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 first quarter ended March 31, 2023.
FIRST QUARTER HIGHLIGHTS
- Q1 2023 average production of
20,111 bo/d (34,967 boe/d), an increase of 1% from Q4 2022 and 11%
year over year; highest in Company history
- Received $7.5 million in lease
bonus income
- Q1 2023 consolidated net income
(including non-controlling interest) of $88.3 million; net income
attributable to Viper Energy Partners LP of $34.0 million, or $0.47
per common unit
- Q1 2023 cash available for
distribution to Viper’s common units (as defined and reconciled
below) of $50.8 million, or $0.70 per common unit
- Q1 2023 base cash distribution of
$0.25 per common unit; implies a 3.4% annualized yield based on the
April 28, 2023 unit closing price of $29.44
- Q1 2023 variable cash distribution
of $0.08 per common unit; total base-plus-variable distribution of
$0.33 per common unit implies a 4.5% annualized yield based on the
April 28, 2023 unit closing price of $29.44
- Repurchased 1.1 million common
units in Q1 2023 for $32.7 million, excluding excise tax (average
price of $29.33 per unit)
- Total Q1 2023 return of capital to
LP unitholders of $38.1 million, or $0.53 per common unit,
represents 75% of cash available for distribution from unit
repurchases and the declared base-plus-variable distribution
- Acquired 819 net royalty acres (696
of which are operated by Diamondback) for an aggregate purchase
price of $115.8 million, including a $75.1 million drop down
transaction from Diamondback
- 241 total gross (6.0 net 100%
royalty interest) horizontal wells turned to production on Viper’s
acreage during Q1 2023 with an average lateral length of 10,384
feet
- Initiating average daily production
guidance for Q2 2023 and Q3 2023 of 21,000 to 22,500 bo/d (36,250
to 38,750 boe/d), the midpoint of which implies 8.2% growth
relative to Q1 2023
- Increasing full year 2023 average
daily production to 20,500 to 22,500 bo/d (35,250 to 38,750 boe/d),
an increase of 2.4% at the midpoint
“The first quarter was a strong start to the
year for Viper as oil production set a Company record for a fourth
consecutive quarter. The advantaged nature of the royalty business
model was highlighted during the quarter as we maintained our
strong free cash flow conversion despite the volatility in
commodity prices. We took advantage of this volatility through our
flexible return of capital program by opportunistically
repurchasing over one million common units while still being set to
pay a distribution that provides an annualized yield of over four
percent,” stated Travis Stice, Chief Executive Officer of Viper’s
General Partner.
Mr. Stice continued, “Viper today also announced
it completed a drop down transaction of certain royalty interests
from Diamondback on operated properties located in Ward County.
This transaction provides high NRI exposure to Diamondback’s
expected development plan in the Southern Delaware Basin over the
next several years and will enhance Viper’s growth profile over
that same period. As a result of this acquisition, as well as
continued outperformance from our legacy asset base, we have
increased production guidance for 2023 by over two percent at the
midpoint.”
DROP DOWN TRANSACTION
On March 8, 2023, Viper completed the
acquisition of certain royalty interests from subsidiaries of
Diamondback for approximately $75.1 million in cash, subject to
customary post-closing adjustments. The acquisition was funded
through a combination of cash on hand and borrowings under the
Company’s revolving credit facility.
DROP DOWN HIGHLIGHTS
- 660 net royalty acres, 100% of
which are operated by Diamondback, in Ward County
- Acreage provides a 6.9% average NRI
across ten Diamondback operated units
- Q1 2023 average daily production of
approximately 300 bo/d (72% oil); contributed approximately 80 bo/d
of production to Q1 2023 financials given March 8, 2023 closing
date
- Full year 2023 estimated average
daily production of 525 bo/d
- Full year 2024 estimated average
daily production of 550 bo/d
FINANCIAL UPDATE
Viper’s first quarter 2023 average unhedged
realized prices were $75.48 per barrel of oil, $2.13 per Mcf of
natural gas and $24.45 per barrel of natural gas liquids, resulting
in a total equivalent realized price of $51.19/boe.
