Cover
Cover - shares | 6 Months Ended | ||
Jun. 30, 2020 | Jul. 31, 2020 | Dec. 31, 2019 | |
Document Information [Line Items] | |||
Document Type | 10-Q | ||
Document Quarterly Report | true | ||
Document Period End Date | Jun. 30, 2020 | ||
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 | 67,844,370 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | Q2 | ||
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) | 90,709,946 | 90,709,946 | 90,709,946 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 9,663 | $ 3,602 |
Royalty income receivable (net of allowance for credit losses) | 32,118 | 58,089 |
Royalty income receivable—related party | 917 | 10,576 |
Other current assets | 482 | 397 |
Total current assets | 43,180 | 72,664 |
Property: | ||
Oil and natural gas interests, full cost method of accounting ($1,480,346 and $1,551,767 excluded from depletion at June 30, 2020 and December 31, 2019, respectively) | 2,933,731 | 2,868,459 |
Land | 5,688 | 5,688 |
Accumulated depletion and impairment | (373,898) | (326,474) |
Property, net | 2,565,521 | 2,547,673 |
Deferred tax asset (net of allowance) | 0 | 142,466 |
Other assets | 15,572 | 22,823 |
Total assets | 2,624,273 | 2,785,626 |
Current liabilities: | ||
Accounts payable | 11 | 0 |
Accounts payable—related party | 0 | 150 |
Accrued liabilities | 12,439 | 13,282 |
Derivative instruments | 33,956 | 0 |
Total current liabilities | 46,406 | 13,432 |
Long-term debt, net | 630,507 | 586,774 |
Derivative instruments | 5,875 | 0 |
Total liabilities | 682,788 | 600,206 |
Commitments and contingencies (Note 12) | ||
Unitholders’ equity: | ||
General partner | 849 | 889 |
Common units (67,831,342 units issued and outstanding as of June 30, 2020 and 67,805,707 units issued and outstanding as of December 31, 2019) | 728,149 | 929,116 |
Class B units (90,709,946 units issued and outstanding as of June 30, 2020 and December 31, 2019) | 1,080 | 1,130 |
Total Viper Energy Partners LP unitholders’ equity | 730,078 | 931,135 |
Non-controlling interest | 1,211,407 | 1,254,285 |
Total equity | 1,941,485 | 2,185,420 |
Total liabilities and unitholders’ equity | $ 2,624,273 | $ 2,785,626 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jul. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Oil and natural gas interests, based on the full cost method of accounting, amount excluded from depletion | $ 1,480,346 | $ 1,551,767 | |
Common Units | |||
Limited partners' capital account, units issued (in shares) | 67,831,342 | 67,805,707 | |
Limited partners' capital account, units outstanding (in shares) | 67,831,342 | 67,805,707 | |
Class B Units | |||
Limited partners' capital account, units issued (in shares) | 90,709,946 | 90,709,946 | |
Limited partners' capital account, units outstanding (in shares) | 90,709,946 | 90,709,946 | 90,709,946 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Operating income: | ||||
Royalty income | $ 32,444 | $ 70,442 | $ 109,273 | $ 130,870 |
Lease bonus income | 23 | 1,749 | 1,645 | 2,909 |
Other operating income | 202 | 3 | 443 | 5 |
Total operating income | 32,669 | 72,194 | 111,361 | 133,784 |
Costs and expenses: | ||||
Production and ad valorem taxes | 3,110 | 4,389 | 9,257 | 8,081 |
Depletion | 22,782 | 16,512 | 47,424 | 32,711 |
General and administrative expenses | 1,683 | 1,723 | 4,349 | 3,418 |
Total costs and expenses | 27,575 | 22,624 | 61,030 | 44,210 |
Income from operations | 5,094 | 49,570 | 50,331 | 89,574 |
Other income (expense): | ||||
Interest expense, net | (7,669) | (2,713) | (16,632) | (7,262) |
Loss on derivative instruments, net | (34,443) | 0 | (42,385) | 0 |
Gain (loss) on revaluation of investment | 3,443 | 50 | (6,677) | 3,642 |
Other income, net | 519 | 547 | 923 | 1,203 |
Total other expense, net | (38,150) | (2,116) | (64,771) | (2,417) |
(Loss) income before income taxes | (33,056) | 47,454 | (14,440) | 87,157 |
Provision for (benefit from) income taxes | 0 | 180 | 142,466 | (34,428) |
Net (loss) income | (33,056) | 47,274 | (156,906) | 121,585 |
Net (loss) income attributable to non-controlling interest | (11,304) | 45,009 | 7,015 | 85,541 |
Net (loss) income attributable to Viper Energy Partners LP | $ (21,752) | $ 2,265 | $ (163,921) | $ 36,044 |
Net (loss) income attributable to common limited partner units: | ||||
Basic (dollars per unit) | $ (0.32) | $ 0.04 | $ (2.42) | $ 0.61 |
