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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Viper Energy Inc | NASDAQ:VNOM | NASDAQ | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 51.36 | 50.37 | 51.36 | 0 | 00:00:00 |
From Nov 2021 to Nov 2024
FOURTH QUARTER HIGHLIGHTS
FULL YEAR 2021 HIGHLIGHTS
2022 OUTLOOK
“During the fourth quarter, Viper generated record financial and operating results, highlighted by the $0.67 per common unit of cash available for distribution, exceeding our previous record by over 10%. Importantly, production outperformed expectations during the quarter following the closing of the Swallowtail acquisition as third party operated activity levels exceeded our conservative acquisition assumptions and Diamondback continued to focus its activity on Viper’s concentrated royalty acreage,” stated Travis Stice, Chief Executive Officer of Viper’s General Partner.
Mr. Stice continued, “Looking ahead to 2022, Viper is uniquely positioned within the industry to be able to capture numerous tailwinds and return substantial amounts of cash back to our unitholders. With zero capital requirements and only limited operating costs, royalty companies will be advantaged in 2022 as we will not face inflationary cost pressures. For Viper specifically, as our defensive hedges placed in 2020 rolled off at the end of 2021, our industry leading cash margins will now be further enhanced by mostly uncapped exposure to strength in commodity prices. Lastly, Viper continues to have unmatched, high confidence visibility into Diamondback’s expected forward plan to support our production profile, with additional upside from third party operated production continuing to exceed our conservative activity and timing assumptions.”
MANAGEMENT CHANGES
Austen Gilfillian, currently Senior Finance Associate, has been promoted to General Manager of Viper. Mr. Gilfillian’s additional responsibilities will include both the Viper land and business development functions reporting to him, along with his existing responsibilities of finance and investor relations. Mr. Gilfillian will continue to report to Kaes Van’t Hof, President of Viper’s General Partner.
FINANCIAL UPDATE
Viper’s fourth quarter 2021 average unhedged realized prices were $74.00 per barrel of oil, $4.82 per Mcf of natural gas and $36.65 per barrel of natural gas liquids, resulting in a total equivalent realized price of $56.82/boe.
During the fourth quarter of 2021, the Company recorded total operating income of $165.8 million and consolidated net income (including non-controlling interest) of $117.0 million.
As of December 31, 2021, the Company had a cash balance of $39.4 million and total long-term debt outstanding (excluding debt issuance, discounts and premiums) of $783.9 million, resulting in net debt (as defined and reconciled below) of $744.5 million. Viper’s outstanding long-term debt as of December 31, 2021 consisted of $479.9 million in aggregate principal amount of its 5.375% Senior Notes due 2027 and $304.0 million in borrowings on its revolving credit facility, leaving $196.0 million available for future borrowings and $235.4 million of total liquidity.
FOURTH 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 December 31, 2021 of $0.47 per common unit. The distribution is payable on March 11, 2022 to eligible common unitholders of record at the close of business on March 4, 2022. This distribution represents approximately 70% of total cash available for distribution.
On August 19, 2021 and November 18, 2021, Viper made cash distributions to its common unitholders and subsequently has reasonably estimated that a portion of such distributions, as well as a portion of the distribution payable on March 11, 2022, should not constitute dividends for U.S. federal income tax purposes. Rather, approximately 90% of distributions expected to be paid in 2022 and 60% of distributions paid in 2021 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 fourth quarter of 2021, Viper repurchased 574,200 common units for an aggregate of $12.4 million. In total through December 31, 2021, the Company had repurchased 4,657,840 common units for an aggregate of $70.0 million, reflecting an average price of $15.01 per unit.
From the end of the fourth quarter through January 31, 2022, Viper repurchased an additional 1,580,200 units for an aggregate of approximately $39.3 million, including a privately negotiated transaction for 1,500,000 units with an affiliate of Blackstone, Inc. In total through January 31, 2022, the Company had repurchased 6,238,040 common units at an average price of $17.50 per unit, utilizing approximately 72.9% of the $150.0 million approved by the Board for the repurchase program.
OPERATIONS AND ACQUISITIONS UPDATE
During the fourth quarter of 2021, Viper estimates that 179 gross (5.1 net 100% royalty interest) horizontal wells with an average royalty interest of 2.9% were turned to production on its acreage position with an average lateral length of 10,048 feet. Of these 179 gross wells, Diamondback is the operator of 40 gross wells with an average royalty interest of 9.3%, and the remaining 139 gross wells, with an average royalty interest of 1.0%, are operated by third parties.
