Kimbell Royalty Partners will acquire oil and natural gas mineral and royalty interests in the Midland Basin in a cash-and-equity deal valued at $231 million, the company said Jan. 7.
Kimbell will pay $207 million in cash and 1.4 million common units valued at $24 million for interests held by Boren Minerals.
The interests are located in the Mabee Ranch and concentrated in Martin and Andrews counties, Texas. They hold more than 875 gross producing wells across 68,000 gross acres. Operators on the acreage include ConocoPhillips, Diamondback Energy and Exxon Mobil Corp.
The assets’ average anticipated production for 2025 is approximately 1,842 boe/d (60% oil, 17% natural gas, 23% NGL), generating $30.9 million cash flow, Kimbell said. The company expects new net wells needed to maintain production will grow to 6.5 net wells from 5.8 wells.
The deal is expected to build on Kimbell’s Permian Basin portfolio and grow Kimbell’s undrilled inventory in the play by about 19%. The Permian is Kimbell’s leading basin in terms of production, active rig count, DUCs, permits and undrilled inventory, the company said.
The assets “enhance Kimbell's Permian footprint with excellent reservoir quality, near-term cash flow and long-term production growth,” said Bob Ravnaas, chairman and CEO of Kimbell’s general partner. “Headlined by PDP production from approximately 875 gross producing wells, excellent rig activity and line of sight wells, premier E&P operators, and substantial undeveloped drilling inventory, the Acquisition is expected to be immediately accretive to distributable cash flow per unit, with accelerated accretion anticipated in future years."
The transaction is expected to close in first-quarter 2025. Kimbell’s board of directors and Boren’s governing body have both approved the transaction.
On Jan. 7, Kimbell also announced an underwritten public offering of 9 million common units, with the option to purchase an additional 1.35 million common units. Proceeds from the offering will be used to repay its revolving credit facility, which will be used to fund the cash portion of the Boren acquisition.
Citigroup served as exclusive financial adviser and White & Case LLP acted as legal counsel to Kimbell. TPH&Co. served as exclusive financial adviser and MLT Aikins LLP and Vinson & Elkins LP served as legal adviser to Boren.
The White & Case team was led by Capital Markets Partner Jason Rocha and M&A Partner Charlie Ofner, both in Houston.