Rattler Midstream LP, a Subsidiary of Diamondback Energy, Inc., Reports Fourth Quarter and Full Year 2019 Financial and Operating Results; Increases Distribution
FOURTH QUARTER 2019 HIGHLIGHTS
- Q4 2019 consolidated net income (including non-controlling interest) of
$51.6 million , consolidated adjusted EBITDA (as defined and reconciled below) of$71.0 million - Board of directors of Rattler's general partner approved a cash distribution for the fourth quarter of 2019 of
$0.29 per common unit ($1.16 annualized), up 16% from the initial annualized distribution - Q4 2019 capital expenditures of
$54.2 million - Q4 2019 average produced water gathering and disposal volumes of 895 MBbl/d, up 6% over Q3 2019 and 164% over Q4 2018
- Q4 2019 average sourced water volumes of 478 MBbl/d, up 25% over Q3 2019 and 137% over Q4 2018; 26% of total sourced water volumes in Q4 2019 was sourced from recycled produced water compared to ~10% for full year 2018
- Q4 2019 average crude oil gathering volumes of 99 MBbl/d, up 11% over Q3 2019 and 63% over Q4 2018
- Q4 2019 average gas gathering volumes of 104 BBtu/d, up 14% over Q3 2019 and 125% over Q4 2018
- Entered into a 50/50 joint venture with
Amarillo Midstream, LLC ("Amarillo Midstream"), a portfolio company ofArcLight Capital Partners , to operate a gas gathering and processing system and construct a new 60 MMcf/d cryogenic natural gas processing plant inMartin County for Diamondback's acreage acquired from Ajax Resources - Rattler and Oryx Midstream, a portfolio company of
Stonepeak Infrastructure Partners , through their newly created joint ventureOMOG JV LLC ("OMOG"), acquiredReliance Gathering, LLC (now known asOryx Midland Oil Gathering LLC )
FULL YEAR 2019 HIGHLIGHTS
- Full year 2019 consolidated net income (including non-controlling interest) of
$185.7 million ; up 195% from full year 2018 - Full year 2019 consolidated adjusted EBITDA (as defined and reconciled below) of
$264.7 million ; up 151% from full year 2018 - Full year 2019 capital expenditures of
$241.8 million - Full year 2019 average produced water gathering and disposal volumes of 806 MBbl/d, up 186% over full year 2018
- Full year 2019 average sourced water volumes of 416 MBbl/d, up 65% full year 2018
- Full year 2019 average crude oil gathering volumes of 85 MBbl/d, up 80% over full year 2018
- Full year 2019 average gas gathering volumes of 85 BBtu/d, up 117% over full year 2018
“Rattler's core business continued to operate extremely well with a strong final quarter of 2019. Volumes in our produced water gathering and oil gathering service lines organically increased by 26% and 32%, respectively, since just the first quarter of 2019. Moreover, Adjusted EBITDA of
Mr. Stice continued, “Rattler also announced its entry into the Amarillo Rattler joint venture to develop a gathering, compression and processing system, including a new 60 MMcf/d cryogenic natural gas processing plant in northwest
OPERATIONS AND FINANCIAL UPDATE
During the fourth quarter of 2019, the Company recorded total operating income of
During the fourth quarter of 2019, the Company recorded consolidated net income (including non-controlling interest) of
Fourth quarter 2019 Adjusted EBITDA (as defined and reconciled below) was
During the fourth quarter of 2019, average produced water gathering and disposal volumes were 895 MBbl/d, up 6% over Q3 2019 and 164% over Q4 2018. Average sourced water volumes were 478 MBbl/d, up 25% over Q3 2019 and 137% over Q4 2018. Average oil gathering volumes were 99 MBbl/d, up 11% over Q3 2019 and 63% over Q4 2018. Average gas gathering volumes were 104 BBtu/d, up 14% over Q3 2019 and 125% over Q4 2018.
For the full year 2019, average produced water gathering and disposal volumes were 806 MBbl/d, up 186% over full year 2018. Average sourced water gathering volumes were 416 MBbl/d, up 65% over full year 2018. Average oil gathering volumes were 85 MBbl/d, up 80% over full year 2018. Average gas gathering volumes were 85 BBtu/d, up 117% over full year 2018.
Fourth quarter capital expenditures totaled
As of December 31, 2019, the Company had a cash balance of
CASH DISTRIBUTION
On
AMARILLO RATTLER GAS PROCESSING JOINT VENTURE
On
Rattler anticipates that the new processing plant will commence full commercial operations in mid 2021. Diamondback has dedicated to this joint venture acreage and production from the acreage acquired from the Ajax Resources acquisition in October 2018. Amarillo Midstream serves as construction manager and operator for this joint venture, and Rattler will account for the investment in the joint venture as an equity method investment.
