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Viper Energy Partners LP, a Subsidiary of Diamondback Energy, Inc., Reports First Quarter 2019 Financial and Operating Results
HIGHLIGHTS
- Q1 2019 cash distribution of
$0.38 per common unit; implies a last twelve month yield of 5.9% based on theApril 26, 2019 unit closing price of$34.82 - Q1 2019 consolidated net income (including non-controlling interest) of
$74.3 million , consolidated adjusted EBITDA (as defined and reconciled below) of$57.3 million and cash available for distribution to Limited Partner units (as defined below) of$24.0 million - Q1 2019 production of 19,042 boe/d (67% oil), an increase of 35% year over year
- Initiating average production guidance for Q2 2019/Q3 2019 of 19,000 to 21,000 boe/d
- Reaffirm full year 2019 production guidance of 20,000 to 23,000 boe/d (67% - 71% oil)
- Closed 39 acquisitions for an aggregate purchase price of approximately
$82.7 million in Q1 2019, increasing Viper's mineral interests to a total of 15,469 net royalty acres, up 47% year over year - As of
April 17, 2019 , there were 38 active rigs on Viper's mineral acreage and approximately 553 active drilling permits filed in the past six months; average 3.6% NRI in approximately 113 gross wells expected to be drilled by the 38 active rigs - 110 total gross (1.8 net 100% royalty interest) wells turned to production during Q1 2019 on existing acreage; acquired interest in an additional 55 gross (2.0 net 100% royalty interest) producing horizontal wells through the quarter
- Q4 2018 and Q1 2019 distributions reasonably estimated to not constitute dividends for U.S. federal income tax purposes; instead should generally constitute non-taxable reductions to the tax basis
“After delivering double digit sequential production growth for four consecutive quarters, Viper experienced a six percent quarter over quarter decline in production in the first quarter of 2019. Non-operated production outside of Spanish Trail increased over five percent during the quarter as we continue to see robust activity levels across our acreage position. However, after completing an eight-well pad in Spanish Trail in
Mr. Stice continued, “Our business development operation continues to consolidate the fragmented private minerals market, having completed another 39 acquisitions for
FINANCIAL UPDATE
Viper's first quarter 2019 average realized prices were
During the first quarter of 2019, the Company recorded total operating income of
As of March 31, 2019, the Company had a cash balance of
FIRST QUARTER 2019 CASH DISTRIBUTION
The Board of Directors of Viper's general partner declared a cash distribution for the three months ended
On
OPERATIONS AND ACQUISITION UPDATE
During the first quarter of 2019, Viper was informed that 110 gross horizontal wells with an average royalty interest of 1.6% had been turned to production on its existing acreage position. Of these 110 gross wells, Diamondback was the operator of 35 with an average royalty interest of 2.4%, and the remaining 75 gross wells, which had an average royalty interest of 1.3%, were operated by third parties.
Additionally during the first quarter of 2019, Viper acquired 627 net royalty acres for an aggregate purchase price of approximately
In total, as of
GUIDANCE UPDATE
Below is Viper's guidance for the full year 2019, as well as average production guidance for Q2 2019 and Q3 2019.
Viper Energy Partners | ||
Q2 2019/Q3 2019 Net Production – MBoe/d | 19.00 - 21.00 | |
Total 2019 Net Production – MBoe/d | 20.00 - 23.00 | |
Oil Production - % of Net Production | 67% - 71% | |
Unit costs ($/boe) | ||
Depletion | $9.00 - $10.50 | |
G&A | ||
Cash G&A | Under $1.00 | |
Non-Cash Unit-Based Compensation | $0.40 - $0.65 | |
Production and Ad Valorem Taxes (% of Revenue) (a) | 7% |
- Includes production taxes of 4.6% for crude oil and 7.5% for natural gas and NGLs and ad valorem taxes.
