Sec Form 13D Filing - EnCap Partners GP LLC filing for KIMBELL ROYALTY PARTNERS LP UN (KRP) - 2023-05-19

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 4)*

KIMBELL ROYALTY PARTNERS, LP

(Name of Issuer)

Common Units Representing Limited Partner Interests

(Title of Class of Securities)

4943 5R1 02

(CUSIP Number)

Douglas E. Swanson, Jr.

EnCap Investments L.P.

9651 Katy Freeway, Suite 600

Houston, TX 77024

(713) 659-6100

With a copy to:

W. Matthew Strock

Vinson & Elkins L.L.P.

845 Texas Avenue, Suite 4700

Houston, TX 77002

(713) 758-2222

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

May 17, 2023

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box:  ☐

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

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This Amendment No. 4 (this “Amendment”) amends the Schedule 13D filed with the Securities and Exchange Commission (the “SEC”) on April 4, 2019 (the “Original Schedule 13D”), as amended by Amendment No. 1 filed on April 1, 2022 (“Amendment No. 1”), as further amended by Amendment No. 2 filed on July 29, 2022 (“Amendment No. 2”) and as further amended by Amendment No. 3 filed on October 26, 2022 (“Amendment No. 3” and, together with the Original Schedule 13D, as so amended, the “Schedule 13D”).

Item 2 of the Original Schedule 13D is hereby amended and restated as follows:

This Schedule 13D is being filed by MB Minerals, L.P., a Delaware limited partnership (“MB Minerals”), Sabalo Midland Basin, Inc., a Delaware Corporation (“Sabalo Midland Basin”), EnCap Energy Capital Fund VIII, L.P., a Texas limited partnership (“EnCap Fund VIII”), EnCap Energy Capital Fund IX, L.P., a Texas limited Partnership (“EnCap Fund IX”), and EnCap Partners GP, LLC, a Delaware limited liability company (“EnCap Partners GP,” collectively with MB Minerals, Sabalo Midland Basin, EnCap Fund VIII and EnCap Fund IX, the “EnCap Entities”). The EnCap Entities are sometimes referred to in this Schedule 13D individually as a “Reporting Person” and, collectively, they are referred to herein as the “Reporting Persons.”

The address of the principal office of MB Minerals and Sabalo Midland Basin is 800 North Shoreline Blvd., Suite 900 North, Corpus Christi, Texas 78401. The address of the principal office of the EnCap Fund VIII, EnCap Fund IX and EnCap Partners GP is 9651 Katy Freeway, Suite 600, Houston, Texas 77024. The principal business of each of EnCap Fund VIII and Fund IX is investing in securities of energy companies. The principal business of MB Minerals is to own oil and gas mineral interests. The principal business of Sabalo Midland Basin is to be the general partner of MB Minerals. The principal business of EnCap Partners GP is indirectly managing the EnCap Entities.

Information regarding the executive officers, managers or other control persons of MB Minerals, Sabalo Midland Basin, EnCap Fund VIII, EnCap Fund IX and EnCap Partners GP is set forth on Schedule A, Schedule B, Schedule C and Schedule D, respectively, attached hereto. Schedule A, Schedule B, Schedule C and Schedule D attached hereto set forth the following information as to each such person:

(i) name;

(ii) residence or business address;

(iii) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted; and

(iv) citizenship.

Other than as set forth on Schedule C attached hereto, during the last five years, to the best of the Reporting Person’s knowledge, no person named on Schedule A, Schedule B, Schedule C or Schedule D attached hereto, has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 4 of the Original Schedule 13D is amended to include the following after the final paragraph:

Kimbell Royalty Partners Purchase and Sale Agreement

On April 11, 2023, MB Minerals entered into a purchase and sale agreement (the “Kimbell PSA”) by and among MB Minerals, Barry Clark, Michael F. Dignam Jr., Thomas A. Medary, Wayne A. Psencik (as “Sellers”) and Kimbell Royalty Partners, LP and Kimbell Royalty Operating, LLC (as “Buyers”), to, among other things, buy certain assets and rights, title and interests in and to certain mineral interests and related lands, for a Purchase Price (as defined in the Kimbell PSA) equal to the cash consideration in the amount of $51,784,229.88, combined with a stock consideration equal to $95,615,770.12, whereby MB Minerals received 5,369,218 Class B Units (and an equivalent number of OpCo Common Units) (the “MB Minerals Consideration Units”) at the close of the transaction on May 17, 2023.

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In connection with the closing and pursuant to the Kimbell PSA, the Purchasers placed into escrow certain of the MB Minerals Consideration Units pending the outcome of potential claims related to a Title Defect (as defined in the Kimbell PSA) by the Buyers against the Sellers (such MB Minerals Consideration Units held in escrow, the “Indemnity Escrow Units”). The Indemnity Escrow Units are comprised of 827,712 OpCo Common Units (and an equivalent number of Class B Units) constituting a portion of the MB Minerals Consideration Units. Depending on the determination of any such potential claims in accordance with the applicable terms of the Kimbell PSA, the Indemnity Units are to be released to either the Buyers or the Sellers pursuant to the terms of the Kimbell PSA.

