Viper Energy Partners LP, a Subsidiary of Diamondback Energy, Inc., Reports Fourth Quarter 2016 Financial and Operating Results
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
FINANCIAL UPDATE
During the fourth quarter of 2016, the Company recorded total operating income of
As of
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
RESERVES
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
Proved developed reserves increased by 28% to 18.2 MMboe as of
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
| Oil (Bbls) | Liquids (Bbls) | Gas (Mcf) | BOE | ||||||||
| Proved reserves as of | 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 | 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
| 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
Partners | ||
| Total Net Production - MBoe/d | 8.0 - 8.5 | |
| Unit costs ($/boe) | ||
| Lease Operating Expenses | n/a | |
| Gathering & Transportation | ||
| DD&A | ||
| G&A | ||
| Cash G&A | ||
| Non-Cash Unit-Based Compensation | ||
| Production and Ad Valorem Taxes (% of Revenue) (a) | 7% | |
| Capital Budget ($ - 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
About
Viper is a limited partnership formed by Diamondback to own, acquire and
exploit oil and natural gas properties in
About
Diamondback is an independent oil and natural gas company headquartered in
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
| Consolidated Statements of Operations | |||||||||||||
| (unaudited, in thousands, except per unit data) | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| 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 | |||||||||
| Selected Operating Data | |||||||||||||
| (unaudited) | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| 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).
| (unaudited, in thousands, except per unit data) | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| 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
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) | |||
| 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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