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, 2023. The Company
today also announced that following the approval by the Board of
Directors of Viper’s General Partner, the Company has filed with
the Delaware Secretary of State to convert from a Delaware limited
partnership into a Delaware corporation. This conversion will
become effective on November 13, 2023.
THIRD QUARTER HIGHLIGHTS
- Q3 2023 average production of
22,141 bo/d (40,446 boe/d), an increase of 4.7% from Q2 2023 and
11.4% year over year; highest in Company history
- Received $97.4 million in lease
bonus income
- Q3 2023 consolidated net income
(including non-controlling interest) of $207.2 million; net income
attributable to Viper Energy Partners LP of $78.6 million, or $1.11
per common unit
- Q3 2023 cash available for
distribution to Viper’s common units (as defined and reconciled
below) of $59.4 million, or $0.84 per common unit
- Declared Q3 2023 base cash
distribution of $0.27 per common unit; implies a 3.8% annualized
yield based on the November 3, 2023 unit closing price of
$28.32
- Q3 2023 variable cash distribution
of $0.30 per common unit; total base-plus-variable distribution of
$0.57 per common unit implies an 8.1% annualized yield based on the
November 3, 2023 unit closing price of $28.32
- Repurchased 0.4 million common
units in Q3 2023 for $9.6 million, excluding excise tax
(average price of $26.22 per unit)
- Total Q3 2023 return of capital to
LP unitholders of $44.5 million, or $0.63 per common unit,
represents 75% of cash available for distribution from unit
repurchases and the declared base-plus-variable distribution
- Increased borrowing base from
$1.0 billion to $1.3 billion upon consummation of the GRP
Acquisition and increased the aggregate elected commitment amount
from $750.0 million to $850.0 million; extended maturity
from June 2, 2025 to September 22, 2028
- 210 total gross (6.0 net 100%
royalty interest) horizontal wells turned to production on Viper’s
acreage during Q3 2023 with an average lateral length of 10,912
feet
- Initiating average daily production
guidance for Q4 2023 of 24,250 to 24,750 bo/d (43,250 to 44,250
boe/d); including contribution from the GRP Acquisition for the
entire quarter would result in pro forma oil production being
roughly 1,500 bo/d higher for the quarter
- Increasing full year 2023 average
daily production guidance to ~22,000 bo/d (~39,250 boe/d)
RECENT HIGHLIGHTS
- On October 19, 2023, completed
the offering of $400.0 million in aggregate principal amount
of 7.375% Senior Notes due 2031
- On October 31, 2023, completed the
issuance of 7.22 million common units to Diamondback for total
net proceeds of approximately $200.0 million
- On November 1, 2023, completed
the acquisition of certain mineral and royalty interests from
affiliates of Warwick Capital Partners and GRP Energy Capital (the
“GRP Acquisition”)
- On November 2, 2023, Viper’s board
of directors approved its conversion into a Delaware corporation
and Viper filed its conversion documents with the Delaware
Secretary of State; expected to become effective on
November 13, 2023
- Kaes Van’t Hof, who currently
serves as President of both Viper and Diamondback, was appointed to
the Board of Directors of Viper
- Initiated preliminary average daily
production guidance for full year 2024 of 25,500 to 27,500 bo/d
(44,500 to 48,000 boe/d)
“Viper’s upcoming conversion into a Delaware
corporation, along with the recent closing of the GRP Acquisition,
combine to mark an important step in the growth and evolution of
Viper. In providing increased governance rights to our current
limited partners as well as an expected increase in Viper’s trading
liquidity and potential investor universe, we are positioning Viper
to continue to grow the business and fully highlight the advantaged
nature of mineral ownership. There are many structural advantages
to mineral ownership beyond cost-free royalties, with one
particular example being the almost $100 million lease bonus Viper
received this quarter which will allow for the future development
of deeper zones on certain acreage in the Midland Basin,” stated
Travis Stice, Chief Executive Officer of Viper’s General
Partner.
Mr. Stice continued, “Looking specifically at
operations, the third quarter was another strong quarter for Viper
as production grew roughly 5% for the second consecutive quarter.
As previously mentioned, we closed the GRP Acquisition on November
1 and continue to expect that acquisition to provide immediate
financial accretion as well as support the long-term growth outlook
of the business. We have initiated guidance for the fourth quarter
that implies roughly 24.5 mbo/d of production at the midpoint, or
roughly 26.0 if we would have owned the GRP assets for the entire
quarter. Importantly, we have also provided preliminary full year
2024 production guidance. Within the provided range, we expect
production in Q1 2024 to decline 2-3% quarter-over-quarter on a pro
forma basis, but to grow throughout the year with Q4 2024
production expected to be roughly 5% higher than pro forma Q4 2023,
or near the high-end of the guidance range.”
FINANCIAL UPDATE
Viper’s third quarter 2023 average unhedged
realized prices were $82.48 per barrel of oil, $1.81 per Mcf of
natural gas and $21.58 per barrel of natural gas liquids, resulting
in a total equivalent realized price of $52.57/boe.
Viper’s third quarter 2023 average hedged
realized prices were $81.44 per barrel of oil, $1.47 per Mcf of
natural gas and $21.58 per barrel of natural gas liquids, resulting
in a total equivalent realized price of $51.55/boe.
During the third quarter of 2023, the Company
recorded total operating income of $293.2 million and consolidated
net income (including non-controlling interest) of $207.2
million.
As of September 30, 2023, the Company had a
cash balance of $146.8 million and total long-term debt outstanding
(excluding debt issuance, discounts and premiums) of $680.4
million, resulting in net debt (as defined and reconciled below) of
$533.5 million. Viper’s outstanding long-term debt as of
September 30, 2023 consisted of $430.4 million in aggregate
principal amount of its 5.375% Senior Notes due 2027 and $250.0
million in borrowings on its revolving credit facility, leaving
$600.0 million available for future borrowings and $746.8 million
of total liquidity.