OMOG JV (RELIANCE GATHERING)
On
GUIDANCE UPDATE
Below is Rattler's guidance for 2020, which is the same as the guidance for 2020 released by Rattler in
Rattler Midstream LP Guidance | ||
2020 | ||
Rattler Operated Volumes (a) | ||
Produced Water Gathering and Disposal Volumes (MBbl/d) | 950 - 1,050 | |
Sourced Water Volumes (MBbl/d) | 400 - 475 | |
Oil Gathering Volumes (MBbl/d) | 100 - 110 | |
Gas Gathering Volumes (BBtu/d) | 100 - 120 | |
Financial Metrics ($ millions except per unit metrics) | ||
Adjusted EBITDA | $350 - $400 | |
Equity Method Investment EBITDA(b) | $40 - $60 | |
Operated Midstream Capex | $200 - $225 | |
2020 Equity Method Investment Contributions(b) | $135 - $150 | |
Total Remaining Equity Method Investment Contributions(b) | $170 - $185 | |
Depreciation, Amortization & Accretion | $45 - $60 | |
Annualized Distribution per Unit | $1.16 |
(a) Does not include volumes from the EPIC,
(b) Includes EPIC,
CONFERENCE CALL
Rattler will host a conference call and webcast for investors and analysts to discuss its results for the fourth quarter and full year 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) | |||||||
December 31, | December 31, | ||||||
2019 | 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 10,633 | $ | 8,564 | |||
Accounts receivable—related party | 50,270 | 18,274 | |||||
Accounts receivable—third party | 9,071 | 1,849 | |||||
Sourced water inventory | 14,325 | 9,200 | |||||
Other current assets | 1,428 | 4,209 | |||||
Total current assets | 85,727 | 42,096 | |||||
Property, plant and equipment: | |||||||
Land | 88,509 | 70,373 | |||||
Property, plant and equipment | 930,768 | 415,888 | |||||
Accumulated depreciation, amortization and accretion | (61,132 | ) | (28,317 | ) | |||
Property, plant and equipment, net | 958,145 | 457,944 | |||||
Right of use assets | 418 | — | |||||
Equity method investments | 479,558 | — | |||||
Real estate assets, net | 98,679 | 93,023 | |||||
Intangible lease assets, net | 8,070 | 10,954 | |||||
Other assets | 5,796 | — | |||||
Total assets | $ | 1,636,393 | $ | 604,017 |
Rattler Midstream LP | |||||||
Consolidated Balance Sheets - Continued | |||||||
(unaudited, in thousands) | |||||||
December 31, | December 31, | ||||||
2019 | 2018 | ||||||
Liabilities and Unitholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 147 | $ | 100 | |||
Accrued liabilities | 76,625 | 51,804 | |||||
Taxes payable | 189 | 11,514 | |||||
Short-term lease liability | 418 | — | |||||
Total current liabilities | 77,379 | 63,418 | |||||
Long-term debt | 424,000 | — | |||||
Asset retirement obligations | 11,347 | 561 | |||||
Deferred income taxes | 7,827 | 12,912 | |||||
Total liabilities | 520,553 | 76,891 | |||||
Commitment and contingencies | |||||||
Unitholders' equity: | |||||||
Limited partners member's equity—Diamondback | — | 527,125 | |||||
General partner—Diamondback | 979 | — | |||||
Common units—public (43,700,000 units issued and outstanding as of December 31, 2019) | 737,777 | — | |||||
Class B units—Diamondback (107,815,152 units issued and outstanding as of December 31, 2019) | 979 | 1 | |||||
Accumulated other comprehensive loss | (198 | ) | — | ||||
Total Rattler Midstream LP unitholders’ equity | 739,537 | 527,126 | |||||
Non-controlling interest | 376,928 | — | |||||
Non-controlling interest in accumulated other comprehensive loss | (625 | ) | — | ||||
Total equity | 1,115,840 | 527,126 | |||||
Total liabilities and unitholders’ equity | $ | 1,636,393 | $ | 604,017 |
Rattler Midstream LP | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(unaudited, in thousands, except per unit data) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Predecessor | Predecessor | ||||||||||||||
Revenues: | |||||||||||||||
Revenues—related party | $ | 112,612 | $ | 45,226 | $ | 409,120 | $ | 169,396 | |||||||
Revenues—third party | 8,919 | 3,013 | 24,324 | 3,292 | |||||||||||
Rental income—related party | 1,401 | 700 | 4,771 | 2,383 | |||||||||||
Rental income—third party | 1,891 | 2,072 | 7,890 | 8,125 | |||||||||||
