Kimbell Royalty Partners LP

Previous wording

*The following discussion and analysis of financial condition and results of operationsshould be readin conjunction with our unaudited interim consolidated financial statements and notes thereto presented in this Quarterly Report on Form 10-Q (this “Quarterly Report”),*as well as our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

Current wording

*The following discussion and analysis of financial condition and results of operationsshould be readin conjunction with our unaudited interim consolidated financial statements and notes thereto presented in this Quarterly Report on Form 10-Q (this “Quarterly Report”),*as well as our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, as amended (the “2023 Form 10-K”).

Previous 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.

Current wording

On November 7, 2024, our General Partner’s Board of Directors (the “Board of Directors”) declared a quarterly cash distribution of $0.41 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 September 30, 2024. We intend to pay the distributions on November 25, 2024 to common unitholders and OpCo common unitholders of record as of the close of business on November 18, 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 $4.8 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.

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 $4.9 million for the quarter ended September 30, 2024. We intend to pay the distribution subsequent to November 7, 2024 and prior to the distribution on the common units and OpCo common units.

Previous 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.

Current wording

On October 28, 2024, the West Texas Intermediate posted price for crude oil was $67.65 per Bbl and the Henry Hub spot market price of natural gas was $2.03 per MMBtu.

Previous 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.

Current wording

The Baker Hughes United States Rotary Rig count decreased by 5.5% to 567 active land rigs at September 30, 2024 compared to 600 active land rigs at September 30, 2023. The 567 active land rigs at September 30, 2024 increased slightly compared to 560 active land rigs at June 30, 2024. While the average daily prices for oil and natural gas at September 30, 2024 remained relatively flat when compared to September 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, 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

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 of Adjusted EBITDA. We define cash available for distribution on common units as Adjusted EBITDA, less cash needed

Previous 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.

Current wording

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

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.

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 nine months ended September 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

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.

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 nine months ended September 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 September 30, 2024 or three and nine months ended September 30, 2023.

Previous 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.

Current wording

For the three months ended September 30, 2024, our oil, natural gas and NGL revenues were $71.1 million, an increase of $1.9 million from $69.2 million for the three months ended September 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 September 30, 2024 as discussed below.

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 2,193,965 Boe or 24,110 Boe/d, for the three months ended June 30, 2024,

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 2,193,876 Boe or 23,846 Boe/d, for the three months ended September 30,

Previous wording

an increase of 542,809 Boe or 5,965 Boe/d, from 1,651,156 Boe or 18,145 Boe/d, for the three months ended June 30, 2023. The increase in production for the three months ended June 30, 2024 was primarily attributable to production associated with the LongPoint Acquisition.

Current wording

2024, an increase of 374,419 Boe or 4,069 Boe/d, from 1,819,457 Boe or 19,777 Boe/d, for the three months ended September 30, 2023. The increase in production for the three months ended September 30, 2024 was primarily attributable to production associated with the LongPoint Acquisition.

Previous 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.

Current wording

Our operators received an average of $78.09 per Bbl of oil, $1.60 per Mcf of natural gas and $21.49 per Bbl of NGL for the volumes sold during the three months ended September 30, 2024 compared to $81.53 per Bbl of oil, $2.21 per Mcf of natural gas and $23.10 per Bbl of NGL for the volumes sold during the three months ended September 30, 2023. These average prices received during the three months ended September 30, 2024 decreased 4.2% or $3.44 per Bbl of oil and decreased 27.6% or $0.61 per Mcf of natural gas as compared to the three months ended September 30, 2023. This change is consistent with prices experienced in the market, specifically when compared to the EIA average price decrease of 7.1% or $5.82 per Bbl of oil and a decrease of 18.5% or $0.48 per Mcf of natural gas for the comparable periods.

Previous wording

Lease bonus and other income for the six months ended June 30, 2024 was $1.1 million, a decrease of $1.4 million from $2.5 million for the six months ended June 30, 2023. The decrease in lease bonus and other income was primarily related to a $0.9 million legal settlement received during the six months ended June 30, 2023.

Current wording

Lease bonus and other income for the three months ended September 30, 2024 was $3.2 million, an increase of $0.7 million from $2.5 million for the three months ended September 30, 2023. The increase in lease bonus and other income is primarily due to a large lease bonus received during the three months ended September 30, 2024.

Previous 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.

Current wording

Gain on commodity derivative instruments for the three months ended September 30, 2024 included $7.1 million of mark-to-market gains and $2.5 million of gains on the settlement of commodity derivative instruments compared to $4.1 million of mark-to-market losses and $0.5 million of losses on the settlement of commodity derivative instruments for the three months ended September 30, 2023. We recorded a mark-to-market gain for the three months ended September 30, 2024 as a result of the maturity of derivative contracts with lower strike pricing. We recorded a mark-to-market loss for the three months ended September 30, 2023 as a result of the increase in oil and natural gas strip pricing from the three months ended June 30, 2023.

