| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 48.33 | 260 |
| Intrinsic value (DCF) | 4.94 | -63 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 3.43 | -74 |
Kimbell Royalty Partners, LP (NYSE: KRP) is a leading owner of mineral and royalty interests in U.S. oil and natural gas properties. With a diversified portfolio spanning approximately 11.4 million gross mineral acres and 4.7 million gross overriding royalty acres across 28 states, Kimbell benefits from exposure to high-growth basins like the Permian, where it holds interests in ~46,000 wells. The company's asset-light business model generates stable cash flows through royalty payments, insulating it from production costs and capital expenditures while providing leveraged upside to commodity prices. As a publicly traded royalty trust, Kimbell offers investors pure-play exposure to U.S. energy production with a focus on shareholder returns, evidenced by its $1.70 annual dividend per share. The Fort Worth-based partnership has grown rapidly since its 2013 founding, capitalizing on industry consolidation and the secular shift toward non-operating mineral ownership structures in the energy sector.
Kimbell Royalty Partners presents an attractive income-oriented investment within the energy sector, offering a 9.5% dividend yield (based on current share price) with commodity price upside. The company's low-beta (0.44) profile provides defensive characteristics during market volatility, while its royalty model eliminates exposure to operating costs and capex. However, investors face risks from oil price volatility, potential production declines from underlying assets, and dependence on operator activity levels. The balance sheet appears manageable with $243M debt against $34M cash and strong operating cash flows ($251M TTM). With concentrated Permian Basin exposure (40% of wells) and a scalable acquisition strategy, KRP is well-positioned to benefit from continued U.S. shale development, though its negative EPS (-$0.12) warrants monitoring of payout sustainability.
Kimbell Royalty's competitive advantage stems from its massive scale (16M+ gross acres), basin diversification, and pure-play royalty model that differentiates it from traditional E&P companies. The company's Permian Basin concentration (the most prolific U.S. shale play) provides premium asset quality, while its 28-state footprint reduces regional risk. KRP's acquisition strategy focuses on larger, institutional-quality packages that smaller royalty companies cannot access, giving it first-mover advantage in industry consolidation. Unlike operators, Kimbell has zero capex requirements and benefits automatically from operator efficiency gains. However, the company faces competition from private mineral aggregators and larger royalty peers in acquiring premium assets. Its partnership structure provides tax advantages but limits financial flexibility compared to corporate competitors. KRP's scale allows it to negotiate better data access from operators than smaller rivals, enhancing its valuation capabilities. The company's biggest challenge is maintaining acquisition momentum in a competitive mineral rights market while sustaining its high dividend payout ratio (currently ~90% of cash flow).