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 fourth quarter ended December 31, 2016.
HIGHLIGHTS
- Previously announced Q4 2016 cash distribution of $0.258 per
common unit
- Q4 2016 average daily production of 7,919 boe/d (74% oil), up
27% from Q3 2016 average daily production of 6,255 boe/d
- Q4 2016 average realized prices were $46.14 per barrel of oil,
$2.50 per Mcf of natural gas and $16.15 per barrel of natural gas
liquids, resulting in a total equivalent price of $38.33/boe, up
10% from the Q3 2016 total equivalent price of $34.74/boe
- Proved reserves as of December 31, 2016 of 31.4 MMboe (68%
oil), up 19% year over year
- Full year 2017 production guidance of 8,000 to 8,500 boe/d, the
midpoint of which is up over 25% from 2016 average daily
production
- There are approximately 161 active well permits and seven
active rigs currently on Viper's mineral acreage
- Closed 13 deals for $68 million in Q4 2016, increasing Viper's
mineral assets by 887 net royalty acres
“Viper's mineral assets in the most attractive
areas of the Permian Basin continue to be a driving force in both
production and distribution growth. Assuming current activity
levels on our existing asset base, we expect annualized organic
production growth of over 25% in 2017," stated Travis Stice, Chief
Executive Officer of Viper's general partner.
Mr. Stice continued, "After our recent equity
raise, Viper currently has net cash, a clear organic growth
trajectory and significant upside from operators accelerating
development in 2017. Our acquisition machine came to life in the
second half of 2016, adding over 1,900 net royalty acres after
completing 26 deals for over $194 million. We look to continue this
momentum in 2017 after assembling a full-time dedicated team for
Viper in 2016."
FINANCIAL UPDATE
During the fourth quarter of 2016, the Company
recorded total operating income of $27.9 million and net income of
$16.3 million.
As of December 31, 2016, Viper had $120.5
million outstanding under its revolving credit facility. In January
2017, the Company paid off all of these outstanding borrowings with
net proceeds from its underwritten public offering of common equity
units.
FOURTH QUARTER 2016 CASH
DISTRIBUTION
As previously announced, the Board of Directors
of Viper's general partner declared a cash distribution for the
three months ended December 31, 2016 of $0.258 per common unit. The
distribution is payable on February 24, 2017 to unitholders of
record at the close of business on February 17, 2017.
RESERVES
Ryder Scott Company, L.P. prepared an estimate
of Viper's proved reserves as of December 31, 2016. Reference
prices of $42.75 per barrel of oil, $2.49 per MMbtu of natural gas
and $19.97 per barrel of natural gas liquids were used in
accordance with applicable rules of the Securities and Exchange
Commission. Realized prices with applicable differentials were
$39.64 per barrel of oil, $1.36 per Mcf of natural gas and $11.69
per barrel of natural gas liquids.
Proved reserves at year-end 2016 of 31.4 MMboe
represent a 19% increase over year-end 2015 reserves. These proved
reserves have a PV-10 value of approximately $414.8 million.
Proved developed reserves increased by 28% to
18.2 MMboe as of December 31, 2016 reflecting continued horizontal
development by the operators of Viper’s acreage. Crude oil
represents 68% of Viper's total proved reserves.
Net proved reserve additions of 7.4 MMboe
resulted in a reserve replacement ratio of 316% (defined as the sum
of extensions, discoveries, revisions and purchases, divided by
annual production). The organic reserve replacement ratio was 233%
(defined as the sum of extensions, discoveries and revisions,
divided by annual production).
Extensions and discoveries of 8,321 Mboe are
primarily attributable to the drilling of 33 new wells and from 32
new proved undeveloped locations added. Viper’s negative revisions
of previously estimated quantities of 2,837 Mboe were primarily due
to technical revisions with the remainder due to lower product
pricing. Purchases of reserves in place of 1,960 Mboe due to
multiple acquisitions, with the largest being located in Loving and
Midland counties.
|
|
|
|
|
|
|
|
|
Oil (Bbls) |
|
Liquids (Bbls) |
|
Gas (Mcf) |
|
BOE |
Proved reserves as of
December 31, 2015 |
18,377,422 |
|
|
3,915,956 |
|
|
24,307,885 |
|
|
26,344,692 |
|
Purchase
of reserves in place |
1,137,783 |
|
|
436,846 |
|
|
2,315,051 |
|
|
1,960,471 |
|
Extensions and discoveries |
5,647,430 |
|
|
1,477,074 |
|
|
7,181,625 |
|
|
8,321,442 |
|
Revisions
of previous estimates |
(2,040,713 |
) |
|
74,023 |
|
|
(5,223,179 |
) |
|
(2,837,220 |
) |
Production |
(1,777,922 |
) |
|
(327,899 |
) |
|
(1,490,382 |
) |
|
(2,354,218 |
) |
Proved reserves as of
December 31, 2016 |
21,344,000 |
|
|
5,576,000 |
|
|
27,091,000 |
|
|
31,435,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
As the owner of mineral interests, Viper
incurred no exploration and development costs during the year ended
December 31, 2016. The Company incurred $205.7 million in
acquisition costs during 2016.