Viper’s first quarter 2023 average hedged
realized prices were $74.30 per barrel of oil, $2.11 per Mcf of
natural gas and $24.45 per barrel of natural gas liquids, resulting
in a total equivalent realized price of $50.48/boe.
During the first quarter of 2023, the Company
recorded total operating income of $169.0 million and consolidated
net income (including non-controlling interest) of $88.3
million.
As of March 31, 2023, the Company had a
cash balance of $9.1 million and total long-term debt outstanding
(excluding debt issuance, discounts and premiums) of $700.4
million, resulting in net debt (as defined and reconciled below) of
$691.2 million. Viper’s outstanding long-term debt as of
March 31, 2023 consisted of $430.4 million in aggregate
principal amount of its 5.375% Senior Notes due 2027 and $270.0
million in borrowings on its revolving credit facility, leaving
$230.0 million available for future borrowings and $239.1 million
of total liquidity.
FIRST 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 $0.25 per common unit for the first
quarter of 2023 payable on May 18, 2023 to eligible common
unitholders of record at the close of business on May 11, 2023.
The Board also declared a variable cash
distribution of $0.08 per common unit for the first quarter of 2023
payable on May 18, 2023 to eligible common unitholders of record at
the close of business on May 11, 2023.
During the first quarter of 2023, Viper
repurchased 1.1 million common units for an aggregate purchase
price of $32.7 million, excluding excise tax, (average price of
$29.33 per unit). In total, since the initiation of Viper’s common
unit repurchase program through March 31, 2023, the Company
repurchased 11.2 million common units for an aggregate of $253.3
million, reflecting an average price of $22.68 per unit.
OPERATIONS UPDATE
During the first quarter of 2023, Viper
estimates that 241 gross (6.0 net 100% royalty interest) horizontal
wells with an average royalty interest of 2.5% were turned to
production on its acreage position with an average lateral length
of 10,384 feet. Of these 241 gross wells, Diamondback is the
operator of 50 gross wells, with an average royalty interest of
6.4%, and the remaining 191 gross wells, with an average royalty
interest of 1.4%, are operated by third parties.
Additionally, during the first quarter of 2023,
Viper acquired 159 net royalty acres from third party sellers for
an aggregate net purchase price of $40.7 million, subject to
customary post-closing adjustments. Of the acquired properties,
approximately 36 net royalty acres are operated by Diamondback.
Including the drop down, during the first quarter, Viper acquired a
total of 819 net royalty acres for an aggregate net purchase price
of $115.8 million.
As a result of these acquisitions, Viper’s
footprint of mineral and royalty interests was 27,134 net royalty
acres as of March 31, 2023.
The following table summarizes Viper’s gross well
information:
|
Diamondback Operated |
|
Third Party Operated |
|
Total |
Horizontal wells
turned to production (first
quarter2023)(1): |
|
|
|
|
|
Gross wells |
50 |
|
191 |
|
241 |
Net 100% royalty interest wells |
3.2 |
|
2.8 |
|
6.0 |
Average percent net royalty interest |
6.4% |
|
1.4% |
|
2.5% |
|
|
|
|
|
|
Horizontal producing
well count (as ofApril 13,
2023): |
|
|
|
|
|
Gross wells |
1,633 |
|
3,929 |
|
5,562 |
Net 100% royalty interest wells |
119.4 |
|
63.1 |
|
182.5 |
Average percent net royalty interest |
7.3% |
|
1.6% |
|
3.3% |
|
|
|
|
|
|
Horizontal active
development well count (as ofApril 13,
2023): |
|
|
|
|
|
Gross wells |
143 |
|
345 |
|
488 |
Net 100% royalty interest wells |
9.1 |
|
3.2 |
|
12.3 |
Average percent net royalty interest |
6.4% |
|
0.9% |
|
2.5% |
|
|
|
|
|
|
Line of sight wells
(as ofApril 13,
2023): |
|
|
|
|
|
Gross wells |
177 |
|
276 |
|
453 |
Net 100% royalty interest wells |
8.2 |
|
4.1 |
|
12.3 |
Average percent net royalty interest |
4.7% |
|
1.5% |
|
2.7% |
(1) Average
lateral length of 10,384 feet. |
|
The 488 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 38 gross rigs operating on
Viper’s acreage, nine of which are operated by Diamondback. The 453
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 average production guidance for Q2 2023 and
Q3 2023.
