Fast-Growth Royalty LP Dropping K-1s, Yields 7.6%, Big Q3 Deal Will Up DCF 15%

Unlike most royalty companies, this one is growing, via dropdowns, acquisitions, and organic growth. A big Q3 deal will grow production by over 50% and DCF by 15%. Management intends to convert to a C-Corp, eliminating K-1s. Distributions are up 40% since the 2017 IPO. Royalties are all revenue-based.

Have you ever owned a royalty LP? Usually, there's a fixed amount of assets for which the LP gets paid royalty interests in a variety of ways, and a target termination date, usually with no growth. The reserves are just drawn down, and may or may not be replaced. However, Kimbell Royalty Partners LP (KRP) is a royalty LP with a difference - it's actively managed, meaning that it can grow its interests through acquisitions and dropdowns. This is precisely what KRP's management has done. Since its February 2017 IPO, production has grown 19%, and revenue has grown 44%.

Source: Seeking Alpha

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