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 second quarter ended June 30, 2021.
SECOND QUARTER HIGHLIGHTS
- Q2 2021 average production of
16,516 bo/d (27,352 boe/d)
- Q2 2021 consolidated net income
(including non-controlling interest) of $42.4 million; adjusted net
income (as defined and reconciled below) of $51.0 million
- Q2 2021 cash distribution of $0.33
per common unit, representing approximately 70% of total cash
available for distribution of $0.47 per common unit; $0.33
distribution implies a 7.3% annualized yield based on the July 30,
2021 unit closing price of $18.01
- Consolidated adjusted EBITDA (as
defined and reconciled below) of $83.3 million and cash available
for distribution to Viper’s common units (as reconciled below) of
$30.3 million
- Repurchased 403,163 common units in
Q2 2021 for an aggregate of $6.8 million; from the end of the
second quarter through July 30, 2021, Viper repurchased an
additional 294,921 common units for an aggregate of $5.1
million
- Ended the second quarter of 2021
with total long-term debt of $541.9 and net debt of $499.5 million
(as defined and reconciled below); net debt down $130.3 million
since June 30, 2020, or an approximately 21% reduction over
the past twelve months
- 184 total gross (3.3 net 100%
royalty interest) horizontal wells turned to production on Viper’s
acreage during Q2 2021 with an average lateral length of 8,638
feet
- Initiating average daily production
guidance for the second half of 2021 of 15,500 to 16,250 bo/d
(25,750 to 27,000 boe/d)
- Increasing full year 2021 average
daily production guidance to 15,750 to 16,250 bo/d (26,250 to
27,000 boe/d), an increase of approximately 2% at the midpoint
- As of July 12, 2021, there were
approximately 467 gross horizontal wells in the process of active
development on Viper’s acreage in which Viper expects to own an
average 1.8% net royalty interest (8.3 net 100% royalty interest
wells)
- Approximately 496 gross (7.2 net
100% royalty interest) line-of-sight wells on Viper’s acreage that
are not currently in the process of active development, but for
which Viper has visibility to the potential of future development
in coming quarters, based on Diamondback’s current completion
schedule and third party operators’ permits
- A portion of distributions paid in
2021 are reasonably estimated to not constitute dividends for U.S.
federal income tax purposes. Approximately 80% are estimated to
constitute non-taxable reductions to tax basis.
“Viper’s production during the second quarter
was supported by concentrated exposure to Diamondback’s Midland
Basin development plan, as well as increasing activity from third
party operators. As a result of this strong production, and
enhanced by our best-in-class cost structure, Viper generated over
$75 million in net cash from operating activities during the
quarter. This strong cash flow generation, and the resulting
continued decrease in net debt, has enabled Viper to increase our
distribution to common unitholders to 70% of cash available for
distribution. This increase in our distribution marks the second
consecutive quarter of increasing return of capital to unitholders,
and the $0.33 per common unit distribution represents a 32%
increase from the first quarter distribution,” stated Travis Stice,
Chief Executive Officer of Viper’s General Partner.
Mr. Stice continued, “Looking ahead, Viper has
increased its production outlook for 2021 and continues to maintain
visibility into Diamondback’s expected forward development plan
that includes several large pads where Viper will own a significant
royalty interest. With the balance sheet in strong shape and the
current distribution representing a greater than 7% yield, Viper
plans to retain 30% of its cash flow during the coming quarters to
focus primarily on acquiring additional royalty interests that are
operated by Diamondback as well as continuing to repurchase common
units under our repurchase program approved by the Board. Viper’s
acquisition strategy is unique in the minerals industry in that we
have a clear understanding of our parent company’s expected
development plans, where others must rely on existing permits or
other signs of development to give confidence in future cash
flows.”
FINANCIAL UPDATE
Viper’s second quarter 2021 average unhedged
realized prices were $62.51 per barrel of oil, $2.96 per Mcf of
natural gas and $22.21 per barrel of natural gas liquids, resulting
in a total equivalent realized price of $45.58/boe.