Diluted (dollars per unit) | $ (0.32) | $ 0.04 | $ (2.42) | $ 0.61 |
Weighted average number of common limited partner units outstanding: | ||||
Basic (in units) | 67,831 | 62,628 | 67,827 | 59,058 |
Diluted (in units) | 67,831 | 62,664 | 67,827 | 59,094 |
Revenue, Product and Service [Extensible List] | us-gaap:RoyaltyMember |
Consolidated Statements of Unit
Consolidated Statements of Unitholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Limited Partner | General Partner | Non-Controlling Interest | Common UnitsLimited Partner | Class B UnitsLimited Partner |
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 | (353) | $ (353) | ||||
Net (loss) 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] | ||||||
Change in ownership of consolidated subsidiaries, net | $ (71,195) | |||||
Net (loss) income | 121,585 | |||||
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 | |
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 (units) | 0 | |||||
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) | ||||
Change in ownership of consolidated subsidiaries, net | 0 | |||||
Net (loss) 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 | |
Beginning balance at Dec. 31, 2019 | 2,185,420 | 889 | 1,254,285 | $ 929,116 | $ 1,130 | |
Beginning balance (in shares) at Dec. 31, 2019 | 67,806 | 90,710 | ||||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||||
Unit-based compensation (units) | 42 | |||||
Unit-based compensation | 387 | $ 387 | ||||
Distribution equivalent rights payments | (20) | (20) | ||||
Distributions to public | (30,194) | (30,194) | ||||
Distributions to Diamondback | (41,173) | (40,819) | $ (329) | $ (25) | ||
Distributions to General Partner | (20) | (20) | ||||
Units repurchased for tax withholding (units) | (17) | |||||
Units repurchased for tax withholding | (383) | $ (383) | ||||
Net (loss) income | (123,850) | 18,319 | $ (142,169) | |||
Ending balance (in shares) at Mar. 31, 2020 | 67,831 | 90,710 | ||||
Ending balance at Mar. 31, 2020 | 1,990,167 | 869 | 1,231,785 | $ 756,408 | $ 1,105 | |
Beginning balance at Dec. 31, 2019 | 2,185,420 | 889 | 1,254,285 | $ 929,116 | $ 1,130 | |
Beginning balance (in shares) at Dec. 31, 2019 | 67,806 | 90,710 | ||||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||||
Change in ownership of consolidated subsidiaries, net | 0 | |||||
Net (loss) income | (156,906) | |||||
Ending balance (in shares) at Jun. 30, 2020 | 67,831 | 90,710 | ||||
Ending balance at Jun. 30, 2020 | 1,941,485 | 849 | 1,211,407 | $ 728,149 | $ 1,080 | |
Beginning balance at Mar. 31, 2020 | 1,990,167 | 869 | 1,231,785 | $ 756,408 | $ 1,105 | |
Beginning balance (in shares) at Mar. 31, 2020 | 67,831 | 90,710 | ||||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||||
Unit-based compensation (units) | 0 | |||||
Unit-based compensation | 283 | $ 283 | ||||
Distribution equivalent rights payments | (4) | (4) | ||||
Distributions to public | (6,710) | (6,710) | ||||
Distributions to Diamondback | (9,175) | (9,074) | (76) | $ (25) | ||
Distributions to General Partner | (20) | (20) | ||||
Change in ownership of consolidated subsidiaries, net | $ 0 | |||||
Net (loss) income | (33,056) | (11,304) | $ (21,752) | |||
Ending balance (in shares) at Jun. 30, 2020 | 67,831 | 90,710 | ||||
Ending balance at Jun. 30, 2020 | $ 1,941,485 | $ 849 | $ 1,211,407 | $ 728,149 | $ 1,080 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (156,906) | $ 121,585 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Provision for (benefit from) income taxes | 142,466 | (34,536) |
Depletion | 47,424 | 32,711 |
Loss on derivative instruments, net | 42,385 | 0 |
Net cash payments on derivatives | (2,554) | 0 |
Gain on extinguishment of debt | (14) | 0 |
Loss (gain) on revaluation of investment | 6,677 | (3,642) |
Amortization of debt issuance costs | 1,152 | 441 |
Non-cash unit-based compensation | 670 | 877 |
Changes in operating assets and liabilities: | ||
Royalty income receivable, net | 25,971 | (7,996) |
Royalty income receivable—related party | 9,659 | (5,549) |
Accounts payable and accrued liabilities | (832) | (2,238) |
Accounts payable—related party | (150) | 0 |
Income tax payable | 0 | 108 |
Other current assets | (85) | (41) |
Net cash provided by operating activities | 115,863 | 101,720 |
Cash flows from investing activities: | ||
