| Item 1.01. |
Entry into a Material Definitive Agreement. |
On June 13, 2023, Kimbell
Royalty Partners, LP, a Delaware limited partnership (the “Partnership”), entered into an Amended and Restated Credit
Agreement (the “A&R Credit Agreement”), which amended and restated the Partnership’s existing Credit Agreement,
dated as of January 11, 2017 (as amended on July 12, 2018, December 8, 2020, June 7, 2022 and December 15, 2022),
by and among the Partnership, as borrower, certain subsidiaries of the Partnership, as guarantors, the several lenders party thereto (the
“Lenders”) and Citibank, N.A., as administrative agent.
The A&R Credit Agreement
provides for, among other things, (i) a senior secured reserve-based revolving credit facility in an aggregate maximum principal
amount of up to $750,000,000 (the “Facility”) with an initial borrowing base of $400.0 million and an initial aggregate
elected commitments amount of up to $400.0 million, including a sub-facility for the issuance of letters of credit of up to $10,000,000,
and (ii) an extension of the maturity date of the A&R Credit Agreement to June 7, 2027.
The Facility bears interest
at a rate equal to, at the Partnership’s election, either (a) the Secured Overnight Financing Rate (as defined in the A&R
Credit Agreement) plus an applicable margin that varies from 2.75% to 3.75% per annum or (b) a base rate plus an applicable margin
that varies from 1.75% to 2.75% per annum, based on borrowing base utilization.
The Facility is guaranteed
by certain of the Partnership’s material subsidiaries and is collateralized by substantially all assets, including the oil and natural
gas properties of such subsidiaries, including mortgages on at least 75% of the PV-9 of the proved reserves constituting borrowing base
properties as set forth on the Partnership’s most recent reserve report. The borrowing base will be based on the value of the Partnership’s
and certain of its material subsidiaries’ oil and natural gas properties. The borrowing base will be redetermined semi-annually
on or about May 1 and November 1 of each year by the Lenders, with one interim unscheduled redetermination available to each
of the Partnership and a group of certain Lenders between scheduled redeterminations during each calendar year. The first scheduled redetermination
will be on or around November 1, 2023.
Customary borrowing base reductions
and mandatory prepayments are required under the A&R Credit Agreement in connection with certain sales of certain types of borrowing
base properties, sales of equity interests in guarantor subsidiaries owning such properties, certain debt issuances or certain types of
swap terminations. In addition, Cash Balance (as defined in the A&R Credit Agreement) above $30.0 million is required to be applied
weekly to prepay loans (without a commitment reduction) if not otherwise reduced to zero in a manner permitted by the A&R Credit Agreement.
The Partnership is required
to pay a commitment fee of 0.50% per annum on the average daily unused portion of the current aggregate commitments under the Facility.
The Partnership is also required to pay customary letter of credit and fronting fees.
The A&R Credit Agreement
requires the Partnership to maintain as of the last day of each fiscal quarter: (i) a Debt to EBITDAX Ratio (as defined in the A&R
Credit Agreement) of not more than 3.5 to 1.0 and (ii) a ratio of current assets to current liabilities of not less than 1.0 to 1.0,
each beginning with the fiscal quarter ending June 30, 2023.
The A&R Credit Agreement
also contains customary affirmative and negative covenants, including, among other things, as to compliance with laws (including environmental
laws and anti-corruption laws), delivery of quarterly and annual financial statements and borrowing base certificates, conduct of business,
maintenance of property, maintenance of insurance, entry into certain derivatives contracts, restrictions on the incurrence of liens,
indebtedness, asset dispositions, restricted payments, and other customary covenants. These covenants are subject to a number of limitations
and exceptions.
Additionally, the A&R
Credit Agreement contains customary events of default and remedies for credit facilities of this nature. If the Partnership does not comply
with the financial and other covenants in the A&R Credit Agreement, the Lenders may, subject to customary cure rights, require immediate
payment of all amounts outstanding under the A&R Credit Agreement and any outstanding unfunded commitments may be terminated.
The foregoing description
of the A&R Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the A&R
Credit Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated into this
Item 1.01 by reference.