Rattler Midstream LP (NASDAQ: RTLR) (“Rattler” or the “Company”), a
subsidiary of Diamondback Energy, Inc. (NASDAQ: FANG)
(“Diamondback”), today announced financial and operating results
for the fourth quarter ended December 31, 2021.
FOURTH QUARTER 2021 HIGHLIGHTS
- Q4 2021 consolidated net income
(including non-controlling interest) of $44.5 million
- Q4 2021 consolidated Adjusted
EBITDA (as defined and reconciled below) of $80.8 million
- Q4 2021 cash flow provided by
operating activities of $62.3 million
- Q4 2021 cash operated capital
expenditures of $8.0 million
- Q4 2021 consolidated Free Cash Flow
(as defined and reconciled below) of $54.1 million
- Board of Directors of Rattler's
general partner approved a cash distribution for the fourth quarter
of 2021 of $0.30 per common unit ($1.20 annualized); implies a 9.3%
annualized yield based on the February 22, 2022 closing unit price
of $12.94
- Repurchased approximately 1.7
million common units at an average unit price of $11.12 for a total
cost of $19.0 million during the quarter
- In October 2021, Rattler entered
into a gas gathering and processing joint venture focused on the
Midland Basin for $104.0 million
- In November 2021, Rattler closed
the sale of its Pecos County gas gathering assets to Brazos
Midstream for gross potential consideration of $93.0 million,
including $83.0 million of cash at closing
- In December 2021, Rattler closed on
an acquisition of certain water midstream assets from Diamondback
for $160.0 million
- In January 2022, Rattler acquired a
10% equity interest in BANGL, a long-haul NGL pipeline joint
venture, for $22.2 million
- Q4 2021 average produced water
gathering and disposal volumes of 818 MBbl/d
- Q4 2021 average sourced water
volumes of 307 MBbl/d; 28% of total sourced water volumes in Q4
2021 sourced from recycled produced water
- Q4 2021 average crude oil gathering
volumes of 75 MBbl/d
FULL YEAR 2021 HIGHLIGHTS
- Consolidated net income (including
non-controlling interest) of $163.8 million
- Consolidated Adjusted EBITDA (as
defined and reconciled below) of $297.2 million
- Cash flow provided by operating
activities of $248.1 million
- Cash operated capital expenditures
of $32.2 million
- Consolidated Free Cash Flow (as
defined and reconciled below) of $216.2 million
- Full year 2021 average produced
water gathering and disposal volumes of 783 MBbl/d
- Full year 2021 average sourced
water volumes of 268 MBbl/d; 23% of total sourced water volumes in
Full year 2021 sourced from recycled produced water
- Full year 2021 average crude oil
gathering volumes of 79 MBbl/d
“Rattler closed the year on a high note, with a
strong operational quarter in terms of volumes, operating expense
control and Free Cash Flow. In particular, the free cash flow of
$54 million in the fourth quarter and $216 million for full year
2021 highlights the cash generation potential of the operated
business before taking into account the return of capital from the
majority of Rattler's equity method joint ventures. Underpinned by
contracts extending through 2034 and with unparalleled visibility
into the development plan and reserves of its primary customer,
Diamondback, Rattler's operated gathering business has been
resilient, growing free cash flow even though Diamondback's oil
production has stayed flat over the same time period,” stated
Travis Stice, Chief Executive Officer of Rattler’s general
partner.
Mr. Stice continued, “Looking forward to 2022,
the three strategic announcements closed in the fourth quarter of
2021 and the newly announced participation in the BANGL joint
venture provide an opportunity for Rattler to continue to grow the
business. Building out greenfield water infrastructure on assets
acquired as part of the drop down, as well as the expansion of gas
processing and NGL takeaway for Diamondback and other producers as
part of the WTG and BANGL joint ventures, will result in higher
capital expenditures this year. However, such expenditures will
result in a sustainable and growing Free Cash Flow profile in 2023
and beyond. Lastly, in keeping with Rattler's history of
prioritizing return of the free cash flow produced by the business,
we are increasing our distribution by 20% to $1.20 per unit
annualized as a reflection of the confidence in the future
trajectory of the business.”
OPERATIONS AND FINANCIAL
UPDATE
During the fourth quarter of 2021, the Company
recorded total operating income of $47.3 million, an increase of 6%
compared to the third quarter of 2021. During the fourth quarter of
2021, the Company recorded consolidated net income (including
non-controlling interest) of $44.5 million, an increase of 14% from
the third quarter of 2021. Fourth quarter 2021 Adjusted EBITDA
(including non-controlling interest and as defined and reconciled
below) was $80.8 million, an increase of 8% from the third quarter
of 2021.
Fourth quarter operated capital expenditures
totaled $8.0 million and aggregate contributions to equity method
joint ventures were $2.0 million. Rattler also received proceeds of
$11.5 million in distributions from equity method investments
related to operations during the quarter.
