Cover
Cover - shares | 9 Months Ended | ||
Sep. 30, 2019 | Oct. 25, 2019 | Dec. 31, 2018 | |
Document Information [Line Items] | |||
Document Type | 10-Q | ||
Document Quarterly Report | true | ||
Document Period End Date | Sep. 30, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 001-36505 | ||
Entity Registrant Name | Viper Energy Partners LP | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 46-5001985 | ||
Entity Address, Address Line One | 500 West Texas | ||
Entity Address, City or Town | Suite 1200 | ||
Entity Address, City or Town | Midland, | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 79701 | ||
City Area Code | 432 | ||
Local Phone Number | 221-7400 | ||
Title of 12(b) Security | Common Units | ||
Trading Symbol | VNOM | ||
Security Exchange Name | NASDAQ | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Units, Units Outstanding | 62,653,583 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | Q3 | ||
Entity Central Index Key | 0001602065 | ||
Current Fiscal Year End Date | --12-31 | ||
Class B Units | |||
Document Information [Line Items] | |||
Limited partners' capital account, units outstanding (in shares) | 72,418,500 | 90,709,946 | 72,418,500 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 19,952 | $ 22,676 |
Royalty income receivable | 43,288 | 38,823 |
Royalty income receivable—related party | 14,033 | 3,489 |
Other current assets | 252 | 257 |
Total current assets | 77,525 | 65,245 |
Property: | ||
Oil and natural gas interests, full cost method of accounting ($1,051,791 and $871,485 excluded from depletion at September 30, 2019 and December 31, 2018, respectively) | 2,036,561 | 1,716,713 |
Land | 5,688 | 5,688 |
Accumulated depletion and impairment | (299,704) | (248,296) |
Property, net | 1,742,545 | 1,474,105 |
Funds held in escrow | 7,500 | 0 |
Deferred tax asset | 157,885 | 96,883 |
Other assets | 21,483 | 17,831 |
Total assets | 2,006,938 | 1,654,064 |
Current liabilities: | ||
Other accrued liabilities | 5,370 | 6,022 |
Total current liabilities | 5,370 | 6,022 |
Long-term debt | 409,500 | 411,000 |
Total liabilities | 414,870 | 417,022 |
Commitments and contingencies (Note 13) | ||
Unitholders’ equity: | ||
General partner | 1,000 | 1,000 |
Common units (62,649,348 units issued and outstanding as of September 30, 2019 and 51,653,956 units issued and outstanding as of December 31, 2018) | 774,815 | 540,112 |
Class B units (72,418,500 units issued and outstanding as of September 30, 2019 and December 31, 2018) | 990 | 990 |
Total Viper Energy Partners LP unitholders’ equity | 776,805 | 542,102 |
Non-controlling interest | 815,263 | 694,940 |
Total equity | 1,592,068 | 1,237,042 |
Total liabilities and unitholders’ equity | $ 2,006,938 | $ 1,654,064 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Oct. 25, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Oil and natural gas interests, based on the full cost method of accounting, amount excluded from depletion | $ 1,051,791 | $ 871,485 | |
Common Units | |||
Limited partners' capital account, units issued (in shares) | 62,649,348 | 51,653,956 | |
Limited partners' capital account, units outstanding (in shares) | 62,649,348 | 51,653,956 | |
Class B Units | |||
Limited partners' capital account, units issued (in shares) | 72,418,500 | 72,418,500 | |
Limited partners' capital account, units outstanding (in shares) | 90,709,946 | 72,418,500 | 72,418,500 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Operating income: | ||||
Royalty income | $ 71,080 | $ 73,497 | $ 201,950 | $ 209,902 |
Lease bonus income | 698 | 4,205 | 3,607 | 5,133 |
Other operating income | 10 | 12 | 15 | 120 |
Total operating income | 71,788 | 77,714 | 205,572 | 215,155 |
Costs and expenses: | ||||
Production and ad valorem taxes | 4,731 | 5,027 | 12,812 | 14,133 |
Depletion | 18,697 | 16,532 | 51,408 | 41,317 |
General and administrative expenses | 1,805 | 1,309 | 5,223 | 6,230 |
Total costs and expenses | 25,233 | 22,868 | 69,443 | 61,680 |
Income from operations | 46,555 | 54,846 | 136,129 | 153,475 |
Other income (expense): | ||||
Interest expense, net | (3,827) | (3,711) | (11,089) | (9,061) |
Gain (loss) on revaluation of investment | 336 | (199) | 3,978 | 5,165 |
Other income, net | 553 | 640 | 1,756 | 1,479 |
Total other expense, net | (2,938) | (3,270) | (5,355) | (2,417) |
Income before income taxes | 43,617 | 51,576 | 130,774 | 151,058 |
Provision for (benefit from) income taxes | (7,480) | 764 | (41,908) | (71,114) |
Net income | 51,097 | 50,812 | 172,682 | 222,172 |
Net income attributable to non-controlling interest | 43,151 | 48,466 | 128,692 | 77,526 |
Net income attributable to Viper Energy Partners LP | $ 7,946 | $ 2,346 | $ 43,990 | $ 144,646 |
Net income attributable to common limited partners per unit: | ||||
Basic (dollars per unit) | $ 0.13 | $ 0.05 | $ 0.73 | $ 1.85 |
Diluted (dollars per unit) | $ 0.13 | $ 0.05 | $ 0.73 | $ 1.85 |
Weighted average number of common limited partner units outstanding: | ||||
Basic (in units) | 62,645 | 48,234 | 60,267 | 78,250 |
Diluted (in units) | 62,678 | 48,304 | 60,296 | 78,319 |
Consolidated Statements of Unit
Consolidated Statements of Unitholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | General Partner | Non-Controlling Interest | Common UnitsLimited Partner | Class B UnitsLimited Partner |
Beginning balance at Dec. 31, 2017 | $ 913,908 | $ 0 | $ 0 | $ 913,908 | $ 0 |
Beginning balance (in shares) at Dec. 31, 2017 | 113,882 | 0 | |||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Unit-based compensation | 1,288 | $ 1,288 | |||
Distributions to public | (18,737) | (18,737) | |||
Distributions to Diamondback | (33,649) | (33,649) | |||
Net income | 42,896 | $ 42,896 | |||
Ending balance (in shares) at Mar. 31, 2018 | 113,882 | 0 | |||
Ending balance at Mar. 31, 2018 | 887,055 | 0 | 0 | $ 887,055 | $ 0 |
Beginning balance at Dec. 31, 2017 | 913,908 | 0 | 0 | $ 913,908 | $ 0 |
Beginning balance (in shares) at Dec. 31, 2017 | 113,882 | 0 | |||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Net income | 222,172 | ||||
Ending balance (in shares) at Sep. 30, 2018 | 51,654 | 72,419 | |||
Ending balance at Sep. 30, 2018 | 1,267,767 | 1,000 | 695,550 | $ 570,227 | $ 990 |
Beginning balance at Mar. 31, 2018 | 887,055 | 0 | 0 | $ 887,055 | $ 0 |
Beginning balance (in shares) at Mar. 31, 2018 | 113,882 | 0 | |||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Unit exchange related to tax conversion, units | (73,150) | 73,150 | |||
Unit exchange related to tax conversion | 2,000 | 1,000 | 545,441 | $ (545,441) | $ 1,000 |
Recapitalization related to tax conversion, units | 732 | (732) | |||
Recapitalization related to tax conversion | (10) | $ (10) | |||
Unit-based compensation, units | 7 | ||||
Unit-based compensation | 452 | $ 452 | |||
Distributions to public | (19,551) | (19,551) | |||
Distributions to Diamondback | (35,112) | (35,112) | |||
Net income | 128,464 | 29,060 | $ 99,404 | ||
Ending balance (in shares) at Jun. 30, 2018 | 41,471 | 72,419 | |||
Ending balance at Jun. 30, 2018 | 963,298 | 1,000 | 574,501 | $ 386,807 | $ 990 |
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Net proceeds from the issuance of common units - public, units | 10,080 | ||||
Net proceeds from the issuance of common units - public | 305,773 | $ 305,773 | |||
Offering costs | (2,636) | $ (2,636) | |||
Unit-based compensation, units | 96 | ||||
Unit-based compensation | 426 | $ 426 | |||
Unit options exercised, units | 8 | ||||
Unit options exercised | 140 | $ 140 | |||
Distributions to public | (30,501) | (30,501) | |||
Distributions to Diamondback | (43,901) | (43,451) | (450) | ||
Distributions to General Partner | (11) | (11) | |||
Change in ownership of consolidated subsidiaries, net | 24,367 | 116,034 | (91,667) | ||
Net income | 50,812 | 48,466 | $ 2,346 | ||
Ending balance (in shares) at Sep. 30, 2018 | 51,654 | 72,419 | |||
Ending balance at Sep. 30, 2018 | 1,267,767 | 1,000 | 695,550 | $ 570,227 | $ 990 |
Beginning balance at Dec. 31, 2018 | 1,237,042 | 1,000 | 694,940 | $ 540,112 | $ 990 |
Beginning balance (in shares) at Dec. 31, 2018 | 51,654 | 72,419 | |||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Net proceeds from the issuance of common units - public, units | 10,925 | ||||
Net proceeds from the issuance of common units - public | 340,648 | $ 340,648 | |||
Unit-based compensation, units | 60 | ||||
Unit-based compensation | 405 | $ 405 | |||
Distributions to public | (25,970) | (25,970) | |||
Distributions to Diamondback | (37,326) | (36,934) | (392) | ||
Distributions to General Partner | (20) | (20) | |||
Change in ownership of consolidated subsidiaries, net | 18,925 | 90,120 | $ (71,195) | ||
Units repurchased for tax withholding, units | (11) | ||||
Units repurchased for tax withholding, dollars | (353) | $ (353) | |||
Net income | 74,311 | 40,532 | $ 33,779 | ||
Ending balance (in shares) at Mar. 31, 2019 | 62,628 | 72,419 | |||
Ending balance at Mar. 31, 2019 | 1,607,662 | 1,000 | 788,658 | $ 817,014 | $ 990 |
Beginning balance at Dec. 31, 2018 | 1,237,042 | 1,000 | 694,940 | $ 540,112 | $ 990 |
Beginning balance (in shares) at Dec. 31, 2018 | 51,654 | 72,419 | |||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Net income | 172,682 | ||||
Ending balance (in shares) at Sep. 30, 2019 | 62,649 | 72,419 | |||
Ending balance at Sep. 30, 2019 | 1,592,068 | 1,000 | 815,263 | $ 774,815 | $ 990 |
Beginning balance at Mar. 31, 2019 | 1,607,662 | 1,000 | 788,658 | $ 817,014 | $ 990 |
Beginning balance (in shares) at Mar. 31, 2019 | 62,628 | 72,419 | |||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Offering costs | (9) | $ (9) | |||
Unit-based compensation | 472 | 472 | |||
Distributions to public | (23,521) | (23,521) | |||
Distributions to Diamondback | (27,817) | (27,519) | (298) | ||
Distributions to General Partner | (20) | (20) | |||
Net income | 47,274 | 45,009 | $ 2,265 | ||
Ending balance (in shares) at Jun. 30, 2019 | 62,628 | 72,419 | |||
Ending balance at Jun. 30, 2019 | 1,604,041 | 1,000 | 806,148 | $ 795,903 | $ 990 |
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Unit-based compensation, units | 21 | ||||
Unit-based compensation | 449 | $ 449 | |||
Distributions to public | (29,099) | (29,099) | |||
Distributions to Diamondback | (34,400) | (34,036) | (364) | ||
Distributions to General Partner | (20) | (20) | |||
Net income | 51,097 | 43,151 | $ 7,946 | ||
Ending balance (in shares) at Sep. 30, 2019 | 62,649 | 72,419 | |||
Ending balance at Sep. 30, 2019 | $ 1,592,068 | $ 1,000 | $ 815,263 | $ 774,815 | $ 990 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 172,682 | $ 222,172 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Benefit from deferred income taxes | (42,077) | (71,184) |
Depletion | 51,408 | 41,317 |
Gain on revaluation of investment | (3,978) | (5,165) |
Amortization of debt issuance costs | 676 | 521 |
Non-cash unit-based compensation | 1,326 | 2,166 |
Changes in operating assets and liabilities: | ||
Royalty income receivable | (4,465) | (12,264) |
Royalty income receivable—related party | (10,544) | (2,616) |
Accounts payable and other accrued liabilities | (821) | 1,315 |
Income tax payable | 169 | 69 |
Other current assets | (148) | 83 |
Net cash provided by operating activities | 164,228 | 176,414 |
Cash flows from investing activities: | ||
Acquisition of oil and natural gas interests | (319,696) | (505,842) |
Other | 0 | (4,687) |
Funds held in escrow | (7,500) | 0 |
Proceeds from sale of assets | 0 | 441 |
Proceeds from the sale of investments | 0 | 124 |
Net cash used in investing activities | (327,196) | (509,964) |
Cash flows from financing activities: | ||
Proceeds from borrowings under credit facility | 368,000 | 557,000 |
Repayment on credit facility | (369,500) | (354,000) |
Debt issuance costs | (349) | (623) |
Proceeds from public offerings | 340,860 | 305,773 |
Public offering costs | (221) | (2,636) |
Proceeds from exercise of unit options | 0 | 140 |
Contributions by members | 0 | 2,000 |
Units purchased for tax withholding | (353) | 0 |
Distributions to partners | (178,193) | (181,472) |
Net cash provided by financing activities | 160,244 | 326,182 |
Net decrease in cash | (2,724) | (7,368) |
Cash and cash equivalents at beginning of period | 22,676 | 24,197 |
Cash and cash equivalents at end of period | 19,952 | 16,829 |
Supplemental disclosure of cash flow information: | ||
