Kimbell Royalty (NYSE:KRP) reported fourth-quarter results that management said capped “another outstanding year” for the mineral and royalty owner, highlighting organic production growth versus the third quarter, an increased quarterly cash distribution, and higher proved developed reserves. The company discussed its 2026 outlook, balance sheet priorities, and investor interest in the Barnett Woodford potential across its Permian Basin acreage during its earnings call covering the period ended Dec. 31, 2025.
Fourth-quarter results and distribution
Chairman and CEO Bob Ravnaas said Kimbell exceeded the midpoint of its fourth-quarter guidance and grew production organically from the prior quarter. President and CFO Davis Ravnaas reported fourth-quarter oil, natural gas, and NGL revenues of $76 million and run-rate production of 25,627 BOE per day.
Kimbell reported fourth-quarter consolidated Adjusted EBITDA of $64.8 million.
The partnership declared a fourth-quarter cash distribution of $0.37 per common unit, which Bob Ravnaas said was up 6% from the third quarter. Management estimated that approximately 100% of the distribution is expected to be treated as return of capital and “not subject to dividend taxes.” Davis Ravnaas said the distribution represents 75% of cash available for distribution, with the remaining 25% earmarked to pay down borrowings under the company’s secured revolving credit facility.
For full-year 2025, Bob Ravnaas said Kimbell returned $1.60 per common unit through quarterly distributions, all classified as return of capital, while also reducing debt.
2025 operational highlights: acquisitions, capital structure, and reserves
Management pointed to several milestones during 2025, including acquisitions and actions to simplify the capital structure. Bob Ravnaas said Kimbell began 2025 with a $230 million acquisition of mineral and royalty interests beneath the historic Mabee Ranch in the Midland Basin, which he said strengthened the Permian Basin as Kimbell’s leading area for production, activity, and inventory.
He also noted that during the second quarter the company redeemed 50% of its Series A Cumulative Convertible Preferred Units, which he said simplified the capital structure and lowered Kimbell’s cost of capital.
On the resource base, Bob Ravnaas said proved developed reserves increased approximately 8% in 2025 to a record level of nearly 73 million BOE.
Activity levels and 2026 production outlook
Bob Ravnaas said Kimbell’s active rig count remained strong at 85 rigs drilling across its acreage, representing a 16% share of U.S. land rigs. He added that the company’s “line of sight” wells remained above the number needed to maintain flat production, supporting confidence in production resilience into 2026.
For 2026, Davis Ravnaas said the company’s production guidance at the midpoint was unchanged from 2025 at 25,500 BOE per day. In response to an analyst question about cadence from fourth-quarter 2025 levels, management said it expects a “relatively stable” development cadence during 2026, while noting that Kimbell does not control operators’ development timing.
One analyst asked about Kimbell’s updated maintenance well assumption. Management said the “net line-of-sight maintenance well” assumption increased to 6.8 from 6.5 because the company’s annual calculation now reflects the addition of properties acquired with Boren Resources, described as “high upside, unconventional, horizontal properties.”
Balance sheet, credit facility, and mezzanine redemption comments
On liquidity, Davis Ravnaas highlighted an amendment to Kimbell’s credit agreement on Dec. 16, 2025. He said the company reaffirmed its borrowing base and elected commitments at $625 million, lowered the cost of bank debt by a combined 35 basis points, and extended the maturity to Dec. 16, 2030.
As of Dec. 31, 2025, Kimbell had approximately $441.5 million in debt outstanding under the secured revolving credit facility and net debt to trailing twelve-month Adjusted EBITDA of approximately 1.5x. The company also had approximately $183.5 million of undrawn capacity under the revolver at year-end. Management said it remained comfortable with its conservative balance sheet and financial flexibility.
During the Q&A, management said it would likely consider redeeming an additional portion of mezzanine equity in the latter half of the year, noting a minimum redemption threshold and stating it would be opportunistic based on the relative cash interest expense of revolver borrowings versus the mezzanine.
Market conditions, differentials, and Barnett Woodford discussion
In response to questions on commodity realizations and differentials, Chief Operating Officer Matt Daly said oil differentials were flat at 2% between the third and fourth quarters. He said natural gas differentials increased from 18% in the third quarter to 24% in the fourth quarter, while NGL realizations were flat quarter over quarter. Daly attributed the gas differential move to seasonality, saying differentials typically rise in the winter months (fourth and first quarters) and may move back closer to 18% in the second and third quarters. He also said expected pipeline buildout and takeaway capacity out of the Permian “over the next couple of years” should improve long-term natural gas differentials.
On West Texas Waha pricing, Daly said over 85% of Kimbell’s gas production is outside Waha, with about 15% exposed to that pricing. Management said improved differentials tied to additional pipelines could be a catalyst into 2027, but said it had not quantified the impact.
Management also spent time discussing interest in the Barnett Woodford across the Permian. Bob Ravnaas said Kimbell owns “all depths” across the vast majority of its acreage, positioning it to benefit from development in new formations such as the Barnett Woodford. He emphasized that as a mineral owner, Kimbell does not pay for test pilots or delineation work, which he framed as a potential catalyst for future free cash flow.
During Q&A, the company said it is already seeing Woodford Barnett development on its assets from major operators and expects that to accelerate. Management indicated the potential upside is more likely to show up through production rather than lease bonus income, noting that “almost all” of its acreage is leased and “almost all” is held by production (HBP). The company cited Mabee Ranch as an example, stating that ConocoPhillips has drilled a couple of wells there that “have been very good,” and noted surrounding activity from other operators.
Finally, Davis Ravnaas said 2025 featured significant consolidation across the company’s U.S. peer group and described Kimbell as a potential consolidator in a fragmented U.S. royalty sector that the company estimates exceeds $650 billion.
About Kimbell Royalty (NYSE:KRP)
Kimbell Royalty Partners LP (NYSE: KRP) is a mineral and royalty company focused on acquiring and managing oil and natural gas royalty interests in the United States. As a master limited partnership, Kimbell Royalty generates fee-like revenues by collecting royalties and overriding royalty interests on production volumes, without directly bearing the capital or operating costs of drilling and completion activities. The partnership’s business model emphasizes steady cash flows and limited downside exposure to commodity price fluctuations.
The company’s asset portfolio spans multiple onshore basins, with a core concentration in Texas and New Mexico.