THIRD QUARTER 2023 CASH DISTRIBUTION
& CAPITAL RETURN PROGRAM
Viper announced today that the Board of
Directors (the “Board”) of Viper Energy Partners General Partner
declared a base distribution of $0.27 per common unit for the third
quarter of 2023 payable on November 24, 2023 to eligible common
unitholders of record at the close of business on November 16,
2023.
The Board also declared a variable cash
distribution of $0.30 per common unit for the third quarter of 2023
payable on November 24, 2023 to eligible common unitholders of
record at the close of business on November 16, 2023.
During the third quarter of 2023, Viper
repurchased 0.4 million common units for an aggregate purchase
price of $9.6 million, excluding excise tax (average price of
$26.22 per unit). In total, since the initiation of Viper’s common
unit repurchase program through September 30, 2023, the
Company repurchased 12.4 million common units for an aggregate of
$287.1 million, excluding excise tax, reflecting an average price
of $23.07 per unit.
ACQUISITION UPDATE AND RELATED FINANCING
ACTIVITIES
On November 1, 2023, the Company completed
the acquisition of certain mineral and royalty interests from
affiliates of Warwick Capital Partners and GRP Energy Capital for
approximately 9.02 million common units and
$750.0 million in cash, subject to customary post-closing
adjustments (the “GRP Acquisition”). The mineral and royalty
interests acquired represent approximately 4,600 net royalty acres
in the Permian Basin, plus an additional 2,700 net royalty acres in
other major basins. Pro forma for this Acquisition, Viper’s
footprint of mineral and royalty interests as of September 30, 2023
would have totaled approximately 34,500 net royalty acres.
On September 22, 2023, Viper entered into
two material amendments to its revolving credit agreement which
collectively, among other things, (i) increased the aggregate
elected commitment amount from $750.0 million to
$850.0 million, (ii) increased the borrowing base from
$1.0 billion to $1.3 billion upon consummation of the GRP
Acquisition, and (iii) extended the maturity date from June 2,
2025 to September 22, 2028.
On October 19, 2023, Viper completed the
offering of $400.0 million in aggregate principal amount of
7.375% Senior Notes due 2031. The Company used the net proceeds to
pay a portion of the cash consideration of the GRP Acquisition.
On October 31, 2023, the Company completed the
issuance of 7.22 million of its common units to Diamondback at
a price of $27.72 per unit for total net proceeds of approximately
$200.0 million. The net proceeds of this issuance were used to pay
a portion of the cash consideration for the GRP Acquisition.
CONVERSION INTO A DELAWARE
CORPORATION
On November 2, 2023, Viper’s previously
announced intent to convert from a Delaware partnership into a
Delaware corporation was unanimously approved by the Board and
Viper filed its conversion documents with the Delaware Secretary of
State. This conversion will become effective at 12:01 a.m. (Eastern
Time) on November 13, 2023 and at such time the partnership will
change its name from Viper Energy Partners LP to Viper Energy,
Inc.
At the effective time of the conversion, the
outstanding common units and Class B units of Viper will convert,
on a unit-for-unit basis, into Class A Common Stock and Class B
Common Stock, respectively, and the general partner will be
canceled. As a result, holders of common units will become holders
of Class A Common Stock and holders of Class B units will become
holders of Class B Common Stock.
At the effective time of the conversion,
Diamondback will beneficially own 56% of the outstanding shares of
Common Stock of Viper Energy, Inc. (the same equity ownership
percentage as immediately prior to the conversion). As a result,
Viper Energy, Inc. will be a “controlled company” within the
meaning of the corporate governance standards of Nasdaq Stock
Market LLC (“Nasdaq”) and will thereby qualify for certain
exemptions from the Nasdaq corporate governance rules.
Viper has requested that, as of the open of
business on November 13, 2023, Nasdaq cease trading of the common
units and commence trading of the Class A Common Stock on Nasdaq
under the existing ticker symbol “VNOM.” No action by the current
holders of common units of Viper is currently anticipated to be
necessary. A new CUSIP number has been issued for the Class A
Common Stock, which will become effective at the time of the
conversion.
Because Viper is already treated as a
corporation for U.S. federal income tax purposes, Viper expects
that the conversion will not affect the successor entity’s status
as a corporation for U.S. federal income tax purposes or materially
impact the U.S. federal income tax treatment of Viper’s current
public common unitholders.
OPERATIONS UPDATE
During the third quarter of 2023, Viper
estimates that 210 gross (6.0 net 100% royalty interest) horizontal
wells with an average royalty interest of 2.9% were turned to
production on its acreage position with an average lateral length
of 10,912 feet. Of these 210 gross wells, Diamondback is the
operator of 53 gross wells, with an average royalty interest of
8.3%, and the remaining 157 gross wells, with an average royalty
interest of 1.0%, are operated by third parties.
Viper’s footprint of mineral and royalty
interests was 27,189 net royalty acres as of September 30,
2023.
