Viper Energy Partners LP, a Subsidiary of Diamondback Energy, Inc., Reports Third Quarter 2016 Financial and Operating Result...
November 07 2016 - 4:06PM
Viper Energy Partners LP (NASDAQ:VNOM) ("Viper" or the “Company”),
a subsidiary of Diamondback Energy, Inc. (NASDAQ:FANG)
("Diamondback"), today announced financial and operating results
for the third quarter ended September 30, 2016.
HIGHLIGHTS
- As previously announced, the Board of Directors of Viper's
general partner declared a cash distribution for the three months
ended September 30, 2016 of $0.207 per common unit, payable on
November 18, 2016, to unitholders of record at the close of
business on November 11, 2016.
- Also disclosed, Viper's Q3 2016 average daily production was
6,255 boe/d (75% oil), up 16% from Q2 2016 average daily production
of 5,380 boe/d. Viper's Q3 2016 average realized prices were $41.97
per barrel of oil, $2.39 per Mcf of natural gas and $12.56 per
barrel of natural gas liquids.
- During the third quarter of 2016, the operators of Viper’s
Spanish Trail mineral interests brought online 20 gross horizontal
wells, consisting of 14 Lower Spraberry wells, three Wolfcamp A
wells, two Wolfcamp B wells and one Middle Spraberry well.
- As of September 30th, there were approximately 20 horizontal
wells in various stages of drilling or completion in Spanish Trail.
Additionally, there is active development on the Company's mineral
acreage in Loving, Reeves, Midland, Howard and Glasscock
counties.
- There are approximately 95 active well permits and five
active rigs currently on Viper's mineral acreage.
- In October 2016, Viper's lenders approved a borrowing base
increase to $275 million from $175 million previously.
“Viper's strong third quarter reflects the
meaningful return to drilling activity from operators across its
mineral acreage. With the Company's assets located in some of the
most active and economic parts of the Permian Basin, we expect a
strong finish to 2016 as operators continue to accelerate
completions following the difficult first half of the year," stated
Travis Stice, Chief Executive Officer of Viper's general
partner.
Mr. Stice continued, "We closed $126 million of
mineral acquisitions in Q3 2016 and continue to see increased deal
flow as prices recover from their lows in early 2016. Viper remains
focused on accretive transactions for unitholders as we look to
continue to significantly grow distributions into 2017."
FINANCIAL UPDATE
During the third quarter of 2016, the Company
recorded total operating income of $20.0 million and net income of
$10.2 million.
As of September 30, 2016, Viper had $54.5
million outstanding under its revolving credit facility. In
connection with its Fall 2016 redetermination, Viper's lenders
recently approved a borrowing base increase to $275 million from
$175 million previously.
THIRD QUARTER 2016 CASH
DISTRIBUTION
As previously announced, the Board of Directors
of Viper's general partner declared a cash distribution for the
three months ended September 30, 2016 of $0.207 per common unit.
The distribution is payable on November 18, 2016 to
unitholders of record at the close of business on November 11,
2016.
FULL YEAR 2016 GUIDANCE
Below is Viper's full year 2016 guidance, which
was updated in August for decreased depreciation, depletion and
amortization expense ("DD&A").
|
|
|
Viper Energy Partners |
|
|
Total Net Production –
MBoe/d |
6.0 – 6.5 |
|
|
Unit costs ($/boe) |
|
Lease Operating
Expenses |
n/a |
Gathering &
Transportation |
$0.25-$0.50 |
DD&A |
$12.00-$14.00 |
G&A |
|
Cash
G&A |
$0.50-$1.50 |
Non-Cash
Unit-Based Compensation |
$2.00-$3.00 |
|
|
Production and Ad
Valorem Taxes (% of Revenue) (a) |
|
8 |
% |
|
|
Capital Budget ($ -
Million) |
|
2016 Capital Spend |
n/a |
(a) Includes production taxes of 4.6% for crude
oil and 7.5% for natural gas and NGLs and ad valorem
taxes.
CONFERENCE CALL
Diamondback and Viper will host a joint
conference call and webcast for investors and analysts to discuss
their results for the third quarter of 2016 on Tuesday, November 8,
2016 at 9:00 a.m. CT. Participants should call (877) 440-7573
(United States/Canada) or (253) 237-1144 (International) and
use the confirmation code 7883814. A telephonic replay will be
available from 12:00 p.m. CT on Tuesday, November 8, 2016 through
Sunday, November 13, 2016 at 12:00 p.m. CT. To access the replay,
call (855) 859-2056 (United States/Canada) or
(404) 537-3406 (International) and enter confirmation code
7883814. A live broadcast of the earnings conference call will also
be available via the internet at
www.diamondbackenergy.com under the “Investor Relations”
section of the site. A replay will also be available on the website
following the call.
About Viper Energy Partners LP
Viper is a limited partnership formed by
Diamondback to own, acquire and exploit oil and natural gas
properties in North America, with a focus on oil-weighted basins,
primarily the Permian Basin in West Texas.