As previously announced, on October 1, 2021, Viper completed the acquisition of certain mineral and royalty interests from Swallowtail for approximately 15.25 million of our common units and approximately $225.3 million in cash. The mineral and royalty interests acquired in the Swallowtail acquisition represent approximately 2,313 net royalty acres primarily in the Northern Midland Basin, of which approximately 62% are operated by Diamondback.
In addition to the Swallowtail acquisition, during the fourth quarter of 2021 Viper acquired 350 net royalty acres for an aggregate of approximately $49.1 million, 100% of which are operated by Diamondback. These acquisitions were funded through a combination of cash on hand and borrowings under the Company’s credit facility.
As a result of the acquisitions completed during the fourth quarter of 2021, the Company’s footprint of mineral and royalty interests as of December 31, 2021 was 27,027 net royalty acres.
Subsequent to the end of the fourth quarter, Viper completed a divestiture of approximately 325 net royalty acres for total proceeds of approximately $29.3 million, subject to post-closing adjustments. The mineral and royalty interests included in the divestiture represent third party operated acreage located entirely in Upton and Reagan counties.The following table summarizes Viper’s gross well information:
| Diamondback Operated | Third Party Operated | Total | ||||||
| Horizontal wells turned to production (fourth quarter 2021)(1): | ||||||||
| Gross wells | 40 | 139 | 179 | |||||
| Net 100% royalty interest wells | 3.7 | 1.4 | 5.1 | |||||
| Average percent net royalty interest | 9.3% | 1.0% | 2.9% | |||||
| Horizontal wells turned to production (year ended December 31, 2021)(2): | ||||||||
| Gross wells | 158 | 562 | 720 | |||||
| Net 100% royalty interest wells | 10.2 | 3.8 | 14.0 | |||||
| Average percent net royalty interest | 6.5% | 0.7% | 1.9% | |||||
| Horizontal producing well count (fourth quarter 2021): | ||||||||
| Gross wells | 1,335 | 4,371 | 5,706 | |||||
| Net 100% royalty interest wells | 101.8 | 59.4 | 161.2 | |||||
| Average percent net royalty interest | 7.6% | 1.4% | 2.8% | |||||
| Horizontal active development well count (as of January 27, 2022): | ||||||||
| Gross wells | 106 | 512 | 618 | |||||
| Net 100% royalty interest wells | 6.8 | 3.8 | 10.6 | |||||
| Average percent net royalty interest | 6.4% | 0.7% | 1.7% | |||||
| Line of sight wells (as of January 27, 2022): | ||||||||
| Gross wells | 135 | 428 | 563 | |||||
| Net 100% royalty interest wells | 7.8 | 3.8 | 11.6 | |||||
| Average percent net royalty interest | 5.8% | 0.9% | 2.1% | |||||
(1) Average lateral length of 10,048 feet.(2) Average lateral length of 9,823 feet.
The 618 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 39 gross rigs operating on Viper’s acreage, six of which are operated by Diamondback. The 563 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.
YEAR END RESERVES UPDATE
Ryder Scott Company, L.P. prepared an estimate of Viper’s proved reserves as of December 31, 2021. Reference prices of $66.56 per barrel of oil and natural gas liquids and $3.59 per MMbtu of natural gas were used in accordance with applicable rules of the Securities and Exchange Commission. Realized prices with applicable differentials were $64.87 per barrel of oil, $2.97 per Mcf of natural gas and $25.93 per barrel of natural gas liquids.
Proved reserves at year-end 2021 of 127,888 Mboe (69,240 Mbo) represent a 29% increase over year-end 2020 reserves. The year-end 2021 proved reserves have a PV-10 value (as defined and reconciled below) of approximately $2.3 billion and a standardized measure of discounted future net cash flows of $2.1 billion.
Proved developed reserves increased by 26% year over year to 91,170 Mboe (49,280 Mbo) as of December 31, 2021, reflecting continued horizontal development by the operators of Viper’s acreage.
Net proved reserve additions of 38,756 Mboe resulted in a reserve replacement ratio of 378% (defined as the sum of extensions, discoveries, revisions, purchases and divestitures, divided by annual production). The organic reserve replacement ratio was 293% (defined as the sum of extensions, discoveries and revisions, divided by annual production).
