Rattler Midstream LP, a Subsidiary of Diamondback Energy, Inc., Reports Second Quarter 2019 Financial and Operating Results
HIGHLIGHTS
- Q2 2019 consolidated net income (including non-controlling interest) of
$46.7 million , consolidated adjusted EBITDA (as defined and reconciled below) of$66.6 million - Q2 2019 capital expenditures of
$51.2 million ; net cash position at quarter end - Q2 2019 average produced water volumes of 770 MBbl/d, up 8% over Q1 2019 and 256% over Q2 2018
- Q2 2019 average fresh water volumes of 448 MBbl/d, up 27% over Q1 2019 and 104% over Q2 2018
- Q2 2019 average crude oil gathering volumes of 78 MBbl/d, up 5% over Q1 2019 and 82% over Q2 2018
- Q2 2019 average gas gathering volumes of 84 BBtu/d, up 39% over Q1 2019 and 154% over Q2 2018
- Closed Initial Public Offering of 43.7 million common units on
May 28, 2019 - Announced participation in
Wink to Webster Pipeline project with expected in service date of 1H 2021; expected capital outlay to be funded with a combination of cash on hand, cash flow from operations and borrowings under Rattler's revolving credit facility
“Rattler executed well in its first quarter as a public company. All four midstream revenue streams grew in the second quarter, resulting in 11% quarter over quarter Adjusted EBITDA growth. Rattler has been cash flow positive through the first two quarters of 2019 excluding pipeline equity investments. Over the long term, Rattler expects to grow free cash flow per unit through top line growth based on our sponsor Diamondback’s long-term growth plans while controlling capital expenditures on a 'just-in-time' basis to meet these plans. This relationship, along with aligned incentives, differentiates the Rattler business model from the traditional midstream company and is expected to result in a higher return on capital and a growing distribution without the need for external capital to fund organic growth,” stated
Mr. Stice continued, “Further, the commitment to the
OPERATIONS AND FINANCIAL UPDATE
During the second quarter of 2019, the Company recorded total operating income of
Second quarter 2019 Adjusted EBITDA (as defined and reconciled below) was
During the second quarter of 2019, average produced water volumes were 770 MBbl/d, up 8% over Q1 2019 and 256% over Q2 2018. Average fresh water volumes were 448 MBbl/d, up 27% over Q1 2019 and 104% over Q2 2018. Average oil gathering volumes were 78 MBbl/d, up 5% over Q1 2019 and 82% over Q2 2018. Average gas gathering volumes were 84 BBtu/d, up 39% over Q1 2019 and 154% over Q2 2018.
Second quarter capital expenditures totaled
As of June 30, 2019, the Company had a cash balance of
WINK TO WEBSTER PIPELINE JOINT VENTURE
On
GUIDANCE UPDATE
Below is Rattler's guidance for the full year 2019.
Rattler Midstream LP | ||
Rattler Volumes | ||
Produced Water Gathering Volumes (MBbl/d) | 750 - 800 | |
Fresh Water Gathering Volumes (MBbl/d) | 350 - 400 | |
Oil Gathering Volumes (MBbl/d) | 75 - 90 | |
Gas Gathering Volumes (BBtu/d) | 70 - 85 | |
Financial Metrics ($ millions except per unit metrics) | ||
Adjusted EBITDA | $245 - $265 | |
Net Capex(a) | $225 - $250 | |
Long-Haul Pipeline Contributions(b) | $245 - $255 | |
Depreciation, Amortization & Accretion | $40 - $50 | |
Annualized Distribution per Unit | $1.00 |
(a) Excludes Long-Haul Pipeline Contributions
(b) Includes contributions to
CONFERENCE CALL
Rattler will host a conference call and webcast for investors and analysts to discuss its results for the second quarter of 2019 on
About
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 Rattler 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 any pending, completed or future acquisitions discussed above. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of Rattler. Information concerning these risks and other factors can be found in Rattler’s filings with the
Rattler Midstream LP | |||||||
Consolidated Balance Sheets | |||||||