During the second quarter of 2021, the Company
recorded total operating income of $114.2 million and consolidated
net income (including non-controlling interest) of $42.4
million.
As of June 30, 2021, the Company had a cash
balance of $42.4 million and total long-term debt outstanding
(excluding debt issuance, discounts and premiums) of $541.9
million, resulting in net debt (as defined and reconciled below) of
$499.5 million. Viper’s outstanding long-term debt as of
June 30, 2021 consisted of $479.9 million in aggregate
principal amount of its 5.375% Senior Notes due 2027 and $62.0
million in borrowings on its revolving credit facility, leaving
$438.0 million available for future borrowings and $480.4 million
of total liquidity.
Viper entered into an amendment to its revolving
credit facility in June 2021 where its borrowing base of $580.0
million was reaffirmed and the Company elected a commitment amount
of $500.0 million. Additionally, the facility’s maturity date was
extended to June 2025 from November 2022.
SECOND QUARTER 2021 CASH DISTRIBUTION
& CAPITAL RETURN PROGRAM
The Board of Directors of Viper’s General
Partner declared a cash distribution for the three months ended
June 30, 2021 of $0.33 per common unit. The distribution is payable
on August 19, 2021 to eligible common unitholders of record at the
close of business on August 12, 2021. This distribution represents
approximately 70% of total cash available for distribution.On March
11, 2021, and May 20, 2021, Viper made a cash distribution to its
common unitholders and subsequently has reasonably estimated that a
portion of such distribution, as well as the distribution payable
on August 19, 2021, should not constitute dividends for U.S.
federal income tax purposes. Rather, approximately 80% of these
distributions are estimated to constitute non-taxable reductions to
the tax basis of each distribution recipient’s ownership interest
in Viper. The Form 8937 containing additional information may be
found on www.viperenergy.com under the “Investor Relations” section
of the site.
During the second quarter of 2021, Viper
repurchased 403,163 common units for an aggregate of
$6.8 million. From the end of the second quarter through July
30, 2021, Viper repurchased an additional 294,921 common units for
an aggregate of $5.1 million. In total through July 30, 2021, the
Company had repurchased 3,613,049 common units at an average price
of $13.54 per unit, utilizing approximately 49% of the
$100.0 million approved by the Board for the repurchase
program.
The repurchase program is authorized to extend
through December 31, 2021 and the Company intends to purchase
common units under the repurchase program opportunistically with
cash on hand, free cash flow from operations and proceeds from
potential liquidity events such as the sale of assets. This
repurchase program may be suspended from time to time, modified,
extended or discontinued by the Board at any time. Purchases under
the repurchase program may be made from time to time in open market
or privately negotiated transactions in compliance with Rule 10b-18
under the Securities Exchange Act of 1934, as amended, and will be
subject to market conditions, applicable legal requirements,
contractual obligations and other factors. Any common units
purchased as part of this program will be retired.
OPERATIONS AND ACQUISITIONS UPDATE
During the second quarter of 2021, Viper
estimates that 184 gross (3.3 net 100% royalty interest) horizontal
wells with an average royalty interest of 1.8% were turned to
production on its existing acreage position with an average lateral
length of 8,638 feet. Of these 184 gross wells, Diamondback is the
operator of 24 gross wells with an average royalty interest of
10.9%, and the remaining 160 gross wells, with an average royalty
interest of 0.4%, are operated by third parties.
During the second quarter of 2021, Viper had
immaterial acquisitions or divestitures of mineral and royalty
interests, bringing the Company’s footprint of mineral and royalty
interests as of June 30, 2021 to a total of 24,341 net royalty
acres.
