Viper Energy Partners LP (NASDAQ:VNOM) Q3 2018 Earnings Conference Call Transcript

Oct 30, 2018 • 10:00 am ET


Viper Energy Partners LP (NASDAQ:VNOM) Q3 2018 Earnings Conference Call Transcript


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Good day, ladies and gentlemen and welcome to the Viper Energy Partners Third Quarter 2018 Earnings Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference call, Adam Lawlis, Director of IR. You may begin, sir.

Adam T. Lawlis

Thank you, Chris. Good morning and welcome to Viper Energy Partners' third quarter 2018 conference call. During our call today, we will reference an updated investor presentation, which can be found on Viper's website. Representing Viper today are Travis Stice, CEO; Tracy Dick, CFO; and Kaes Van't Hof, President.

(Forward-Looking Cautionary Statements)

I'll now turn the call over to Travis Stice.

Travis D. Stice

Thank you, Adam. Welcome everyone and thank you for listening to Viper Energy Partners' third quarter 2018 conference call. 2018 has been an exceptional year so far for Viper and the third quarter was no exception. We've acquired over 4,000 net royalty acres through the first 3 quarters of the year, giving us over $1 billion of closed acquisitions since our IPO just 4 years ago.

As the direct results of these accretive acquisitions as well as continued organic growth on our legacy assets, Viper once again delivered significant quarter-over-quarter production growth. We completed our first drop-down transaction from Diamondback during the quarter. And looking ahead to 2019, we are excited about the opportunity for further drop-downs given the sizable mineral inventory currently held by Diamondback. Viper is unmatched in terms of size, scale and expertise when it comes to the minerals market in the Permian Basin, and we believe this will allow us to continue to execute on our differentiated acquisition strategy.

We continue to maintain over 90% margins. So as the pricing environment in the Permian Basin improves, our production growth will lead directly to distribution growth. Given the active visible development on our existing acreage, we are initiating average production guidance for the fourth quarter of 2018 and the first quarter of 2019 of 18,500 BOEs to 20,000 BOEs per day as well as raising full year 2018 production guidance to 16,750 BOEs to 17,250 BOEs a day. Our full year 2018 production guidance now implies 54% year-over-year production growth.

I'll now turn the call over to Kaes.

Kaes Vant Hof

Thank you, Travis. Turning to Slide 5. We saw a year-over-year growth on several key financial metrics as well as give an update on our rolling 6-month and annual production guidance. Importantly, we show a range of our annualized distribution using our rolling 6-month production guidance and a range of realized oil prices. Our realized oil price for the third quarter was $54.51 per barrel, roughly in line with the average Midland spot price for the quarter, which we expect to improve in the fourth quarter given the current pricing environment.

Flipping ahead to Slide 7, we illustrate Viper's position as an industry leader in