The following table summarizes the Company's
throughput(a) on its operated assets.
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Crude oil gathering
(Bbl/d) |
74,582 |
|
88,634 |
|
79,071 |
|
92,056 |
Natural gas gathering
(MMBtu/d) |
42,672 |
|
141,140 |
|
112,130 |
|
121,637 |
Produced water gathering and
disposal (Bbl/d) |
818,291 |
|
810,493 |
|
783,259 |
|
821,543 |
Sourced water gathering
(Bbl/d) |
307,047 |
|
287,255 |
|
268,259 |
|
253,907 |
|
|
|
|
|
|
|
|
(a) Does not include any volumes from our equity method
investments joint ventures.
CASH DISTRIBUTION
On February 16, 2022, the Board of Directors of
Rattler's general partner approved a cash distribution for the
fourth quarter of 2021 of $0.30 per common unit, payable on
March 14, 2022 to unitholders of record at the close of
business on March 7, 2022.
COMMON UNIT REPURCHASE PROGRAM
On October 29, 2020, the Board of Directors of
Rattler's general partner approved a common unit repurchase program
to acquire up to $100.0 million of Rattler's outstanding common
units through December 31, 2021. Pursuant to this program, during
the fourth quarter of 2021, the Company repurchased 1.7 million
common units at an average unit price of $11.12 per unit for a
total cost of $19.0 million.
On October 27, 2021, the Board of Directors of
Rattler's general partner approved an increase of $50.0 million to
the common unit repurchase program, bringing the total
authorization to $150.0 million of Rattler's outstanding common
units. The Board of Directors removed the expiration of the
authorization, extending the term of the repurchase authorization
indefinitely. In total from the program's inception through
February 18, 2022, Rattler has repurchased 6.3 million common units
for a total cost of $64.9 million, utilizing 43% of the $150.0
million authorization.
The Company intends to purchase common units
under the repurchase program opportunistically with cash on hand,
free cash flow from operations and proceeds from potential
liquidity events such as the sale of assets. The repurchase program
may be suspended from time to time, modified, extended or
discontinued by the Board of Directors of Rattler’s general partner
at any time. Purchases under the repurchase program may be made
from time to time in open market or privately negotiated
transactions in compliance with Rule 10b-18 under the Securities
Exchange Act of 1934, as amended, and will be subject to market
conditions, applicable legal requirements, contractual obligations
and other factors. Any common units purchased as part of this
program will be retired.
ACQUISITIONS AND DIVESTITURES
WTG JOINT VENTURE
On October 5, 2021, Rattler and a private
affiliate of an investment fund formed Remuda Midstream Holdings
LLC ("WTG joint venture"). Rattler invested approximately
$104.0 million in cash to acquire a 25% ownership interest in
the WTG joint venture, which then completed an acquisition of a
majority interest in WTG Midstream LLC ("WTG Midstream") from West
Texas Gas, Inc. and its affiliates. WTG Midstream’s assets
primarily consist of an interconnected gas gathering system and six
major gas processing plants servicing the Midland Basin with 925
MMcf/d of total processing capacity with additional gas gathering
and processing expansions planned.
PECOS COUNTY GAS GATHERING DIVESTITURE
On November 1, 2021, Rattler closed on the sale
of its gas gathering assets to Brazos Delaware Gas, LLC, an
affiliate of Brazos Midstream, for aggregate total gross potential
consideration of $93.0 million, consisting of (i) $83.0 million at
closing and (ii) $10.0 million in contingent payments payable from
2023-2024 based on volume thresholds on the gas gathering
assets.
DROP DOWN TRANSACTION
On December 1, 2021, Rattler completed the
acquisition of certain water assets from Diamondback and certain of
its subsidiaries (the "Seller") in a drop down transaction ("Drop
Down"). The Drop Down consisted of the sale of certain water
midstream assets for $160.0 million in cash. Rattler and the Seller
also mutually agreed to amend their commercial agreements covering
produced water gathering and disposal and sourced water gathering
services to add certain Diamondback leasehold acreage to the
Company’s dedication. The transaction was approved by the Conflicts
Committee of the Board of Directors of Rattler's general
partner.
SUBSEQUENT EVENTS
On January 19, 2022, Rattler invested approximately $22.2
million in cash to acquire a 10% interest in the BANGL joint
venture. The BANGL pipeline, which began full commercial service in
the fourth quarter of 2021, provides NGL takeaway capacity from
MPLX and WTG gas processing plants in the Permian Basin to the NGL
fractionation hub in Sweeny, Texas and has expansion capacity of up
to 300,000 Bbl/d.
