Kimbell Royalty Partners LP

Previous wording

As of March 31, 2024, we owned mineral and royalty interests in approximately 12.2 million gross acres and overriding royalty interests in approximately 4.7 million gross acres, with approximately 54% of our aggregate acres located in the Permian Basin and Mid-Continent. We refer to these non-cost-bearing interests collectively as our “mineral and royalty interests.” As of March 31, 2024, over 99% of the acreage subject to our mineral and royalty interests was leased to working interest owners, including 100% of our overriding royalty interests, and substantially all of those leases

Current wording

located in the Permian Basin and Mid-Continent. We refer to these non-cost-bearing interests collectively as our “mineral and royalty interests.” As of June 30, 2024, over 99% of the acreage subject to our mineral and royalty interests was leased to working interest owners, including 100% of our overriding royalty interests, and substantially all of those leases were held by production. Our mineral and royalty interests are located in 28 states and in every major onshore basin across the continental United States and include ownership in over 129,000 gross wells, including over 50,000 wells in the Permian Basin.

Previous wording

On May 2, 2024, our General Partner’s Board of Directors (the “Board of Directors”) declared a quarterly cash distribution of $0.49 per common unit representing limited partner interests in the Partnership (“common unit”) and common unit of the Operating Company (“OpCo common unit”) for the quarter ended March 31, 2024. We intend to pay the distributions on May 20, 2024 to common unitholders and OpCo common unitholders of record as of the close of business on May 13, 2024.

Current wording

On August 1, 2024, our General Partner’s Board of Directors (the “Board of Directors”) declared a quarterly cash distribution of $0.42 per common unit representing limited partner interests in the Partnership (“common unit”) and common unit of the Operating Company (“OpCo common unit”) for the quarter ended June 30, 2024. We intend to pay the distributions on August 19, 2024 to common unitholders and OpCo common unitholders of record as of the close of business on August 12, 2024.

Previous wording

We will pay a cash distribution on the Series A Cumulative Convertible Preferred Units representing limited partner interests in the Partnership (the “Series A preferred units”) of approximately $4.9 million for the quarter ended March 31, 2024. We intend to pay the distribution subsequent to May 13, 2024 and prior to the distribution on the common units and OpCo common units.

Current wording

We will pay a cash distribution on the Series A Cumulative Convertible Preferred Units representing limited partner interests in the Partnership (the “Series A preferred units”) of approximately $4.8 million for the quarter ended June 30, 2024. We intend to pay the distribution subsequent to August 1, 2024 and prior to the distribution on the common units and OpCo common units.

Previous wording

On April 22, 2024, the West Texas Intermediate posted price for crude oil was $83.82 per Bbl and the Henry Hub spot market price of natural gas was $1.64 per MMBtu.

Current wording

On July 22, 2024, the West Texas Intermediate posted price for crude oil was $81.25 per Bbl and the Henry Hub spot market price of natural gas was $2.19 per MMBtu.

Previous wording

The Baker Hughes United States Rotary Rig count decreased by 18.3% to 601 active land rigs at March 31, 2024 compared to 736 active land rigs at March 31, 2023. The 601 active land rigs at March 31, 2024 remained nearly flat compared to 602 active land rigs at December 31, 2023. The average daily prices for oil and natural gas at March 31, 2024 remained relatively flat when compared to March 31, 2023, discouraging any substantial uptake in the market.

Current wording

The Baker Hughes United States Rotary Rig count decreased by 14.2% to 560 active land rigs at June 30, 2024 compared to 653 active land rigs at June 30, 2023. The 560 active land rigs at June 30, 2024 decreased by 6.8% compared to 601 active land rigs at March 31, 2024. While the average daily prices for oil and natural gas at June 30, 2024 remained relatively flat when compared to June 30, 2023, higher labor and equipment costs, as a result of inflation, discourages any substantial uptake in the market.