The following table summarizes Viper’s gross well
information:
|
DiamondbackOperated |
|
ThirdPartyOperated |
|
Total |
Horizontal wells
turned to production (second quarter
2021)(1): |
|
|
|
|
|
Gross wells |
24 |
|
|
160 |
|
|
184 |
|
Net 100% royalty interest
wells |
2.6 |
|
|
0.7 |
|
|
3.3 |
|
Average percent net royalty
interest |
10.9 |
% |
|
0.4 |
% |
|
1.8 |
% |
|
|
|
|
|
|
Horizontal producing
well count (as of July 12, 2021): |
|
|
|
|
|
Gross wells |
1,189 |
|
|
3,671 |
|
|
4,860 |
|
Net 100% royalty interest
wells |
92.8 |
|
|
54.0 |
|
|
146.8 |
|
Average percent net royalty
interest |
7.8 |
% |
|
1.5 |
% |
|
3.0 |
% |
|
|
|
|
|
|
Horizontal active
development well count (as of July 12, 2021): |
|
|
|
|
|
Gross wells |
67 |
|
|
400 |
|
|
467 |
|
Net 100% royalty interest
wells |
5.0 |
|
|
3.2 |
|
|
8.3 |
|
Average percent net royalty
interest |
7.5 |
% |
|
0.8 |
% |
|
1.8 |
% |
|
|
|
|
|
|
Line of sight wells
(as of July 12, 2021) |
|
|
|
|
|
Gross wells |
113 |
|
|
383 |
|
|
496 |
|
Net 100% royalty interest
wells |
4.5 |
|
|
2.7 |
|
|
7.2 |
|
Average percent net royalty
interest |
3.9 |
% |
|
0.7 |
% |
|
1.4 |
% |
(1) Average lateral length of 8,638 feet.
There continues to be active development across
Viper’s asset base with near-term activity expected to be driven
primarily by Diamondback operations. The 467 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. The 496 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 guidance for the full year
2021, as well as average production guidance for the second half of
2021.
|
|
|
Viper Energy Partners |
|
|
2H 2021 Net Production -
MBo/d |
15.50 - 16.25 |
2H 2021 Net Production -
MBoe/d |
25.75 - 27.00 |
Full Year 2021 Net Production
- MBo/d |
15.75 - 16.25 |
Full Year 2021 Net Production
- MBoe/d |
26.25 - 27.00 |
|
|
Unit costs ($/boe) |
|
Depletion |
$9.50 - $10.50 |
Cash G&A |
$0.60 - $0.80 |
Non-Cash Unit-Based
Compensation |
$0.10 - $0.25 |
Interest Expense(1) |
$3.00 - $3.25 |
|
|
Production and Ad Valorem
Taxes (% of Revenue) (2) |
7% |
(1) Assumes actual interest expense for the
first half of 2021 plus expected interest for the remainder of 2021
assuming $480.0 million in principal of senior notes and $60.0
million drawn on the revolver.(2) Includes
production taxes of 4.6% for crude oil and 7.5% for natural gas and
natural gas liquids and ad valorem taxes.
CONFERENCE CALL
Viper will host a conference call and webcast
for investors and analysts to discuss its results for the second
quarter of 2021 on Tuesday, August 3, 2021 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
1383663. A telephonic replay will be available from 1:00 p.m. CT on
Tuesday, August 3, 2021 through Tuesday, August 10, 2021 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 5896442. 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 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 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 the current volatile industry and
macroeconomic conditions, volatile commodity prices, production