Extensions and discoveries of 30,981 Mboe are primarily attributable to the drilling of 407 new wells and from 336 new proved undeveloped locations added. The Company’s negative revisions of previous estimated quantities of 918 Mboe were driven primarily by a reassessment of Diamondback’s expected development plan following two large acquisitions. There were offsetting positive revisions due to price increases and improved well performance. The purchase of reserves in place of 9,102 Mboe was due to multiple acquisitions of certain mineral and royalty interests, primarily the Swallowtail acquisition.
| Oil (MBbls) | Liquids (MBbls) | Gas (MMcf) | MBOE | ||||||||
| As of December 31, 2020 | 57,530 | 21,953 | 119,450 | 99,392 | |||||||
| Purchase of reserves in place | 5,246 | 2,264 | 9,549 | 9,102 | |||||||
| Extensions and discoveries | 17,256 | 7,182 | 39,256 | 30,981 | |||||||
| Revisions of previous estimates | (4,544 | ) | (1,339 | ) | 29,788 | (918 | ) | ||||
| Divestitures | (180 | ) | (114 | ) | (681 | ) | (409 | ) | |||
| Production | (6,068 | ) | (1,913 | ) | (13,672 | ) | (10,260 | ) | |||
| As of December 31, 2021 | 69,240 | 28,033 | 183,690 | 127,888 | |||||||
As the owner of mineral and royalty interests, Viper incurred no exploration and development costs during the year ended December 31, 2021.
| December 31, | ||||||||
| 2021 | 2020 | 2019 | ||||||
| (in thousands) | ||||||||
| Acquisition costs: | ||||||||
| Proved properties | $ | 138,882 | $ | 9,509 | $ | 318,525 | ||
| Unproved properties | 479,041 | 56,169 | 833,221 | |||||
| Total | $ | 617,923 | $ | 65,678 | $ | 1,151,746 | ||
GUIDANCE UPDATE
Below is Viper’s preliminary guidance for the full year 2022, as well as average production guidance for the first half of 2022.
| Viper Energy Partners | |
| Q1 2022 / Q2 2022 Net Production - MBo/d | 17.75 - 18.50 |
| Q1 2022 / Q2 2022 Net Production - MBoe/d | 29.50 - 30.75 |
| Full Year 2022 Net Production - MBo/d | 17.75 - 19.00 |
| Full Year 2022 Net Production - MBoe/d | 29.50 - 31.50 |
| 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) | $3.25 - $3.75 |
| Production and Ad Valorem Taxes (% of Revenue) (2) | 7% - 8% |
| (1) | Expected interest for the full year 2022 assuming $480.0 million in principal of senior notes and $300.0 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 fourth quarter of 2021 on Wednesday, February 23, 2022 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 5529768. A telephonic replay will be available from 1:00 p.m. CT on Wednesday, February 23, 2022 through Wednesday, March 2, 2022 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 5529768. 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 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 (including acquisitions and 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; 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; 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 | |||||||
| Consolidated Balance Sheets | |||||||
| (unaudited, in thousands, except unit amounts) | |||||||
| December 31, | December 31, | ||||||
| 2021 | 2020 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 39,448 | $ | 19,121 | |||
| Royalty income receivable (net of allowance for credit losses) | 68,568 | 32,210 | |||||
| Royalty income receivable—related party | 2,144 | 1,998 | |||||
| Other current assets | 989 | 665 | |||||
| Total current assets | 111,149 | 53,994 | |||||
| Property: | |||||||
| Oil and natural gas interests, full cost method of accounting ($1,640,172 and $1,364,906 excluded from depletion at December 31, 2021 and December 31, 2020, respectively) | 3,513,590 | 2,895,542 | |||||
| Land | 5,688 | 5,688 | |||||
| Accumulated depletion and impairment | (599,163 | ) | (496,176 | ) | |||
| Property, net | 2,920,115 | 2,405,054 | |||||
| Other assets | 2,757 | 2,327 | |||||
| Total assets | $ | 3,034,021 | $ | 2,461,375 | |||