GUIDANCE
Below is Rattler's guidance for the full year
2022.
|
|
|
Rattler Midstream LP Guidance |
|
2022 |
|
|
Rattler Operated Volumes
(a) |
|
Produced Water Gathering and
Disposal (MBbl/d) |
800 - 900 |
Sourced Water (MBbl/d) |
300 - 400 |
Crude Oil Gathering
(MBbl/d) |
65 - 80 |
|
|
Financial Metrics ($ millions
except per unit metrics) |
|
Net Income |
$160 - $200 |
Adjusted EBITDA |
$320 - $360 |
Operated Midstream Capex |
$80 - $100 |
Equity Method Investment
EBITDA |
$100 - $130 |
Equity Method Investment
Distributions |
$45 - $55 |
Equity Method Investment
Contributions(b) |
$10 - $15 |
Depreciation, Amortization
& Accretion |
$40 - $60 |
Distribution per Unit(c) |
$1.20 |
|
|
(a) Excludes any volumes from Rattler's equity
method investment joint ventures(b) Excludes the
approximate $22 million paid for the acquisition of the interest in
BANGL joint venture in January 2022(c) Represents
distribution paid during calendar year
CONFERENCE CALL
Rattler will host a conference call and webcast
for investors and analysts to discuss its results for the fourth
quarter of 2021 on Thursday, February 24, 2022 at 9:00 a.m. CT.
Participants should call (877) 288-2756 (United States/Canada) or
(470) 495-9481 (International) and use the confirmation code
2297026. A telephonic replay will be available from 12:00 p.m. CT
on Thursday, February 24, 2022 through Thursday, March 3, 2022 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 2297026. A live broadcast of the earnings
conference call will also be available via the internet at
www.rattlermidstream.com under the “Investors” section of the site.
A replay will also be available on the website following the
call.
About Rattler Midstream LP
Rattler Midstream LP is a Delaware limited
partnership formed by Diamondback Energy to own, operate, develop
and acquire midstream and energy-related infrastructure assets.
Rattler owns crude oil, natural gas and water-related midstream
assets in the Permian Basin that provide services to Diamondback
Energy and third party customers under primarily long-term,
fixed-fee contracts. For more information, please visit
www.rattlermidstream.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 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
Rattler’s: future performance; business strategy; future
operations; estimates and projections of revenues, losses, costs,
expenses, returns, cash flow, and financial position; anticipated
benefits of strategic transactions (including acquisitions and
divestitures); and plans and objectives of management (including
plans for future cash flow from operations) 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 Rattler are intended to identify forward-looking statements,
although not all forward-looking statements contain such
identifying words. Although Rattler 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 Rattler’s
control. Accordingly, forward-looking statements are not guarantees
of future performance and Rattler’s actual outcomes could differ
materially from what Rattler has 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 such as the COVID-19 pandemic, 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; regional supply and demand factors,
including delays, curtailment delays or interruptions of
production, or governmental orders, rules or regulations that
impose production limits; federal and state legislative and
regulatory initiatives relating to hydraulic fracturing, including
the effect of existing and future laws and governmental
regulations; and the risks and other factors disclosed in Rattler’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 Rattler’s forward-looking statements may not occur
at the time anticipated or at all. Moreover, Rattler operates in a
very competitive and rapidly changing environment and new risks