After giving effect to the GRP Acquisition, our
gross well information as of November 1, 2023 is as
follows:
|
|
Diamondback Operated |
|
Third Party Operated |
|
Total |
| Horizontal wells
turned to
production(1): |
|
|
|
|
|
|
Gross wells |
53 |
|
157 |
|
210 |
|
Net 100% royalty interest wells |
4.4 |
|
1.6 |
|
6.0 |
|
Average percent net royalty interest |
8.3% |
|
1.0% |
|
2.9% |
| |
|
|
|
|
|
| Horizontal producing
well count: |
|
|
|
|
|
|
Gross wells |
1,782 |
|
9,293 |
|
11,075 |
|
Net 100% royalty interest wells |
125.8 |
|
105.6 |
|
231.4 |
|
Average percent net royalty interest |
7.1% |
|
1.1% |
|
2.1% |
| |
|
|
|
|
|
| Horizontal active
development well count: |
|
|
|
|
|
|
Gross wells |
123 |
|
743 |
|
866 |
|
Net 100% royalty interest wells |
5.8 |
|
8.2 |
|
14.0 |
|
Average percent net royalty interest |
4.7% |
|
1.1% |
|
1.6% |
| |
|
|
|
|
|
| Line of sight
wells: |
|
|
|
|
|
|
Gross wells |
143 |
|
540 |
|
683 |
|
Net 100% royalty interest wells |
9.5 |
|
8.8 |
|
18.3 |
|
Average percent net royalty interest |
6.6% |
|
1.6% |
|
2.7% |
(1) Average lateral length of 10,912 feet.
The 866 gross wells currently in the process of
active development are those wells that have been spud and are
expected to be turned to production within approximately the next
six to eight months. Further in regard to the active development on
Viper’s asset base, there are currently 73 gross rigs operating on
Viper’s acreage, ten of which are operated by Diamondback. The 683
line-of-sight wells are those that are not currently in the process
of active development, but for which Viper has reason to believe
that they will be turned to production within approximately the
next 15 to 18 months. The expected timing of these line-of-sight
wells is based primarily on permitting by third party operators or
Diamondback’s current expected completion schedule. Existing
permits or active development of Viper’s royalty acreage does not
ensure that those wells will be turned to production.
GUIDANCE UPDATE
Below is Viper’s updated guidance for the full
year 2023, as well as production guidance for Q4 2023 and
preliminary production guidance for full year 2024.
|
|
|
|
|
Viper Energy Partners |
|
|
|
| Q4 2023 Net Production -
MBo/d |
24.25 - 24.75 |
| Q4 2023 Net Production -
MBoe/d |
43.25 - 44.25 |
| Full Year 2023 Net Production
- MBo/d |
~22.00 |
| Full Year 2023 Net Production
- MBoe/d |
~39.25 |
| Preliminary Full Year 2024 Net
Production - MBo/d |
25.50 - 27.50 |
| Preliminary Full Year 2024 Net
Production - MBoe/d |
44.50 - 48.00 |
| |
|
| Unit costs ($/boe) |
|
| Depletion |
$9.50 - $10.00 |
| Cash G&A |
$0.50 - $0.60 |
| Non-Cash Unit-Based
Compensation |
$0.10 - $0.15 |
| Interest Expense |
$3.00 - $3.25 |
| |
|
| Production and Ad Valorem
Taxes (% of Revenue) |
~7% |
| Cash Tax Rate (% of Pre-Tax
Income Attributable to Viper Energy Partners LP)(1) |
20% - 22% |
| Q4 2023 Cash Taxes ($ -
million)(2) |
$13.0 - $17.0 |
(1) Pre-tax income attributable
to Viper Energy Partners LP is reconciled
below.(2) Attributable to Viper Energy Partners
LP.
CONFERENCE CALL
Viper will host a conference call and webcast
for investors and analysts to discuss its results for the third
quarter of 2023 on Tuesday, November 7, 2023 at 10:00 a.m. CT.
Access to the live audio-only webcast, and replay which will be
available following the call, may be found here. The live webcast
of the earnings conference call will also be available via Viper’s
website at www.viperenergy.com under the “Investor Relations”
section of the site.
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 owning and acquiring
mineral and royalty interests in oil-weighted basins, primarily the
Permian Basin. 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 primarily 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 Section 27A of the Securities Act
and Section 21E of the Exchange Act, which involve risks,
uncertainties, and assumptions. All statements, other than
statements of historical fact, including statements regarding
Viper’s: future performance; business strategy; future operations;
estimates and projections of operating income, losses, costs and
expenses, returns, cash flow, and financial position; production
levels on properties in which Viper has mineral and royalty
interests, developmental activity by other operators; reserve
estimates and Viper’s ability to replace or increase reserves;
Viper’s pending conversion into a Delaware corporation, the
effective time of such conversion, and any expected increase in
trading liquidity and related statements; anticipated benefits of
other strategic transactions (such as acquisitions or
divestitures); and plans and objectives of (including Diamondback’s
plans for developing Viper’s acreage and Viper’s cash distribution
policy and common unit repurchase program) are forward-looking
statements. When used in this news release, the words “aim,”
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“forecast,” “future,” “guidance,” “intend,” “may,” “model,”
“outlook,” “plan,” “positioned,” “potential,” “predict,” “project,”
“seek,” “should,” “target,” “will,” “would,” and similar
expressions (including the negative of such terms) as they relate
to Viper are intended to identify forward-looking statements,
although not all forward-looking statements contain such
identifying words. Although Viper believes that the expectations
and assumptions reflected in its forward-looking statements are
reasonable as and when made, they involve risks and uncertainties
that are difficult to predict and, in many cases, beyond its
control. Accordingly, forward-looking statements are not guarantees
of Viper’s future performance and the actual outcomes could differ
materially from what Viper expressed in its forward-looking
statements.
Factors that could cause the outcomes to differ
materially include (but are not limited to) the following: changes
in supply and demand levels for oil, natural gas, and natural gas
liquids, and the resulting impact on the price for those
commodities; the impact of public health crises, including epidemic
or pandemic diseases, and any related company or government
policies or actions; actions taken by the members of OPEC and
Russia affecting the production and pricing of oil, as well as
other domestic and global political, economic, or diplomatic
developments, including any impact of the ongoing war in Ukraine
and the Israel-Hamas war on the global energy markets and
geopolitical stability; instability in the financial sector;
concerns over economic slowdown or potential recession; rising
interest rates and their impact on the cost of capital; regional
supply and demand factors, including delays, curtailment delays or
interruptions of production on Viper’s mineral and royalty acreage,
or governmental orders, rules or regulations that impose production
limits on such acreage; federal and state legislative and
regulatory initiatives relating to hydraulic fracturing, including
the effect of existing and future laws and governmental
regulations; physical and transition risks relating to climate
change and the risks and other factors disclosed 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.
