Kimbell Royalty Partners has agreed to acquire the mineral and royalty interests held by Haymaker Minerals & Royalties and Haymaker Resources in a transaction valued at approximately $404 million. The deal is expected to close in the third quarter of this year. A mineral and royalty acquisition company, Texas-based Haymaker is backed by KKR and Kayne Anderson Capital Advisors.
The consideration for the Interests includes $126 million in cash and 6 million common units of Kimbell valued at approximately $116 million. Following the closing of the transaction, the 6 million units will represent approximately 22% of the common units of Kimbell. In addition, Kimbell announced its plans to change its tax status from a pass-through partnership to that of a taxable entity following the closing of the acquisition. Kimbell expects that the conversion to a taxable entity will enable it to target a significantly larger investor base, increase its liquidity and support its continued growth and consolidation strategy.
KKR, through its Energy Real Assets investment strategy, has invested in and signed pending transactions to acquire over $3.4 billion in upstream oil and gas asset positions since the beginning of 2015, primarily funded with equity from the Energy Income and Growth Fund I. These investments represent a diversified portfolio of oil and natural gas working and mineral interests and related cash flows throughout major oil and gas basins in the United States. KKR’s Energy Real Assets investment strategy provides flexible capital solutions and acquisition funding to upstream operators and asset owners.
Following the closing of the acquisition, Haymaker’s private equity sponsors, KKR & Co. L.P. (“KKR”) and Kayne Anderson Capital Advisors, L.P. (“Kayne”), along with Haymaker management, will collectively own approximately 37% of the then outstanding common units of Kimbell.
Acquisition Highlights
- Pro forma free cash flow yield4 of 12% drives accretion to distributable cash flow per unit of >20% based on first quarter 2018 results and using run-rate G&A
- Increases average daily net production per Kimbell unit for first quarter 2018 by more than 50% on pro forma basis
- Highly complementary Haymaker acreage increases Kimbell’s net royalty acres per unit by 10% on a pro forma basis
- 52% of the combined net royalty acreage is in the high growth Permian and Mid-Continent areas
- Conservatively financed with estimated pro forma net debt to EBITDA below 2.0x5 and ample liquidity under new revolving credit facility
About Haymaker
Founded in 2013, Haymaker has invested capital on behalf of Kayne Anderson and KKR to acquire over 5 million gross mineral acres through over 700 individual transactions. Using sophisticated practices from the software, finance, and upstream E&P industries, Haymaker was able to assemble a diversified portfolio of mineral and royalty interests in over 35,000 producing wells across 26 states and over 500 counties. To learn more, visit their website.
