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PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Viper Energy Partners LP, a Subsidiary of Diamondback Energy, Inc., Reports Third Quarter 2021 ...

November 1, 2021 GMT

MIDLAND, Texas, Nov. 01, 2021 (GLOBE NEWSWIRE) -- Viper Energy Partners LP (NASDAQ:VNOM) (“Viper” or the “Company”), a subsidiary of Diamondback Energy, Inc. (NASDAQ:FANG) (“Diamondback”), today announced financial and operating results for the third quarter ended September 30, 2021.

THIRD QUARTER HIGHLIGHTS

  • Q3 2021 average production of 16,087 bo/d (27,620 boe/d)
  • Q3 2021 consolidated net income (including non-controlling interest) of $73.4 million; net income attributable to Viper Energy Partners LP of $16.8 million, or $0.26 per common unit
  • Adjusted net income (as defined and reconciled below) of $57.7 million, or $0.90 per common unit
  • Q3 2021 cash distribution of $0.38 per common unit, representing approximately 70% of total cash available for distribution of $0.54 per common unit; $0.38 distribution is up 15% quarter over quarter and implies a 6.9% annualized yield based on the October 29, 2021 unit closing price of $22.05
  • Consolidated adjusted EBITDA (as defined and reconciled below) of $92.6 million and cash available for distribution to Viper’s common units (as reconciled below) of $34.3 million
  • Repurchased 765,512 common units in Q3 2021 for an aggregate of $13.7 million
  • Ended the third quarter of 2021 with total long-term debt of $571.9 and net debt of $530.4 million (as defined and reconciled below)
  • 223 total gross (3.1 net 100% royalty interest) horizontal wells turned to production on Viper’s acreage during Q3 2021 with an average lateral length of 10,163 feet
  • As previously announced, closed acquisition from Swallowtail Royalties LLC and Swallowtail Royalties II LLC; adds approximately 2,313 net royalty acres in the Northern Midland Basin, roughly 62% of which are operated by Diamondback
  • Initiating average daily production guidance for Q4 2021 and Q1 2022 of 17,000 to 17,750 bo/d (28,250 to 29,500 boe/d)
  • Increasing full year 2021 average daily production guidance to 16,250 to 16,500 bo/d (27,250 to 27,750 boe/d)
  • As of October 11, 2021, there were approximately 570 gross horizontal wells in the process of active development on Viper’s acreage in which Viper expects to own an average 1.7% net royalty interest (9.5 net 100% royalty interest wells)
  • Approximately 492 gross (9.3 net 100% royalty interest) line-of-sight wells on Viper’s acreage that are not currently in the process of active development, but for which Viper has visibility to the potential of future development in coming quarters, based on Diamondback’s current completion schedule and third party operators’ permits
  • Approximately 60% of distributions paid in 2021 are reasonably estimated to constitute non-taxable reductions to the tax basis, and not dividends, for U.S. federal income tax purposes

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“During the third quarter, Viper saw third party operated net wells turned to production on our acreage rebound to their highest level since the first quarter of 2020. As a result of our continued strong production, and further enhanced by our high-margin exposure to increasing commodity prices, Viper’s cash available for distribution increased 15% quarter over quarter to $0.54 per common unit,” stated Travis Stice, Chief Executive Officer of Viper’s General Partner.

Mr. Stice continued, “Following the recent closing of the Swallowtail acquisition, Viper has unprecedented, high confidence visibility into Diamondback’s forward development plan that is expected to bolster oil production for Viper not only for the next several quarters, but also for years to come. With a tailwind to cash flows as our defensive hedges placed in 2020 roll off at the end of this year, we look forward to continuing to generate robust amounts of free cash flow and subsequently using that cash to both reduce debt and increase returns to unitholders.”

FINANCIAL UPDATE

Viper’s third quarter 2021 average unhedged realized prices were $67.67 per barrel of oil, $3.61 per Mcf of natural gas and $30.66 per barrel of natural gas liquids, resulting in a total equivalent realized price of $50.24/boe.

During the third quarter of 2021, the Company recorded total operating income of $128.0 million and consolidated net income (including non-controlling interest) of $73.4 million.

As of September 30, 2021, the Company had a cash balance of $41.5 million and total long-term debt outstanding (excluding debt issuance, discounts and premiums) of $571.9 million, resulting in net debt (as defined and reconciled below) of $530.4 million. Viper’s outstanding long-term debt as of September 30, 2021 consisted of $479.9 million in aggregate principal amount of its 5.375% Senior Notes due 2027 and $92.0 million in borrowings on its revolving credit facility, leaving $408.0 million available for future borrowings and $449.5 million of total liquidity.