|
|
|
Viper Energy Partners |
|
|
Q2 2023 / Q3 2023 Net
Production - MBo/d |
21.00 - 22.50 |
Q2 2023 / Q3 2023 Net
Production - MBoe/d |
36.25 - 38.75 |
Full Year 2023 Net Production
- MBo/d |
20.50 - 22.50 |
Full Year 2023 Net Production
- MBoe/d |
35.25 - 38.75 |
|
|
Unit costs ($/boe) |
|
Depletion |
$9.75 - $10.75 |
Cash G&A |
$0.60 - $0.80 |
Non-Cash Unit-Based
Compensation |
$0.10 - $0.20 |
Interest Expense(1) |
$3.00 - $3.50 |
|
|
Production and Ad Valorem
Taxes (% of Revenue)(2) |
7% - 8% |
Cash Tax Rate (% of Pre-Tax
Income Attributable to Viper Energy Partners LP)(3) |
20% - 22% |
Q2 2023 Cash Taxes ($ -
million)(4) |
$8.0 - $12.0 |
(1) |
Assumes $430.0 million in principal of senior notes and current
revolver balance. |
(2) |
Includes production taxes of 4.6% for crude oil and 7.5% for
natural gas and natural gas liquids and ad valorem taxes. |
(3) |
Pre-tax income attributable to Viper Energy Partners LP is
reconciled below. |
(4) |
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 first
quarter of 2023 on Tuesday, May 2, 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;
anticipated benefits of 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 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 war in
Ukraine 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) |
|
|
|
|
|
March 31, |
|
December 31, |
|
2023 |
|
2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
9,106 |
|
|
$ |
18,179 |
|
Royalty income receivable (net of allowance for credit losses) |
|
83,038 |
|
|
|
81,657 |
|
Royalty income receivable—related party |
|
36,324 |
|
|
|
6,260 |
|
Derivative instruments |
|
1,357 |
|
|
|
9,328 |
|
Other current assets |
|
3,445 |
|
|
|
3,196 |
|
Total current assets |
|
133,270 |
|
|
|
118,620 |
|
Property: |
|
|
|
Oil and natural gas interests, full cost method of accounting
($1,262,269 and $1,297,221 excluded from depletion at
March 31, 2023 and December 31, 2022, respectively) |
|
3,582,601 |
|
|
|
3,464,819 |
|
Land |
|
5,688 |
|
|
|
5,688 |
|
Accumulated depletion and impairment |
|
(751,221 |
) |
|
|
(720,234 |
) |
Property, net |
|
2,837,068 |
|
|
|
2,750,273 |
|
Derivative instruments |
|
— |
|
|
|
442 |
|
Deferred income taxes (net of
allowances) |
|
49,228 |
|
|
|
49,656 |
|
Other assets |
|
170 |
|
|
|
1,382 |
|
Total assets |
$ |
3,019,736 |
|
|
$ |
2,920,373 |
|
Liabilities and Unitholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
436 |
|
|
$ |
1,129 |
|
Accounts payable—related party |
|
— |
|
|
|
306 |
|
Accrued liabilities |
|
17,759 |
|
|
|
19,600 |
|
Derivative instruments |
|
2,099 |
|
|
|
— |
|
Income taxes payable |
|
9,477 |
|
|
|
911 |
|
Total current liabilities |
|
29,771 |
|
|
|
21,946 |
|
Long-term debt, net |
|
695,154 |
|
|
|
576,895 |
|
Derivative instruments |
|
2,383 |
|
|
|
7 |
|
Total liabilities |
|
727,308 |
|
|
|
598,848 |
|
Unitholders’ equity: |