Previous wording

We define Adjusted EBITDA as net income (loss), net of depreciation and depletion expense, interest expense, income taxes, impairment of oil and natural gas properties, non cash unit based compensation, unrealized gains and losses on derivative instruments and operational impacts of VIEs, which include general and administrative expense and interest income. Adjusted EBITDA is not a measure of net income (loss) or net cash provided by operating activities as determined by generally accepted accounting principles in the United States (“GAAP”). We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as historic costs of depreciable assets, none of which are components of Adjusted EBITDA. We define cash available for distribution on common units as Adjusted EBITDA, less cash needed for debt service and other contractual obligations,

Current wording

We define Adjusted EBITDA as net income (loss), net of depreciation and depletion expense, interest expense, income taxes, impairment of oil and natural gas properties, non-cash unit based compensation, loss on extinguishment of debt, unrealized gains and losses on derivative instruments and operational impacts of VIEs, which include general and administrative expense and interest income. Adjusted EBITDA is not a measure of net income (loss) or net cash provided by operating activities as determined by generally accepted accounting principles in the United States (“GAAP”). We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as historic costs of depreciable assets, none of which are components

Previous wording

tax obligations, fixed charges and reserves for future operating or capital needs that the Board of Directors may determine is appropriate.

Current wording

of Adjusted EBITDA. We define cash available for distribution on common units as Adjusted EBITDA, less cash needed for debt service and other contractual obligations, tax obligations, fixed charges and reserves for future operating or capital needs that the Board of Directors may determine is appropriate.

Previous wording

Acquisitions are an important part of our growth strategy, and we expect to pursue acquisitions of mineral and royalty interests from third parties, affiliates of our Sponsors and the Contributing Parties. As a part of these efforts, we often engage in discussions with potential sellers or other parties regarding the possible purchase of or investment in mineral and royalty interests, including in connection with a dropdown of assets from affiliates of our Sponsors and the Contributing Parties. Such efforts may involve participation by us in processes that have been made public and involve a number of potential buyers or investors, commonly referred to as “auction” processes, as well as situations in which we believe we are the only party or one of a limited number of parties who are in negotiations with the potential seller or other party. These acquisition and investment efforts often involve assets which, if acquired or constructed, could have a material effect on our financial condition and results of operations. Material acquisitions that would impact the comparability of our results for the three months ended March 31, 2024 and 2023 include the acquisition of certain mineral and royalty assets held by MB Minerals, L.P. and certain of its affiliates (the “MB Minerals Acquisition”) in May 2023 andthe

Current wording

often engage in discussions with potential sellers or other parties regarding the possible purchase of or investment in mineral and royalty interests, including in connection with a dropdown of assets from affiliates of our Sponsors and the Contributing Parties. Such efforts may involve participation by us in processes that have been made public and involve a number of potential buyers or investors, commonly referred to as “auction” processes, as well as situations in which we believe we are the only party or one of a limited number of parties who are in negotiations with the potential seller or other party. These acquisition and investment efforts often involve assets which, if acquired or constructed, could have a material effect on our financial condition and results of operations. Material acquisitions that would impact the comparability of our results for the three and six months ended June 30, 2024 and 2023 include the acquisition of certain mineral and royalty assets held by MB Minerals, L.P. and certain of its affiliates (the “MB Minerals Acquisition”) in May 2023 andthe acquisition of all of the issued and outstanding membership interests of Cherry Creek Minerals LLC pursuant to a securities purchase agreement with LongPoint Minerals II, LLC (the “LongPoint Acquisition”) in September 2023.

Previous wording

We recorded an impairment on our oil and natural gas properties of $6.0 million during the three months ended March 31, 2024, as a result of our full cost ceiling analysis. The impairment is primarily attributed to the decline in the 12-month average price of oil and natural gas. As of March 31, 2024, the 12-month average prices of oil and natural gas were $77.48 per Bbl of oil and $2.45 per Mcf of natural gas. These prices represent a 14.8% and 58.8% decrease, respectively, from the 12-month average prices of oil and natural gas as of March 31, 2023, which were $90.97 per Bbl of oil and $5.95 per Mcf of natural gas. We did not record an impairment on our oil and natural gas properties for the three months ended March 31, 2023.

