Kimbell Royalty Maintains Operational Strength Amid Commodity Price Weakness

Kimbell Royalty Partners has demonstrated resilient operational performance in its second-quarter 2025 results, navigating a challenging period marked by declining commodity prices that have impacted shareholder distributions.

The company reported production of 25,355 barrels of oil equivalent per day (Boe/d), maintaining near-identical output levels compared to the previous quarter. This operational consistency highlights effective management of the company’s extensive mineral portfolio. Further supporting future production stability is an increasing inventory of drilled but uncompleted wells (DUCs) across Kimbell’s properties.

Financial Pressures and Distribution Outlook

Weaker oil and natural gas prices have directly affected the company’s distribution capabilities. Kimbell reduced its quarterly payout from $0.47 per unit in Q1 2025 to $0.38 per unit in Q2 2025. Looking ahead, based on current strip prices for the remainder of 2025, management anticipates distributions will likely settle in the mid-30 cent range—specifically between approximately $0.35 and $0.36 per unit.

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Strategic Hedging Provides Price Protection

Kimbell has implemented a comprehensive hedging strategy to mitigate price volatility, currently protecting approximately 20% of its oil and gas production through the second quarter of 2027. The company’s oil hedges for Q3 2025 through Q2 2026 average approximately $71 per barrel, while later hedges from Q4 2026 through Q2 2027 average around $63 per barrel. These less robust later hedges are expected to have only a minimal impact on future distributions, reducing projected payouts by roughly $0.01 per unit each quarter.

Institutional Confidence and Balance Sheet Discipline

The investment community continues to show interest in Kimbell Royalty, with several institutional investors adjusting their positions during the first quarter of 2025. HighTower Advisors LLC significantly increased its stake by 198.6%, bringing its total holdings to 72,182 shares valued at $1.011 million. Other institutions including Bessemer Group Inc. and GAMMA Investing LLC also modified their positions in the company.

Kimbell has maintained financial discipline by allocating 25% of available cash toward debt reduction, recently repaying approximately $13.6 million outstanding on credit facilities. This move underscores management’s commitment to strengthening the balance sheet during periods of market uncertainty.