THIRD QUARTER 2021 CASH DISTRIBUTION & CAPITAL RETURN PROGRAM

The Board of Directors of Viper’s General Partner declared a cash distribution for the three months ended September 30, 2021 of $0.38 per common unit. The distribution is payable on November 18, 2021 to eligible common unitholders of record at the close of business on November 11, 2021. This distribution represents approximately 70% of total cash available for distribution.

On May 20, 2021 and August 19, 2021, Viper made cash distributions to its common unitholders and subsequently has reasonably estimated that a portion of such distributions, as well as the distribution payable on November 18, 2021, should not constitute dividends for U.S. federal income tax purposes. Rather, approximately 60% of these distributions are estimated to constitute non-taxable reductions to the tax basis of each distribution recipient’s ownership interest in Viper. The Form 8937 containing additional information may be found on www.viperenergy.com under the “Investor Relations” section of the site.

During the third quarter of 2021, Viper repurchased 765,512 common units for an aggregate of $13.7 million. In total through September 30, 2021, the Company had repurchased 4,083,640 common units at an average price of $14.10 per unit.

OPERATIONS AND ACQUISITIONS UPDATE

During the third quarter of 2021, Viper estimates that 223 gross (3.1 net 100% royalty interest) horizontal wells with an average royalty interest of 1.4% were turned to production on its existing acreage position with an average lateral length of 10,163 feet. Of these 223 gross wells, Diamondback is the operator of 44 gross wells with an average royalty interest of 4.0%, and the remaining 179 gross wells, with an average royalty interest of 0.7%, are operated by third parties.

During the third quarter of 2021, Viper acquired 38 net royalty acres for an aggregate purchase price of approximately $5.5 million, bringing the Company’s footprint of mineral and royalty interests as of September 30, 2021 to a total of 24,368 net royalty acres.

Subsequent to the end of the third quarter, Viper completed the acquisition of certain mineral and royalty interests from Swallowtail Royalties LLC and Swallowtail Royalties II LLC for approximately 15.25 million common units in Viper and $225.0 million in cash. On October 1, 2021, an additional $190 million was borrowed under the revolving credit facility to fund a portion of the cash purchase price for the Swallowtail acquisition. 

The mineral and royalty interests acquired in the Swallowtail acquisition represent approximately 2,313 net royalty acres primarily in the Northern Midland Basin, of which approximately 62% are operated by Diamondback. As a result of this acquisition, Viper’s footprint of mineral and royalty interests increased to a total of 26,681 net royalty acres as of October 1, 2021.

The following table summarizes Viper’s gross well information:

 Diamondback Operated Third Party Operated Total
Horizontal wells turned to production (third quarter 2021)(1):     
Gross wells44  179  223 
Net 100% royalty interest wells1.8  1.3  3.1 
Average percent net royalty interest4.0% 0.7% 1.4%
      
Horizontal producing well count (as of October 11, 2021):     
Gross wells1,295  4,282  5,577 
Net 100% royalty interest wells97.7  58.4  156.1 
Average percent net royalty interest7.5% 1.4% 2.8%
      
Horizontal active development well count (as of October 11, 2021):     
Gross wells103  467  570 
Net 100% royalty interest wells5.8  3.7  9.5 
Average percent net royalty interest5.7% 0.8% 1.7%
      
Line of sight wells (as of October 11, 2021):     
Gross wells107  385  492 
Net 100% royalty interest wells5.7  3.6  9.3 
Average percent net royalty interest5.3% 0.9% 1.9%
(1)Average lateral length of 10,163 feet.
  

There continues to be active development across Viper’s asset base with near-term activity expected to be driven primarily by Diamondback operations. The 570 gross wells currently in the process of active development are those wells that have been spud and are expected to be turned to production within approximately the next six to eight months. Further in regard to the active development on Viper’s asset base, there are currently 35 gross rigs operating on Viper’s acreage, five of which are operated by Diamondback. The 492 line-of-sight wells are those that are not currently in the process of active development, but for which Viper has reason to believe that they will be turned to production within approximately the next 15 to 18 months. The expected timing of these line-of-sight wells is based primarily on permitting by third party operators or Diamondback’s current expected completion schedule. Existing permits or active development of Viper’s royalty acreage does not ensure that those wells will be turned to production.