Current wording

As a result of our full cost ceiling analysis, we recorded an impairment on our oil and natural gas properties of $6.0 million during the six months ended June 30, 2024. The impairment was primarily attributed to the decline in the 12-month average price of oil and natural gas for the three months ended March 31, 2024. As of March 31, 2024, the 12-month average prices of oil and natural gas were $77.48 per Bbl of oil and $2.45 per Mcf of natural gas. These prices represent a 14.8% and 58.8% decrease, respectively, from the 12-month average prices of oil and natural gas as of March 31, 2023, which were $90.97 per Bbl of oil and $5.95 per Mcf of natural gas. We did not record an impairment on our oil and natural gas properties for the three months ended June 30, 2024 or three and six months ended June 30, 2023.

Previous wording

For the three months ended March 31, 2024, our oil, natural gas and NGL revenues were $87.5 million, an increase of $30.1 million from $57.4 million for the three months ended March 31, 2023. The increase in oil, natural gas and NGL revenues was primarily related to an increase in production volumes for the three months ended March 31, 2024 as discussed below.

Current wording

For the three months ended June 30, 2024, our oil, natural gas and NGL revenues were $77.0 million, an increase of $20.0 million from $57.0 million for the three months ended June 30, 2023. The increase in oil, natural gas and NGL revenues was primarily related to an increase in production volumes for the three months ended June 30, 2024 as discussed below.

Previous wording

average prices received during the three months ended March 31, 2024 increased 3.5% or $2.61 per Bbl of oil and decreased 44.2% or $1.55 per Mcf of natural gas as compared to the three months ended March 31, 2023. This change is consistent with prices experienced in the market, specifically when compared to the EIA average price increase of 2.1% or $1.57 per Bbl of oil and decrease of 18.6% or $0.49 per Mcf of natural gas for the comparable periods.

Current wording

Our operators received an average of $77.20 per Bbl of oil, $2.10 per Mcf of natural gas and $24.75 per Bbl of NGL for the volumes sold during the three months ended June 30, 2024 compared to $71.91 per Bbl of oil, $2.22 per Mcf of natural gas and $24.46 per Bbl of NGL for the volumes sold during the three months ended June 30, 2023. These average prices received during the three months ended June 30, 2024 increased 7.4% or $5.29 per Bbl of oil and decreased 5.4% or $0.12 per Mcf of natural gas as compared to the three months ended June 30, 2023. This change is consistent with prices experienced in the market, specifically when compared to the EIA average price increase of 11.2% or $8.27 per Bbl of oil and decrease of 4.2% or $0.09 per Mcf of natural gas for the comparable periods.

Previous wording

Loss on commodity derivative instruments for the three months ended March 31, 2024 included $8.7 million of mark-to-market losses and $3.0 million of gains on the settlement of commodity derivative instruments compared to $12.5 million of mark-to-market gains and $3.4 million of losses on the settlement of commodity derivative instruments for the three months ended March 31, 2023. We recorded a mark-to-market loss for the three months ended March 31, 2024 as a result of the increase in strip pricing from the three months ended December 31, 2023. We recorded a mark-to-market gain for the three months ended March 31, 2023 as a result of the maturity of derivative contracts with lower strike pricing, offset by realized losses on the settlement of commodity derivative instruments.

