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 second quarter ended June 30, 2022. Due to the pending
merger between Diamondback and Rattler, Rattler will not host an
earnings call for the second quarter 2022 nor hold an investor
presentation.
SECOND QUARTER 2022
HIGHLIGHTS
- Q2 2022 consolidated net income
(including non-controlling interest) of $55.1 million
- Q2 2022 Adjusted EBITDA (as defined
and reconciled below) of $102.4 million
- Q2 2022 cash flow provided by
operating activities of $73.2 million
- Q2 2022 cash operated capital
expenditures of $25.2 million
- Q2 2022 Free Cash Flow (as defined
and reconciled below) of $36.1 million
- Board of Directors of Rattler's
general partner approved a cash distribution for the second quarter
of 2022 of $0.30 per common unit
- 40% of sourced water volumes sold
during Q2 2022 represented recycled produced water
OPERATIONS AND FINANCIAL
UPDATE
During the second quarter of 2022, the Company
recorded total operating income of $39.6 million, an increase of 1%
compared to the first quarter of 2022. During the second quarter of
2022, the Company recorded consolidated net income (including
non-controlling interest) of $55.1 million, an increase of 48% from
the first quarter of 2022. Second quarter 2022 Adjusted EBITDA
(including non-controlling interest and as defined and reconciled
below) was $102.4 million, an increase of 18% from the first
quarter of 2022.
Second quarter operated capital expenditures
totaled $25.2 million. Rattler also received proceeds of $11.4
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 EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Crude oil gathering (Bbl/d) |
|
72,324 |
|
|
84,014 |
|
|
75,141 |
|
|
84,609 |
|
Natural gas gathering
(MMBtu/d) |
|
— |
|
|
141,529 |
|
|
— |
|
|
136,014 |
|
Produced water gathering and
disposal (Bbl/d) |
|
840,205 |
|
|
801,967 |
|
|
843,004 |
|
|
783,878 |
|
Sourced water gathering
(Bbl/d) |
|
373,619 |
|
|
241,570 |
|
|
380,542 |
|
|
254,629 |
|
(a) Does not include any volumes from our equity
method investment joint ventures.
CASH DISTRIBUTION AND TRANSACTION
UPDATE
On July 27, 2022, the Board of Directors of
Rattler's general partner approved a cash distribution for the
second quarter of 2022 of $0.30 per common unit, payable on
August 23, 2022 to unitholders of record at the close of
business on August 16, 2022. Rattler and Diamondback expect that
their pending merger will close, subject to certain closing
conditions, reasonably promptly following the distribution payment
date.
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.
Important Information for Investors; Additional
Information and Where to Find It
This communication is for information purposes
only does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or
approval, nor shall there be any sale, issuance, exchange or
transfer of the securities referred to in this document in any
jurisdiction in contravention of applicable law. In connection with
the pending merger, Diamondback has filed with the Securities and
Exchange Commission (the “SEC”) a registration statement on Form
S-4, as amended, that includes an information statement that also
constitutes a prospectus of Diamondback. Diamondback’s registration
statement on Form S-4, as amended, was declared effective by the
SEC on July 28, 2022, and Rattler’s information statement and
Diamondback’s Rule 424(b)(3) prospectus were filed with the SEC on
the same date. Each of Rattler and Diamondback have also filed
other relevant documents with the SEC regarding the pending merger.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
INVESTORS AND SECURITY HOLDERS OF RATTLER AND
DIAMONDBACK ARE URGED TO READ THE REGISTRATION STATEMENT,
INFORMATION STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT HAVE BEEN
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY
CONTAIN IMPORTANT INFORMATION ABOUT THE PENDING MERGER.
Investors and security holders are able to
obtain free copies of these documents and other documents
containing important information about Rattler and Diamondback
through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed with the SEC by Rattler are available
free of charge on Rattler’s website at
https://www.rattlermidstream.com under the tab “Investors” and then
under the heading “Financial Information.” Copies of the documents
filed with the SEC by Diamondback are available free of charge on
Diamondback’s website at https://www.diamondbackenergy.com under
the tab “Investors” and then under the heading “Financial
Information.”