Interest paid | $ 10,882 | $ 8,147 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | ORGANIZATION AND BASIS OF PRESENTATION Organization Viper Energy Partners LP (the “Partnership”) is a publicly traded Delaware limited partnership, the common units of which are listed on the Nasdaq Global Select Market under the symbol “VNOM”. The Partnership was formed by Diamondback Energy, Inc. (“Diamondback”) on February 27, 2014 to, among other things, own, acquire and exploit oil and natural gas properties in North America. The Partnership is currently focused on oil and natural gas properties in the Permian Basin and Eagle Ford Shale. Unless the context requires otherwise, references to “we,” “us,” “our” or “the Partnership” are intended to mean the business and operations of the Partnership and its consolidated subsidiary, Viper Energy Partners LLC (the “Operating Company”). As of September 30, 2019 , Viper Energy Partners GP LLC (the “General Partner”), held a 100% general partner interest in the Partnership and Diamondback had an approximate 54% limited partner interest in the Partnership. Diamondback owns and controls the General Partner. Immediately following the completion of the Drop-Down Acquisition on October 1, 2019, Diamondback owned 731,500 common units and 90,709,946 Class B units, representing approximately 60% of the Partnership’s total units outstanding. See Note 4 — Acquisitions and Note 14 — Subsequent Events for additional information regarding this transaction. Recapitalization, Tax Status Election and Related Transactions In March 2018, the Board of Directors of the General Partner unanimously approved a change of the Partnership’s federal income tax status from that of a pass-through partnership to that of a taxable entity via a “check the box” election. In connection with making this election, on May 9, 2018 the Partnership (i) amended and restated its First Amended and Restated Partnership Agreement, (ii) amended and restated the First Amended and Restated Limited Liability Company Agreement of the Operating Company, (iii) amended and restated its existing registration rights agreement with Diamondback and (iv) entered into an exchange agreement with Diamondback, the General Partner and the Operating Company. Simultaneously with the effectiveness of these agreements, Diamondback delivered and assigned to the Partnership the 73,150,000 common units Diamondback owned in exchange for (i) 73,150,000 of the Partnership’s newly-issued Class B units and (ii) 73,150,000 newly-issued units of the Operating Company pursuant to the terms of a Recapitalization Agreement dated March 28, 2018, as amended as of May 9, 2018 (the “Recapitalization Agreement”). Immediately following that exchange, the Partnership continued to be the managing member of the Operating Company, with sole control of its operations, and owned approximately 36% of the outstanding units issued by the Operating Company, and Diamondback owned the remaining approximately 64% of the outstanding units issued by the Operating Company. Upon completion of the Partnership’s July 2018 offering of units, it owned approximately 41% of the outstanding units issued by the Operating Company and Diamondback owned the remaining approximately 59% . The Operating Company units and the Partnership’s Class B units owned by Diamondback are exchangeable from time to time for the Partnership’s common units (that is, one Operating Company unit and one Partnership Class B unit, together, will be exchangeable for one Partnership common unit). On May 10, 2018, the change in the Partnership’s income tax status became effective. On that date, pursuant to the terms of the Recapitalization Agreement, (i) the General Partner made a cash capital contribution of $1.0 million to the Partnership in respect of its general partner interest and (ii) Diamondback made a cash capital contribution of $1.0 million to the Partnership in respect of the Class B units. Diamondback, as the holder of the Class B units, and the General Partner, as the holder of the general partner interest, are entitled to receive an 8% annual distribution on the outstanding amount of these capital contributions, payable quarterly, as a return on this invested capital. On May 10, 2018, Diamondback also exchanged 731,500 Class B units and 731,500 units in the Operating Company for 731,500 common units of the Partnership and a cash amount of $10,000 representing a proportionate return of the $1.0 million invested capital in respect of the Class B units. The General Partner continues to serve as the Partnership’s general partner and Diamondback continues to control the Partnership. After the effectiveness of the tax status election and the completion of related transactions, the Partnership’s minerals business continues to be conducted through the Operating Company, which continues to be taxed as a partnership for federal and state income tax purposes. This structure is anticipated to provide significant benefits to the Partnership’s business, including operational effectiveness, acquisition and disposition transactional planning flexibility and income tax efficiency. For additional information regarding the tax status election and related transactions, please refer to the Partnership’s Definitive Information Statement on Schedule 14C filed with the SEC on April 17, 2018 and the Partnership’s Current Report on Form 8-K filed with the SEC on May 15, 2018. Basis of Presentation The accompanying consolidated financial statements and related notes thereto were prepared in conformity with GAAP. All material intercompany balances and transactions are eliminated in consolidation. These financial statements have been prepared by the Partnership without audit, pursuant to the rules and regulations of the SEC. They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations, although the Partnership believes the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10–Q should be read in conjunction with the Partnership’s most recent Annual Report on Form 10–K for the fiscal year ended December 31, 2018 , which contains a summary of the Partnership’s significant accounting policies and other disclosures. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates Certain amounts included in or affecting the Partnership’s financial statements and related disclosures must be estimated by management, requiring certain assumptions to be made with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared. These estimates and assumptions affect the amounts the Partnership reports for assets and liabilities and the Partnership’s disclosure of contingent assets and liabilities at the date of the financial statements. The Partnership evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Partnership considers reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from the Partnership’s estimates. Any effects on the Partnership’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas interests and unit–based compensation. Investments The Partnership has an equity interest in a limited partnership that is so minor that the Partnership has no influence over the limited partnership’s operating and financial policies. This interest was acquired during the year ended December 31, 2014 and was accounted for under the cost method. This investment is presented on the balance sheet as other long-term assets. Effective January 1, 2018, the Partnership adopted Accounting Standards Update (“ASU”) 2016-01 which requires the Partnership to measure this investment at fair value which resulted in a downward adjustment of $18.7 million to record the impact of this adoption. See Note 12 — Fair Value Measurements for additional disclosure regarding the impact of the fair value measurement of this investment. Income Taxes The Partnership uses the asset and liability method of accounting for income taxes, under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and (ii) operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are based on enacted tax rates applicable to the future period when those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period the rate change is enacted. A valuation allowance is provided for deferred tax assets when it is more likely than not the deferred tax assets will not be realized. The Partnership is subject to margin tax in the state of Texas pursuant to a tax sharing agreement with Diamondback, as discussed further in Note 7 — Related Party Transactions . In addition to the 2018 tax year, the Partnership’s 2016 and 2017 tax years, periods during which the Partnership was organized as a pass-through entity for income tax purposes, remain open to examination by tax authorities. As of September 30, 2019 , the Partnership had no unrecognized tax benefits that would have a material impact on the effective tax rate. The Partnership is continuing its practice of recognizing interest and penalties related to income tax matters as interest expense and general and administrative expenses, respectively. During the three and nine months ended September 30, 2019 , there was no interest or penalties associated with uncertain tax positions recognized in the Partnership’s consolidated financial statements. New Accounting Pronouncements Recently Adopted Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases”. This update applies to any entity that enters into a lease, with some specified scope exemptions. Under this update, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. While there were no major changes to the lessor accounting, changes were made to align key aspects with the revenue recognition guidance. This update was effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Entities were required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. As of September 30, 2019 , the Partnership was not the lessor or lessee of any leases other than mineral leases which were excluded from the scope of this ASU. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In January 2018, the FASB issued ASU 2018-01, “Leases - Land Easement Practical Expedient for Transition to Topic 842”. This update applies to any entity that holds land easements. The update allows entities to adopt a practical expedient to not evaluate existing or expired land easements under Topic 842 that were not previously accounted for as leases under the current leases guidance. An entity that elects this practical expedient should evaluate new or modified land easements under Topic 842 beginning at the date that the entity adopts Topic 842. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases”. This update provides clarification and corrects unintended application of certain sections in the new lease guidance. This update was effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In July 2018, the FASB issued ASU 2018-11, “Lease (Topic 842): Targeted Improvements”. This update provides another transition method of allowing entities to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. This update was effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In December 2018, the FASB issued ASU 2018-20, “Leases (Topic 842) - Narrow-Scope Improvements for Lessors”. This update provides a practical expedient for lessors to elect not to evaluate whether sales taxes and other similar taxes are lessor costs. The update also requires a lessor to exclude from variable payments those costs paid directly by the lessee to third parties and include lessor costs paid by the lessor and reimbursed by the lessee. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In January 2019, the FASB issued ASU 2019-01, “Leases (Topic 842): Codification Improvements”. This update clarifies certain presentation and transition disclosures under Topic 842. This update was effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In June 2018, the FASB issued ASU 2018-07, “Stock Compensation - Improvements to Nonemployee Share-Based Payment Accounting”. This update applies the existing employee guidance to nonemployee share-based transactions, with the exception of specific guidance related to the attribution of compensation cost. This update was effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In July 2018, the FASB issued ASU 2018-09, “Codification Improvements”. This update provides clarification and corrects unintended application of the guidance in various sections. This update was effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In July 2019, the FASB issued ASU 2019-07, “Codification Updates to SEC Sections”. This update simplifies the guidance in various sections that was duplicative, redundant or outdated. The Partnership adopted this update effective July 2019. It did not have a material impact on its financial position, results of operations or liquidity. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses”. This update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from the scope that have the contractual right to receive cash. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This update will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Partnership does not believe the adoption of this standard will have an impact on its financial statements since it does not have a history of credit losses. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”. This update clarifies that receivables arising from operating leases are not in scope of this topic, but rather Topic 842, Leases. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This update will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Partnership does not believe the adoption of this standard will have an impact on its financial statements since it does not have a history of credit losses. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”. This update clarifies guidance previously issued in ASU 2016-01, ASU 2016-13 and ASU 2017-12. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Partnership does not believe the updates to the referenced standards will have an impact on its financial position, results of operations or liquidity. In May 2019, the FASB issued ASU 2019-05, “Financial Instruments-Credit Losses (Topic 326)”. This update allows a fair value option to be elected for certain financial assets, other than held-to-maturity debt securities, that were previously required to be measured at amortized cost basis. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Partnership does not believe the adoption of this standard will have an impact on its financial position, results of operations or liquidity. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”. This update modifies the fair value measurement disclosure requirements specifically related to Level 3 fair value measurements and transfers between levels. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This update will be applied prospectively. The Partnership does not believe the adoption of this standard will have an impact on its financial position, results of operations or liquidity. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS Effective January 1, 2018, the Partnership adopted the FASB ASU 2014-09, “Revenue from Contracts with Customers” using the modified retrospective method. The adoption of this standard did not result in a cumulative-effect adjustment. Royalty income represents the right to receive revenues from oil, natural gas and natural gas liquids sales obtained by the operator of the wells in which the Partnership owns a royalty interest. Royalty income is recognized at the point control of the product is transferred to the purchaser. Virtually all of the Partnership’s contracts’ pricing provisions are tied to a market index. Royalty income from oil, natural gas and natural gas liquids sales The Partnership’s oil, natural gas and natural gas liquids sales contracts are generally structured whereby the producer of the properties in which the Partnership owns a royalty interest sells the Partnership’s proportionate share of oil, natural gas and natural gas liquids production to the purchaser and the Partnership collects its percentage royalty based on the revenue generated by the sale of the oil, natural gas and natural gas liquids. In this scenario, the Partnership recognizes revenue when control transfers to the purchaser or operator at the wellhead or at the gas processing facility based on the Partnership’s percentage ownership share of the revenue, net any deductions for gathering and transportation. Transaction price allocated to remaining performance obligations The Partnership’s right to royalty income does not originate until production occurs and, therefore, is not considered to exist beyond each days’ production. Therefore, there are no remaining performance obligations under any of the Partnership’s royalty income contracts. Contract balances Under the Partnership’s royalty income contracts, it would have the right to receive royalty income once production has occurred, at which point payment is unconditional. Accordingly, the Partnership’s royalty income contracts do not give rise to contract assets or liabilities under Accounting Standards Codification 606. Prior-period performance obligations The Partnership records revenue in the month production is delivered. However, settlement statements for certain natural gas and natural gas liquids sales may not be received for 30 to 90 days after the date production is delivered, and as a result, the Partnership is required to estimate the amount of royalty income to be received based upon the Partnership’s interest. The Partnership records the differences between its estimates and the actual amounts received for royalties in the month that payment is received from the producer. The Partnership has existing internal controls for its revenue estimation process and related accruals, and any identified differences between its revenue estimates and actual revenue received historically have not been significant. For the three and nine months ended September 30, 2019 , revenue recognized in the reporting period related to performance obligations satisfied in prior reporting periods was not material. The Partnership believes that the pricing provisions of its oil, natural gas and natural gas liquids contracts are customary in the industry. To the extent actual volumes and prices of oil and natural gas sales are unavailable for a given reporting period because of timing or information not received from third parties, the royalties related to expected sales volumes and prices for those properties are estimated and recorded. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS 2019 Activity Drop-Down Acquisition On July 29, 2019, the Partnership entered into a definitive purchase agreement to acquire certain mineral and royalty interests from subsidiaries of Diamondback for approximately 18.3 million of its newly-issued Class B units, approximately 18.3 million newly-issued units of the Operating Company and $190.2 million in cash, after giving effect to closing adjustments for net title benefits (the ‘‘Drop-Down Acquisition’’). Based on the volume weighted average sales price of our common units for the ten trading-day period ended July 26, 2019 of $30.07 , the transaction is valued at $740.2 million . The mineral and royalty interests acquired in the Drop-Down Acquisition represent approximately 5,490 net royalty acres across the Midland and Delaware Basins, of which over 95% are operated by Diamondback, and have an average net royalty interest of approximately 3.2% (the ‘‘Drop-Down Assets’’). The Drop-Down Assets are concentrated in Diamondback’s seven core operating areas, with the largest exposure to Spanish Trail North, where Diamondback is currently running two rigs, as well as Pecos County, where Diamondback is currently running six rigs. The Partnership completed the acquisition on October 1, 2019 and funded the cash portion of the purchase price for the Drop-Down Assets through a combination of cash on hand and borrowings under the Operating Company’s revolving credit facility. In connection with the closing of the Drop-Down Acquisition on October 1, 2019, the borrowing base under the Operating Company’s revolving credit facility was increased by $125.0 million to $725.0 million from $600.0 million . Other Recent Acquisitions In addition, during the three months ended September 30, 2019 , the Partnership acquired, from unrelated third-party sellers, mineral interests representing 101,520 gross ( 1,281 net royalty) acres in the Permian Basin for an aggregate of approximately $193.6 million , subject to post-closing adjustments. These acquisitions were funded with cash on hand and borrowings under the Operating Company’s revolving credit facility. During the nine months ended September 30, 2019 , the Partnership acquired, from unrelated third parties, mineral interests underlying 2,309 net royalty acres for an aggregate purchase price of approximately $320.5 million and, as of September 30, 2019 , had mineral interests underlying 17,151 net royalty acres. The Partnership funded these acquisitions with cash on hand, a portion of the net proceeds from its first quarter 2019 offering of common units and borrowings under the Operating Company’s revolving credit facility. As a result of the Drop-Down Acquisition and the other recently completed acquisitions described above (collectively, the ‘‘Recent Acquisitions’’), as of October 15, 2019, the Partnership’s assets included mineral interests representing 22,641 net royalty acres in the Permian Basin and the Eagle Ford Shale, 51% of which are operated by Diamondback. Pending Santa Elena Acquisition On September 9, 2019, the Partnership and the Operating Company entered into a definitive purchase and sale agreement (the ‘‘Santa Elena Purchase and Sale Agreement’’) with Santa Elena Minerals, LP, an unrelated third-party seller (‘‘Santa Elena’’), providing for an acquisition by the Partnership of certain mineral and royalty interests from Santa Elena (the ‘‘Pending Santa Elena Acquisition’’), which assets will be immediately contributed by the Partnership to the Operating Company at closing of the Pending Santa Elena Acquisition. The assets being acquired in the Pending Santa Elena Acquisition represent approximately 1,358 net royalty acres across the Midland Basin with an average net royalty interest of approximately 5.6% and are primarily operated by Diamondback in Glasscock and Martin counties (the ‘‘Santa Elena Assets’’). The Pending Santa Elena Acquisition is expected to close on October 31, 2019, subject to the completion of due diligence and the satisfaction of customary closing conditions, and will have an effective date of October 1, 2019. At closing, the Partnership will issue to Santa Elena common units representing limited partner interests in the Partnership as consideration for the Santa Elena Assets, and the Operating Company will issue to the Partnership new units of the Operating Company, in each case in a number equal to the quotient of (a) $150.0 million (as adjusted pursuant to the Santa Elena Purchase and Sale Agreement) divided by (b) $29.02 , which represents the volume weighted average sale prices as traded on Nasdaq of the Partnership’s common units calculated for the five trading-day period ended September 5, 2019. Assuming no adjustments to the purchase price, Santa Elena would receive approximately 5.2 million common units. With respect to the common units it receives under the Santa Elena Purchase and Sale Agreement, Santa Elena has agreed to waive its right to receive any distributions for which the record date falls in the fourth quarter of 2019. 2018 Activity During the nine months ended September 30, 2018 , the Partnership acquired from unrelated third parties mineral interests underlying 2,651 net royalty acres for an aggregate purchase price of approximately $521.2 million and, as of September 30, 2018 , had mineral interests underlying 13,908 net royalty acres. The Partnership funded these acquisitions with cash on hand and borrowings under its revolving credit facility. |
OIL AND NATURAL GAS INTERESTS
OIL AND NATURAL GAS INTERESTS | 9 Months Ended |
Sep. 30, 2019 | |
Extractive Industries [Abstract] | |
OIL AND NATURAL GAS INTERESTS | OIL AND NATURAL GAS INTERESTS Oil and natural gas interests include the following: September 30, December 31, 2019 2018 (in thousands) Oil and natural gas interests: Subject to depletion $ 984,770 $ 845,228 Not subject to depletion 1,051,791 871,485 Gross oil and natural gas interests 2,036,561 1,716,713 Accumulated depletion and impairment (299,704 ) (248,296 ) Oil and natural gas interests, net 1,736,857 1,468,417 Land 5,688 5,688 Property, net of accumulated depletion and impairment $ 1,742,545 $ 1,474,105 Balance of costs not subject to depletion: Incurred in 2019 $ 267,930 Incurred in 2018 462,630 Incurred in 2017 284,371 Incurred in 2016 36,860 Total not subject to depletion $ 1,051,791 Costs associated with unevaluated interests are excluded from the full cost pool until a determination as to the existence of proved reserves is able to be made. The inclusion of the Partnership’s unevaluated costs into the amortization base is expected to be completed within three years to five years . |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The Operating Company’s Revolving Credit Facility On July 20, 2018, the Partnership, as guarantor, entered into an amended and restated credit agreement with the Operating Company, as borrower, Wells Fargo National Bank (“Wells Fargo”), as administrative agent, and the other lenders. The credit agreement, as amended to the date hereof, provides for a revolving credit facility in the maximum credit amount of $2.0 billion and a borrowing base based on the Operating Company’s oil and natural gas reserves and other factors (the ‘‘borrowing base’’) of $725.0 million , subject to scheduled semi-annual and other borrowing base redeterminations. The borrowing base is scheduled to be re-determined semi-annually with effective dates of May 1st and November 1st. In addition, the Operating Company and Wells Fargo each may request up to three interim redeterminations of the borrowing base during any 12 -month period. Upon closing of the Drop-Down Acquisition on October 1, 2019, the borrowing base under the Operating Company’s revolving credit facility was increased by $125.0 million to $725.0 million from $600.0 million . In connection with the commencement of the Notes Offering described in Note 14 — Subsequent Events below, the Partnership entered into a third amendment to the Operating Company’s revolving credit facility with Wells Fargo, as administrative agent, and certain required lenders party thereto, which provides for the waiver of the automatic reduction of the borrowing base that would otherwise occur upon the consummation of the Notes Offering. In addition, the third amendment increased the maximum amount of unsecured senior or senior subordinated notes that may be issued by the Operating Company or the Partnership from $400.0 million to $1.0 billion . The amendment was approved by the requisite percentage of lenders under the revolving credit facility and became effective on October 8, 2019. If the amendment had not been approved, the borrowing base under the revolving credit facility would have decreased by $125.0 million upon consummation of the Notes Offering. As of September 30, 2019, when the borrowing base was set at $600.0 million , the Operating Company had $409.5 million of outstanding borrowings