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Kimbell Royalty Partners, LP (NYSE:KRP), a Delaware-based oil and natural gas company with a market capitalization of $1.17 billion and an impressive 93.43% gross profit margin according to InvestingPro, announced today that it has initiated the redemption of 50% of its outstanding Series A Cumulative Convertible Preferred Units. The redemption of 162,500 Preferred Units is scheduled for May 7, 2025, at a redemption price of $1,121.91781 per unit, totaling approximately $182.3 million.
The company plans to fund the redemption through borrowings under its revolving credit facility. This move follows the initial issuance of the Preferred Units in 2023. With a healthy current ratio of 6.69 and moderate debt levels, the company appears well-positioned to manage this redemption. After the redemption, an equal number of Preferred Units, representing the remaining 50%, will be outstanding.
This financial maneuver is part of the company's capital management strategy and is not an offer to purchase or sell securities. Currently trading near its InvestingPro Fair Value, the company maintains a significant 13.82% dividend yield. Kimbell Royalty Partners cautions that forward-looking statements regarding the redemption and funding are based on current expectations and are subject to market conditions, capital needs, and other risks. For deeper insights into KRP's valuation and 13 additional ProTips, consider exploring the comprehensive Pro Research Report available on InvestingPro. These factors could potentially affect the actual outcome of the planned redemption.
Investors and stakeholders should note that this announcement is based on a press release statement and additional details can be found in the company's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2024. The company's COO, Matthew S. Daly, has signed off on the report confirming the redemption details.
In other recent news, Kimbell Royalty Partners faced a challenging fourth quarter for 2024, reporting earnings per share of -$0.48, which significantly missed the forecast of $0.19. The company's revenue also fell short, coming in at $66.71 million against the expected $76.42 million. This earnings miss has led to various analyst actions, including Truist Securities downgrading the stock from Buy to Hold and lowering the price target to $16.00 due to concerns over share growth volatility and high earnings multiples. Similarly, Raymond (NSE:RYMD) James downgraded Kimbell Royalty Partners to Market Perform, citing lower-than-expected production guidance for 2025.
Mizuho (NYSE:MFG) Securities initiated coverage with a Neutral rating, setting a price target of $16.00, noting the company's diversified royalty minerals portfolio but expressing concerns over its natural gas focus and lower margins. Despite these challenges, Kimbell maintains a conservative approach to its 2025 guidance, with expected production at 25,500 barrels of oil equivalent per day. The company continues to focus on acquisitions, including a recent $230 million acquisition and an equity offering aimed at strengthening its position in the royalty sector. Investors and analysts will be closely watching Kimbell Royalty Partners' ability to navigate these challenges and sustain distributions amidst a volatile commodity market environment.
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