Acquisitions of oil and natural gas interests | (65,272) | (125,231) |
Funds held in escrow | 0 | (13,215) |
Net cash used in investing activities | (65,272) | (138,446) |
Cash flows from financing activities: | ||
Proceeds from borrowings under credit facility | 92,000 | 171,000 |
Repayment on credit facility | (35,000) | (369,500) |
Debt issuance costs | (44) | (258) |
Repayment of senior notes | (13,787) | 0 |
Proceeds from public offerings | 0 | 340,860 |
Public offering costs | 0 | (221) |
Units purchased for tax withholding | (383) | (353) |
Distributions to General Partner | (40) | (40) |
Distributions to public | (36,928) | (49,491) |
Distributions to Diamondback | (50,348) | (65,143) |
Net cash (used in) provided by financing activities | (44,530) | 26,854 |
Net increase (decrease) in cash | 6,061 | (9,872) |
Cash and cash equivalents at beginning of period | 3,602 | 22,676 |
Cash and cash equivalents at end of period | 9,663 | 12,804 |
Supplemental disclosure of cash flow information: | ||
Interest paid | $ 17,918 | $ 2,382 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2020 | |
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 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 owning and acquiring mineral interests and royalty interests in oil and natural gas properties in the Permian Basin and Eagle Ford Shale. Since May 10, 2018, the Partnership has been treated as a corporation for U.S. federal income tax purposes. As of June 30, 2020, Viper Energy Partners GP LLC (the “General Partner”), held a 100% general partner interest in the Partnership and Diamondback had an approximate 58% limited partner interest in the Partnership. Diamondback owns and controls the General Partner. Basis of Presentation The accompanying consolidated financial statements and related notes thereto were prepared in accordance with GAAP. All material intercompany balances and transactions have been eliminated upon consolidation. These consolidated 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 SEC rules and regulations, although the Partnership believes the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Partnership’s most recent Annual Report on Form 10–K for the fiscal year ended December 31, 2019, which contains a summary of the Partnership’s significant accounting policies and other disclosures. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
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. Making accurate estimates and assumptions is particularly difficult as the oil and gas industry experiences challenges resulting from negative pricing pressure from the effects of COVID-19 and actions by OPEC members and other exporting nations on the supply and demand in global oil and natural gas markets. Many companies in the oil and natural gas industry have changed near term business plans in response to changing market conditions. The aforementioned circumstances generally increase the estimation uncertainty in the Partnership’s accounting estimates, particularly the accounting estimates involving financial forecasts. The Partnership evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Partnership considers reasonable in each particular circumstance. 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, the recoverability of costs of unevaluated properties, fair value estimates of commodity derivatives, unit–based compensation and estimate of income taxes. Accounts Receivable Accounts receivable consist of receivables from oil and natural gas sales. The operators remit payment for production directly to the Partnership. Most payments for production are received within three months after the production date. Payments on new wells added organically or through acquisition may be further delayed due to title opinion work which is required to be completed by the operator before payments are released. The Partnership adopted Accounting Standards Update (“ASU”) 2016-13 and the subsequent applicable modifications to the rule on January 1, 2020. Accounts receivable are stated at amounts due from purchasers, net of an allowance for expected losses as estimated by the Partnership when collection is deemed doubtful. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Partnership determines its allowance by considering a number of factors, including the Partnership’s previous loss history, the debtor’s current ability to pay its obligation to the Partnership, the condition of the general economy and the industry as a whole. The Partnership writes off specific accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for expected losses. The adoption of ASU 2016-13 did not result in a material change to the Partnership’s allowance, and no cumulative-effect adjustment was made to beginning unitholders’ equity. At June 30, 2020, the Partnership recorded an immaterial allowance for expected losses and did not record such an allowance at December 31, 2019. Derivative Instruments The Partnership is required to recognize its derivative instruments on the consolidated balance sheets as assets or liabilities at fair value with such amounts classified as current or long-term based on their anticipated settlement dates. The accounting for the changes in fair value of a derivative depends on the intended use of the derivative and resulting designation. The Partnership has not designated its derivative instruments as hedges for accounting purposes and, as a result, marks its derivative instruments to fair value and recognizes the cash and non-cash change in fair value on derivative instruments for each period in the consolidated statements of operations. Accrued Liabilities Accrued liabilities consist of the following: June 30, December 31, 2020 2019 (In thousands) Interest payable $ 4,391 $ 6,718 Ad valorem taxes payable 3,324 5,632 Derivatives payable 4,627 — Other 97 932 Total accrued liabilities $ 12,439 $ 13,282 Non-controlling Interest Non-controlling interest in the accompanying consolidated financial statements represents Diamondback’s ownership in the net assets of the Operating Company. When Diamondback’s relative ownership interest in the Operating Company changes, adjustments to non-controlling interest and common unitholder equity, tax effected, will occur. Because these changes in the Partnership’s ownership interest in the Operating Company did not result in a change of control, the transactions were accounted for as equity transactions under ASC Topic 810, Consolidation, which requires that any differences between the carrying value of the Partnership’s basis in the Operating Company and the fair value of the consideration received are recognized directly in equity and attributed to the controlling interest. In the first quarter of 2019, the Partnership recorded an adjustment to non-controlling interest of $90.1 million , common unitholder equity of $(71.2) million , and deferred tax asset of $18.9 million to reflect the ownership structure that was effective at March 31, 2019. The adjustment had no impact on earnings. See Note 7 - Unitholders' Equity and Partnership Distributions for further discussion of change in ownership. Recent Accounting Pronouncements The Partnership considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or clarifications of ASUs previously disclosed. The following table provides a brief description of recent accounting pronouncements and the Partnership’s analysis of the effects on its financial statements: Standard Description Date of Adoption Effect on Financial Statements or Other Significant Matters Recently Adopted Pronouncements 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. Q1 2020 The Partnership adopted this update effective January 1, 2020. The adoption of this update did not have a material impact on its financial position, results of operations or liquidity since it does not have a history of credit losses. Pronouncements Not Yet Adopted ASU 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes” This update is intended to simplify the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance. Q1 2021 This update is effective for public business entities beginning after December 15, 2020 with early adoption permitted. 