In light of these factors, the events
anticipated by Viper’s forward-looking statements may not occur at
the time anticipated or at all. Moreover, the new risks emerge from
time to time. Viper cannot predict all risks, nor can it assess the
impact of all factors on its business or the extent to which any
factor, or combination of factors, may cause actual results to
differ materially from those anticipated by any forward-looking
statements it may make. Accordingly, you should not place undue
reliance on any forward-looking statements made in this news
release. All forward-looking statements speak only as of the date
of this news release or, if earlier, as of the date they were made.
Viper does not intend to, and disclaim any obligation to, update or
revise any forward-looking statements unless required by applicable
law.
|
Viper Energy Partners LP |
|
Condensed Consolidated Balance Sheets |
|
(unaudited, in thousands, except unit
amounts) |
| |
|
|
|
| |
September 30, |
|
December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Assets |
|
|
|
| Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
146,814 |
|
|
$ |
18,179 |
|
|
Royalty income receivable (net of allowance for credit losses) |
|
103,804 |
|
|
|
81,657 |
|
|
Royalty income receivable—related party |
|
7,431 |
|
|
|
6,260 |
|
|
Derivative instruments |
|
— |
|
|
|
9,328 |
|
|
Other current assets |
|
4,081 |
|
|
|
3,196 |
|
|
Total current assets |
|
262,130 |
|
|
|
118,620 |
|
| Property: |
|
|
|
|
Oil and natural gas interests, full cost method of accounting
($1,151,711 and $1,297,221 excluded from depletion at
September 30, 2023 and December 31, 2022, respectively) |
|
3,592,768 |
|
|
|
3,464,819 |
|
|
Land |
|
5,688 |
|
|
|
5,688 |
|
|
Accumulated depletion and impairment |
|
(821,565 |
) |
|
|
(720,234 |
) |
|
Property, net |
|
2,776,891 |
|
|
|
2,750,273 |
|
| Funds held in escrow |
|
50,000 |
|
|
|
— |
|
| Derivative instruments |
|
— |
|
|
|
442 |
|
| Deferred income taxes (net of
allowances) |
|
48,768 |
|
|
|
49,656 |
|
| Other assets |
|
5,577 |
|
|
|
1,382 |
|
|
Total assets |
$ |
3,143,366 |
|
|
$ |
2,920,373 |
|
|
Liabilities and Unitholders’ Equity |
|
|
|
| Current liabilities: |
|
|
|
|
Accounts payable |
$ |
197 |
|
|
$ |
1,129 |
|
|
Accounts payable—related party |
|
— |
|
|
|
306 |
|
|
Accrued liabilities |
|
24,688 |
|
|
|
19,600 |
|
|
Derivative instruments |
|
9,284 |
|
|
|
— |
|
|
Income taxes payable |
|
13,322 |
|
|
|
911 |
|
|
Total current liabilities |
|
47,491 |
|
|
|
21,946 |
|
| Long-term debt, net |
|
675,681 |
|
|
|
576,895 |
|
| Derivative instruments |
|
1,619 |
|
|
|
7 |
|
|
Total liabilities |
|
724,791 |
|
|
|
598,848 |
|
| Unitholders’ equity: |
|
|
|
|
General Partner |
|
589 |
|
|
|
649 |
|
| Common units (70,861,557 units
issued and outstanding as of September 30, 2023 and 73,229,645
units issued and outstanding as of December 31, 2022) |
|
712,728 |
|
|
|
689,178 |
|
|
Class B units (90,709,946 units issued and outstanding
September 30, 2023 and December 31, 2022) |
|
757 |
|
|
|
832 |
|
|
Total Viper Energy Partners LP unitholders’ equity |
|
714,074 |
|
|
|
690,659 |
|
| Non-controlling interest |
|
1,704,501 |
|
|
|
1,630,866 |
|
|
Total equity |
|
2,418,575 |
|
|
|
2,321,525 |
|
|
Total liabilities and unitholders’ equity |
$ |
3,143,366 |
|
|
$ |
2,920,373 |
|
|
Viper Energy Partners LP |
|
Condensed Consolidated Statements of
Operations |
|
(unaudited, in thousands, except per unit
data) |
| |
|
|
|
|
|
|
|
| |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Operating
income: |
|
|
|
|
|
|
|
|
Royalty income |
$ |
195,614 |
|
|
$ |
219,909 |
|
|
$ |
514,896 |
|
|
$ |
651,828 |
|
|
Lease bonus income—related party |
|
97,237 |
|
|
|
372 |
|
|
|
105,585 |
|
|
|
6,652 |
|
|
Lease bonus income |
|
196 |
|
|
|
1,125 |
|
|
|
1,730 |
|
|
|
3,856 |
|
|
Other operating income |
|
193 |
|
|
|
211 |
|
|
|
774 |
|
|
|
506 |
|
|
Total operating income |
|
293,240 |
|
|
|
221,617 |
|
|
|
622,985 |
|
|
|
662,842 |
|
| Costs and
expenses: |
|
|
|
|
|
|
|
|
Production and ad valorem taxes |
|
12,286 |
|
|
|
15,638 |
|
|
|
37,794 |
|
|
|
45,547 |
|
