Viper Energy Partners LP, a Subsidiary of Diamondback Energy, Inc., Reports First Quarter 2017 Financial and Operating Result...
May 02 2017 - 4:01PM
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, 2017.
HIGHLIGHTS
- Q1 2017 cash distribution of $0.302 per common unit, up 17%
over Q4 2016, 103% year over year and the highest in Company
history; implies a 7.1% annualized yield based on May 1 unit
closing price of $17.02
- Q1 2017 production of 8,519 boe/d (76% oil), up 8% over Q4 2016
and 38% year over year
- Increasing full year 2017 production guidance to 8,500 to 9,500
boe/d, up 9% from the midpoint of prior guidance range of 8,000 to
8,500 boe/d
- Q1 2017 average realized prices were $49.40 per barrel of oil,
$2.76 per Mcf of natural gas and $18.34 per barrel of natural gas
liquids, resulting in a total equivalent price of $41.80/boe, up 9%
from the Q4 2016 total equivalent price of $38.33/boe
- There are approximately 198 active well permits and eight
active rigs currently on Viper's mineral acreage
- Closed 28 deals for $8.4 million (100% Diamondback-operated) in
Q1 2017, increasing Viper's mineral assets to 6,508 net royalty
acres
- 15 gross horizontal wells completed by operators of Viper's
Spanish Trail mineral interests during Q1 2017 at an average
royalty interest of 15.2%
“Viper announced its largest distribution in
Company history as it continues to benefit from increasing activity
levels across its mineral acreage located in the most prolific
areas of the Permian Basin. With production year-to-date exceeding
expectations, along with recent acquisitions, we have the
conviction to raise the midpoint of our full year production
guidance by 9% and expect to achieve annualized production growth
of 40% in 2017," stated Travis Stice, Chief Executive Officer of
Viper's general partner.
Mr. Stice continued, "Viper ended the first
quarter with net cash and ample liquidity after completing 28 deals
for $8.4 million in the first quarter. We will continue to be
active in looking for accretive mineral opportunities that will
allow us to grow production and distributions for our
unitholders."
FINANCIAL UPDATE
During the first quarter of 2017, the Company
recorded total operating income of $33.7 million and net income of
$20.7 million.
As of March 31, 2017, Viper had a cash
balance of $29 million and an undrawn $275 million revolving credit
facility. In connection with its Spring 2017 redetermination
expected to close in May 2017, the lead bank on Viper's credit
facility recently recommended a borrowing base increase to $315
million from $275 million previously.
FIRST QUARTER 2017 CASH
DISTRIBUTION
The Board of Directors of Viper's general
partner has declared a cash distribution for the three months ended
March 31, 2017 of $0.302 per common unit. The distribution is
payable on May 25, 2017 to unitholders of record at the close
of business on May 18, 2017.
FULL YEAR 2017 GUIDANCE
Below is Viper's full year 2017 guidance, which has been updated
to reflect higher production attributable to its mineral interests.
Additionally, the Company now expects non-cash unit-based
compensation of $0.50 to $1.50 per boe, down from the prior range
of $2.00 to $3.00 per boe.
|
|
|
Viper Energy Partners |
|
|
Total Net Production –
MBoe/d |
8.5 –
9.5 |
|
|
Unit costs ($/boe) |
|
Lease Operating
Expenses |
n/a |
Gathering &
Transportation |
$0.25
- $0.50 |
DD&A |
$8.00
- $10.00 |
G&A |
|
Cash
G&A |
$0.50
- $1.50 |
Non-Cash
Unit-Based Compensation |
$0.50
- $1.50 |
|
|
Corporate Tax Rate |
n/a |
Production and Ad
Valorem Taxes (% of Revenue) (a) |
7% |
|
|
Capital Budget ($ -
Million) |
|
2017 Capital Spend |
n/a |
(a) 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 financial and operating
results for the first quarter of 2017 on Wednesday, May 3,
2017 at 10:00 a.m. CT. Participants should call
(844) 400-1537 (United States/Canada) or (703) 326-5198
(International) and use the confirmation code 12963443. A
telephonic replay will be available from 1:00 p.m.
CT on Wednesday, May 3, 2017 through Wednesday,
May 10, 2017 at 1:00 p.m. CT. To access the replay, call
(855) 859-2056 (United States/Canada) or (404) 537-3406
(International) and enter confirmation code 12963443. A live
broadcast of the earnings conference call will also be available
via the internet at www.viperenergy.com under the “Investor
Relations” section of the site. A replay will also be available on
the website following the call.
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 oil-weighted basins,
primarily the Permian Basin in West Texas.
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. Diamondback's activities are primarily focused
on the horizontal exploitation of multiple intervals within the
Wolfcamp, Spraberry, Clearfork, Bone Spring and Cline
formations.
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. 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 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. Viper undertakes no
obligation to update or revise any forward-looking statement.
