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 first quarter ended March 31, 2019.
HIGHLIGHTS
- Q1 2019 cash distribution of $0.38 per common unit; implies a
last twelve month yield of 5.9% based on the April 26, 2019 unit
closing price of $34.82
- Q1 2019 consolidated net income (including non-controlling
interest) of $74.3 million, consolidated adjusted EBITDA (as
defined and reconciled below) of $57.3 million and cash available
for distribution to Limited Partner units (as defined below) of
$24.0 million
- Q1 2019 production of 19,042 boe/d (67% oil), an increase of
35% year over year
- Initiating average production guidance for Q2 2019/Q3 2019 of
19,000 to 21,000 boe/d
- Reaffirm full year 2019 production guidance of 20,000 to 23,000
boe/d (67% - 71% oil)
- Closed 39 acquisitions for an aggregate purchase price of
approximately $82.7 million in Q1 2019, increasing Viper's mineral
interests to a total of 15,469 net royalty acres, up 47% year over
year
- As of April 17, 2019, there were 38 active rigs on Viper's
mineral acreage and approximately 553 active drilling permits filed
in the past six months; average 3.6% NRI in approximately 113 gross
wells expected to be drilled by the 38 active rigs
- 110 total gross (1.8 net 100% royalty interest) wells turned to
production during Q1 2019 on existing acreage; acquired interest in
an additional 55 gross (2.0 net 100% royalty interest) producing
horizontal wells through the quarter
- Q4 2018 and Q1 2019 distributions reasonably estimated to not
constitute dividends for U.S. federal income tax purposes; instead
should generally constitute non-taxable reductions to the tax
basis
“After delivering double digit sequential
production growth for four consecutive quarters, Viper experienced
a six percent quarter over quarter decline in production in the
first quarter of 2019. Non-operated production outside of
Spanish Trail increased over five percent during the quarter as we
continue to see robust activity levels across our acreage
position. However, after completing an eight-well pad in
Spanish Trail in October 2018, there have not been any further
wells completed on the acreage. Looking forward, Diamondback
plans to complete another 12 wells in Spanish Trail in the third
quarter of 2019 with an average royalty interest of 22% for Viper
as well as an additional 5 wells in the fourth quarter with a full
25% NRI. These Spanish Trail wells, along with our visible
net DUC inventory and net rig activity, gives us confidence in our
full year 24% year over year organic production growth
expectations,” stated Travis Stice, Chief Executive Officer of
Viper’s general partner.
Mr. Stice continued, “Our business development
operation continues to consolidate the fragmented private minerals
market, having completed another 39 acquisitions for $82.7 million
in the first quarter of 2019. We look forward to multiple
visible catalysts over the remainder of 2019 including a return to
growing production as DUCs are completed, improving oil
realizations beginning in the second quarter of 2019, and finally,
the continued execution of our acquisition strategy, including both
our normal business development operations as well as the potential
for a significant drop down transaction from our parent
company.”
FINANCIAL UPDATE
Viper's first quarter 2019 average realized
prices were $45.31 per barrel of oil, $2.05 per Mcf of natural gas
and $18.09 per barrel of natural gas liquids, resulting in a total
equivalent realized price of $35.26/boe. Realized pricing is
expected to improve for Viper beginning in the second quarter of
2019 as Diamondback's fixed differential contracts roll off and
convert to commitments on new-build long-haul pipelines or move
closer to the current Midland market price. Based on current
market differentials and estimated in-basin gathering costs, Viper
expects to realize ~88-92% of WTI for the remainder of 2019 and
~100% of WTI in 2020.
During the first quarter of 2019, the Company
recorded total operating income of $61.6 million and consolidated
net income (including non-controlling interest) of $74.3
million.
As of March 31, 2019, the Company had a
cash balance of $10.1 million and $398.0 million available under
its $555 million revolving credit facility.
FIRST QUARTER 2019 CASH
DISTRIBUTION
The Board of Directors of Viper's general
partner declared a cash distribution for the three months ended
March 31, 2019 of $0.38 per common unit. The distribution is
payable on May 20, 2019 to common unitholders of record at the
close of business on May 13, 2019.
On February 25, 2019, Viper made a cash
distribution to its unitholders and subsequently has reasonably
estimated that such distribution, as well as the distribution
payable on May 20, 2019, should not constitute dividends for U.S.
federal income tax purposes. Rather, these distributions
should generally constitute non-taxable reductions to the tax basis
of each distribution recipient's ownership interest in Viper.
The Form 8937 containing additional information may be found on
www.viperenergy.com under the "Investor Relations" section of
the site.