|
|
|
December 31, |
|
2016 |
|
2015 |
|
2014 |
|
(in thousands) |
Acquisition costs |
|
|
|
|
|
Proved
properties |
$ |
31,441 |
|
|
$ |
4,121 |
|
|
$ |
10,879 |
|
Unproved
properties |
174,385 |
|
|
39,786 |
|
|
46,810 |
|
Total |
$ |
205,826 |
|
|
$ |
43,907 |
|
|
$ |
57,689 |
|
|
|
|
|
|
|
|
|
|
|
|
|
FULL YEAR 2017 GUIDANCE
Viper expects full year 2017 production
attributable to its mineral interests will average between 8.0 and
8.5 Mboe/d. Expenses for gathering and transportation are expected
to be between $0.25 and $0.50 per boe, expenses for depreciation,
depletion and amortization ("DD&A") between $8.00 and $10.00
per boe, with cash general and administrative expense ("G&A")
of $0.50 to $1.50 per boe and non-cash unit-based compensation of
$2.00 to $3.00 per boe. Production and ad valorem taxes are
expected to be 7.0% of revenue. As a reminder, Viper does not incur
lease operating or capital expenses.
|
|
|
Viper Energy Partners |
|
|
Total Net Production –
MBoe/d |
8.0 – 8.5 |
|
|
Unit costs ($/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 |
$2.00 - $3.00 |
|
|
Production and Ad
Valorem Taxes (% of Revenue) (a) |
7% |
|
|
Capital Budget ($ -
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 fourth quarter and full year of 2016 on Wednesday,
February 15, 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 67368952. A
telephonic replay will be available from 1:00 p.m. CT on Wednesday,
February 15, 2017 through Wednesday, February 22, 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 67368952. 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 December 31, |
|
Year Ended December 31, |
|
2016 |
2015 |
|
2016 |
2015 |
|
(In thousands) |
Operating
income: |
|
|
|
|
|
Royalty
income |
$ |
27,923 |
|
$ |
19,918 |
|
|
$ |
78,837 |
|
$ |
74,859 |
|
Lease
bonus |
— |
|
— |
|
|
309 |
|
— |
|
Total
operating income |
27,923 |
|
19,918 |
|
|
79,146 |
|
74,859 |
|
Costs and
expenses: |
|
|
|
|
|
Production and ad valorem taxes |
1,410 |
|
1,100 |
|
|
5,544 |
|
5,531 |
|
Gathering
and transportation |
168 |
|
92 |
|
|
415 |
|
259 |
|
Depletion |
8,335 |
|
8,849 |
|
|
29,820 |
|
35,436 |
|
Impairment |
— |
|
3,423 |
|
|
47,469 |
|
3,423 |
|
General
and administrative expenses |
1,100 |
|
1,334 |
|
|
5,209 |
|
5,835 |
|
Total
costs and expenses |
11,013 |
|
14,798 |
|
|
88,457 |
|
50,484 |
|
Income (loss)
from operations |
16,910 |
|
5,120 |
|
|
(9,311 |
) |
24,375 |
|
Other income
(expense): |
|
|
|
|
|
Interest
expense |
(911 |
) |
(377 |
) |
|
(2,455 |
) |
(1,110 |
) |
Other
income |
255 |
|
194 |
|
|
867 |
|
1,154 |
|
Total
other income (expense), net |
(656 |
) |
(183 |
) |
|
(1,588 |
) |
44 |
|
Net income
(loss) |
$ |
16,254 |
|
$ |
4,937 |
|
|
$ |
(10,899 |
) |
$ |
24,419 |
|
|
|
|
|
|
|
Net income
attributable to common limited partners per unit: |
|
|
|
|
|
Basic and
Diluted |
$ |
0.19 |
|
$ |
0.06 |
|
|
$ |
(0.13 |
) |
$ |
0.31 |
|
Weighted
average number of limited partner units outstanding: |
|
|
|
|
|
Basic |
87,800 |
|
79,726 |
|
|
83,081 |
|
79,717 |
|
Diluted |
87,804 |
|
79,729 |
|
|
83,081 |
|
79,727 |
|
|
|
|
|
|
|
|
|
|
|
Viper Energy Partners LP |
Selected Operating Data |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2016 |
2015 |
|
2016 |
2015 |
Production
Data: |
|
|
|
|
|
Oil (Bbls) |
541,919 |
|
469,500 |
|
|
1,777,922 |
|
1,555,493 |
|
Natural gas (Mcf) |
