Rattler Midstream LP, a Subsidiary of Diamondback Energy, Inc., Reports First Quarter 2020 Financial and Operating Results
FIRST QUARTER 2020 HIGHLIGHTS
- Q1 2020 consolidated net income (including non-controlling interest) of
$54.6 million , consolidated adjusted EBITDA (as defined and reconciled below) of$81.0 million - Board of Directors of Rattler's general partner approved a cash distribution for the first quarter of 2020 of
$0.29 per common unit ($1.16 annualized) - Q1 2020 operated capital expenditures of
$52.0 million - Q1 2020 average produced water gathering and disposal volumes of 942 MBbl/d, up 5% over Q4 2019 and up 32% over Q1 2019
- Q1 2020 average sourced water volumes of 447 MBbl/d, down 7% from Q4 2019 and up 27% over Q1 2019; 17% of total sourced water volumes in Q1 2020 sourced from recycled produced water
- Q1 2020 average crude oil gathering volumes of 97 MBbl/d, down 1% from Q4 2019 and up 30% over Q1 2019
- Q1 2020 average gas gathering volumes of 118 BBtu/d, up 13% over Q4 2019 and up 95% over Q1 2019
“First of all, and most importantly, our thoughts and prayers go out to all of those affected by the coronavirus. The first half of 2020 will be in the history books forever, for all of the wrong reasons, but our business must go on and we have taken swift and decisive action to adapt to rapidly changing circumstances and preserve our strength through this cycle,” stated
OPERATIONS AND FINANCIAL UPDATE
During the first quarter of 2020, the Company recorded total operating income of
Average produced water gathering and disposal volumes for Q1 2020 were 942 MBbl/d, up 5% over Q4 2019 and up 32% over Q1 2019. Average sourced water volumes were 447 MBbl/d, down 7% from Q4 2019 due to Diamondback reducing completion activity in March, and up 27% over Q1 2019. Average crude oil gathering volumes were 97 MBbl/d, down 1% from Q4 2019 and up 30% over Q1 2019. Average gas gathering volumes were 118 BBtu/d, up 13% over Q4 2019 and up 95% over Q1 2019.
First quarter operated capital expenditures totaled
CASH DISTRIBUTION
On
GUIDANCE UPDATE
Below is Rattler's revised guidance for the full year 2020, with volume guidance updated to reflect the latest base case operating plan. EBITDA and capital expenditure guidance remain consistent with the Company's
Rattler Midstream LP Guidance | ||
2020 | ||
Rattler Operated Volumes (a) | ||
Produced Water Gathering and Disposal Volumes (MBbl/d) | 800 - 900 | |
Sourced Water Volumes (MBbl/d) | 150 - 250 | |
Crude Oil Gathering Volumes (MBbl/d) | 85 - 95 | |
Gas Gathering Volumes (BBtu/d) | 95 - 115 | |
Financial Metrics ($ millions except per unit metrics) | ||
Net Income | ||
Adjusted EBITDA | ||
Equity Method Investment EBITDA(b) | ||
Operated Midstream Capex | ||
2020 Equity Method Investment Contributions(b) | ||
Depreciation, Amortization & Accretion | ||
Annualized Distribution per Unit |
(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 first quarter and full year of 2020 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 expectations of plans, strategies, objectives and anticipated financial and operating results of Rattler, including Rattler's capital expenditure levels and other guidance 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
Consolidated Balance Sheets | |||||||
(unaudited, in thousands) | |||||||
2020 | 2019 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 16,183 | $ | 10,633 | |||
Accounts receivable—related party | 18,244 | 50,270 | |||||
Accounts receivable—third party, net | 10,782 | 9,071 | |||||
Sourced water inventory | 13,265 | 14,325 | |||||
Other current assets | 1,051 | 1,428 | |||||
Total current assets | 59,525 | 85,727 | |||||
Property, plant and equipment: | |||||||
Land | 88,309 | 88,509 | |||||
Property, plant and equipment | 987,336 | 930,768 | |||||
Accumulated depreciation, amortization and accretion | (71,604 | ) | (61,132 | ) | |||
Property, plant and equipment, net | 1,004,041 | 958,145 | |||||
Right of use assets | 171 | 418 | |||||
Equity method investments | 502,040 | 479,558 | |||||
Real estate assets, net | 97,580 | 98,679 | |||||
Intangible lease assets, net | 7,274 | 8,070 | |||||
Other assets | 5,584 | 5,796 | |||||
Total assets | $ | 1,676,215 | $ | 1,636,393 | |||
Consolidated Balance Sheets - Continued | |||||||
(unaudited, in thousands, except unit amounts) | |||||||
2020 | 2019 | ||||||
