Kimbell Royalty Partners LP

Greetings, and welcome to the Kimball Royalty Partners Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black, Investor Relations for Kimball Royalty Partners. Thank you, Mr. Black. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to the Kimball Royalty Partners conference call to review financial and operational results for the second quarter ended June 30, 2022. This call is also being webcast and can be accessed through the audio link on the events and presentations page of the IR section of kimballrp.com. Information recorded on this call speaks only as of today, August 4, 2022, so please be advised that any time-sensitive information may no longer be accurate as of the date of any listing or transcript reading. I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance, are forward-looking statements made pursuant to the safe harbor provisions for the Private Securities Litigation Reform Act of 1995. We will be making forward-looking statements as part of today's call, which by their nature are uncertain and outside of the company's control. Actual results may differ materially. Please refer to today's press release for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Management will also refer to non-GAAP measures, including the adjusted EBITDA and cash available for distribution. Reconciliations to the nearest GAAP measures can be found at the end of today's earnings press release. Kimball assumes no obligation to publicly update or revise any forward-looking statements. With that, I would now like to turn the call over to Bob Ravenous, Kimball Realty Partners Chairman and Chief Executive Officer. Bob?

Thank you, Rick, and good morning, everyone. We appreciate you joining us on the call this morning. With me today are several members of our senior management team, including Davis Ravenous, our President and Chief Financial Officer, Matt Daly, our Chief Operating Officer, and Blaine Reinsberger, our Controller. I'll start the call today by commenting on the quarter and the current operating environment before turning the call over to Davis to walk you through our financials in more detail. We are very pleased to sustain the momentum we had last quarter into this quarter. The strong commodity prices during the quarter coupled with organic production growth resulted in several new records for Kimball. In addition, net ducks and permits reached record levels at the end of Q2 2022 reflecting increased activity and line of sight on our acreage. I am particularly pleased with the 4% organic production growth in the quarter, which drove record run rate production in Q2 2022, driven mainly by significant new production from multiple high-interest wells in the Haynesville. Reflecting these strong quarterly results, we are pleased to announce today that our second quarter distribution is $0.55 per common unit, This marks yet another record for the company. Recessionary fears have now permeated across the economy, and U.S. gasoline demand has decreased, resulting in a steep drop in oil prices from the March 2022 highs. However, upstream operators across the United States have generally kept production growth constrained, which should provide a sturdy backstop for potential downside in oil prices from current levels. In fact, overall U.S. Oil production has grown only approximately 2% this year, even with multi-year highs in commodity prices. As of June 30, 2022, we had 74 rigs actively drilling on our acreage, up 1% from last quarter and representing over 10% market share of all rigs drilling in the continental U.S. After a significant correction in natural gas prices from June highs, These prices are again trending higher, reflecting record power demand and tepid production growth. This price increase is happening notwithstanding approximately two BCF per day of demand temporarily lost due to a major LNG export facility being offline. These higher oil and natural gas prices are supporting activity increases across all major basins, which we are seeing through increased lease bonus activity as well as record net ducts and permits. And we continue to see operators maintaining discipline even in the face of these higher prices and expect only modest production growth as we finish out 2022. As we have mentioned before, at Kimball, we only need approximately four and a half net wells completed each year to keep production flat. And our net ducts and permits currently exceed this level, providing the potential for continued organic production growth as we finish out 2022. As we look forward in 2022 and beyond, we remain very bullish about the industry overall. We remain extremely excited about our role as a leading consolidator in the oil and natural gas royalty sector, and we believe there are substantial opportunities for Kimball to generate long-term unit holder value for years to come. And with that, I'll now turn the call over to Davis.