Kimbell Royalty Partners, LP signed a definitive agreement to acquire mineral and royalty interests from Haymaker Resources, LP for approximately $240 million.
May 29, 2018
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Kimbell Royalty Partners, LP (NYSE:KRP) signed a definitive agreement to acquire mineral and royalty interests from Haymaker Resources, LP for approximately $240 million on May 28, 2018. The consideration includes $126 million in cash and 6 million common units of Kimbell. In a related deal, Kimbell Royalty Partners signed a definitive agreement to acquire mineral and royalty interests from Haymaker Minerals & Royalties, LLC. Following the closing of the transactions, KKR & Co. L.P. and Kayne Anderson Capital Advisors, L.P. (parent of Haymaker Minerals & Royalties), along with Haymaker management, will collectively own approximately 37% of the then outstanding common units of Kimbell. Kimbell will raise the cash portion of the purchase price of the two deals through a private placement of 7% Series A Cumulative Convertible Preferred Units to an affiliate of Apollo Global Management, LLC for gross proceeds of $110 million and through borrowings of $114 million under a new $200 million revolving credit facility with Frost Bank, Wells Fargo Bank and Credit Suisse AG. In addition, Kimbell is expected to change its tax status from a pass-through partnership to that of a taxable entity following the closing of the acquisition.
Kimbell’s management team, led by Kimbell Chief Executive Officer Bob Ravnaas, will operate the combined company following the closing. The transaction is subject to customary closing conditions, entering into a transitional services agreement, registration rights agreement, closing of merger Haymaker Minerals & Royalties, and listing of shares on the New York Stock Exchange. Additionally, Kimbell’s unit holder vote will not be required. The Boards of Kimbell and Haymaker have unanimously approved the acquisition. The transaction is expected to close in the third quarter of 2018 and is expected to be immediately accretive to distributable cash flow per unit. Credit Suisse Securities (USA) LLC acted as financial advisor and Jason A. Rocha and Josh Davidson of Baker Botts L.L.P. acted as legal advisor to Kimbell. RBC Richardson Barr acted as financial advisor to Haymaker, John D. Pitts, and David M. Castro of Kirkland & Ellis LLP acted as legal counsel to KKR and Haymaker. Kirkland & Ellis LLP also represented Apollo in connection with the Series A Preferred Units offering. UBS Investment Bank acted as capital markets advisor to Kimbell in connection with the election to change to a taxable entity. Jack Langlois of DLA Piper LLP (US) acted as legal advisor to Haymaker. American Stock Transfer & Trust Company, LLC acted as transfer agent to Kimbell Royalty in the transaction.
Kimbell Royalty Partners, LP is an oil and gas mineral and royalty company. It owns mineral and royalty interests in over 17 million gross acres in 28 states and in onshore basin in the continental United States, including ownership in more than 129,000 gross wells. Its properties include the Permian Basin, Mid-Continent, Appalachian, Eagle Ford, Bakken, Terryville/Cotton Valley/Haynesville, and DJ Basin/Rockies/Niobrara. The Permian Basin extends from southeastern New Mexico into West Texas. The Mid-Continent is an area containing fields in Arkansas, Kansas, Louisiana, New Mexico, Oklahoma, Nebraska and Texas and including the Granite Wash, Cleveland, and Mississippi Lime formations. The Appalachian Basin covers most of Pennsylvania, eastern Ohio, West Virginia, western Maryland, eastern Kentucky, central Tennessee, western Virginia, northwestern Georgia, and northern Alabama. The Williston Basin stretches through North Dakota, the northwest part of South Dakota, and eastern Montana.
Kimbell Royalty Partners, LP signed a definitive agreement to acquire mineral and royalty interests from Haymaker Resources, LP for approximately $240 million.