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, 2018.
HIGHLIGHTS
- Q3 2018 cash distribution of $0.58 per common unit , up 72%
year over year; implies a 6.4% annualized yield based on the
October 26, 2018 unit closing price of $36.29
- Q3 2018 consolidated net income (including non-controlling
interest) of $50.8 million, consolidated adjusted EBITDA (as
defined and reconciled below) of $72.4 million and cash available
for distribution to Limited Partner units (as defined below) of
$29.9 million
- Q3 2018 production of 18,384 boe/d (69% oil), up 13% over Q2
2018 and 46% year over year
- Initiating average production guidance for Q4 2018/Q1 2019 of
18,500 to 20,000 boe/d, the midpoint of which is up 5% from Q3 2018
production
- Raising full year 2018 production guidance to 16,750 to 17,250
boe/d (69% - 73% oil), up 1% from previous full year 2018 guidance,
which implies 54% annualized growth over full year 2017
production
- Closed 15 acquisitions for an aggregate purchase price of
approximately $260 million in Q3 2018, including a completed drop
down from Diamondback; increases Viper's mineral assets by 2,457
net royalty acres to 13,908 total net royalty acres, up 52% year
over year
- As of October 22, 2018, there were 24 active rigs on Viper's
mineral acreage and approximately 523 active drilling permits filed
in the past six months
“During the third quarter, Viper surpassed $1
billion of closed acquisitions since its IPO four years ago, with
over $500 million of these deals having been completed through the
first three quarters of 2018. Viper continues to use its
size, scale and expertise in the Permian Basin to consolidate the
fragmented private minerals market, and we believe there remain
significant opportunities ahead for us to continue this
consolidation,” stated Travis Stice, Chief Executive Officer of
Viper’s general partner.
Mr. Stice continued, “As a direct result of
Viper's accretive acquisitions, as well as continued organic growth
on our legacy assets, Viper once again achieved significant quarter
over quarter production growth. We have raised our full year
production guidance so that the midpoint now represents 54% year
over year growth. Looking ahead to 2019, we are excited about
our organic growth profile as well as the continued execution of
our acquisition strategy, including further drop downs from
Diamondback.”
FINANCIAL UPDATE
Viper's third quarter 2018 average realized
prices were $54.51 per barrel of oil, $2.42 per Mcf of natural gas
and $27.05 per barrel of natural gas liquids, resulting in a total
equivalent price of $43.98/boe, up 21% year over year from
$36.38/boe in Q3 2017.
During the third quarter of 2018, the Company
recorded total operating income of $78.6 million and consolidated
net income (including non-controlling interest) of $50.8
million. Operating income was up 4% quarter over quarter and
85% year over year.
As of September 30, 2018, the Company had a
cash balance of $16.8 million and $178.5 million available under
its revolving credit facility. In connection with its Fall
redetermination, which closed in October 2018, Viper's borrowing
base increased to $555.0 million from $475.0 million prior,
resulting in $258.5 million of pro forma credit facility
availability.
THIRD QUARTER 2018 CASH
DISTRIBUTION
The Board of Directors of Viper's general
partner declared a cash distribution for the three months ended
September 30, 2018 of $0.58 per common unit, up 72% year over
year. The distribution is payable on November 19, 2018
to unitholders of record at the close of business on
November 12, 2018.
ACQUISITION UPDATE
During the third quarter of 2018, Viper acquired
760 net royalty acres for an aggregate purchase price of $85
million from unrelated third parties. Also during the
quarter, Viper closed the previously announced drop down of 1,696
net royalty acres from Diamondback for $175.0 million. These
transactions brought Viper's footprint of mineral interests to a
total of 13,908 net royalty acres. Viper funded the recent
acquisitions with cash on hand, borrowings under its revolving
credit facility and proceeds from its July 2018 offering of
10,080,000 common units.
GUIDANCE UPDATE
Below is Viper's updated guidance for the full year 2018, as
well as average production guidance for Q4 2018 and Q1 2019.
|
|
|
Viper Energy Partners |
|
|
Q4
2018 / Q1 2019 Net Production – MBoe/d |
18.50 - 20.00 |
Total 2018 Net Production – MBoe/d |
16.75 - 17.25 |
Oil Production - % of Net Production |
69% - 73% |
|
|
Unit costs ($/boe) |
|
Gathering & Transportation |
$0.20 - $0.40 |
Depletion |
$8.00 - $11.00 |
G&A |
|
Cash G&A |
$0.75 - $1.25 |
Non-Cash Unit-Based Compensation |
$0.50 - $0.75 |
|
|
Production and Ad Valorem Taxes (% of Revenue) (a) |
7% |
|
|
Capital Budget ($ - Million) |
|
2018 Capital Spend |
n/a |
- Includes production taxes of 4.6% for crude oil and 7.5% for
natural gas and NGLs and ad valorem taxes.