emerge from time to time. Rattler 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. Rattler does not intend to, and disclaims any obligation to,
update or revise any forward-looking statements unless required by
applicable law.
Rattler Midstream LP |
Consolidated Balance Sheets |
(unaudited, in thousands) |
|
|
|
|
|
December 31, |
|
December 31, |
|
|
2021 |
|
|
|
2020 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
19,897 |
|
|
$ |
23,927 |
|
Accounts receivable—related party |
|
58,154 |
|
|
|
57,447 |
|
Accounts receivable—third party, net |
|
9,415 |
|
|
|
5,658 |
|
Sourced water inventory |
|
13,081 |
|
|
|
10,108 |
|
Other current assets |
|
1,181 |
|
|
|
1,127 |
|
Total current assets |
|
101,728 |
|
|
|
98,267 |
|
Property, plant and
equipment: |
|
|
|
Land |
|
98,645 |
|
|
|
85,826 |
|
Property, plant and equipment |
|
1,075,405 |
|
|
|
1,012,777 |
|
Accumulated depreciation, amortization and accretion |
|
(121,507 |
) |
|
|
(100,728 |
) |
Property, plant and equipment, net |
|
1,052,543 |
|
|
|
997,875 |
|
Right of use assets |
|
— |
|
|
|
574 |
|
Equity method investments |
|
612,541 |
|
|
|
532,927 |
|
Real estate assets, net |
|
84,609 |
|
|
|
96,687 |
|
Intangible lease assets,
net |
|
3,650 |
|
|
|
4,262 |
|
Deferred tax asset |
|
62,356 |
|
|
|
73,264 |
|
Other assets |
|
3,708 |
|
|
|
4,732 |
|
Total assets |
$ |
1,921,135 |
|
|
$ |
1,808,588 |
|
Liabilities and Unitholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued liabilities |
$ |
48,267 |
|
|
$ |
42,647 |
|
Taxes payable |
|
603 |
|
|
|
192 |
|
Short-term lease liability |
|
— |
|
|
|
574 |
|
Asset retirement obligations |
|
79 |
|
|
|
35 |
|
Total current liabilities |
|
48,949 |
|
|
|
43,448 |
|
Long-term debt |
|
687,956 |
|
|
|
569,947 |
|
Asset retirement
obligations |
|
16,911 |
|
|
|
15,093 |
|
Total liabilities |
|
753,816 |
|
|
|
628,488 |
|
Commitments and
contingencies |
|
|
|
Unitholders’ equity: |
|
|
|
General Partner—Diamondback |
|
819 |
|
|
|
899 |
|
Common units—public (38,356,771 units issued and outstanding as of
December 31, 2021 and 42,356,637 units issued and outstanding
as of December 31, 2020) |
|
350,230 |
|
|
|
385,189 |
|
Class B units—Diamondback (107,815,152 units issued and outstanding
as of December 31, 2021 and as of December 31, 2020) |
|
819 |
|
|
|
899 |
|
Accumulated other comprehensive income (loss) |
|
10 |
|
|
|
(123 |
) |
Total Rattler Midstream LP unitholders’ equity |
|
351,878 |
|
|
|
386,864 |
|
Non-controlling interest |
|
815,441 |
|
|
|
793,638 |
|
Non-controlling interest in
accumulated other comprehensive income (loss) |
|
— |
|
|
|
(402 |
) |
Total equity |
|
1,167,319 |
|
|
|
1,180,100 |
|
Total liabilities and unitholders’ equity |
$ |
1,921,135 |
|
|
$ |
1,808,588 |
|
|
|
|
|
|
|
|
|
Rattler Midstream LP |
Consolidated Statements of Operations |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Revenues: |
|
|
|
|
|
|
|
Midstream revenues—related party |
$ |
90,228 |
|
|
$ |
98,629 |
|
|
$ |
356,498 |
|
|
$ |
379,089 |
|
Midstream revenues—third party |
|
6,920 |
|
|
|
7,620 |
|
|
|
26,893 |
|
|
|
31,124 |
|
Other revenues—related party |
|
1,747 |
|
|
|
2,382 |
|
|
|
8,909 |
|
|
|
7,801 |
|
Other revenues—third party |
|
937 |
|
|
|
605 |
|
|
|
4,041 |
|
|
|
5,891 |
|
Total revenues |
|
99,832 |
|
|
|
109,236 |
|
|
|
396,341 |
|
|
|
423,905 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Direct operating expenses |
|
21,780 |
|
|
|
29,968 |
|
|
|
102,925 |
|
|
|
131,393 |
|
Cost of goods sold (exclusive of depreciation and
amortization) |
|
13,410 |
|
|
|
11,002 |
|
|
|
43,470 |
|
|
|
38,370 |
|
Real estate operating expenses |
|
612 |
|
|
|
549 |
|
|
|
2,231 |
|
|
|
2,361 |
|
Depreciation, amortization and accretion |
|
11,268 |
|
|
|
17,527 |
|
|
|
49,196 |
|
|
|
53,123 |
|
Impairment and abandonments |
|
— |
|
|
|
918 |
|
|
|
3,371 |
|
|
|
918 |
|
General and administrative expenses |