OPERATIONS AND ACQUISITION UPDATE
During the first quarter of 2019, Viper was
informed that 110 gross horizontal wells with an average royalty
interest of 1.6% had been turned to production on its existing
acreage position. Of these 110 gross wells, Diamondback was
the operator of 35 with an average royalty interest of 2.4%, and
the remaining 75 gross wells, which had an average royalty interest
of 1.3%, were operated by third parties.
Additionally during the first quarter of 2019,
Viper acquired 627 net royalty acres for an aggregate purchase
price of approximately $82.7 million. These transactions brought
Viper's footprint of mineral interests to a total of 15,469 net
royalty acres. Viper funded these acquisitions with cash on
hand, borrowings under its revolving credit facility and proceeds
from its February 2019 offering of 10,925,000 common units.
These acquisitions added a further 55 producing gross horizontal
wells with an average royalty interest of 3.6%.
In total, as of March 31, 2019, Viper had 1,243
vertical wells and 2,604 horizontal wells producing on its
acreage. There continues to be active development on Viper's
mineral acreage as represented by 38 active rigs on this acreage as
of April 17, 2019 and 553 active drilling permits which had been
filed in the past six months. Viper anticipates these 38
active rigs currently on its acreage to drill approximately 113
gross wells in which Viper will have an average royalty interest of
3.6%.
GUIDANCE UPDATE
Below is Viper's guidance for the full year 2019, as well as
average production guidance for Q2 2019 and Q3 2019.
|
|
|
Viper Energy Partners |
|
|
Q2 2019/Q3 2019 Net
Production – MBoe/d |
19.00 - 21.00 |
Total 2019 Net
Production – MBoe/d |
20.00 - 23.00 |
Oil Production - % of
Net Production |
67% - 71% |
|
|
Unit costs ($/boe) |
|
Depletion |
$9.00 - $10.50 |
G&A |
|
Cash G&A |
Under $1.00 |
Non-Cash Unit-Based
Compensation |
$0.40 - $0.65 |
|
|
Production and Ad
Valorem Taxes (% of Revenue) (a) |
7% |
- 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 its results for the first
quarter of 2019 on Wednesday, May 1, 2019 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
5954037. A telephonic replay will be available from 12:00
p.m. CT on Wednesday, May 1, 2019 through Wednesday, May 8, 2019 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 5954037. 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 Balance Sheets |
(unaudited, in thousands, except unit
amounts) |
|
|
|
|
March 31, |
December 31, |
|
2019 |
2018 |
Assets |
|
|
Current assets: |
|
|
Cash and
cash equivalents |
$ |
10,133 |
|
$ |
22,676 |
|
Royalty
income receivable |
38,083 |
|
38,823 |
|
Royalty
income receivable—related party |
7,376 |
|
3,489 |
|
Other
current assets |
258 |
|
257 |
|
Total current assets |
55,850 |
|
65,245 |
|
Property: |
|
|
Oil and natural gas interests, full cost method of accounting
($916,437 and $871,485 excluded from depletion at March 31, 2019
and December 31, 2018, respectively) |
1,798,679 |
|
1,716,713 |
|
Land |
5,688 |
|
5,688 |
|
Accumulated depletion and impairment |
(264,495 |
) |
(248,296 |
) |
Property, net |
1,539,872 |
|
1,474,105 |
|
Other assets |
21,257 |
|
17,831 |
|
Deferred tax asset |
150,463 |
|
96,883 |
|
Total assets |
$ |
1,767,442 |
|
$ |
1,654,064 |
|
Liabilities and Unitholders’ Equity |
|
|
Current
liabilities: |
|
|
Accounts
payable |
$ |
8 |
|
$ |
— |
|
Other
accrued liabilities |
2,772 |
|
6,022 |
|
Total current liabilities |
2,780 |
|
6,022 |
|
Long-term debt |
157,000 |
|
411,000 |
|
Total liabilities |
159,780 |
|
417,022 |
|
Commitments and
contingencies (Note 13) |
|
|
Unitholders’
equity: |
|
|
General
partner |
1,000 |
|
1,000 |
|
Common
units (62,628,357 units issued and outstanding as of March 31, 2019