About Diamondback Energy, Inc.
Diamondback is an independent oil and natural
gas company headquartered in Midland, Texas focused on the
acquisition, development, exploration and exploitation of
unconventional, onshore oil and natural gas reserves in the Permian
Basin in West Texas. Diamondback's activities are primarily focused
on the horizontal exploitation of multiple intervals within the
Wolfcamp, Spraberry, Clearfork, Bone Spring and Cline
formations.
Forward-Looking Statements
This news release contains forward-looking
statements within the meaning of the federal securities laws. All
statements, other than historical facts, that address activities
that Viper assumes, plans, expects, believes, intends or
anticipates (and other similar expressions) will, should or may
occur in the future are forward-looking statements. The
forward-looking statements are based on management’s current
beliefs, based on currently available information, as to the
outcome and timing of future events. These forward-looking
statements involve certain risks and uncertainties that could cause
the results to differ materially from those expected by the
management of Viper. Information concerning these risks and other
factors can be found in Viper’s filings with the Securities and
Exchange Commission, including its Forms 10-K, 10-Q and 8-K, which
can be obtained free of charge on the Securities and Exchange
Commission’s web site at http://www.sec.gov. Viper undertakes no
obligation to update or revise any forward-looking statement.
|
Viper Energy Partners LP |
Consolidated Statements of
Operations |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2016 |
2015 |
|
2016 |
2015 |
|
(In thousands) |
Operating
income: |
|
|
|
|
|
Royalty
income |
$ |
19,992 |
|
$ |
18,777 |
|
|
$ |
50,914 |
|
$ |
54,941 |
|
Lease
bonus |
5 |
|
— |
|
|
309 |
|
— |
|
Total
operating income |
19,997 |
|
18,777 |
|
|
51,223 |
|
54,941 |
|
Costs and
expenses: |
|
|
|
|
|
Production and ad valorem taxes |
1,429 |
|
1,686 |
|
|
4,134 |
|
4,431 |
|
Gathering
and transportation |
70 |
|
167 |
|
|
247 |
|
167 |
|
Depletion |
6,751 |
|
8,737 |
|
|
21,485 |
|
26,587 |
|
Impairment |
— |
|
— |
|
|
47,469 |
|
— |
|
General
and administrative expenses |
1,153 |
|
1,642 |
|
|
4,109 |
|
4,501 |
|
Total
costs and expenses |
9,403 |
|
12,232 |
|
|
77,444 |
|
35,686 |
|
Income (loss)
from operations |
10,594 |
|
6,545 |
|
|
(26,221 |
) |
19,255 |
|
Other income
(expense): |
|
|
|
|
|
Interest
expense |
(658 |
) |
(358 |
) |
|
(1,544 |
) |
(733 |
) |
Other
income |
266 |
|
168 |
|
|
612 |
|
960 |
|
Total
other income (expense), net |
(392 |
) |
(190 |
) |
|
(932 |
) |
227 |
|
Net income
(loss) |
$ |
10,202 |
|
$ |
6,355 |
|
|
$ |
(27,153 |
) |
$ |
19,482 |
|
|
|
|
|
|
|
Net income
attributable to common limited partners per unit: |
|
|
|
|
|
Basic and
Diluted |
$ |
0.12 |
|
$ |
0.08 |
|
|
$ |
(0.33 |
) |
$ |
0.24 |
|
Weighted
average number of limited partner units outstanding: |
|
|
|
|
|
Basic |
84,996 |
|
79,721 |
|
|
81,496 |
|
79,713 |
|
Diluted |
85,003 |
|
79,730 |
|
|
81,496 |
|
79,728 |
|
|
|
|
|
|
|
|
|
|
|
Viper Energy Partners LP |
Selected Operating Data |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2016 |
2015 |
|
2016 |
2015 |
Production
Data: |
|
|
|
|
|
Oil (Bbls) |
430,732 |
|
391,757 |
|
|
1,236,003 |
|
1,085,993 |
|
Natural gas (Mcf) |
315,030 |
|
316,323 |
|
|
1,008,745 |
|
775,445 |
|
Natural gas liquids
(Bbls) |
92,221 |
|
81,339 |
|
|
221,582 |
|
186,295 |
|
Combined volumes
(BOE)(1)(2) |
575,458 |
|
525,817 |
|
|
1,625,709 |
|
1,401,529 |
|
Daily combined volumes
(BOE/d) |
6,255 |
|
5,715 |
|
|
5,933 |
|
5,134 |
|
% Oil |
75 |
% |
75 |
% |
|
76 |
% |
77 |
% |
|
|
|
|
|
|
Average sales
prices: |
|
|
|
|
|
Oil,
realized ($/Bbl) |
$ |
41.97 |
|
$ |
44.17 |
|
|
$ |
37.64 |
|
$ |
47.10 |
|
Natural
gas realized ($/Mcf) |
2.39 |
|
2.43 |
|
|
1.89 |
|
2.39 |
|
Natural
gas liquids ($/Bbl) |
12.56 |
|
8.66 |
|
|
11.25 |
|
10.44 |
|
Average
price realized ($/BOE) |
34.74 |
|
35.71 |
|
|
31.32 |
|
39.20 |
|
|
|
|
|
|
|
Average Costs
(per BOE) |
|
|
|
|
|
Production and ad valorem taxes |
$ |
2.48 |
|
$ |
3.21 |
|
|