|
6,683 |
|
|
|
4,538 |
|
|
|
21,611 |
|
|
|
16,367 |
|
(Gain) loss on disposal of assets |
|
(1,199 |
) |
|
|
(3,494 |
) |
|
|
4,956 |
|
|
|
(729 |
) |
Total costs and expenses |
|
52,554 |
|
|
|
61,008 |
|
|
|
227,760 |
|
|
|
241,803 |
|
Income (loss) from
operations |
|
47,278 |
|
|
|
48,228 |
|
|
|
168,581 |
|
|
|
182,102 |
|
Other income
(expense): |
|
|
|
|
|
|
|
Interest income (expense), net |
|
(8,363 |
) |
|
|
(6,923 |
) |
|
|
(32,080 |
) |
|
|
(17,287 |
) |
Gain (loss) on sale of equity method investments |
|
— |
|
|
|
— |
|
|
|
23,020 |
|
|
|
— |
|
Income (loss) from equity method investments |
|
8,305 |
|
|
|
29 |
|
|
|
14,779 |
|
|
|
(9,881 |
) |
Total other income (expense), net |
|
(58 |
) |
|
|
(6,894 |
) |
|
|
5,719 |
|
|
|
(27,168 |
) |
Net income (loss)
before income taxes |
|
47,220 |
|
|
|
41,334 |
|
|
|
174,300 |
|
|
|
154,934 |
|
Provision for (benefit from) income taxes |
|
2,769 |
|
|
|
2,475 |
|
|
|
10,530 |
|
|
|
10,229 |
|
Net income
(loss) |
|
44,451 |
|
|
|
38,859 |
|
|
|
163,770 |
|
|
|
144,705 |
|
Less: Net income (loss)
attributable to non-controlling interest |
|
34,616 |
|
|
|
29,239 |
|
|
|
126,990 |
|
|
|
110,014 |
|
Net income (loss)
attributable to Rattler Midstream LP |
$ |
9,835 |
|
|
$ |
9,620 |
|
|
$ |
36,780 |
|
|
$ |
34,691 |
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to limited partners per common unit: |
|
|
|
|
|
|
|
Basic |
$ |
0.24 |
|
|
$ |
0.21 |
|
|
$ |
0.86 |
|
|
$ |
0.74 |
|
Diluted |
$ |
0.24 |
|
|
$ |
0.21 |
|
|
$ |
0.86 |
|
|
$ |
0.74 |
|
Weighted average
number of limited partner common units outstanding: |
|
|
|
|
|
|
|
Basic |
|
39,436 |
|
|
|
43,448 |
|
|
|
40,682 |
|
|
|
43,739 |
|
Diluted |
|
39,436 |
|
|
|
43,448 |
|
|
|
40,682 |
|
|
|
43,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rattler Midstream LP |
Consolidated Statements of Cash Flows |
(unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
44,451 |
|
|
$ |
38,859 |
|
|
$ |
163,770 |
|
|
$ |
144,705 |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Provision for deferred income taxes |
|
1,451 |
|
|
|
2,475 |
|
|
|
9,212 |
|
|
|
10,229 |
|
Depreciation, amortization and accretion |
|
11,268 |
|
|
|
17,527 |
|
|
|
49,196 |
|
|
|
53,123 |
|
(Gain) loss on disposal of assets |
|
(1,199 |
) |
|
|
(3,494 |
) |
|
|
4,956 |
|
|
|
(729 |
) |
Unit-based compensation expense |
|
2,535 |
|
|
|
2,340 |
|
|
|
9,843 |
|
|
|
8,895 |
|
Impairment and abandonments |
|
— |
|
|
|
918 |
|
|
|
3,371 |
|
|
|
918 |
|
(Gain) loss on sale of equity method investments |
|
— |
|
|
|
— |
|
|
|
(23,020 |
) |
|
|
— |
|
(Income) loss from equity method investments |
|
(8,305 |
) |
|
|
(29 |
) |
|
|
(14,779 |
) |
|
|
9,881 |
|
Distributions from equity method investments |
|
11,455 |
|
|
|
— |
|
|
|
34,739 |
|
|
|
— |
|
Other |
|
500 |
|
|
|
503 |
|
|
|
2,009 |
|
|
|
970 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable—related party |
|
(11,022 |
) |
|
|
(8,826 |
) |
|
|
(675 |
) |
|
|
(7,177 |
) |
Accounts receivable—third party |
|
1,590 |
|
|
|
1,169 |
|
|
|
1,211 |
|
|
|
855 |
|
Accounts payable and accrued liabilities |
|
11,450 |
|
|
|
2,625 |
|
|
|
7,777 |
|
|
|
2,742 |
|
Other |
|
(1,873 |
) |
|
|
(1,542 |
) |
|
|
490 |
|
|
|
5,487 |
|
Net cash provided by (used in)
operating activities |
|
62,301 |
|
|
|
52,525 |
|
|
|
248,100 |
|
|
|
229,899 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
(8,030 |
) |
|
|
(11,831 |
) |
|
|
(32,169 |
) |
|
|
(136,820 |
) |
Acquisitions of property, plant and equipment |
|
(160,000 |
) |
|
|
— |
|
|
|
(160,000 |
) |
|
|
— |
|
Contributions to equity method investments |
|
(2,016 |
) |
|
|
(12,748 |
) |
|
|
(9,085 |
) |
|
|
(102,499 |
) |
Acquisition of equity method investment |
|
(104,502 |
) |
|
|
— |
|
|
|
(104,502 |
) |
|
|
— |
|
Distributions from equity method investments |
|
— |
|
|
|
12,277 |
|
|
|
9,107 |