Viper Energy Partners LP |
Consolidated Statements of
Operations |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
Three Months Ended March 31, |
|
2017 |
2016 |
|
(In thousands) |
Operating
income: |
|
|
Royalty
income |
$ |
32,050 |
|
$ |
14,086 |
|
Lease
bonus |
1,602 |
|
108 |
|
Total
operating income |
33,652 |
|
14,194 |
|
Costs and
expenses: |
|
|
Production and ad valorem taxes |
2,070 |
|
1,302 |
|
Gathering
and transportation |
143 |
|
86 |
|
Depletion |
7,847 |
|
8,150 |
|
Impairment |
— |
|
26,011 |
|
General
and administrative expenses |
2,142 |
|
1,749 |
|
Total
costs and expenses |
12,202 |
|
37,298 |
|
Income (loss)
from operations |
21,450 |
|
(23,104 |
) |
Other income
(expense): |
|
|
Interest
expense |
(612 |
) |
(430 |
) |
Other
income (expense) |
(186 |
) |
199 |
|
Total
other income (expense), net |
(798 |
) |
(231 |
) |
Net income
(loss) |
$ |
20,652 |
|
$ |
(23,335 |
) |
|
|
|
Net income
attributable to common limited partners per unit: |
|
|
Basic and
Diluted |
$ |
0.22 |
|
$ |
(0.29 |
) |
Weighted
average number of limited partner units outstanding: |
|
|
Basic |
94,969 |
|
79,726 |
|
Diluted |
94,979 |
|
79,726 |
|
Viper Energy Partners LP |
Selected Operating Data |
(unaudited) |
|
|
|
|
Three Months Ended March 31, |
|
2017 |
2016 |
Production
Data: |
|
|
Oil (Bbls) |
583,854 |
|
433,541 |
|
Natural gas (Mcf) |
488,903 |
|
348,283 |
|
Natural gas liquids
(Bbls) |
101,342 |
|
69,103 |
|
Combined volumes
(BOE)(1)(2) |
766,680 |
|
560,691 |
|
Daily combined volumes
(BOE/d) |
8,519 |
|
6,161 |
|
% Oil |
76 |
% |
77 |
% |
|
|
|
Average sales
prices: |
|
|
Oil,
realized ($/Bbl) |
$ |
49.40 |
|
$ |
29.81 |
|
Natural
gas realized ($/Mcf) |
2.76 |
|
1.76 |
|
Natural
gas liquids ($/Bbl) |
18.34 |
|
7.93 |
|
Average
price realized ($/BOE) |
41.80 |
|
25.12 |
|
|
|
|
Average Costs
(per BOE) |
|
|
Production and ad valorem taxes |
$ |
2.70 |
|
$ |
2.32 |
|
Gathering
and transportation expense |
0.19 |
|
0.15 |
|
General
and administrative - cash component |
1.73 |
|
1.38 |
|
Total
operating expense - cash |
$ |
4.62 |
|
$ |
3.85 |
|
|
|
|
General
and administrative - non-cash component |
$ |
1.06 |
|
$ |
1.74 |
|
Interest
expense |
0.80 |
|
0.77 |
|
Depletion |
10.24 |
|
14.54 |
|
(1) Bbl equivalents are calculated using a conversion rate of
six Mcf per one Bbl.(2) The volumes presented are based on actual
results and are not calculated using the rounded numbers in the
table above.
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) plus interest expense, non-cash unit-based
compensation expense, depletion and impairment. Adjusted EBITDA is
not a measure of net income (loss) 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 as determined in accordance with GAAP or as an indicator
of Viper’s operating performance or liquidity. 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 and other
contractual obligations and fixed charges and reserves for future
operating or capital needs that the board of directors of Viper’s
general partner may deem appropriate. 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 (loss).
Viper Energy Partners LP |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
Three Months Ended March 31, |
|
2017 |
2016 |
Net income
(loss) |
$ |
20,652 |
|
$ |
(23,335 |
) |
Interest
expense |
612 |
|
430 |
|
Non-cash
unit-based compensation expense |
819 |
|
973 |
|
Depletion |
7,847 |
|
8,150 |
|
Impairment |
— |
|
26,011 |
|
Adjusted
EBITDA |
$ |
29,930 |
|
$ |
12,229 |
|
|
|
|
Adjustments to
reconcile Adjusted EBITDA to cash available for
distribution: |
|
|
Debt service,
contractual obligations, fixed charges and reserves |
(480 |
) |
(340 |
) |
Cash available
for distribution |
$ |
29,450 |
|
$ |
11,889 |
|
|
|
|
Limited Partner units
outstanding |
97,575 |
|
79,726 |
|
|
|
|
Cash available
for distribution per limited partner unit |
$ |
0.302 |
|
$ |
0.149 |
|
Investor Contact:
Adam Lawlis
+1 432.221.7467
alawlis@viperenergy.com
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