|
Depletion |
|
36,280 |
|
|
|
30,460 |
|
|
|
101,331 |
|
|
|
89,833 |
|
|
General and administrative expenses |
|
1,880 |
|
|
|
2,139 |
|
|
|
6,652 |
|
|
|
5,972 |
|
|
Total costs and expenses |
|
50,446 |
|
|
|
48,237 |
|
|
|
145,777 |
|
|
|
141,352 |
|
| Income (loss) from
operations |
|
242,794 |
|
|
|
173,380 |
|
|
|
477,208 |
|
|
|
521,490 |
|
| Other income
(expense): |
|
|
|
|
|
|
|
|
Interest expense, net |
|
(11,203 |
) |
|
|
(10,731 |
) |
|
|
(32,180 |
) |
|
|
(30,158 |
) |
|
Gain (loss) on derivative instruments, net |
|
(2,988 |
) |
|
|
882 |
|
|
|
(30,685 |
) |
|
|
(19,366 |
) |
|
Other income, net |
|
489 |
|
|
|
162 |
|
|
|
802 |
|
|
|
200 |
|
|
Total other expense, net |
|
(13,702 |
) |
|
|
(9,687 |
) |
|
|
(62,063 |
) |
|
|
(49,324 |
) |
| Income (loss) before
income taxes |
|
229,092 |
|
|
|
163,693 |
|
|
|
415,145 |
|
|
|
472,166 |
|
|
Provision for (benefit from) income taxes |
|
21,879 |
|
|
|
(46,409 |
) |
|
|
39,735 |
|
|
|
(37,597 |
) |
| Net income
(loss) |
|
207,213 |
|
|
|
210,102 |
|
|
|
375,410 |
|
|
|
509,763 |
|
|
Net income (loss) attributable to non-controlling interest |
|
128,614 |
|
|
|
130,762 |
|
|
|
232,294 |
|
|
|
379,796 |
|
| Net income (loss)
attributable to Viper Energy Partners LP |
$ |
78,599 |
|
|
$ |
79,340 |
|
|
$ |
143,116 |
|
|
$ |
129,967 |
|
| |
|
|
|
|
|
|
|
| Net income (loss)
attributable to common limited partner units: |
|
|
|
1 |
|
|
|
|
Basic |
$ |
1.11 |
|
|
$ |
1.06 |
|
|
$ |
1.99 |
|
|
$ |
1.70 |
|
|
Diluted |
$ |
1.11 |
|
|
$ |
1.06 |
|
|
$ |
1.99 |
|
|
$ |
1.70 |
|
| Weighted average
number of common limited partner units outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
70,925 |
|
|
|
74,943 |
|
|
|
71,803 |
|
|
|
76,215 |
|
|
Diluted |
|
70,925 |
|
|
|
74,943 |
|
|
|
71,803 |
|
|
|
76,325 |
|
|
Viper Energy Partners LP |
|
Condensed Consolidated Statements of Cash
Flows |
|
(unaudited, in thousands) |
| |
|
|
|
|
|
|
|
| |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Cash flows from operating
activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
207,213 |
|
|
$ |
210,102 |
|
|
$ |
375,410 |
|
|
$ |
509,763 |
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Provision for (benefit from) deferred income taxes |
|
355 |
|
|
|
(49,656 |
) |
|
|
887 |
|
|
|
(49,656 |
) |
|
Depletion |
|
36,280 |
|
|
|
30,460 |
|
|
|
101,331 |
|
|
|
89,833 |
|
|
(Gain) loss on derivative instruments, net |
|
2,988 |
|
|
|
(882 |
) |
|
|
30,685 |
|
|
|
19,366 |
|
|
Net cash receipts (payments) on derivatives |
|
(3,807 |
) |
|
|
(10,263 |
) |
|
|
(10,019 |
) |
|
|
(27,292 |
) |
|
Other |
|
823 |
|
|
|
1,479 |
|
|
|
2,045 |
|
|
|
4,372 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Royalty income receivable |
|
(23,039 |
) |
|
|
28,229 |
|
|
|
(22,147 |
) |
|
|
(25,647 |
) |
|
Royalty income receivable—related party |
|
(3,047 |
) |
|
|
322 |
|
|
|
(1,171 |
) |
|
|
(8,123 |
) |
|
Accounts payable and accrued liabilities |
|
6,739 |
|
|
|
9,192 |
|
|
|
4,156 |
|
|
|
3,612 |
|
|
Accounts payable—related party |
|
— |
|
|
|
— |
|
|
|
(306 |
) |
|
|
— |
|
|
Income tax payable |
|
11,738 |
|
|
|
(2,759 |
) |
|
|
12,411 |
|
|
|
(471 |
) |
|
Other |
|
3,485 |
|
|
|
(2,003 |
) |
|
|
(885 |
) |
|
|
(2,516 |
) |
| Net cash provided by (used in)
operating activities |
|
239,728 |
|
|
|
214,221 |
|
|
|
492,397 |
|
|
|
513,241 |
|
| Cash flows from investing
activities: |
|
|
|
|
|
|
|
|
Acquisitions of oil and natural gas interests—related party |
|
— |
|
|
|
— |
|
|
|
(75,073 |
) |
|
|
— |
|
|
Acquisitions of oil and natural gas interests |
|
(51,101 |
) |
|
|
(40,196 |
) |
|
|
(98,510 |
) |
|
|
(38,334 |
) |
|
Proceeds from sale of oil and natural gas interests |
|
(1,191 |
) |
|
|
28,609 |
|
|
|
(3,166 |
) |
|
|
57,945 |
|
| Net cash provided by (used in)
investing activities |
|
(52,292 |
) |
|
|
(11,587 |
) |
|
|
(176,749 |
) |
|
|
19,611 |
|
| Cash flows from financing
activities: |
|
|
|
|
|
|
|
|
Proceeds from borrowings under credit facility |
|
69,000 |
|
|
|
85,000 |
|
|
|
260,000 |
|
|
|
229,000 |
|
|
Repayment on credit facility |
|
(43,000 |
) |
|
|
(90,000 |
) |
|
|
(162,000 |
