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Mailstop 3561
September 5,
2018
Teresa L. Dick
Executive Vice President and
Chief Financial Officer
Rattler Midstream Partners LP
9400 N. Broadway, Suite 700
Oklahoma City, OK 73114
Re: Rattler Midstream Partners LP
Registration Statement on Form S-1
Filed August 7, 2018
File No. 333-226645
Dear Ms. Dick:
We have reviewed your registration statement and have the following
comments. In
some of our comments, we may ask you to provide us with information so we
may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell us
why in your
response.
After reviewing any amendment to your registration statement and the
information you
provide in response to these comments, we may have additional comments.
General
1. Please supplementally provide us with copies of all written
communications, as defined
in Rule 405 under the Securities Act, that you, or anyone authorized
to do so on your
behalf, present to potential investors in reliance on Section 5(d)
of the Securities Act,
whether or not they retain copies of the communications.
Prospectus Summary
2. Where you refer to the potential cash flow stream associated with
the EPIC Crude Oil
Pipeline, please ensure that you also state that there is no
guarantee that you will exercise
the option to purchase an interest in this Pipeline, if true, and
disclose the steps you need
to take to exercise this option.
Teresa L. Dick
Rattler Midstream Partners LP
September 5, 2018
Page 2
Diamondback's Horizontal Drilling Location at Various Crude Oil Prices, page 5
3. Please revise this section to contextualize your disclosure regarding
"U.S. Securities and
Exchange Commission, or SEC, proved crude oil and natural gas reserves."
If you are
referencing Regulation S-X's definition of proved oil and gas reserves,
please state as
much throughout your prospectus.
Our Competitive Strengths, page 12
4. Reference is made to your disclosure of non-GAAP pro forma EBITDA
margins in the
first paragraph on page 14. Please revise to present, with equal or
greater prominence,
the most directly comparable financial measure calculated and presented
in accordance
with GAAP. Refer to Item 10(e)(1)(i)(A) of Regulation S-K and Question
102.10 of the
Division's Compliance and Disclosure Interpretations on Non-GAAP
Measures.
5. Please disclose the basis for your statements concerning Diamondback's
competitive
position in its industry or state that that it is management's belief,
if true. In this regard,
we note your statement that "Diamondback has been an operational and
cost leader in the
Permian with a track record of achieving robust production growth" and
that
Diamondback has one of the largest Permian acreage positions among
independent E&P
operators.
Summary of Conflicts of Interest and Fiduciary Duties, page 19
6. Please revise this section to provide a summary of the conflicts of
interest inherent in the
agreements you have entered, or will enter, into with Diamondback
Energy, Inc. In this
regard, we note that Diamondback owns and controls your general partner
and that you
derive substantially all of your revenues from Diamondback Energy, Inc.
Capitalization, page 61
7. Please revise your table to show a double-underline beneath cash and
cash equivalents.
Dilution, page 62
8. Please revise your table to present a separate line showing the change
in pro forma net
tangible book value per share attributable to the cash payments made by
the purchasers of
the common units being offered. Refer to Item 506 of Regulation S-K.
Teresa L. Dick
Rattler Midstream Partners LP
September 5, 2018
Page 3
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Our Business, page 80
9. Please disclose the estimated amount of funds needed to acquire the 10%
equity interest
in the EPIC project.
Results of Operations
Three Months Ended March 31, 2018 compared to the Three months Ended March 31,
2017,
page 88
10. Given that your midstream revenues are subject to different terms and
conditions and are
derived from different assets, please revise to break down the types of
midstream
revenues you generate and explain how and why those revenues varied
from period to
period.
Capital Resources and Liquidity
Capital Contributions, page 90
11. Please revise to clarify that the $177.0 million of assets added in the
year ended
December 31, 2017 were contributed. Further, please clarify whether
your estimated
capital expenditures for the twelve months ended December 31, 2018
include cash
expenditures and/or capital contributions. Please also disclose capital
contributions
through June 30, 2018.
Industry Overview
Market Fundamentals, page 97
12. Please revise your MD&A section to discuss the material impact the
trends identified in
this section have had, or will have, on your financial condition or
results of operations.
For example, we note that the EIA expects crude oil and natural gas
prices to rise over the
next several years and that Diamondback and your other customers are
exposed to
commodity price risk. Please refer to Item 303 of Regulation S-K.