| Liabilities and Unitholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 69 | $ | 43 | |||
| Accrued liabilities | 20,980 | 18,262 | |||||
| Derivative instruments | 3,417 | 26,593 | |||||
| Total current liabilities | 24,466 | 44,898 | |||||
| Long-term debt, net | 776,727 | 555,644 | |||||
| Total liabilities | 801,193 | 600,542 | |||||
| Commitments and contingencies | |||||||
| Unitholders’ equity: | |||||||
| General Partner | 729 | 809 | |||||
| Common units (78,546,403 units issued and outstanding as of December 31, 2021 and 65,817,281 units issued and outstanding as of December 31, 2020) | 813,161 | 633,415 | |||||
| Class B units (90,709,946 units issued and outstanding December 31, 2021 and December 31, 2020) | 931 | 1,031 | |||||
| Total Viper Energy Partners LP unitholders’ equity | 814,821 | 635,255 | |||||
| Non-controlling interest | 1,418,007 | 1,225,578 | |||||
| Total equity | 2,232,828 | 1,860,833 | |||||
| Total liabilities and unitholders’ equity | $ | 3,034,021 | $ | 2,461,375 | |||
| Viper Energy Partners LP | |||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||
| (unaudited, in thousands, except per unit data) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Operating income: | |||||||||||||||
| Royalty income | $ | 163,915 | $ | 75,124 | $ | 501,534 | $ | 246,981 | |||||||
| Lease bonus income | 1,731 | 900 | 2,763 | 2,585 | |||||||||||
| Other operating income | 141 | 299 | 620 | 1,060 | |||||||||||
| Total operating income | 165,787 | 76,323 | 504,917 | 250,626 | |||||||||||
| Costs and expenses: | |||||||||||||||
| Production and ad valorem taxes | 9,132 | 5,538 | 32,558 | 19,844 | |||||||||||
| Depletion | 28,757 | 28,297 | 102,987 | 100,501 | |||||||||||
| Impairment | — | 69,202 | — | 69,202 | |||||||||||
| General and administrative expenses | 1,682 | 2,005 | 7,800 | 8,165 | |||||||||||
| Total costs and expenses | 39,571 | 105,042 | 143,345 | 197,712 | |||||||||||
| Income (loss) from operations | 126,216 | (28,719 | ) | 361,572 | 52,914 | ||||||||||
| Other income (expense): | |||||||||||||||
| Interest expense, net | (9,883 | ) | (8,130 | ) | (34,044 | ) | (33,000 | ) | |||||||
| Gain (loss) on derivative instruments, net | 1,240 | (16,122 | ) | (69,409 | ) | (63,591 | ) | ||||||||
| Gain (loss) on revaluation of investment | — | 105 | — | (8,556 | ) | ||||||||||
| Other income, net | 2 | 175 | 79 | 1,286 | |||||||||||
| Total other expense, net | (8,641 | ) | (23,972 | ) | (103,374 | ) | (103,861 | ) | |||||||
| Income (loss) before income taxes | 117,575 | (52,691 | ) | 258,198 | (50,947 | ) | |||||||||
| Provision for (benefit from) income taxes | 580 | — | 1,521 | 142,466 | |||||||||||
| Net income (loss) | 116,995 | (52,691 | ) | 256,677 | (193,413 | ) | |||||||||
| Net income (loss) attributable to non-controlling interest | 77,530 | (25,072 | ) | 198,738 | (1,109 | ) | |||||||||
| Net income (loss) attributable to Viper Energy Partners LP | $ | 39,465 | $ | (27,619 | ) | $ | 57,939 | $ | (192,304 | ) | |||||
| Net income (loss) attributable to common limited partner units: | |||||||||||||||
| Basic | $ | 0.50 | $ | (0.41 | ) | $ | 0.85 | $ | (2.84 | ) | |||||
| Diluted | $ | 0.50 | $ | (0.41 | ) | $ | 0.85 | $ | (2.84 | ) | |||||
| Weighted average number of common limited partner units outstanding: | |||||||||||||||
| Basic | 78,986 | 67,253 | 68,319 | 67,686 | |||||||||||
| Diluted | 79,058 | 67,253 | 68,391 | 67,686 | |||||||||||
| Viper Energy Partners LP | |||||||||||||||
| Consolidated Statements of Cash Flows | |||||||||||||||
| (unaudited, in thousands) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Cash flows from operating activities: | |||||||||||||||
| Net income (loss) | $ | 116,995 | $ | (52,691 | ) | $ | 256,677 | $ | (193,413 | ) | |||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