Participants in the Solicitation
Rattler, Diamondback, the directors and
executive officers of the General Partner and Diamondback, as
applicable, and certain other persons may be deemed to be
participants in the solicitation of proxies and consents in respect
of the pending merger. Information regarding the directors and
executive officers of the General Partner is available in Rattler’s
annual report on Form 10-K for the fiscal year ended December 31,
2021 filed with the SEC on February 24, 2022. Information regarding
the directors and executive officers of Diamondback is available in
its definitive proxy statement for its 2022 annual meeting, filed
with the SEC on April 28, 2022, and in Diamondback’s annual report
on Form 10-K for the fiscal year ended December 31, 2021, filed
with the SEC on February 24, 2022. Other information regarding the
participants in the solicitations and a description of their direct
and indirect interests, by security holdings or otherwise, are
contained in the information statement/prospectus and other
relevant materials filed with the SEC. Investors should read the
information statement/prospectus carefully before making any
investment decisions. You may obtain free copies of these documents
from Rattler or Diamondback using the sources indicated above.
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, including any impact of the ongoing
Russian-Ukrainian conflict on the global energy markets and
geopolitical stability; 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) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash |
|
$ |
17,784 |
|
|
$ |
19,897 |
|
Accounts receivable—related-party |
|
|
54,620 |
|
|
|
58,154 |
|
Accounts receivable—third-party, net |
|
|
7,971 |
|
|
|
9,415 |
|
Sourced water inventory |
|
|
15,858 |
|
|
|
13,081 |
|
Other current assets |
|
|
778 |
|
|
|
1,181 |
|
Total current assets |
|
|
97,011 |
|
|
|
101,728 |
|
Property, plant and
equipment: |
|
|
|
|
Land |
|
|
98,646 |
|
|
|
98,645 |
|
Property, plant and equipment |
|
|
1,140,914 |
|
|
|
1,075,405 |
|
Accumulated depreciation, amortization and accretion |
|
|
(144,332 |
) |
|
|
(121,507 |
) |
Property, plant and equipment, net |
|
|
1,095,228 |
|
|
|
1,052,543 |
|
Equity method investments |
|
|
659,749 |
|
|
|
612,541 |
|
Real estate assets, net |
|
|
84,042 |
|
|
|
84,609 |
|
Intangible lease assets,
net |
|
|
3,425 |
|
|
|
3,650 |
|
Deferred tax asset |
|
|
56,218 |
|
|
|
62,356 |
|
Other assets |
|
|
5,943 |
|
|
|
3,708 |
|
Total assets |
|
$ |
2,001,616 |
|
|
$ |
1,921,135 |
|
Liabilities and Unitholders’ Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
67,501 |
|
|
$ |
48,267 |
|
Taxes payable |
|
|
187 |
|
|
|
603 |
|
Asset retirement obligations |
|
|
— |
|
|
|
79 |
|
Total current liabilities |
|
|
67,688 |
|
|
|
48,949 |
|
Long-term debt |
|
|
725,963 |
|
|
|
687,956 |
|
Asset retirement
obligations |
|
|
37,904 |
|
|
|
16,911 |
|
Total liabilities |
|
|
831,555 |
|
|
|
753,816 |
|
Unitholders’ equity: |
|
|
|
|