Teresa L. Dick
Rattler Midstream Partners LP
September 5, 2018
Page 4
Management
Management of Rattler Midstream Partners LP
Director Independence, page 135
13. We note that you expect to add two independent directors after the
completion of your
initial public offering to your audit committee and that you will not
have an audit
committee consisting of entirely independent directors for up to a year
following the
effective date of your registration statement. Please revise your
prospectus summary to
include more prominent disclosures concerning these facts.
Description of our Units
Applicable Law; Forum; Venue and Jurisdiction, page 170
14. Please clarify whether the waiver of the right to a jury trial applies
to claims made under
the federal securities laws.
Index to Financial Statements, page F-1
15. Please update the financial statements and financial information
included in the filing to
include the interim periods ended June 30, 2018 and June 30, 2017.
Refer to Rule 3-12
of Regulation S-X.
16. In your letter dated June 25, 2018 to the Division's Office of the
Chief Accountant, you
state the Registration Statement will present an audited balance sheet
of the Partnership,
as of a date within 135 days of the filing of the Registration
Statement, pursuant to the
requirements of Rule 3-01 of Regulation S-X. Please ensure this audited
balance sheet is
provided in your amended filing.
Pro Forma Combined Financial Statements, page F-2
17. We note Rattler LLC plans to distribute a portion of the net offering
proceeds to
Diamondback. To the extent applicable, please include pro forma per
unit data giving
effect to the number of units whose proceeds would be necessary to pay
the distribution
in excess of the current year s earnings. Please include your
calculation as a footnote.
Refer to SAB Topic 1:B.3.
Notes to Pro Forma Combined Financial Statements, page F-7
18. Reference is made to adjustment (a) for $306,000 reflecting the
depreciation,
amortization and accretion for the Fasken Center for the year as if the
transaction had
occurred on January 1, 2017. Based on the disclosures in Note 5 on page
F-21 of the
Teresa L. Dick
Rattler Midstream Partners LP
September 5, 2018
Page 5
interim statements for the three months ended March 31, 2018, it is not
clear how the
adjustment in the amount of $306,000 was derived. Please advise or
revise.
19. We note you have estimated the expense you expect to incur as a result
of being a
publicly traded partnership. Any increase in costs related to being a
public company
would be incurred subsequent to and would be incidental to the offering
of common units
in your IPO (rather than directly attributable to the IPO) and
therefore should not be
presented as an adjustment. You may disclose your estimate for these
expenses in the
notes to the pro forma financial statements. Please revise. Refer to
Rule 11-02(b )(6) of
Regulation S-X.
20. In your letter dated June 25, 2018 to the Division's Office of the
Chief Accountant you
stated the unaudited pro forma combined balance sheet as of March 31,
2018 would
include a pro forma adjustment to reflect the change in stockholders'
equity following the
transfer of Rattler LLC to the Partnership. In this regard, we note
other transactions
described on page F-2 have not yet been included as an adjustment to
the pro forma
financial statements. Please advise.
Rattler Midstream LLC Audited Financial Statements
Notes to Audited Financial Statements, page F-31
21. Please disclose the nature, amount and timing of assets and liabilities
contributed not
currently disclosed in Note 3. Provide similar disclosure in the notes
to unaudited
condensed consolidated financial statements.
Note 7. Transactions with Affiliates, page F-37
22. Reference is made to the first full paragraph on page F-38. Please
revise to provide more
detail regarding the pertinent provisions under the credit agreement
which may restrict
certain actions of Rattler LLC. Please also disclose the amount of
member's equity or net
income restricted or free from restriction on the payment of dividends
by Rattler LLC.
Refer to Rule 4-08(e)(1) of Regulation S-X.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Teresa L. Dick
Rattler Midstream Partners LP
September 5, 2018
Page 6
You may contact Adam Phippen, Staff Accountant, at (202)551-3336 or
Donna Di Silvio
at (202)551-3202 if you have questions regarding comments on the financial
statements and
related matters. Please contact Danilo Castelli, Staff Attorney, at
(202)551-6521 or me at
(202)551-3720 with any other questions.
Sincerely,
/s/ Mara L. Ransom
Mara L. Ransom
Assistant Director
Office of Consumer
Products
cc: Seth Molay