| Deferred income tax expense (benefit) | — | — | — | 142,466 | |||||||||||
| Depletion | 28,757 | 28,297 | 102,987 | 100,501 | |||||||||||
| Impairment | — | 69,202 | — | 69,202 | |||||||||||
| (Gain) loss on derivative instruments, net | (1,240 | ) | 16,122 | 69,409 | 63,591 | ||||||||||
| Net cash receipts (payments) on derivatives | (31,397 | ) | (18,280 | ) | (92,585 | ) | (36,998 | ) | |||||||
| (Gain) loss on revaluation of investment | — | (105 | ) | — | 8,556 | ||||||||||
| Other | 1,378 | 908 | 4,710 | 3,589 | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||
| Royalty income receivable | (21,435 | ) | (102 | ) | (36,358 | ) | 25,879 | ||||||||
| Royalty income receivable—related party | 19,878 | 12,913 | (146 | ) | 8,578 | ||||||||||
| Other | (5,494 | ) | (2,914 | ) | 2,420 | 4,605 | |||||||||
| Net cash provided by (used in) operating activities | 107,442 | 53,350 | 307,114 | 196,556 | |||||||||||
| Cash flows from investing activities: | |||||||||||||||
| Acquisitions of oil and natural gas interests | (274,448 | ) | (1,170 | ) | (281,176 | ) | (65,678 | ) | |||||||
| Proceeds from sale of assets | — | 36,496 | — | 38,594 | |||||||||||
| Proceeds from the sale of investments | — | 5,539 | — | 10,801 | |||||||||||
| Net cash provided by (used in) investing activities | (274,448 | ) | 40,865 | (281,176 | ) | (16,283 | ) | ||||||||
| Cash flows from financing activities: | |||||||||||||||
| Proceeds from borrowings under credit facility | 243,000 | 9,000 | 330,000 | 104,000 | |||||||||||
| Repayment on credit facility | (31,000 | ) | (51,500 | ) | (110,000 | ) | (116,500 | ) | |||||||
| Repayment of senior notes | — | — | — | (19,697 | ) | ||||||||||
| Debt issuance costs | (17 | ) | (21 | ) | (2,885 | ) | (111 | ) | |||||||
| Repurchased units as part of unit buyback | (12,437 | ) | (24,026 | ) | (45,999 | ) | (24,026 | ) | |||||||
| Distributions to public | (29,840 | ) | (6,731 | ) | (75,942 | ) | (45,674 | ) | |||||||
| Distributions to Diamondback | (34,772 | ) | (9,170 | ) | (100,685 | ) | (62,282 | ) | |||||||
| Other | (20 | ) | (20 | ) | (100 | ) | (464 | ) | |||||||
| Net cash provided by (used in) financing activities | 134,914 | (82,468 | ) | (5,611 | ) | (164,754 | ) | ||||||||
| Net increase (decrease) in cash and cash equivalents | (32,092 | ) | 11,747 | 20,327 | 15,519 | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 71,540 | 7,374 | 19,121 | 3,602 | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 39,448 | $ | 19,121 | $ | 39,448 | $ | 19,121 | |||||||
| Viper Energy Partners LP | |||||||||||
| Selected Operating Data | |||||||||||
| (unaudited) | |||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||
| Production Data: | |||||||||||
| Oil (MBbls) | 1,690 | 1,597 | 6,068 | 5,956 | |||||||
| Natural gas (MMcf) | 3,844 | 3,032 | 13,672 | 11,486 | |||||||
| Natural gas liquids (MBbls) | 554 | 446 | 1,913 | 1,848 | |||||||
| Combined volumes (MBOE)(1) | 2,885 | 2,549 | 10,260 | 9,718 | |||||||
| Average daily oil volumes (BO/d) | 18,370 | 17,359 | 16,625 | 16,272 | |||||||
| Average daily combined volumes (BOE/d) | 31,359 | 27,699 | 28,110 | 26,551 | |||||||
| Average sales prices: | |||||||||||
| Oil ($/Bbl) | $ | 74.00 | $ | 40.36 | $ | 65.51 | $ | 36.58 | |||
| Natural gas ($/Mcf) | $ | 4.82 | $ | 1.36 | $ | 3.60 | $ | 0.79 | |||
| Natural gas liquids ($/Bbl) | $ | 36.65 | $ | 14.71 | $ | 28.66 | $ | 10.88 | |||
| Combined ($/BOE)(2) | $ | 56.82 | $ | 29.48 | $ | 48.88 | $ | 25.41 | |||
| Oil, hedged ($/Bbl)(3) | $ | 55.42 | $ | 30.48 | $ | 50.25 | $ | 32.00 | |||
| Natural gas, hedged ($/Mcf)(3) | $ | 4.82 | $ | 0.84 | $ | 3.60 | $ | 0.02 | |||
| Natural gas liquids ($/Bbl)(3) | $ | 36.65 | $ | 14.71 | $ | 28.66 | $ | 10.88 | |||
| Combined price, hedged ($/BOE)(3) | $ | 45.94 | $ | 22.68 | $ | 39.86 | $ | 21.71 | |||
| Average Costs ($/BOE): | |||||||||||
| Production and ad valorem taxes | $ | 3.17 | $ | 2.17 | $ | 3.17 | $ | 2.04 | |||