and 51,653,956 units issued and outstanding as of December 31,
2018) |
817,014 |
|
540,112 |
|
Class B
units (72,418,500 units issued and outstanding as of March 31, 2019
and as of December 31, 2018) |
990 |
|
990 |
|
Total Viper Energy Partners LP unitholders’
equity |
819,004 |
|
542,102 |
|
Non-controlling
interest |
788,658 |
|
694,940 |
|
Total
equity |
1,607,662 |
|
1,237,042 |
|
Total liabilities and unitholders’ equity |
$ |
1,767,442 |
|
$ |
1,654,064 |
|
Viper Energy Partners LP |
Consolidated Statements of
Operations |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
Operating income: |
|
|
|
|
|
|
Royalty
income |
$ |
60,428 |
|
$ |
62,128 |
|
Lease bonus income |
1,160 |
|
— |
|
Lease bonus income - related party |
— |
|
— |
|
Other operating income |
2 |
|
50 |
|
Total operating income |
61,590 |
|
62,178 |
|
Costs and expenses: |
|
|
Production and ad valorem taxes |
3,692 |
|
4,239 |
|
Depletion |
16,199 |
|
11,525 |
|
General and administrative expenses |
1,695 |
|
2,711 |
|
Total costs and expenses |
21,586 |
|
18,475 |
|
Income from operations |
40,004 |
|
43,703 |
|
Other income (expense): |
|
|
Interest expense, net |
(4,549 |
) |
(2,098 |
) |
Gain on revaluation of investment |
3,592 |
|
899 |
|
Other income, net |
656 |
|
392 |
|
Total other income (expense), net |
(301 |
) |
(807 |
) |
Income before income taxes |
39,703 |
|
42,896 |
|
Benefit
from income taxes |
(34,608 |
) |
— |
|
Net
income |
74,311 |
|
42,896 |
|
Net income
attributable to non-controlling interest |
40,532 |
|
— |
|
Net
income attributable to Viper Energy Partners LP |
$ |
33,779 |
|
$ |
42,896 |
|
|
|
|
Net
income attributable to common limited partners per
unit: |
|
|
Basic |
$ |
0.61 |
|
$ |
0.38 |
|
Diluted |
$ |
0.61 |
|
$ |
0.38 |
|
Weighted average number of common limited partner units
outstanding: |
|
|
Basic |
55,448 |
|
113,901 |
|
Diluted |
55,475 |
|
113,991 |
|
Viper Energy Partners LP |
Consolidated Statements of Cash
Flows |
(unaudited, in thousands) |
|
|
|
|
Three Months Ended March 31, |
|
2019 |
2018 |
Cash flows
from operating activities: |
|
|
|
|
|
|
Net income |
$ |
74,311 |
|
$ |
42,896 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
Benefit from deferred income taxes |
(34,655 |
) |
— |
|
Depletion |
16,199 |
|
11,525 |
|
Gain on revaluation of investment |
(3,592 |
) |
(899 |
) |
Amortization of debt issuance costs |
216 |
|
155 |
|
Non-cash unit-based compensation |
405 |
|
1,288 |
|
Changes in operating assets and liabilities: |
|
|
Royalty income receivable |
740 |
|
(3,119 |
) |
Royalty income receivable—related
party |
(3,887 |
) |
(1,363 |
) |
Accounts payable and other accrued
liabilities |
(3,289 |
) |
(1,265 |
) |
Income tax payable |
47 |
|
— |
|
Other current assets |
(44 |
) |
(6 |
) |
Net cash
provided by operating activities |
46,451 |
|
49,212 |
|
Cash flows
from investing activities: |
|
|
Acquisition of oil and natural gas interests |
(81,923 |
) |
(149,994 |
) |
Proceeds from the sale of investments |
— |
|
125 |
|
Net cash
used in investing activities |
(81,923 |
) |
(149,869 |
) |
Cash flows
from financing activities: |
|
|
Proceeds from borrowings under credit facility |
59,500 |
|
147,000 |
|
Repayment on credit facility |
(313,500 |
) |
— |
|
Debt issuance costs |
(50 |
) |
(3 |
) |
Proceeds from public offerings |
340,860 |
|
— |
|
Public offering costs |
(212 |
) |
— |
|
Units purchased for tax withholding |
(353 |
) |
— |
|
Distributions to partners |
(63,316 |
) |
(52,386 |
) |
Net cash
provided by financing activities |
22,929 |
|
94,611 |
|
Net
decrease in cash |
(12,543 |
) |
(6,046 |
) |
Cash and
cash equivalents at beginning of period |
22,676 |
|
24,197 |
|
Cash and
cash equivalents at end of period |
$ |
10,133 |
|
$ |