Current wording

Loss on commodity derivative instruments for the three months ended June 30, 2024 included $3.8 million of mark-to-market losses and $2.8 million of gains on the settlement of commodity derivative instruments compared to $2.6 million of mark-to-market gains and $0.9 million of losses on the settlement of commodity derivative instruments for the three months ended June 30, 2023. We recorded a mark-to-market loss for the three months ended June 30, 2024 as a result of the increase in oil and natural gas strip pricing from the three months ended March 31, 2024. We recorded a mark-to-market gain for the three months ended June 30, 2023 as a result of the maturity of derivative contracts with lower strike pricing, partially offset by realized losses on the settlement of commodity derivative instruments.

Previous wording

Interest expense for the three months ended March 31, 2024 was $7.3 million compared to $5.5 million for the three months ended March 31, 2023. The increase in interest expense was primarily due to a 0.5% increase in the weighted average interest rate on our outstanding borrowings for the three months ended March 31, 2024 and also due to an increase in the overall long-term debt balance as a result of borrowings associated with the MB Minerals Acquisition and the LongPoint Acquisition.

Current wording

Interest expense for the three months ended June 30, 2024 was $6.9 million compared to $6.3 million for the three months ended June 30, 2023. The increase in interest expense was primarily due to an increase in the overall long-term debt balance as a result of borrowings associated with the LongPoint Acquisition, partially offset by a slight decrease in the weighted average interest rate on our outstanding borrowings for the three months ended June 30, 2024.

Previous wording

We recorded an income tax expense of $0.9 million and $1.4 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

We recorded an income tax expense of $1.8 million and $0.9 million for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

Our revenues are a function of oil, natural gas, and NGL production volumes sold and average prices received for those volumes. The production volumes were 2,498,348 Boe or 27,454 Boe/d, for the three months ended March 31, 2024, an increase of 917,931 Boe or 10,239 Boe/d, from 1,580,417 Boe or 17,215 Boe/d, for the three months ended March 31, 2023. The increase in production for the three months ended March 31, 2024 was primarily attributable to production associated with the MB Minerals Acquisition and the LongPoint Acquisition.

Current wording

Our revenues are a function of oil, natural gas and NGL production volumes sold and average prices received for those volumes. The production volumes were 4,692,312 Boe or 25,782 Boe/d, for the six months ended June 30, 2024, an increase of 1,460,739 Boe or 7,999 Boe/d, from 3,231,573 Boe or 17,783 Boe/d, for the six months ended June 30, 2023. The increase in production for the six months ended June 30, 2024 was primarily attributable to production associated with the MB Minerals Acquisition and the LongPoint Acquisition.

Previous wording

Production and ad valorem taxes for the three months ended March 31, 2024 were $6.5 million, an increase of $2.2 million from $4.3 million for the three months ended March 31, 2023. The increase in production and ad valorem taxes was primarily attributable to production associated with the MB Minerals Acquisition and the LongPoint Acquisition.

Current wording

Production and ad valorem taxes for the six months ended June 30, 2024 were $12.1 million, an increase of $2.4 million from $9.7 million for the six months ended June 30, 2023. The increase in production and ad valorem taxes was primarily attributable to production associated with the MB Minerals Acquisition and the LongPoint Acquisition.

Previous wording

Depreciation and depletion expense for the three months ended March 31, 2024 was $38.2 million, an increase of $20.6 million from $17.6 million for the three months ended March 31, 2023. The increase in depreciation and depletion expense was due to the MB Minerals Acquisition and the LongPoint Acquisition, which significantly increased our net capitalized oil and natural gas properties.

Current wording

Depreciation and depletion expense for the six months ended June 30, 2024 was $71.2 million, an increase of $34.0 million from $37.2 million for the six months ended June 30, 2023. The increase in depreciation and depletion expense was due to the MB Minerals Acquisition and the LongPoint Acquisition, which significantly increased our net capitalized oil and natural gas properties.