) |
|
|
(288,000 |
) |
|
Repayment of senior notes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(48,963 |
) |
|
Repurchased units as part of unit buyback |
|
(9,650 |
) |
|
|
(50,723 |
) |
|
|
(67,181 |
) |
|
|
(118,932 |
) |
|
Distributions to public |
|
(25,300 |
) |
|
|
(60,033 |
) |
|
|
(84,181 |
) |
|
|
(147,117 |
) |
|
Distributions to Diamondback |
|
(40,200 |
) |
|
|
(79,535 |
) |
|
|
(127,929 |
) |
|
|
(186,550 |
) |
|
Other |
|
(4,551 |
) |
|
|
(39 |
) |
|
|
(5,722 |
) |
|
|
(122 |
) |
| Net cash provided by (used in)
financing activities |
|
(53,701 |
) |
|
|
(195,330 |
) |
|
|
(187,013 |
) |
|
|
(560,684 |
) |
| Net increase (decrease) in
cash and cash equivalents |
|
133,735 |
|
|
|
7,304 |
|
|
|
128,635 |
|
|
|
(27,832 |
) |
| Cash, cash equivalents and
restricted cash at beginning of period |
|
13,079 |
|
|
|
4,312 |
|
|
|
18,179 |
|
|
|
39,448 |
|
| Cash, cash equivalents and
restricted cash at end of period |
$ |
146,814 |
|
|
$ |
11,616 |
|
|
$ |
146,814 |
|
|
$ |
11,616 |
|
|
Viper Energy Partners LP |
|
Selected Operating Data |
|
(unaudited) |
| |
|
|
|
|
|
| |
Three Months Ended |
| |
September 30, 2023 |
|
June 30, 2023 |
|
September 30, 2022 |
| Production
Data: |
|
|
|
|
|
|
Oil (MBbls) |
|
2,037 |
|
|
1,924 |
|
|
1,828 |
|
Natural gas (MMcf) |
|
4,900 |
|
|
4,685 |
|
|
4,086 |
|
Natural gas liquids (MBbls) |
|
867 |
|
|
724 |
|
|
664 |
|
Combined volumes (MBOE)(1) |
|
3,721 |
|
|
3,429 |
|
|
3,173 |
| |
|
|
|
|
|
|
Average daily oil volumes (BO/d) |
|
22,141 |
|
|
21,143 |
|
|
19,870 |
|
Average daily combined volumes (BOE/d) |
|
40,446 |
|
|
37,681 |
|
|
34,489 |
| |
|
|
|
|
|
| Average sales
prices: |
|
|
|
|
|
|
Oil ($/Bbl) |
$ |
82.48 |
|
$ |
72.40 |
|
$ |
91.87 |
|
Natural gas ($/Mcf) |
$ |
1.81 |
|
$ |
1.09 |
|
$ |
7.01 |
|
Natural gas liquids ($/Bbl) |
$ |
21.58 |
|
$ |
19.07 |
|
$ |
35.15 |
|
Combined ($/BOE)(2) |
$ |
52.57 |
|
$ |
46.14 |
|
$ |
69.31 |
| |
|
|
|
|
|
|
Oil, hedged ($/Bbl)(3) |
$ |
81.44 |
|
$ |
71.39 |
|
$ |
91.26 |
|
Natural gas, hedged ($/Mcf)(3) |
$ |
1.47 |
|
$ |
0.65 |
|
$ |
5.36 |
|
Natural gas liquids ($/Bbl)(3) |
$ |
21.58 |
|
$ |
19.07 |
|
$ |
35.15 |
|
Combined price, hedged ($/BOE)(3) |
$ |
51.55 |
|
$ |
44.97 |
|
$ |
66.82 |
| |
|
|
|
|
|
| Average Costs
($/BOE): |
|
|
|
|
|
|
Production and ad valorem taxes |
$ |
3.30 |
|
$ |
3.68 |
|
$ |
4.93 |
|
General and administrative - cash component(4) |
|
0.41 |
|
|
0.51 |
|
|
0.56 |
|
Total operating expense - cash |
$ |
3.71 |
|
$ |
4.19 |
|
$ |
5.49 |
| |
|
|
|
|
|
|
General and administrative - non-cash unit compensation
expense |
$ |
0.10 |
|
$ |
0.08 |
|
$ |
0.11 |
|
Interest expense, net |
$ |
3.01 |
|
$ |
3.29 |
|
$ |
3.38 |
|
Depletion |
$ |
9.75 |
|
$ |
9.93 |
|
$ |
9.60 |
(1) Bbl equivalents are calculated using a conversion rate of
six Mcf per one Bbl.(2) Realized price net of all deducts for
gathering, transportation and processing. (3) Hedged prices reflect
the impact of cash settlements of our matured commodity derivative
transactions on our average sales prices. (4) Excludes non-cash
unit-based compensation expense for the respective periods
presented.
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) attributable to Viper Energy Partners LP plus net
income (loss) attributable to non-controlling interest (“net income
(loss)”) before interest expense, net, non-cash unit-based
compensation expense, depletion, non-cash (gain) loss on derivative
instruments, (gain) loss on extinguishment of debt, if any, and
provision for (benefit from) income taxes. Adjusted EBITDA is not a
measure of net income as determined by United States’ generally
accepted accounting principles (“GAAP”). Management believes
Adjusted EBITDA is useful because it allows them 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, 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 income taxes payable, debt
service, contractual obligations, fixed charges and reserves for
future operating or capital needs that the Board may deem
appropriate, lease bonus income, net of tax, distribution
equivalent rights payments and preferred distributions, if any.