|
|
|
General Partner |
|
629 |
|
|
|
649 |
|
Common units (72,118,622 units
issued and outstanding as of March 31, 2023 and 73,229,645
units issued and outstanding as of December 31, 2022) |
|
666,259 |
|
|
|
689,178 |
|
Class B units (90,709,946 units issued and outstanding
March 31, 2023 and December 31, 2022) |
|
807 |
|
|
|
832 |
|
Total Viper Energy Partners LP unitholders’ equity |
|
667,695 |
|
|
|
690,659 |
|
Non-controlling interest |
|
1,624,733 |
|
|
|
1,630,866 |
|
Total equity |
|
2,292,428 |
|
|
|
2,321,525 |
|
Total liabilities and unitholders’ equity |
$ |
3,019,736 |
|
|
$ |
2,920,373 |
|
Viper Energy Partners LP |
Condensed Consolidated Statements of
Operations |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
Operating
income: |
|
|
|
Royalty income |
$ |
161,085 |
|
|
$ |
193,089 |
|
Lease bonus income—related party |
|
7,071 |
|
|
|
6,280 |
|
Lease bonus income—third party |
|
400 |
|
|
|
2,402 |
|
Other operating income |
|
402 |
|
|
|
132 |
|
Total operating income |
|
168,958 |
|
|
|
201,903 |
|
Costs and
expenses: |
|
|
|
Production and ad valorem taxes |
|
12,887 |
|
|
|
13,870 |
|
Depletion |
|
30,987 |
|
|
|
27,411 |
|
General and administrative expenses |
|
2,764 |
|
|
|
1,953 |
|
Total costs and expenses |
|
46,638 |
|
|
|
43,234 |
|
Income (loss) from
operations |
|
122,320 |
|
|
|
158,669 |
|
Other income
(expense): |
|
|
|
Interest expense, net |
|
(9,686 |
) |
|
|
(9,645 |
) |
Gain (loss) on derivative instruments, net |
|
(15,103 |
) |
|
|
(18,359 |
) |
Other income, net |
|
141 |
|
|
|
6 |
|
Total other expense, net |
|
(24,648 |
) |
|
|
(27,998 |
) |
Income (loss) before
income taxes |
|
97,672 |
|
|
|
130,671 |
|
Provision for (benefit from)
income taxes |
|
9,406 |
|
|
|
2,630 |
|
Net income
(loss) |
|
88,266 |
|
|
|
128,041 |
|
Net income (loss) attributable
to non-controlling interest |
|
54,299 |
|
|
|
111,436 |
|
Net income (loss) attributable
to Viper Energy Partners LP |
$ |
33,967 |
|
|
$ |
16,605 |
|
|
|
|
|
Net income (loss)
attributable to common limited partner units: |
|
|
|
Basic |
$ |
0.47 |
|
|
$ |
0.22 |
|
Diluted |
$ |
0.47 |
|
|
$ |
0.22 |
|
Weighted average
number of common limited partner units outstanding: |
|
|
|
Basic |
|
72,732 |
|
|
|
77,106 |
|
Diluted |
|
72,815 |
|
|
|
77,214 |
|
Condensed Viper Energy Partners LP |
Consolidated Statements of Cash Flows |
(unaudited, in thousands) |
|
|
|
|
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
Cash flows from operating
activities: |
|
|
|
Net income (loss) |
$ |
88,266 |
|
|
$ |
128,041 |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
Provision for (benefit from) deferred income taxes |
|
429 |
|
|
|
— |
|
Depletion |
|
30,987 |
|
|
|
27,411 |
|
(Gain) loss on derivative instruments, net |
|
15,103 |
|
|
|
18,359 |
|
Net cash receipts (payments) on derivatives |
|
(2,215 |
) |
|
|
