VNOM: Viper expanded its footprint in the Permian Basin and ‘looks to continue to be active in acquiring minerals’
Q3 Stats
- Cash distribution of $0.337 per common unit, up 63% year over year and highest in company history; implies a 7.4% annualized yield based on October 23 unit closing price of $18.16
- Production of 12,611 BOEPD (68% oil), up 20% over Q2 2017 and 102% year over year
- Net income of $26.6 million and distributable cash flow (as defined below) of $38.3 million
- Initiating average production guidance for Q4 2017/Q1 2018 of 13,000 to 14,000 BOEPD, up 7% from Q3 production
- Increasing full year 2017 production guidance to 11,000 to 11,500 BOEPD, up 7% from the midpoint of prior guidance range of 10,000 to 11,000 BOEPD and up 75% from full year 2016 production
- Closed 17 acquisitions for an aggregate of approximately $179 million in Q3 2017, increasing Viper’s mineral assets by 1,677 net royalty acres to 9,173 total net royalty acres; up 66% year over year
- Nine gross horizontal wells completed on Viper’s Spanish Trail mineral interests during Q3 2017 (12.2% average royalty interest)
- There are approximately 319 active well permits and 22 active rigs currently on Viper’s mineral acreage
- Over 100 wells in Midland Basin (9.1% estimated average royalty interest) and over 50 wells in Delaware Basin (1.2% estimated average royalty interest) in various stages of drilling or waiting on completion across Viper’s mineral acreage
| (unaudited, in thousands, except per unit data) | |||||||||||
| Three Months Ended September 30, 2017 | Three Months Ended June 30, 2017 | Three Months Ended September 30, 2016 | |||||||||
| Net income | $ | 26,607 | $ | 22,149 | $ | 10,202 | |||||
| Interest expense | 859 | 643 | 658 | ||||||||
| Non-cash unit-based compensation expense | 503 | 718 | 1,044 | ||||||||
| Depletion | 11,068 | 9,672 | 6,751 | ||||||||
| Adjusted EBITDA | $ | 39,037 | $ | 33,182 | $ | 18,655 | |||||
Travis Stice, Chief Executive Officer of Viper’s general partner said, “Volumes and activity levels have exceeded underwriting assumptions in the Delaware Basin. Viper looks to continue to be active in acquiring minerals.”
Financial update
Viper reported that its Q3 average realized prices were $45.33 per barrel of oil, $2.55 per Mcf of natural gas and $19.10 per barrel of NGLs, resulting in a total equivalent price of $36.38/BOE, up 5% year over year from $34.74/BOE in Q3 2016 and down 3% from the Q2 2017 total equivalent price of $37.64/BOE.
During Q3, Viper recorded total operating income of $42.5 million and net income of $26.6 million. Operating income was up 16% quarter over quarter and 113% year over year. Net income was up 20% quarter over quarter and 161% year over year.
As of September 30, 2017, the company had a cash balance of $4 million and approximately $280 million available under its revolving credit facility.
Acquisition update
Viper acquired 1,677 net royalty acres in the Delaware Basin for an aggregate purchase price of approximately $179 million, subject to post-closing adjustments. As of September 30, 2017, Viper had acquired approximately 2,769 net royalty acres year-to-date for an aggregate of approximately $305 million, bringing Viper’s footprint of mineral interests in the Permian Basin to a total of 9,173 net royalty acres.
Viper said it intends to finance potential future acquisitions through a combination of cash on hand, borrowings under its revolving credit agreement and, subject to market conditions and other factors, proceeds from one or more capital markets transactions, which may include debt or equity offerings.