GUIDANCE UPDATE

Below is Viper’s updated guidance for the full year 2021, as well as average production guidance for the fourth quarter of 2021 and first quarter of 2022.

  
 Viper Energy Partners
  
Q4 2021 / Q1 2022 Net Production - MBo/d17.00 - 17.75
Q4 2021 / Q1 2022 Net Production - MBoe/d28.25 - 29.50
Full Year 2021 Net Production - MBo/d16.25 - 16.50
Full Year 2021 Net Production - MBoe/d27.25 - 27.75
  
Unit costs ($/boe) 
Depletion$9.50 - $10.50
Cash G&A$0.60 - $0.80
Non-Cash Unit-Based Compensation$0.10 - $0.25
Interest Expense(1)$3.25 - $3.40
  
Production and Ad Valorem Taxes (% of Revenue) (2)7%
(1)Includes actual interest expense for the first three quarters of 2021 plus expected interest for the remainder of 2021 assuming $480.0 million in principal of senior notes and $250.0 million drawn on the revolver.
(2)Includes production taxes of 4.6% for crude oil and 7.5% for natural gas and natural gas liquids and ad valorem taxes.
  

CONFERENCE CALL

Viper will host a conference call and webcast for investors and analysts to discuss its results for the third quarter of 2021 on Tuesday, November 2, 2021 at 10:00 a.m. CT. Participants should call (844) 400-1537 (United States/Canada) or (703) 326-5198 (International) and use the confirmation code 8077109. A telephonic replay will be available from 1:00 p.m. CT on Tuesday, November 2, 2021 through Tuesday, November 9, 2021 at 1:00 p.m. CT. To access the replay, call (855) 859-2056 (United States/Canada) or (404) 537-3406 (International) and enter confirmation code 8077109. A live broadcast of the earnings conference call will also be available via the internet at www.viperenergy.com under the “Investor Relations” section of the site. A replay will also be available on the website following the call.

About Viper Energy Partners LP

Viper is a limited partnership formed by Diamondback to own, acquire and exploit oil and natural gas properties in North America, with a focus on owning and acquiring mineral and royalty interests in oil-weighted basins, primarily the Permian Basin. For more information, please visit www.viperenergy.com.

About Diamondback Energy, Inc.

Diamondback is an independent oil and natural gas company headquartered in Midland, Texas focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. For more information, please visit www.diamondbackenergy.com.

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 Viper 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 the current volatile industry and macroeconomic conditions, volatile commodity prices, production levels on properties in which Viper has mineral and royalty interests, governmental actions on environmental policies and regulations impacting Viper and its operators, severe weather conditions, any acquisitions or dispositions, Diamondback’s plans for developing Viper’s acreage discussed above, development activity by other operators, Viper’s cash distribution policy and the impact of the COVID-19 pandemic. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of Viper. Information concerning these risks and other factors can be found in Viper’s filings with the Securities and Exchange Commission, including its Forms 10-K, 10-Q and 8-K, which can be obtained free of charge on the Securities and Exchange Commission’s web site at http://www.sec.gov. Viper undertakes no obligation to update or revise any forward-looking statement.

 
Viper Energy Partners LP
Consolidated Balance Sheets
(unaudited, in thousands, except unit amounts)
    
 September 30, December 31,
 2021 2020
Assets   
Current assets:   
Cash and cash equivalents        $41,515  $19,121 
Royalty income receivable (net of allowance for credit losses)        47,133  32,210 
Royalty income receivable—related party        22,022  1,998 
Other current assets        654  665 
Total current assets        111,324  53,994 
Property:   
Oil and natural gas interests, full cost method of accounting ($1,296,765 and $1,364,906 excluded from depletion at September 30, 2021 and December 31, 2020, respectively)        2,902,270  2,895,542 
Land        5,688  5,688 
Accumulated depletion and impairment        (570,406) (496,176)
Property, net        2,337,552  2,405,054 
Funds held in escrow        30,025   
Other assets        3,567  2,327 
Total assets        $2,482,468  $2,461,375 
Liabilities and Unitholders’ Equity   
Current liabilities:   
Accounts payable        $208  $43 
Accrued liabilities        26,000  18,262 
Derivative instruments        35,357  26,593 
Total current liabilities        61,565  44,898 
Long-term debt, net        564,452  555,644 
Derivative instruments        697   
Total liabilities        626,714  600,542 
Commitments and contingencies   
Unitholders’ equity:   
General partner        749  809 
Common units (63,830,715 units issued and outstanding as of September 30, 2021 and 65,817,281 units issued and outstanding as of December 31, 2020)        580,992  633,415 
Class B units (90,709,946 units issued and outstanding September 30, 2021 and December 31, 2020)        956  1,031 
Total Viper Energy Partners LP unitholders’ equity        582,697  635,255 
Non-controlling interest        1,273,057  1,225,578 
Total equity        1,855,754  1,860,833 
Total liabilities and unitholders’ equity        $2,482,468  $2,461,375 
 