(unaudited, in thousands, except unit amounts) | |||||||
June 30, | December 31, | ||||||
2019 | 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 3,737 | $ | 8,564 | |||
Accounts receivable—related party | — | 18,274 | |||||
Accounts receivable—third party | 1,676 | 1,849 | |||||
Fresh water inventory | 12,631 | 9,200 | |||||
Other current assets | 4,718 | 4,209 | |||||
Total current assets | 22,762 | 42,096 | |||||
Property, plant and equipment: | |||||||
Land | 88,509 | 70,373 | |||||
Property, plant and equipment | 822,307 | 415,888 | |||||
Accumulated depreciation, amortization and accretion | (44,352 | ) | (28,317 | ) | |||
Property, plant and equipment, net | 866,464 | 457,944 | |||||
Right of use assets | 1,212 | — | |||||
Equity method investments | 186,902 | — | |||||
Real estate assets, net | 100,460 | 93,023 | |||||
Intangible lease assets, net | 9,464 | 10,954 | |||||
Total assets | $ | 1,187,264 | $ | 604,017 |
Rattler Midstream LP | |||||||||
Consolidated Balance Sheets | |||||||||
(unaudited, in thousands, except unit amounts) | |||||||||
June 30, | December 31, | ||||||||
2019 | 2018 | ||||||||
Liabilities and Unitholders’ Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable—related party | $ | 17,015 | $ | — | |||||
Accounts payable—third party | 246 | 100 | |||||||
Other accrued liabilities | 96,511 | 51,804 | |||||||
Taxes payable | 31 | 11,514 | |||||||
Short term lease liability | 1,126 | — | |||||||
Total current liabilities | 114,929 | 63,418 | |||||||
Long-term debt | 1,000 | — | |||||||
Asset retirement obligations | 4,746 | 561 | |||||||
Long-term lease liability | 86 | — | |||||||
Deferred income taxes | 1,342 | 12,912 | |||||||
Total liabilities | 122,103 | 76,891 | |||||||
Commitment and contingencies | |||||||||
Unitholders' equity: | |||||||||
Limited partners member's equity—Diamondback | — | 527,125 | |||||||
General partner—Diamondback | 1,000 | — | |||||||
Common units—public (43,700,000 units issued and outstanding as of June 30, 2019) | 725,261 | — | |||||||
Class B units—Diamondback (107,815,152 units issued and outstanding as of June 30, 2019) | 1,000 | 1 | |||||||
Total Rattler Midstream LP unitholders’ equity | 727,261 | 527,126 | |||||||
Non-controlling interest | 337,900 | — | |||||||
Total equity | 1,065,161 | 527,126 | |||||||
Total liabilities and unitholders’ equity | $ | 1,187,264 | $ | 604,017 |
Rattler Midstream LP | ||||||||||||||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||||||||||||||
(unaudited, in thousands, except per unit data) | ||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||
Predecessor | Predecessor | |||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||
Revenues—related party | $ | 103,066 | $ | 46,741 | $ | 191,642 | $ | 77,801 | ||||||||||||||||||||||
Revenues—third party | 5,078 | — | 8,565 | 361 | ||||||||||||||||||||||||||
Rental income—related party | 1,256 | 578 | 1,971 | 1,011 | ||||||||||||||||||||||||||
Rental income—third party | 2,038 | 2,138 | 4,105 | 3,966 | ||||||||||||||||||||||||||
Other real estate income—related party | 81 | 41 | 154 | 72 | ||||||||||||||||||||||||||
Other real estate income—third party | 255 | 290 | 513 | 452 | ||||||||||||||||||||||||||
Total revenues | 111,774 | 49,788 | 206,950 | 83,663 | ||||||||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||||
Direct operating expenses | 26,406 | 10,992 | 46,592 | 16,198 | ||||||||||||||||||||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 15,849 | 8,267 | 28,902 | 13,518 | ||||||||||||||||||||||||||
Real estate operating expenses | 695 | 540 | 1,221 | 818 | ||||||||||||||||||||||||||
Depreciation, amortization and accretion | 10,158 | 5,975 | 20,062 | 11,791 | ||||||||||||||||||||||||||
General and administrative expenses | 3,068 | 426 | 4,437 | 680 | ||||||||||||||||||||||||||
(Gain) loss on sale of property, plant and equipment | (4 | ) | 2,568 | (4 | ) | 2,568 | ||||||||||||||||||||||||
