Kimbell Royalty Partners, LP (KRP): BCG Matrix [Dec-2025 Updated]

You're looking at Kimbell Royalty Partners, LP's (KRP) asset map, and honestly, the BCG Matrix cuts right through the noise to show where the real action is as of late 2025. We've got the Permian Basin driving 54% of Q2 revenue as a clear Star, backed by a zero direct capital expenditure model that keeps Q3 Adjusted EBITDA strong at $62.3 million-that's your Cash Cow engine. Still, the $230.4 million Midland Basin acquisition from January is a massive Question Mark, balancing high growth potential against its debt load, while legacy assets across 28 states are quietly fading into Dog territory. Dive in below to see exactly how KRP is managing these four quadrants to navigate the current market.

Background of Kimbell Royalty Partners, LP (KRP)

You're looking at Kimbell Royalty Partners, LP (KRP), which operates as a leading owner and acquirer of oil and natural gas mineral and royalty interests across the United States. Honestly, their model is quite straightforward: they don't drill or produce; instead, they own the rights and collect royalty payments from the operators who do the heavy lifting. This structure gives Kimbell Royalty Partners, LP (KRP) a very low capital intensity and cost sensitivity, which is a key differentiator in the energy space.

As of late 2025, Kimbell Royalty Partners, LP (KRP) has a significant footprint, holding interests in over 131,000 gross wells spread across 28 states. Their acreage is concentrated in premier areas, with substantial exposure in the Permian Basin-where they have ownership in over 52,000 gross wells-along with holdings in the Mid-Continent, Haynesville, and Eagle Ford plays, among others. Revenues flow in from royalty payments based on the sale of oil, natural gas, and NGL production from these underlying assets.

Looking at the operational snapshot from the third quarter of 2025, Kimbell Royalty Partners, LP (KRP) reported a run-rate daily production of 25,530 barrels of oil equivalent per day (Boe/d). This performance, which exceeded the midpoint of their guidance, came despite a general slowdown in the broader U.S. oil and natural gas sector. Their asset quality is evident in the activity on their land; as of September 30, 2025, 86 rigs were actively drilling across their acreage, representing about 16% of the entire U.S. land rig count.

Financially, Q3 2025 saw total revenues hit $76.8 million, with consolidated Adjusted EBITDA coming in at $62.3 million. Net income attributable to common units for that quarter was approximately $17.0 million. The company declared a cash distribution of $0.35 per common unit for Q3 2025, a figure that reflects a deliberate capital allocation strategy: 75% of cash available for distribution goes to unitholders, and the remaining 25% is earmarked for aggressively paying down debt. This focus on the balance sheet is important; as of September 30, 2025, Kimbell Royalty Partners, LP (KRP) maintained a net debt to trailing 12 months consolidated Adjusted EBITDA ratio of approximately 1.6x.

The company continued its growth strategy into 2025, notably completing a $230 million acquisition from Boren Minerals on January 17, 2025, which was funded entirely in cash. Despite some recent stock price softness, with a market capitalization around $1.6B in early November 2025, the underlying operational metrics show resilience and a strong position within the royalty sector.

Kimbell Royalty Partners, LP (KRP) - BCG Matrix: Stars

You're looking at the core engine driving future value for Kimbell Royalty Partners, LP (KRP), which, in BCG terms, sits squarely in the Stars quadrant. These are the assets with high market share in high-growth areas, demanding investment to maintain their lead. For KRP, this primarily means the Permian Basin interests.

The Permian Basin royalty interests are the clear revenue leader, generating about 54% of Q2 2025 revenue. This concentration in a premier, high-growth basin is what qualifies this segment as a Star; it's where the market is growing fastest, and Kimbell Royalty Partners, LP (KRP) has secured a leading position. Honestly, this dominance is the key to their near-term strategy.

Market share, in the context of a royalty company, is often best proxied by activity on the acreage. Kimbell Royalty Partners, LP (KRP) acreage is seeing significant development, representing a 16% market share of the U.S. land rig count as of Q3 2025. That's a strong foothold in the most active drilling environment in the country. To be fair, maintaining that share requires continuous capital deployment, which is why Stars consume cash.

The operational runway looks excellent, suggesting the high-growth market won't slow down for Kimbell Royalty Partners, LP (KRP) anytime soon. They have a substantial line-of-sight inventory of 7.07 net DUCs (Drilled Uncompleted Wells) and permitted wells. Here's the quick math: this inventory exceeds the estimated 6.5 net wells needed just to keep production flat. What this estimate hides is the quality of the underlying acreage, but the sheer volume suggests sustained high activity.

