Viper Energy (NASDAQ: VNOM) reported Q3 EPS of $0.13, $0.01 worse than the analyst estimate of $0.14. Revenue for the quarter came in at $71.79 million versus the consensus estimate of $76.56 million.

• Q3 2019 cash distribution of $0.46 per common unit; implies a 6.8% annualized yield based on the October 25, 2019 unit closing price of $27.04
• Q3 2019 consolidated net income (including non-controlling interest) of $51.1 million, consolidated adjusted EBITDA (as defined and reconciled below) of $66.3 million and cash available for distribution to Limited Partner units (as defined below) of $29.0 million
• Q3 2019 production of 21,266 boe/d (64% oil), an increase of 9% from Q2 2019 and 16% year over year
• 171 total gross (4.7 net 100% royalty interest) horizontal wells turned to production during Q3 2019 on existing acreage with an average lateral length of 8,898 feet; acquired interests in an additional 240 gross (1.9 net 100% royalty interest) producing horizontal wells during the quarter
• Closed 25 acquisitions for an aggregate purchase price of approximately $193.6 million in Q3 2019, increasing Viper's mineral interests to a total of 17,151 net royalty acres at September 30, 2019, up 23% year over year; during first nine months of 2019, have closed 99 acquisitions for an aggregate purchase price of approximately $320.5 million, increasing Viper's acreage position by 2,309 net royalty acres
• Pro forma asset base as of October 17, 2019 of 23,999 net royalty acres (51% of which are operated by Diamondback), after giving effect to the recently closed drop down transaction ("Drop Down") and pending acquisition from Santa Elena Minerals, LP ("Santa Elena")
• On October 16, 2019, closed $500.0 million 5.375% notes due 2027 with proceeds used to pay down borrowings on revolving credit facility
• Initiating average production guidance for Q4 2019/Q1 2020 of 25,000 to 27,000 boe/d (65% - 68% oil), the midpoint of which is up 22% from Q3 2019 production
• As of October 17, 2019, there were approximately 445 gross horizontal wells currently in the process of active development on Viper's pro forma acreage, in which Viper expects to own an average 1.9% net royalty interest (8.6 net 100% royalty interest wells)
• Approximately 326 gross (9.3 net 100% royalty interest) line-of-sight wells which are expected to be turned to production within the next 12 months, but which have not yet begun the process of active development; based on Diamondback's current completion schedule and third party operators' permits
• Q2 2019 and Q3 2019 distributions reasonably estimated to not constitute dividends for U.S. federal income tax purposes; instead should generally constitute non-taxable reductions to the tax basis

“During the third quarter, Viper continued to expand its footprint in the most attractive areas of the Permian Basin via multiple large strategic acquisitions and, after giving pro forma effect to the Santa Elena acquisition, will have acquired over 9,000 net royalty acres to date in 2019. We believe these assets, due to their tier one location and active, well-capitalized operators, will enhance the durability of Viper’s asset base and drive sustained long-term production growth. However, in the near-term, activity on Viper’s asset base is expected to be driven primarily by Diamondback operations as growth across the Permian Basin has slowed. As a result of this broad slowdown, as well as operators now preparing their budgets for 2020, there is currently less visibility into third party operators’ activity levels than in previous quarters and, therefore, Viper is guiding conservatively until we see more clarity on the completion cadence across the basin,” stated Travis Stice, Chief Executive Officer of Viper’s general partner.

Mr. Stice continued, "Importantly, with the Drop Down closed on October 1 and the Santa Elena acquisition expected to close on October 31, Viper will have materially increased its exposure to Diamondback operations in both the Midland and Delaware Basins. Looking ahead to 2020, Viper expects to have a mineral interest in approximately 70% of Diamondback’s planned gross completions, including large scale projects on both ranches to be acquired in the pending Santa Elena acquisition which are expected to begin production in the middle of 2020. Diamondback’s continued focus on developing Viper’s acreage due to the enhanced consolidated returns underscores our confidence in Viper being able to generate sustainable production and distribution growth for the long-term."

For earnings history and earnings-related data on Viper Energy (VNOM) click here.