false000160206500016020652023-11-062023-11-06

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 6, 2023
___________
VIPER ENERGY PARTNERS LP
(Exact Name of Registrant as Specified in Charter)
DE
001-36505
46-5001985
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification Number)
500 West Texas Ave.
Suite 100
Midland, TX
79701
(Address of principal
executive offices)		(Zip code)
(432) 221-7400
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common UnitsVNOMThe Nasdaq Stock Market LLC
(NASDAQ Global Select Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐


Item 2.02.    Results of Operations and Financial Condition.

On November 6, 2023, Viper Energy Partners LP (“Viper”), a subsidiary of Diamondback Energy, Inc., issued a press release announcing financial and operating results for the third quarter ended September 30, 2023, the third quarter 2023 base and variable cash distributions. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits


SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
VIPER ENERGY PARTNERS LP
By:Viper Energy Partners GP LLC,
its general partner
Date:November 6, 2023
By:/s/ Teresa L. Dick
Name:Teresa L. Dick
Title:Chief Financial Officer, Executive Vice President and Assistant Secretary



Exhibit 99.1
viperlogoa30.gif

VIPER ENERGY PARTNERS LP, A SUBSIDIARY OF DIAMONDBACK ENERGY, INC., REPORTS THIRD QUARTER 2023 FINANCIAL AND OPERATING RESULTS; ANNOUNCES FILING FOR CONVERSION INTO A DELAWARE CORPORATION

MIDLAND, Texas, November 6, 2023 (GLOBE NEWSWIRE) -- 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 OperatedThird Party OperatedTotal
Horizontal wells turned to production(1):
Gross wells53157210
Net 100% royalty interest wells4.41.66.0
Average percent net royalty interest8.3%1.0%2.9%
Horizontal producing well count:
Gross wells1,7829,29311,075
Net 100% royalty interest wells125.8105.6231.4
Average percent net royalty interest7.1%1.1%2.1%
Horizontal active development well count:
Gross wells123743866
Net 100% royalty interest wells5.88.214.0
Average percent net royalty interest4.7%1.1%1.6%
Line of sight wells:
Gross wells143540683
Net 100% royalty interest wells9.58.818.3
Average percent net royalty interest6.6%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,
20232022
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 party7,431 6,260 
Derivative instruments— 9,328 
Other current assets4,081 3,196 
Total current assets262,130 118,620 
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 
Land5,688 5,688 
Accumulated depletion and impairment(821,565)(720,234)
Property, net2,776,891 2,750,273 
Funds held in escrow50,000 — 
Derivative instruments— 442 
Deferred income taxes (net of allowances)48,768 49,656 
Other assets5,577 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 liabilities24,688 19,600 
Derivative instruments9,284 — 
Income taxes payable13,322 911 
Total current liabilities47,491 21,946 
Long-term debt, net675,681 576,895 
Derivative instruments1,619 7 
Total liabilities724,791 598,848 
Unitholders’ equity:
General Partner589 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’ equity714,074 690,659 
Non-controlling interest1,704,501 1,630,866 
Total equity2,418,575 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,
2023202220232022
Operating income:
Royalty income$195,614 $219,909 $514,896 $651,828 
Lease bonus income—related party97,237 372 105,585 6,652 
Lease bonus income196 1,125 1,730 3,856 
Other operating income193 211 774 506 
Total operating income293,240 221,617 622,985 662,842 
Costs and expenses:
Production and ad valorem taxes12,286 15,638 37,794 45,547 
Depletion36,280 30,460 101,331 89,833 
General and administrative expenses1,880 2,139 6,652 5,972 
Total costs and expenses50,446 48,237 145,777 141,352 
Income (loss) from operations242,794 173,380 477,208 521,490 
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, net489 162 802 200 
Total other expense, net(13,702)(9,687)(62,063)(49,324)
Income (loss) before income taxes229,092 163,693 415,145 472,166 
Provision for (benefit from) income taxes21,879 (46,409)39,735 (37,597)
Net income (loss)207,213 210,102 375,410 509,763 
Net income (loss) attributable to non-controlling interest128,614 130,762 232,294 379,796 
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:
Basic70,925 74,943 71,803 76,215 
Diluted70,925 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,
2023202220232022
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 taxes355 (49,656)887 (49,656)
Depletion36,280 30,460 101,331 89,833 
(Gain) loss on derivative instruments, net2,988 (882)30,685 19,366 
Net cash receipts (payments) on derivatives(3,807)(10,263)(10,019)(27,292)
Other823 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 liabilities6,739 9,192 4,156 3,612 
Accounts payable—related party— — (306)— 
Income tax payable11,738 (2,759)12,411 (471)
Other3,485 (2,003)(885)(2,516)
Net cash provided by (used in) operating activities239,728 214,221 492,397 513,241 
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 facility69,000 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 equivalents133,735 7,304 128,635 (27,832)
Cash, cash equivalents and restricted cash at beginning of period13,079 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, 2023June 30, 2023September 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 interest128,614 
Net income (loss)207,213 
Interest expense, net11,203 
Non-cash unit-based compensation expense362 
Depletion36,280 
Non-cash (gain) loss on derivative instruments(819)
Provision for (benefit from) income taxes21,879 
Consolidated Adjusted EBITDA276,118 
Less: Adjusted EBITDA attributable to non-controlling interest155,014 
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
AmountsAmounts 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 outstanding70,862 
(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 interest128,614 
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 LP21.4 %

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
AmountsAmounts Per Diluted Unit
Net income (loss) attributable to Viper Energy Partners LP(a)
$78,599 $1.11 
Net income (loss) attributable to non-controlling interest128,614 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 items78 — 
Adjusted net income (loss)(a)
206,472 2.91 
Less: Adjusted net income (loss) attributed to non-controlling interests128,154 1.81 
Adjusted net income (loss) attributable to Viper Energy Partners LP(a)
$78,318 $1.10 
Weighted average common units outstanding:
Basic70,925 
Diluted70,925 
(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, 2023March 31, 2023December 31, 2022September 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 2023Q1 2024Q2 2024Q3 2024Q4 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 2023Q1 2024Q2 2024Q3 2024Q4 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 2023Q1 2024Q2 2024Q3 2024Q4 2024
Midland-Cushing Basis Swabs4,000 — — — — 
Swap Price$1.05 — — — — 
Natural Gas (Mmbtu/day, $/Mmbtu)
Q4 2023Q1 2024Q2 2024Q3 2024Q4 2024
Natural Gas Basis Swaps - Waha Hub30,000 30,000 30,000 30,000 30,000 
Swap Price$(1.33)$(1.20)$(1.20)$(1.20)$(1.20)

Investor Contact:

Austen Gilfillian
+1 432.221.7420
agilfillian@viperenergy.com

Source: Viper Energy Partners LP; Diamondback Energy, Inc.

v3.23.3
Document and Entity Information Statement
Nov. 06, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Nov. 06, 2023
Entity Registrant Name VIPER ENERGY PARTNERS LP
Entity Incorporation, State or Country Code DE
Entity File Number 001-36505
Entity Tax Identification Number 46-5001985
Entity Address, Address Line One 500 West Texas Ave.
Entity Address, Address Line Two Suite 100
Entity Address, City or Town Midland,
Entity Address, State or Province TX
Entity Address, Postal Zip Code 79701
City Area Code 432
Local Phone Number 221-7400
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Units
Trading Symbol VNOM
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001602065
Viper Energy (NASDAQ:VNOM)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Viper Energy Charts.
Viper Energy (NASDAQ:VNOM)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Viper Energy Charts.