levels on properties in which Viper has mineral and royalty
interests, the effect of the recent presidential and congressional
elections on environmental policies and regulations impacting Viper
and its operators, severe weather conditions (such as the impact of
the severe winter storms in February 2021 in the Permian Basin on
production volumes on Viper’s mineral and royalty acreage), any
acquisitions or dispositions, Diamondback’s plans for developing
Viper’s acreage discussed above, development activity by other
operators, Viper’s cash distribution policy and the impact of the
COVID-19 pandemic. 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 Balance Sheets |
(unaudited, in thousands, except unit
amounts) |
|
|
|
|
|
June 30, |
|
December 31, |
|
2021 |
|
2020 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
42,422 |
|
|
|
$ |
19,121 |
|
|
Royalty income receivable (net of allowance for credit
losses) |
42,011 |
|
|
|
32,210 |
|
|
Royalty income receivable—related
party |
3,679 |
|
|
|
1,998 |
|
|
Other current
assets |
658 |
|
|
|
665 |
|
|
Total current
assets |
88,770 |
|
|
|
53,994 |
|
|
Property: |
|
|
|
Oil and natural gas interests, full cost method of accounting
($1,319,256 and $1,364,906 excluded from depletion at June 30,
2021 and December 31, 2020,
respectively) |
2,896,361 |
|
|
|
2,895,542 |
|
|
Land |
5,688 |
|
|
|
5,688 |
|
|
Accumulated depletion and
impairment |
(545,040 |
) |
|
|
(496,176 |
) |
|
Property, net |
2,357,009 |
|
|
|
2,405,054 |
|
|
Other
assets |
4,383 |
|
|
|
2,327 |
|
|
Total assets |
$ |
2,450,162 |
|
|
|
$ |
2,461,375 |
|
|
Liabilities and Unitholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts
payable |
$ |
39 |
|
|
|
$ |
43 |
|
|
Accrued
liabilities |
17,159 |
|
|
|
18,262 |
|
|
Derivative
instruments |
51,762 |
|
|
|
26,593 |
|
|
Total current
liabilities |
68,960 |
|
|
|
44,898 |
|
|
Long-term debt,
net |
534,180 |
|
|
|
555,644 |
|
|
Total
liabilities |
603,140 |
|
|
|
600,542 |
|
|
Commitments and
contingencies |
|
|
|
Unitholders’ equity: |
|
|
|
General
partner |
769 |
|
|
|
809 |
|
|
Common units (64,546,377 units issued and outstanding as of
June 30, 2021 and 65,817,281 units issued and outstanding as
of December 31,
2020) |
594,777 |
|
|
|
633,415 |
|
|
Class B units (90,709,946 units issued and outstanding
June 30, 2021 and December 31,
2020) |
981 |
|
|
|
1,031 |
|
|
Total Viper Energy Partners LP unitholders’
equity |
596,527 |
|
|
|
635,255 |
|
|
Non-controlling
interest |
1,250,495 |
|
|
|
1,225,578 |
|
|
Total equity |
1,847,022 |
|
|
|
1,860,833 |
|
|
Total liabilities and unitholders’
equity |
$ |
2,450,162 |
|
|
|
$ |
2,461,375 |
|
|
Viper Energy Partners LP |
Consolidated Statements of Operations |
(unaudited, in thousands, except per unit
data) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Operating
income: |
|
|
|
|
|
|
|
Royalty income |
$ |
113,458 |
|
|
|
$ |
32,444 |
|
|
|
$ |
209,970 |
|
|
|
$ |
109,273 |
|
|
Lease bonus
income |
484 |
|
|
|
23 |
|
|
|
809 |
|
|
|
1,645 |
|
|
Other operating
income |
208 |
|
|
|
202 |