General Partner—Diamondback |
|
|
779 |
|
|
|
819 |
|
Common units—public (38,417,574 units issued and outstanding as of
June 30, 2022 and 38,356,771 units issued and outstanding as
of December 31, 2021) |
|
|
347,745 |
|
|
|
350,230 |
|
Class B units—Diamondback (107,815,152 units issued and outstanding
as of June 30, 2022 and as of December 31, 2021) |
|
|
779 |
|
|
|
819 |
|
Accumulated other comprehensive income (loss) |
|
|
11 |
|
|
|
10 |
|
Total Rattler Midstream LP unitholders’ equity |
|
|
349,314 |
|
|
|
351,878 |
|
Non-controlling interest |
|
|
820,747 |
|
|
|
815,441 |
|
Total equity |
|
|
1,170,061 |
|
|
|
1,167,319 |
|
Total liabilities and unitholders’ equity |
|
$ |
2,001,616 |
|
|
$ |
1,921,135 |
|
Rattler Midstream LP |
Consolidated Statements of Operations |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenues: |
|
|
|
|
|
|
|
|
Midstream revenues—related-party |
|
$ |
91,130 |
|
|
$ |
91,579 |
|
|
$ |
181,432 |
|
|
$ |
178,657 |
|
Midstream revenues—third-party |
|
|
10,524 |
|
|
|
5,967 |
|
|
|
20,970 |
|
|
|
14,088 |
|
Other revenues—related-party |
|
|
1,748 |
|
|
|
2,542 |
|
|
|
3,499 |
|
|
|
5,082 |
|
Other revenues—third-party |
|
|
960 |
|
|
|
1,043 |
|
|
|
1,924 |
|
|
|
2,112 |
|
Total revenues |
|
|
104,362 |
|
|
|
101,131 |
|
|
|
207,825 |
|
|
|
199,939 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Direct operating expenses |
|
|
21,195 |
|
|
|
26,299 |
|
|
|
42,823 |
|
|
|
58,810 |
|
Cost of goods sold (exclusive of depreciation and
amortization) |
|
|
20,117 |
|
|
|
10,298 |
|
|
|
35,297 |
|
|
|
19,109 |
|
Real estate operating expenses |
|
|
610 |
|
|
|
544 |
|
|
|
1,143 |
|
|
|
1,061 |
|
Depreciation, amortization and accretion |
|
|
15,112 |
|
|
|
15,239 |
|
|
|
35,799 |
|
|
|
26,485 |
|
Impairment and abandonments |
|
|
177 |
|
|
|
— |
|
|
|
1,259 |
|
|
|
3,371 |
|
General and administrative expenses |
|
|
6,389 |
|
|
|
4,956 |
|
|
|
11,734 |
|
|
|
9,590 |
|
(Gain) loss on disposal of assets |
|
|
1,187 |
|
|
|
5,005 |
|
|
|
1,116 |
|
|
|
5,011 |
|
Total costs and expenses |
|
|
64,787 |
|
|
|
62,341 |
|
|
|
129,171 |
|
|
|
123,437 |
|
Income (loss) from
operations |
|
|
39,575 |
|
|
|
38,790 |
|
|
|
78,654 |
|
|
|
76,502 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest income (expense), net |
|
|
(9,126 |
) |
|
|
(8,235 |
) |
|
|
(17,810 |
) |
|
|
(15,545 |
) |
Gain (loss) on sale of equity method investments |
|
|
— |
|
|
|
22,989 |
|
|
|
— |
|
|
|
22,989 |
|
Income (loss) from equity method investments |
|
|
27,952 |
|
|
|
4,472 |
|
|
|
37,032 |
|
|
|
1,649 |
|
Total other income (expense), net |
|
|
18,826 |
|
|
|
19,226 |
|
|
|
19,222 |
|
|
|
9,093 |
|
Net income (loss)
before income taxes |
|
|
58,401 |
|
|
|
58,016 |
|
|
|
97,876 |
|
|
|
85,595 |
|
Provision for (benefit from) income taxes |
|
|
3,330 |
|
|
|
3,539 |
|
|
|
5,714 |
|
|
|
5,210 |
|
Net income
(loss) |
|
|
55,071 |
|
|
|
54,477 |
|
|
|
92,162 |
|
|
|
80,385 |
|
Less: Net income (loss)
attributable to non-controlling interest |