(10,264 |
) |
Other |
|
643 |
|
|
|
1,388 |
|
Changes in operating assets and liabilities: |
|
|
|
Royalty income receivable |
|
(1,381 |
) |
|
|
(29,932 |
) |
Royalty income receivable—related party |
|
(30,064 |
) |
|
|
(2,048 |
) |
Accounts payable and accrued liabilities |
|
(2,534 |
) |
|
|
2,838 |
|
Accounts payable—related party |
|
(306 |
) |
|
|
— |
|
Income tax payable |
|
8,566 |
|
|
|
— |
|
Other |
|
(251 |
) |
|
|
45 |
|
Net cash provided by (used in)
operating activities |
|
107,243 |
|
|
|
135,838 |
|
Cash flows from investing
activities: |
|
|
|
Acquisitions of oil and natural gas interests—related party |
|
(75,073 |
) |
|
|
— |
|
Acquisitions of oil and natural gas interests |
|
(40,802 |
) |
|
|
2,621 |
|
Proceeds from sale of oil and natural gas interests |
|
(1,908 |
) |
|
|
29,336 |
|
Other |
|
1,200 |
|
|
|
— |
|
Net cash provided by (used in)
investing activities |
|
(116,583 |
) |
|
|
31,957 |
|
Cash flows from financing
activities: |
|
|
|
Proceeds from borrowings under credit facility |
|
118,000 |
|
|
|
44,000 |
|
Repayment on credit facility |
|
— |
|
|
|
(100,000 |
) |
Repurchased units as part of unit buyback |
|
(33,022 |
) |
|
|
(39,260 |
) |
Distributions to public |
|
(35,325 |
) |
|
|
(35,894 |
) |
Distributions to Diamondback |
|
(49,366 |
) |
|
|
(43,003 |
) |
Other |
|
(20 |
) |
|
|
(20 |
) |
Net cash provided by (used in)
financing activities |
|
267 |
|
|
|
(174,177 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
(9,073 |
) |
|
|
(6,382 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
|
18,179 |
|
|
|
39,448 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
9,106 |
|
|
$ |
33,066 |
|
Viper Energy Partners LP |
Selected Operating Data |
(unaudited) |
|
|
Three Months Ended |
|
March 31, 2023 |
|
December 31, 2022 |
|
March 31, 2022 |
Production
Data: |
|
|
|
|
|
Oil (MBbls) |
|
1,810 |
|
|
1,838 |
|
|
1,633 |
Natural gas (MMcf) |
|
4,224 |
|
|
4,155 |
|
|
3,729 |
Natural gas liquids (MBbls) |
|
633 |
|
|
683 |
|
|
586 |
Combined volumes (MBOE)(1) |
|
3,147 |
|
|
3,214 |
|
|
2,841 |
|
|
|
|
|
|
Average daily oil volumes (BO/d) |
|
20,111 |
|
|
19,978 |
|
|
18,144 |
Average daily combined volumes (BOE/d) |
|
34,967 |
|
|
34,935 |
|
|
31,567 |
|
|
|
|
|
|
Average sales
prices: |
|
|
|
|
|
Oil ($/Bbl) |
$ |
75.48 |
|
$ |
83.30 |
|
$ |
94.95 |
Natural gas ($/Mcf) |
$ |
2.13 |
|
$ |
3.74 |
|
$ |
4.07 |
Natural gas liquids ($/Bbl) |
$ |
24.45 |
|
$ |
25.65 |
|
$ |
38.99 |
Combined ($/BOE)(2) |
$ |
51.19 |
|
$ |
57.92 |
|
$ |
67.97 |
|
|
|
|
|
|
Oil, hedged ($/Bbl)(3) |
$ |
74.30 |
|
$ |
82.71 |
|
$ |
92.05 |
Natural gas, hedged ($/Mcf)(3) |
$ |
2.11 |
|
$ |
3.03 |
|
$ |
3.71 |
Natural gas liquids ($/Bbl)(3) |
$ |
24.45 |
|
$ |
25.65 |
|
$ |
38.99 |
Combined price, hedged ($/BOE)(3) |
$ |
50.48 |
|
$ |
56.66 |
|
$ |
65.82 |
|
|
|
|
|
|
Average Costs
($/BOE): |
|
|
|
|
|