and $190.5 million available for future borrowings under the Operating Company’s revolving credit facility. The Partnership funded the cash portion of the purchase price for the Drop-Down Acquisition through a combination of cash on hand and borrowings under the Operating Company’s revolving credit facility. The Operating Company used the proceeds from the Notes Offering to pay down borrowings under its revolving credit facility. Following these transactions, as of October 16, 2019, the closing date of the Notes Offering, there was $94.5 million in outstanding borrowings under the Operating Company’s revolving credit facility, the borrowing base under the Operating Company’s revolving credit facility was $725.0 million , and the Operating Company had $630.5 million of available borrowing capacity under the Operating Company’s revolving credit facility. Additionally, in connection with the Partnership’s fall redetermination expected to occur in November 2019, the lead bank under the Operating Company’s revolving credit facility has recommended a borrowing base increase to $775.0 million from the current borrowing base of $725.0 million . The anticipated increase in the borrowing base is subject to approval by the requisite lenders under the Operating Company’s revolving credit facility. The outstanding borrowings under the credit agreement bear interest at a rate elected by the Operating Company that is equal to an alternative base rate (which is equal to the greatest of the prime rate, the Federal Funds effective rate plus 0.50% and 3 -month LIBOR plus 1.0% ) or LIBOR, in each case plus the applicable margin. The applicable margin ranges from 0.75% to 1.75% per annum in the case of the alternative base rate and from 1.75% to 2.75% per annum in the case of LIBOR, in each case depending on the amount of loans and letters of credit outstanding in relation to the commitment, which is defined as the lesser of the maximum credit amount and the borrowing base. The Operating Company is obligated to pay a quarterly commitment fee ranging from 0.375% to 0.500% per year on the unused portion of the commitment, which fee is also dependent on the amount of loans and letters of credit outstanding in relation to the commitment. Loan principal may be optionally repaid from time to time without premium or penalty (other than customary LIBOR breakage), and is required to be repaid (a) to the extent the loan amount exceeds the commitment or the borrowing base, whether due to a borrowing base redetermination or otherwise (in some cases subject to a cure period), (b) in an amount equal to the net cash proceeds from the sale of property when a borrowing base deficiency or event of default exists under the credit agreement and (c) at the maturity date of November 1, 2022. The loan is secured by substantially all of the assets of the Partnership and the Operating Company. The credit agreement contains various affirmative, negative and financial maintenance covenants. These covenants, among other things, limit additional indebtedness, additional liens, sales of assets, mergers and consolidations, dividends and distributions, transactions with affiliates and entering into certain swap agreements, and require the maintenance of the financial ratios described below: Financial Covenant Required Ratio Ratio of total net debt to EBITDAX, as defined in the credit agreement Not greater than 4.0 to 1.0 Ratio of current assets to liabilities, as defined in the credit agreement Not less than 1.0 to 1.0 The covenant prohibiting additional indebtedness allows for the issuance of unsecured debt of up to $400.0 million in the form of senior unsecured notes and, in connection with any such issuance, the reduction of the borrowing base by 25% of the stated principal amount of each such issuance. A borrowing base reduction in connection with such issuance may require a portion of the outstanding principal of the loan to be repaid. As of September 30, 2019 , the Operating Company was in compliance with the financial covenants under its credit agreement. The lenders may accelerate all of the indebtedness under the revolving credit facility upon the occurrence and during the continuance of any event of default. The credit agreement contains customary events of default, including non-payment, breach of covenants, materially incorrect representations, cross-default, bankruptcy and change of control. With certain specified exceptions, the terms and provisions of the credit agreement generally may be amended with the consent of the lenders holding a majority of the outstanding loans or commitments to lend. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Partnership Agreement The second amended and restated agreement of limited partnership, dated as of May 9, 2018, as amended as of May 10, 2018 (the “Partnership Agreement”), requires the Partnership to reimburse the General Partner for all direct and indirect expenses incurred or paid on the Partnership’s behalf and all other expenses allocable to the Partnership or otherwise incurred by the General Partner in connection with operating the Partnership’s business. The Partnership Agreement does not set a limit on the amount of expenses for which the General Partner and its affiliates may be reimbursed. These expenses include salary, bonus, incentive compensation and other amounts paid to persons who perform services for the Partnership or on the Partnership’s behalf and expenses allocated to the General Partner by its affiliates. The General Partner is entitled to determine the expenses that are allocable to the Partnership. For the three months ended September 30, 2019 and 2018 , the General Partner allocated $0.9 million and $0.6 million , respectively, to the Partnership. For the nine months ended September 30, 2019 and 2018 , the General Partner allocated $2.2 million and $1.8 million , respectively, to the Partnership. Advisory Services Agreement In connection with the closing of the IPO, the Partnership and General Partner entered into an advisory services agreement with Wexford Capital LP (“Wexford”) dated as of June 23, 2014 (the “Advisory Services Agreement”), under which Wexford provided the Partnership and the General Partner with general financial and strategic advisory services related to the Partnership’s business in return for an annual fee of $0.5 million , plus reasonable out-of-pocket expenses. The Advisory Services Agreement was terminated on November 12, 2018 and the Partnership’s payment obligation ended in June 2019. During 2019, the Partnership did no t pay any amounts under the Advisory Services Agreement. For the three and nine months ended September 30, 2018 , the Partnership did no t pay any amounts under the Advisory Services Agreement. Tax Sharing In connection with the closing of the IPO, the Partnership entered into a tax sharing agreement with Diamondback, dated June 23, 2014, pursuant to which the Partnership agreed to reimburse Diamondback for its share of state and local income and other taxes for which the Partnership’s results are included in a combined or consolidated tax return filed by Diamondback with respect to taxable periods including or beginning on June 23, 2014. The amount of any such reimbursement is limited to the tax the Partnership would have paid had it not been included in a combined group with Diamondback. Diamondback may use its tax attributes to cause its combined or consolidated group, of which the Partnership may be a member for this purpose, to owe less or no tax. In such a situation, the Partnership agreed to reimburse Diamondback for the tax the Partnership would have owed had the tax attributes not been available or used for the Partnership’s benefit, even though Diamondback had no cash tax expense for that period. For the three months ended September 30, 2019 and 2018 , the Partnership accrued state income tax expense (benefit) of less than $0.1 million and $(0.1) million , respectively, and for the nine months ended September 30, 2019 and 2018 , the Partnership accrued state income tax expense of $0.2 million and $0.1 million , respectively, for its share of Texas margin tax for which the Partnership’s results are included in a combined tax return filed by Diamondback. Lease Bonus During the three months ended September 30, 2019 , Diamondback did no t pay the Partnership any lease bonus payments. During the nine months ended September 30, 2019 , Diamondback paid the Partnership $39,198 in lease bonus payments to extend the term of two leases and $3,101 in lease bonus payments for two new leases. During the three and nine months ended September 30, 2018 , Diamondback paid the Partnership $2.9 million in lease bonus payments to extend the term of 12 leases. |
UNIT-BASED COMPENSATION
UNIT-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
UNIT-BASED COMPENSATION | UNIT-BASED COMPENSATION In connection with the IPO, the board of directors of the General Partner adopted the Viper Energy Partners LP Long Term Incentive Plan (“LTIP”), effective June 17, 2014, for employees, officers, consultants and directors of the General Partner and any of its affiliates, including Diamondback, who perform services for the Partnership. The LTIP provides for the grant of unit options, unit appreciation rights, restricted units, unit awards, phantom units, distribution equivalent rights, cash awards, performance awards, other unit-based awards and substitute awards. As of September 30, 2019 , a total of 8,922,726 common units had been reserved for issuance pursuant to the LTIP. Common units that are cancelled, forfeited or withheld to satisfy exercise prices or tax withholding obligations will be available for delivery pursuant to other awards. The LTIP is administered by the board of directors of the General Partner or a committee thereof. For the three and nine months ended September 30, 2019 , the Partnership incurred $0.4 million and $1.3 million , respectively, of unit–based compensation. Phantom Units Under the LTIP, the board of directors of the General Partner is authorized to issue phantom units to eligible employees and non-employee directors. The Partnership estimates the fair value of phantom units as the closing price of the Partnership’s common units on the grant date of the award, which is expensed over the applicable vesting period. Upon vesting the phantom units entitle the recipient to one common unit of the Partnership for each phantom unit. The following table presents the phantom unit activity under the LTIP for the nine months ended September 30, 2019 : Phantom Weighted Average Unvested at December 31, 2018 125,053 $ 23.44 Granted 33,886 $ 32.78 Vested (81,124 ) $ 23.34 Forfeited (1,028 ) $ 42.50 Unvested at September 30, 2019 76,787 $ 27.42 The aggregate fair value of phantom units that vested during the nine months ended September 30, 2019 was $1.9 million . As of September 30, 2019 , the unrecognized compensation cost related to unvested phantom units was $1.3 million . Such cost is expected to be recognized over a weighted-average period of 0.81 years . |
UNITHOLDERS_ EQUITY AND PARTNER
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS | UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS The Partnership has general partner and limited partner units. At September 30, 2019 , the Partnership had a total of 62,649,348 common units issued and outstanding and 72,418,500 Class B units issued and outstanding, of which 731,500 common units and 72,418,500 Class B units were owned by Diamondback, representing approximately 54% of the total Partnership’s units outstanding. The Operating Company units and the Partnership’s Class B units owned by Diamondback are exchangeable from time to time for the Partnership’s common units (that is, one Operating Company unit and one Partnership Class B unit, together, will be exchangeable for one Partnership common unit). The following table summarizes changes in the number of the Partnership’s common units: Common Units Balance at December 31, 2018 51,653,956 Common units issued in public offerings 10,925,000 Common units vested and issued under the LTIP 81,124 Units repurchased for tax withholding (10,732 ) Balance at September 30, 2019 62,649,348 The Partnership had a total of 72,418,500 Class B units outstanding as of September 30, 2019 and December 31, 2018 , respectively. In March 2019, the Partnership completed an underwritten public offering of 10,925,000 common units, which included 1,425,000 common units issued pursuant to an option to purchase additional common units granted to the underwriters. Following this offering, Diamondback owned approximately 54% of the total Partnership units then outstanding. The Partnership received net proceeds from this offering of approximately $340.6 million , after deducting underwriting discounts and commissions and offering expenses. The Partnership used the net proceeds to purchase units of the Operating Company. The Operating Company in turn used the net proceeds to repay a portion of the outstanding borrowings under the revolving credit facility and finance acquisitions during the period. The board of directors of the General Partner has adopted a policy for the Partnership to distribute on a quarterly basis all available cash it receives from the Operating Company. The following table presents information regarding cash distributions approved by the board of directors of the General Partner for the periods presented: Amount per Common Unit Declaration Date Unitholder Record Date Payment Date Q4 2018 $ 0.51 January 30, 2019 February 19, 2019 February 25, 2019 Q1 2019 $ 0.38 April 25, 2019 May 13, 2019 May 20, 2019 Q2 2019 $ 0.47 July 28, 2019 August 14, 2019 August 21, 2019 Cash distributions will be made to the common unitholders of record on the applicable record date, generally within 60 |