Previous wording

Production and ad valorem taxes for the three months ended June 30, 2024 were $5.6 million, an increase of $0.2 million from $5.4 million for the three months ended June 30, 2023. The increase in production and ad valorem taxes was primarily attributable to production associated with the LongPoint Acquisition.

Current wording

Production and ad valorem taxes for the three months ended September 30, 2024 were $4.3 million, a decrease of $0.7 million from $5.0 million for the three months ended September 30, 2023. The decrease in production and ad valorem taxes was primarily attributable to the decrease in prices received for oil and natural gas production, partially offset by an increase in production and ad valorem taxes associated with the LongPoint Acquisition.

Previous wording

Depreciation and depletion expense for the three months ended June 30, 2024 was $33.0 million, an increase of $13.3 million from $19.7 million for the three months ended June 30, 2023. The increase in depreciation and depletion expense was due to the LongPoint Acquisition, which significantly increased our net capitalized oil and natural gas properties.

Current wording

Depreciation and depletion expense for the three months ended September 30, 2024 was $32.2 million, an increase of $9.1 million from $23.1 million for the three months ended September 30, 2023. The increase in depreciation and depletion expense was due to 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 $15.01 for the three months ended June 30, 2024, an increase of $3.16 per barrel from the $11.85 average depletion rate per barrel for the three months ended June 30, 2023. The increase in the depletion rate was due to 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 $14.61 for the three months ended September 30, 2024, an increase of $1.99 per barrel from the $12.62 average depletion rate per barrel for the three months ended September 30, 2023. The increase in the depletion rate was due to the LongPoint Acquisition, which significantly increased our net capitalized oil and natural gas properties.

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 June 30, 2024 were $3.8 million, an increase of $0.9 million from $2.9 million for the three months ended June 30, 2023. The increase in marketing and other deductions was primarily related to marketing and other deductions associated with 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 three months ended September 30, 2024 were $3.6 million, an increase of $0.1 million from $3.5 million for the three months ended September 30, 2023. The increase in marketing and other deductions

Previous 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.

Current wording

We recorded an income tax expense of $1.9 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

Current wording

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

Previous wording

For the six months ended June 30, 2024, our oil, natural gas and NGL revenues were $164.5 million, an increase of $50.1 million from $114.4 million for the six 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 six months ended June 30, 2024 as discussed below.

Current wording

For the nine months ended September 30, 2024, our oil, natural gas and NGL revenues were $235.5 million, an increase of $51.9 million from $183.6 million for the nine months ended September 30, 2023. The increase in oil, natural gas and NGL revenues was primarily related to an increase in production volumes for the nine months ended September 30, 2024 as discussed below.

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 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.

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 6,886,189 Boe or 25,132 Boe/d, for the nine months ended September 30, 2024, an increase of 1,835,159 Boe or 6,609 Boe/d, from 5,051,030 Boe or 18,523 Boe/d, for the nine months ended September 30, 2023. The increase in production for the nine months ended September 30, 2024 was primarily attributable to production associated with the MB Minerals Acquisition and the LongPoint Acquisition.

Previous wording

Our operators received an average of $76.87 per Bbl of oil, $2.03 per Mcf of natural gas and $24.72 per Bbl of NGL for the volumes sold during the six months ended June 30, 2024 compared to $72.84 per Bbl of oil, $2.89 per Mcf of natural gas and $24.02 per Bbl of NGL for the volumes sold during the six months ended June 30, 2023. These average prices received during the six months ended June 30, 2024 increased 5.5% or $4.03 per Bbl of oil and decreased 29.8% or $0.86 per Mcf of natural gas as compared to the six 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 6.6% or $4.96 per Bbl of oil and decrease of 12.1% or $0.29 per Mcf of natural gas for the comparable periods.

Current wording

Our operators received an average of $77.24 per Bbl of oil, $1.89 per Mcf of natural gas and $23.68 per Bbl of NGL for the volumes sold during the nine months ended September 30, 2024 compared to $76.17 per Bbl of oil, $2.66 per Mcf of natural gas and $23.67 per Bbl of NGL for the volumes sold during the nine months ended September 30, 2023. These average prices received during the nine months ended September 30, 2024 increased 1.4% or $1.07 per Bbl of oil and decreased 28.9% or $0.77 per Mcf of natural gas as compared to the nine months ended September 30, 2023. This change is consistent with prices experienced in the market, specifically when compared to the EIA average price increase of 1.7% or $1.31 per Bbl of oil and decrease of 14.2% or $0.35 per Mcf of natural gas for the comparable periods.

Previous wording

Lease bonus and other income for the three months ended June 30, 2024 was $0.7 million, a decrease of $1.3 million from $2.0 million for the three months ended June 30, 2023. The decrease in lease bonus and other income was primarily related to a $0.9 million legal settlement received during the three months ended June 30, 2023.

