UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): September 10, 2018 (July 12, 2018)
Kimbell Royalty Partners, LP
(Exact name of registrant as specified in its charter)
Delaware |
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1-38005 |
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47-5505475 |
(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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777 Taylor Street, Suite 810
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76102 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (817) 945-9700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
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Introductory Note
As reported in a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission by Kimbell Royalty Partners, LP, a Delaware limited partnership (the Partnership), on July 18, 2018 (the Original Form 8-K), on July 12, 2018, the Partnership completed its previously announced acquisition (the Acquisition) of the equity interests in certain subsidiaries owned by Haymaker Minerals & Royalties, LLC (Haymaker Minerals) and Haymaker Properties, L.P. (Haymaker Properties).
On July 27, 2018, the Partnership filed an amendment (Amendment No. 1) to the Original Form 8-K to provide the historical financial statements of Haymaker Minerals and Haymaker Properties and the pro forma financial information of the Partnership giving effect to the Acquisition, as required by Item 9.01 of Form 8-K.
This amendment is filed to supplement the Original Form 8-K and Amendment No. 1 to provide additional historical and pro forma information, through the quarter ended June 30, 2018, of Haymaker Minerals and Haymaker Properties and the Partnership (as applicable). Except as set forth below, the Original Form 8-K is unchanged.
Item 9.01. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
· Audited historical consolidated financial statements of Haymaker Minerals as of and for the years ended December 31, 2017 and 2016, together with the related notes to the financial statements, were included in the Amendment No. 1 to the Companys Current Report on Form 8-K, filed with the SEC on July 27, 2018.
· Unaudited historical condensed consolidated financial statements of Haymaker Minerals as of June 30, 2018 and December 31, 2017 and for the six months ended June 30, 2018 and 2017, together with the related notes to the financial statements, a copy of which is filed as Exhibit 99.1 hereto and incorporated by reference herein.
· Audited historical financial statements of Haymaker Properties as of and for the years ended December 31, 2017 and 2016, together with the related notes to the financial statements, were included in the Amendment No. 1 to the Companys Current Report on Form 8-K, filed with the SEC on July 27, 2018.
· Unaudited historical condensed financial statements of Haymaker Properties as of June 30, 2018 and December 31, 2017 and for the six months ended June 30, 2018 and 2017, together with related notes to the financial statements, a copy of which is filed as Exhibit 99.2 hereto and incorporated by reference herein.
(b) Pro Forma Financial Information.
The following unaudited pro forma financial information of the Partnership giving effect to the Acquisition is filed as Exhibit 99.3 hereto and incorporated by reference herein:
· Unaudited pro forma condensed combined balance sheet as of June 30, 2018;
· Unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2018; and
· Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2017.
(d) Exhibits.
Number |
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Description |
99.1 |
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99.2 |
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99.3 |
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Unaudited pro forma condensed combined financial statements of Kimbell Royalty Partners, LP |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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KIMBELL ROYALTY PARTNERS, LP |
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By: |
Kimbell Royalty GP, LLC, |
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its general partner |
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By: |
/s/ R. Davis Ravnaas |
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R. Davis Ravnaas |
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President and Chief Financial Officer |
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Date: September 10, 2018
HAYMAKER MINERALS & ROYALTIES, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
The accompanying notes are an integral part of these condensed consolidated financial statements.
HAYMAKER MINERALS & ROYALTIES, LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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Six months ended June 30, |
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2018 |
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2017 |
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OPERATING REVENUES |
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Crude oil and condensate sales |
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$ |
5,621,833 |
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$ |
4,306,970 |
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Natural gas sales |
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1,277,575 |
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1,613,075 |
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Natural gas liquids sales and other |
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907,804 |
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509,707 |
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Income from lease bonus |
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1,119,041 |
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1,592,029 |
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Total revenues |
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8,926,253 |
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8,021,781 |
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COSTS AND EXPENSES: |
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Production, ad valorem, and withholding taxes |
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629,955 |
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368,641 |
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Production expense |
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593,825 |
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562,715 |
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Depletion, depreciation and amortization |
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2,389,109 |
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1,813,553 |
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(Gain) loss on sale of assets |
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(12,870,998 |
) |
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General and administrative |
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3,281,048 |
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3,077,889 |
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Total costs and expenses |
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6,893,937 |
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(7,048,200 |
) |
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INCOME FROM OPERATIONS |
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2,032,316 |
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15,069,981 |
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OTHER INCOME (EXPENSES) |
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Gain (loss) on derivatives |
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(632,594 |
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1,699,155 |
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Interest expense |
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(398,643 |
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(929,159 |
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Loss on debt extinguishment |
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(265,061 |
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Other income (expense) |
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17,710 |
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Total other income (expense) |
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(1,013,527 |
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504,935 |
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INCOME TAX EXPENSE (BENEFIT) |
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(566 |
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(3,918 |
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NET INCOME |
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$ |
1,019,355 |
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$ |
15,578,834 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
HAYMAKER MINERALS & ROYALTIES, LLC
CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS CAPITAL (UNAUDITED)
BALANCE AT DECEMBER 31, 2017 |
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$ |
84,434,315 |
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Net income |
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1,019,355 |
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Contributions |
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45,080 |
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Distributions |
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(8,000,000 |
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BALANCE AT JUNE 30, 2018 |
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$ |
77,498,750 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
HAYMAKER MINERALS & ROYALTIES, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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Six months ended June 30, |
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2018 |
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2017 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
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$ |
1,019,355 |
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$ |
15,578,834 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation, depletion and amortization |
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2,389,109 |
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1,813,553 |
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(Gain) loss on sale of assets |
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(12,870,998 |
) |
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Mark-to-market commodity derivative contracts |
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(Gain) loss on derivatives, net of settlements |
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632,594 |
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(1,699,155 |
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Net cash (payments) received from settlements of commodity derivatives |
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913,530 |
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1,398,818 |
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Loss on debt extinguishment |
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265,061 |
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Amortization of deferred loan costs |
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81,969 |
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170,245 |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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449,996 |
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(173,071 |
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Accounts payable and accrued expenses |
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1,418,081 |
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(25,417 |
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Prepaid expenses and other current assets |
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(20,386 |
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7,106 |
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Receivables/payables from affiliates |
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(38,930 |
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285,157 |
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Deferred revenue |
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(129,672 |
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Net cash provided by operating activities |
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6,715,646 |
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4,750,133 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Acquisitions of oil and natural gas properties |
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(199,053 |
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(130,000 |
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Divestitures of oil and natural gas properties |
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32,061,284 |
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Other capital expenditures |
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(11,472 |
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Net cash provided by (used in) investing activities |
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(199,053 |
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31,919,812 |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Repayments of debt |
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(19,414,998 |
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Deferred offering costs |
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(687,559 |
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Deferred loan costs |
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(5,439 |
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Debt extinguishment fees |
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(31,102 |
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Contributions |
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45,080 |
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Distributions |
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(8,000,000 |
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Net cash used in financing activities |
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(7,960,359 |
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(20,133,659 |
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Net increase (decrease) in cash and cash equivalents |
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$ |
(1,443,766 |
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$ |
16,536,286 |
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Cash and cash equivalents, beginning of period |
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4,535,578 |
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1,052,713 |
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Cash and cash equivalents, end of period |
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$ |
3,091,812 |
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$ |
17,588,999 |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
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Cash paid for interest |
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$ |
439,325 |
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$ |
786,528 |
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Cash paid for income taxes |
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$ |
101,628 |
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$ |
16,242 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
HAYMAKER MINERALS & ROYALTIES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
1. Organization and Basis of Presentation
Organization
Haymaker Minerals & Royalties, LLC, a Delaware limited liability company (the Company), was formed in May 2013 by Haymaker Management Company, LLC and Kayne Anderson Energy Fund VI, LP (Kayne) to own and continually acquire mineral and royalty interests in many of North Americas leading resource plays. The Companys headquarters are located in Houston, Texas.
The Company has a contractual right to receive a fixed percentage of the oil and gas production coming from any acreage in which we own a mineral or royalty interest. The Company does not own or invest in any working interests or net profit interests which allows for the receipt of royalty revenues without having to pay any of the associated operating or capital costs related to the resource development.
In April 2016, the Company entered into a master services agreement with Haymaker Services, LLC (the Manager) to provide portfolio management and administrative services to the Company.
Basis of Presentation
The unaudited interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end balance sheet data was derived from audited financial statements but does not include disclosures required by GAAP for annual periods. The information furnished herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of financial position and results of operations for the respective interim periods.
Our financial results for the six months ended June 30, 2018 are unaudited and are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. These unaudited financial statements should be read in conjunction with our audited annual financial statements as of and for the year ended December 31, 2017 and notes thereto.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Haymaker Holding Company, LLC (Haymaker Holding), Haymaker Greenfield, LLC, (Greenfield), and the Company. Haymaker Holding and Greenfield are both wholly owned subsidiaries of the Company. Intercompany transactions and balances have been eliminated in the consolidation.
2. Summary of Significant Accounting Policies
Significant accounting policies are described in Note 2 in the Companys audited annual financial statements as of and for the year ended December 31, 2017. There have been no changes in such policies or the application of such policies since December 31, 2017, other than the recently adopted accounting pronouncement described below.
Recently Adopted Accounting Pronouncement
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The guidance requires entities to recognize revenue using the following five step model: identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue as the entity satisfies each performance obligation. Adoption of this standard could result in retrospective application, either in the form of recasting all prior periods presented or a cumulative adjustment to equity in the period of adoption. The guidance is effective for annual and interim periods beginning after December 15, 2017.
HAYMAKER MINERALS & ROYALTIES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
On January 1, 2018 the Company adopted ASU 2014-09 using the modified retrospective method. The Company completed its review of a representative sample of revenue contracts covering its material revenue streams and determined that there is no impact to its consolidated financial statements, results of operations or liquidity. When comparing the Companys historical revenue recognition to the newly applied revenue recognition under ASC 606, there was no change to the amount or timing of revenue recognized. Therefore, no quantitative adjustment was required to be made to the prior periods presented in the unaudited consolidated financial statements after the adoption of ASC 606.
Accounting Policy Revenue from Contracts with Customers
Royalty income represents the right to receive revenues from oil, natural gas and natural gas liquids sales obtained from the operator of the wells in which the Company owns a royalty interest. The Companys oil, natural gas and natural gas liquids sales from properties in which the Company owns a mineral or royalty interest are generally structured whereby the producer of the properties sells the Companys proportionate share of oil, natural gas and natural gas liquids production to a purchaser and the Company records revenue based on its proportionate interest when control transfers from the operator to the purchaser. The Companys royalty income pricing provisions are tied to a market index.
Revenues from mineral and royalty interests in properties are recorded under the cash receipts approach as directly received from the operators statement accompanying the revenue check. Since revenue checks are generally received one to four months after the production month, the Company accrues for revenue earned but not received by estimated production volumes and product prices. The difference between the Companys estimates and the actual amounts received for oil and natural gas sales is recorded in the month that payment is received from the operator. The Companys royalty interests represent the right to receive royalty income from the producer once production and delivery has occurred, at which point payment is unconditional. Accordingly, the Companys royalty income contracts do not give rise to contract assets or liabilities and there are no remaining performance obligations.