Production and ad valorem taxes |
$ |
4.10 |
|
$ |
3.37 |
|
$ |
4.88 |
General and administrative - cash component(4) |
|
0.76 |
|
|
0.70 |
|
|
0.59 |
Total operating expense - cash |
$ |
4.86 |
|
$ |
4.07 |
|
$ |
5.47 |
|
|
|
|
|
|
General and administrative - non-cash unit compensation
expense |
$ |
0.12 |
|
$ |
0.10 |
|
$ |
0.10 |
Interest expense, net |
$ |
3.08 |
|
$ |
3.19 |
|
$ |
3.39 |
Depletion |
$ |
9.85 |
|
$ |
9.72 |
|
$ |
9.65 |
(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 expense, non-cash (gain) loss on
derivative instruments, (gain) loss on extinguishment of debt and
provision for (benefit from) income taxes, if any. 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, 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 March 31, 2023 |
Net income
(loss) attributable to Viper Energy Partners LP |
$ |
33,967 |
|
Net income (loss) attributable to non-controlling interest |
|
54,299 |
|
Net income
(loss) |
|
88,266 |
|
Interest expense, net |
|
9,686 |
|
Non-cash unit-based compensation expense |
|
370 |
|
Depletion |
|
30,987 |
|
Non-cash (gain) loss on derivative instruments |
|
12,888 |
|
Provision for (benefit from) income taxes |
|
9,406 |
|
Consolidated Adjusted EBITDA |
|
151,603 |
|
Less: Adjusted EBITDA attributable to non-controlling
interest(1) |
|
84,242 |
|
Adjusted
EBITDA attributable to Viper Energy Partners LP |
$ |
67,361 |
|
|
|
|
|
Adjustments to
reconcile Adjusted EBITDA to cash available for
distribution: |
|
|
|
Income taxes payable for the current period |
$ |
(8,978 |
) |
Debt service, contractual obligations, fixed charges and
reserves |
|
(4,186 |
) |
Lease bonus income(2) |
|
(3,309 |
) |
Distribution equivalent rights payments |
|
(72 |
) |
Preferred distributions |
|
(45 |
) |
Cash
available for distribution to Viper Energy Partners LP
unitholders |
$ |
50,771 |
|
|
|
|
|
|
Three Months Ended March 31, 2023 |
|
Amounts |
|
Amounts Per Common Unit |
Reconciliation to cash
available for variable distribution: |
|
|
|
Cash available for distribution to Viper Energy Partners LP
unitholders |
$ |
50,771 |
|
$ |
0.70 |
|
|
|
|
|
75% Committed Return of
Capital |
$ |
38,078 |
|
$ |
0.53 |
|
Less: |
|
|
|
Base distribution |
|
18,030 |
|
|
0.25 |
|
Repurchased units as part of unit buyback(2) |
|
14,519 |
|
|
0.20 |
|
Cash available for
variable distribution |
$ |
5,529 |
|
$ |
0.08 |
|
|
|
|
|
Total approved base
and variable distribution per unit |
|
|
$ |
0.33 |
|
|
|
|
|
Common limited partner units
outstanding |
|
|
|
72,119 |
|
(1) |
Does not take into account special income allocation
consideration. |
(2) |
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 |
|
March 31, 2023 |
Income (loss) before income taxes |
$ |
97,672 |
|
Less: Net income (loss) attributable to non-controlling
interest |
|
54,299 |
|
Pre-tax income attributable to Viper Energy Partners
LP |
