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Target Price Increased on Oil & Gas Company 'Poised for Continued Growth'

Streetwise Reports, Streetwise Reports
0 Comments| March 15, 2019

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A Raymond James report provided reasons for the upward revision and detailed areas of potential growth for this Texas-based entity.

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In a March 8 research note, analyst John Freeman reported that Raymond James increased its target price to $24 per share from $22 and reiterated its Strong Buy recommendation on Kimbell Royalty Partners LP (KRP:NYSE), whose stock is currently trading at around $18.15 per share.

"We remain highly confident in Kimbell's long-term outlook, particularly following the recently completed acquisitions last year and the roughly $151 million deal with Phillips Energy/EnCap set to close later this month," Freeman explained.

Specifically, the analyst noted, highlights going forward are the limited partnership's (LP's) mineral interest business model, the low declines rates of its proven developed producing (PDP) reserves base and its solid track record in acquiring accretive assets. Raymond James anticipates "continued strength in operator activity on Kimbell acreage along with an improved commodity price environment," added Freeman.

He noted two major areas in which Kimbell could grow. One is acquisitions. Kimbell's management has stated it is looking to make accretive acquisitions regardless of size and currently is reviewing about 30–50 possible transactions of a smaller scale, in the $10–20 million range. However, because competition for mineral assets in key resource plays is increasing, Raymond James expects to see Kimbell making and structuring deals in this market creatively, such as partnering with smaller firms, such as in a joint venture arrangement, to improve the economics.

The second area of potential growth for Kimbell is building on its solid foundation of proven developed reserves, 33.6 million barrels of oil equivalent worth at year-end 2018, a 118% year-over-year increase. "Kimbell replaced about 9x production last year and maintains a reserve life of approximately 15 years," Freeman commented.

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Raymond James, Kimbell Royalty Partners LP, March 8, 2019


Analyst Compensation: Equity research analysts and associates at Raymond James are compensated on a salary and bonus system. Several factors enter into the compensation determination for an analyst, including i) research quality and overall productivity, including success in rating stocks on an absolute basis and relative to the local exchange composite Index and/or a sector index, ii) recognition from institutional investors, iii) support effectiveness to the institutional and retail sales forces and traders, iv) commissions generated in stocks under coverage that are attributable to the analyst's efforts, v) net revenues of the overall Equity Capital Markets Group, and vi) compensation levels for analysts at competing investment dealers.

The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.

Certain affiliates of the RJ Group expect to receive or intend to seek compensation for investment banking services from all companies under research coverage within the next three months.

Limited Partnerships may generate unrelated business taxable income (UBTI), which can create a tax liability that must be paid from a retirement account. To the extent that Raymond James is your IRA custodian, and there is potential tax liability for UBTI generated by the fund, Raymond James will take the necessary steps to pay the tax from the retirement account by working with a third party to compute the tax liability and prepare the IRS form 990-T for submission to the IRS.

Raymond James & Associates makes a market in shares of KRP.

Raymond James & Associates has managed or co-managed an offering of securities for Kimbell Royalty Partners L.P. within the past 12 months.

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