481,637 |
|
353,160 |
|
|
1,490,382 |
|
1,128,605 |
|
Natural gas liquids
(Bbls) |
106,317 |
|
52,421 |
|
|
327,899 |
|
238,716 |
|
Combined volumes
(BOE)(1)(2) |
728,509 |
|
580,781 |
|
|
2,354,218 |
|
1,982,310 |
|
Daily combined volumes
(BOE/d) |
7,919 |
|
6,313 |
|
|
6,432 |
|
5,431 |
|
% Oil |
74 |
% |
81 |
% |
|
76 |
% |
78 |
% |
|
|
|
|
|
|
Average sales
prices: |
|
|
|
|
|
Oil,
realized ($/Bbl) |
$ |
46.14 |
|
$ |
39.32 |
|
|
$ |
40.23 |
|
$ |
44.75 |
|
Natural
gas realized ($/Mcf) |
2.50 |
|
2.29 |
|
|
2.08 |
|
2.36 |
|
Natural
gas liquids ($/Bbl) |
16.15 |
|
12.32 |
|
|
12.84 |
|
10.85 |
|
Average
price realized ($/BOE) |
38.33 |
|
34.30 |
|
|
33.49 |
|
37.76 |
|
|
|
|
|
|
|
Average Costs
(per BOE) |
|
|
|
|
|
Production and ad valorem taxes |
$ |
1.94 |
|
$ |
1.89 |
|
|
$ |
2.35 |
|
$ |
2.79 |
|
Gathering
and transportation expense |
0.23 |
|
0.16 |
|
|
0.18 |
|
0.13 |
|
General
and administrative - cash component |
0.36 |
|
0.62 |
|
|
0.59 |
|
0.96 |
|
Total
operating expense - cash |
$ |
2.53 |
|
$ |
2.67 |
|
|
$ |
3.12 |
|
$ |
3.88 |
|
|
|
|
|
|
|
General
and administrative - non-cash component |
$ |
1.15 |
|
$ |
1.68 |
|
|
$ |
1.62 |
|
$ |
1.98 |
|
Interest
expense |
1.25 |
|
0.65 |
|
|
1.04 |
|
0.56 |
|
Depletion |
11.44 |
|
15.24 |
|
|
12.67 |
|
17.88 |
|
|
|
|
|
|
|
|
|
|
|
(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 December 31, |
|
Year Ended December 31, |
|
2016 |
2015 |
|
2016 |
2015 |
Net income
(loss) |
$ |
16,254 |
|
$ |
4,937 |
|
|
$ |
(10,899 |
) |
$ |
24,419 |
|
Interest
expense |
911 |
|
377 |
|
|
2,455 |
|
1,110 |
|
Non-cash
unit-based compensation expense |
841 |
|
973 |
|
|
3,815 |
|
3,929 |
|
Depletion |
8,335 |
|
8,849 |
|
|
29,820 |
|
35,436 |
|
Impairment |
— |
|
3,423 |
|
|
47,469 |
|
3,423 |
|
Adjusted
EBITDA |
$ |
26,341 |
|
$ |
18,559 |
|
|
$ |
72,660 |
|
$ |
68,317 |
|
|
|
|
|
|
|
Adjustments to
reconcile Adjusted EBITDA to cash available for
distribution: |
|
|
|
|
|
Debt service,
contractual obligations, fixed charges and reserves |
(1,197 |
) |
(426 |
) |
|
(2,471 |
) |
(1,213 |
) |
Cash available
for distribution |
$ |
25,144 |
|
$ |
18,133 |
|
|
$ |
70,189 |
|
$ |
67,104 |
|
|
|
|
|
|
|
Limited Partner units
outstanding |
97,575 |
|
79,726 |
|
|
97,575 |
|
79,726 |
|
|
|
|
|
|
|
Cash available
for distribution per limited partner unit(1) |
$ |
0.258 |
|
$ |
0.228 |
|
|
$ |
0.803 |
|
$ |
0.838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Due to the units issued in the August 2016 and January 2017
public offerings, the 2016 year-to-date cash available for
distribution per limited partner unit cannot be calculated from
this table.
PV-10
PV-10 is the Company’s estimate of the present
value of the future net revenues from proved oil and 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 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 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 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, 2016 |
PV-10 |
$ |
414,770 |
|
Less income taxes: |
|
Undiscounted future income taxes |
(4,615 |
) |
10%
discount factor |
(2,426 |
) |
Future discounted
income taxes |
$ |
(2,189 |
) |
|
|
Standardized measure of
discounted future net cash flows |
$ |
412,581 |
|
|
|
|
|
Investor Contact:
Adam Lawlis
+1 432.221.7467
alawlis@viperenergy.com
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