Current wording

Lease bonus and other income for the nine months ended September 30, 2024 was $4.3 million, a decrease of $0.7 million from $5.0 million for the nine months ended September 30, 2023. The decrease in lease bonus and other income was primarily related to legal settlements received during the nine months ended September 30, 2023.

Previous wording

Loss on commodity derivative instruments for the six months ended June 30, 2024 included $12.5 million of mark-to-market losses and $5.7 million of gains on the settlement of commodity derivative instruments compared to $15.1 million of mark-to-market gains and $4.3 million of losses on the settlement of commodity derivative instruments for the six months ended June 30, 2023. We recorded a mark-to-market loss for the six months ended June 30, 2024 as a result of

Current wording

Gain on commodity derivative instruments for the nine months ended September 30, 2024 included $5.5 million of mark-to-market losses and $8.3 million of gains on the settlement of commodity derivative instruments compared to $11.0 million of mark-to-market gains and $4.8 million of losses on the settlement of commodity derivative instruments for the nine months ended September 30, 2023. We recorded a mark-to-market loss for the nine months ended September 30, 2024 as a result of the increase in oil and natural gas strip pricing from the year ended December 31, 2023, offset by

Previous wording

the increase in oil and natural gas strip pricing from the year ended December 31, 2023. We recorded a mark-to-market gain for the six 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.

Current wording

realized gains on the settlement of commodity derivative instruments. We recorded a mark-to-market gain for the nine months ended September 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

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.

Current wording

Production and ad valorem taxes for the nine months ended September 30, 2024 were $16.5 million, an increase of $1.8 million from $14.7 million for the nine months ended September 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, partially offset by the decrease in prices received for oil and natural gas production.

Previous 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.

Current wording

Depreciation and depletion expense for the nine months ended September 30, 2024 was $103.3 million, an increase of $43.0 million from $60.3 million for the nine months ended September 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 $15.13 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.

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 $14.97 for the nine months ended September 30, 2024, an increase of $3.09 per barrel from the $11.88 average depletion rate per barrel for the nine months ended September 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

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.

Current wording

We recorded an impairment on our oil and natural gas properties of $6.0 million during the nine months ended September 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 nine months ended September 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 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.

Current wording

Our marketing and other deductions include product marketing expense, which is a post-production expense. Marketing and other deductions for the nine months ended September 30, 2024 were $12.0 million, an increase of $2.8 million from $9.2 million for the nine months ended September 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

General and administrative expenses for the three months ended June 30, 2024 were $10.3 million, an increase of $2.4 million compared to $7.9 million for the three months ended June 30, 2023. Included within general and administrative expenses are non-cash expenses for unit-based compensation as a result of the amortization of restricted units that have been issued by us over various periods. The increase in general and administrative expenses was attributable to a $1.8 million increase in unit-based compensation expense and cash general and administrative expenses resulting from an increase in our costs associated with company growth.

Current wording

General and administrative expenses for the nine months ended September 30, 2024 were $29.2 million, an increase of $2.6 million compared to $26.6 million for the nine months ended September 30, 2023. Included within general and administrative expenses are non-cash expenses for unit-based compensation as a result of the amortization of restricted units that have been issued by us over various periods. The increase in general and administrative expenses was primarily attributable to a $2.8 million increase in unit-based compensation expense.

Previous wording

Interest expense for the six months ended June 30, 2024 was $14.2 million compared to $11.8 million for the six 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 MB Minerals Acquisition and the LongPoint Acquisition.

Current wording

Interest expense for the nine months ended September 30, 2024 was $20.7 million compared to $18.5 million for the nine months ended September 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 MB Minerals Acquisition and the LongPoint Acquisition.

Previous wording

We recorded an income tax expense of $2.7 million and $2.3 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

We recorded an income tax expense of $4.6 million and $2.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous 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.

Current wording

The Board of Directors approved the allocation of 25% of our cash available for distribution on common units for the third quarter of 2024 for the repayment of $13.0 million in outstanding borrowings under our secured revolving credit facility during its determination of “available cash” for the third 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

Current 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

Previous 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.

Current wording

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 third 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 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.

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 nine months ended September 30, 2024 were $194.3 million, an increase of $79.3 million compared to $115.0 million for the nine months ended September 30, 2023.

Previous 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.

Current wording

Cash flows used in investing activities for the nine months ended September 30, 2024 were $0.2 million compared to $246.1 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, cash flows used in investing activities included the purchase of equipment. For the nine months ended September 30, 2023, cash flows used in investing activities included $490.1 million used to fund costs associated with the MB Minerals Acquisition and the LongPoint Acquisition and $0.1 million used to fund the purchase of equipment, partially offset by $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.