|
|
43,083 |
|
|
|
42,032 |
|
|
|
72,243 |
|
|
|
61,925 |
|
Net income (loss)
attributable to Rattler Midstream LP |
|
$ |
11,988 |
|
|
$ |
12,445 |
|
|
$ |
19,919 |
|
|
$ |
18,460 |
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to limited partners per common unit: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.30 |
|
|
$ |
0.30 |
|
|
$ |
0.49 |
|
|
$ |
0.42 |
|
Diluted |
|
$ |
0.30 |
|
|
$ |
0.30 |
|
|
$ |
0.49 |
|
|
$ |
0.42 |
|
Weighted average
number of limited partner common units outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
38,245 |
|
|
|
41,033 |
|
|
|
38,202 |
|
|
|
41,386 |
|
Diluted |
|
|
38,267 |
|
|
|
41,033 |
|
|
|
38,202 |
|
|
|
41,386 |
|
Rattler Midstream LP |
Consolidated Statements of Cash Flows |
(unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
55,071 |
|
|
$ |
54,477 |
|
|
$ |
92,162 |
|
|
$ |
80,385 |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Provision for (benefit from) income taxes |
|
|
3,336 |
|
|
|
3,539 |
|
|
|
5,723 |
|
|
|
5,210 |
|
Depreciation, amortization and accretion |
|
|
15,112 |
|
|
|
15,239 |
|
|
|
35,799 |
|
|
|
26,485 |
|
Unit-based compensation expense |
|
|
2,609 |
|
|
|
2,485 |
|
|
|
5,129 |
|
|
|
4,817 |
|
Impairment and abandonments |
|
|
177 |
|
|
|
— |
|
|
|
1,259 |
|
|
|
3,371 |
|
(Gain) loss on sale of equity method investments |
|
|
— |
|
|
|
(22,989 |
) |
|
|
— |
|
|
|
(22,989 |
) |
(Income) loss from equity method investments |
|
|
(27,952 |
) |
|
|
(4,472 |
) |
|
|
(37,032 |
) |
|
|
(1,649 |
) |
Distributions from equity method investments |
|
|
11,408 |
|
|
|
9,055 |
|
|
|
18,958 |
|
|
|
9,055 |
|
Other |
|
|
1,548 |
|
|
|
5,509 |
|
|
|
2,122 |
|
|
|
6,018 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable—related-party |
|
|
(2,238 |
) |
|
|
7,843 |
|
|
|
3,502 |
|
|
|
19,052 |
|
Accounts receivable—third-party |
|
|
6,136 |
|
|
|
1,474 |
|
|
|
1,476 |
|
|
|
72 |
|
Accounts payable and accrued liabilities |
|
|
10,202 |
|
|
|
2,567 |
|
|
|
6,135 |
|
|
|
(3,525 |
) |
Other |
|
|
(2,196 |
) |
|
|
1,017 |
|
|
|
(2,132 |
) |
|
|
2,110 |
|
Net cash provided by (used in)
operating activities |
|
|
73,213 |
|
|
|
75,744 |
|
|
|
133,101 |
|
|
|
128,412 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(25,180 |
) |
|
|
(11,853 |
) |
|
|
(43,068 |
) |
|
|
(17,713 |
) |
Acquisitions of property, plant and equipment |
|
|
— |
|
|
|
— |
|
|
|
(4,334 |
) |
|
|
— |
|
Contributions to equity method investments |
|
|
— |
|
|
|
(2,791 |
) |
|
|
(29,133 |
) |
|
|
(6,454 |
) |
Distributions from equity method investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,107 |
|
Proceeds from the sale of equity method investments |
|
|
— |
|
|
|
23,455 |
|
|
|
— |
|
|
|
23,455 |
|
Proceeds from the sale of real estate |
|
|
— |
|
|
|
9,118 |
|
|
|
— |
|
|
|
9,118 |
|
Other |
|
|
1,197 |
|
|
|
250 |
|
|
|
(1,553 |
) |
|
|
250 |
|
Net cash provided by (used in)
investing activities |
|
|
(23,983 |
) |
|
|
18,179 |
|
|
|
(78,088 |
) |
|
|