|
|
|
347 |
|
|
|
443 |
|
|
Total operating
income |
114,150 |
|
|
|
32,669 |
|
|
|
211,126 |
|
|
|
111,361 |
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
Production and ad valorem
taxes |
8,152 |
|
|
|
3,110 |
|
|
|
14,801 |
|
|
|
9,257 |
|
|
Depletion |
23,978 |
|
|
|
22,782 |
|
|
|
48,864 |
|
|
|
47,424 |
|
|
General and administrative
expenses |
2,162 |
|
|
|
1,683 |
|
|
|
4,383 |
|
|
|
4,349 |
|
|
Total costs and
expenses |
34,292 |
|
|
|
27,575 |
|
|
|
68,048 |
|
|
|
61,030 |
|
|
Income (loss) from
operations |
79,858 |
|
|
|
5,094 |
|
|
|
143,078 |
|
|
|
50,331 |
|
|
Other income
(expense): |
|
|
|
|
|
|
|
Interest expense,
net |
(7,973 |
) |
|
|
(7,669 |
) |
|
|
(15,833 |
) |
|
|
(16,632 |
) |
|
Gain (loss) on derivative instruments,
net |
(29,546 |
) |
|
|
(34,443 |
) |
|
|
(61,050 |
) |
|
|
(42,385 |
) |
|
Gain (loss) on revaluation of
investment |
— |
|
|
|
3,443 |
|
|
|
— |
|
|
|
(6,677 |
) |
|
Other income,
net |
39 |
|
|
|
519 |
|
|
|
77 |
|
|
|
923 |
|
|
Total other expense,
net |
(37,480 |
) |
|
|
(38,150 |
) |
|
|
(76,806 |
) |
|
|
(64,771 |
) |
|
Income (loss) before
income
taxes |
42,378 |
|
|
|
(33,056 |
) |
|
|
66,272 |
|
|
|
(14,440 |
) |
|
Provision for (benefit from)
income taxes |
— |
|
|
|
— |
|
|
|
35 |
|
|
|
142,466 |
|
|
Net income
(loss) |
42,378 |
|
|
|
(33,056 |
) |
|
|
66,237 |
|
|
|
(156,906 |
) |
|
Net income (loss) attributable
to non-controlling
interest |
37,716 |
|
|
|
(11,304 |
) |
|
|
64,595 |
|
|
|
7,015 |
|
|
Net income (loss)
attributable to Viper Energy Partners
LP |
$ |
4,662 |
|
|
|
$ |
(21,752 |
) |
|
|
$ |
1,642 |
|
|
|
$ |
(163,921 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common limited partner units: |
|
|
|
|
|
|
|
Basic |
$ |
0.07 |
|
|
|
$ |
(0.32 |
) |
|
|
$ |
0.03 |
|
|
|
$ |
(2.42 |
) |
|
Diluted |
$ |
0.07 |
|
|
|
$ |
(0.32 |
) |
|
|
$ |
0.03 |
|
|
|
$ |
(2.42 |
) |
|
Weighted average
number of common limited partner units outstanding: |
|
|
|
|
|
|
|
Basic |
64,672 |
|
|
|
67,831 |
|
|
|
65,014 |
|
|
|
67,827 |
|
|
Diluted |
64,795 |
|
|
|
67,831 |
|
|
|
65,151 |
|
|
|
67,827 |
|
|
Viper Energy Partners LP |
Consolidated Statements of Cash Flows |
(unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Cash flows from operating
activities: |
|
|
|
|
|
|
|
Net income
(loss) |
$ |
42,378 |
|
|
|
$ |
(33,056 |
) |
|
|
$ |
66,237 |
|
|
|
$ |
(156,906 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Deferred income tax expense
(benefit) |
— |
|
|
|
— |
|
|
|
— |
|
|
|
142,466 |
|
|
Depletion |
23,978 |
|
|
|
22,782 |
|
|
|
48,864 |
|
|
|
47,424 |
|
|
(Gain) loss on derivative instruments,
net |
29,546 |
|
|
|
34,443 |
|
|
|
61,050 |
|
|
|
42,385 |
|
|
Net cash receipts (payments) on
derivatives |
(20,940 |
) |
|
|
(2,101 |
) |
|
|
(35,882 |
) |
|
|
(2,554 |
) |
|
(Gain) loss on revaluation of
investment |
— |
|
|
|
(3,443 |
) |
|
|
— |
|
|
|
6,677 |
|
|
Other |
1,091 |
|
|
|
847 |
|
|
|
1,992 |
|
|
|
1,808 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Royalty income
receivable |
(220 |
) |
|
|
5,842 |
|
|
|