Other real estate income—related party | 114 | (551 | ) | 379 | 228 | ||||||||||
Other real estate income—third party | 371 | 1,043 | 1,189 | 1,043 | |||||||||||
Total revenues | 125,308 | 51,503 | 447,673 | 184,467 | |||||||||||
Costs and expenses: | |||||||||||||||
Direct operating expenses | 29,930 | 9,058 | 106,311 | 33,714 | |||||||||||
Cost of goods sold (exclusive of depreciation and amortization) | 16,604 | 14,484 | 62,856 | 38,852 | |||||||||||
Real estate operating expenses | 680 | 501 | 2,643 | 1,872 | |||||||||||
Depreciation, amortization and accretion | 10,538 | 7,304 | 42,336 | 25,134 | |||||||||||
General and administrative expenses | 4,986 | 590 | 12,663 | 1,999 | |||||||||||
Loss on disposal of property, plant and equipment | 1,528 | 9 | 1,524 | 2,577 | |||||||||||
Total costs and expenses | 64,266 | 31,946 | 228,333 | 104,148 | |||||||||||
Income from operations | 61,042 | 19,557 | 219,340 | 80,319 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (401 | ) | — | (1,039 | ) | — | |||||||||
Income (loss) from equity method investments | (5,634 | ) | — | (6,329 | ) | — | |||||||||
Total other income (expense), net | (6,035 | ) | — | (7,368 | ) | — | |||||||||
Net income before income taxes | 55,007 | 19,557 | 211,972 | 80,319 | |||||||||||
Provision for income taxes | 3,403 | 4,245 | 26,253 | 17,359 | |||||||||||
Net income after taxes | $ | 51,604 | $ | 15,312 | $ | 185,719 | $ | 62,960 | |||||||
Net income before initial public offering | $ | 65,995 | |||||||||||||
Net income subsequent to initial public offering | $ | 119,724 | |||||||||||||
Net income attributable to non-controlling interest subsequent to initial public offering | 39,136 | 90,922 | |||||||||||||
Net income attributable to Rattler Midstream LP | $ | 12,468 | $ | 28,802 | |||||||||||
Net income attributable to limited partners per common unit - subsequent to initial public offering: | |||||||||||||||
Basic | $ | 0.27 | $ | 0.64 | |||||||||||
Diluted | $ | 0.27 | $ | 0.64 | |||||||||||
Weighted average number of limited partner common units outstanding: | |||||||||||||||
Basic | 43,700 | 43,622 | |||||||||||||
Diluted | 43,700 | 43,622 |
Rattler Midstream LP | |||||||
Consolidated Statements of Cash Flows | |||||||
(unaudited, in thousands) | |||||||
Year Ended December 31, | |||||||
2019 | 2018 | ||||||
Predecessor | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 185,719 | $ | 62,960 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for deferred income taxes | 26,253 | 5,845 | |||||
Depreciation, amortization and accretion | 42,336 | 25,134 | |||||
Loss on disposal of property, plant and equipment | 1,524 | 2,577 | |||||
Unit-based compensation expense | 5,208 | — | |||||
Expense (Income) from equity method investment | 6,329 | — | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable—related party | (65,032 | ) | 17,625 | ||||
Accounts receivable—third party | (1,212 | ) | (1,849 | ) | |||
Accounts payable, accrued liabilities and taxes payable | 34,299 | 61,139 | |||||
Other | (17,231 | ) | — | ||||
Net cash provided by operating activities | 218,193 | 173,431 | |||||
Cash flows from investing activities: | |||||||
Additions to property, plant and equipment | (241,786 | ) | (164,876 | ) | |||
Contributions to equity method investments | (336,601 | ) | — | ||||
Proceeds from the sale of fixed assets | 18 | — | |||||
Net cash used in investing activities | (578,369 | ) | (164,876 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from borrowings from credit facility | 463,000 | — | |||||
Payments on credit facility | (39,000 | ) | — | ||||
Distribution equivalent rights | (751 | ) | — | ||||
Debt issuance costs | (4,310 | ) | — | ||||
Net proceeds from initial public offering—public | 719,377 | — | |||||
Net proceeds from initial public offering—General Partner | 1,000 | — | |||||
Net proceeds from initial public offering—Diamondback | 999 | 1 | |||||
Distribution to General Partner (Note 1) | (21 | ) | — | ||||
Distribution to public (Note 1) | (14,858 | ) | — | ||||
Distribution to Diamondback (Note 1) | (763,191 | ) | — | ||||