Viper Energy Partners LP
Consolidated Statements of Operations
(unaudited, in thousands, except per unit data)
        
 Three Months Ended September 30, Nine Months Ended September 30,
 2021 2020 2021 2020
Operating income:       
Royalty income        $127,649  $62,584  $337,619  $171,857 
Lease bonus income        223  40  1,032  1,685 
Other operating income        132  318  479  761 
Total operating income        128,004  62,942  339,130  174,303 
Costs and expenses:       
Production and ad valorem taxes        8,625  5,049  23,426  14,306 
Depletion        25,366  24,780  74,230  72,204 
General and administrative expenses        1,735  1,811  6,118  6,160 
Total costs and expenses        35,726  31,640  103,774  92,670 
Income (loss) from operations        92,278  31,302  235,356  81,633 
Other income (expense):       
Interest expense, net        (8,328) (8,238) (24,161) (24,870)
Gain (loss) on derivative instruments, net        (9,599) (5,084) (70,649) (47,469)
Gain (loss) on revaluation of investment          (1,984)   (8,661)
Other income, net          188  77  1,111 
Total other expense, net        (17,927) (15,118) (94,733) (79,889)
Income (loss) before income taxes        74,351  16,184  140,623  1,744 
Provision for (benefit from) income taxes        906    941  142,466 
Net income (loss)        73,445  16,184  139,682  (140,722)
Net income (loss) attributable to non-controlling interest        56,613  16,948  121,208  23,963 
Net income (loss) attributable to Viper Energy Partners LP        $16,832  $(764) $18,474  $(164,685)
        
Net income (loss) attributable to common limited partner units:       
Basic        $0.26  $(0.01) $0.29  $(2.43)
Diluted        $0.26  $(0.01) $0.29  $(2.43)
Weighted average number of common limited partner units outstanding:       
Basic        64,152  67,847  64,724  67,832 
Diluted        64,241  67,847  64,815  67,832 
 
Viper Energy Partners LP
Consolidated Statements of Cash Flows
(unaudited, in thousands)
        
 Three Months Ended September 30, Nine Months Ended September 30,
 2021 2020 2021 2020
Cash flows from operating activities:       
Net income (loss)        $73,445  $16,184  $139,682  $(140,722)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:       
Deferred income tax expense (benefit)              142,466 
Depletion        25,366  24,780  74,230  72,204 
(Gain) loss on derivative instruments, net        9,599  5,084  70,649  47,469 
Net cash receipts (payments) on derivatives        (25,306) (16,164) (61,188) (18,718)
(Gain) loss on revaluation of investment          1,984    8,661 
Other        1,340  873  3,332  2,681 
Changes in operating assets and liabilities:       
Royalty income receivable        (5,122) 10  (14,923) 25,981 
Royalty income receivable—related party        (18,343) (13,994) (20,024) (4,335)
Other        9,013  8,586  7,914  7,519 
Net cash provided by (used in) operating activities        69,992  27,343  199,672  143,206 
Cash flows from investing activities:       
Acquisitions of oil and natural gas interests        (5,909) 764  (6,728) (64,508)
Other          7,360    7,360 
Net cash provided by (used in) investing activities        (5,909) 8,124  (6,728) (57,148)
Cash flows from financing activities:       
Proceeds from borrowings under credit facility        62,000  3,000  87,000  95,000 
Repayment on credit facility        (32,000) (30,000) (79,000) (65,000)
Repayment of senior notes          (5,910)   (19,697)
Repurchased units as part of unit buyback        (13,740)   (33,562)  
Distributions to public         (20,995) (2,015) (46,102) (38,943)
Distributions to Diamondback         (30,201) (2,764) (65,913) (53,112)
Other        (29) (67) (2,948) (534)
Net cash provided by (used in) financing activities        (34,965) (37,756) (140,525) (82,286)
Net increase (decrease) in cash and cash equivalents        29,118  (2,289) 52,419  3,772 
Cash, cash equivalents and restricted cash at beginning of period        42,422  9,663  19,121  3,602 
Cash, cash equivalents and restricted cash at end of period        $71,540  $7,374  $71,540  $7,374 
 