(9,801 |
) |
|
|
25,971 |
|
|
Royalty income receivable—related
party |
1,842 |
|
|
|
(917 |
) |
|
|
(1,681 |
) |
|
|
9,659 |
|
|
Other |
(2,654 |
) |
|
|
(4,645 |
) |
|
|
(1,099 |
) |
|
|
(1,067 |
) |
|
Net cash provided by (used in)
operating
activities |
75,021 |
|
|
|
19,752 |
|
|
|
129,680 |
|
|
|
115,863 |
|
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
Acquisitions of oil and natural gas
interests |
(745 |
) |
|
|
(646 |
) |
|
|
(819 |
) |
|
|
(65,272 |
) |
|
Net cash provided by (used in)
investing
activities |
(745 |
) |
|
|
(646 |
) |
|
|
(819 |
) |
|
|
(65,272 |
) |
|
Cash flows from financing
activities: |
|
|
|
|
|
|
|
Proceeds from borrowings under credit
facility |
25,000 |
|
|
|
— |
|
|
|
25,000 |
|
|
|
92,000 |
|
|
Repayment on credit
facility |
(20,000 |
) |
|
|
(20,000 |
) |
|
|
(47,000 |
) |
|
|
(35,000 |
) |
|
Repayment of senior
notes |
— |
|
|
|
(13,787 |
) |
|
|
— |
|
|
|
(13,787 |
) |
|
Repurchased units as part of unit
buyback |
(6,779 |
) |
|
|
— |
|
|
|
(19,822 |
) |
|
|
— |
|
|
Distributions to public
|
(16,047 |
) |
|
|
(6,714 |
) |
|
|
(25,107 |
) |
|
|
(36,928 |
) |
|
Distributions to Diamondback
|
(22,886 |
) |
|
|
(9,175 |
) |
|
|
(35,712 |
) |
|
|
(50,348 |
) |
|
Other |
(2,869 |
) |
|
|
(38 |
) |
|
|
(2,919 |
) |
|
|
(467 |
) |
|
Net cash provided by (used in)
financing
activities |
(43,581 |
) |
|
|
(49,714 |
) |
|
|
(105,560 |
) |
|
|
(44,530 |
) |
|
Net increase (decrease) in
cash |
30,695 |
|
|
|
(30,608 |
) |
|
|
23,301 |
|
|
|
6,061 |
|
|
Cash and cash equivalents at
beginning of
period |
11,727 |
|
|
|
40,271 |
|
|
|
19,121 |
|
|
|
3,602 |
|
|
Cash and cash equivalents at
end of period |
$ |
42,422 |
|
|
|
$ |
9,663 |
|
|
|
$ |
42,422 |
|
|
|
$ |
9,663 |
|
|
Viper Energy Partners LP |
Selected Operating Data |
(unaudited) |
|
|
|
|
|
|
|
Three Months EndedJune 30, 2021 |
|
Three Months EndedMarch 31, 2021 |
|
Three Months EndedJune 30, 2020 |
Production
Data: |
|
|
|
|
|
Oil (MBbls) |
1,503 |
|
|
1,395 |
|
|
1,315 |
|
|
Natural gas
(MMcf) |
3,219 |
|
|
3,262 |
|
|
2,685 |
|
|
Natural gas liquids
(MBbls) |
449 |
|
|
407 |
|
|
467 |
|
|
Combined volumes
(MBOE)(1) |
2,489 |
|
|
2,346 |
|
|
2,230 |
|
|
|
|
|
|
|
|
Average daily oil volumes
(BO/d)(2) |
16,516 |
|
|
15,500 |
|
|
14,453 |
|
|
Average daily combined volumes
(BOE/d)(2) |
27,352 |
|
|
26,066 |
|
|
24,508 |
|
|
|
|
|
|
|
|
Average sales
prices(2): |
|
|
|
|
|
Oil ($/Bbl) |
$ |
62.51 |
|
|
$ |
56.16 |
|
|
$ |
21.00 |
|
|
Natural gas
($/Mcf) |
$ |
2.96 |
|
|
$ |
2.77 |
|
|
$ |
0.46 |
|
|
Natural gas liquids
($/Bbl) |
$ |
22.21 |
|
|
$ |
22.42 |
|
|
$ |
7.69 |
|
|
Combined
($/BOE)(3) |
$ |
45.58 |
|
|
$ |
41.14 |
|
|
$ |
14.55 |
|
|
|
|
|
|
|
|
Oil, hedged
($/Bbl)(4) |
$ |
48.58 |
|
|
$ |
45.45 |
|
|
$ |
22.39 |
|
|
Natural gas, hedged
($/Mcf)(4) |
$ |
2.96 |
|
|
$ |
2.77 |
|
|
$ |
(1.01 |
) |
|
Natural gas liquids
($/Bbl)(4) |
$ |
22.21 |
|
|
$ |
22.42 |
|
|
$ |
7.69 |
|
|
Combined price, hedged
($/BOE)(4) |
$ |
37.18 |
|
|
$ |
34.77 |
|
|
$ |
13.60 |
|
|
|
|
|
|
|
|
Average Costs
($/BOE): |
|
|