Net cash provided by financing activities | 362,245 | 1 | |||||
Net increase in cash | 2,069 | 8,556 | |||||
Cash at beginning of period | 8,564 | 8 | |||||
Cash at end of period | $ | 10,633 | $ | 8,564 | |||
Supplemental disclosure of cash flow information: | |||||||
Interest paid | $ | 2,707 | $ | — | |||
Supplemental disclosure of non-cash financing activity: | |||||||
Contributions from Diamondback | $ | 456,055 | $ | 171,557 | |||
Supplemental disclosure of non-cash investing activity: | |||||||
Increase in long term assets and inventory due to contributions from Diamondback | $ | 456,055 | $ | 171,557 | |||
Change in accrued liabilities related to property, plant and equipment | $ | 4,176 | $ | 2,693 |
Rattler Midstream LP | ||||||||
Pipeline Infrastructure Assets | ||||||||
(unaudited, in miles) | ||||||||
(miles) | Delaware Basin | Midland Basin | Permian Total | |||||
Crude oil | 104 | 44 | 148 | |||||
Natural gas | 148 | — | 148 | |||||
Produced water | 257 | 217 | 474 | |||||
Sourced water | 26 | 71 | 97 | |||||
Total | 535 | 332 | 867 |
Rattler Midstream LP | |||||||||||
Capacity/Capability | |||||||||||
(unaudited) | |||||||||||
(capacity/capability) | Delaware Basin | Midland Basin | Permian Total | Utilization | |||||||
Crude oil gathering (Bbl/d) | 180,000 | 56,000 | 236,000 | 42% | |||||||
Natural gas compression (Mcf/d) | 135,000 | — | 135,000 | 70% | |||||||
Natural gas gathering (Mcf/d) | 150,000 | — | 150,000 | 56% | |||||||
Produced water gathering and disposal (Bbl/d) | 1,576,500 | 1,732,300 | 3,308,800 | 27% | |||||||
Sourced water (Bbl/d) | 120,000 | 455,000 | 575,000 | 83% |
Rattler Midstream LP | |||||||||||
Throughput and Volumes | |||||||||||
(unaudited) | |||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||
(throughput) | 2019 | 2018 | 2019 | 2018 | |||||||
Crude oil gathering volumes (Bbl/d) | 98,725 | 60,581 | 85,164 | 47,338 | |||||||
Natural gas gathering volumes (MMBtu/d) | 104,169 | 46,196 | 85,283 | 39,252 | |||||||
Produced water gathering and disposal volumes (Bbl/d) | 894,693 | 339,110 | 806,078 | 281,916 | |||||||
Sourced water gathering volumes (Bbl/d) | 478,232 | 202,177 | 415,939 | 252,118 |
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.
Rattler defines Adjusted EBITDA as net income before income taxes, interest expense, net of amount capitalized, interest expense related to equity method investments, non-cash unit-based compensation expense, depreciation, amortization and accretion and other non-cash transactions. Depreciation, amortization and accretion includes depreciation, amortization and accretion on assets and liabilities of
The following table presents a reconciliation of Adjusted EBITDA to net income, 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 December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Reconciliation of Net Income to Adjusted EBITDA: | |||||||||||||||
Net income | $ | 51,604 | $ | 15,312 | $ | 185,719 | $ | 62,960 | |||||||
Depreciation, amortization and accretion | 10,538 | 7,304 | 42,336 | 25,134 | |||||||||||
Interest expense, net of amount capitalized | 401 | — | 1,039 | — | |||||||||||
Interest expense (income) related to equity method investments | (156 | ) | — | 1,005 | — | ||||||||||
Depreciation related to equity method investments | 1,443 | — | 1,636 | — | |||||||||||
Non-cash unit-based compensation expense | 2,219 | — | 5,208 | — | |||||||||||
Other non-cash transactions | 1,528 | — | 1,528 | — | |||||||||||
Provision for income taxes | 3,403 | 4,245 | 26,253 | 17,359 | |||||||||||
Adjusted EBITDA | 70,980 | $ | 26,861 | 264,724 | $ | 105,453 | |||||||||
Less: Adjusted EBITDA prior to the IPO | — | (100,743 | ) | ||||||||||||
Adjusted EBITDA subsequent to the IPO | 70,980 | 163,981 | |||||||||||||
Less: Adjusted EBITDA attributable to non-controlling interest | (50,508 | ) | (116,685 | ) | |||||||||||
Adjusted EBITDA attributable to Rattler Midstream LP | $ | 20,472 | $ | 47,296 |
Investor Contact:
+1 432.221.7467
IR@rattlermidstream.com
Source:
Source: Rattler Midstream LP