KRP

Analyst Note: KRP (Kimbell Royalty Partners, LP)

Date: 2026-06-13 Current Price: $14.77

1. Structural Readiness

• Conservative Entry: Not yet defined (requires breakout confirmation).
• Aggressive/Pre-Breakout Entry: Not applicable for a pure setup-led strategy; entry is contingent on the breakout firing.
• Breakout Level: Not yet defined (requires price to close above the consolidation high).
• Current Price: $14.77.
• Extension: — (No extension calculated as no breakout has fired).
• ATR Context: Current ATR is 2.2% (sub-threshold). This indicates lower volatility than the historical "sweet spot" (4–6%), suggesting the market is currently in a consolidation or low-momentum phase, consistent with a forming coil.

2. Thesis Layer

• Thesis Classification: Tactical / Setup-Led.
• Macro Thesis: There is no named secular thesis attached to this specific setup as of 2026-06-13. The investment case is not driven by a specific macro narrative (e.g., "Energy Transition" or "Global Supply Shock") but is instead judged on the quality of the technical setup (the forming coil) and the underlying business fundamentals.

3. Business Overview

Kimbell Royalty Partners, LP (KRP) operates as a royalty and mineral interest company. Its business model is to acquire and own mineral and royalty interests in crude oil and natural gas properties across the United States, generating cash distributions to unitholders from the production of these assets.

• Portfolio Scale & Composition: As of March 31, 2026, the Partnership owned mineral and royalty interests in approximately 12.3 million gross acres and overriding royalty interests in approximately 4.7 million gross acres. Approximately 54% of these aggregate acres are located in the Permian Basin and Mid-Continent. The portfolio spans 28 states and includes ownership in over 133,000 gross wells (including over 53,000 in the Permian).
• Operational Activity: The company benefits from the drilling activity of its working interest owners. As of the Q1 2026 earnings call (May 7, 2026), the active rig count on KRP's acreage was 85 rigs, representing a 16% market share of U.S. land rigs. Management noted an uptick in activity in the Bakken and Eagle Ford basins.
• Revenue & Production: For the first quarter of 2026, oil, natural gas, and NGL revenues totaled $82.9 million. Run-rate production was 25,522 BOE per day, which exceeded the midpoint of guidance. Revenue mix was 62% oil, 25% natural gas, and 13% NGLs.
• Capital Allocation & Growth:
• Acquisitions: The company completed the acquisition of mineral and royalty interests from Boren Minerals on January 17, 2025, valued at approximately $230.4 million.
• Shareholder Returns: On May 7, 2026, the Board declared a quarterly cash distribution of $0.41 per common unit. Additionally, a $100 million common unit repurchase program was approved on March 6, 2026.
• Debt Management: During 2025, the Board approved the repayment of $56.5 million in outstanding borrowings under its secured revolving credit facility.
• Reserves & Decline: As of December 31, 2025, estimated proved reserves were 72,944 MBoe (51.2% liquids). The PDP reserves have an average estimated yearly decline rate of 13.5% during the initial five years. Management expects continued development through infill drilling and recompletions to offset this decline.

4. Archetype and Conviction

• Archetype: Cyclical Recovery.
• Valuation Context: The financial spine indicates a forward consensus EPS of $0.83 for FY1 and $0.86 for FY2. With a current price of $14.77, the forward P/E is approximately 17.8x (FY1).
• Conviction Stack:
• Thesis Strength: Moderate (Tactical, no macro thesis).
• Evidence Quality: High. The evidence base is robust, with specific, quantified data on acreage, rig counts, production volumes, and reserve decline rates from both earnings transcripts and SEC filings.
• Setup Readiness: Partial. The structure is in place, but the breakout has not fired. The sub-threshold ATR (2.2%) suggests the market is currently quiet, waiting for a catalyst.
• Rerating Potential: Dependent on the confirmation of the "modest uptick in activity" mentioned by management and the successful execution of the $100M buyback program.

5. Invalidations, Strengths, and Gaps

• Strengthening: A confirmed breakout above the consolidation range (price action) combined with management raising guidance for 2026 production or confirming higher oil price realization would strengthen the case.
• Gaps in Evidence:
• Breakout Level: The specific price target for the breakout is not defined.
• Future Guidance Precision: While management expects "modest uptick," specific quantitative guidance for the remainder of 2026 (beyond the Q1 run-rate) is not detailed in the provided excerpts.

PRIVATE ANALYST CALL

Judgment: Speculative Confidence: medium Key evidence: 85 active rigs on acreage (16% market share) with management citing uptick in Bakken/Eagle Ford; $100M buyback program approved March 2026; Q1 2026 production of 25,522 BOE/day exceeded guidance midpoint. Key risks: Sub-threshold ATR (2.2%) indicates low volatility and potential lack of immediate momentum; 13.5% initial decline rate on PDP reserves requires constant drilling to maintain production; reliance on commodity prices for revenue. Sizing hint: Position size should reflect the "forming" status—smaller than a confirmed breakout, sized for the risk of a failed breakout rather than a guaranteed move. Expected path: Management expects continued development and modest activity uptick; if oil prices hold, rig count should stabilize or rise, supporting the breakout from the current base. Expected horizon: 3 to 6 months for the setup to resolve into a confirmed breakout or invalidation.