the quarter as "outstanding," citing records in revenues, net income, Adjusted EBITDA, lease bonuses, average daily production, and cash available for distribution.
• Management highlighted positive operating leverage, noting that cash G&A per BoE remained below the mid-point of guidance.
• The tone emphasized confidence in the company's role as a consolidator and its ability to generate unitholder value through operational momentum and acquisitions.

Other Key Points

• Announced a Q2 2026 cash distribution of $0.47 per common unit, a 15% increase from Q1 2026, reflecting a 75% payout ratio of cash available for distribution.
• The distribution implies a 13.0% annualized yield based on the August 6, 2026 closing price of $14.51 per unit.
• Approximately 47% of the Q2 2026 distribution is estimated to be a non-taxable return of capital.
• The remaining 25% of cash available for distribution is allocated to repay approximately $17.9 million of outstanding borrowings.
• Kimbell repurchased and cancelled 500,000 common units for approximately $7.4 million (average price $14.70) during the quarter.
• The borrowing base and aggregate commitments on the secured revolving credit facility were increased from $625 million to $660 million on June 24, 2026.
• Kimbell has authorization to repurchase an additional $85.4 million of common units under its program.
• The company expects to close the Drop Down acquisition later in the month, adding to the $360 million in acquisitions announced over the prior 90 days.