Kimbell Royalty Partners LP

Greetings and welcome to the Kimball Royalty Partners Third 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. Thank you, Rick. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to Kimball Royalty Partners' conference call to review financial and operational results for the third quarter ended September 30th, 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, November 3rd, 2022, so please be advised that any time-sensitive information may no longer be accurate as of the date of any replay, listening, 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 for future events or future financial performance, are forward-looking statements made pursuant to the safe harbor provisions of 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 earnings release for our disclosure 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 adjusted EBITDA and cash available for distribution. Reconciliations to the nearest GAAP measures can be found at the end of today's earnings release. Temple assumes no obligation to publicly update or revise any forward-looking statements. I would now like to turn the call over to Bob Ravnis, 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 Ravnis, our President and Chief Financial Officer, Matt Daly, our Chief Operating Officer, and Blaine Reinsberger, our Controller. I'll start by commenting on the quarter and the current operating environment and before turning the call over to Davis to review our financials in more detail before we open the call to your questions. We maintain strong momentum in the third quarter coming off record results in the second quarter. In terms of production, we achieved another record as run rate daily production for Q3 2022 was 14,985 BOE per day. While last quarter's record production was driven by a surge in natural gas production in the Haynesville area, This quarter's record performance was driven by accelerated oil-weighted activity, primarily in the Permian and Eagleford, which drove an 8% sequential increase in oil production. This is a good example of the power of geographic diversity. As of September 30, 2022, we had 79 rigs actively drilling on our acreage, up 7% from last quarter, and representing over 10.6% market share of all rigs drilling in the continental United States. This is the highest level of rigs actively drilling on our acreage that we've experienced since 2019. Reflecting these strong quarterly results, we are pleased to announce today that our third quarter distribution is 49 cents per common unit. Moving into the final quarter of 2022, we see continued momentum supported by a record number of ducks and permits at the end of Q3 2022. We believe that this operational success is a result of seeds planted over the last five years with more than $900 million in acquisitions across the leading basins in the U.S. since 2018. Our consistent and proven strategy of having a strict set of time-tested acquisition criteria, which includes significant upside drilling inventory, continues to propel our business model and enhance growth. We are now realizing the benefits of this acquisition strategy as reflected in our inventory conversions, record production, and operational performance. I'm pleased to announce that we now believe Kimball only needs 4.0 net wells completed each year to keep production flat, an 11% reduction from the prior estimate of 4.5 net wells per year. This reduction further highlights Kimball's best-in-class production stability. Given that we currently have 5.44 net ducts and permits, which is another quarterly record, we are well-positioned to drive continued organic production growth. Today, the macro events dominating the financial headlines in many industry sectors, which were leaders over the last several years, are experiencing significant headwinds in this current environment. However, I believe the energy sector is in the best shape that I've seen in my career, which has spanned over 40 years, as is well prepared to weather any storm that may be coming in future quarters. In general, balance sheets are running at low levels of leverage. Free cash flow is strong. Management teams are disciplined, and valuations remain compelling, even in a higher interest rate environment. Many are expecting a slowdown in drilling in the medium term due to increased costs, especially labor. As I said before, this is one of the strongest competitive advantages of being a pure royalty company. Namely, we have zero inflationary risk in terms of drilling and production costs. Yet, we receive the upside from higher commodity prices. We remain structurally bullish on both oil and natural gas of the long term due to years of woefully low investment, especially among energy companies outside of the U.S. and strong global demand trends that we expect to accelerate in 2023. As we finish 2022, we are very grateful to our employees, board of directors, and advisors for helping us achieve a record year at Kimball. We remain extremely excited about our role as a leading consolidator in the oil and gas royalty sector. and the prospects for Kimball to generate long-term unit holder value for years to come. I'll now turn the call over to Davis to review our financials in more detail before we open the call to questions.