CONFERENCE CALL
Viper will host a conference call and webcast for investors and analysts to discuss its results for the first quarter of 2019 on
About
Viper is a limited partnership formed by Diamondback to own, acquire and exploit oil and natural gas properties in
About
Diamondback is an independent oil and natural gas company headquartered in
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the federal securities laws. All statements, other than historical facts, that address activities that Viper assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events, including specifically the statements regarding any pending, completed or future acquisitions discussed above. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of Viper. Information concerning these risks and other factors can be found in Viper’s filings with the
Viper Energy Partners LP | ||||||||||
Consolidated Balance Sheets | ||||||||||
(unaudited, in thousands, except unit amounts) | ||||||||||
March 31, | December 31, | |||||||||
2019 | 2018 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 10,133 | $ | 22,676 | ||||||
Royalty income receivable | 38,083 | 38,823 | ||||||||
Royalty income receivable—related party | 7,376 | 3,489 | ||||||||
Other current assets | 258 | 257 | ||||||||
Total current assets | 55,850 | 65,245 | ||||||||
Property: | ||||||||||
Oil and natural gas interests, full cost method of accounting ($916,437 and $871,485 excluded from depletion at March 31, 2019 and December 31, 2018, respectively) |
1,798,679 | 1,716,713 | ||||||||
Land | 5,688 | 5,688 | ||||||||
Accumulated depletion and impairment | (264,495 | ) | (248,296 | ) | ||||||
Property, net | 1,539,872 | 1,474,105 | ||||||||
Other assets | 21,257 | 17,831 | ||||||||
Deferred tax asset | 150,463 | 96,883 | ||||||||
Total assets | $ | 1,767,442 | $ | 1,654,064 | ||||||
Liabilities and Unitholders’ Equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 8 | $ | — | ||||||
Other accrued liabilities | 2,772 | 6,022 | ||||||||
Total current liabilities | 2,780 | 6,022 | ||||||||
Long-term debt | 157,000 | 411,000 | ||||||||
Total liabilities | 159,780 | 417,022 | ||||||||
Commitments and contingencies (Note 13) | ||||||||||
Unitholders’ equity: | ||||||||||
General partner | 1,000 | 1,000 | ||||||||
Common units (62,628,357 units issued and outstanding as of March 31, 2019 and 51,653,956 units issued and outstanding as of December 31, 2018) |
817,014 | 540,112 | ||||||||
Class B units (72,418,500 units issued and outstanding as of March 31, 2019 and as of December 31, 2018) |
990 | 990 | ||||||||
Total Viper Energy Partners LP unitholders’ equity | 819,004 | 542,102 | ||||||||
Non-controlling interest | 788,658 | 694,940 | ||||||||
Total equity | 1,607,662 | 1,237,042 | ||||||||
Total liabilities and unitholders’ equity | $ | 1,767,442 | $ | 1,654,064 |
Viper Energy Partners LP | |||||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||||
(unaudited, in thousands, except per unit data) | |||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||
2019 | 2018 | ||||||||||||||||||
Operating income: | |||||||||||||||||||
Royalty income | $ | 60,428 | $ | 62,128 | |||||||||||||||
Lease bonus income | 1,160 | — | |||||||||||||||||
Lease bonus income - related party | — | — | |||||||||||||||||
Other operating income | 2 | 50 | |||||||||||||||||
Total operating income | 61,590 | 62,178 | |||||||||||||||||
Costs and expenses: | |||||||||||||||||||
Production and ad valorem taxes | 3,692 | 4,239 | |||||||||||||||||
Depletion | 16,199 | 11,525 | |||||||||||||||||
General and administrative expenses | 1,695 | 2,711 | |||||||||||||||||
Total costs and expenses | 21,586 | 18,475 | |||||||||||||||||
Income from operations | 40,004 | 43,703 | |||||||||||||||||
Other income (expense): | |||||||||||||||||||
Interest expense, net | (4,549 | ) | (2,098 | ) | |||||||||||||||
Gain on revaluation of investment | 3,592 | 899 | |||||||||||||||||
Other income, net | 656 | 392 | |||||||||||||||||
Total other income (expense), net | (301 | ) | (807 | ) | |||||||||||||||
Income before income taxes | 39,703 | 42,896 | |||||||||||||||||
Benefit from income taxes | (34,608 | ) | — | ||||||||||||||||
Net income | 74,311 | 42,896 | |||||||||||||||||
Net income attributable to non-controlling interest | 40,532 | — | |||||||||||||||||
Net income attributable to Viper Energy Partners LP | $ | 33,779 | $ | 42,896 | |||||||||||||||
Net income attributable to common limited partners per unit: | |||||||||||||||||||