Liabilities and Unitholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 36 | $ | 147 | |||
Accrued liabilities | 72,906 | 76,625 | |||||
Taxes payable | 336 | 189 | |||||
Short-term lease liability | 171 | 418 | |||||
Total current liabilities | 73,449 | 77,379 | |||||
Long-term debt | 451,000 | 424,000 | |||||
Asset retirement obligations | 12,525 | 11,347 | |||||
Deferred income taxes | 11,483 | 7,827 | |||||
Total liabilities | 548,457 | 520,553 | |||||
Commitment and contingencies | |||||||
Unitholders' equity: | |||||||
General partner—Diamondback | 959 | 979 | |||||
Common units—public (43,700,000 units issued and outstanding as of |
739,702 | 737,777 | |||||
Class B units—Diamondback (107,815,152 units issued and outstanding as of |
959 | 979 | |||||
Accumulated other comprehensive loss | (261 | ) | (198 | ) | |||
741,359 | 739,537 | ||||||
Non-controlling interest | 387,219 | 376,928 | |||||
Non-controlling interest in accumulated other comprehensive loss | (820 | ) | (625 | ) | |||
Total equity | 1,127,758 | 1,115,840 | |||||
Total liabilities and unitholders’ equity | $ | 1,676,215 | $ | 1,636,393 | |||
Consolidated Statements of Operations | |||||||
(unaudited, in thousands, except per unit data) | |||||||
Three Months Ended |
|||||||
2020 | 2019 | ||||||
Predecessor | |||||||
Revenues: | |||||||
Revenues—related party | $ | 116,583 | $ | 88,576 | |||
Revenues—third party | 9,100 | 3,487 | |||||
Rental income—related party | 1,402 | 715 | |||||
Rental income—third party | 1,901 | 2,067 | |||||
Other real estate income—related party | 116 | 73 | |||||
Other real estate income—third party | 293 | 258 | |||||
Total revenues | 129,395 | 95,176 | |||||
Costs and expenses: | |||||||
Direct operating expenses | 32,874 | 20,186 | |||||
Cost of goods sold (exclusive of depreciation and amortization) | 15,961 | 13,053 | |||||
Real estate operating expenses | 728 | 526 | |||||
Depreciation, amortization and accretion | 12,506 | 9,904 | |||||
General and administrative expenses | 4,514 | 1,369 | |||||
Loss on disposal of property, plant and equipment | 1,538 | — | |||||
Total costs and expenses | 68,121 | 45,038 | |||||
Income from operations | 61,274 | 50,138 | |||||
Other income (expense): | |||||||
Interest expense, net | (2,621 | ) | — | ||||
(Loss) income from equity method investments | (245 | ) | 50 | ||||
Total other income (expense), net | (2,866 | ) | 50 | ||||
Net income before income taxes | 58,408 | 50,188 | |||||
Provision for income taxes | 3,820 | 10,832 | |||||
Net income after taxes | $ | 54,588 | $ | 39,356 | |||
Net income attributable to non-controlling interest | 41,557 | ||||||
Net income attributable to |
$ | 13,031 | |||||
Net income attributable to limited partners per common unit: | |||||||
Basic | $ | 0.28 | |||||
Diluted | $ | 0.28 | |||||
Weighted average number of limited partner common units outstanding: | |||||||
Basic | 43,700 | ||||||
Diluted | 43,700 |
Consolidated Statements of Cash Flows | |||||||
(unaudited, in thousands) | |||||||
Three Months Ended |
|||||||
2020 | 2019 | ||||||
Predecessor | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 54,588 | $ | 39,356 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for deferred income taxes | 3,820 | 2,867 | |||||
Depreciation, amortization and accretion | 12,506 | 9,904 | |||||
Loss on disposal of property, plant and equipment | 1,538 | — | |||||
Unit-based compensation expense | 2,219 | — | |||||
Loss (income) from equity method investments | 245 | (50 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable—related party | 31,674 | (15,516 | ) | ||||
Accounts receivable—third party | (1,711 | ) | 625 | ||||
Accounts payable, accrued liabilities and taxes payable | (8,540 | ) | 19,578 | ||||
Other | 1,648 | (1,524 | ) | ||||
Net cash provided by operating activities | 97,987 | 55,240 | |||||
Cash flows from investing activities: | |||||||
Additions to property, plant and equipment | (52,046 | ) | (51,743 | ) | |||
Contributions to equity method investments | (32,563 | ) | — | ||||
Distributions from equity method investments | 9,761 | — | |||||
Proceeds from the sale of fixed assets | 42 | — | |||||
Net cash used in investing activities | (74,806 | ) | (51,743 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from borrowings from credit facility | 27,000 | — | |||||
Distribution equivalent rights | (652 | ) | — | ||||
Distribution to |
(20 | ) | — | ||||