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 | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | 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 recogni zed at the point control of the product is transferred to the purchaser at the wellhead or at the gas processing facility based on the Partnership’s percentage ownership share of the revenue, net of any deductions for gathering and transportation. V irtually all of the pricing provisions in the Partnership’s contracts are tied to a market index. The following table disaggregates the Partnership’s total royalty income by product type: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Oil income $ 27,617 $ 65,863 $ 99,817 $ 117,850 Natural gas income 1,234 (1,074) 1,578 2,765 Natural gas liquids income 3,593 5,653 7,878 10,255 Total royalty income $ 32,444 $ 70,442 $ 109,273 $ 130,870 |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS 2020 Activity During the six months ended June 30, 2020, the Partnership acquired, from unrelated third-party sellers, mineral and royalty interests representin g 4,948 gross (410 net royalty) acres in the Permian Basin for an aggregate purchase price of approximately $63.4 million, subject to post-closing adjustments. The Partnership funded these acquisitions with cash on hand and borrowings under the Operating Company ’s revolving credit facility. 2019 Activity During the six months ended June 30, 2019, the Partnership acquired, from unrelated third-party sellers, mineral and royalty interests representing 1,028 net royalty acres for an aggregate purchase price of approximately $126.9 million. The Partnership funded these acquisitions with cash on hand, a portion of the net proceeds from its February 2019 offering of common units and borrowings under the Operating Company’s revolving credit facility. |
OIL AND NATURAL GAS INTERESTS
OIL AND NATURAL GAS INTERESTS | 6 Months Ended |
Jun. 30, 2020 | |
Extractive Industries [Abstract] | |
OIL AND NATURAL GAS INTERESTS | OIL AND NATURAL GAS INTERESTS Oil and natural gas interests include the following: June 30, December 31, 2020 2019 (In thousands) Oil and natural gas interests: Subject to depletion $ 1,453,385 $ 1,316,692 Not subject to depletion 1,480,346 1,551,767 Gross oil and natural gas interests 2,933,731 2,868,459 Accumulated depletion and impairment (373,898) (326,474) Oil and natural gas interests, net 2,559,833 2,541,985 Land 5,688 5,688 Property, net of accumulated depletion and impairment $ 2,565,521 $ 2,547,673 As of June 30, 2020 and December 31, 2019, the Partnership had mineral and royalty interests representing 24,714 and 24,304 net royalty acres, respectively. Under the full cost method of accounting, the Partnership is required to perform a ceiling test each quarter. The test determines a limit, or ceiling, on the book value of the proved oil and gas interests. After performing the ceiling test for the quarter ended June 30, 2020, the Partnership was not required to record an impairment. If the trailing 12-month commodity prices continue to fall as compared to the com |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Long-term debt consisted of the following as of the dates indicated: June 30, December 31, 2020 2019 (In thousands) 5.375% Senior Notes due 2027 $ 485,938 $ 500,000 Revolving credit facility 153,500 96,500 Unamortized debt issuance costs (2,237) (2,458) Unamortized discount costs (6,694) (7,268) Total long-term debt $ 630,507 $ 586,774 2027 Senior Notes 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 $490.0 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. During the second quarter of 2020, the Partnership repurchased $14.1 million of the outstanding principal of the Notes at a cash price ranging from 97.5% to 98.5% of the aggregate principal amount, which resulted in an immaterial gain on extinguishment of debt. As of June 30, 2020, the remaining outstanding principal amount of Notes totaled $485.9 million and will mature on November 1, 2027. 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 date, 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 Partnership’s borrowing base was reduced from $775.0 million to $580.0 million during the scheduled semi-annual redetermination in the second quarter of 2020. The borrowing base is scheduled to be re-determined semi-annually in May and November. 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. As of June 30, 2020, there was $426.5 million available for future borrowings under the Operating Company’s revolving credit facility. During the three and six months ended June 30, 2020, the weighted average interest rates on the Operating Company’s revolving credit facility were 2.41% and 2.82%, respectively. The revolving credit facility will mature on November 1, 2022. |
UNITHOLDERS_ EQUITY AND PARTNER