Previous wording

Depletion is the amount of cost basis of oil and natural gas properties at the beginning of a period attributable to the volume of hydrocarbons extracted during such period, calculated on a units-of-production basis. Estimates of proved developed reserves are a major component in the calculation of depletion. Our average depletion rate per barrel was $15.24 for the three months ended March 31, 2024, an increase of $4.19 per barrel from the $11.05 average depletion rate per barrel for the three months ended March 31, 2023. The increase in the depletion rate was due to the MB Minerals Acquisition and the LongPoint Acquisition, which significantly increased our net capitalized oil and natural gas properties.

Current wording

Depletion is the amount of cost basis of oil and natural gas properties at the beginning of a period attributable to the volume of hydrocarbons extracted during such period, calculated on a units-of-production basis. Estimates of proved developed reserves are a major component in the calculation of depletion. Our average depletion rate per barrel was $15.13 for the six months ended June 30, 2024, an increase of $3.67 per barrel from the $11.46 average depletion rate per barrel for the six months ended June 30, 2023. The increase in the depletion rate was due to the MB Minerals Acquisition and the LongPoint Acquisition, which significantly increased our net capitalized oil and natural gas properties.

Previous wording

As a result of our full cost ceiling analysis, we recorded an impairment on our oil and natural gas properties of $6.0 million during the three months ended March 31, 2024. The impairment is primarily attributed to the decline in the 12-month average price of oil and natural gas. As of March 31, 2024, the 12-month average prices of oil and natural gas were $77.48 per Bbl of oil and $2.45 per Mcf of natural gas. These prices represent a 14.8% and 58.8% decrease, respectively, from the 12-month average prices of oil and natural gas as of March 31, 2023, which were $90.97 per Bbl of oil and $5.95 per Mcf of natural gas. We did not record an impairment on our oil and natural gas properties for the three months ended March 31, 2023.

Current wording

We recorded an impairment on our oil and natural gas properties of $6.0 million during the six months ended June 30, 2024, as a result of our full cost ceiling analysis. The impairment was primarily attributed to the decline in the 12-month average price of oil and natural gas for the three months ended March 31, 2024. As of March 31, 2024, the 12-month average prices of oil and natural gas were $77.48 per Bbl of oil and $2.45 per Mcf of natural gas. These prices represent a 14.8% and 58.8% decrease, respectively, from the 12-month average prices of oil and natural gas as of March 31, 2023, which were $90.97 per Bbl of oil and $5.95 per Mcf of natural gas. We did not record an impairment on our oil and natural gas properties for the six months ended June 30, 2023.

Previous wording

Our marketing and other deductions include product marketing expense, which is a post-production expense. Marketing and other deductions for the three months ended March 31, 2024 were $4.6 million, an increase of $1.8 million from $2.8 million for the three months ended March 31, 2023. The increase in marketing and other deductions was primarily related to marketing and other deductions associated with the MB Minerals Acquisition and the LongPoint Acquisition.

Current wording

Our marketing and other deductions include product marketing expense, which is a post-production expense. Marketing and other deductions for the six months ended June 30, 2024 were $8.4 million, an increase of $2.7 million from $5.7 million for the six months ended June 30, 2023. The increase in marketing and other deductions was primarily related to marketing and other deductions associated with the MB Minerals Acquisition and the LongPoint Acquisition.

Previous wording

The Board of Directors approved the allocation of 25% of our cash available for distribution on common units for the first quarter of 2024 for the repayment of $15.6 million in outstanding borrowings under our secured revolving credit facility during its determination of “available cash” for the first quarter of 2024. With respect to future quarters, the Board of Directors intends to continue to allocate a portion of our cash available for distribution on common units to the repayment of outstanding borrowings under our secured revolving credit facility and may allocate such cash in other manners in which the Board of Directors determines to be appropriate at the time. The Board of Directors may further change its policy with respect to cash distributions in the future.