Distribution to public | (12,673 | ) | — | ||||
Distribution to Diamondback | (31,286 | ) | — | ||||
Net cash used in financing activities | (17,631 | ) | — | ||||
Net increase in cash | 5,550 | 3,497 | |||||
Cash at beginning of period | 10,633 | 8,564 | |||||
Cash at end of period | $ | 16,183 | $ | 12,061 | |||
Supplemental disclosure of cash flow information: | |||||||
Interest paid | $ | 2,978 | $ | — | |||
Supplemental disclosure of non-cash financing activity: | |||||||
Contributions from Diamondback | $ | — | $ | 458,674 | |||
Supplemental disclosure of non-cash investing activity: | |||||||
Increase in long term assets and inventory due to contributions from Diamondback | $ | — | $ | 449,441 | |||
Change in accrued liabilities related to property, plant and equipment | $ | 5,063 | $ | 15,856 | |||
Decrease in current liabilities | $ | — | $ | 9,233 |
Pipeline Infrastructure Assets | ||||||||
(unaudited, in miles) | ||||||||
As of |
||||||||
(miles) | Permian Total | |||||||
Crude oil | 106 | 44 | 150 | |||||
Natural gas | 149 | — | 149 | |||||
Produced water | 261 | 221 | 482 | |||||
Sourced water | 32 | 73 | 105 | |||||
Total | 548 | 338 | 886 | |||||
Capacity/Capability | |||||||||||
(unaudited) | |||||||||||
As of |
|||||||||||
(capacity/capability) | Permian Total | Utilization | |||||||||
Crude oil gathering (Bbl/d) | 180,000 | 56,000 | 236,000 | 41 | % | ||||||
Natural gas compression (Mcf/d) | 135,000 | — | 135,000 | 63 | % | ||||||
Natural gas gathering (Mcf/d) | 150,000 | — | 150,000 | 56 | % | ||||||
Produced water gathering and disposal (Bbl/d) | 1,660,500 | 1,872,300 | 3,532,800 | 28 | % | ||||||
Sourced water (Bbl/d) | 120,000 | 455,000 | 575,000 | 78 | % |
Throughput and Volumes | |||||
(unaudited) | |||||
Three Months Ended |
|||||
(throughput) | 2020 | 2019 | |||
Crude oil gathering volumes (Bbl/d) | 97,293 | 74,567 | |||
Natural gas gathering volumes (MMBtu/d) | 117,761 | 60,534 | |||
Produced water gathering and disposal volumes (Bbl/d) | 941,628 | 711,198 | |||
Sourced water gathering volumes (Bbl/d) | 446,713 | 352,603 | |||
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA is a supplemental non-GAAP financial measure used by management and external users of its financial statements, such as industry analysts, investors, lenders and rating agencies. Management believes Adjusted EBITDA is useful because the measure allows it to more effectively evaluate the Company's operating performance and compare the results of its operations period to period without regard to its financing methods or capital structure.
The Company defines Adjusted EBITDA as net income before income taxes, interest expense, net of amount capitalized, its proportional interest expense related to equity method investments, non-cash unit-based compensation expense, depreciation, amortization and accretion on assets and liabilities of
The Company does not provide guidance on the reconciling items between forecasted Net Income and forecasted Adjusted EBITDA due to the uncertainty regarding timing and estimates of these items. Rattler provides a range for the forecasts of Net Income and Adjusted EBITDA to allow for the variability in timing and uncertainty of estimates of reconciling items between forecasted Net Income and forecasted Adjusted EBITDA. Therefore, the Company cannot reconcile forecasted Net Income to forecasted Adjusted EBITDA without unreasonable effort.
The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure for each of the periods indicated:
(unaudited, in thousands) | |||||||
Three Months Ended |
|||||||
2020 | 2019 | ||||||
Reconciliation of Net Income to Adjusted EBITDA: | |||||||
Net income | $ | 54,588 | $ | 39,356 | |||
Depreciation, amortization and accretion | 12,506 | 9,904 | |||||
Depreciation related to equity method investments | 3,443 | — | |||||
Interest expense, net of amount capitalized | 2,621 | — | |||||
Interest expense related to equity method investments | 323 | — | |||||
Non-cash unit-based compensation expense | 2,219 | — | |||||
Other non-cash transactions | 1,460 | — | |||||
Provision for income taxes | 3,820 | 10,832 | |||||
Adjusted EBITDA | 80,980 | $ | 60,092 | ||||
Less: Adjusted EBITDA attributable to non-controlling interest | (57,624 | ) | |||||
Adjusted EBITDA attributable to |
$ | 23,356 | |||||
Investor Contact:
+1 432.221.7467
IR@rattlermidstream.com
Source:
Source: Rattler Midstream LP