Kimbell Posts Record Q3 Production, Reaffirms Q4 Outlook

Kimbell Royalty Partners LP reported record third-quarter 2026 production of 27,565 barrels of oil equivalent per day, supported in part by its August drop-down acquisition, while reaffirming fourth-quarter production guidance of 27.7 thousand to 30.7 thousand Boe/d. The mineral and royalty owner also declared a quarterly cash distribution of $0.45 per common unit and said it expects to redeem half of its remaining Series A preferred units on November 16.

For the three months ended September 30, Kimbell generated $96.9 million in oil, natural gas and natural gas liquids revenue. Net income was approximately $17.3 million, including about $12.4 million attributable to common units.

Consolidated Adjusted EBITDA, a non-GAAP measure, totaled $80.4 million. The calculation included $64.2 million of consolidated EBITDA, plus $4.4 million of unit-based compensation and $11.8 million of losses on derivative instruments, net of settlements. Kimbell cautioned that Adjusted EBITDA excludes several significant expenses and should not be considered a substitute for GAAP net income or operating cash flow.

Third-quarter production included 41 days of contribution from the company’s $221.2 million drop-down acquisition, which closed on August 21. Following the transaction, run-rate production was 28,910 Boe/d.

Permian leads portfolio activity

The Permian Basin accounted for 47% of third-quarter production, making it Kimbell’s largest producing region. The Mid-Continent represented 18%, while the Haynesville and Eagle Ford contributed 11% and 6%, respectively. The overall portfolio’s production mix was 49% natural gas, 27% oil and 25% NGLs, with figures affected by rounding.

Kimbell had 93 active rigs on its acreage as of September 30, equal to approximately 16% of the U.S. land rig count cited in the presentation. About 98% of those rigs were horizontal, and operators bear the associated drilling costs. The Permian accounted for 60 rigs, followed by 16 in the Mid-Continent and six each in the Eagle Ford and Haynesville.

The company identified 10,527 gross, or 77.52 net, undeveloped upside locations across its major properties. Management estimates that minor properties could add as much as 10% to net inventory, potentially bringing the total to 86.13 net locations. Based on an estimated 8.2 net wells needed annually to maintain production, Kimbell said its portfolio contains more than 10 years of drilling inventory.

Near-term development inventory included 1,005 gross, or 4.56 net, drilled-but-uncompleted wells and 705 gross, or 4.81 net, permitted locations. Together, the 9.37 net wells exceeded the company’s estimated annual maintenance requirement. The Permian represented 74% of net DUC and permit inventory.

These location figures include proved undeveloped, probable and possible resources estimated from Kimbell’s internal reserves database. The company did not book undeveloped reserves in its year-end 2025 SEC reserve report, and it cautioned that probable and possible reserve estimates are more speculative than proved reserves.

Q4 guidance maintained

Kimbell reaffirmed fourth-quarter net production guidance of 27.7 thousand to 30.7 thousand Boe/d on a 6:1 conversion basis. Oil is expected to represent 32% to 36% of production, natural gas 43% to 47%, and NGLs 19% to 23%.

The company expects marketing and other expenses of $1.45 to $2.25 per Boe, cash general and administrative expenses of $2.25 to $2.45 per Boe, and depreciation and depletion expense of $13 to $20 per Boe. Production and ad valorem taxes are projected at 6% to 8% of oil, natural gas and NGL revenue.

Kimbell maintained a 75% payout ratio assumption. The presentation’s distribution sensitivity estimates depend on commodity prices, existing hedges, quarterly lease bonus revenue of $500,000 and realized differentials consistent with third-quarter results. The assumptions also reflect the expected redemption of 50% of the remaining preferred units and the use of 25% of expected cash available for distribution to reduce borrowings under the revolving credit facility.

At September 30, total debt stood at $535.8 million and cash and cash equivalents were $33.7 million, resulting in net debt of $502.1 million. Net debt was 1.5 times trailing-12-month consolidated Adjusted EBITDA of $338.9 million. Kimbell said it was actively hedging approximately 15% of current production over a two-year period.

Management plans to continue pursuing high-quality mineral and royalty acquisitions opportunistically. Since its 2017 initial public offering, Kimbell has completed about $2.4 billion of mergers and acquisitions and increased average daily production by roughly ninefold.

The outlook remains exposed to oil and natural gas price declines, production depletion, operator drilling budgets and results, transportation and permitting constraints, tariffs and changes in U.S. trade policy. Other disclosed risks include property impairments, hedge performance, borrowing-base redeterminations, compliance with credit covenants and the company’s ability to integrate acquisitions and realize their expected benefits.