Current wording

The Board of Directors approved the allocation of 25% of our cash available for distribution on common units for the second quarter of 2024 for the repayment of $13.6 million in outstanding borrowings under our secured revolving credit facility during its determination of “available cash” for the second quarter of 2024. With respect to future quarters, the Board of Directors intends to continue to allocate a portion of our cash available for distribution on common units to the repayment of outstanding borrowings under our secured revolving credit facility and may allocate such cash in other manners in which the Board of Directors determines to be appropriate at the time. The Board of Directors may further change its policy with respect to cash distributions in the future.

Previous wording

It is our intent, subject to market conditions, to finance acquisitions of mineral and royalty interests that increase our asset base largely through external sources, such as borrowings under our secured revolving credit facility and the issuance of equity and debt securities. For example, we issued 5,369,218 OpCo common units and an equal number of Class B units representing limited partnership interests in the Partnership (“Class B units”) and 557,302 common units as partial consideration in connection with the MB Minerals Acquisition and we completed the LongPoint Acquisition partially with net proceeds from the private placement of Series A preferred units. The Board of Directors may choose to reserve a portion of cash generated from operations to finance such acquisitions as well. We do not currently intend to (i) maintain excess distribution coverage for the purpose of maintaining stability or growth in our quarterly distribution, (ii) otherwise reserve cash for distributions or (iii) incur debt to pay quarterly distributions, although the Board of Directors may do so if they believe it is warranted. See “Recent Developments—Quarterly Distributions” above for discussion of our first quarter 2024 distributions.

Current wording

partial consideration in connection with the MB Minerals Acquisition and we completed the LongPoint Acquisition partially with net proceeds from the private placement of Series A preferred units. The Board of Directors may choose to reserve a portion of cash generated from operations to finance such acquisitions as well. We do not currently intend to (i) maintain excess distribution coverage for the purpose of maintaining stability or growth in our quarterly distribution, (ii) otherwise reserve cash for distributions or (iii) incur debt to pay quarterly distributions, although the Board of Directors may do so if they believe it is warranted. See “Recent Developments—Quarterly Distributions” above for discussion of our second quarter 2024 distributions.

Previous wording

Our operating cash flow is impacted by many variables, the most significant of which are changes in oil, natural gas and NGL production volumes due to acquisitions or other external factors and changes in prices for oil, natural gas and NGLs. Prices for these commodities are determined primarily by prevailing market conditions. Regional and worldwide economic activity, weather and other substantially variable factors influence market conditions for these products. These factors are beyond our control and are difficult to predict. Cash flows provided by operating activities for the three months ended March 31, 2024 were $69.0 million, an increase of $21.9 million compared to $47.1 million for the three months ended March 31, 2023.

Current wording

Our operating cash flow is impacted by many variables, the most significant of which are changes in oil, natural gas and NGL production volumes due to acquisitions or other external factors and changes in prices for oil, natural gas and NGLs. Prices for these commodities are determined primarily by prevailing market conditions. Regional and worldwide economic activity, weather and other substantially variable factors influence market conditions for these products. These factors are beyond our control and are difficult to predict. Cash flows provided by operating activities for the six months ended June 30, 2024 were $131.9 million, an increase of $53.3 million compared to $78.6 million for the six months ended June 30, 2023.

Previous wording

Cash flows used in investing activities for the three months ended March 31, 2024 were $0.1 million compared to $0.3 million for the three months ended March 31, 2023. For the three months ended March 31, 2024, cash flows used in investing activities included costs associated with the LongPoint Acquisition and the purchase of equipment. For the three months ended March 31, 2023, cash flows used in investing activities include $0.3 million used to fund costs associated with the acquisition of certain mineral and royalty assets held by Hatch Royalty LLC.

Current wording

Cash flows used in investing activities for the six months ended June 30, 2024 were $0.1 million compared to $199.9 million of cash flows provided by investing activities for the six months ended June 30, 2023. For the six months ended June 30, 2024, cash flows used in investing activities included the purchase of equipment. For the six months ended June 30, 2023, cash flows provided by investing activities included $243.2 million of cash received from investment held in trust related to Kimbell Tiger Acquisition Corporation (“TGR”) and $0.9 million in cash received from the dissolution of TGR, partially offset by $44.2 million used primarily to fund costs associated with the MB Minerals Acquisition.