$ |
2.54 |
|
$ |
3.16 |
|
Gathering
and transportation expense |
0.12 |
|
0.32 |
|
|
0.15 |
|
0.12 |
|
General
and administrative - cash component |
0.19 |
|
1.07 |
|
|
0.70 |
|
1.10 |
|
Total
operating expense - cash |
$ |
2.79 |
|
$ |
4.60 |
|
|
$ |
3.39 |
|
$ |
4.38 |
|
|
|
|
|
|
|
General
and administrative - non-cash component |
$ |
1.81 |
|
$ |
2.05 |
|
|
$ |
1.83 |
|
$ |
2.11 |
|
Interest
expense |
1.14 |
|
0.68 |
|
|
0.95 |
|
0.52 |
|
Depletion |
11.73 |
|
16.62 |
|
|
13.22 |
|
18.97 |
|
|
|
|
|
|
|
|
|
|
|
(1) Bbl equivalents are calculated using a conversion rate of
six Mcf per one Bbl.(2) The volumes presented are based on actual
results and are not calculated using the rounded numbers in the
table above.
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA is a supplemental non-GAAP
financial measure that is used by management and external users of
our financial statements, such as industry analysts, investors,
lenders and rating agencies. Viper defines Adjusted EBITDA as net
income (loss) plus interest expense, non-cash unit-based
compensation expense, depletion and impairment. Adjusted EBITDA is
not a measure of net income (loss) as determined by United States’
generally accepted accounting principles, or GAAP. Management
believes Adjusted EBITDA is useful because it allows it to more
effectively evaluate Viper’s operating performance and compare the
results of its operations from period to period without regard to
its financing methods or capital structure. Adjusted EBITDA should
not be considered as an alternative to, or more meaningful than,
net income as determined in accordance with GAAP or as an indicator
of Viper’s operating performance or liquidity. Certain items
excluded from Adjusted EBITDA are significant components in
understanding and assessing a company’s financial performance, such
as a company’s cost of capital and tax structure, as well as the
historic costs of depreciable assets, none of which are components
of Adjusted EBITDA. Viper defines cash available for distribution
generally as an amount equal to its Adjusted EBITDA for the
applicable quarter less cash needed for debt service and other
contractual obligations and fixed charges and reserves for future
operating or capital needs that the board of directors of Viper’s
general partner may deem appropriate. Viper’s computations of
Adjusted EBITDA and cash available for distribution may not be
comparable to other similarly titled measures of other companies or
to such measure in its credit facility or any of its other
contracts.
The following tables present a reconciliation of
the non-GAAP financial measures of Adjusted EBITDA and cash
available for distribution to the GAAP financial measure of net
income (loss).
|
Viper Energy Partners LP |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2016 |
2015 |
|
2016 |
2015 |
Net income
(loss) |
$ |
10,202 |
|
$ |
6,355 |
|
|
$ |
(27,153 |
) |
$ |
19,482 |
|
Interest
expense |
658 |
|
358 |
|
|
1,544 |
|
733 |
|
Non-cash
unit-based compensation expense |
1,044 |
|
1,077 |
|
|
2,974 |
|
2,956 |
|
Depletion |
6,751 |
|
8,737 |
|
|
21,485 |
|
26,587 |
|
Impairment |
— |
|
— |
|
|
47,469 |
|
— |
|
Adjusted
EBITDA |
$ |
18,655 |
|
$ |
16,527 |
|
|
$ |
46,319 |
|
$ |
49,758 |
|
|
|
|
|
|
|
Adjustments to
reconcile Adjusted EBITDA to cash available for
distribution: |
|
|
|
|
|
Debt service,
contractual obligations, fixed charges and reserves |
(556 |
) |
(252 |
) |
|
(1,274 |
) |
(787 |
) |
Cash available
for distribution |
$ |
18,099 |
|
$ |
16,275 |
|
|
$ |
45,045 |
|
$ |
48,971 |
|
|
|
|
|
|
|
Limited Partner units
outstanding |
87,800 |
|
79,726 |
|
|
87,800 |
|
79,726 |
|
|
|
|
|
|
|
Cash available
for distribution per limited partner unit(1) |
$ |
0.207 |
|
$ |
0.200 |
|
|
$ |
0.545 |
|
$ |
0.610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Due to the units issued in the August 2016 public offering,
the 2016 year-to-date cash available for distribution per limited
partner unit cannot be calculated from this table.
Investor Contact:
Adam Lawlis
+1 432.221.7467
alawlis@viperenergy.com
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