18,151 |
|
|
|
|
Supplemental disclosure of cash flow
information: |
|
|
Interest paid |
$ |
4,908 |
|
$ |
2,072 |
|
Viper Energy Partners LP |
Selected Operating Data |
(unaudited) |
|
|
|
Three Months Ended March 31,
2019 |
|
Three Months Ended December 31,
2018 |
|
Three Months Ended March 31, 2018 |
Production
Data: |
|
|
|
|
|
|
|
|
Oil
(MBbls) |
1,147 |
|
|
1,275 |
|
|
906 |
|
Natural gas
(MMcf) |
1,872 |
|
|
1,773 |
|
|
1,162 |
|
Natural gas
liquids (MBbls) |
254 |
|
|
287 |
|
|
171 |
|
Combined
volumes (MBOE)(1) |
1,714 |
|
|
1,858 |
|
|
1,271 |
|
Daily
combined volumes (BOE/d) |
19,042 |
|
|
20,191 |
|
|
14,122 |
|
% Oil |
67 |
% |
|
69 |
% |
|
71 |
% |
|
|
|
|
|
|
Average sales prices: |
|
|
|
|
|
Oil ($/Bbl) |
$ |
45.31 |
|
|
$ |
48.73 |
|
|
$ |
61.41 |
|
Natural gas ($/Mcf) |
2.05 |
|
|
2.41 |
|
|
2.11 |
|
Natural gas liquids ($/Bbl) |
18.09 |
|
|
22.13 |
|
|
23.47 |
|
Combined (per BOE)(2) |
35.26 |
|
|
39.17 |
|
|
48.88 |
|
|
|
|
|
|
|
Average Costs (per BOE): |
|
|
|
|
|
Production and ad valorem taxes |
$ |
2.15 |
|
|
$ |
2.65 |
|
|
$ |
3.34 |
|
General and administrative - cash component |
0.75 |
|
|
0.61 |
|
|
1.12 |
|
Total operating expense - cash |
$ |
2.90 |
|
|
$ |
3.26 |
|
|
$ |
4.46 |
|
|
|
|
|
|
|
General and administrative - non-cash component |
$ |
0.24 |
|
|
$ |
0.32 |
|
|
$ |
1.01 |
|
Interest expense |
2.65 |
|
|
2.58 |
|
|
1.65 |
|
Depletion |
9.45 |
|
|
9.43 |
|
|
9.07 |
|
- Bbl equivalents are calculated using a conversion rate of six
Mcf per one Bbl.
- Realized price net of all deducts for gathering, transportation
and processing.
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, (gain) loss 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 (loss), royalty income, cash flow from operating
activities or any other measure of financial performance or
liquidity presented as determined in accordance with GAAP.
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, 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 March 31, 2019 |
|
Three Months Ended December 31,
2018 |
|
Three Months Ended March 31, 2018 |
Net income |
$ |
74,311 |
|
|
$ |
40,705 |
|
|
$ |
42,896 |
|
Interest expense, net |
4,549 |
|
|
4,788 |
|
|
2,098 |
|
Non-cash unit-based compensation expense |
405 |
|
|
596 |
|
|
1,288 |
|
Depletion |
16,199 |
|
|
17,513 |
|
|
11,525 |
|
(Gain) loss on revaluation of investment |
(3,592 |
) |
|
5,715 |
|
|
(899 |
) |
Benefit from income taxes |
(34,608 |
) |
|
(1,251 |
) |
|
— |
|
Consolidated Adjusted EBITDA |
$ |
57,264 |
|
|
$ |
68,066 |
|
|
$ |
56,908 |
|
EBITDA
attributable to non-controlling interest |
(30,708 |
) |
|
(39,718 |
) |
|
— |
|
Adjusted EBITDA attributable to Viper Energy Partners
LP |
$ |
26,556 |
|
|
$ |
28,348 |
|
|
$ |
56,908 |
|
|
|
|
|
|
|
Adjustments to reconcile Adjusted EBITDA to cash available
for distribution: |
|
|
|
|
|
Income
taxes payable |
(198 |
) |
|
— |
|
|
— |
|
Debt
service, contractual obligations, fixed charges and reserves |
(1,962 |
) |
|
(1,775 |
) |
|
(1,952 |
) |
Units
repurchased for tax withholding |
(353 |
) |
|
— |
|
|
— |
|
Units -
dividend equivalent rights |
(22 |
) |
|
(42 |
) |
|
— |
|
Preferred
distributions |
(40 |
) |
|
(40 |
) |
|
— |
|
Cash available for distribution |
$ |
23,981 |
|
|
$ |
26,491 |
|
|
$ |
54,956 |
|
|
|
|
|
|
|
Limited
Partner units outstanding |
62,628 |
|
|
51,654 |
|
|
113,882 |
|
|
|
|
|
|
|
Cash available for distribution per common limited partner
unit |
$ |
0.38 |
|
|
$ |
0.51 |
|
|
$ |
0.48 |
|
Investor Contact:Adam Lawlis+1
432.221.7467alawlis@viperenergy.com
Source: Viper Energy Partners LP; Diamondback Energy, Inc.
Viper Energy (NASDAQ:VNOM)
Historical Stock Chart
From Aug 2024 to Sep 2024
Viper Energy (NASDAQ:VNOM)
Historical Stock Chart
From Sep 2023 to Sep 2024