The Kimbell PSA contains customary representations and warranties by Buyers and Sellers. The Buyers, on the one hand, and the Sellers, on the other hand, agreed to indemnify each other, their affiliates and their respective officers, directors, employees, consultants, advisors, representatives and agents against certain losses resulting from breaches of their respective representations, warranties and covenants, subject to certain negotiated limitations and survival periods set forth in the Kimbell PSA.

In connection with the closing of the Kimbell PSA, Buyers and Sellers entered into a Registration Rights Agreement, dated May 17, 2023 (the “Kimbell RRA”). Pursuant to the terms of the Kimbell RRA, the Issuer will, among other things, (1) file a shelf registration statement on Form S-3 with the SEC within 14 days after the closing of the Kimbell PSA covering the resale of the Registerable Securities (as defined in the Kimbell RRA), (2) use its reasonable best efforts to cause the shelf registration statement to become effective as soon as reasonably practicable following such filing and (3) under certain circumstances, conduct underwritten offerings of such securities.

The foregoing descriptions of the Kimbell PSA and Kimbell RRA do not purport to be complete and are qualified in their entirety by the actual Kimbell PSA and Kimbell RRA, copies of which are filed as Exhibit 10.13 and Exhibit 10.14, respectively, and incorporated herein by reference.

Item 5 of the Original Schedule 13D is hereby amended and restated as follows:

(a) The aggregate number and percentage of Common Units beneficially owned by each Reporting Person is set forth in Items 7, 8, 9, 10, 11 and 13 of the cover pages to this Schedule 13D relating to such Reporting Person and is incorporated by reference into this Item 5.

(b) For purposes of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), EnCap Partners GP, through its direct and indirect ownership and management of MB Minerals, Sabalo Midland Basin, EnCap Fund VIII and EnCap Fund IX, may be deemed to share the right to direct the vote or the disposition of the Common Units and OpCo Common Units (and an equal number of Class B Units) held of record by EnCap Fund VIII and MB Minerals, respectively, and thus, for the purposes of Rule 13d-3 promulgated under the Exchange Act, may be deemed to beneficially own the Common Units and OpCo Common Units (and an equal number of Class B Units) held by EnCap Fund VIII and MB Minerals, respectively. The Securities held by the EnCap Entities represent approximately 13.98% of the outstanding Common Units (calculated based on an assumed combined total of 70,319,551 Common Units outstanding, which consists of (a) a total of 64,950,333 Common Units outstanding as of April 28, 2023, as reported by the Issuer in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 5, 2023, (b) 557,302 Common Units issued pursuant to the Kimbell PSA and (c) assumes that all 5,369,218 Class B Units directly held by MB Minerals (along with an equivalent number of Opco Common Units, but no other of Class B Units or Opco Common Units) were exchanged for newly-issued Common Units on a one-for-one basis). Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission by any Reporting Person that it is the beneficial owner of any Common Units or Class B Units (and OpCo Common Units) for purposes of Section 13(d) of the Exchange Act, or for any other purpose, and such beneficial ownership is expressly disclaimed.

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(c) Except as set forth in this Schedule 13D, none of the Reporting Persons or, to their knowledge, any of its directors, executive officers or other control persons named on Schedule A, Schedule B, Schedule C or Schedule D attached hereto, has effected any transaction in the Common Units during the past 60 days.

(d) No person other than the Reporting Persons has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Units reported on this Schedule 13D.

(e) Not applicable.

Item 6 of the Original Schedule 13D is hereby amended and restated as follows:

The information provided in Items 3 and 4 of the Original Schedule 13D is incorporated by reference in its entirety into this Item 6.

On May 19, 2023 the Reporting Persons entered into an Amended and Restated Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law. The Amended and Restated Joint Filing Agreement is attached hereto as Exhibit 1.1 and is incorporated herein by reference.

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

This Amendment amends and restates Item 7 of the Original Schedule 13D in its entirety as set forth below:

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SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: May 19, 2023

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Schedule A

CONTROL PERSONS OF MB MINERALS

The name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the general partner and other control persons of MB Minerals are set forth below.

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Schedule B

CONTROL PERSONS OF SABALO MIDLAND BASIN

The name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the general partner and other control persons of Sabalo Midland Basin are set forth below. All members of the Board of Directors of Sabalo Midland Basin listed below are citizens of the United States.

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Schedule C

CONTROL PERSONS OF ENCAP FUND VIII AND ENCAP FUND IX

The name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the general partner and other control persons of EnCap Fund VIII and EnCap Fund IX are set forth below:

On July 10, 2018, EnCap Investments L.P. (“EnCap”) entered into a settlement with the United States Securities and Exchange Commission (the “SEC”) under which EnCap consented to the entry of an order (the “Order”) that finds that EnCap violated Section 206(4) under the Investment Advisers Act of 1940 (the “Advisers Act”) and Rule 206(4)-5 thereunder. Solely for the purpose of settling these proceedings, EnCap admitted to the SEC’s jurisdiction, the subject matter of these proceedings and consented to the Order. The Order required EnCap to cease and desist from committing or causing any violations and any future violations of Section 206(4) of the Advisers Act and Rule 206(4)-5 thereunder, to be censured, and to pay a civil monetary penalty in the amount of $500,000 to the SEC.

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Schedule D

CONTROL PERSONS OF ENCAP PARTNERS GP

The name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the general partner and other control persons of EnCap Partners GP are set forth below. All members of the Board of Managers of EnCap Partners GP listed below are citizens of the United States.

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