|
|
|
39,767 |
|
Proceeds from the sale of equity method investments |
|
— |
|
|
|
— |
|
|
|
23,485 |
|
|
|
— |
|
Proceeds from the sale of real estate |
|
— |
|
|
|
— |
|
|
|
9,191 |
|
|
|
— |
|
Proceeds from the sale of fixed assets |
|
80,400 |
|
|
|
18,701 |
|
|
|
80,650 |
|
|
|
18,743 |
|
Net cash provided by (used in)
investing activities |
|
(194,148 |
) |
|
|
6,399 |
|
|
|
(183,323 |
) |
|
|
(180,809 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Proceeds from Note Offering |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
500,000 |
|
Proceeds from borrowings from revolving credit facility |
|
311,000 |
|
|
|
32,000 |
|
|
|
355,000 |
|
|
|
211,000 |
|
Payments on revolving credit facility |
|
(116,000 |
) |
|
|
(38,000 |
) |
|
|
(239,000 |
) |
|
|
(556,000 |
) |
Debt issuance costs |
|
— |
|
|
|
(9 |
) |
|
|
— |
|
|
|
(10,023 |
) |
Repurchased units as part of unit buyback |
|
(18,967 |
) |
|
|
(14,741 |
) |
|
|
(47,591 |
) |
|
|
(14,741 |
) |
Distribution to public |
|
(9,940 |
) |
|
|
(8,802 |
) |
|
|
(36,540 |
) |
|
|
(46,906 |
) |
Distribution to Diamondback |
|
(26,974 |
) |
|
|
(21,582 |
) |
|
|
(97,114 |
) |
|
|
(115,442 |
) |
Other |
|
(455 |
) |
|
|
(439 |
) |
|
|
(3,562 |
) |
|
|
(3,684 |
) |
Net cash provided by (used in)
financing activities |
|
138,664 |
|
|
|
(51,573 |
) |
|
|
(68,807 |
) |
|
|
(35,796 |
) |
Net increase
(decrease) in cash |
|
6,817 |
|
|
|
7,351 |
|
|
|
(4,030 |
) |
|
|
13,294 |
|
Cash at beginning of period |
|
13,080 |
|
|
|
16,576 |
|
|
|
23,927 |
|
|
|
10,633 |
|
Cash at end of period |
$ |
19,897 |
|
|
$ |
23,927 |
|
|
$ |
19,897 |
|
|
$ |
23,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables provide information
regarding our gathering, compression and transportation system as
of December 31, 2021 and utilization for the quarter ended
December 31, 2021:
Rattler Midstream LP |
Pipeline Infrastructure Assets |
(unaudited) |
|
|
|
|
|
|
|
As of December 31, 2021 |
(miles)(a) |
Delaware Basin |
|
Midland Basin |
|
Permian Total |
Crude oil |
113 |
|
46 |
|
159 |
Produced water |
273 |
|
310 |
|
583 |
Sourced water |
27 |
|
97 |
|
124 |
Total |
413 |
|
453 |
|
866 |
|
|
|
|
|
|
(a) Does not include any assets of the equity
method investments joint ventures
Rattler Midstream LP |
Capacity/Capability |
(unaudited) |
|
|
|
|
|
|
|
|
|
As of December 31, 2021 |
(capacity/capability)(a) |
Delaware Basin |
|
Midland Basin |
|
Permian Total |
|
Utilization |
Crude oil gathering (Bbl/d) |
240,000 |
|
65,000 |
|
305,000 |
|
27 |
% |
Produced water gathering and
disposal (Bbl/d) |
1,330,000 |
|
2,134,000 |
|
3,464,000 |
|
24 |
% |
Sourced water gathering
(Bbl/d) |
120,000 |
|
544,000 |
|
664,000 |
|
43 |
% |
|
|
|
|
|
|
|
|
|
(a) Does not include any assets of the equity
method investments joint ventures
Rattler Midstream LP |
Throughput |
(unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(throughput)(a) |
2021 |
|
2020 |
|
2021 |
|
2020 |
Crude oil gathering
(Bbl/d) |
74,582 |
|
88,634 |
|
79,071 |
|
92,056 |
Natural gas gathering
(MMBtu/d) |
42,672 |
|
141,140 |
|
112,130 |
|
121,637 |
Produced water gathering and
disposal (Bbl/d) |
818,291 |
|
810,493 |
|
783,259 |
|
821,543 |
Sourced water gathering
(Bbl/d) |
307,047 |
|
287,255 |
|
268,259 |
|
253,907 |
|
|
|
|
|
|
|
|
(a) Does not include any assets of the equity
method investments joint ventures.
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA is a supplemental non-GAAP
financial measure used by management and external users of its
financial statements, such as industry analysts, investors, lenders
and rating agencies. Management believes Adjusted EBITDA is useful
because the measure allows it to more effectively evaluate the
Company's operating performance and compare the results of its
operations period to period without regard to its financing methods
or capital structure.
