Kimbell Royalty Partners LP agreed to acquire mineral and royalty interests held by Houston-based Haymaker Minerals & Royalties LLC and Haymaker Resources LP for about $404 million, according to a May 29 news release.
The deal consideration is composed of $210 million in cash and 10 million Kimbell common units, valued at $194 million based on Kimbell's closing unit price of $19.40 on May 25. Upon deal closing, Haymaker management and the company's private equity sponsors, KKR & Co. LP and Kayne Anderson Capital Advisors LP, will own about 37% of the then outstanding Kimbell common units.
Kimbell expects an increase in its average daily net production per Kimbell unit by more than 50% for the first quarter. Kimbell would also hold 52% of the combined net royalty acreage located in the Permian and Mid-Continent areas, with an 11.1 million gross acre position.
Kimbell also entered into a private placement with an affiliate of Apollo Global Management LLC of 7.00% series A cumulative convertible preferred units, for $110 million in gross proceeds that would be used to help fund the acquisition. The partnership also plans to borrow $114 million under a new $200 million revolver with Frost Bank, Wells Fargo Bank and Credit Suisse AG.
The deal is scheduled to close in the third quarter, with an effective date of April 1.
Credit Suisse Securities (USA) LLC acted as Kimbell's financial adviser and placement agent for the preferred unit sale, while Baker Botts LLP acted as legal counsel. RBC Richardson Barr acted as financial adviser to Haymaker; Kirkland & Ellis LLP acted as legal counsel to KKR and Haymaker; and DLA Piper LLP acted as legal counsel to Kayne and Haymaker.