Basic | $ | 0.61 | $ | 0.38 | |||||||||||||||
Diluted | $ | 0.61 | $ | 0.38 | |||||||||||||||
Weighted average number of common limited partner units outstanding: | |||||||||||||||||||
Basic | 55,448 | 113,901 | |||||||||||||||||
Diluted | 55,475 | 113,991 |
Viper Energy Partners LP | |||||||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||||||
(unaudited, in thousands) | |||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||
2019 | 2018 | ||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income | $ | 74,311 | $ | 42,896 | |||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Benefit from deferred income taxes | (34,655 | ) | — | ||||||||||||||||
Depletion | 16,199 | 11,525 | |||||||||||||||||
Gain on revaluation of investment | (3,592 | ) | (899 | ) | |||||||||||||||
Amortization of debt issuance costs | 216 | 155 | |||||||||||||||||
Non-cash unit-based compensation | 405 | 1,288 | |||||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Royalty income receivable | 740 | (3,119 | ) | ||||||||||||||||
Royalty income receivable—related party | (3,887 | ) | (1,363 | ) | |||||||||||||||
Accounts payable and other accrued liabilities | (3,289 | ) | (1,265 | ) | |||||||||||||||
Income tax payable | 47 | — | |||||||||||||||||
Other current assets | (44 | ) | (6 | ) | |||||||||||||||
Net cash provided by operating activities | 46,451 | 49,212 | |||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Acquisition of oil and natural gas interests | (81,923 | ) | (149,994 | ) | |||||||||||||||
Proceeds from the sale of investments | — | 125 | |||||||||||||||||
Net cash used in investing activities | (81,923 | ) | (149,869 | ) | |||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Proceeds from borrowings under credit facility | 59,500 | 147,000 | |||||||||||||||||
Repayment on credit facility | (313,500 | ) | — | ||||||||||||||||
Debt issuance costs | (50 | ) | (3 | ) | |||||||||||||||
Proceeds from public offerings | 340,860 | — | |||||||||||||||||
Public offering costs | (212 | ) | — | ||||||||||||||||
Units purchased for tax withholding | (353 | ) | — | ||||||||||||||||
Distributions to partners | (63,316 | ) | (52,386 | ) | |||||||||||||||
Net cash provided by financing activities | 22,929 | 94,611 | |||||||||||||||||
Net decrease in cash | (12,543 | ) | (6,046 | ) | |||||||||||||||
Cash and cash equivalents at beginning of period | 22,676 | 24,197 | |||||||||||||||||
Cash and cash equivalents at end of period | $ | 10,133 | $ | 18,151 | |||||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||||
Interest paid | $ | 4,908 | $ | 2,072 |
Viper Energy Partners LP | ||||||||||||||||||||||||||||||||||||
Selected Operating Data | ||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2019 |
Three Months Ended December 31, 2018 |
Three Months Ended March 31, 2018 |
||||||||||||||||||||||||||||||||||
Production Data: | ||||||||||||||||||||||||||||||||||||
Oil (MBbls) | 1,147 | 1,275 | 906 | |||||||||||||||||||||||||||||||||
Natural gas (MMcf) | 1,872 | 1,773 | 1,162 | |||||||||||||||||||||||||||||||||
Natural gas liquids (MBbls) | 254 | 287 | 171 | |||||||||||||||||||||||||||||||||
Combined volumes (MBOE)(1) | 1,714 | 1,858 | 1,271 | |||||||||||||||||||||||||||||||||
Daily combined volumes (BOE/d) | 19,042 | 20,191 | 14,122 | |||||||||||||||||||||||||||||||||
% Oil | 67 | % | 69 | % | 71 | % | ||||||||||||||||||||||||||||||
Average sales prices: | ||||||||||||||||||||||||||||||||||||
Oil ($/Bbl) | $ | 45.31 | $ | 48.73 | $ | 61.41 | ||||||||||||||||||||||||||||||
Natural gas ($/Mcf) | 2.05 | 2.41 | 2.11 | |||||||||||||||||||||||||||||||||
Natural gas liquids ($/Bbl) | 18.09 | 22.13 | 23.47 | |||||||||||||||||||||||||||||||||
Combined (per BOE)(2) | 35.26 | 39.17 | 48.88 | |||||||||||||||||||||||||||||||||
Average Costs (per BOE): | ||||||||||||||||||||||||||||||||||||
Production and ad valorem taxes | $ | 2.15 | $ | 2.65 | $ | 3.34 | ||||||||||||||||||||||||||||||
General and administrative - cash component | 0.75 | 0.61 | 1.12 | |||||||||||||||||||||||||||||||||
Total operating expense - cash | $ | 2.90 | $ | 3.26 | $ | 4.46 | ||||||||||||||||||||||||||||||
General and administrative - non-cash component | $ | 0.24 | $ | 0.32 | $ | 1.01 | ||||||||||||||||||||||||||||||
Interest expense | 2.65 | 2.58 | 1.65 | |||||||||||||||||||||||||||||||||
Depletion | 9.45 | 9.43 | 9.07 |
- Bbl equivalents are calculated using a conversion rate of six Mcf per one Bbl.