EARNINGS PER UNIT
EARNINGS PER UNIT | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER UNIT | EARNINGS PER UNIT The net income per common unit on the consolidated statements of operations is based on the net income of the Partnership for the three and nine months ended September 30, 2019 and 2018 , since this is the amount of net income that is attributable to the Partnership’s common units. The Partnership’s net income is allocated wholly to the common units. Payments made to the Partnership’s unitholders are determined in relation to the cash distribution policy described in Note 9 — Unitholders' Equity and Partnership Distributions . Basic net income per common unit is calculated by dividing net income by the weighted-average number of common units outstanding during the period. Diluted net income per common unit gives effect, when applicable, to unvested common units granted under the LTIP. Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (In thousands, except per unit amounts) Net income attributable to the period $ 7,946 $ 2,346 $ 43,990 $ 144,646 Weighted average common units outstanding: Basic weighted average common units outstanding 62,645 48,234 60,267 78,250 Effect of dilutive securities: Potential common units issuable 33 70 29 69 Diluted weighted average common units outstanding 62,678 48,304 60,296 78,319 Net income per common unit, basic $ 0.13 $ 0.05 $ 0.73 $ 1.85 Net income per common unit, diluted $ 0.13 $ 0.05 $ 0.73 $ 1.85 For the three months ended September 30, 2019 and 2018 , there were no common units and for nine months ended September 30, 2019 and 2018 , there were no common units and 1,092 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES As discussed further in Note 1 — Organization and Basis of Presentation , on March 29, 2018, the Partnership announced that the Board of Directors of the General Partner had unanimously approved a change of the Partnership’s federal income tax status from that of a pass-through partnership to that of a taxable entity, which change became effective on May 10, 2018. Subsequent to the Partnership’s change in tax status, the Partnership’s provision for income taxes for the period ended September 30, 2019 is based on the estimated annual effective tax rate plus discrete items. The Partnership’s effective income tax rates were (17.1)% and 1.5% for the three months ended September 30, 2019 and 2018 , respectively, and (32.05)% and (47.10)% for the nine months ended September 30, 2019 and 2018 , respectively. Total income tax benefit for the three and nine months ended September 30, 2019 differed from amounts computed by applying the United States federal statutory tax rate to pre-tax income for the period primarily due to net income attributable to the non-controlling interest and the revision of estimated deferred taxes recognized as a result of the Partnership’s change in tax status. Total income tax expense for the three months ended September 30, 2018 and total income tax benefit for the nine months ended September 30, 2018 September 30, 2018 differed from amounts computed by applying the United States federal statutory rate to pre-tax income for the period primarily due to (i) net income attributable to the non-controlling interest (ii) net income attributable to the period prior to the Partnership’s change in tax status, and (iii) for the nine months ended September 30, 2018 , the impact of deferred taxes recognized as a result of the Partnership’s change in tax status. For the nine months ended September 30, 2019 , the Partnership recorded a discrete income tax benefit of approximately $42.4 million related to the revision of estimated deferred taxes on the Partnership’s investment in the Operating Company arising from the change in the Partnership’s federal tax status. Under federal income tax provisions applicable to the Partnership’s change in tax status, the Partnership’s basis for federal income tax purposes in its interest in the Operating Company consists primarily of the sum of the Partnership’s unitholders’ tax bases in their interests in the Partnership on the date of the tax status change. The Partnership prepared its best estimate of the resultant tax basis in the Operating Company for purposes of the Partnership’s income tax provision for the period of the change, but information necessary for the partnership to finalize its determination was not available until unitholders’ tax basis information was fully reported and the Partnership finalized its federal income tax computations for 2018. Based on such finalized information, the Partnership has revised its estimate of the difference between its tax basis and its basis for financial accounting purposes in the Operating Company on the date of the tax status change, resulting in deferred income tax benefit of $42.4 million included in the Partnership’s income tax provision for the nine months ended September 30, 2019 . Prior to May 10, 2018, the effective date of the Partnership’s change in income tax status, the Partnership was organized as a pass-through entity for income tax purposes. As a result, the Partnership’s partners were responsible for federal income taxes on their share of the Partnership’s taxable income. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The Partnership’s assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The Partnership uses appropriate valuation techniques based on available inputs to measure the fair values of its assets and liabilities. Level 1 - Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date. Level 2 - Observable market-based inputs or unobservable inputs that are corroborated by market data. These are inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 - Unobservable inputs that are not corroborated by market data and may be used with internally developed methodologies that result in management’s best estimate of fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Partnership’s cost method investment is reported at fair value on a recurring basis. The fair value of the Partnership’s investment at September 30, 2019 and December 31, 2018 was determined using the September 30, 2019 and December 31, 2018 quoted market prices. The investment is a Level 1 classification in the fair value hierarchy. See Note 2 — Summary of Significant Accounting Policies . The following table summarizes the changes in fair value of the Partnership’s investment: (in thousands) Fair value of investment as of December 31, 2018 $ 14,525 Gain on investment 3,978 Fair value of investment as of September 30, 2019 $ 18,503 (in thousands) Fair value of investment as of December 31, 2017 $ 33,851 Impact of adoption of Accounting Standards Update 2016-01 (18,651 ) Gain on investment 5,165 Fair value of investment as of September 30, 2018 $ 20,365 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Partnership is a party to various legal proceedings, disputes and claims from time to time arising in the course of its business, including those that arise from interpretation of federal and state laws and regulations affecting the crude oil and natural gas industry. These proceedings, disputes and claims may include differing interpretations as to the prices at which crude oil and natural gas sales may be made, the prices at which royalty owners may be paid for production from their leases, title claims, environmental issues and other matters. While the ultimate outcome of the pending proceedings, disputes or claims, and any resulting impact on the Partnership, cannot be predicted with certainty, the Partnership believes that none of these matters, if ultimately decided adversely, will have a material adverse effect on the Partnership’s financial condition, cash flows or results of operations. The Partnership’s assessment is based on information known about the pending matters and its experience in contesting, litigating and settling similar matters. Actual outcomes could differ materially from the Partnership’s assessment. The Partnership records reserves for contingencies related to outstanding legal proceedings, disputes or claims when information available indicates that a loss is probable and the amount of the loss can be reasonably estimated. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Cash Distribution On October 25, 2019 , the board of directors of the General Partner approved a cash distribution for the third quarter of 2019 of $0.46 per common unit, payable on November 15, 2019 , to eligible unitholders of record at the close of business on November 8, 2019 . Diamondback received Class B units and units in the Operating Company upon the closing of the Drop-Down Acquisition on October 1, 2019 and the Partnership will issue common units to Santa Elena at the closing of the Pending Santa Elena Acquisition. Each of Diamondback and Santa Elena has waived its right to receive distributions for the third quarter of 2019 in respect of the applicable equity interests issued in these transactions and the cash distribution for the third quarter of 2019 has been calculated on this basis. Drop-Down Acquisition On October 1, 2019, the Partnership completed the acquisition of certain mineral and royalty interests from subsidiaries of Diamondback for approximately 18.3 million of the Partnership’s newly-issued Class B units, approximately 18.3 million newly-issued units of the Operating Company and $190.2 million in cash, after giving effect to closing adjustments for net title benefits. For a description of the Drop-Down Acquisition, see Note 4 — Acquisitions — Drop-Down Acquisition above. Pending Santa Elena Acquisition On September 9, 2019, the Partnership and the Operating Company entered into a definitive purchase and sale agreement with Santa Elena, providing for an acquisition by the Partnership of certain mineral and royalty interests from Santa Elena which assets will be immediately contributed by the Partnership to the Operating Company at closing of the Pending Santa Elena Acquisition. For a descript ion of the Pending Santa Elena Acquisition, see Note 4 — Acquisitions — Pending Santa Elena Acquisition above. Notes Offering On October 16, 2019, the Partnership completed an offering (the “Notes Offering”) of $500.0 million in aggregate principal amount of its 5.375% Senior Notes due 2027 (the “Notes”). The Partnership received net proceeds of approximately $492.0 million from the Notes Offering. The Partnership loaned the gross proceeds to the Operating Company. The Operating Company used the proceeds from the Notes Offering to pay down borrowings under its revolving credit facility. The Notes are senior unsecured obligations of the Partnership, initially are guaranteed on a senior unsecured basis by the Operating Company, and will pay interest semi-annually. Neither Diamondback nor the general partner will guarantee the Notes. In the future, each of the Partnership’s restricted subsidiaries that either (1) guarantees any of its or a guarantor’s other indebtedness or (2) is a domestic restricted subsidiary and is an obligor with respect to any indebtedness under any credit facility will be required to guarantee the Notes. Amendments to the Operating Company’s Revolving Credit Facility As described above, on September 24, 2019, the Partnership entered into a second amendment to the Operating Company’s revolving credit facility with Wells Fargo, as administrative agent, and certain required lenders party thereto, which provided for an automatic increase of the borrowing base of $125.0 million upon the closing of the Drop-Down Acquisition and the satisfaction of certain conditions set forth therein. On October 1, 2019 , upon closing of the Drop-Down Acquisition and the satisfaction of such conditions, the borrowing base was increased from $600.0 million to $725.0 million . In connection with the commencement of the Notes Offering, the Partnership entered into a third amendment to the Operating Company’s revolving credit facility with Wells Fargo, as administrative agent, and certain required lenders party thereto, which provides for the waiver of the automatic reduction of the borrowing base that would otherwise occur upon the consummation of the Notes Offering. In addition, the third amendment increased the maximum amount of unsecured senior or senior subordinated notes that may be issued by the Operating Company or the Partnership from $400.0 million to $1.0 billion . The amendment was approved by the requisite percentage of lenders under the revolving credit facility and became effective on October 8, 2019. If the amendment had not been approved, the borrowing base under the revolving credit facility would have decreased by $125.0 million upon consummation of the Notes Offering. Anticipated Additional Borrowing Base Increase under the Operating Company’s Revolving Credit Facility In connection with the Partnership’s fall redetermination expected to occur in November 2019, the lead bank under the Operating Company’s revolving credit facility has recommended a further borrowing base increase to $775.0 million from the current borrowing base of $725.0 million . The anticipated increase in the borrowing base is subject to approval by the requisite lenders under the Operating Company’s revolving credit facility. Intercompany Promissory Note In connection with and upon closing of the Notes Offering, the Partnership loaned the gross proceeds from the Notes Offering to the Operating Company under the terms of that certain Subordinated Promissory Note, dated as of October 16, 2019, by the Operating Company in favor of the Partnership (the “Intercompany Promissory Note”). The Intercompany Promissory Note requires the Operating Company to repay the underlying loan to the Partnership on the same terms and in the same amounts as the Notes and has the same maturity date, interest rate, change of control repurchase and redemption provisions. The Partnership’s right to receive payment under the Intercompany Promissory Note is contractually subordinated to the Operating Company’s guarantee of the notes and is structurally subordinated to all of the Operating Company’s secured indebtedness (including all borrowings and other obligations under the Operating Company’s revolving credit facility) to the extent of the value of the collateral securing such indebtedness. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Presentation The accompanying consolidated financial statements and related notes thereto were prepared in conformity with GAAP. All material intercompany balances and transactions are eliminated in consolidation. These financial statements have been prepared by the Partnership without audit, pursuant to the rules and regulations of the SEC. They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations, although the Partnership believes the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10–Q should be read in conjunction with the Partnership’s most recent Annual Report on Form 10–K for the fiscal year ended December 31, 2018 , which contains a summary of the Partnership’s significant accounting policies and other disclosures. |
Use of Estimates | Use of Estimates Certain amounts included in or affecting the Partnership’s financial statements and related disclosures must be estimated by management, requiring certain assumptions to be made with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared. These estimates and assumptions affect the amounts the Partnership reports for assets and liabilities and the Partnership’s disclosure of contingent assets and liabilities at the date of the financial statements. The Partnership evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Partnership considers reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from the Partnership’s estimates. Any effects on the Partnership’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas interests and unit–based compensation. |
Investments | Investments The Partnership has an equity interest in a limited partnership that is so minor that the Partnership has no influence over the limited partnership’s operating and financial policies. This interest was acquired during the year ended December 31, 2014 and was accounted for under the cost method. This investment is presented on the balance sheet as other long-term assets. Effective January 1, 2018, the Partnership adopted Accounting Standards Update (“ASU”) 2016-01 which requires the Partnership to measure this investment at fair value which resulted in a downward adjustment of $18.7 million |
Income Taxes | Income Taxes The Partnership uses the asset and liability method of accounting for income taxes, under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and (ii) operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are based on enacted tax rates applicable to the future period when those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period the rate change is enacted. A valuation allowance is provided for deferred tax assets when it is more likely than not the deferred tax assets will not be realized. The Partnership is subject to margin tax in the state of Texas pursuant to a tax sharing agreement with Diamondback, as discussed further in Note 7 — Related Party Transactions |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases”. This update applies to any entity that enters into a lease, with some specified scope exemptions. Under this update, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. While there were no major changes to the lessor accounting, changes were made to align key aspects with the revenue recognition guidance. This update was effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Entities were required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. As of September 30, 2019 , the Partnership was not the lessor or lessee of any leases other than mineral leases which were excluded from the scope of this ASU. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In January 2018, the FASB issued ASU 2018-01, “Leases - Land Easement Practical Expedient for Transition to Topic 842”. This update applies to any entity that holds land easements. The update allows entities to adopt a practical expedient to not evaluate existing or expired land easements under Topic 842 that were not previously accounted for as leases under the current leases guidance. An entity that elects this practical expedient should evaluate new or modified land easements under Topic 842 beginning at the date that the entity adopts Topic 842. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases”. This update provides clarification and corrects unintended application of certain sections in the new lease guidance. This update was effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In July 2018, the FASB issued ASU 2018-11, “Lease (Topic 842): Targeted Improvements”. This update provides another transition method of allowing entities to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. This update was effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In December 2018, the FASB issued ASU 2018-20, “Leases (Topic 842) - Narrow-Scope Improvements for Lessors”. This update provides a practical expedient for lessors to elect not to evaluate whether sales taxes and other similar taxes are lessor costs. The update also requires a lessor to exclude from variable payments those costs paid directly by the lessee to third parties and include lessor costs paid by the lessor and reimbursed by the lessee. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In January 2019, the FASB issued ASU 2019-01, “Leases (Topic 842): Codification Improvements”. This update clarifies certain presentation and transition disclosures under Topic 842. This update was effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In June 2018, the FASB issued ASU 2018-07, “Stock Compensation - Improvements to Nonemployee Share-Based Payment Accounting”. This update applies the existing employee guidance to nonemployee share-based transactions, with the exception of specific guidance related to the attribution of compensation cost. This update was effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In July 2018, the FASB issued ASU 2018-09, “Codification Improvements”. This update provides clarification and corrects unintended application of the guidance in various sections. This update was effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Partnership adopted this update effective January 1, 2019. It did not have a material impact on its financial position, results of operations or liquidity. In July 2019, the FASB issued ASU 2019-07, “Codification Updates to SEC Sections”. This update simplifies the guidance in various sections that was duplicative, redundant or outdated. The Partnership adopted this update effective July 2019. It did not have a material impact on its financial position, results of operations or liquidity. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses”. This update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from the scope that have the contractual right to receive cash. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This update will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Partnership does not believe the adoption of this standard will have an impact on its financial statements since it does not have a history of credit losses. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”. This update clarifies that receivables arising from operating leases are not in scope of this topic, but rather Topic 842, Leases. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This update will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Partnership does not believe the adoption of this standard will have an impact on its financial statements since it does not have a history of credit losses. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”. This update clarifies guidance previously issued in ASU 2016-01, ASU 2016-13 and ASU 2017-12. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Partnership does not believe the updates to the referenced standards will have an impact on its financial position, results of operations or liquidity. In May 2019, the FASB issued ASU 2019-05, “Financial Instruments-Credit Losses (Topic 326)”. This update allows a fair value option to be elected for certain financial assets, other than held-to-maturity debt securities, that were previously required to be measured at amortized cost basis. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Partnership does not believe the adoption of this standard will have an impact on its financial position, results of operations or liquidity. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”. This update modifies the fair value measurement disclosure requirements specifically related to Level 3 fair value measurements and transfers between levels. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This update will be applied prospectively. The Partnership does not believe the adoption of this standard will have an impact on its financial position, results of operations or liquidity. |
Revenue from Contracts with Customers | Royalty income represents the right to receive revenues from oil, natural gas and natural gas liquids sales obtained by the operator of the wells in which the Partnership owns a royalty interest. Royalty income is recognized at the point control of the product is transferred to the purchaser. Virtually all of the Partnership’s contracts’ pricing provisions are tied to a market index. Royalty income from oil, natural gas and natural gas liquids sales The Partnership’s oil, natural gas and natural gas liquids sales contracts are generally structured whereby the producer of the properties in which the Partnership owns a royalty interest sells the Partnership’s proportionate share of oil, natural gas and natural gas liquids production to the purchaser and the Partnership collects its percentage royalty based on the revenue generated by the sale of the oil, natural gas and natural gas liquids. In this scenario, the Partnership recognizes revenue when control transfers to the purchaser or operator at the wellhead or at the gas processing facility based on the Partnership’s percentage ownership share of the revenue, net any deductions for gathering and transportation. Transaction price allocated to remaining performance obligations The Partnership’s right to royalty income does not originate until production occurs and, therefore, is not considered to exist beyond each days’ production. Therefore, there are no remaining performance obligations under any of the Partnership’s royalty income contracts. Contract balances Under the Partnership’s royalty income contracts, it would have the right to receive royalty income once production has occurred, at which point payment is unconditional. Accordingly, the Partnership’s royalty income contracts do not give rise to contract assets or liabilities under Accounting Standards Codification 606. Prior-period performance obligations The Partnership records revenue in the month production is delivered. However, settlement statements for certain natural gas and natural gas liquids sales may not be received for 30 to 90 days after the date production is delivered, and as a result, the Partnership is required to estimate the amount of royalty income to be received based upon the Partnership’s interest. The Partnership records the differences between its estimates and the actual amounts received for royalties in the month that payment is received from the producer. The Partnership has existing internal controls for its revenue estimation process and related accruals, and any identified differences between its revenue estimates and actual revenue received historically have not been significant. For the three and nine months ended September 30, 2019 , revenue recognized in the reporting period related to performance obligations satisfied in prior reporting periods was not material. The Partnership believes that the pricing provisions of its oil, natural gas and natural gas liquids contracts are customary in the industry. To the extent actual volumes and prices of oil and natural gas sales are unavailable for a given reporting period because of timing or information not received from third parties, the royalties related to expected sales volumes and prices for those properties are estimated and recorded. |