CONFERENCE CALL
Viper will host a conference call and webcast
for investors and analysts to discuss their results for the third
quarter of 2018 on Tuesday, October 30, 2018 at 9:00 a.m. CT.
Participants should call (844) 400-1537 (United States/Canada) or
(703) 326-5198 (International) and use the confirmation code
9867957. A telephonic replay will be available from 12:00
p.m. CT on Tuesday, October 30, 2018 through Tuesday, November 6,
2018 at 11:00 a.m. CT. To access the replay, call (855)
859-2056 (United States/Canada) or (404) 537-3406 (International)
and enter confirmation code 9867957. A live broadcast of the
earnings conference call will also be available via the internet at
www.viperenergy.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. For more
information, please visit www.viperenergy.com.
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. For more information, please visit
www.diamondbackenergy.com.
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, including specifically the
statements regarding any pending, completed or future acquisitions
discussed above. 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, |
|
2018 |
2017 |
|
2018 |
2017 |
|
(In
thousands) |
Operating income: |
|
|
|
|
|
Royalty income |
$ |
74,386 |
|
$ |
42,211 |
|
|
$ |
211,199 |
|
$ |
110,194 |
|
Lease bonus income |
4,205 |
|
322 |
|
|
5,133 |
|
2,613 |
|
Other operating income |
12 |
|
— |
|
|
120 |
|
— |
|
Total operating income |
78,603 |
|
42,533 |
|
|
216,452 |
|
112,807 |
|
Costs and expenses: |
|
|
|
|
|
Production and ad valorem taxes |
5,027 |
|
2,825 |
|
|
14,133 |
|
7,668 |
|
Gathering and transportation |
889 |
|
205 |
|
|
1,297 |
|
492 |
|
Depletion |
16,532 |
|
11,068 |
|
|
41,317 |
|
28,587 |
|
General and administrative expenses |
1,309 |
|
1,368 |
|
|
6,230 |
|
5,064 |
|
Total costs and expenses |
23,757 |
|
15,466 |
|
|
62,977 |
|
41,811 |
|
Income from operations |
54,846 |
|
27,067 |
|
|
153,475 |
|
70,996 |
|
Other income (expense): |
|
|
|
|
|
Interest expense, net |
(3,711 |
) |
(859 |
) |
|
(9,061 |
) |
(2,114 |
) |
Gain (loss) on revaluation of investment |
(199 |
) |
— |
|
|
5,165 |
|
— |
|
Other income, net |
640 |
|
399 |
|
|
1,479 |
|
526 |
|
Total other income (expense), net |
(3,270 |
) |
(460 |
) |
|
(2,417 |
) |
(1,588 |
) |
Income before income taxes |
51,576 |
|
26,607 |
|
|
151,058 |
|
69,408 |
|
Provision for (benefit from) income taxes |
764 |
|
— |
|
|
(71,114 |
) |
— |
|
Net income |
50,812 |
|
26,607 |
|
|
222,172 |
|
69,408 |
|
Net income attributable to non-controlling interest |
48,466 |
|
— |
|
|
77,526 |
|
— |
|
Net income attributable to Viper Energy Partners
LP |
$ |
2,346 |
|
$ |
26,607 |
|
|
$ |
144,646 |
|
$ |
69,408 |
|
|
|
|
|
|
|
Net income attributable to common limited partners per
unit: |
|
|
|
|
|
Basic |
$ |
0.05 |
|
$ |
0.24 |
|
|
$ |
1.85 |
|
$ |
0.69 |
|
Diluted |
$ |
0.05 |
|
$ |
0.24 |
|
|
$ |
1.85 |
|
$ |
0.69 |
|
Weighted average number of common limited partner units
outstanding: |
|
|
|
|
|
Basic |
48,234 |
|
110,377 |
|
|
78,250 |
|
101,095 |
|
Diluted |
48,304 |
|
110,424 |
|
|
78,319 |
|
101,143 |
|
Viper Energy Partners LP |
Selected Operating Data |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended September 30,
2018 |
|
Three Months Ended June 30, 2018 |
|
Three Months Ended September 30,
2017 |
Production
Data: |
|
|
|
|
|
Oil (MBbls) |
