Kimbell Royalty Partners announced that it has agreed to acquire certain oil and gas royalty assets from EnCap Investments for approximately $151.3m.
Image: Kimbell has acquired certain oil and gas royalty assets from EnCap. Photo: Courtesy of Cytonn Photography on Unsplash.
The transaction includes acquisition of oil and natural gas, mineral and royalty interests controlled by EnCap through Phillips Energy Partners, Phillips Energy Partners II and Phillips Energy Partners III.
Kimbell general partner CEO Bob Ravnaas said: “With this acquisition, we have now completed over $700 million in acquisitions in less than six months and have positioned ourselves as one of the leading consolidators within the U.S. royalty and minerals space. We are gratified that EnCap is willing to put their trust in us and our business model by taking 100% equity in the transaction.
“Like the Haymaker acquisition and the recent dropdown transaction, we believe this acquisition is an excellent fit with our existing portfolio of mineral and royalty assets. We expect not only immediate cash flow accretion in the near term, but also additional future development from an outstanding list of leading operators”
The deal included diversified package of royalty interests with over 64% of production in 6:1 ratio from the Eagle Ford Shale, Permian Basin, Haynesville Shale and Powder River Basin.
It is expected to add approximately 12,200 net royalty acres, increasing Kimbell’s total net royalty acre position by 9% to approximately 144,100 net royalty acres across the continental US .
The transaction is expected to be completed in late March 2019.
For the acquisition, Baker Botts has served as Kimbell’s legal advisor. RBC Richardson Barr served as exclusive financial advisor and Vinson & Elkins acted as legal advisor for the sellers in the acquisition.
EnCap founder and managing partner Marty Phillips said: “EnCap is excited about this transaction and our expanding relationship with Kimbell. We have known Bob Ravnaas for over two decades and think very highly of him, his management team and the portfolio of mineral interests they have acquired at Kimbell.
“Kimbell’s track record of success and proven growth trajectory paired with its low PDP decline rate is compelling. We believe that Kimbell is the right strategic partner for the Philips assets and that the combination represents a best-in-class diversified mineral company, which is well positioned to continue to make accretive acquisitions within the large and highly fragmented U.S. mineral and royalty market.”