| General and administrative - cash component(4) | 0.48 | 0.66 | 0.65 | 0.71 | |||||||
| Total operating expense - cash | $ | 3.65 | $ | 2.83 | $ | 3.82 | $ | 2.75 | |||
| General and administrative - non-cash unit compensation expense | $ | 0.10 | $ | 0.13 | $ | 0.11 | $ | 0.13 | |||
| Interest expense, net | $ | 3.43 | $ | 3.19 | $ | 3.32 | $ | 3.40 | |||
| Depletion | $ | 9.97 | $ | 11.10 | $ | 10.04 | $ | 10.34 | |||
| (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, 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, 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.
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 Ended | |||||||||||||||
| December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | ||||||||||||
| Net income (loss) attributable to Viper Energy Partners LP | $ | 39,465 | $ | 16,832 | $ | 4,662 | $ | (3,020 | ) | ||||||
| Net income (loss) attributable to non-controlling interest | 77,530 | 56,613 | 37,716 | 26,879 | |||||||||||
| Net income (loss) | 116,995 | 73,445 | 42,378 | 23,859 | |||||||||||
| Interest expense, net | 9,883 | 8,328 | 7,973 | 7,860 | |||||||||||
| Non-cash unit-based compensation expense | 276 | 243 | 338 | 315 | |||||||||||
| Depletion | 28,757 | 25,366 | 23,978 | 24,886 | |||||||||||
| Non-cash (gain) loss on derivative instruments | (32,637 | ) | (15,707 | ) | 8,606 | 16,562 | |||||||||
| Provision for (benefit from) income taxes | 580 | 906 | — | 35 | |||||||||||
| Consolidated Adjusted EBITDA | 123,854 | 92,581 | 83,273 | 73,517 | |||||||||||
| Less: Adjusted EBITDA attributable to non- controlling interest(1) | 66,242 | 54,269 | 48,637 | 42,779 | |||||||||||
| Adjusted EBITDA attributable to Viper Energy Partners LP | $ | 57,612 | $ | 38,312 | $ | 34,636 | $ | 30,738 | |||||||
| Adjustments to reconcile Adjusted EBITDA to cash available for distribution: | |||||||||||||||
| Income taxes payable | $ | (580 | ) | $ | (906 | ) | $ | — | $ | (35 | ) | ||||
| Debt service, contractual obligations, fixed charges and reserves | (4,094 | ) | (2,996 | ) | (4,187 | ) | (3,047 | ) | |||||||
| Cash paid for tax withholding on vested common units | — | — | — | (20 | ) | ||||||||||
| Distribution equivalent rights payments | (52 | ) | (62 | ) | (55 | ) | (24 | ) | |||||||
| Preferred distributions | (45 | ) | (45 | ) | (45 | ) | (45 | ) | |||||||
| Cash available for distribution to Viper Energy Partners LP unitholders | $ | 52,841 | $ | 34,303 | $ | 30,349 | $ | 27,567 | |||||||
| Common limited partner units outstanding | 78,546 | 63,831 | 64,546 | 64,950 | |||||||||||
| Cash available for distribution per limited partner unit | $ | 0.67 | $ | 0.54 | $ | 0.47 | $ | 0.42 | |||||||
| Cash per unit approved for distribution | $ | 0.47 | $ | 0.38 | $ | 0.33 | $ | 0.25 | |||||||
| (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 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 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 December 31, 2021 | |||||||
| Amounts | Amounts Per Diluted Unit | ||||||
| Net income (loss) attributable to Viper Energy Partners LP | $ | 39,465 | $ | 0.50 | |||
| Net income (loss) attributable to non-controlling interest | 77,530 | 0.98 | |||||
| Net income (loss) | 116,995 | 1.48 | |||||
| Non-cash (gain) loss on derivative instruments, net | (32,637 | ) | (0.41 | ) | |||
| Adjusted net income (loss) | 84,358 | 1.07 | |||||
| Less: Adjusted net income (loss) attributed to non-controlling interests | 55,627 | 0.71 | |||||
| Adjusted net income (loss) attributable to Viper Energy Partners LP | $ | 28,731 | $ | 0.36 | |||
| Weighted average common units outstanding: | |||||||
| Basic | 78,986 | ||||||
| Diluted | 79,058 | ||||||
RECONCILIATION OF LONG-TERM DEBT TO NET DEBT
The Company defines net debt as debt (excluding debt issuance costs, 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.