1,167 |
|
|
1,052 |
|
|
794 |
|
Natural gas (MMcf) |
1,624 |
|
|
1,280 |
|
|
1,236 |
|
Natural gas liquids
(MBbls) |
254 |
|
|
221 |
|
|
160 |
|
Combined volumes
(MBOE)(1) |
1,691 |
|
|
1,485 |
|
|
1,160 |
|
Daily combined volumes
(BOE/d) |
18,384 |
|
|
16,323 |
|
|
12,611 |
|
% Oil |
69 |
% |
|
71 |
% |
|
68 |
% |
|
|
|
|
|
|
Average sales
prices: |
|
|
|
|
|
Oil (per Bbl) |
$ |
54.51 |
|
|
$ |
62.66 |
|
|
$ |
45.33 |
|
Natural
gas (per Mcf) |
2.42 |
|
|
2.07 |
|
|
2.55 |
|
Natural
gas liquids (per Bbl) |
27.05 |
|
|
26.68 |
|
|
19.10 |
|
Combined
(per BOE) |
43.98 |
|
|
50.10 |
|
|
36.38 |
|
|
|
|
|
|
|
Average Costs
(per BOE) |
|
|
|
|
|
Production and ad valorem taxes |
$ |
2.97 |
|
|
$ |
3.28 |
|
|
$ |
2.43 |
|
Gathering
and transportation expense |
0.53 |
|
|
0.10 |
|
|
0.18 |
|
General
and administrative - cash component |
0.52 |
|
|
1.18 |
|
|
0.75 |
|
Total
operating expense - cash |
$ |
4.02 |
|
|
$ |
4.56 |
|
|
$ |
3.36 |
|
|
|
|
|
|
|
General
and administrative - non-cash component |
$ |
0.25 |
|
|
$ |
0.31 |
|
|
$ |
0.43 |
|
Interest
expense |
2.19 |
|
|
2.19 |
|
|
0.74 |
|
Depletion |
9.77 |
|
|
8.93 |
|
|
9.54 |
|
- Bbl equivalents are calculated using a conversion rate of six
Mcf per one Bbl.
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 plus interest expense, net, non-cash unit-based
compensation expense, depletion, loss (gain) on revaluation of
investments and benefit from income taxes. Adjusted EBITDA is
not a measure of net income 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, fixed charges and
reserves for future operating or capital needs that the board of
directors of Viper’s general partner may deem appropriate, dividend
equivalent rights and preferred distributions. 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.
Viper Energy Partners LP |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
|
|
|
Three Months Ended September 30,
2018 |
|
Three Months Ended June 30, 2018 |
|
Three Months Ended September 30,
2017 |
Net
income |
$ |
50,812 |
|
|
$ |
128,464 |
|
|
$ |
26,607 |
|
Interest expense, net |
3,711 |
|
|
3,252 |
|
|
859 |
|
Non-cash unit-based compensation expense |
426 |
|
|
452 |
|
|
503 |
|
Depletion |
16,532 |
|
|
13,260 |
|
|
11,068 |
|
Loss (gain) on revaluation of investment |
199 |
|
|
(4,465 |
) |
|
— |
|
Provision for (benefit from) income taxes |
764 |
|
|
(71,878 |
) |
|
— |
|
Consolidated Adjusted EBITDA |
72,444 |
|
|
69,085 |
|
|
39,037 |
|
EBITDA
attributable to non-controlling interest |
(42,256 |
) |
|
(43,642 |
) |
|
— |
|
Adjusted EBITDA attributable to Viper Energy Partners
LP |
$ |
30,188 |
|
|
$ |
25,443 |
|
|
$ |
39,037 |
|
|
|
|
|
|
|
Adjustments to reconcile Adjusted EBITDA to cash available
for distribution: |
|
|
|
|
|
Debt
service, contractual obligations, fixed charges and reserves |
(184 |
) |
|
(437 |
) |
|
(708 |
) |
Units -
dividend equivalent rights |
(48 |
) |
|
(25 |
) |
|
— |
|
Preferred
distributions |
(40 |
) |
|
(23 |
) |
|
— |
|
Cash available for distribution |
$ |
29,916 |
|
|
$ |
24,958 |
|
|
$ |
38,329 |
|
|
|
|
|
|
|
Limited
Partner units outstanding |
51,654 |
|
|
41,471 |
|
|
113,882 |
|
|
|
|
|
|
|
Cash available for distribution per common limited partner
unit |
$ |
0.58 |
|
|
$ |
0.60 |
|
|
$ |
0.34 |
|
Investor Contact:Adam Lawlis+1
432.221.7467alawlis@viperenergy.com
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