The Company also earns revenue from mineral lease bonuses. The Company generates lease bonus revenue by leasing its mineral interests to exploration and production companies. A lease agreement represents the Companys contract with a customer and generally transfers the rights to any oil or natural gas discovered, grants the Company a right to a specified royalty interest, and requires that drilling and completion operations commence within a specified time period. Control is transferred to the lessee and the Company has satisfied its performance obligation when the lease agreement is executed, such that revenue is recognized when the lease bonus payment is received. At the time the Company executes the lease agreement, the Company expects to receive the lease bonus payment within a reasonable time, though in no case more than one year, such that the Company has not adjusted the expected amount of consideration for the effects of any significant financing component per the practical expedient provision in ASC 606.
3. Acquisitions & Divestitures
Divestitures
In February 2017, the Company disposed of certain assets in the Delaware basin for approximately $20.1 million, subject to customary post-closing adjustments. The divestiture resulted in a gain of $12.5 million. Total oil and natural gas properties decreased by $7.6 million, of which $4.3 million was related to proved properties and $3.3 million was related to unevaluated properties. The Company utilized the proceeds from the disposal of the assets in the Delaware basin to completely pay off its balance under the Second Lien. See Note 5Debt for details of the Companys extinguishment of the Second Lien.
In March 2017, the Company disposed of certain assets in the Midland basin for approximately $12.0 million, subject to customary post-closing adjustments. The divestiture resulted in a gain of approximately $0.4 million. Total oil and natural gas properties decreased by $11.6 million, of which $1.0 million was related to proved properties and $10.6 million was related to unevaluated properties.
HAYMAKER MINERALS & ROYALTIES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
4. Derivative Contracts
The Company enters into crude oil and natural gas swap contracts as part of its strategy to economically hedge against changes in crude oil and natural gas prices and to achieve more predictable cash flows in an environment of volatile oil and gas prices. While the use of these commodity derivative instruments limits the downside risk of adverse price movements, such use may also limit the Companys ability to benefit from favorable price movements. The Company may, from time to time, add incremental derivatives to hedge additional production, restructure existing derivative contracts or enter into new transactions to modify the terms of current contracts in order to realize the current value of the Companys existing positions.
The fair value of open swaps reported in the condensed consolidated balance sheets may differ from that which would be realized in the event the Company terminated its position in the contract. Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the aggregate of the unrealized gain/loss on the swap contracts in an unrealized gain position. Therefore, the Company considers the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. A derivative counterparty of the Company is also a lender or an affiliate of a lender participating in the Companys credit facility agreement. Additionally, risks may arise from unanticipated movements in the fair value of the underlying commodities.
Effective June 30, 2018, the Company terminated all remaining crude oil and natural gas swap positions. As a result of the termination of 39,479 Bbls of crude oil and 283,763 MMBtu of natural gas swap positions, the Company recorded a receivable of $0.7 million.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes the location and amounts of the Companys assets and liabilities measured at fair value on a recurring basis as presented within discontinued operations in the condensed consolidated balance sheet as of December 31, 2017. Balances are presented on a gross basis, prior to the application of the impact of counterparty netting. Total derivative assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of master netting arrangements. All items included in the tables below are Level 2 inputs within the fair value hierarchy:
As of December 31, 2017
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Measurement
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Gross Fair Value |
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Effect of
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Net Carrying
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Derivative assets |
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Derivative assets (current) |
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Level 2 |
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$ |
2,031,116 |
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$ |
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$ |
2,031,116 |
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Derivative assets (noncurrent) |
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Level 2 |
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Derivative liabilities |
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Derivative liabilities (current) |
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Level 2 |
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Derivative liabilities (noncurrent) |
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Level 2 |
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Total |
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$ |
2,031,116 |
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$ |
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$ |
2,031,116 |
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The fair value of the Companys derivative assets and liabilities is based on a third-party industry-standard pricing model that uses market data obtained from third-party sources, including quoted forward prices for oil and gas, discount rates and volatility factors. The fair value is also compared to the values provided by the counterparty for reasonableness and is adjusted for the counterparties credit quality for derivative assets and the Companys credit quality for derivative liabilities. To date, adjustments for credit quality have not had a material impact on the fair value.
The derivative asset and liability fair values reported in the condensed consolidated balance sheets are as of a particular point in time and subsequently change as these estimates are revised to reflect actual results, changes in market conditions and other factors. The Company typically has numerous hedge positions that span several time periods and often result in both derivative
HAYMAKER MINERALS & ROYALTIES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
assets and liabilities with the same counterparty, which positions are all offset to a single current and as single noncurrent derivative asset or liability in the condensed consolidated balance sheets. The Company nets the fair values of its derivative assets and liabilities associated with derivative instruments executed with the same counterparty pursuant to ISDA master agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The Company applies the provisions of the fair value measurement standard on a nonrecurring basis to its nonfinancial assets and liabilities. These assets and liabilities are not measured at fair value on a recurring basis, but are subject to fair value adjustments when facts and circumstances arise that indicate a need for measurement.
Fair Value of Other Financial Instruments
The Companys other financial instruments consist of cash, receivables and payables which are classified as Level 1 under the fair value hierarchy and long-term debt, which is classified as Level 2 under the fair value hierarchy. The carrying amounts of cash, receivables, and payables approximate fair value due to the highly liquid or short-term nature of these instruments. The fair value of the long-term debt approximates its carrying value as the interest rates are variable and reflective of market rates.
5. Debt
At June 30, 2018, the borrowing base and principal balance outstanding under the First Lien were $22.0 million and $15.5 million, respectively. At December 31, 2017, the borrowing base and principal balance outstanding under the First Lien were $22.0 million and $15.5 million, respectively.
Concurrent with the First Lien, the Company entered into a Second Lien Term Loan Credit Agreement with Wells Fargo Energy Capital, Inc. as the administrative agent (the Second Lien). The Second Lien provides for a maximum borrowing of $20.0 million. In February 2017, the Company paid in full the outstanding balance under the Second Lien and terminated such loan. The Company recorded a $0.3 million loss on debt extinguishment related to the repayment and termination of the Second Lien.
The interest rates elected for the First Lien at June 30, 2018 and December 31, 2017 were 4.10% and 3.57%, respectively, based on LIBOR plus the applicable margin. Accrued interest is payable at the end of each interest period and reported in the Companys condensed consolidated balance sheets as a current payable. In addition to interest, the Company also pays a quarterly commitment fee of 0.50% per annum on the unused portion of the commitments.
All borrowings are collateralized by substantially all of the assets of the Company, and are subject to certain nonfinancial and financial covenants. At June 30, 2018 and at December 31, 2017, the most restrictive financial covenants require the Company to maintain a current ratio greater than 1.0:1.0 and a ratio of total debt to EBITDAX less than 4.0:1.0. At June 30, 2018 and December 31, 2017, the Company was in compliance with all covenants.
6. Members Capital
In accordance with the terms of the Companys Limited Liability Company Agreement, the net profits and losses of the Company, and all other items of income, gain, loss, deduction, and credit of the Company, shall be allocated to each of the members for capital account and federal income tax purposes. Moreover, the Company may make distributions of available cash or other properties from time to time, as determined by the Company in its sole discretion. Pursuant to the Companys LLC agreement (and as is customary for limited liability companies), the liabilities of the members is limited to their contributed capital.
HAYMAKER MINERALS & ROYALTIES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
During the six months ended June 30, 2018, members capital contributions totaled $45 thousand.
During the six months ended June 30, 2018, the Company distributed $8.0 million of available cash in accordance with the Companys LLC agreement.
At June 30, 2018 and December 31, 2017, unfunded capital commitments totaled $42.8 million, respectively.
7. Commitments and Contingencies
The Company could be subject to various possible loss contingencies which arise primarily from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry. Such contingencies include differing interpretations as to the prices at which natural gas and crude oil sales may be made, the prices at which royalty owners may be paid for production from their leases, environmental issues and other matters. Management believes it has complied with the various laws and regulations, administrative rulings and interpretations.
Litigation
The Company is involved in disputes or legal actions arising in the ordinary course of business. Management does not believe the outcome of such disputes or legal actions will have a material adverse effect on the Companys condensed consolidated financial statements, and no amounts have been accrued at June 30, 2018 or December 31, 2017, respectively.
8. Subsequent Events
On May 29, 2018, the Company and certain affiliates entered into a definitive agreement with Kimbell Royalty Partners, LP (Kimbell) to divest substantially all of the Companys oil and gas mineral and royalty interests and other related assets for $84 million in cash and 4 million common units representing limited partner interests in Kimbell. The effective date of the transaction is April 1, 2018. The transaction closed on July 12, 2018. Pursuant to terms of the agreement, the Company paid in full the outstanding balance under the First Lien Loan at close.
On July 13, 2018, the Company distributed $56.8 million to Kayne and $0.2 million to Haymaker Management from the proceeds of the sale.
The Company has evaluated subsequent events through September 10, 2018, the date these financial statements were available to be issued, and has concluded that no other events need to be reported in relation to this period.
HAYMAKER PROPERTIES, L.P.
CONDENSED BALANCE SHEETS (UNAUDITED)
|
|
June 30, 2018 |
|
December 31, 2017 |
|
||
|
|
|
|
|
|
||
Assets |
|
|
|
|
|
||
Current assets |
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
3,060,329 |
|
$ |
1,979,304 |
|
Accounts receivable |
|
|
|
|
|
||
Oil, natural gas and natural gas liquids receivables |
|
4,952,387 |
|
5,668,982 |
|
||
Other |
|
142,383 |
|
75,525 |
|
||
Receivables from affiliates |
|
23,601 |
|
112,567 |
|
||
Prepaid expenses |
|
72,594 |
|
60,096 |
|
||
Short-term derivative asset |
|
|
|
202,070 |
|
||
Total current assets |
|
8,251,294 |
|
8,098,544 |
|
||
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
||
Oil and natural gas properties, full cost method |
|
|
|
|
|
||
Proved properties |
|
65,110,994 |
|
63,040,178 |
|
||
Unevaluated properties |
|
19,401,795 |
|
23,417,587 |
|
||
Total oil and natural gas properties, at cost |
|
84,512,789 |
|
86,457,765 |
|
||
Accumulated depletion and impairment |
|
(25,340,878 |
) |
(21,651,958 |
) |
||
Total oil and natural gas properties, net |
|
59,171,911 |
|
64,805,807 |
|
||
|
|
|
|
|
|
||
Noncurrent assets |
|
|
|
|
|
||
Long-term derivative asset |
|
|
|
191,475 |
|
||
Deferred loan costs, net |
|
302,459 |
|
361,000 |
|
||
Total noncurrent assets |
|
302,459 |
|
552,475 |
|
||
|
|
|
|
|
|
||
Total assets |
|
$ |
67,725,664 |
|
$ |
73,456,826 |
|
|
|
|
|
|
|
||
Liabilities and partners capital |
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
||
Accounts payable |
|
$ |
2,031,871 |
|
$ |
1,462,586 |
|
Current income tax payable |
|
|
|
747,833 |
|
||
Other accrued expenses |
|
3,595,305 |
|
529,065 |
|
||
Accrued interest |
|
4,805 |
|
6,147 |
|
||
Total current liabilities |
|
5,631,981 |
|
2,745,631 |
|
||
|
|
|
|
|
|
||
Noncurrent liabilities |
|
|
|
|
|
||
Debt |
|
20,349,082 |
|
20,349,082 |
|
||
Total noncurrent liabilities |
|
20,349,082 |
|
20,349,082 |
|
||
Total liabilities |
|
25,981,063 |
|
23,094,713 |
|
||
|
|
|
|
|
|
||
Commitments and contingencies (Note 8) |
|
|
|
|
|
||
Partners capital |
|
|
|
|
|
||
Limited partners |
|
41,744,601 |
|
50,362,113 |
|
||
General partner |
|
|
|
|
|
||
|
|
|
|
|
|
||
Total liabilities and partners capital |
|
$ |
67,725,664 |
|
$ |
73,456,826 |
|
The accompanying notes are an integral part of these condensed financial statements.