The Company defines Adjusted EBITDA as net
income (loss) attributable to the Company plus net income (loss)
attributable to non-controlling interest before interest expense
(net of amount capitalized), depreciation, amortization and
accretion on assets and liabilities of Rattler Midstream Operating
LLC, its proportional depreciation and interest expense related to
equity method investments, its proportional impairments and
abandonments related to equity method investments, non-cash
unit-based compensation expense, impairment and abandonments,
(gain) loss on disposal of assets, (gain) loss from sale of equity
method investment, provision for income taxes and other. The GAAP
measure most directly comparable to Adjusted EBITDA is net income
(loss). However, Adjusted EBITDA should not be considered an
alternative to net income (loss) or any other measure of financial
performance or liquidity presented in accordance with generally
accepted accounting principles in the United States ("GAAP"). The
Company excludes the items listed above from net income (loss) in
arriving at Adjusted EBITDA because these amounts can vary
substantially from company to company within our industry depending
upon accounting methods and book values of assets, capital
structures and the method by which the assets were acquired. As
such, Adjusted EBITDA as presented below may not be comparable to
similarly titled measures of other companies, and may not be
comparable to similarly titled measures in Rattler Midstream
Operating LLC’s credit agreement and in the indenture that governs
its senior notes. 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 historic costs of depreciable assets.
This release provides 2022 guidance for Adjusted
EBITDA (non-GAAP measure) and net income (loss) (the comparable
GAAP measure). We do not provide guidance on the reconciling items
between forecasted net income (loss) and forecasted Adjusted EBITDA
due to the uncertainty regarding timing and estimates of these
items. We provide a range for the forecasts of net income (loss)
and Adjusted EBITDA to allow for the variability in timing and
uncertainty of estimates of reconciling items between forecasted
net income (loss) and forecasted Adjusted EBITDA. Such reconciling
items could be significant. Therefore, we cannot reconcile
forecasted net income (loss) to forecasted Adjusted EBITDA without
unreasonable effort.
The following table presents a reconciliation of
net income (loss), the most directly comparable GAAP financial
measure, to Adjusted EBITDA for each of the periods indicated:
Rattler Midstream LP |
Adjusted EBITDA |
(unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year Ended December 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Reconciliation of Net Income (Loss) to Adjusted
EBITDA: |
|
|
|
|
|
|
|
Net income (loss) attributable to Rattler Midstream
LP |
$ |
9,835 |
|
|
$ |
9,620 |
|
|
$ |
36,780 |
|
|
$ |
34,691 |
|
Net income (loss) attributable to non-controlling interest |
|
34,616 |
|
|
|
29,239 |
|
|
|
126,990 |
|
|
|
110,014 |
|
Net income (loss) |
|
44,451 |
|
|
|
38,859 |
|
|
|
163,770 |
|
|
|
144,705 |
|
Interest expense, net of amount capitalized |
|
8,363 |
|
|
|
6,923 |
|
|
|
32,080 |
|
|
|
17,287 |
|
Depreciation, amortization and accretion |
|
11,268 |
|
|
|
17,527 |
|
|
|
49,196 |
|
|
|
53,123 |
|
Depreciation and interest expense related to equity method
investments |
|
12,624 |
|
|
|
12,116 |
|
|
|
42,984 |
|
|
|
32,456 |
|
Impairments and abandonments related to equity method
investments |
|
— |
|
|
|
28 |
|
|
|
3,484 |
|
|
|
16,543 |
|
Non-cash unit-based compensation expense |
|
2,535 |
|
|
|
2,340 |
|
|
|
9,843 |
|
|
|
8,895 |
|
Impairment and abandonments |
|
— |
|
|
|
918 |
|
|
|
3,371 |
|
|
|
918 |
|
(Gain) loss on disposal of assets |
|
(1,199 |
) |
|
|
(3,494 |
) |
|
|
4,956 |
|
|
|
(729 |
) |
Gain (loss) on sale of equity method investments |
|
— |
|
|
|
— |
|
|
|
(23,020 |
) |
|
|
— |
|
Provision for income taxes |
|
2,769 |
|
|
|
2,475 |
|
|
|
10,530 |
|
|
|
10,229 |
|
Other |
|
— |
|
|
|
(49 |
) |
|
|
6 |
|
|
|
422 |
|
Adjusted EBITDA |
|
80,811 |
|
|
|
77,643 |
|
|
|
297,200 |
|
|
|
283,849 |
|
Less:
Adjusted EBITDA attributable to non-controlling interest |
|
59,263 |
|
|
|
55,411 |
|
|
|
216,096 |
|
|
|
201,994 |
|
Adjusted EBITDA attributable to Rattler Midstream
LP |
$ |
21,548 |
|
|
$ |
22,232 |
|
|
$ |
81,104 |
|
|
$ |
81,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) is a supplemental
non-GAAP financial measure equal to net income (loss) attributable
to Rattler Midstream LP plus net income (loss) attributable to
non-controlling interest adjusted for (gain) loss on disposal of
assets and related income tax adjustments. Management believes
adjusted net income (loss) is useful because the measure provides
useful information to analysts and investors for analysis of its
operating results on a consistent, comparable basis from period to
period. The Company's computation of adjusted net income (loss) 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.