Management believes cash available for distribution is useful
because it allows them to more effectively evaluate Viper’s
operating performance excluding the impact of non-cash financial
items and short-term changes in working capital. 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. Viper further defines cash available for variable
distribution as 75 percent of cash available for distribution less
base distributions declared and repurchased units as part of its
unit buyback program for the applicable quarter.
The following tables present a reconciliation of
the GAAP financial measure of net income (loss) to the non-GAAP
financial measures of Adjusted EBITDA, cash available for
distribution and cash available for variable distribution:
|
Viper Energy Partners LP |
|
(unaudited, in thousands, except per unit
data) |
| |
|
|
|
| |
|
|
Three Months Ended September 30, 2023 |
| Net income
(loss) attributable to Viper Energy Partners LP |
$ |
78,599 |
|
|
Net income (loss) attributable to non-controlling interest |
|
128,614 |
|
| Net income
(loss) |
|
207,213 |
|
|
Interest expense, net |
|
11,203 |
|
|
Non-cash unit-based compensation expense |
|
362 |
|
|
Depletion |
|
36,280 |
|
|
Non-cash (gain) loss on derivative instruments |
|
(819 |
) |
|
Provision for (benefit from) income taxes |
|
21,879 |
|
|
Consolidated Adjusted EBITDA |
|
276,118 |
|
|
Less: Adjusted EBITDA attributable to non-controlling interest |
|
155,014 |
|
| Adjusted
EBITDA attributable to Viper Energy Partners LP |
$ |
121,104 |
|
| |
|
|
|
| Adjustments to
reconcile Adjusted EBITDA to cash available for
distribution: |
|
|
|
|
Income taxes payable for the current period |
$ |
(21,524 |
) |
|
Debt service, contractual obligations, fixed charges and
reserves |
|
(6,699 |
) |
|
Lease bonus income, net of tax |
|
(33,427 |
) |
|
Distribution equivalent rights payments |
|
(48 |
) |
|
Preferred distributions |
|
(45 |
) |
| Cash
available for distribution to Viper Energy Partners LP
unitholders |
$ |
59,361 |
|
| |
|
|
|
| |
Three Months Ended September 30, 2023 |
| |
Amounts |
|
Amounts Per Common Unit |
| Reconciliation to cash
available for variable distribution: |
|
|
|
|
Cash available for distribution to Viper Energy Partners LP
unitholders |
$ |
59,361 |
|
$ |
0.84 |
|
| |
|
|
|
| 75% Committed Return of
Capital |
$ |
44,521 |
|
$ |
0.63 |
|
| Less: |
|
|
|
|
Base distribution |
|
19,133 |
|
|
0.27 |
|
|
Repurchased units as part of unit buyback(1) |
|
4,193 |
|
|
0.06 |
|
| Cash available for
variable distribution |
$ |
21,195 |
|
$ |
0.30 |
|
| |
|
|
|
| Total approved base
and variable distribution per unit |
|
|
$ |
0.57 |
|
| |
|
|
|
| Common limited partner units
outstanding |
|
|
|
70,862 |
|
(1) Reflects amounts attributable to the common
unitholders’ ownership interest in Viper Energy Partners LP.
The following table presents a reconciliation of
the GAAP financial measure of income (loss) before income taxes to
the non-GAAP financial measure of pre-tax income attributable to
Viper Energy Partners LP. Management believes this measure is
useful to investors given it provides the basis for income taxes
payable by Viper Energy Partners LP, which is an adjustment to
reconcile Adjusted EBITDA to cash available for distribution to
Viper Energy Partners LP unitholders.
|
Viper Energy Partners LP |
|
Pre-tax income attributable to Viper Energy Partners
LP |
|
(unaudited, in thousands) |
| |
|
| |
Three Months Ended September 30, 2023 |
|
Income (loss) before income taxes |
$ |
229,092 |
|
|
Less: Net income (loss) attributable to non-controlling
interest |
|
128,614 |
|
|
Pre-tax income attributable to Viper Energy Partners
LP |
$ |
100,478 |
|
|
|
|
|
Income taxes payable for the current period |
$ |
21,524 |
|
|
Effective cash tax rate attributable to Viper Energy
Partners LP |
|
21.4 |
% |
Adjusted net income (loss) is a non-GAAP
financial measure equal to net income (loss) attributable to Viper
Energy Partners, LP plus net income (loss) attributable to
non-controlling interest adjusted for non-cash (gain) loss on
derivative instruments, (gain) loss on extinguishment of debt, if
any, and related income tax adjustments. The Company’s computation
of adjusted net income may not be comparable to other similarly
titled measures of other companies or to such measure in our credit
facility or any of our other contracts. Management believes
adjusted net income helps investors in the oil and natural gas
industry to measure and compare the Company’s performance to other
oil and natural gas companies by excluding from the calculation
items that can vary significantly from company to company depending
upon accounting methods, the book value of assets and other
non-operational factors.