HAYMAKER PROPERTIES, L.P.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
For the Six Months Ended, |
|
||||
|
|
June 30, 2018 |
|
June 30, 2017 |
|
||
Revenues |
|
|
|
|
|
||
Crude oil and condensate sales |
|
$ |
2,930,717 |
|
$ |
3,000,553 |
|
Natural gas sales |
|
9,995,501 |
|
14,283,520 |
|
||
Natural gas liquids sales and other |
|
1,502,451 |
|
2,075,085 |
|
||
Income from lease bonus |
|
259,445 |
|
458,293 |
|
||
Total revenues |
|
14,688,114 |
|
19,817,451 |
|
||
|
|
|
|
|
|
||
Costs and expenses |
|
|
|
|
|
||
Production, ad valorem and withholding taxes |
|
746,704 |
|
747,582 |
|
||
Production expense |
|
1,709,692 |
|
1,785,498 |
|
||
Depletion, depreciation and amortization |
|
3,744,033 |
|
4,802,801 |
|
||
General and administrative expenses |
|
4,834,483 |
|
4,289,686 |
|
||
Gain on sale of assets |
|
|
|
(83,645,029 |
) |
||
Total costs and expenses |
|
11,034,912 |
|
(72,019,462 |
) |
||
|
|
|
|
|
|
||
Income from operations |
|
3,653,202 |
|
91,836,913 |
|
||
|
|
|
|
|
|
||
Other income (expense) |
|
|
|
|
|
||
Gain (loss) on derivatives |
|
(736,696 |
) |
1,694,995 |
|
||
Interest expense |
|
(538,704 |
) |
(443,198 |
) |
||
Other income |
|
4,686 |
|
1,918 |
|
||
Total other income (expense) |
|
(1,270,714 |
) |
1,253,715 |
|
||
|
|
|
|
|
|
||
Net income |
|
$ |
2,382,488 |
|
$ |
93,090,628 |
|
HAYMAKER PROPERTIES, L.P.
CONDENSED STATEMENT OF PARTNERS CAPITAL (UNAUDITED)
|
|
Limited Partners |
|
General Partner |
|
||
BALANCE AT DECEMBER 31, 2017 |
|
$ |
50,362,113 |
|
$ |
|
|
Distributions |
|
(11,000,000 |
) |
|
|
||
Net income |
|
2,382,488 |
|
|
|
||
BALANCE AT JUNE 30, 2018 |
|
$ |
41,744,601 |
|
$ |
|
|
The accompanying notes are an integral part of these condensed financial statements.
HAYMAKER PROPERTIES, L.P.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
For the Six Months Ended, |
|
||||
|
|
June 30, 2018 |
|
June 30,2017 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
||
Net income |
|
$ |
2,382,488 |
|
$ |
93,090,628 |
|
|
|
|
|
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
||
Depletion, depreciation and amortization |
|
3,744,033 |
|
4,802,801 |
|
||
Gain on sale of assets |
|
|
|
(83,645,029 |
) |
||
Amortization of deferred loan costs |
|
58,541 |
|
58,541 |
|
||
Equity-based compensation |
|
|
|
589,608 |
|
||
Mark-to-market commodity derivative contracts |
|
|
|
|
|
||
(Gain) loss on derivatives |
|
736,696 |
|
(1,694,995 |
) |
||
Net cash (payments) received from settlements of commodity derivative contracts |
|
191,614 |
|
(444,621 |
) |
||
Change in operating assets & liabilities |
|
|
|
|
|
||
Accounts receivable |
|
716,595 |
|
(1,575,412 |
) |
||
Receivable from affiliate |
|
88,966 |
|
603,617 |
|
||
Accounts payable and accrued expenses |
|
2,284,727 |
|
188,801 |
|
||
Prepaid expenses |
|
(12,498 |
) |
5,055 |
|
||
Net cash provided by operating activities |
|
10,191,162 |
|
11,978,994 |
|
||
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
||
Acquisition of oil and natural gas properties |
|
|
|
(8,416 |
) |
||
Escrow deposit for Chesapeake properties |
|
|
|
1,471,002 |
|
||
Divestiture of oil and natural gas properties |
|
1,889,863 |
|
117,657,807 |
|
||
Net cash provided by investing activities |
|
1,889,863 |
|
119,120,393 |
|
||
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
||
Deferred offering costs |
|
|
|
(1,269,656 |
) |
||
Distributions |
|
(11,000,000 |
) |
(130,892,880 |
) |
||
Net cash used in financing activities |
|
(11,000,000 |
) |
(132,162,536 |
) |
||
|
|
|
|
|
|
||
Net increase (decrease) in cash and cash equivalents |
|
1,081,025 |
|
(1,063,149 |
) |
||
|
|
|
|
|
|
||
Cash and cash equivalents at the beginning of the period |
|
1,979,304 |
|
3,452,547 |
|
||
|
|
|
|
|
|
||
Cash and cash equivalents at the end of the period |
|
$ |
3,060,329 |
|
$ |
2,389,398 |
|
|
|
|
|
|
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
||
Cash paid for interest |
|
$ |
481,505 |
|
$ |
384,657 |
|
|
|
|
|
|
|
||
Cash paid for taxes |
|
$ |
747,833 |
|
$ |
|
|
The accompanying notes are an integral part of these condensed financial statements.
HAYMAKER PROPERTIES, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
1. Organization and Basis of Presentation
Organization
Haymaker Properties, L.P., (the Partnership), was formed on December 2, 2015 as a Delaware limited partnership by Haymaker Management Company, LLC (Management) and affiliates of Kohlberg Kravis Roberts & Co. L.P. The Partnership was created to acquire and maintain a diversified mix of oil and natural gas mineral and royalty interests in many of North Americas leading resource plays. The Partnership is 100% owned by Haymaker Resources, LP (Haymaker Resources). Haymaker Resources is owned 99% by Haymaker Resources GP, LLC (the General Partner) and 1% owned by Management. The Partnerships headquarters are located in Houston, Texas.
The Partnership has a contractual right to receive a fixed percentage of the oil and gas production coming from any acreage in which we own a mineral or royalty interest. The Partnership does not own or invest in any working interests or net profit interests which allows for the receipt of royalty revenues without having to pay any of the associated operating or capital costs related to the resource development.
On January 28, 2016, the Partnership entered into a master services agreement with Haymaker Services, LLC (the Manager) to provide portfolio management and administrative services.
Basis of Presentation
These unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end balance sheet data was derived from audited financial statements but does not include disclosures required by GAAP for annual periods. The information furnished herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of financial position and results of operations for the respective interim periods.
Our financial results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. These unaudited financial statements should be read in conjunction with our audited annual financial statements as of and for the year ended December 31, 2017 and notes thereto.
2. Summary of Significant Accounting Policies
Significant accounting policies are described in Note 2 in the Partnerships audited annual financial statements as of and for the year ended December 31, 2017. There have been no changes in such policies or the application of such policies since December 31, 2017, other than the recently adopted accounting pronouncement described below.
Recently Adopted Accounting Pronouncements
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows Restricted Cash. This update affects entities that have restricted cash or restricted cash equivalents. The guidance will be effective for the Partnership for fiscal years and interim periods beginning after December 15, 2017 and is required to be adopted using a retrospective approach, with early adoption permitted. The Partnership adopted ASU 2016-18 effective January 1, 2018. Adoption of this standard did not have an impact on the Partnerships financial statements or disclosures. As of June 30, 2018 and December 31, 2017, the Partnership had no restricted cash.
In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues, including presentation of debt prepayment or debt extinguishment costs, with the objective of reducing the existing diversity in practice. The guidance will be
HAYMAKER PROPERTIES, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) Continued
For the Six Months Ended June 30, 2018 and 2017
effective for the Partnership for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. Entities that elect early adoption must adopt all of the amendments in the same period. The Partnership adopted this standard effective January 1, 2018. Adoption of this standard did not have a material impact on the Partnerships financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The guidance requires entities to recognize revenue using the following five step model: identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue as the entity satisfies each performance obligation. Adoption of this standard could result in retrospective application, either in the form of recasting all prior periods presented or a cumulative adjustment to equity in the period of adoption. The guidance is effective for annual and interim periods beginning after December 15, 2017.
On January 1, 2018 the Partnership adopted ASU 2014-09 using the modified retrospective method. The Partnership completed its review of a representative sample of revenue contracts covering its material revenue streams and determined that there is no impact to its financial statements, results of operations or liquidity. When comparing the Partnerships historical revenue recognition to the newly applied revenue recognition under ASC 606, there was no change to the amount or timing of revenue recognized. Therefore, no quantitative adjustment was required to be made to the prior periods presented in the unaudited financial statements after the adoption of ASC 606.
Accounting Policy Revenue from Contracts with Customers
Royalty income represents the right to receive revenues from oil, natural gas and natural gas liquids sales obtained by the operator of the wells in which the Partnership owns a royalty interest. The Partnerships oil, natural gas and natural gas liquids sales from properties in which the Partnership owns a mineral or royalty interest are generally structured whereby the producer of the properties in which the Partnership owns a royalty interest sells the Partnerships proportionate share of oil, natural gas and natural gas liquids production to the purchaser and the Partnership collects its percentage royalty based on the revenue generated by the sale of the oil, natural gas and natural gas liquids. The Partnership recognizes revenue when control transfers to the purchaser based on the Partnerships percentage ownership share of the revenue. The Partnerships royalty income pricing provisions are tied to a market index.
Revenues from mineral and royalty properties are recorded under the cash receipts approach as directly received from the operators statement accompanying the revenue check. Since the revenue checks are generally received one to four months after the production month, the Partnership estimates and accrues for revenue earned but not received by estimated production volumes and product prices. The difference between the Partnerships estimates and the actual amounts received for oil and natural gas sales is recorded in the month that payment is received from the third party. The Partnerships royalty interests represent the right to receive royalty income from the producer once production and delivery has occurred, at which point payment is unconditional. Accordingly, the Partnerships royalty income contracts do not give rise to contract assets or liabilities and there are no remaining performance obligations.
The Partnership also earns revenue from mineral lease bonuses. The Partnership generates lease bonus revenue by leasing its mineral interests to exploration and production companies. A lease agreement represents the Partnerships contract with a customer and generally transfers the rights to any oil or natural gas discovered, grants the Partnership a right to a specified royalty interest, and requires that drilling and completion operations commence within a specified time period. Control is transferred to the lessee and the Partnership has satisfied its performance obligation when the lease agreement is executed, such that revenue is recognized when the lease bonus payment is received. At the time the Partnership executes the lease agreement, the Partnership expects to receive the lease bonus payment within a reasonable time, though in no case more than one year, such that the
HAYMAKER PROPERTIES, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) Continued
For the Six Months Ended June 30, 2018 and 2017
Partnership has not adjusted the expected amount of consideration for the effects of any significant financing component per the practical expedient provision in ASC 606.
