Kimbell Royalty Partners LP

Greetings and welcome to the Kimball Royalty Partners first quarter earnings conference call. This time all participants are on a listen-only mode. The 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. 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 first quarter ended March 31, 2023. 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 on this call speaks only as of today, May 3rd, 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 of the statements made in today's discussion that are not historical facts, including statements of expectations for future events or future financial performance or 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 earnings press 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 newest 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. I would now like to turn the call over to Bob Ravenous, Kimball Royalty 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 Daley, our chief operating officer, and Blaine Reinsberger, our controller. We are pleased to report our first quarter results that included record run rate daily production, a new record high rig count on our acreage, and a declared cash distribution of 35 cents per common unit. We're also very excited about our Midland Basin mineral and royalty acquisition that we announced last month. We expect to close this acquisition later this month. With the addition of MB Minerals to our portfolio, we continue to build on last year's momentum and our production mix is now expected to materially shift towards oil. After giving effect to our recent M&A activity, the Permian now leads all categories in terms of production, inventory, rig count, and line of site wells. Looking at our natural gas royalty assets, even in the face of low natural gas prices in the first quarter, the rig count on our core Haynesville acreage increased quarter over quarter led by private operators. This increase in the rig count is a testament to the quality of our acreage in this area. In addition, we realized natural gas prices that were substantially higher than Henry Hub across several basins during Q1, led by the DJ Basin and Bakken, which highlights the strength of our diversified royalty model. In fact, we realized natural gas prices during Q1 that were 19% above Henry Hub. Before turning the call over to Davis to provide a more detailed review of our financials, I'd like to comment further on our Midland Basin acquisition. These assets include targeted oil and gas mineral and royalty interest on approximately 60,000 gross acres concentrated in the northern Midland Basin. Located primarily in northern Howard County, there is a high interest contiguous footprint and three active rigs on the acreage as of March 31st. The mineral and overriding royalty ownership is on over 100 horizontal DSUs and is 100% held by production with over 300 total producing wells. We expect to add approximately 1,900 BOE per day with a mix of 77% oil, 12% natural gas, and 11% NGL based on our estimated run rate average daily production over the next 12 months. We believe this is an excellent and highly accretive transaction for our company and our unit holders at a very favorable multiple. This acquisition, again, reinforces our Permian Basin position as our leading basin in terms of production, active rig count, ducts, permits, and undrilled inventory. We expect to increase our run rate average daily production to over 19,000 BOE per day, and the acquisition is expected to add 2.06% net ducts and net permitted locations to Kimball's inventory. Following the transaction, we expect our oil weighting daily production mix to increase from 29% to 34%. We also expect to maintain a peer leading five year PDP decline rate of approximately 13%. If we zoom out to take in a broad view of the industry, we continue to expect oil production growth from US operators to remain relatively flat. We arrive at this view not only from the commentary we're hearing from U.S. operators, but also due to the fact that the number of ducks in the U.S., which is one of the best indicators for near-term production growth, has dropped precipitously since 2020 and has not recovered. Many operators will continue to focus on replenishing their duck inventories in the short term, and we believe that inflationary pressures in the drilling, completion, and labor side of their businesses will continue to temper oil production growth during 2023. Production stability, profitability and quality of inventory will continue to be the primary themes of energy investing rather than the hyper growth models we've seen in prior cycles. Moving forward, we will continue to drive growth both through organic development and our discipline acquisition strategy that is both a consistent and proven method at Kimball. We also expect to continue benefiting from our diverse portfolio with quality production, low PDP decline rates, and upside drilling locations. As a major consolidator in the highly fragmented U.S. oil and gas royalty sector, we remain bullish about the long-term consolidation in this space and our role in it. We believe that future opportunities for Kimball are very bright and extend for many years. I'll now turn the call over to Davis to review our financials in more detail before we open the call to questions.