The following table presents a reconciliation of
net income (loss) attributable to Rattler Midstream LP to adjusted
net income (loss) for each of the periods indicated:
Rattler Midstream LP |
Adjusted Net Income (Loss) |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
|
Three Months Ended December 31, 2021 |
|
Amounts |
|
Amounts Per Dilutive Share |
Reconciliation of Net Income (Loss) to Adjusted Net
Income: |
|
|
|
Net income (loss) attributable to Rattler Midstream LP |
$ |
9,835 |
|
|
$ |
0.24 |
|
Net income (loss) attributable to non-controlling interest |
|
34,616 |
|
|
|
0.88 |
|
Net income
(loss) |
|
44,451 |
|
|
|
1.12 |
|
(Gain) loss on disposal of assets |
|
(1,199 |
) |
|
|
(0.02 |
) |
Adjusted income (loss) excluding above items |
|
43,252 |
|
|
|
1.10 |
|
Income tax adjustment for above items |
|
75 |
|
|
|
— |
|
Adjusted Net Income
(Loss) |
|
43,327 |
|
|
|
1.10 |
|
Less: Adjusted net income (loss) attributable to non-controlling
interest |
|
33,738 |
|
|
|
0.86 |
|
Adjusted net income
(loss) attributable to Rattler Midstream LP |
$ |
9,589 |
|
|
$ |
0.24 |
|
|
|
|
|
Weighted average
common units outstanding: |
Basic |
|
|
39,436 |
|
Diluted |
|
|
39,436 |
|
|
|
|
|
|
Operating cash flow before working capital
changes, which is a supplemental non-GAAP financial measure,
represents net cash provided by operating activities as determined
under GAAP without regard to changes in operating assets and
liabilities. The GAAP financial measure most directly comparable to
operating cash flow before working capital changes is net cash
provided by operating activities. Management believes operating
cash flow before working capital changes is an accepted measure
which reflects cash flow from operating activities, additions to
property, plant and equipment and net investments in its equity
method investments across periods on a consistent basis. The
Company also uses this measure because adjusted operating cash flow
relates to the timing of cash receipts and disbursements that the
Company may not control and may not relate to the period in which
the operating activities occurred. This allows the Company to
compare its operating performance with that of other companies
without regard to financing methods and capital structure.
Free Cash Flow, which is a supplemental non-GAAP
financial measure, is operating cash flow before working capital
changes net of additions to property, plant and equipment and
distributions from equity method investments. The GAAP financial
measure most directly comparable to Free Cash Flow is net cash
provided by operating activities. Management believes that Free
Cash Flow is useful to investors as it provides the amount of cash
available for reducing debt, investing in additional capital
projects or paying dividends. This measure should not be considered
as an alternative to, or more meaningful than, net cash provided by
operating activities as an indicator of operating performance. The
Company's computation of operating cash flow before working capital
changes and Free Cash Flow may not be comparable to other similarly
titled measures of other companies.
The following tables present a reconciliation of
net cash provided by operating activities to operating cash flow
before working capital changes and Free Cash Flow:
Rattler Midstream LP |
Operating Cash Flow and Free Cash Flow |
(unaudited, in thousands) |
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Net cash provided by
operating activities |
$ |
62,301 |
|
|
$ |
52,525 |
|
|
$ |
248,100 |
|
|
$ |
229,899 |
|
Less: Changes in cash due to
changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable—related party |
|
(11,022 |
) |
|
|
(8,826 |
) |
|
|
(675 |
) |
|
|
(7,177 |
) |
Accounts receivable—third party |
|
1,590 |
|
|
|
1,169 |
|
|
|
1,211 |
|
|
|
855 |
|
Accounts payable and accrued liabilities |
|
11,450 |
|
|
|
2,625 |
|
|
|
7,777 |
|
|
|
2,742 |
|
Other |
|
(1,873 |
) |
|
|
(1,542 |
) |
|
|
490 |
|
|
|
5,487 |
|
Total working capital
changes |
|
145 |
|
|
|
(6,574 |
) |
|
|
8,803 |
|
|
|
1,907 |
|
Operating cash flow
before working capital changes |
|
62,156 |
|
|
|
59,099 |
|
|
|
239,297 |
|
|
|
227,992 |
|
Additions to property, plant and equipment |
|
(8,030 |
) |
|
|
(11,831 |
) |
|
|
(32,169 |
) |
|
|
(136,820 |
) |
Distributions from equity method investments |
|
— |
|
|
|
12,277 |
|
|
|
9,107 |
|
|
|
39,767 |
|
Free Cash
Flow |
$ |
54,126 |
|
|
$ |
59,545 |
|
|
$ |
216,235 |
|
|
$ |
130,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Contact:Adam Lawlis+1
432.221.7467alawlis@rattlermidstream.com
Jared Carameros+1
432.247.6213jcarameros@rattlermidstream.com
Source: Rattler Midstream LP; Diamondback Energy, Inc.
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