3. Divestitures
In April 2018, the Partnership disposed of certain assets in West Virginia for approximately $1.1 million, subject to customary post-closing adjustments. The divestiture was reflected as a reduction to the full cost pool, as such, no gain or loss on sales of oil and natural gas properties was recognized.
In February 2018, the Partnership disposed of certain assets in Oklahoma for approximately $0.6 million, subject to customary post-closing adjustments. The divestiture was reflected as a reduction to the full cost pool, as such, no gain or loss on sales of oil and natural gas properties was recognized.
In January 2018, the Partnership disposed of certain assets in Texas for approximately $0.2 million, subject to customary post-closing adjustments. The divestiture was reflected as a reduction to the full cost pool, as such, no gain or loss on sales of oil and natural gas properties was recognized.
In April 2017, the Partnership disposed of certain assets in the Delaware basin for approximately $17.1 million, subject to customary post-closing adjustments. The divestiture resulted in a gain of approximately $17.0 million. Total oil and natural gas properties decreased by $0.1 million, all of which was related to proved properties.
In February and March 2017, the Partnership disposed of certain assets in the Appalachian basin for approximately $61.1 million, subject to customary post-closing adjustments. As of June 30, 2018, the Partnership has paid $0.5 million related to post-closing adjustments. The divestiture resulted in a gain of approximately $29.0 million. Total oil and natural gas properties decreased by $31.6 million, of which, $3.9 million was related to proved properties and $27.7 million was related to unevaluated properties.
In February 2017, the Partnership disposed of certain assets in the Delaware basin for approximately $39.7 million, subject to customary post-closing adjustments. As of June 30, 2018, the Partnership has paid $0.1 million related to post-closing adjustments. The divestiture resulted in a gain of approximately $37.6 million. Total oil and natural gas properties decreased by $2.0 million, all of which was related to proved properties.
4. Related Party Transactions
The Partnership utilizes the Manager to process all shared general and administrative costs on its behalf and then allocate to the Partnership a percentage representative of costs that directly benefited the Partnership. Such allocated costs are reported in the Partnerships Statements of Operations as part of general and administrative expenses.
The Partnership generally provides funds to Manager in advance based on an estimate of allocated expenses. As a result of these transactions, the net amount receivable from or payable to Manager is reported in the Partnerships Balance Sheets as Receivables from affiliates or Payables to affiliates. At June 30, 2018 and December 31, 2017, the net amount due from the Manager was approximately $24 thousand and $0.1 million, respectively.
5. Derivative Contracts
The Partnership enters into crude oil and natural gas swap contracts as part of its strategy to economically hedge against changes in crude oil and natural gas prices and to achieve more predictable cash flows in an environment of volatile oil and gas prices. While the use of these commodity derivative instruments limits the downside risk of adverse price movements, such use may also limit the Partnerships ability to benefit from favorable price movements. The Partnership may, from time to time, add incremental derivatives to hedge additional production, restructure existing derivative contracts or enter into new transactions to modify the terms of current
HAYMAKER PROPERTIES, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) Continued
For the Six Months Ended June 30, 2018 and 2017
contracts in order to realize the current value of the Partnerships existing positions.
The fair value of open swaps reported in the Balance Sheets may differ from that which would be realized in the event the Partnership terminated its position in the contract. Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the aggregate of the unrealized gain/loss on the swap contracts in an unrealized gain position as well as any collateral posted with the counterparty. Therefore, the Partnership considers the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. A derivative counterparty of the Partnership is also a lender in the Partnerships credit facility agreement. Additionally, risks may arise from unanticipated movements in the fair value of the underlying commodities.
Effective June 30, 2018, the Partnership terminated all of its remaining crude oil and natural gas commodity derivative positions. As a result of the termination of 64,200 Bbls of crude oil and 1,545,600 MMbtu of natural gas swap positions, the Partnership recorded a payable of $0.6 million. Upon termination of 1,728,100 MMbtu of natural gas swap positions, the Partnership also recorded a receivable of $0.1 million.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables summarize the location and amounts of the Partnerships assets and liabilities measured at fair value on a recurring basis as presented in the Balance Sheets as of December 31, 2017. Balances are presented on a gross basis, prior to the application of the impact of counterparty and collateral netting. No collateral was posted at December 31, 2017. Total derivative assets and liabilities are adjusted on an aggregate basis to take in to consideration the effects of master netting arrangements. All items included in the tables below are Level 2 inputs within the fair value hierarchy:
As of December 31, 2017
|
|
Measurement
|
|
Gross Fair Value |
|
Effect of
|
|
Net Carrying
|
|
|||
Derivative assets |
|
|
|
|
|
|
|
|
|
|||
Derivative assets (current) |
|
Level 2 |
|
$ |
230,727 |
|
$ |
(28,657 |
) |
$ |
202,070 |
|
Derivative assets (noncurrent) |
|
Level 2 |
|
199,493 |
|
(8,018 |
) |
191,475 |
|
|||
Derivative liabilities |
|
|
|
|
|
|
|
|
|
|||
Derivative liabilities (current) |
|
Level 2 |
|
(28,657 |
) |
28,657 |
|
|
|
|||
Derivative liabilities (noncurrent) |
|
Level 2 |
|
(8,018 |
) |
8,018 |
|
|
|
|||
Total |
|
|
|
$ |
393,545 |
|
$ |
|
|
$ |
393,545 |
|
The fair value of the Partnerships derivative assets and liabilities is based on a third-party valuation that uses market data obtained from third-party sources, including quoted forward prices for oil and gas, discount rates and volatility factors. The fair value is also compared to the values provided by the counterparty for reasonableness and are adjusted for the counterparties credit quality for derivative assets and the Partnerships credit quality for derivative liabilities. To date, adjustments for credit quality have not had a material impact on the fair values.
The derivative asset and liability fair values reported in the Balance Sheets are as of a particular point in time and subsequently change as these estimates are revised to reflect actual results, changes in market conditions and other factors. The Partnership typically has numerous hedge positions that span several time periods and often result in both derivative assets and liabilities with the same counterparty, which positions are all offset to a single current and a single noncurrent derivative asset or liability in the Balance Sheets. The Partnership nets the fair values of its derivative assets and liabilities associated with derivative instruments executed with the same counterparty pursuant to ISDA master agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract.
HAYMAKER PROPERTIES, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) Continued
For the Six Months Ended June 30, 2018 and 2017
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
The Partnership applies the provisions of the fair value measurement standard on a non-recurring basis to its non-financial assets and liabilities. These assets and liabilities are not measured at fair value on a recurring basis, but are subject to fair value adjustments when facts and circumstances arise that indicate a need for measurement.
Fair Value of Other Financial Instruments
The Partnerships other financial instruments consist of cash, receivables and payables which are classified as Level 1 under the fair value hierarchy and long-term debt, which is classified as Level 2 under the fair value hierarchy. The carrying amounts of cash, receivables, and payables approximate fair value due to the highly liquid or short-term nature of these instruments. The fair value of the long-term debt approximates its carrying value as the interest rates are variable and reflective of market rates.
6. Debt
In February 2017, as a result of the 2017 divestitures, the Partnerships borrowing base was reduced from $36.0 million to $33.0 million. In November 2017, the Partnerships borrowing base was reaffirmed at $36.0 million. At June 30, 2018 and December 31, 2017, the borrowing base and principal balance outstanding were $36.0 million and $20.3 million, respectively.
At June 30, 2018 and December 31, 2017, the interest rate elected for the loan was 4.38% and 3.88% based on LIBOR plus the applicable margin, respectively.
All borrowings are collateralized by substantially all of the assets of the Partnership and are subject to certain nonfinancial and financial covenants. At June 30, 2018 and at December 31, 2017, the most restrictive financial covenants require the Partnership to maintain a current ratio greater than 1.0:1.0 and a ratio of total debt to EBITDAX less than 4.0:1.0. At June 30, 2018 and December 31, 2017, the Partnership was in compliance with all covenants.
7. Partners Capital
Under the terms of the Partnerships Limited Partnership Agreement (LP Agreement), profits and losses shall be allocated in proportion to the capital contributions of the partners of the Partnership. The Partnership may make distributions of available cash at the times and amounts determined by the General Partner and allocated among the partners of the Partnership in the same proportion as their capital account balances. Pursuant to the Partnerships LP Agreement, the Limited Partner does not have any liability for the obligations and liabilities of the Partnership.
For the six months ended June 30, 2018 and 2017, the Partnership distributed $11.0 million and $130.9 million of available cash in accordance with the Partnerships LP Agreement, respectively.
8. Commitments and Contingencies
The Partnership could be subject to various possible loss contingencies which arise primarily from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry. Such contingencies include differing interpretations as to the prices at which natural gas and crude oil sales may be made, the prices at which royalty owners may be paid for production from their leases, environmental issues and other matters. Management believes it has complied with the various laws and regulations, administrative rulings and interpretations.
The Partnership is involved in disputes or legal actions arising in the ordinary course of business. Management does not believe the outcome of such disputes or legal actions will have a material adverse effect on the Partnerships condensed financial statements, and no amounts have been accrued at June 30, 2018 or December 31, 2017, respectively.
HAYMAKER PROPERTIES, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) Continued
For the Six Months Ended June 30, 2018 and 2017
9. Equity-based compensation
Pursuant to the Series B Interest Award Agreement dated January 28, 2016 (Grant date), Haymaker Resources granted Series B interests to key employees. The compensation cost associated with the Series B interests is reflected on the Partnerships Statements of Operations as services are provided. The Series B interests are profits interests in the Partnership that vest ratably over one year and qualify for distributions in accordance with the waterfall calculation defined per the Partnership Agreement.
Series B interests are accounted for as equity-based compensation under ASC 718. The Partnership utilized the Backsolve method within the Option Pricing Model (OPM) framework to determine the grant date fair value of these awards. The Partnership utilizes the estimated weighted average of the Partnerships expected fund life dependent on various exit scenarios to estimate the expected term of the awards. Expected volatility is based on the volatility of historical stock prices of the Partnerships peer group. The risk-free rates are based on the yields of U.S. Treasury instruments with comparable terms.
Compensation cost related to the Series B interests is based on the fair value as of the Grant date of the award and is recognized ratably over the one-year requisite service period. Series B interests are issued to employees in return for services provided. Additionally, Series B interests do not settle upon distribution and continue to retain profits in future distributions of the Partnership. The non-cash equity-based compensation expense expected to be recognized as of the grant date is $7.1 million. For the six months ended June 30, 2017, $0.6 million was recognized as non-cash equity-based compensation expense in the Partnerships Statements of Operations with an offset to partners capital. There was no non-cash equity-based compensation expense recognized in the Partnerships Statements of Operations for the six months ended June 30, 2018.