17,763 |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Proceeds from borrowings under Credit Agreement |
|
|
19,000 |
|
|
|
12,000 |
|
|
|
54,000 |
|
|
|
24,000 |
|
Payments on Credit Agreement |
|
|
(17,000 |
) |
|
|
(61,000 |
) |
|
|
(17,000 |
) |
|
|
(98,000 |
) |
Repurchased units as part of unit buyback |
|
|
— |
|
|
|
(5,198 |
) |
|
|
(2,582 |
) |
|
|
(16,312 |
) |
Distribution to public |
|
|
(11,444 |
) |
|
|
(8,183 |
) |
|
|
(22,888 |
) |
|
|
(16,446 |
) |
Distribution to Diamondback |
|
|
(32,365 |
) |
|
|
(21,583 |
) |
|
|
(64,730 |
) |
|
|
(43,166 |
) |
Other |
|
|
(3,339 |
) |
|
|
(2,169 |
) |
|
|
(3,926 |
) |
|
|
(2,628 |
) |
Net cash provided by (used in)
financing activities |
|
|
(45,148 |
) |
|
|
(86,133 |
) |
|
|
(57,126 |
) |
|
|
(152,552 |
) |
Net increase
(decrease) in cash |
|
|
4,082 |
|
|
|
7,790 |
|
|
|
(2,113 |
) |
|
|
(6,377 |
) |
Cash at beginning of period |
|
|
13,702 |
|
|
|
9,760 |
|
|
|
19,897 |
|
|
|
23,927 |
|
Cash at end of period |
|
$ |
17,784 |
|
|
$ |
17,550 |
|
|
$ |
17,784 |
|
|
$ |
17,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables provide information
regarding our gathering, compression and transportation system as
of June 30, 2022 and utilization for the quarter ended
June 30, 2022:
Rattler Midstream LP |
Pipeline Infrastructure Assets |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2022 |
(miles)(a) |
|
Delaware Basin |
|
Midland Basin |
|
Permian Total |
Crude oil |
|
114 |
|
|
46 |
|
|
160 |
|
Produced water |
|
276 |
|
|
333 |
|
|
609 |
|
Sourced water |
|
27 |
|
|
102 |
|
|
129 |
|
Total |
|
417 |
|
|
481 |
|
|
898 |
|
(a) Does not include any assets of the equity
method investment joint ventures.
Rattler Midstream LP |
Capacity/Capability |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2022 |
(capacity/capability)(a) |
|
DelawareBasin |
|
MidlandBasin |
|
PermianTotal |
|
Utilization |
Crude oil gathering (Bbl/d) |
|
240,000 |
|
|
65,000 |
|
|
305,000 |
|
|
26% |
|
Produced water gathering and
disposal (Bbl/d) |
|
1,330,000 |
|
|
2,108,000 |
|
|
3,438,000 |
|
|
23% |
|
Sourced water gathering
(Bbl/d) |
|
120,000 |
|
|
655,000 |
|
|
775,000 |
|
|
37% |
|
(a) Does not include any assets of the equity
method investment joint ventures.
Rattler Midstream LP |
Throughput |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
(throughput)(a) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Crude oil gathering
(Bbl/d) |
|
72,324 |
|
|
84,014 |
|
|
75,141 |
|
|
84,609 |
|
Natural gas gathering
(MMBtu/d) |
|
— |
|
|
141,529 |
|
|
— |
|
|
136,014 |
|
Produced water gathering and
disposal (Bbl/d) |
|
840,205 |
|
|
801,967 |
|
|
843,004 |
|
|
783,878 |
|
Sourced water gathering
(Bbl/d) |
|
373,619 |
|
|
241,570 |
|
|
380,542 |
|
|
254,629 |
|
(a) Does not include any assets of the equity
method investment 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, impairment and
abandonments, non-cash unit-based compensation expense, (gain) loss
on disposal of assets, 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.