|
|
|
Production and ad valorem
taxes |
$ |
3.28 |
|
|
$ |
2.83 |
|
|
$ |
1.39 |
|
|
General and administrative - cash
component(5) |
0.73 |
|
|
0.81 |
|
|
0.63 |
|
|
Total operating expense -
cash |
$ |
4.01 |
|
|
$ |
3.64 |
|
|
$ |
2.02 |
|
|
|
|
|
|
|
|
General and administrative - non-cash unit compensation
expense |
$ |
0.14 |
|
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
Interest expense,
net |
$ |
3.20 |
|
|
$ |
3.35 |
|
|
$ |
3.44 |
|
|
Depletion |
$ |
9.63 |
|
|
$ |
10.61 |
|
|
$ |
10.21 |
|
|
(1) Bbl equivalents are calculated using a
conversion rate of six Mcf per one Bbl.(2) Average
daily volumes and average sales prices presented are based on
actual production volumes and not calculated utilizing the rounded
production volumes presented in the table
above.(3) Realized price net of all deducts for
gathering, transportation and
processing.(4) Hedged prices reflect the impact of
cash settlements of our matured commodity derivative transactions
on our average sales prices. (5) 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, impairment 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 of directors of
Viper’s general partner may deem appropriate, cash paid for tax
withholding on vested common units, distribution equivalent rights
and preferred distributions. 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.
The following tables present a reconciliation of
the GAAP financial measure of net income (loss) to the non-GAAP
financial measures of Adjusted EBITDA and cash available for
distribution:
Viper Energy Partners LP |
(unaudited, in thousands, except per unit
data) |
|
|
|
Three Months EndedJune 30, 2021 |
Net income (loss) attributable to Viper Energy Partners
LP |
$ |
4,662 |
|
|
Net income (loss) attributable to non-controlling
interest |
37,716 |
|
|
Net income
(loss) |
42,378 |
|
|
Interest expense,
net |
7,973 |
|
|
Non-cash unit-based compensation
expense |
338 |
|
|
Depletion |
23,978 |
|
|
Non-cash (gain) loss on derivative
instruments |
8,606 |
|
|
Consolidated Adjusted
EBITDA |
83,273 |
|
|
Less: Adjusted EBITDA attributable to non-controlling
interest(1) |
48,637 |
|
|
Adjusted EBITDA
attributable to Viper Energy Partners
LP |
$ |
34,636 |
|
|
|
|
Adjustments to
reconcile Adjusted EBITDA to cash available for
distribution: |
|
Debt service, contractual obligations, fixed charges and
reserves |
$ |
(4,187 |
) |
|
Distribution equivalent rights
payments |
(55 |
) |
|
Preferred
distributions |
(45 |
) |
|
Cash available for
distribution to Viper Energy Partners LP
unitholders |
$ |
30,349 |
|
|
|
|
Common limited partner units
outstanding |
64,546 |
|
|
|
|
Cash available for
distribution per limited partner
unit |
$ |
0.47 |
|
|
Cash per unit approved for
distribution |
$ |
0.33 |
|
|
(1) Does not take into account special income
allocation consideration.
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 impairment expense, non-cash
(gain) loss on derivative instruments, (gain) loss on
extinguishment of debt and related income tax adjustments, if any.