The following table summarizes the Series B activity:
|
|
Series B
|
|
Outstandng as of December 31, 2017 |
|
100 |
|
Granted |
|
|
|
Forfeited |
|
|
|
Outstanding as of June 30, 2018 |
|
100 |
|
10. Subsequent Events
On May 29, 2018, Haymaker Resources and certain affiliates entered into a definitive agreement with Kimbell Royalty Partners, LP (Kimbell) to divest all of its interest in the Partnership for $126 million in cash and 6 million common units representing limited partner interests in Kimbell. The effective date of the transaction is April 1, 2018. The transaction closed on July 12, 2018.
On July 12, 2018, as part of the transaction with Kimbell, the Partnership paid in full the principal balance outstanding under the credit facility.
The Partnership has evaluated subsequent events through September 10, 2018, the date these condensed financial statements were available to be issued, and has concluded that no other events need to be reported in relation to this period.
Unaudited Pro Forma Condensed Combined Financial Statements
On July 12, 2018 (the Closing Date ), Kimbell Royalty Partners, LP, a Delaware limited partnership ( Kimbell or the Partnership ), completed its acquisition (the Acquisition ) of (i) all of the equity interests in certain subsidiaries owned by Haymaker Minerals & Royalties, LLC, a Delaware limited liability company ( Haymaker Minerals ), pursuant to the Securities Purchase Agreement, dated as of May 28, 2018, by and among Kimbell, Haymaker Minerals and Haymaker Services, LLC, a Delaware limited liability company ( Haymaker Services ), and (ii) all of the equity interests in certain subsidiaries, including Haymaker Properties, L.P. ( Haymaker Properties ), owned by Haymaker Resources, LP, a Delaware limited partnership ( Haymaker Resources and, together with Haymaker Minerals, the Haymaker Sellers ), pursuant to the Securities Purchase Agreement, dated as of May 28, 2018, by and among Kimbell, Haymaker Resources and Haymaker Services (the Haymaker Resources Purchase Agreement ). The aggregate consideration for the Acquisition consisted of approximately $216.3 million in cash (including amounts held in escrow, after standard pre-closing adjustments) and the issuance of 10 million common units representing limited partner interests ( Common Units ), resulting in a total valuation of approximately $451.7 million based on a closing price of $23.54 per unit for Kimbells Common Units as of the Closing Date. The completion of the Acquisition is referred to herein as the Haymaker Closing and, the entities in which Kimbell acquired equity interests, the Haymaker Subsidiaries . Prior to the Closing Date, EIGF Aggregator III LLC, a Delaware limited liability company, TE Drilling Aggregator LLC, a Delaware limited liability company, and Haymaker Management, LLC, a Texas limited liability company (each of the preceding entities, together with Haymaker Minerals, the Haymaker Holders ), were designated as the recipients of the portion of the Common Units issued as consideration in connection with the Haymaker Resources Purchase Agreement.
Simultaneous with the Haymaker Closing, Kimbell completed the private placement (the Preferred Unit Private Placement ) of 110,000 Series A Cumulative Convertible Preferred Units (the Series A Preferred Units ) to certain affiliates of Apollo Capital Management, L.P. (collectively, the Series A Purchasers ) for gross proceeds of $110 million, pursuant to the Preferred Unit Purchase Agreement, dated as of May 28, 2018, by and among Kimbell and the Series A Purchasers.
At the time of the Haymaker Closing, Kimbell also entered into an amendment (the Credit Agreement Amendment ) to Kimbells existing Credit Agreement, dated as of January 11, 2017 (the Original Credit Agreement and, the Original Credit Agreement as amended by the Credit Agreement Amendment, the Amended Credit Agreement ), by and among the Partnership, certain subsidiaries of the Partnership as guarantors, Frost Bank, as administrative agent, and the other lenders party thereto. The Credit Agreement Amendment increased commitments under the Amended Credit Agreement, resulting in a fully underwritten $200 million revolving credit facility.
The Board of Directors of Kimbell Royalty GP, LLC, a Delaware limited liability company and the general partner of the Partnership, approved on July 2, 2018, subject to approval of the holders of a majority of the outstanding Common Units and Series A Preferred Units (voting together as a class), that the Partnership change its U.S. federal income tax status from a partnership to a corporation by means of a check-the-box election (the Tax Election ). Following the Tax Election, the Partnership will be treated as an entity taxable as a corporation for U.S. federal income tax purposes and the Partnership will pay entity-level U.S. federal income tax, currently at a flat rate of 21% on its taxable income, if any.
On the day immediately prior to the effectiveness of the Tax Election, (i) the Partnerships equity interest in Kimbell Royalty Operating, LLC, a Delaware limited liability company (the Operating Company ), will be recapitalized into 13,886,204 newly issued common units of the Operating Company ( OpCo Common Units ) and 110,000 newly issued Series A Cumulative Convertible Preferred Units of the Operating Company ( OpCo Series A Preferred Units ), (ii) the Haymaker Holders and the Kimbell Art Foundation will deliver and assign to the Partnership the 10,000,000 and 2,953,258 Common Units they own, respectively, in exchange for (a) 10,000,000 and 2,953,258 newly issued Class B common units representing limited partner interests in the Partnership (the Class B Units ), respectively, and (b) 10,000,000 and 2,953,258 newly issued OpCo Common Units, respectively, (iii) the Limited Liability Company Agreement of the Operating Company will be amended and restated to reflect the foregoing transactions, and (iv) the Second Amended and Restated Agreement of Limited Partnership of the Partnership will be amended and restated to reflect the foregoing transactions (together with the Tax Election, the Up-C Transaction ). Following the Up-C Transaction, the Partnership will pay U.S. federal income tax on income allocated from its ownership of OpCo Common Units and OpCo Series A Preferred Units. There will be no step-up in tax basis on OpCo Common Units or OpCo Series A Preferred Units as a result of the Up-C Transaction and no tax receivable agreement between the Partnership and the Haymaker Holders and the Kimbell Art Foundation. The Acquisition, Preferred Unit Private Placement, the Credit Agreement Amendment and the Up-C Transaction are collectively referred to herein as the Pro Forma Transactions .
The following unaudited pro forma condensed combined balance sheet of Kimbell as of June 30, 2018 and the unaudited pro forma condensed combined statements of operations of Kimbell for the six months ended June 30, 2018 and for the year ended December 31, 2017 are based on the unaudited financial statements as of and for the six months ended June 30, 2018 and the audited financial statements for the year ended December 31, 2017 of Kimbell, Haymaker Minerals and Haymaker Properties. The effect of the Tax Cuts and Jobs Act signed into law on December 22, 2017 has been included in the unaudited pro forma condensed combined balance sheet of Kimbell as of June 30, 2018 and in the unaudited pro forma condensed combined statements of operations of Kimbell
for the six months ended June 30, 2018 and for the year ended December 31, 2017.
The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2018 and for the year ended December 31, 2017 and the unaudited pro forma condensed combined balance sheet as of June 30, 2018 have been prepared to reflect the Pro Forma Transactions. The pro forma financial data is presented as if the Pro Forma Transactions had occurred on June 30, 2018 for the purposes of the unaudited pro forma condensed combined balance sheet as of June 30, 2018 and on January 1, 2017 for the purposes of the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2018 and for the year ended December 31, 2017.
The unaudited pro forma adjustments are based on preliminary estimates, accounting judgments and currently available information and assumptions that management believes are reasonable. The notes to the unaudited pro forma condensed combined statements provide a detailed discussion of how such adjustments were derived and presented in the unaudited pro forma financial information.
The unaudited pro forma condensed combined financial information has been prepared to reflect adjustments to the Partnerships historical financial information that are (i) directly attributable to the Pro Forma Transactions and (ii) factually supportable, and with respect to the unaudited pro forma condensed combined statement of operations, expected to have a continuing impact on the Partnerships results.
These unaudited pro forma condensed combined financial statements are for informational purposes only and do not purport to represent what the Partnerships financial position and results of operations would have been had the Acquisition occurred on the dates indicated. These unaudited pro forma condensed combined financial statements should not be used to project the Partnerships financial performance for any future period. A number of factors may affect the Partnerships results. Please read Risk Factors and Cautionary Statement Regarding Forward-Looking Statements in the Partnerships Annual Report on Form 10-K for the year ended December 31, 2017 (the Form 10-K ) and the Partnerships Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018 and June 30, 2018 for information regarding statements that do not relate strictly to historical or current facts and certain risks inherent in the Partnerships business.