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 EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Reconciliation of Net
Income (Loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Rattler Midstream LP |
|
$ |
11,988 |
|
|
$ |
12,445 |
|
|
$ |
19,919 |
|
|
$ |
18,460 |
|
Net income (loss) attributable to non-controlling interest |
|
|
43,083 |
|
|
|
42,032 |
|
|
|
72,243 |
|
|
|
61,925 |
|
Net income
(loss) |
|
|
55,071 |
|
|
|
54,477 |
|
|
|
92,162 |
|
|
|
80,385 |
|
Interest expense, net of amount capitalized |
|
|
9,126 |
|
|
|
8,235 |
|
|
|
17,810 |
|
|
|
15,545 |
|
Depreciation, amortization and accretion |
|
|
15,112 |
|
|
|
15,239 |
|
|
|
35,799 |
|
|
|
26,485 |
|
Depreciation and interest expense related to equity method
investments |
|
|
15,681 |
|
|
|
10,036 |
|
|
|
30,052 |
|
|
|
20,561 |
|
Impairments and abandonments related to equity method
investments |
|
|
124 |
|
|
|
— |
|
|
|
361 |
|
|
|
2,933 |
|
Impairment and abandonments |
|
|
177 |
|
|
|
— |
|
|
|
1,259 |
|
|
|
3,371 |
|
Non-cash unit-based compensation expense |
|
|
2,609 |
|
|
|
2,485 |
|
|
|
5,129 |
|
|
|
4,817 |
|
(Gain) loss on disposal of assets |
|
|
1,187 |
|
|
|
5,005 |
|
|
|
1,116 |
|
|
|
5,011 |
|
(Gain) loss on sale of equity method investments |
|
|
— |
|
|
|
(22,989 |
) |
|
|
— |
|
|
|
(22,989 |
) |
Provision for income taxes |
|
|
3,330 |
|
|
|
3,539 |
|
|
|
5,714 |
|
|
|
5,210 |
|
Other |
|
|
— |
|
|
|
22 |
|
|
|
— |
|
|
|
34 |
|
Adjusted
EBITDA |
|
|
102,417 |
|
|
|
76,049 |
|
|
|
189,402 |
|
|
|
141,363 |
|
Less: Adjusted EBITDA
attributable to non-controlling interest |
|
|
75,560 |
|
|
|
55,084 |
|
|
|
139,814 |
|
|
|
102,219 |
|
Adjusted EBITDA
attributable to Rattler Midstream LP |
|
$ |
26,857 |
|
|
$ |
20,965 |
|
|
$ |
49,588 |
|
|
$ |
39,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net cash provided by
operating activities |
|
$ |
73,213 |
|
|
$ |
75,744 |
|
|
$ |
133,101 |
|
|
$ |
128,412 |
|
Less: Changes in cash due to
changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable—related-party |
|
|
(2,238 |
) |
|
|
7,843 |
|
|
|
3,502 |
|
|
|
19,052 |
|
Accounts receivable—third-party |
|
|
6,136 |
|
|
|
1,474 |
|
|
|
1,476 |
|
|
|
72 |
|
Accounts payable and accrued liabilities |
|
|
10,202 |
|
|
|
2,567 |
|
|
|
6,135 |
|
|
|
(3,525 |
) |
Other |
|
|
(2,196 |
) |
|
|
1,017 |
|
|
|
(2,132 |
) |
|
|
2,110 |
|
Total working capital
changes |
|
|
11,904 |
|
|
|
12,901 |
|
|
|
8,981 |
|
|
|
17,709 |
|
Operating cash flow
before working capital changes |
|
|
61,309 |
|
|
|
62,843 |
|
|
|
124,120 |
|
|
|
110,703 |
|
Additions to property, plant and equipment |
|
|
(25,180 |
) |
|
|
(11,853 |
) |
|
|
(43,068 |
) |
|
|
(17,713 |
) |
Distributions from equity method investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,107 |
|
Free Cash
Flow |
|
$ |
36,129 |
|
|
$ |
50,990 |
|
|
$ |
81,052 |
|
|
$ |
102,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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