Total costs and expenses | 56,172 | 28,768 | 101,210 | 45,573 | ||||||||||||||||||||||||||
Income from operations | 55,602 | 21,020 | 105,740 | 38,090 | ||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||||
Interest expense, net | (85 | ) | — | (85 | ) | — | ||||||||||||||||||||||||
Expense from equity investments | (114 | ) | (1,459 | ) | (64 | ) | — | |||||||||||||||||||||||
Total other expense | (199 | ) | (1,459 | ) | (149 | ) | — | |||||||||||||||||||||||
Net income before income taxes | 55,403 | 19,561 | 105,591 | 38,090 | ||||||||||||||||||||||||||
Provision for income taxes | 8,724 | 4,089 | 19,556 | 8,222 | ||||||||||||||||||||||||||
Net income after taxes | $ | 46,679 | $ | 15,472 | $ | 86,035 | $ | 29,868 | ||||||||||||||||||||||
Net income before initial public offering | $ | 26,639 | $ | 65,995 | ||||||||||||||||||||||||||
Net income subsequent to initial public offering | $ | 20,040 | $ | 20,040 | ||||||||||||||||||||||||||
Net income attributable to non-controlling interest subsequent to initial public offering | 15,237 | 15,237 | ||||||||||||||||||||||||||||
Net income attributable to Rattler Midstream LP | $ | 4,803 | $ | 4,803 | ||||||||||||||||||||||||||
Net income attributable to common limited partners per unit - subsequent to initial public offering: | ||||||||||||||||||||||||||||||
Basic | $ | 0.11 | $ | 0.11 | ||||||||||||||||||||||||||
Diluted | $ | 0.11 | $ | 0.11 | ||||||||||||||||||||||||||
Weighted average number of limited partner units outstanding: | ||||||||||||||||||||||||||||||
Basic | 43,197 | 43,197 | ||||||||||||||||||||||||||||
Diluted | 44,340 | 44,340 |
Rattler Midstream LP | ||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||
(unaudited, in thousands) | ||||||||||||||
Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | |||||||||||||
Predecessor | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | $ | 86,035 | $ | 29,868 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Provision for deferred income taxes | 19,556 | 8,222 | ||||||||||||
Depreciation, amortization and accretion | 20,062 | 11,791 | ||||||||||||
(Gain) loss on sale of property, plant and equipment | (4 | ) | 2,568 | |||||||||||
Unit-based compensation expense | 831 | — | ||||||||||||
Expense from equity method investment | 64 | — | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable—related party | (15,439 | ) | 29,984 | |||||||||||
Accounts receivable—third party | 173 | — | ||||||||||||
Accounts payable, accrued liabilities and taxes payable | 44,842 | 6,370 | ||||||||||||
Other assets, including inventory | (16,723 | ) | 338 | |||||||||||
Net cash provided by operating activities | 139,397 | 89,141 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||
Additions to property, plant and equipment | (102,935 | ) | (84,671 | ) | ||||||||||
Contributions to equity method investments | (37,420 | ) | — | |||||||||||
Proceeds from the sale of fixed assets | 18 | — | ||||||||||||
Net cash used in investing activities | (140,337 | ) | (84,671 | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||
Proceeds from borrowings from credit facility | 10,000 | — | ||||||||||||
Payments on credit facility | (9,000 | ) | — | |||||||||||
Net proceeds from initial public offering - public | 719,627 | — | ||||||||||||
Net proceeds from initial public offering - General Partner | 1,000 | — | ||||||||||||
Net proceeds from initial public offering - Diamondback | 999 | — | ||||||||||||
Distribution to Diamondback (Note 1) | (726,513 | ) | — | |||||||||||
Net cash used in financing activities | (3,887 | ) | — | |||||||||||
Net increase (decrease) in cash | (4,827 | ) | 4,470 | |||||||||||
Cash at beginning of period | 8,564 | 8 | ||||||||||||
Cash at end of period | $ | 3,737 | $ | 4,478 | ||||||||||
Supplemental disclosure of non-cash financing activity: | ||||||||||||||
Contributions from Diamondback | $ | 456,055 | $ | 178,517 | ||||||||||
Supplemental disclosure of non-cash investing activity: | ||||||||||||||