The unaudited pro forma condensed combined financial information should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Form 10-K, the unaudited consolidated financial statements and notes thereto contained in the Partnerships Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 and each of the historical financial statements and notes thereto of each of Haymaker Minerals and Haymaker Properties, as filed herewith by the Partnership with the Commission.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2018
|
|
Kimbell |
|
Pro Forma
|
|
Pro Forma |
|
|||
|
|
|
|
|
|
|
|
|||
Assets |
|
|
|
|
|
|
|
|||
Current assets: |
|
|
|
|
|
|
|
|||
Cash and cash equivalents |
|
$ |
8,334,632 |
|
$ |
(216,320,376 |
)(A) |
$ |
(3,531,358 |
) |
|
|
|
|
101,724,755 |
(B) |
|
|
|||
|
|
|
|
102,729,631 |
(C) |
|
|
|||
Oil, natural gas and NGL receivables |
|
6,597,763 |
|
|
|
6,597,763 |
|
|||
Accounts receivable and other current assets |
|
226,641 |
|
|
|
226,641 |
|
|||
|
|
|
|
|
|
|
|
|||
Total current assets |
|
15,159,036 |
|
(11,865,990 |
) |
3,293,046 |
|
|||
|
|
|
|
|
|
|
|
|||
Property and equipment, net |
|
107,889 |
|
|
|
107,889 |
|
|||
|
|
|
|
|
|
|
|
|||
Oil and natural gas properties |
|
|
|
|
|
|
|
|||
Oil and natural gas properties, using full cost method of accounting |
|
287,050,787 |
|
169,395,141 |
(A) |
456,445,928 |
|
|||
Unevaluated properties |
|
|
|
282,325,235 |
(A) |
282,325,235 |
|
|||
Less: accumulated depreciation, depletion, accretion and impairment |
|
(77,946,337 |
) |
|
|
(77,946,337 |
) |
|||
|
|
|
|
|
|
|
|
|||
Total oil and natural gas properties |
|
209,104,450 |
|
451,720,376 |
|
660,824,826 |
|
|||
|
|
|
|
|
|
|
|
|||
Long term derivative asset |
|
|
|
|
|
|
|
|||
Deposits on oil and natural gas properties |
|
23,533,243 |
|
|
|
23,533,243 |
|
|||
Other assets |
|
1,189,994 |
|
|
|
1,189,994 |
|
|||
Loan origination costs, net |
|
223,958 |
|
3,275,245 |
(B) |
3,499,203 |
|
|||
Deferred tax assets |
|
|
|
8,513,953 |
(M) |
8,513,953 |
|
|||
|
|
|
|
|
|
|
|
|||
Total assets |
|
$ |
249,318,570 |
|
$ |
451,643,584 |
|
$ |
700,962,154 |
|
|
|
|
|
|
|
|
|
|||
Liabilities and equity |
|
|
|
|
|
|
|
|||
Current liabilities: |
|
|
|
|
|
|
|
|||
Accounts payable |
|
$ |
5,239,072 |
|
$ |
|
|
$ |
5,239,072 |
|
Current income taxes payable |
|
|
|
694,905 |
(M) |
694,905 |
|
|||
Other current liabilities |
|
1,226,727 |
|
|
|
1,226,727 |
|
|||
Commodity derivative liabilities |
|
400,798 |
|
|
|
400,798 |
|
|||
|
|
|
|
|
|
|
|
|||
Total current liabilities |
|
6,866,597 |
|
694,905 |
|
7,561,502 |
|
|||
|
|
|
|
|
|
|
|
|||
Commodity derivative liabilities |
|
599,561 |
|
|
|
599,561 |
|
|||
Long-term debt |
|
42,972,997 |
|
105,000,000 |
(B) |
147,972,997 |
|
|||
Total liabilities |
|
50,439,155 |
|
105,694,905 |
|
156,134,060 |
|
|||
|
|
|
|
|
|
|
|
|||
Commitments and contingencies |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Equity |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Series A Preferred Units, 110,000 units issued and outstanding |
|
|
|
102,729,631 |
(C) |
102,729,631 |
|
|||
|
|
|
|
|
|
|
|
|||
Partners capital |
|
198,879,415 |
|
235,400,000 |
(A) |
442,098,463 |
|
|||
|
|
|
|
7,819,048 |
(M) |
|
|
|||
|
|
|
|
|
|
|
|
|||
Total liabilities and equity |
|
$ |
249,318,570 |
|
$ |
451,643,584 |
|
$ |
700,962,154 |
|
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended June 30, 2018
|
|
Kimbell |
|
Haymaker
|
|
Haymaker
|
|
Pro Forma
|
|
Pro Forma |
|
|||||
Oil, natural gas and NGL revenues |
|
$ |
22,422,590 |
|
$ |
|
|
$ |
|
|
$ |
22,235,881 |
(D) |
$ |
43,504,576 |
|
|
|
|
|
|
|
|
|
(368,124 |
)(F) |
|
|
|||||
|
|
|
|
|
|
|
|
(785,771 |
)(E) |
|
|
|||||
Crude oil and condensate sales |
|
|
|
2,930,717 |
|
5,621,833 |
|
(8,552,550 |
)(D) |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Natural gas sales |
|
|
|
9,995,501 |
|
1,277,575 |
|
(11,273,076 |
)(D) |
|
|
|||||
Natural gas liquids sales and other |
|
|
|
1,502,451 |
|
907,804 |
|
(2,410,255 |
)(D) |
|
|
|||||
Income from lease bonus |
|
|
|
259,445 |
|
1,119,041 |
|
368,124 |
(F) |
1,746,610 |
|
|||||
Loss on commodity derivative instruments |
|
(823,354 |
) |
|
|
|
|
|
|
(823,354 |
) |
|||||
Total revenues |
|
21,599,236 |
|
14,688,114 |
|
8,926,253 |
|
(785,771 |
) |
44,427,832 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|||||
Production and ad valorem taxes |
|
1,621,397 |
|
|
|
|
|
1,276,388 |
(G) |
2,897,785 |
|
|||||
Production ad valorem, and withholding taxes |
|
|
|
746,704 |
|
629,955 |
|
(1,276,388 |
)(G) |
|
|
|||||
|
|
|
|
|
|
|
|
(100,271 |
)(E) |
|
|
|||||
Production expense |
|
|
|
1,709,692 |
|
593,825 |
|
(2,288,924 |
)(H) |
|
|
|||||
|
|
|
|
|
|
|
|
(14,593 |
)(E) |
|
|
|||||
Depreciation, depletion and accretion expense |
|
7,887,302 |
|
3,744,033 |
|
2,389,109 |
|
(6,133,142 |
)(A) |
16,634,274 |
|
|||||
|
|
|
|
|
|
|
|
8,746,972 |
(A) |
|
|
|||||
Impairment of oil and natural gas properties |
|
54,753,444 |
|
|
|
|
|
|
|
54,753,444 |
|
|||||
Marketing and other deductions |
|
1,178,875 |
|
|
|
|
|
2,288,924 |
(H) |
3,467,799 |
|
|||||
General and administrative expense |
|
6,770,794 |
|
4,834,483 |
|
3,281,048 |
|
(5,458,064 |
)(N) |
9,428,261 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total costs and expenses |
|
72,211,812 |
|
11,034,912 |
|
6,893,937 |
|
(2,959,098 |
) |
87,181,563 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating (loss) income |
|
(50,612,576 |
) |
3,653,202 |
|
2,032,316 |
|
2,173,327 |
|
(42,753,731 |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|||||
Gain (loss) on derivatives |
|
|
|
(736,696 |
) |
(632,594 |
) |
1,369,290 |
(I) |
|
|
|||||
Interest expense |
|
(833,600 |
) |
(538,704 |
) |
(398,643 |
) |
1,770,947 |
(B) |
(3,875,768 |
) |
|||||
|
|
|
|
|
|
|
|
(3,875,768 |
)(B) |
|
|
|||||
Other income |
|
|
|
4,686 |
|
17,710 |
|
(22,396 |
)(O) |
|
|
|||||
Total other income (expense) |
|
(833,600 |
) |
(1,270,714 |
) |
(1,013,527 |
) |
(757,927 |
) |
(3,875,768 |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) before income taxes |
|
(51,446,176 |
) |
2,382,488 |
|
1,018,789 |
|
1,415,400 |
|
(46,629,499 |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax expense (benefit) |
|
|
|
|
|
(566 |
) |
(5,884,457 |
)(L) |
(5,885,023 |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net (loss) income |
|
$ |
(51,446,176 |
) |
$ |
2,382,488 |
|
$ |
1,019,355 |
|
$ |
7,299,857 |
|
$ |
(40,744,476 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income (loss) per Common Unit |
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic |
|
$ |
(3.14 |
) |
|
|
|
|
|
|
$ |
(1.55 |
) |
|||
Diluted |
|
$ |
(3.14 |
) |
|
|
|
|
|
|
$ |
(1.55 |
) |
|||
Weighted average Common Unit outstanding |
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic |
|
16,361,619 |
|
|
|
|
|
10,000,000 |
|
26,361,619 |
|
|||||
Diluted |
|
16,361,619 |
|
|
|
|
|
10,000,000 |
|
26,361,619 |
|
|||||
Distributions declared and paid per Common Unit |
|
$ |
0.43 |
|
|
|
|
|
|
|
$ |
0.43 |
|
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2017
|
|
Kimbell
|
|
Pro Forma Kimbell
|
|
Haymaker
|
|
Haymaker
|
|
Pro Forma
|
|
Pro Forma |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Oil, natural gas and NGL revenues |
|
$ |
30,665,092 |
|
$ |
3,515,409 |
|
$ |
|
|
$ |
|
|
$ |
44,986,176 |
(D) |
$ |
76,695,440 |
|
|
|
|
|
|
|
|
|
|
|
(721,172 |
)(F) |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
(1,750,065 |
)(E) |
|
|
||||||
Crude oil and condensate sales |
|
|
|
|
|
5,198,807 |
|
8,412,906 |
|
(13,611,713 |
)(D) |
|
|
||||||
Natural gas sales |
|
|
|
|
|
23,802,198 |
|
3,104,569 |
|
(26,906,767 |
)(D) |
|
|
||||||
Natural gas liquids sales and other |
|
|
|
|
|
3,346,480 |
|
1,121,216 |
|
(4,467,696 |
)(D) |
|
|
||||||
Income from lease bonus |
|
|
|
|
|
659,552 |
|
2,535,014 |
|
721,172 |
(F) |
3,915,738 |
|
||||||
Loss on commodity derivative instruments |
|
(318,829 |
) |
|
|
|
|
|
|
|
|
(318,829 |
) |
||||||
Total revenues |
|
30,346,263 |
|
3,515,409 |
|
33,007,037 |
|
15,173,705 |
|
(1,750,065 |
) |
80,292,349 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Production and ad valorem taxes |
|
2,452,058 |
|
261,760 |
|
|
|
|
|
2,896,789 |
(G) |
5,610,607 |
|
||||||
Production ad valorem, and withholding taxes |
|
|
|
|
|
2,009,528 |
|
918,933 |
|
(2,896,789 |
)(G) |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
(31,672 |
)(E) |
|
|
||||||
Production expense |
|
|
|
|
|
3,616,353 |
|
1,107,389 |
|
(4,392,854 |
)(H) |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
(330,888 |
)(E) |
|
|
||||||
Depreciation, depletion and accretion expense |
|
15,546,341 |
|
1,477,274 |
|
8,821,353 |
|
3,794,983 |
|
(12,616,336 |
)(A) |
35,144,929 |
|
||||||
|
|
|
|
|
|
|
|
|
|
18,121,314 |
(A) |
|
|
||||||
Marketing and other deductions |
|
1,648,895 |
|
167,222 |
|
|
|
|
|
4,392,854 |
(H) |
6,208,971 |
|
||||||
General and administrative expense |
|
8,191,792 |
|
930,181 |
|
8,152,102 |
|
6,344,052 |
|
|
|
23,618,127 |
|
||||||
Gain on sale of assets |
|
|
|
|
|
(83,633,721 |
) |
(12,870,998 |
) |
96,504,719 |
(E) |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total costs and expenses |
|
27,839,086 |
|
2,836,437 |
|
(61,034,385 |
) |
(705,641 |
) |
101,647,137 |
|
70,582,634 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating income |
|
2,507,177 |
|
678,972 |
|
94,041,422 |
|
15,879,346 |
|
(103,397,202 |
) |
9,709,715 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gain on derivatives |
|
|
|
|
|
2,289,723 |
|
917,330 |
|
(3,207,053 |
)(I) |
|
|
||||||
Interest expense |
|
(791,437 |
) |
|
|
(909,604 |
) |
(1,549,482 |
) |
3,250,523 |
(B) |
(7,751,536 |
) |
||||||
|
|
|
|
|
|
|
|
|
|
(7,751,536 |
)(B) |
|
|
||||||
Interest income |
|
|
|
|
|
1,918 |
|
|
|
(1,918 |
)(J) |
|
|
||||||
Loss on debt extinguishment |
|
|
|
|
|
|
|
(265,061 |
) |
265,061 |
(B) |
|
|
||||||
Total other income (expense) |
|
(791,437 |
) |
|
|
1,382,037 |
|
(897,213 |
) |
(7,444,923 |
) |
(7,751,536 |
) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income before income taxes |
|
1,715,740 |
|
678,972 |
|
95,423,459 |
|
14,982,133 |
|
(110,842,125 |
) |
1,958,179 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income tax expense |
|
|
|
|
|
|
|
97,388 |
|
(97,388 |
)(K) |
1,036,084 |
|
||||||
|
|
|
|
|
|
|
|
|
|
1,036,084 |
(L) |
|
|
||||||
Net income |
|
$ |
1,715,740 |
|
$ |
678,972 |
|
$ |
95,423,459 |
|
$ |
14,884,745 |
|
$ |
(110,744,737 |
) |
$ |
922,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) per Common Unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic |
|
$ |
0.11 |
|
|
|
|
|
|
|
|
|
0.04 |
|
|||||
Diluted |
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
0.03 |
|
|||||
Weighted average Common Unit outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic |
|
16,336,871 |
|
|
|
|
|
|
|
10,000,000 |
|
26,336,871 |
|
||||||
Diluted |
|
16,455,602 |
|
|
|
|
|
|
|
15,945,946 |
|
32,401,548 |
|
||||||
Distributions declared and paid per Common Unit |
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
1.20 |
|
(1) On February 8, 2017, the Partnership completed its initial public offering. The adjustment reflects the pro forma revenues, direct expenses, depletion and general and administrative expenses for the Partnership during the stub period from January 1, 2017 to February 7, 2017.