Fair Value Measurement | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The Partnership’s assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The Partnership uses appropriate valuation techniques based on available inputs to measure the fair values of its assets and liabilities. Level 1 - Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date. Level 2 - Observable market-based inputs or unobservable inputs that are corroborated by market data. These are inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 - Unobservable inputs that are not corroborated by market data and may be used with internally developed methodologies that result in management’s best estimate of fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. |
OIL AND NATURAL GAS INTERESTS (
OIL AND NATURAL GAS INTERESTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Extractive Industries [Abstract] | |
Aggregate capitalized costs related to oil and natural gas production activities | Oil and natural gas interests include the following: September 30, December 31, 2019 2018 (in thousands) Oil and natural gas interests: Subject to depletion $ 984,770 $ 845,228 Not subject to depletion 1,051,791 871,485 Gross oil and natural gas interests 2,036,561 1,716,713 Accumulated depletion and impairment (299,704 ) (248,296 ) Oil and natural gas interests, net 1,736,857 1,468,417 Land 5,688 5,688 Property, net of accumulated depletion and impairment $ 1,742,545 $ 1,474,105 Balance of costs not subject to depletion: Incurred in 2019 $ 267,930 Incurred in 2018 462,630 Incurred in 2017 284,371 Incurred in 2016 36,860 Total not subject to depletion $ 1,051,791 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of financial covenants | These covenants, among other things, limit additional indebtedness, additional liens, sales of assets, mergers and consolidations, dividends and distributions, transactions with affiliates and entering into certain swap agreements, and require the maintenance of the financial ratios described below: Financial Covenant Required Ratio Ratio of total net debt to EBITDAX, as defined in the credit agreement Not greater than 4.0 to 1.0 Ratio of current assets to liabilities, as defined in the credit agreement Not less than 1.0 to 1.0 |
UNIT-BASED COMPENSATION (Tables
UNIT-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Nonvested Share Activity | The following table presents the phantom unit activity under the LTIP for the nine months ended September 30, 2019 : Phantom Weighted Average Unvested at December 31, 2018 125,053 $ 23.44 Granted 33,886 $ 32.78 Vested (81,124 ) $ 23.34 Forfeited (1,028 ) $ 42.50 Unvested at September 30, 2019 76,787 $ 27.42 |
UNITHOLDERS_ EQUITY AND PARTN_2
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of Changes in Common Units | The following table summarizes changes in the number of the Partnership’s common units: Common Units Balance at December 31, 2018 51,653,956 Common units issued in public offerings 10,925,000 Common units vested and issued under the LTIP 81,124 Units repurchased for tax withholding (10,732 ) Balance at September 30, 2019 62,649,348 |
Distributions Made to Limited Partner, by Distribution | The following table presents information regarding cash distributions approved by the board of directors of the General Partner for the periods presented: Amount per Common Unit Declaration Date Unitholder Record Date Payment Date Q4 2018 $ 0.51 January 30, 2019 February 19, 2019 February 25, 2019 Q1 2019 $ 0.38 April 25, 2019 May 13, 2019 May 20, 2019 Q2 2019 $ 0.47 July 28, 2019 August 14, 2019 August 21, 2019 |
EARNINGS PER UNIT (Tables)
EARNINGS PER UNIT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net income per common unit | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (In thousands, except per unit amounts) Net income attributable to the period $ 7,946 $ 2,346 $ 43,990 $ 144,646 Weighted average common units outstanding: Basic weighted average common units outstanding 62,645 48,234 60,267 78,250 Effect of dilutive securities: Potential common units issuable 33 70 29 69 Diluted weighted average common units outstanding 62,678 48,304 60,296 78,319 Net income per common unit, basic $ 0.13 $ 0.05 $ 0.73 $ 1.85 Net income per common unit, diluted $ 0.13 $ 0.05 $ 0.73 $ 1.85 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets Measured on Recurring and Nonrecurring Basis | The following table summarizes the changes in fair value of the Partnership’s investment: (in thousands) Fair value of investment as of December 31, 2018 $ 14,525 Gain on investment 3,978 Fair value of investment as of September 30, 2019 $ 18,503 (in thousands) Fair value of investment as of December 31, 2017 $ 33,851 Impact of adoption of Accounting Standards Update 2016-01 (18,651 ) Gain on investment 5,165 Fair value of investment as of September 30, 2018 $ 20,365 |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | Oct. 01, 2019 | May 10, 2018 | May 09, 2018 | Jul. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2019 | Oct. 25, 2019 | Dec. 31, 2018 |
Limited Partners' Capital Account [Line Items] | ||||||||
Percent of General Partner interest | 36.00% | 41.00% | 100.00% | |||||
General partners' cash capital contribution | $ 1,000 | |||||||
Limited partners' cash capital contribution | $ 1,000 | |||||||
Limited partners capital account, percentage of distribution | 8.00% | |||||||
Number of class B units converted (in shares) | 731,500 | |||||||
Partnership common units (in shares) | 731,500 | |||||||
Limited partners' cash account | $ 10 | |||||||
Diamondback Energy, Inc. | ||||||||
Limited Partners' Capital Account [Line Items] | ||||||||
Number of common units exchanged (in shares) | 73,150,000 | |||||||
Number of units issued in the exchange (in shares) | 73,150,000 | |||||||
Common Units | ||||||||
Limited Partners' Capital Account [Line Items] | ||||||||
Limited partners' capital account, units outstanding (in shares) | 62,649,348 | 62,649,348 | 51,653,956 | |||||
Common Units | Diamondback Energy, Inc. | ||||||||
Limited Partners' Capital Account [Line Items] | ||||||||
Limited partners' capital account, units outstanding (in shares) | 731,500 | 731,500 | ||||||
Common Units | Diamondback Energy, Inc. | Subsequent Event | ||||||||
Limited Partners' Capital Account [Line Items] | ||||||||
Limited partners' capital account, units outstanding (in shares) | 731,500 | |||||||
Class B Units | ||||||||
Limited Partners' Capital Account [Line Items] | ||||||||
Limited partners' capital account, units outstanding (in shares) | 72,418,500 | 72,418,500 | 90,709,946 | 72,418,500 | ||||
Number of partnership's newly issued units exchanged (in shares) | 73,150,000 | |||||||
Class B Units | Diamondback Energy, Inc. | ||||||||
Limited Partners' Capital Account [Line Items] | ||||||||
Limited partners' capital account, units outstanding (in shares) | 72,418,500 | 72,418,500 | ||||||
Class B Units | Diamondback Energy, Inc. | Subsequent Event | ||||||||
Limited Partners' Capital Account [Line Items] | ||||||||
Limited partners' capital account, units outstanding (in shares) | 90,709,946 | |||||||
Viper Energy Partners LP | Diamondback Energy, Inc. | ||||||||
Limited Partners' Capital Account [Line Items] | ||||||||
Percent of limited partnership interest | 64.00% | 59.00% | 54.00% | 54.00% | ||||
Viper Energy Partners LP | Diamondback Energy, Inc. | Subsequent Event | ||||||||
Limited Partners' Capital Account [Line Items] | ||||||||
Percent of limited partnership interest | 60.00% |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Jan. 01, 2018 | |
Investment [Line Items] | |||
Impact of adoption of Accounting Standards Update 2016-01 | $ 18,651,000 | ||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | $ 0 | $ 0 | |
Interest or penalties associated with uncertain tax positions | $ 0 | $ 0 | |
Accounting Standards Update 2016-01 | Limited Partner | |||
Investment [Line Items] | |||
Impact of adoption of Accounting Standards Update 2016-01 | $ (18,700,000) |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Revenue settlement period after production delivery | 30 days |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Revenue settlement period after production delivery | 90 days |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ / shares in Units, shares in Millions | Oct. 01, 2019USD ($) | Sep. 09, 2019USD ($)a$ / sharesshares | Jul. 29, 2019USD ($)aareaRig$ / sharesshares | Sep. 30, 2019USD ($)a | Sep. 30, 2019USD ($)a | Sep. 30, 2018USD ($)a | Oct. 16, 2019USD ($) | Oct. 15, 2019a |
Revolving credit facility | ||||||||
Business Acquisition [Line Items] | ||||||||
Credit facility borrowing base | $ 600,000,000 | $ 600,000,000 | ||||||
Drop-Down Acquisition | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of units to be issued in acquisition (in shares) | shares | 18.3 | |||||||
Payments to acquire mineral rights | $ 190,200,000 | |||||||
Business acquisition, shares issued, number of trading-day period | 10 days | |||||||
Business acquisition, shares issued, weighted average price (in USD per share) | $ / shares | $ 30.07 | |||||||
Aggregate purchase price | $ 740,200,000 | |||||||
Mineral interests acquired, net royalty acres (in acre) | a | 5,490 | |||||||
Percentage of average net royalty interest in acquired mineral and royalty interests | 3.20% | |||||||
Mineral interests in Permian Basin | ||||||||
Business Acquisition [Line Items] | ||||||||
Aggregate purchase price | $ 193,600,000 | $ 320,500,000 | ||||||
Mineral interests acquired, net royalty acres (in acre) | a | 1,281 | 2,309 | ||||||
Mineral interests acquired, gross acres (in acre) | a | 101,520 | |||||||
Mineral properties, net royalty acres | a | 17,151 | 17,151 | ||||||
Santa Elena Acquisition | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of units to be issued in acquisition (in shares) | shares | 5.2 | |||||||
Business acquisition, shares issued, number of trading-day period | 5 days | |||||||
Business acquisition, shares issued, weighted average price (in USD per share) | $ / shares | $ 29.02 | |||||||
Mineral interests acquired, net royalty acres (in acre) | a | 1,358 | |||||||
Business acquisition, shares issued calculation base | $ 150,000,000 | |||||||
Miscellaneous Mineral Interests Acquired | ||||||||
Business Acquisition [Line Items] | ||||||||
Aggregate purchase price | $ 521,200,000 | |||||||
Mineral interests acquired, net royalty acres (in acre) | a | 2,651 | |||||||
Mineral properties, net royalty acres | a | 13,908 | |||||||
Subsequent Event | ||||||||
Business Acquisition [Line Items] | ||||||||
Mineral properties, net royalty acres | a | 22,641 | |||||||
Subsequent Event | Revolving credit facility | ||||||||
Business Acquisition [Line Items] | ||||||||
Credit facility borrowing base | $ 725,000,000 | $ 725,000,000 | ||||||
Subsequent Event | Drop-Down Acquisition | ||||||||
Business Acquisition [Line Items] | ||||||||
Payments to acquire mineral rights | 190,200,000 | |||||||
Subsequent Event | Drop-Down Acquisition | Revolving credit facility | ||||||||
Business Acquisition [Line Items] | ||||||||
Credit facility, increase of borrowing base | 125,000,000 | |||||||
Credit facility borrowing base | $ 725,000,000 | |||||||
Diamondback Energy, Inc. | Drop-Down Acquisition | ||||||||
Business Acquisition [Line Items] | ||||||||
Percentage of mineral acres operated by affiliate | 95.00% | |||||||
Number of core operating areas | area | 7 | |||||||
Diamondback Energy, Inc. | Drop-Down Acquisition | Pecos County | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of operating rigs | Rig | 2 | |||||||
Diamondback Energy, Inc. | Drop-Down Acquisition | Spanish Trail North | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of operating rigs | Rig | 6 | |||||||
Diamondback Energy, Inc. | Santa Elena Acquisition | ||||||||
Business Acquisition [Line Items] | ||||||||
Percentage of mineral acres operated by affiliate | 5.60% | |||||||
Diamondback Energy, Inc. | Subsequent Event | ||||||||
Business Acquisition [Line Items] | ||||||||
Percentage of mineral acres operated by affiliate | 51.00% |
OIL AND NATURAL GAS INTERESTS_2
OIL AND NATURAL GAS INTERESTS (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Oil and natural gas interests: | ||||
Subject to depletion | $ 984,770 | $ 845,228 | ||
Not subject to depletion | 1,051,791 | 871,485 | ||
Gross oil and natural gas interests | 2,036,561 | 1,716,713 | ||
Accumulated depletion and impairment | (299,704) | (248,296) | ||
Oil and natural gas interests, net | 1,736,857 | 1,468,417 | ||
Land | 5,688 | 5,688 | ||
Property, net | 1,742,545 | 1,474,105 | ||
Balance of costs not subject to depletion: | $ 267,930 | $ 462,630 | $ 284,371 | $ 36,860 |
Minimum | ||||
Oil and natural gas interests: | ||||
Anticipated timing of cost inclusion in amortization calculation | 3 years | |||
Maximum | ||||
Oil and natural gas interests: | ||||
