EX-99.2 4 tm251962d3_ex99-2.htm EXHIBIT 99.2

 

Exhibit 99.2

 

Pro Forma Statement of Operations

 

   Year Ended December 31, 2023 
           Transaction                
       Historical   Accounting      Pro Forma         
   Historical   LongPoint   Adjustments      (excluding TGR   TGR   Pro Forma 
   Kimbell   1/1/23 - 6/30/23   LongPoint      Redemption)   Redemption   Combined 
             Note 1             Note 2      
Revenue:                                  
Oil, natural gas and NGL revenues  $267,584,785   $32,745,000   $13,716,633    1a  $314,046,418   $-   $314,046,418 
Lease bonus and other income   5,594,855    16,862,000    -        22,456,855    -    22,456,855 
Loss on commodity derivative instruments, net   20,888,972    -    -        20,888,972    -    20,888,972 
Total revenues   294,068,612    49,607,000    13,716,633        357,392,245    -    357,392,245 
                                 - 
Costs and expenses                                - 
Production and ad valorem taxes   20,326,477    3,105,000    -        23,431,477    -    23,431,477 
Depreciation and depletion expense   96,477,003    5,277,000    10,643,660    1b   112,397,663    -    112,397,663 
Impairment of oil and natural gas properties   18,220,173    -    -        18,220,173    -    18,220,173 
Marketing and other deductions   12,564,619    2,207,000    (703,262)   1c   14,068,357    -    14,068,357 
General and administrative expense   35,677,851    -    -        35,677,851    -    35,677,851 
Consolidated variable interest entities related:                                - 
General and administrative expense   927,699    -    -        927,699    (927,699)   - 
Total costs and expenses   184,193,822    10,589,000    9,940,398        204,723,220    (927,699)   203,795,521 
Operating Income   109,874,790    39,018,000    3,776,235        152,669,025    927,699    153,596,724 
Other income (expense)                                - 
Interest expense   (25,950,600)   (466,000)   (8,363,022)   1d   (34,779,622)   -    (34,779,622)
Loss on extinguishment of debt   (480,244)   -    -        (480,244)   -    (480,244)
Other Income   (180,765)   284,000    -        103,235    -    103,235 
Consolidated variable interest entities related:                                - 
Interest earned on marketable securities in trust account   3,508,691    -    -        3,508,691    (3,508,691)   - 
Net income before income taxes   86,771,872    38,836,000    (4,586,787)       121,021,085    (2,580,992)   118,440,093 
Income tax (benefit) expense   3,766,302    170,000    (199,088)   1e   3,737,214    (112,027)   3,625,187 
Net Income   83,005,570    38,666,000    (4,387,699)       117,283,871    (2,468,965)   114,814,906 
Distribution and accretion on Series A preferred units   (6,310,215)   -    -        (6,310,215)   -    (6,310,215)
Net income and distributions and accretion on Series A preferred units attributable to noncontrolling interests in OpCo   (16,464,890)   -    -        (16,464,890)   -    (16,464,890)
Distribution on Class B units   (88,786)   -    -        (88,786)   -    (88,786)
Net income attributable to common units of Kimbell Royalty Partners, LP  $60,141,679   $38,666,000   $(4,387,699)      $94,419,980   $(2,468,965)  $91,951,015 
                                   
Net Income per unit attributable to common units of Kimbell Royalty Partners LP                                  
Basic  $0.93                           $1.50 
Diluted  $0.91                           $1.34 
Weighted average number of common units outstanding                                  
Basic   66,595,273                            66,595,273 
Diluted   93,057,731                            93,057,731 

 

 

 

 

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

Note 1 - LongPoint Transaction Accounting Adjustments – Statement of Operations

 

The unaudited pro forma statement of operations has been adjusted to reflect the assets acquired from the Acquisition and has been prepared for informational purposes only. The results of operations and financial position of LongPoint are included in the consolidated financial statements of Kimbell after September 13, 2023, the Closing Date of the LongPoint Acquisition (the "Acquisition").

 

a)Represents historical royalty income derived from the acquired mineral and royalty interests for the period July 1, 2023, through September 13, 2022, totaling $13.7 million.

 

b)Represents the increase in depletion expense computed on a unit of production basis following the preliminary purchase price allocation to proved oil and natural gas properties, as if the Acquisition was consummated on January 1, 2023. Of the $455.8 million estimated fair value of proved oil and natural gas properties acquired, only $198.2 million were subject to depletion in the period presented.

 

c)Reflects the removal of $0.7 million of historical direct marketing expense activity related to LongPoint that is unrelated to the acquired oil and gas properties.

 

d)Represents the increase to interest expense resulting from the interest on the additional borrowings under the Partnership’s existing credit facility that were used to finance the Acquisition. The Partnership’s credit facility bears interest at SOFR plus a margin of 3.5% or the ABR plus a margin of 2.50%. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 used the weighted average interest of 8.52% on the net outstanding borrowings of $140.5 million. A 1/8 of a percent point increase or decrease in the benchmark rate would not have a material impact on the pro forma interest expense in the period presented.

 

e)For the year ended December 31, 2023, reflects estimated incremental income tax benefit associated with the Partnership’s historical statement of operations, using an effective tax rate of approximately 4.34% on net earnings from the Acquisition.

 

Note 2 - Redemption of Kimbell Tiger Acquisition Corporation

 

On May 22, 2023, as a result of TGR’s inability to consummate an initial business combination, TGR redeemed all of its outstanding shares of Class A common stock included as part of the units issued in its initial public offering. Following such redemption, TGR (along with TGR’s Sponsor, Kimbell Tiger Acquisition Sponsor, LLC) was dissolved in accordance with the terms of its organizational documents. The unaudited pro forma condensed combined statement of operations reflects the TGR redemption as if it occurred on January 1, 2023. The pro forma adjustments include:

 

·The derecognition of general and administrative expense of approximately $0.9 million for the twelve months ended December 31, 2023;

 

·The derecognition of interest expense on marketable securities of approximately $3.5 million for the twelve months ended December 31, 2023; and

 

·The derecognition of income tax benefit of approximately $0.1 million for the twelve months ended December 31, 2023.