For the Six Months Ended June 30, 2018 and for the Year Ended December 31, 2017
1) Basis of Presentation
The unaudited pro forma condensed combined balance sheet as of June 30, 2018 and the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2018 and for the year ended December 31, 2017 are derived from the historical financial statements of Kimbell, Haymaker Minerals and Haymaker Properties.
2) Pro Forma Adjustments and Assumptions
The adjustments are based on currently available information and certain estimates and assumptions. Therefore, the actual effects of the Pro Forma Transactions will differ from the pro forma adjustments. A general description of the pro forma adjustments is provided as follows:
A) To record the preliminary fair value assigned to the acquired oil and natural gas properties, subject to change, and eliminate the historical depreciation, depletion and accretion expense related to the acquired oil and natural gas properties. The Partnership acquired the oil and natural gas properties of the Haymaker Subsidiaries for a purchase price of approximately $451.7 million, comprising:
· Cash consideration of approximately $216.8 million, which was reduced by approximately $6.4 million of cash acquired and approximately an additional $5.9 million in capitalized transaction costs for a net amount of approximately $216.3 million.
· Equity consideration of 10,000,000 Common Units, issued at a closing price of $23.54 per unit for a value of approximately $235.4 million.
The estimated fair value assigned to oil and natural gas properties (full cost method), the estimated net proved reserves based on the Partnerships managements estimates, and the estimated depreciation, depletion and accretion expense related to oil and natural gas properties owned by the Haymaker Subsidiaries are as follows:
|
|
|
|
|
|
Six Months |
|
|
|
|||
|
|
|
|
|
|
Ended |
|
Year Ended |
|
|||
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|||
|
|
|
|
|
|
2018 |
|
2017 |
|
|||
|
|
Estimated |
|
|
|
Estimated |
|
Estimated |
|
|||
|
|
Fair Value |
|
Estimated |
|
Depreciation, |
|
Depreciation, |
|
|||
|
|
Using Full |
|
Proved |
|
Depletion and |
|
Depletion and |
|
|||
|
|
Cost Method of |
|
Reserves |
|
Accretion |
|
Accretion |
|
|||
|
|
Accounting |
|
(MBoe) |
|
Expense |
|
Expense |
|
|||
Oil and natural gas properties: |
|
|
|
|
|
|
|
|
|
|||
Proved properties |
|
$ |
169,395,141 |
|
14,636 |
|
$ |
8,746,972 |
|
$ |
18,121,314 |
|
Unevaluated properties |
|
282,325,235 |
|
|
|
|
|
|
|
|||
Total pro forma adjustments |
|
$ |
451,720,376 |
|
14,636 |
|
$ |
8,746,972 |
|
$ |
18,121,314 |
|
B) Reflects the Partnerships entrance into the Credit Agreement Amendment, and increased borrowings at the closing of the Acquisition of $105.0 million.
The Amended Credit Agreement bears interest at LIBOR plus a margin of 2.5%. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2018 and for the year ended December 31, 2017 each used an estimated 4.62% interest rate on the outstanding borrowings under the Amended Credit Facility. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2018 and for the year ended December 31, 2017 each estimated that the Partnership had total borrowings outstanding under the Amended Credit Agreement of $148.0 million. The impact of a 1% increase in the interest rate on this amount of debt would result in an increase in interest expense of approximately $1.5 million annually, assuming that the Partnerships indebtedness remained constant throughout the year.
The following table represents the impact of adjustments to interest expense:
|
|
Six Months |
|
|
|
||
|
|
Ended |
|
Year Ended |
|
||
|
|
June 30, |
|
December 31, |
|
||
|
|
2018 |
|
2017 |
|
||
New secured revolving credit facility: |
|
|
|
|
|
||
Interest expense |
|
$ |
3,548,244 |
|
$ |
7,096,487 |
|
Amortization expense of loan origination costs |
|
327,524 |
|
655,049 |
|
||
|
|
3,875,768 |
|
7,751,536 |
|
||
Pro forma adjustment of existing debt: |
|
|
|
|
|
||
Interest expense - Kimbell |
|
(833,600 |
) |
(791,437 |
) |
||
Interest expense - Haymaker Properties |
|
(538,704 |
) |
(909,604 |
) |
||
Interest expense - Haymaker Minerals |
|
(398,643 |
) |
(1,549,482 |
) |
||
|
|
(1,770,947 |
) |
(3,250,523 |
) |
||
Net adjustment to interest expense |
|
$ |
2,104,821 |
|
$ |
4,501,013 |
|
C) To record the proceeds from the Preferred Unit Private Placement, net of related expenses.
D) Reflects the historical statement of operations related to the Acquisition, which also reflects a reclassification of approximately $22.2 million and approximately $45.0 million for the six months ended June 30, 2018 and the year ended December 31, 2017, respectively, related to crude oil and condensate sales, natural gas sales, and natural gas liquids sales and other in order to conform the presentation to be consistent with the Partnerships presentation of such revenues within the oil, natural gas and NGL revenues line item in its historical statements of operations for the same periods.
E) Haymaker Minerals and Haymaker Properties sold assets to third parties prior to the Haymaker Closing. This pro forma adjustment reflects the reduction in revenues and direct expenses related to assets that were not acquired by the Partnership but that were included in the historical statements of operations of Haymaker Minerals and Haymaker Properties.
F) Reflects the reclassification of revenue related to lease bonus income that was previously recorded in the Partnerships oil, natural gas and NGL revenues.
G) Reflects the reclassification of production, ad valorem, and withholding taxes into production and ad valorem taxes.
H) Reflects the reclassification of production expense into marketing and other deductions.
I) Reflects the elimination of the impact of Haymaker Minerals and Haymaker Properties derivative instruments, which were terminated prior to the Haymaker Closing, from their respective historical statement of operations.
J) Reflects the elimination of interest income from Haymaker Properties historical statement of operations related to a receivable owed to Haymaker Properties that was settled prior to the Haymaker Closing.
K) Reflects the elimination of income tax expense from Haymaker Minerals historical statement of operations as the Haymaker Minerals taxable income was taken into consideration in tick mark (L).
L) For the year ended December 31, 2017, reflects estimated incremental income tax provision associated with the Partnerships historical statement of operations, assuming the Partnerships earnings had been subject to federal and state income tax as a subchapter C corporation using a federal and state blended statutory tax rate of approximately 39.2% on earnings from the Partnerships 51.7% investment in the Operating Company after giving effect to the Up-C Transaction. The tax provision also includes the effects of reducing the Partnerships deferred tax asset in connection with the Tax Cuts and Jobs Act. For the six months ended June 30, 2018, the Partnerships federal and state blended statutory rate is approximately 26.0% and reflects the Partnerships 51.7% ownership in the Operating Company after giving effect to the Up-C Transaction.
M) Reflects the Partnerships estimated current tax liability of $0.7 million associated with the Preferred Unit Private Placement and an estimated non-current net deferred tax asset of $8.5 million to record the difference between the Partnerships net book basis and net tax basis.
N) For the six months ended June 30, 2018, Haymaker Minerals and Haymaker Properties incurred $2.2 million and $3.3 million, respectively, in transaction costs related to their divestiture to Kimbell. This proforma adjustment reflects the
reduction in general and administrative expenses related to the historical statement of operations of Haymaker Minerals and Haymaker Properties.
O) Reflects the elimination of other income from Haymaker Minerals and Haymaker Properties historical statement of operations related to revenues that are not considered to be ongoing.
3) Pro Forma Net Income (Loss) per Common Unit
Pro forma net income (loss) per Common Unit is determined by dividing the pro forma net income available to common unitholders by the number of Common Units reflected in the unaudited condensed combined pro forma financial statements. All Common Units were assumed to have been outstanding since the beginning of the periods presented. The calculation of diluted net loss per Common Unit for the six months ended June 30, 2018 excludes 438,785 non-vested, restricted Common Units issuable upon vesting and 5,945,946 additional Common Units, which represent the Series A Preferred Units on an as-converted basis, because their inclusion in the calculation would be anti-dilutive.
4) Pro Forma Supplemental Oil and Gas Reserve Information
The following pro forma standardized measure of the discounted net future cash flows and changes are applicable to the proved reserves of Kimbell, Haymaker Minerals and Haymaker Properties. The future cash flows are discounted at 10% per year and assume continuation of existing economic conditions.
The standardized measure of discounted future net cash flows, in managements opinion, should be examined with caution. The basis for this table is the reserve studies prepared by management, which contain imprecise estimates of quantities and rates of production of reserves. Revisions of previous year estimates can have a significant impact on these results. Also, exploration costs in one year may lead to significant discoveries in later years and may significantly change previous estimates of proved reserves and their valuation. Therefore, the standardized measure of discounted future net cash flows is not necessarily indicative of the fair value of the proved oil and natural gas properties of Kimbell, Haymaker Minerals and Haymaker Properties.
The data presented should not be viewed as representing the expected cash flows from, or current value of, existing proved reserves since the computations are based on a large number of estimates and arbitrary assumptions. Reserve quantities cannot be measured with precision and their estimation requires many judgmental determinations and frequent revisions. Actual future prices and costs are likely to be substantially different from the prices and costs utilized in the computation of reported amounts.
A more through discussion of the assumptions used in preparing the information presented can be found in the Form 10-K, as well as in the historical financial statements and notes thereto of each of Haymaker Minerals and Haymaker Properties, as filed herewith by the Partnership with the Commission.
The following tables provide a pro forma rollforward of the total proved reserves for the year ended December 31, 2017, as well as pro forma proved developed and proved undeveloped reserves at the beginning and end of the year:
|
|
Crude Oil and Condensate (MBbls) |
|
||||||||
|
|
Kimbell |
|
Haymaker
|
|
Haymaker
|
|
Divestitures |
|
Pro Forma |
|
Net proved reserves at December 31, 2016 |
|
7,210 |
|
1,315 |
|
859 |
|
(1 |
) |
9,383 |
|
Revisions of previous estimates (1) |
|
(193 |
) |
284 |
|
(4 |
) |
(5 |
) |
82 |
|
Purchase of minerals in place (2) |
|
362 |
|
|
|
|
|
|
|
362 |
|
Extensions, discoveries and other additions (3) |
|
505 |
|
582 |
|
91 |
|
(2 |
) |
1,176 |
|
Divestiture of reserves (4) |
|
|
|
(91 |
) |
(107 |
) |
|
|
(198 |
) |
Production |
|
(421 |
) |
(183 |
) |
(109 |
) |
2 |
|
(711 |
) |
Net proved reserves at December 31, 2017 |
|
7,463 |
|
1,907 |
|
730 |
|
(6 |
) |
10,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proved developed reserves |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
4,879 |
|
1,315 |
|
859 |
|
(1 |
) |
7,052 |
|
December 31, 2017 |
|
5,284 |
|
1,907 |
|
730 |
|
(6 |
) |
7,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proved undeveloped reserves |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
2,331 |
|
|
|
|
|
|
|
2,331 |
|
December 31, 2017 |
|
2,179 |
|
|
|
|
|
|
|
2,179 |
|
(1) Revisions of previous estimates include technical revisions due to changes in commodity prices, historical and projected performance and other factors.