Anticipated timing of cost inclusion in amortization calculation | 5 years |
DEBT (Details)
DEBT (Details) | 9 Months Ended | |||||
Sep. 30, 2019USD ($)redetermindation | Nov. 11, 2019USD ($) | Oct. 16, 2019USD ($) | Oct. 08, 2019USD ($) | Oct. 01, 2019USD ($) | Jul. 20, 2018USD ($) | |
Senior Notes | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, covenant, maximum issuance of additional indebtedness | $ 400,000,000 | $ 400,000,000 | ||||
Reduction of borrowing base due to additional issuances of unsecured debt | 25.00% | |||||
Senior Notes | Subsequent Event | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, covenant, maximum issuance of additional indebtedness | $ 1,000,000,000 | |||||
Revolving credit facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility maximum borrowing capacity | $ 2,000,000,000 | |||||
Credit facility borrowing base | $ 600,000,000 | |||||
Number of interim redeterminations that may be requested | redetermindation | 3 | |||||
Period of redeterminations of borrowing base | 12 months | |||||
Amount outstanding under credit facility | $ 409,500,000 | |||||
Credit facility remaining borrowing capacity | $ 190,500,000 | |||||
Revolving credit facility | Subsequent Event | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility borrowing base | $ 725,000,000 | $ 725,000,000 | ||||
Credit facility, decrease of borrowing base provided amendment not been approved | $ 125,000,000 | |||||
Amount outstanding under credit facility | 94,500,000 | |||||
Credit facility remaining borrowing capacity | $ 630,500,000 | |||||
Revolving credit facility | Fed Funds Effective Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Basis spread on variable rate | 0.50% | |||||
Revolving credit facility | LIBOR | ||||||
Line of Credit Facility [Line Items] | ||||||
Basis spread on variable rate | 1.00% | |||||
Revolving credit facility | Minimum | ||||||
Line of Credit Facility [Line Items] | ||||||
Commitment fee on the unused portion of the borrowing base | 0.375% | |||||
Debt covenant, ratio of total net debt to EBITDAX | 4 | |||||
Revolving credit facility | Minimum | LIBOR | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt applicable margin | 1.75% | |||||
Revolving credit facility | Minimum | Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt applicable margin | 0.75% | |||||
Revolving credit facility | Maximum | ||||||
Line of Credit Facility [Line Items] | ||||||
Commitment fee on the unused portion of the borrowing base | 0.50% | |||||
Debt covenant, ratio of current assets to liabilities | 1 | |||||
Revolving credit facility | Maximum | LIBOR | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt applicable margin | 2.75% | |||||
Revolving credit facility | Maximum | Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt applicable margin | 1.75% | |||||
Forecast | Revolving credit facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility borrowing base | $ 775,000,000 | |||||
Drop-Down Acquisition | Revolving credit facility | Subsequent Event | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility borrowing base | 725,000,000 | |||||
Credit facility, increase of borrowing base | $ 125,000,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | Jun. 23, 2014USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($)lease | Sep. 30, 2019USD ($)lease | Sep. 30, 2018USD ($)lease |
Related Party Transaction [Line Items] | |||||
Accrued state income tax expense | $ (100,000) | $ 200,000 | $ 100,000 | ||
General Partner | Partnership Agreement | |||||
Related Party Transaction [Line Items] | |||||
Incurred costs for transactions with related party | $ 900,000 | 600,000 | 2,200,000 | 1,800,000 | |
Affiliated Entity | Advisory Services Agreement | |||||
Related Party Transaction [Line Items] | |||||
Incurred costs for transactions with related party | 0 | 0 | 0 | ||
Advisory services agreement, annual fee | $ 500,000 | ||||
Diamondback Energy, Inc. | |||||
Related Party Transaction [Line Items] | |||||
Revenue from Related Parties | 0 | $ 2,900,000 | $ 39,198 | $ 2,900,000 | |
Number of leases extended | lease | 12 | 2 | 12 | ||
Revenue from related parties on new leases | $ 3,101 | ||||
Number of new leases | lease | 2 | ||||
Maximum | |||||
Related Party Transaction [Line Items] | |||||
Accrued state income tax expense | $ 100,000 |
UNIT-BASED COMPENSATION - Addit
UNIT-BASED COMPENSATION - Additional Disclosures (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($)shares | Sep. 30, 2019USD ($)shares | |
Share-based Payment Arrangement [Abstract] | ||
Number of common units reserved for issuance (in shares) | shares | 8,922,726 | 8,922,726 |
Unit-based compensation expenses incurred | $ | $ 0.4 | $ 1.3 |
UNIT-BASED COMPENSATION - Phant
UNIT-BASED COMPENSATION - Phantom Units (Details) - Phantom Units $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested at December 31, 2018 (in shares) | shares | 125,053 |
Granted (in shares) | shares | 33,886 |
Vested (in shares) | shares | (81,124) |
Forfeited (in shares) | shares | (1,028) |
Unvested at September 30, 2019 (in shares) | shares | 76,787 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Unvested at December 31, 2018 | $ / shares | $ 23.44 |
Granted | $ / shares | 32.78 |
Vested | $ / shares | 23.34 |
Forfeited | $ / shares | 42.50 |
Unvested at September 30, 2019 | $ / shares | $ 27.42 |
Aggregate fair value of phantom units vested during period | $ | $ 1.9 |
Unrecognized compensation cost related to unvested phantom units | $ | $ 1.3 |
Unrecognized compensation cost related to unvested phantom units, period for recognition | 9 months 21 days |
UNITHOLDERS_ EQUITY AND PARTN_3
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS - Additional Information (Details) - USD ($) $ in Millions | May 10, 2018 | Mar. 31, 2019 | Jul. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2019 | Oct. 25, 2019 | Dec. 31, 2018 |
Common Units | |||||||
Limited Partners' Capital Account [Line Items] | |||||||
Limited partners' capital account, units issued (in shares) | 62,649,348 | 62,649,348 | 51,653,956 | ||||
Limited partners' capital account, units outstanding (in shares) | 62,649,348 | 62,649,348 | 51,653,956 | ||||
Common units issued in public offerings (in shares) | 10,925,000 | ||||||
Net proceeds from offering | $ 340.6 | ||||||
Common Units | Follow-on Public Offering | |||||||
Limited Partners' Capital Account [Line Items] | |||||||
Common units issued in public offerings (in shares) | 10,925,000 | ||||||
Common Units | Over-Allotment Option | |||||||
Limited Partners' Capital Account [Line Items] | |||||||
Common units issued in public offerings (in shares) | 1,425,000 | ||||||
Common Units | Diamondback Energy, Inc. | |||||||
Limited Partners' Capital Account [Line Items] | |||||||
Limited partners' capital account, units outstanding (in shares) | 731,500 | 731,500 | |||||
Class B Units | |||||||
Limited Partners' Capital Account [Line Items] | |||||||
Limited partners' capital account, units issued (in shares) | 72,418,500 | 72,418,500 | 72,418,500 | ||||
Limited partners' capital account, units outstanding (in shares) | 72,418,500 | 72,418,500 | 90,709,946 | 72,418,500 | |||
Class B Units | Diamondback Energy, Inc. | |||||||
Limited Partners' Capital Account [Line Items] | |||||||
Limited partners' capital account, units outstanding (in shares) | 72,418,500 | 72,418,500 | |||||
Viper Energy Partners LP | Diamondback Energy, Inc. | |||||||
Limited Partners' Capital Account [Line Items] | |||||||
Percent of limited partnership interest | 64.00% | 59.00% | 54.00% | 54.00% |
UNITHOLDERS_ EQUITY AND PARTN_4
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS - Schedule of Changes in Common Units (Details) - Common Units | 9 Months Ended |
Sep. 30, 2019shares | |
Changes In Common Units [Roll Forward] | |
Common units outstanding, begging balance (in shares) | 51,653,956 |
Common units issued in public offerings (in shares) | 10,925,000 |
Common units vested and issued under the LTIP (in shares) | 81,124 |
Units repurchased for tax withholding (in shares) | (10,732) |
Common units outstanding, ending balance (in shares) | 62,649,348 |
UNITHOLDERS_ EQUITY AND PARTN_5
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS - Partnership Distributions (Details) - Cash Distribution - $ / shares | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | |
Limited Partners' Capital Account [Line Items] | ||||
Cash distributions, amount per common unit (in USD per unit) | $ 0.47 | $ 0.38 | $ 0.51 | |
Cash distributions, period after end of each quarter | 60 days |
EARNINGS PER UNIT (Details)
EARNINGS PER UNIT (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to the period | $ 7,946 | $ 2,346 | $ 43,990 | $ 144,646 |
Basic weighted average common units outstanding (in shares) | 62,645,000 | 48,234,000 | 60,267,000 | 78,250,000 |
Effect of dilutive securities: | ||||
Effect of dilutive securities: Potential common units issuable (in shares) | 33,000 | 70,000 | 29,000 | 69,000 |
Diluted weighted average common units outstanding (in shares) | 62,678,000 | 48,304,000 | 60,296,000 | 78,319,000 |
Net income per common unit, basic (in USD per share) | $ 0.13 | $ 0.05 | $ 0.73 | $ 1.85 |
Net income per common unit, diluted (in USD per share) | $ 0.13 | $ 0.05 | $ 0.73 | $ 1.85 |
Anti-dilutive for potentially dilute basic earnings per common unit (in shares) | 0 | 0 | 0 | 1,092 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate reconciliation, percent | (17.10%) | 1.50% | (32.05%) | (47.10%) |
Discrete income tax benefit related to deferred taxes recorded during the period | $ 42.4 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jan. 01, 2018 | |
Movement in Fair Value of Investment [Roll Forward] | |||||
Impact of adoption of Accounting Standards Update 2016-01 | $ (18,651) | ||||
Gain on investment | $ 336 | $ (199) | $ 3,978 | $ 5,165 | |
Fair Value, Recurring | Fair Value, Inputs, Level 1 | |||||
Movement in Fair Value of Investment [Roll Forward] | |||||
Fair value of investment, beginning balance | 14,525 | 33,851 | |||
Impact of adoption of Accounting Standards Update 2016-01 | $ (18,651) | ||||
Gain on investment | 3,978 | 5,165 | |||
Fair value of investment, ending balance | $ 18,503 | $ 20,365 | $ 18,503 | $ 20,365 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, shares in Millions | Oct. 25, 2019 | Oct. 16, 2019 | Oct. 01, 2019 | Jul. 29, 2019 | Oct. 25, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Nov. 11, 2019 | Oct. 08, 2019 | Sep. 30, 2019 | Jul. 20, 2018 |
Cash Distribution | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Distribution Made to Limited Partner, Distribution Date | Oct. 25, 2019 | ||||||||||||
Cash distributions, amount per common unit (in USD per unit) | $ 0.47 | $ 0.38 | $ 0.51 | ||||||||||
Cash Distribution | Subsequent Event | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Distribution Made to Limited Partner, Distribution Date | Nov. 15, 2019 | ||||||||||||
Cash distributions, amount per common unit (in USD per unit) | $ 0.46 | ||||||||||||
Distribution Made to Limited Partner, Date of Record | Nov. 8, 2019 | ||||||||||||
Senior Notes | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Credit facility, covenant, maximum issuance of additional indebtedness | $ 400,000,000 | $ 400,000,000 | |||||||||||
Senior Notes | Subsequent Event | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Credit facility, covenant, maximum issuance of additional indebtedness | $ 1,000,000,000 | ||||||||||||
Revolving credit facility | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Credit facility borrowing base | $ 600,000,000 | ||||||||||||
Revolving credit facility | Forecast | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Credit facility borrowing base | $ 775,000,000 | ||||||||||||
Revolving credit facility | Subsequent Event | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Credit facility borrowing base | $ 725,000,000 | $ 725,000,000 | |||||||||||
Credit facility, decrease of borrowing base provided amendment not been approved | $ 125,000,000 | ||||||||||||
5.375% Senior Notes Due 2027 | Senior Notes | Subsequent Event | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Debt principal amount | $ 500,000,000 | ||||||||||||
Debt interest rate, percentage | 5.375% | ||||||||||||
Net proceeds from issuance of senior notes | $ 492,000,000 | ||||||||||||
Drop-Down Acquisition | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Payments to acquire mineral rights | $ 190,200,000 | ||||||||||||
Drop-Down Acquisition | Subsequent Event | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Number units issued in acquisition (in shares) | 18.3 | ||||||||||||
Payments to acquire mineral rights | $ 190,200,000 | ||||||||||||
Drop-Down Acquisition | Revolving credit facility | Subsequent Event | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Credit facility, increase of borrowing base | 125,000,000 | ||||||||||||
Credit facility borrowing base | $ 725,000,000 | ||||||||||||
Class B Units | Drop-Down Acquisition | Subsequent Event | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Number units issued in acquisition (in shares) | 18.3 |
Uncategorized Items - q32019vip
Label | Element | Value |
Common Stock [Member] | Limited Partner [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (18,651,000) |