- Realized price net of all deducts for gathering, transportation and processing.
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 plus interest expense, net, non-cash unit-based compensation expense, depletion, (gain) loss on revaluation of investments and benefit from income taxes. Adjusted EBITDA is not a measure of net income as determined by United States’ generally accepted accounting principles, or GAAP. Management believes Adjusted EBITDA is useful because it allows it 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 (loss), 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 debt service, other contractual obligations, fixed charges and reserves for future operating or capital needs that the board of directors of Viper’s general partner may deem appropriate, dividend equivalent rights and preferred distributions. 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.
The following tables present a reconciliation of the non-GAAP financial measures of Adjusted EBITDA and cash available for distribution to the GAAP financial measure of net income.
Viper Energy Partners LP | ||||||||||||||||||||||||||||
(unaudited, in thousands, except per unit data) | ||||||||||||||||||||||||||||
Three Months Ended March 31, 2019 |
Three Months Ended December 31, 2018 |
Three Months Ended March 31, 2018 |
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Net income | $ | 74,311 | $ | 40,705 | $ | 42,896 | ||||||||||||||||||||||
Interest expense, net | 4,549 | 4,788 | 2,098 | |||||||||||||||||||||||||
Non-cash unit-based compensation expense | 405 | 596 | 1,288 | |||||||||||||||||||||||||
Depletion | 16,199 | 17,513 | 11,525 | |||||||||||||||||||||||||
(Gain) loss on revaluation of investment | (3,592 | ) | 5,715 | (899 | ) | |||||||||||||||||||||||
Benefit from income taxes | (34,608 | ) | (1,251 | ) | — | |||||||||||||||||||||||
Consolidated Adjusted EBITDA | $ | 57,264 | $ | 68,066 | $ | 56,908 | ||||||||||||||||||||||
EBITDA attributable to non-controlling interest | (30,708 | ) | (39,718 | ) | — | |||||||||||||||||||||||
Adjusted EBITDA attributable to Viper Energy Partners LP | $ | 26,556 | $ | 28,348 | $ | 56,908 | ||||||||||||||||||||||
Adjustments to reconcile Adjusted EBITDA to cash available for distribution: | ||||||||||||||||||||||||||||
Income taxes payable | (198 | ) | — | — | ||||||||||||||||||||||||
Debt service, contractual obligations, fixed charges and reserves | (1,962 | ) | (1,775 | ) | (1,952 | ) | ||||||||||||||||||||||
Units repurchased for tax withholding | (353 | ) | — | — | ||||||||||||||||||||||||
Units - dividend equivalent rights | (22 | ) | (42 | ) | — | |||||||||||||||||||||||
Preferred distributions | (40 | ) | (40 | ) | — | |||||||||||||||||||||||
Cash available for distribution | $ | 23,981 | $ | 26,491 | $ | 54,956 | ||||||||||||||||||||||
Limited Partner units outstanding | 62,628 | 51,654 | 113,882 | |||||||||||||||||||||||||
Cash available for distribution per common limited partner unit | $ | 0.38 | $ | 0.51 | $ | 0.48 |
Investor Contact:
+1 432.221.7467
alawlis@viperenergy.com
Source:
Source: Viper Energy Partners LP