The following table presents a reconciliation of
the GAAP financial measure of net income (loss) attributable to
Viper Energy Partners LP to the non-GAAP financial measure of
adjusted net income (loss):
|
Viper Energy Partners LP |
|
Adjusted Net Income (Loss) |
|
(unaudited, in thousands, except per unit
data) |
| |
|
| |
Three Months Ended September 30, 2023 |
| |
Amounts |
|
Amounts PerDiluted Unit |
|
Net income (loss) attributable to Viper Energy Partners
LP(a) |
$ |
78,599 |
|
|
$ |
1.11 |
|
|
Net income (loss) attributable to non-controlling interest |
|
128,614 |
|
|
|
1.81 |
|
| Net income
(loss)(a) |
|
207,213 |
|
|
|
2.92 |
|
|
Non-cash (gain) loss on derivative instruments, net |
|
(819 |
) |
|
|
(0.01 |
) |
|
Adjusted income excluding above items(a) |
|
206,394 |
|
|
|
2.91 |
|
|
Income tax adjustment for above items |
|
78 |
|
|
|
— |
|
| Adjusted net income
(loss)(a) |
|
206,472 |
|
|
|
2.91 |
|
|
Less: Adjusted net income (loss) attributed to non-controlling
interests |
|
128,154 |
|
|
|
1.81 |
|
| Adjusted net income
(loss) attributable to Viper Energy Partners
LP(a) |
$ |
78,318 |
|
|
$ |
1.10 |
|
| |
|
|
|
| Weighted average
common units outstanding: |
|
|
|
|
Basic |
|
70,925 |
|
|
Diluted |
|
70,925 |
|
(a) The Company’s earnings (loss) per diluted
unit amount has been computed using the two-class method in
accordance with GAAP. The two-class method is an earnings
allocation which reflects the respective ownership among holders of
common units and participating securities. Diluted earnings per
share using the two-class method is calculated as (i) net income
attributable to Viper Energy Partners LP, (ii) less the
reallocation of $0.1 million in earnings attributable to
participating securities, divided by (iii) diluted weighted average
common units outstanding.
RECONCILIATION OF LONG-TERM DEBT TO NET
DEBT
The Company defines net debt as debt (excluding
debt issuance costs, discounts and premiums) less cash and cash
equivalents. Net debt should not be considered an alternative to,
or more meaningful than, total debt, the most directly comparable
GAAP measure. Management uses net debt to determine the Company's
outstanding debt obligations that would not be readily satisfied by
its cash and cash equivalents on hand. The Company believes this
metric is useful to analysts and investors in determining the
Company's leverage position because the Company has the ability to,
and may decide to, use a portion of its cash and cash equivalents
to reduce debt.
| |
September 30, 2023 |
|
Net Q3 Principal
Borrowings/ (Repayments) |
|
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
| |
|
| |
(in thousands) |
|
Total long-term debt(1) |
$ |
680,350 |
|
|
$ |
26,000 |
|
$ |
654,350 |
|
|
$ |
700,350 |
|
|
$ |
582,350 |
|
|
$ |
675,350 |
|
| Cash and cash equivalents |
|
(146,814 |
) |
|
|
|
|
(13,079 |
) |
|
|
(9,106 |
) |
|
|
(18,179 |
) |
|
|
(11,616 |
) |
| Net debt |
$ |
533,536 |
|
|
|
|
$ |
641,271 |
|
|
$ |
691,244 |
|
|
$ |
564,171 |
|
|
$ |
663,734 |
|
(1) Excludes debt issuance costs, discounts
& premiums.
Derivatives
As of the filing date, the Company had the
following outstanding derivative contracts. The Company’s
derivative contracts are based upon reported settlement prices on
commodity exchanges, with crude oil derivative settlements based on
New York Mercantile Exchange West Texas Intermediate pricing and
Crude Oil Brent. When aggregating multiple contracts, the weighted
average contract price is disclosed.
| |
Crude Oil (Bbls/day, $/Bbl) |
| |
Q4 2023 |
|
Q1 2024 |
|
Q2 2024 |
|
Q3 2024 |
|
Q4 2024 |
|
Deferred Premium Puts - WTI (Cushing) |
|
16,000 |
|
|
|
14,000 |
|
|
|
12,000 |
|
|
— |
|
— |
|
Strike |
$ |
56.25 |
|
|
$ |
58.57 |
|
|
$ |
60.00 |
|
|
— |
|
— |
|
Premium |
$ |
(1.70 |
) |
|
$ |
(1.54 |
) |
|
$ |
(1.50 |
) |
|
— |
|
— |
| |
Crude Oil (Bbls/day, $/Bbl) |
| |
Q4 2023 |
|
Q1 2024 |
|
Q2 2024 |
|
Q3 2024 |
|
Q4 2024 |
|
Costless Collars - WTI (Cushing) |
— |
|
|
6,000 |
|
|
6,000 |
|
— |
|
— |
|
Floor |
— |
|
$ |
65.00 |
|
$ |
65.00 |
|
— |
|
— |
|
Ceiling |
— |
|
$ |
95.55 |
|
$ |
95.55 |
|
— |
|
— |
| |
Crude Oil (Bbls/day, $/Bbl) |
| |
Q4 2023 |
|
Q1 2024 |
|
Q2 2024 |
|
Q3 2024 |
|
Q4 2024 |
|
Midland-Cushing Basis Swabs |
|
4,000 |
|
— |
|
— |
|
— |
|
— |
|
Swap Price |
$ |
1.05 |
|
— |
|
— |
|
— |
|
— |
| |
Natural Gas (Mmbtu/day, $/Mmbtu) |
| |
Q4 2023 |
|
Q1 2024 |
|
Q2 2024 |
|
Q3 2024 |
|
Q4 2024 |
|
Natural Gas Basis Swaps - Waha Hub |
|
30,000 |
|
|
|
30,000 |
|
|
|
30,000 |
|
|
|
30,000 |
|
|
|
30,000 |
|
|
Swap Price |
$ |
(1.33 |
) |
|
$ |
(1.20 |
) |
|
$ |
(1.20 |
) |
|
$ |
(1.20 |
) |
|
$ |
(1.20 |
) |
Investor Contact:
Austen Gilfillian+1
432.221.7420agilfillian@viperenergy.com
Source: Viper Energy Partners LP; Diamondback Energy, Inc.
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