Even with sector headwinds you might be seeing elsewhere, the organic production growth proves the model works. Kimbell Royalty Partners, LP (KRP) achieved a 1% organic production growth from Q2 to Q3 2025. This growth, driven by the development of these Star assets, is exactly what you want to see before a market matures into a Cash Cow.

To summarize the key performance indicators defining these Star assets, look at this snapshot:

• Permian Basin revenue contribution: 54% of Q2 2025 total.
• U.S. land rig market share on acreage: 16% as of Q3 2025.
• Inventory buffer over maintenance level: 0.57 net wells (7.07 minus 6.5).
• Quarter-over-quarter organic growth: 1% (Q2 to Q3 2025).

The investment thesis for a Star is clear: invest to keep that market share high. Here's how the key metrics stack up for these growth drivers:

The strategy here is to fund the development of this inventory to ensure Kimbell Royalty Partners, LP (KRP) maintains its leading position in the Permian as long as the growth rate supports it. Finance: draft the capital allocation plan for Permian development by next Wednesday.

Kimbell Royalty Partners, LP (KRP) - BCG Matrix: Cash Cows

Kimbell Royalty Partners, LP operates with an asset-light royalty model that requires zero direct capital expenditures (capex) from Kimbell Royalty Partners. This structure is the foundation for its Cash Cow status, as it allows for maximum cash conversion from its existing asset base.

You see this cash generation clearly in the third quarter of 2025 results. Kimbell Royalty Partners, LP posted a strong, stable cash generation figure, with Q3 2025 consolidated Adjusted EBITDA at $62.3 million. This high market share asset in a mature sector generates significant cash flow without the need for heavy reinvestment into operations.

The capital allocation strategy reflects this Cash Cow management style, prioritizing shareholder returns and balance sheet strength over aggressive growth spending. Here's the quick math on how Kimbell Royalty Partners, LP managed its cash available for distribution (CAD) for the quarter:

• Asset-light royalty model requires zero direct capital expenditures (capex).
• Cash distribution to common unitholders was $0.35 per common unit.
• This distribution reflects a payout ratio of 75% of cash available for distribution.
• The annualized yield implied by this distribution was 10.7% based on the November 5, 2025 closing price.

The disciplined approach to capital allocation is evident in how the remaining cash is deployed. Kimbell Royalty Partners, LP uses the remaining 25% of cash available for distribution to aggressively pay down debt, which amounted to about $12.6 million in Q3 2025. This focus on deleveraging is key to maintaining the long-term stability of this cash flow engine.

The balance sheet as of September 30, 2025, shows the context for this debt paydown focus. The company had approximately $448.5 million in debt outstanding under its secured revolving credit facility. This resulted in a net debt to trailing twelve-month consolidated Adjusted EBITDA ratio of approximately 1.6x at that date. The 25% allocation toward debt reduction is a direct action to lower this leverage, which is a priority for a mature business unit.

Operational efficiency supports the high cash flow, as evidenced by low overhead costs relative to production. Cash General and Administrative (G&A) expense was $5.9 million in Q3 2025, translating to Cash G&A per barrel of oil equivalent (BOE) of $2.51. Furthermore, activity on Kimbell Royalty Partners, LP acreage remains robust, with 86 rigs actively drilling as of September 30, 2025, representing approximately 16% market share of all land rigs drilling in the continental United States.

You can see the key financial metrics supporting the Cash Cow designation in this summary of Q3 2025 performance:

The strategy for Kimbell Royalty Partners, LP is clear: maintain productivity and milk the gains passively. Investments are focused on infrastructure that improves efficiency, like the operational discipline reflected in the Cash G&A per BOE, rather than high-growth exploration.

Kimbell Royalty Partners, LP (KRP) - BCG Matrix: Dogs

You're looking at the segment of Kimbell Royalty Partners, LP's portfolio that demands careful scrutiny-the Dogs. These are the assets that require management attention without promising significant future growth or cash generation relative to the core business. Honestly, for a pure-play mineral and royalty company, the Dogs are often the legacy, non-core interests that are too small or too mature to warrant dedicated capital for development, even with the no-capex model.

Royalty interests in mature, non-core basins with minimal recent drilling activity represent this quadrant. While Kimbell Royalty Partners, LP has made significant, strategic acquisitions in high-growth areas like the Midland Basin-spending approximately $231 million in early 2025 to bolster its core-the remainder of the portfolio spans a vast geography that naturally includes less active plays. As of Q3 2025, Kimbell Royalty Partners, LP had 86 active rigs drilling across its acreage, representing a 16% market share of U.S. land rigs. The implication is that the majority of the drilling activity, and thus the growth catalyst, is concentrated away from these mature, non-core areas.