(2) Includes the acquisition of $29.3 million of mineral and royalty interests, the largest of which being mineral and royalty interests in the Anadarko Basin, and also includes additional mineral and royalty interests in Texas, Louisiana, Wyoming, California, North Dakota, Utah, New Mexico, Arkansas, and Kansas.
(3) Includes discoveries and additions primarily related to active drilling on our acreage in the Permian Basin, Eagle Ford Shale, Appalachia region, and the Anadarko Basin.
(4) Includes divestitures of reserves the Appalachia region.
|
|
Natural Gas (MMcf) |
|
||||||||
|
|
Kimbell |
|
Haymaker
|
|
Haymaker
|
|
Divestitures |
|
Pro Forma |
|
Net proved reserves at December 31, 2016 |
|
50,390 |
|
10,139 |
|
33,729 |
|
(795 |
) |
93,463 |
|
Revisions of previous estimates (1) |
|
(1,535 |
) |
1,106 |
|
8,282 |
|
(106 |
) |
7,747 |
|
Purchase of minerals in place (2) |
|
16,312 |
|
|
|
|
|
|
|
16,312 |
|
Extensions, discoveries and other additions (3) |
|
2,261 |
|
735 |
|
12,663 |
|
(1,329 |
) |
14,330 |
|
Divestiture of reserves (4) |
|
|
|
(164 |
) |
(4,959 |
) |
|
|
(5,123 |
) |
Production |
|
(3,512 |
) |
(1,144 |
) |
(8,728 |
) |
351 |
|
(13,033 |
) |
Net proved reserves at December 31, 2017 |
|
63,916 |
|
10,672 |
|
40,987 |
|
(1,879 |
) |
113,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proved developed reserves |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
35,172 |
|
10,139 |
|
33,729 |
|
(795 |
) |
78,245 |
|
December 31, 2017 |
|
47,501 |
|
10,672 |
|
40,987 |
|
(1,879 |
) |
97,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proved undeveloped reserves |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
15,218 |
|
|
|
|
|
|
|
15,218 |
|
December 31, 2017 |
|
16,415 |
|
|
|
|
|
|
|
16,415 |
|
(1) Revisions of previous estimates include technical revisions due to changes in commodity prices, historical and projected performance and other factors.
(2) Includes the acquisition of $29.3 million of mineral and royalty interests, the largest of which being mineral and royalty interests in the Anadarko Basin, and also includes additional mineral and royalty interests in Texas, Louisiana, Wyoming, California, North Dakota, Utah, New Mexico, Arkansas, and Kansas.
(3) Includes discoveries and additions primarily related to active drilling on our acreage in the Permian Basin, Eagle Ford Shale, Appalachia region, and the Anadarko Basin.
(4) Includes divestitures of reserves the Appalachia region.
|
|
Natural Gas Liquids (MBbls) |
|
||||||||
|
|
Kimbell Royalty
|
|
Haymaker
|
|
Haymaker
|
|
Divestitures |
|
Pro Forma |
|
Net proved reserves at December 31, 2016 |
|
1,982 |
|
305 |
|
576 |
|
(7 |
) |
2,856 |
|
Revisions of previous estimates (1) |
|
666 |
|
95 |
|
103 |
|
(18 |
) |
846 |
|
Purchase of minerals in place (2) |
|
274 |
|
|
|
|
|
|
|
274 |
|
Extensions, discoveries and other additions (3) |
|
91 |
|
113 |
|
147 |
|
(45 |
) |
306 |
|
Divestiture of reserves (4) |
|
|
|
(15 |
) |
(18 |
) |
|
|
(33 |
) |
Production |
|
(175 |
) |
(45 |
) |
(121 |
) |
9 |
|
(332 |
) |
Net proved reserves at December 31, 2017 |
|
2,838 |
|
453 |
|
687 |
|
(61 |
) |
3,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proved developed reserves |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
1,416 |
|
305 |
|
576 |
|
(7 |
) |
2,290 |
|
December 31, 2017 |
|
2,202 |
|
453 |
|
687 |
|
(61 |
) |
3,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proved undeveloped reserves |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
566 |
|
|
|
|
|
|
|
566 |
|
December 31, 2017 |
|
636 |
|
|
|
|
|
|
|
636 |
|
(1) Revisions of previous estimates include technical revisions due to changes in commodity prices, historical and projected performance and other factors.
(2) Includes the acquisition of $29.3 million of mineral and royalty interests, the largest of which being mineral and royalty interests in the Anadarko Basin, and also includes additional mineral and royalty interests in Texas, Louisiana, Wyoming, California, North Dakota, Utah, New Mexico, Arkansas, and Kansas.
(3) Includes discoveries and additions primarily related to active drilling on our acreage in the Permian Basin, Eagle Ford Shale, Appalachia region, and the Anadarko Basin.
(4) Includes divestitures of reserves the Appalachia region.
|
|
Total (Mboe) |
|
||||||||
|
|
Kimbell Royalty
|
|
Haymaker
|
|
Haymaker
|
|
Divestitures |
|
Pro Forma |
|
Net proved reserves at December 31, 2016 |
|
17,590 |
|
3,310 |
|
7,057 |
|
(141 |
) |
27,816 |
|
Revisions of previous estimates (1) |
|
217 |
|
563 |
|
1,479 |
|
(41 |
) |
2,218 |
|
Purchase of minerals in place (2) |
|
3,355 |
|
|
|
|
|
|
|
3,355 |
|
Extensions, discoveries and other additions (3) |
|
973 |
|
818 |
|
2,349 |
|
(269 |
) |
3,871 |
|
Divestiture of reserves (4) |
|
|
|
(133 |
) |
(951 |
) |
|
|
(1,084 |
) |
Production |
|
(1,181 |
) |
(419 |
) |
(1,686 |
) |
70 |
|
(3,216 |
) |
Net proved reserves at December 31, 2017 |
|
20,954 |
|
4,139 |
|
8,248 |
|
(381 |
) |
32,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proved developed reserves |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
12,157 |
|
3,310 |
|
7,057 |
|
(141 |
) |
22,383 |
|
December 31, 2017 |
|
15,403 |
|
4,139 |
|
8,248 |
|
(381 |
) |
27,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proved undeveloped reserves |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
5,433 |
|
|
|
|
|
|
|
5,433 |
|
December 31, 2017 |
|
5,551 |
|
|
|
|
|
|
|
5,551 |
|
(1) Revisions of previous estimates include technical revisions due to changes in commodity prices, historical and projected performance and other factors.
(2) Includes the acquisition of $29.3 million of mineral and royalty interests, the largest of which being mineral and royalty interests in the Anadarko Basin, and also includes additional mineral and royalty interests in Texas, Louisiana, Wyoming, California, North Dakota, Utah, New Mexico, Arkansas, and Kansas.
(3) Includes discoveries and additions primarily related to active drilling on our acreage in the Permian Basin, Eagle Ford Shale, Appalachia region, and the Anadarko Basin.
(4) Includes divestitures of reserves the Appalachia region.
The following pro forma standardized measure of the discounted net future cash flows and changes applicable to the Kimbell, Haymaker Minerals and Haymaker Properties proved reserves reflect the effect of income taxes assuming the Partnerships standardized measure had been subject to federal and state income tax as a subchapter C corporation using a statutory rate of 26 per cent and 51.7 per cent ownership in the Operating Partnership. The pro forma standardized measure of discounted future net cash flows was as follows as of December 31, 2017 (in thousands):
|
|
Kimbell Royalty Partners |
|
Haymaker
|
|
Haymaker
|
|
Divestitures |
|
Corporate
|
|
Pro Forma |
|
||||||
Future cash inflows |
|
$ |
562,967 |
|
$ |
120,068 |
|
$ |
132,639 |
|
$ |
(4,575 |
) |
$ |
|
|
$ |
811,099 |
|
Future production costs |
|
(45,652 |
) |
(9,398 |
) |
(5,139 |
) |
419 |
|
|
|
(59,770 |
) |
||||||
Future income taxes |
|
(2,790 |
) |
(216 |
) |
|
|
|
|
(39,813 |
) |
(42,819 |
) |
||||||
Future net cash flows |
|
514,525 |
|
110,454 |
|
127,500 |
|
(4,156 |
) |
(39,813 |
) |
708,510 |
|
||||||
Less 10% annual discount to reflect estimated timing of cash flows |
|
(298,973 |
) |
(56,624 |
) |
(61,511 |
) |
1,975 |
|
22,156 |
|
(392,977 |
) |
||||||
Standard measure of discounted future net cash flows |
|
$ |
215,552 |
|
$ |
53,830 |
|
$ |
65,989 |
|
$ |
(2,181 |
) |
$ |
(17,657 |
) |
$ |
315,533 |
|
The changes in the pro forma standardized measure of discounted estimated future net cash flows were as follows for the year ended December 31, 2017 (in thousands):
|
|
Kimbell Royalty
|
|
Haymaker Minerals |
|
Haymaker Properties |
|
Divestitures |
|
Corporate
|
|
Pro Forma |
|
||||||
Standardized measure, beginning of year |
|
$ |
159,275 |
|
$ |
32,794 |
|
$ |
46,882 |
|
$ |
(733 |
) |
$ |
|
|
$ |
238,218 |
|
Sales, net of production costs |
|
(29,288 |
) |
(10,612 |
) |
(27,469 |
) |
945 |
|
|
|
(66,424 |
) |
||||||
Net changes of prices and production costs related to future production |
|
21,946 |
|
8,126 |
|
13,654 |
|
(68 |
) |
|
|
43,658 |
|
||||||
Extensions, discoveries and improved recovery, net of future production and development costs |
|
10,064 |
|
16,440 |
|
22,646 |
|
(2,098 |
) |
|
|
47,052 |
|
||||||
Revisions or previous quantity estimates, net of related costs |
|
2,248 |
|
7,886 |
|
11,940 |
|
(167 |
) |
|
|
21,907 |
|
||||||
Net change in income taxes |
|
301 |
|
(45 |
) |
|
|
|
|
(17,657 |
) |
(17,401 |
) |
||||||
Accretion of discount |
|
15,928 |
|
3,286 |
|
4,693 |
|
(78 |
) |
|
|
23,829 |
|
||||||
Purchases of reserves in place, less related costs |
|
23,309 |
|
|
|
|
|
|
|
|
|
23,309 |
|
||||||
Divestiture of reserves |
|
|
|
(1,840 |
) |
(5,319 |
) |
|
|
|
|
(7,159 |
) |
||||||
Timing differences and other |
|
11,769 |
|
(2,205 |
) |
(1,038 |
) |
18 |
|
|
|
8,544 |
|
||||||
Standardized measure - end of year |
|
$ |
215,552 |
|
$ |
53,830 |
|
$ |
65,989 |
|
$ |
(2,181 |
) |
$ |
(17,657 |
) |
$ |
315,533 |
|