| December 31, 2021 | Net Q4 Principal Borrowings/(Repayments) | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | |||||||||||||||||
| (in thousands) | ||||||||||||||||||||||
| Total long-term debt(1) | $ | 783,938 | $ | 212,000 | $ | 571,938 | $ | 541,938 | $ | 536,938 | $ | 563,938 | ||||||||||
| Cash and cash equivalents | (39,448 | ) | (41,515 | ) | (42,422 | ) | (11,727 | ) | (19,121 | ) | ||||||||||||
| Net debt | $ | 744,490 | $ | 530,423 | $ | 499,516 | $ | 525,211 | $ | 544,817 | ||||||||||||
(1) Excludes debt issuance costs, discounts & premiums.
PV-10
PV-10 is the Company’s estimate of the present value of the future net revenues from proved oil and natural gas reserves after deducting estimated production and ad valorem taxes, future capital costs and operating expenses, but before deducting any estimates of future income taxes. The estimated future net revenues are discounted at an annual rate of 10% to determine their “present value.” The Company believes PV-10 to be an important measure for evaluating the relative significance of its oil and natural gas properties and that the presentation of the non-GAAP financial measure of PV-10 provides useful information to investors because it is widely used by professional analysts and investors in evaluating oil and natural gas companies. Because there are many unique factors that can impact an individual company when estimating the amount of future income taxes to be paid, the Company believes the use of a pre-tax measure is valuable for evaluating the Company. The Company believes that PV-10 is a financial measure routinely used and calculated similarly by other companies in the oil and natural gas industry.
The following table reconciles PV-10 to the Company’s standardized measure of discounted future net cash flows, the most directly comparable measure calculated and presented in accordance with GAAP. PV-10 should not be considered as an alternative to the standardized measure as computed under GAAP.
| (in thousands) | December 31, 2021 | |
| Standardized measure of discounted future net cash flows after taxes | $ | 2,093,117 |
| Add: Present value of future income tax discounted at 10% | 254,053 | |
| PV-10 | $ | 2,347,170 |
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) | ||||||||||||||
| Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | |||||||||||
| Collars - WTI (Cushing) | 2,500 | 2,000 | 4,000 | — | ||||||||||
| Floor Price | $ | 45.00 | $ | 45.00 | $ | 45.00 | $ | — | ||||||
| Ceiling Price | $ | 79.55 | $ | 80.15 | $ | 92.65 | $ | — | ||||||
| Deferred Premium Puts - WTI (Cushing) | 9,500 | 10,000 | 8,000 | — | ||||||||||
| Strike | $ | 47.51 | $ | 47.50 | $ | 47.50 | $ | — | ||||||
| Premium | $ | (1.57 | ) | $ | (1.49 | ) | $ | (1.52 | ) | $ | — | |||
| 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 | |||
| Natural Gas (Mmbtu/day, $/Mmbtu) | |||||||||||||||
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | ||||||||||||
| Natural Gas Basis Swaps - Waha Hub | 10,000 | 10,000 | 10,000 | 10,000 | |||||||||||
| Swap Price | $ | (1.02 | ) | $ | (1.02 | ) | $ | (1.02 | ) | $ | (1.02 | ) | |||
Investor Contact:
Austen Gilfillian+1 432.221.7420agilfillian@viperenergy.com
Source: Viper Energy Partners LP; Diamondback Energy, Inc.
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