$ |
43,373 |
|
|
|
Income taxes payable for the current period |
$ |
8,978 |
|
Effective cash tax rate attributable to Viper Energy
Partners LP |
|
20.7 |
% |
|
|
|
|
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 EndedMarch 31, 2023 |
|
Amounts |
|
Amounts PerDiluted Unit |
Net income (loss) attributable to Viper Energy Partners
LP(a) |
$ |
33,967 |
|
|
$ |
0.47 |
|
Net income (loss) attributable to non-controlling interest |
|
54,299 |
|
|
|
0.74 |
|
Net income
(loss)(a) |
|
88,266 |
|
|
|
1.21 |
|
Non-cash (gain) loss on derivative instruments, net |
|
12,888 |
|
|
|
0.18 |
|
Adjusted income excluding above items(a) |
|
101,154 |
|
|
|
1.39 |
|
Income tax adjustment for above items |
|
(1,241 |
) |
|
|
(0.02 |
) |
Adjusted net income
(loss)(a) |
|
99,913 |
|
|
|
1.37 |
|
Less: Adjusted net income (loss) attributed to non-controlling
interests |
|
61,464 |
|
|
|
0.84 |
|
Adjusted net income
(loss) attributable to Viper Energy Partners
LP(a) |
$ |
38,449 |
|
|
$ |
0.53 |
|
|
|
|
|
Weighted average
common units outstanding: |
|
|
|
Basic |
|
72,732 |
|
Diluted |
|
72,815 |
|
|
|
|
|
(a) |
The Partnership’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) plus the reallocation of $0.1
million in earnings attributable to participating securities,
divided by (iii) diluted weighted average common shares
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.
|
March 31, 2023 |
|
Net Q1Principal
Borrowings/(Repayments) |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
|
(in thousands) |
Total long-term debt(1) |
$ |
700,350 |
|
|
$ |
118,000 |
|
$ |
582,350 |
|
|
$ |
675,350 |
|
|
$ |
680,350 |
|
|
$ |
727,938 |
|
Cash and cash equivalents |
|
(9,106 |
) |
|
|
|
|
(18,179 |
) |
|
|
(11,616 |
) |
|
|
(4,312 |
) |
|
|
(33,066 |
) |
Net debt |
$ |
691,244 |
|
|
|
|
$ |
564,171 |
|
|
$ |
663,734 |
|
|
$ |
676,038 |
|
|
$ |
694,872 |
|
(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) |
|
Q2 2023 |
|
Q3 2023 |
|
Q4 2023 |
|
FY 2024 |
Deferred Premium Puts - WTI (Cushing) |
|
12,000 |
|
|
|
12,000 |
|
|
|
8,000 |
|
|
|
— |
Strike |
$ |
55.00 |
|
|
$ |
55.00 |
|
|
$ |
55.00 |
|
|
$ |
— |
Premium |
$ |
(1.82 |
) |
|
$ |
(1.80 |
) |
|
$ |
(1.89 |
) |
|
$ |
— |
|
Crude Oil (Bbls/day, $/Bbl) |
|
Q2 2023 |
|
Q3 2023 |
|
Q4 2023 |
|
FY 2024 |
Midland-Cushing Basis Swabs |
|
4,000 |
|
|
4,000 |
|
|
4,000 |
|
|
— |
Swap Price |
$ |
1.05 |
|
$ |
1.05 |
|
$ |
1.05 |
|
$ |
— |
|
Natural Gas (Mmbtu/day, $/Mmbtu) |
|
Q2 2023 |
|
Q3 2023 |
|
Q4 2023 |
|
FY 2024 |
Natural Gas Basis Swaps - Waha Hub |
|
30,000 |
|
|
|
30,000 |
|
|
|
30,000 |
|
|
|
30,000 |
|
Swap Price |
$ |
(1.33 |
) |
|
$ |
(1.33 |
) |
|
$ |
(1.33 |
) |
|
$ |
(1.20 |
) |
Investor Contact:
Austen Gilfillian+1 432.221.7420agilfillian@viperenergy.com
Source: Viper Energy Partners LP; Diamondback Energy, Inc.
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