Viper Energy Partners LP
Selected Operating Data
(unaudited)
      
  Three Months Ended
September 30, 2021
  Three Months Ended
June 30, 2021
  Three Months Ended
September 30, 2020
Production Data:     
Oil (MBbls)        1,480  1,503  1,456 
Natural gas (MMcf)        3,347  3,219  3,111 
Natural gas liquids (MBbls)        503  449  455 
Combined volumes (MBOE)(1)        2,541  2,489  2,430 
      
Average daily oil volumes (BO/d)        16,087  16,516  15,829 
Average daily combined volumes (BOE/d)        27,620  27,352  26,409 
      
Average sales prices:     
Oil ($/Bbl)        $67.67  $62.51  $36.80 
Natural gas ($/Mcf)        $3.61  $2.96  $1.07 
Natural gas liquids ($/Bbl)        $30.66  $22.21  $12.44 
Combined ($/BOE)(2)        $50.24  $45.58  $25.76 
      
Oil, hedged ($/Bbl)(3)        $50.57  $48.58  $27.65 
Natural gas, hedged ($/Mcf)(3)        $3.61  $2.96  $0.16 
Natural gas liquids ($/Bbl)(3)        $30.66  $22.21  $12.44 
Combined price, hedged ($/BOE)(3)        $40.28  $37.18  $19.11 
      
Average Costs ($/BOE):     
Production and ad valorem taxes        $3.39  $3.28  $2.08 
General and administrative - cash component(4)        0.59  0.73  0.63 
Total operating expense - cash        $3.98  $4.01  $2.71 
      
General and administrative - non-cash unit compensation expense        $0.10  $0.14  $0.11 
Interest expense, net        $3.28  $3.20  $3.39 
Depletion        $9.98  $9.63  $10.20 
(1)Bbl equivalents are calculated using a conversion rate of six Mcf per one Bbl.
(2)Realized price net of all deducts for gathering, transportation and processing.
(3)Hedged prices reflect the impact of cash settlements of our matured commodity derivative transactions on our average sales prices.
(4)Excludes non-cash unit-based compensation expense for the respective periods presented.
  

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. Viper defines Adjusted EBITDA as net income (loss) attributable to Viper Energy Partners LP plus net income (loss) attributable to non-controlling interest (“net income (loss)”) before interest expense, net, non-cash unit-based compensation expense, depletion expense, impairment expense, non-cash (gain) loss on derivative instruments, (gain) loss on extinguishment of debt and provision for (benefit from) income taxes, if any. Adjusted EBITDA is not a measure of net income as determined by United States’ generally accepted accounting principles (“GAAP”). Management believes Adjusted EBITDA is useful because it allows them to more effectively evaluate Viper’s operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income, royalty income, cash flow from operating activities or any other measure of financial performance or liquidity presented as determined in accordance with GAAP. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA.

Viper defines cash available for distribution generally as an amount equal to its Adjusted EBITDA for the applicable quarter less cash needed for income taxes payable, debt service, contractual obligations, fixed charges and reserves for future operating or capital needs that the board of directors of Viper’s general partner may deem appropriate, cash paid for tax withholding on vested common units, distribution equivalent rights and preferred distributions, if any. Management believes cash available for distribution is useful because it allows them to more effectively evaluate Viper’s operating performance excluding the impact of non-cash financial items and short-term changes in working capital. Viper’s computations of Adjusted EBITDA and cash available for distribution may not be comparable to other similarly titled measures of other companies or to such measure in its credit facility or any of its other contracts.

The following tables present a reconciliation of the GAAP financial measure of net income (loss) to the non-GAAP financial measures of Adjusted EBITDA and cash available for distribution:

Viper Energy Partners LP
(unaudited, in thousands, except per unit data)
  
  Three Months Ended
September 30, 2021
Net income (loss) attributable to Viper Energy Partners LP        $16,832 
Net income (loss) attributable to non-controlling interest        56,613 
Net income (loss)        73,445 
Interest expense, net        8,328 
Non-cash unit-based compensation expense        243 
Depletion        25,366 
Non-cash (gain) loss on derivative instruments        (15,707)
Provision for (benefit from) income taxes        906 
Consolidated Adjusted EBITDA        92,581 
Less: Adjusted EBITDA attributable to non-controlling interest(1)        54,269 
Adjusted EBITDA attributable to Viper Energy Partners LP        $38,312 
  
Adjustments to reconcile Adjusted EBITDA to cash available for distribution: 
Income taxes payable        $(906)
Debt service, contractual obligations, fixed charges and reserves        (2,996)
Distribution equivalent rights payments        (62)
Preferred distributions        (45)
Cash available for distribution to Viper Energy Partners LP unitholders        $34,303 
  
Common limited partner units outstanding        63,831 
  
Cash available for distribution per limited partner unit        $0.54 
Cash per unit approved for distribution        $0.38 
(1)Does not take into account special income allocation consideration.
  