Previous wording

Cash flows used in financing activities were $60.3 million for the three months ended March 31, 2024 compared to $52.6 million for the three months ended March 31, 2023. Cash flows used in financing activities for the three months ended March 31, 2024 consists primarily of $46.5 million of distributions paid to holders of common units, OpCo common units, Series A preferred units and Class B units, $13.8 million used to repay borrowings under our secured revolving credit facility and $4.9 millionof restricted units repurchased for tax withholding, partially offset by$5.0 million of additional borrowings under our secured revolving credit facility.

Current wording

Cash flows used in financing activities were $131.8 million for the six months ended June 30, 2024 compared to $282.7 million for the six months ended June 30, 2023. Cash flows used in financing activities for the six months ended June 30, 2024 consists primarily of $98.2 million of distributions paid to holders of common units, OpCo common units, Series A preferred units and Class B units, $33.4 million used to repay borrowings under our secured revolving credit facility, $4.9 millionof restricted units repurchased for tax withholding and $0.3 million paid in connection with the redemption of Class B units, partially offset by$5.0 million of additional borrowings under our secured revolving credit facility.

Previous wording

Cash flows used in financing activities for the three months ended March 31, 2023 consists of $38.6 million of distributions paid to holders common units, OpCo common units and Class B units, $13.1 million used to repay borrowings under our secured revolving credit facility and $4.9 millionof restricted units repurchased for tax withholding, partially offset by$4.0 million of additional borrowings under our secured revolving credit facility.

Current wording

Cash flows used in financing activities for the six months ended June 30, 2023 consists of $243.2 million of distributions to common unitholders of TGR, $66.7 million of distributions paid to holders common units, OpCo common units and Class B units, $22.5 million used to repay borrowings under our secured revolving credit facility, $4.9 millionof restricted units repurchased for tax withholding and a $4.8 million payment of loan origination costs, partially offset by$59.1 million of additional borrowings under our secured revolving credit facility and $0.3 million in Class B contributions.

Previous wording

Distributions in excess of the amount taxable as dividend income will reduce a common unitholder's tax basis in its common units or produce capital gain to the extent they exceed a common unitholder's tax basis. Any reduced tax basis will increase a common unitholder's capital gain when it sells its common units. Our estimates are the result of certain non-cash expenses (principally depletion) substantially offsetting our taxable income and tax “earnings and profits.” Our estimates of the tax treatment of earnings and distributions are based upon assumptions regarding the capital structure and earnings of the Operating Company, our capital structure and the amount of the earnings of the Operating Company allocated to us. Many factors may impact these estimates, including changes in drilling and production activity, commodity

Current wording

Distributions in excess of the amount taxable as dividend income will reduce a common unitholder’s tax basis in its common units or produce capital gain to the extent they exceed a common unitholder’s tax basis. Any reduced tax basis will increase a common unitholder’s capital gain when it sells its common units. Our estimates are the result of certain non-cash expenses (principally depletion) substantially offsetting our taxable income and tax “earnings and profits.” Our estimates of the tax treatment of earnings and distributions are based upon assumptions regarding the capital structure and earnings of the Operating Company, our capital structure and the amount of the earnings of the Operating Company allocated to us. Many factors may impact these estimates, including changes in drilling and production activity, commodity prices, future acquisitions or changes in the business, economic, regulatory, legislative, competitive or political environment in which we operate. These estimates are based on current tax law and tax reporting positions that we have adopted and with which the Internal Revenue Service could disagree. These estimates are not fact and should not be relied upon as being necessarily indicative of future results, and no assurances can be made regarding these estimates. You are encouraged to consult with your tax advisor on this matter.