KRP

Kimbell is a mineral-and-royalty owner, not a driller — it collects a share of production revenue across ~12.3M gross acres (54% Permian/Mid-Continent), with over 99% of acreage leased and substantially all held by production. That model shows in the numbers: 39.8% operating margin, 29.9% net margin, and $246M of operating cash flow on $334M of revenue, the bulk of the gap to $99.7M net income being non-cash full-cost depletion ($125M D&A). Capex is effectively nil (the only figure provided is a stale FY2018 $404K), so cash conversion is excellent and funds the declared $0.37/quarter common distribution — roughly a double-digit yield at $14.43. Revenue has compounded steadily from $136M (2021) to $334M (2025), and the 10-K's inventory disclosure (10,341 gross / 73.11 net horizontal locations, 900 gross DUCs, 628 permits) gives a multi-year runway of operator-funded development the company pays nothing to drill.

The headline cheapness — P/S 0.7, and net income of $99.7M against a stated $243M market cap — is too good to take at face value, and that is the central caveat. The $243M is price × 16.8M units, but 16.8M is the publicly-traded common-unit count; KRP's up-C OpCo structure means a large slice of economics (and the $99.7M total ProfitLoss) accrues to OpCo noncontrolling interests and Series A preferred (a ~$2.5M/quarter preferred distribution is disclosed). So the true equity base and the income attributable to public unitholders are both larger/smaller than the screen implies, and a 2-3x 'P/E' is an artifact, not a free lunch. I still rate it buy because the underlying asset quality, margin profile, and cash generation are genuinely strong and the royalty model is durable — but I will not stake high conviction or a price target on distorted multiples.