Item 1.01.
Entry into a Material Definitive Agreement.
Underwriting Agreement
On July 26, 2016, Viper Energy Partners LP (the “
Partnership
”), a subsidiary of Diamondback Energy, Inc. (“
Diamondback
”), entered into an Underwriting Agreement (the “
Underwriting Agreement
”), by and among the Partnership, Viper Energy Partners GP LLC (the “
General Partner
”), Viper Energy Partners LLC (“
OpCo
” and, together with the Partnership and the General Partner, the “
Partnership Parties
”) and Credit Suisse Securities (USA) LLC, as representative of the several underwriters named therein (the “
Underwriters
”), providing for the offer and sale by the Partnership and the purchase by the Underwriters, of 7,000,000 common units representing limited partner interests in the Partnership (the “
Firm Unit Offering
”) at a purchase price to the public of $16.00 per common unit. Pursuant to the Underwriting Agreement, the Partnership also granted the Underwriters an option for a period of 30 days to purchase up to an additional 1,050,000 common units to cover over-allotments on the same terms (the “
Optional Unit Offering
” and, together with the Firm Unit Offering, the “
Offering
”). In the Firm Unit Offering, Diamondback purchased 2,000,000 common units from the Underwriters at $15.60 per unit, which is the price per common unit paid by the Underwriters to the Partnership. Following the Firm Unit Offering, Diamondback had an approximate 84% limited partner interest in the Partnership.
The Firm Unit Offering closed on August 1, 2016. The Partnership received net proceeds of approximately $109.0 million (after deducting underwriting discounts and commissions and estimated offering expenses) from the Firm Unit Offering. The Partnership intends to use the net proceeds of the Firm Unit Offering to repay a portion of the outstanding borrowings under the Partnership’s revolving credit facility and to fund the purchase price of the Partnership’s recently announced pending acquisition of mineral interests in the Delaware Basin (the “
Pending Acquisition
”). If the Pending Acquisition is not consummated in its entirety or at all, the Partnership intends to use any net proceeds that otherwise would have been used to fund the purchase price of the Pending Acquisition for general corporate purposes, which may include future acquisitions.
The Underwriting Agreement contains customary representations, warranties and agreements of the Partnership Parties and customary conditions to closing, obligations of the parties and termination provisions. The Partnership Parties have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “
Securities Act
”), or to contribute to payments the Underwriters may be required to make because of any of those liabilities.
The Offering was made pursuant to the Partnership’s effective shelf registration statement on Form S-3 (File No. 333-205432), filed with the Securities and Exchange Commission (the “
SEC
”) on July 2, 2015 and declared effective by the SEC on July 13, 2015 (the “
Shelf Registration Statement
”), and a prospectus, which consists of a base prospectus, dated as of July 13, 2015, a preliminary prospectus supplement, filed with the SEC on July 25, 2016, and a final prospectus supplement, filed with the SEC on July 28, 2016 (collectively, the “
Prospectus
”).
As more fully described under the caption “Underwriting” in the Prospectus, the Underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The Underwriters and certain of their affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for the Partnership and its affiliates, for which they received or may in the future receive customary fees and expenses. An affiliate of one of the Underwriters, Wells Fargo Securities, LLC, is a lender under the Partnership’s revolving credit facility and therefore will receive a portion of the net proceeds from the Offering.
The foregoing description of the Underwriting Agreement is not complete and is qualified in its entirety by reference to the full text of the Underwriting Agreement, which is filed as Exhibit 1.1 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.