Viper Energy (NASDAQ: VNOM) reported Q4 EPS of $0.03, $0.14 worse than the analyst estimate of $0.17. Revenue for the quarter came in at $92.71 million versus the consensus estimate of $90.92 million.

FOURTH QUARTER HIGHLIGHTS

• Q4 2019 cash distribution of $0.45 per common unit; implies an 8.1% annualized yield based on the February 7, 2020 unit closing price of $22.11
• Q4 2019 consolidated net income (including non-controlling interest) of $48.5 million, consolidated adjusted EBITDA (as defined and reconciled below) of $85.3 million and cash available for distribution to Viper’s common limited partner units (as reconciled below) of $30.7 million
• Q4 2019 average production of 16,476 bo/d (26,137 boe/d), an increase of 20% from Q3 2019 average daily oil production
• 123 total gross (3.4 net 100% royalty interest) horizontal wells turned to production during Q4 2019 with an average lateral length of 8,895 feet
• Closed nine acquisitions for an aggregate purchase price of approximately $912.9 million in Q4 2019, increasing Viper’s mineral interests to a total of 24,304 net royalty acres at December 31, 2019
• Initiating average production guidance for 1H 2020 of 16,500 to 18,000 bo/d (26,000 to 28,500 boe/d), the midpoint of which is up 5% from Q4 2019 average daily oil production
• Initiating full year 2020 average production guidance of 17,000 to 19,000 bo/d (27,000 to 30,000 boe/d), the midpoint of which is up 28% from full year 2019 average daily oil production
• As of January 15, 2020, there were approximately 497 gross horizontal wells currently in the process of active development on Viper’s acreage, in which Viper expects to own an average 2.0% net royalty interest (9.9 net 100% royalty interest wells)
• Approximately 420 gross (10.4 net 100% royalty interest) line-of-sight wells which are expected to be turned to production on Viper’s acreage within the next 12 to 15 months, but which have not yet begun the process of active development; based on Diamondback’s current completion schedule and third party operators’ permits
• Q3 2019 and Q4 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

“2019 was an important year for Viper as we successfully leveraged our size and scale to acquire more than 9,000 net royalty acres across 108 separate transactions. Critically, these acquisitions more than doubled Viper’s exposure to Diamondback-operated acreage and now provide Viper with concentrated exposure to six of Diamondback’s seven core operating areas. Based on Diamondback’s current completion schedule, Viper expects to have exposure to roughly 70% of Diamondback’s expected 2020 gross completions with an average net revenue interest of greater than 5%, translating to at least 12 Diamondback-operated net 100% royalty interest wells turned to production this year versus less than eight in 2019,” stated Travis Stice, Chief Executive Officer of Viper’s general partner.

Mr. Stice continued, “Outside of Diamondback-operated acreage, we continue to see strong activity levels across our acreage position, as highlighted by 4.2 net 100% royalty interest wells that are currently in the process of active development and a further 2.7 net wells that have been permitted but not yet spud. In an effort to be conservative, we have contemplated slower than normal timing assumptions for both spud-to-first production and permit-to-first production in our production forecast for 2020. Even on that basis, Viper is initiating full year 2020 oil production guidance that implies 28% growth relative to full year 2019 oil production. In a difficult energy landscape, Diamondback’s continued focus on developing Viper’s acreage, as well as exposure to other well-capitalized operators in the best parts of the Permian Basin, underscores our confidence in Viper’s ability to generate significant organic production growth in 2020 and beyond.”

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