Increase in long term assets and inventory | $ | 456,055 | $ | 178,517 | ||||||||||
Change in accrued liabilities related to property, plant and equipment | $ | (30,633 | ) | $ | (7,039 | ) |
Rattler Midstream LP | |||||||||||||||||||
Pipeline Infrastructure Assets | |||||||||||||||||||
(unaudited, in miles) | |||||||||||||||||||
(miles) | Delaware Basin | Midland Basin | Permian Total | ||||||||||||||||
Crude oil | 99 | 43 | 142 | ||||||||||||||||
Natural gas | 143 | — | 143 | ||||||||||||||||
SWD | 239 | 195 | 434 | ||||||||||||||||
Fresh water | 26 | 69 | 95 | ||||||||||||||||
Total | 507 | 307 | 814 |
Rattler Midstream LP | ||||||||||||||||||||||||||
Capacity/Capability | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
(capacity/capability) | Delaware Basin | Midland Basin | Permian Total | Utilization | ||||||||||||||||||||||
Crude oil (Bbl/d) | 180,000 | 56,000 | 236,000 | 33 | % | |||||||||||||||||||||
Natural gas compression (Mcf/d) | 80,000 | — | 80,000 | 85 | % | |||||||||||||||||||||
Natural gas pipeline (Mcf/d) | 150,000 | — | 150,000 | 46 | % | |||||||||||||||||||||
SWD (Bbl/d) | 1,367,000 | 1,462,000 | 2,829,000 | 27 | % | |||||||||||||||||||||
Fresh water (Bbl/d) | 120,000 | 455,000 | 575,000 | 78 | % |
Rattler Midstream LP | ||||||||||||||||||||||||||||||||
Throughput and Crude Oil Volumes | ||||||||||||||||||||||||||||||||
(unaudited, in thousands) | ||||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
(throughput) | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||
Crude oil gathering volumes (Bbl/d) | 78,066 | 42,945 | 76,326 | 36,715 | ||||||||||||||||||||||||||||
Natural gas gathering volumes (MMBtu/d) | 84,426 | 33,189 | 72,546 | 31,827 | ||||||||||||||||||||||||||||
Saltwater services volumes (Bbl/d) | 770,091 | 216,193 | 740,807 | 228,744 | ||||||||||||||||||||||||||||
Fresh water services volumes (Bbl/d) | 447,823 | 220,021 | 400,476 | 263,062 | ||||||||||||||||||||||||||||
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. We believe Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations period to period without regard to our financing methods or capital structure.
We define Adjusted EBITDA as net income before income taxes, interest expense, net of amount capitalized, interest expense related to equity investments, non-cash unit-based compensation expense, depreciation, amortization and accretion. Depreciation, amortization and accretion includes depreciation, amortization and accretion on assets and liabilities of the
The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measures, on a historical basis and pro forma basis, as applicable, for each of the periods indicated:
Rattler Midstream LP | ||||||||||||||||||||||||
(unaudited, in thousands) | ||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||
Reconciliation of net income to Adjusted EBITDA: | ||||||||||||||||||||||||
Net income | $ | 46,679 | $ | 15,472 | $ | 86,035 | $ | 29,868 | ||||||||||||||||
Depreciation, amortization and accretion | 10,158 | 5,975 | 20,062 | 11,791 | ||||||||||||||||||||
Interest expense, net of amount capitalized | 85 | — | 85 | — | ||||||||||||||||||||
Interest expense related to equity investments | 149 | — | 149 | — | ||||||||||||||||||||
Non-cash unit-based compensation expense | 831 | — | 831 | — | ||||||||||||||||||||
Provision for income taxes | 8,724 | 4,089 | 19,556 | 8,222 | ||||||||||||||||||||
Adjusted EBITDA | 66,626 | $ | 25,536 | 126,718 | $ | 49,881 | ||||||||||||||||||
Less: Adjusted EBITDA prior to the Offering | (40,651 | ) | (100,743 | ) | ||||||||||||||||||||
Adjusted EBITDA subsequent to the Offering | 25,975 | 25,975 | ||||||||||||||||||||||
Less: Adjusted EBITDA attributable to non-controlling interest | (18,483 | ) | (18,483 | ) | ||||||||||||||||||||
Adjusted EBITDA attributable to Rattler Midstream LP | $ | 7,492 | $ | 7,492 | ||||||||||||||||||||
Investor Contact:
+1 432.221.7467
IR@rattlermidstream.com
Source:
Source: Rattler Midstream LP