Kimbell Royalty Partners, LP (NYSE: KRP) raised its third and fourth quarter 2026 production guidance, citing record daily output expectations following two recent acquisitions.

The Fort Worth-based royalty company expects net production to reach a midpoint of 28 million boe/d in Q3 2026 and 29.2 million boe/d in Q4 2026. This represents a 10% increase for Q3 and a 15% increase for Q4 over prior guidance issued with its Q4 2025 earnings release.

Acquisition Impact

The guidance revision follows the closing of the purchase of mineral and royalty interests from Mesa Royalties in a transaction valued at approximately $145.9 million. Kimbell also closed a separate acquisition of certain oil and gas royalty interests from affiliated sellers valued at approximately $221.2 million.

Kimbell is entitled to all cash flow from these acquisitions beginning June 1, 2026. Revenues were recorded under GAAP starting June 22, 2026 for the Mesa deal and August 21, 2026 for the affiliated seller transaction.

Production Mix and Costs

Management highlighted an increased oil production mix, with the Permian Basin leading all categories including revenue, production, drilled but uncompleted wells, permits, and permitted but undeveloped locations.

Cash general and administrative expenses per boe are expected to decline, reflecting positive operating leverage despite the expanded asset base. Depreciation and depletion expenses are guided at $13 to $20 per boe for both quarters.

Distribution Policy

Kimbell maintains its payout ratio at 75% of projected cash available for distribution. The company intends to utilize the remaining 25% to pay down outstanding borrowings under its secured revolving credit facility each quarter.

What the Numbers Show

The step-up in production guidance is directly attributable to the timing of the acquisitions. Q3 2026 guidance includes a full quarter of production from the Mesa Acquisition but only 41 days of contribution from the affiliated seller drop-down. In contrast, Q4 2026 reflects full-quarter contributions from both deals, explaining the larger 15% upside versus the prior 2026 midpoint compared to the 10% upside for Q3.

Kimbell Royalty Partners, LP (NYSE: KRP) has closed its previously announced drop down acquisition of mineral and royalty interests for approximately $221.2 million. The transaction expands the company’s footprint across major onshore basins.

The purchase price consisted of $74.9 million in cash and 9.5 million common units of Kimbell Royalty Operating, LLC valued at $146.3 million. Kimbell is entitled to all cash flow from production attributable to the acquired assets since June 1, 2026, though revenues will be recorded starting August 21, 2026.

Production and Portfolio Details

As of June 1, 2026, the acquired portfolio produces approximately 2,347 Boe/d. This output includes 841 Bbl/d of oil, 569 Bbl/d of NGLs, and 5,624 Mcf/d of natural gas, based on a 6:1 conversion ratio.

The assets span over 3 million gross acres with more than 29,000 gross producing wells. Key regions include the Eagle Ford, Permian, Mid-Con, and Appalachia basins. This addition complements Kimbell’s existing position of over 17 million gross acres in 28 states.

What the Numbers Show

The capital structure of this deal highlights a significant equity-heavy approach. The unit component represents approximately 66% of the total consideration, while cash accounts for the remaining 34%. This structure allows Kimbell to acquire substantial production volume—over 2,300 Boe/d—while preserving liquidity relative to an all-cash transaction. The inclusion of affiliated sellers in the deal suggests a strategic alignment with existing stakeholders to consolidate assets within the company’s operating framework.