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 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 net income
(loss) attributable to Viper Energy Partners LP to adjusted net
income (loss):
Viper Energy Partners LP |
Adjusted Net Income (Loss) |
(unaudited, in thousands, except per unit
data) |
|
|
|
Three Months Ended June 30, 2021 |
|
Amounts |
|
Amounts PerDiluted Unit |
Net income (loss) attributable to Viper Energy Partners
LP |
$ |
4,662 |
|
|
$ |
0.07 |
|
Net income (loss) attributable to non-controlling
interest |
37,716 |
|
|
0.58 |
|
Net income
(loss)
|
42,378 |
|
|
0.65 |
|
Non-cash (gain) loss on derivative instruments,
net |
8,606 |
|
|
0.14 |
|
Adjusted net income
(loss)(1) |
50,984 |
|
|
0.79 |
|
Less: Adjusted net income (loss) attributed to non-controlling
interests(1) |
45,376 |
|
|
0.70 |
|
Adjusted net income
(loss) attributable to Viper Energy Partners
LP |
$ |
5,608 |
|
|
$ |
0.09 |
|
|
|
|
|
Weighted average
common units outstanding: |
|
|
|
Basic |
64,672 |
|
Diluted |
64,795 |
|
(1) Calculated using diluted shares (non-GAAP)
RECONCILIATION OF LONG-TERM DEBT TO NET
DEBT
The Company defines net debt as debt (excluding
debt issuance, discounts and premiums) less 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.
|
June 30,2021 |
|
Net Q1 PrincipalBorrowings/(Repayments) |
|
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
(in thousands) |
Total long-term
debt(1) |
$ |
541,938 |
|
|
|
$ |
5,000 |
|
|
$ |
536,938 |
|
|
|
$ |
563,938 |
|
|
|
$ |
606,438 |
|
|
|
$ |
639,438 |
|
|
Cash and cash
equivalents |
(42,422 |
) |
|
|
|
|
(11,727 |
) |
|
|
(19,121 |
) |
|
|
(7,374 |
) |
|
|
(9,663 |
) |
|
Net
debt |
$ |
499,516 |
|
|
|
|
|
$ |
525,211 |
|
|
|
$ |
544,817 |
|
|
|
$ |
599,064 |
|
|
|
$ |
629,775 |
|
|
(1) Excludes debt issuance, 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) |
|
Q3 2021 |
|
Q4 2021 |
|
Q1 2022 |
Collars - WTI (Cushing) |
10,000 |
|
|
10,000 |
|
|
2,500 |
|
|
Floor Price |
$ |
30.00 |
|
|
$ |
30.00 |
|
|
$ |
45.00 |
|
|
Ceiling Price |
$ |
43.05 |
|
|
$ |
43.05 |
|
|
$ |
79.55 |
|
|
Deferred Premium Puts - WTI (Cushing) |
— |
|
|
— |
|
|
7,500 |
|
|
Strike |
$ |
— |
|
|
$ |
— |
|
|
$ |
47.51 |
|
|
Premium |
$ |
— |
|
|
$ |
— |
|
|
$ |
(1.66 |
) |
|
|
Natural Gas (Mmbtu/day, $/Mmbtu) |
|
Q1 2022 |
|
Q2 2022 |
|
Q3 2022 |
|
Q4 2022 |
Costless Collars - Henry Hub |
20,000 |
|
|
20,000 |
|
|
20,000 |
|
|
20,000 |
|
Floor Price |
$ |
2.50 |
|
|
$ |
2.50 |
|
|
$ |
2.50 |
|
|
$ |
2.50 |
|
Ceiling Price |
$ |
4.62 |
|
|
$ |
4.62 |
|
|
$ |
4.62 |
|
|
$ |
4.62 |
|
Investor Contacts:Adam Lawlis+1
432.221.7467alawlis@viperenergy.com
Austen Gilfillian+1 432.221.7420agilfillian@viperenergy.com
Source: Viper Energy Partners LP; Diamondback Energy, Inc.
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