The nature of these assets means they are likely in older fields characterized by high natural production decline rates that are not offset by new wells. Kimbell Royalty Partners, LP's overall portfolio has an estimated five-year average PDP (Proved Developed Producing) decline rate of approximately 14% on a 6:1 basis. You can bet the decline rate on assets outside the core Permian region, which accounted for 52% of Q1 2025 revenue, is significantly higher than this blended average. These older wells are simply running out of steam without the constant infusion of new drilling activity seen in the core plays.

The sheer scale of Kimbell Royalty Partners, LP's footprint across 28 states means there are inevitably small, fragmented royalty parcels that contribute negligible revenue and lack growth catalysts. The company holds interests in over 131,000 gross wells as of Q3 2025. Management has noted that minor properties, which fit this description, generally carry less than a 0.1% net revenue interest and are time-consuming to quantify, though they could add up to an additional 15% to net inventory in the aggregate. These parcels are the definition of low market share and low growth potential.

Still, this segment isn't entirely a cash drain. You see production from legacy wells that is slowly declining, but still generates marginal cash flow due to the no-capex model. Because Kimbell Royalty Partners, LP is a passive royalty owner, it incurs no drilling or completion costs. For Q3 2025, the cash General and Administrative expense (G&A) per BOE was $2.51, reflecting operational discipline. This low operating cost means that even marginal production from legacy wells can contribute positively to the cash flow available for distribution, even if the production volume is shrinking.

Here's a quick look at how the portfolio split suggests where the focus-and thus, where the Dogs are not-lies, based on Q1 2025 figures:

The fact that non-Permian basins contribute a higher percentage of production than revenue suggests that the production mix in those areas is less valuable per unit of volume, which is typical of mature, lower-pressure, or gas-heavy legacy plays. These are the areas where divestiture may be considered to free up management time.

The characteristics that define these Dogs for Kimbell Royalty Partners, LP include:

• Royalty interests in basins with minimal recent rig additions relative to core areas.
• Assets where the net revenue interest is typically less than 0.1% on minor parcels.
• Production that is not expected to be offset by new wells in the near term.
• The overall portfolio decline rate baseline of approximately 14%, which Dogs will likely exceed.

Finance: draft a list of all non-Permian, non-Mid-Continent assets by gross acreage for review by end of month.

Kimbell Royalty Partners, LP (KRP) - BCG Matrix: Question Marks

You're looking at the assets that represent Kimbell Royalty Partners, LP's high-growth bets-areas where market share is still being fought for, demanding capital now for potential future Star status.

The $230.4 million Midland Basin acquisition (Jan 2025) is a high-growth asset that is currently debt-funded, requiring significant cash to de-leverage. Kimbell Royalty Partners closed this purchase of mineral and royalty interests in January 2025. The acquired assets were estimated to produce approximately 1,842 Boe/d for the full year 2025. This transaction was expected to increase daily production by approximately 8%. As of September 30, 2025, Kimbell Royalty Partners had outstanding borrowings of $448.5 million under its secured revolving credit facility.

Natural gas-heavy assets, which comprise about 48% of Q3 2025 production, face high growth potential but are subject to volatile and currently softer commodity prices. Kimbell Royalty Partners' Q3 2025 run-rate average daily production was 25,530 Boe per day (6:1). The realized price per Mcf of natural gas for Q3 2025 was $2.47.

Future, large-scale, highly accretive M&A deals, which management is targeting but which carry high execution and funding risk. Kimbell Royalty Partners intends to utilize 25% of its cash available for distribution to pay down outstanding borrowings under its secured revolving credit facility. As of September 30, 2025, the company had $176.5 million in undrawn capacity under that facility. The Net Debt to EBITDA Ratio was approximately 1.6 times as of September 30, 2025.

Exposure to specific gas plays like the Haynesville, which could see a massive upside from long-term LNG demand but are currently low-growth due to price. Kimbell Royalty Partners has significant exposure to the Haynesville, among other high-gas assets. Nearly 96% of Kimbell Royalty Partners' production comes from the seven premier United States onshore resource plays.

Here's a quick look at the Q3 2025 production breakdown:

The strategy here is clear: invest to grow share or divest. Kimbell Royalty Partners is actively drilling, with 86 active rigs on its acreage as of September 30, 2025, representing approximately 16% market share of U.S. land rigs.

The cash flow picture for these growth areas is tied to commodity realization:

• Q3 2025 Oil Revenue per Bbl: $64.21
• Q3 2025 Natural Gas Revenue per Mcf: $2.47
• Q3 2025 NGL Revenue per Bbl: $21.74
• Q3 2025 Combined Revenue per Boe: $32.14

Management is focused on operational discipline, with Cash G&A per BOE reported at $2.51 in Q3 2025.