Adjusted net income (loss) is a non-GAAP financial measure equal to net income (loss) attributable to Viper Energy Partners, LP plus net income (loss) attributable to non-controlling interest adjusted for impairment expense, non-cash (gain) loss on derivative instruments, (gain) loss on extinguishment of debt and related income tax adjustments, if any. The Company’s computation of adjusted net income may not be comparable to other similarly titled measures of other companies or to such measure in our credit facility or any of our other contracts. Management believes Adjusted Net Income helps investors in the oil and natural gas industry to measure and compare the Company’s performance to other oil and natural gas companies by excluding from the calculation items that can vary significantly from company to company depending upon accounting methods, the book value of assets and other non-operational factors.

The following table presents a reconciliation of net income (loss) attributable to Viper Energy Partners LP to adjusted net income (loss):

Viper Energy Partners LP
Adjusted Net Income (Loss)
(unaudited, in thousands, except per unit data)
  
  Three Months Ended
September 30, 2021
 Amounts Amounts Per Diluted Unit
Net income (loss) attributable to Viper Energy Partners LP$16,832  $0.26 
Net income (loss) attributable to non-controlling interest56,613  0.88 
Net income (loss)73,445  1.14 
Non-cash (gain) loss on derivative instruments, net(15,707) (0.24)
Adjusted net income (loss)57,738  0.90 
Less: Adjusted net income (loss) attributed to non-controlling interests43,962  0.69 
Adjusted net income (loss) attributable to Viper Energy Partners LP$13,776  $0.21 
    
Weighted average common units outstanding:   
Basic64,152 
Diluted64,241 
   

RECONCILIATION OF LONG-TERM DEBT TO NET DEBT

The Company defines net debt as debt (excluding debt issuance, discounts and premiums) less cash equivalents. Net debt should not be considered an alternative to, or more meaningful than, total debt, the most directly comparable GAAP measure. Management uses net debt to determine the Company’s outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. The Company believes this metric is useful to analysts and investors in determining the Company’s leverage position because the Company has the ability to, and may decide to, use a portion of its cash and cash equivalents to reduce debt.

  September 30,
2021
 Net Q3 Principal Borrowings/(Repayments)  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
 (in thousands)
Total long-term debt(1)        $571,938  $30,000  $541,938  $536,938  $563,938  $606,438 
Cash and cash equivalents        (41,515)   (42,422) (11,727) (19,121) (7,374)
Net debt        $530,423    $499,516  $525,211  $544,817  $599,064 
(1)Excludes debt issuance, discounts & premiums.
  

Derivatives

As of the filing date, the Company had the following outstanding derivative contracts. The Company’s derivative contracts are based upon reported settlement prices on commodity exchanges, with crude oil derivative settlements based on New York Mercantile Exchange West Texas Intermediate pricing and Crude Oil Brent. When aggregating multiple contracts, the weighted average contract price is disclosed.

 Crude Oil (Bbls/day, $/Bbl)
 Q4 2021 Q1 2022 Q2 2022
Collars - WTI (Cushing)10,000  2,500  2,000 
Floor Price$30.00  $45.00  $45.00 
Ceiling Price$43.05  $79.55  $80.15 
Deferred Premium Puts - WTI (Cushing)  9,500  8,000 
Strike$  $47.51  $47.50 
Premium$  $(1.57) $(1.55)
 Natural Gas (Mmbtu/day, $/Mmbtu)
 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Costless Collars - Henry Hub20,000  20,000  20,000  20,000 
Floor Price$2.50  $2.50  $2.50  $2.50 
Ceiling Price$4.62  $4.62  $4.62  $4.62 
                

Investor Contacts:
Adam Lawlis
+1 432.221.7467
alawlis@viperenergy.com

Austen Gilfillian
+1 432.221.7420
agilfillian@viperenergy.com

Source: Viper Energy Partners LP; Diamondback Energy, Inc.