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS | UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS The Partnership has general partner and limite d partner units. At June 30, 2020, the Partnership had a total of 67,831,342 common units issued and outstanding and 90,709,946 Class B units issued and outstanding, of which 731,500 common units and 90,709,946 Class B units were owned by Diamondback, representing approximately 58% of the Partnership’s total 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). 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 its revolving credit facility and finance acquisitions during the period. The following table summarizes the ownership interest in subsidiary changes during the period: Six Months Ended June 30, 2019 (In thousands) Net income attributable to the Partnership $ 36,044 Change in ownership of consolidated subsidiaries due to purchase of subsidiary shares in 2019 offering (71,195) Change from net loss attributable to the Partnership's shareholders and transfers to non-controlling interest $ (35,151) There were no changes in ownership of consolidated subsidiaries during the three and six months ended June 30, 2020 and the three months ended June 30, 2019. Beginning with the first quarter of 2020, the board of directors of the General Partner revised the distribution policy pursuant to which the Operating Company now distributes 25% of the available cash it generates each quarter to its unitholders (including the Partnership), and pursuant to which the Partnership in turn distributes all of the available cash it receives from the Operating Company to its common unitholders. The Partnership’s available cash, and the available cash of the Operating Company, for each quarter is determined by the board of directors of the General Partner following the end of such quarter. The Operating Company’s available cash generally equals its Adjusted EBITDA for the quarter, less cash needed for debt service and other contractual obligations and fixed charges and reserves for future operating or capital needs that the board of directors of the General Partner deems necessary or appropriate, if any. The Partnership’s available cash for each quarter generally equals its Adjusted EBITDA (which is the Partnership’s proportional share of the available cash of the Operating Company for the quarter), less cash needed for the payment of income taxes by it, if any, and the preferred distribution. Immediately prior to the adoption of this policy, the Operating Company’s policy was to distribute all of its available cash quarterly to its unitholders rather than 25%. The distribution policy was changed to enable the Operating Company to retain cash flow to help strengthen the Partnership’s balance sheet. The board of directors of the General Partner may change the distribution policies at any time. The Partnership is not required to pay distributions to its common unitholders on a quarterly or other basis. 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 2019 $ 0.45 February 7, 2020 February 21, 2020 February 28, 2020 Q1 2020 $ 0.10 April 30, 2020 May 14, 2020 May 21, 2020 Cash distributions will be made to the common unitholders of record on the applicable record date, generally within 60 days after the end of each quarter. Amendment to LLC Agreement - Tax Allocation On March 30, 2020, the Partnership, as managing member of the Operating Company, entered into the First Amendment to Second Amended and Restated Limited Liability Company Agreement of the Operating Company (the “Amendment”) to extend the remaining period of special allocations to Diamondback of the Operating Company’s income and gains over losses and deductions (but before depletion) from two |
EARNINGS PER COMMON UNIT
EARNINGS PER COMMON UNIT | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER COMMON UNIT | EARNINGS PER COMMON UNIT The net (loss) income per common unit on the consolidated statements of operations is based on the net (loss) income of the Partnership for the three and six months ended June 30, 2020 and 2019, since this is the amount of net (loss) income that is attributable to the Partnership’s common units. The Partnership’s net (loss) income is allocated wholly to the common units, as the General Partner does not have an economic interest. Payments made to the Partnership’s unitholders are determined in relation to the cash distribution policy described in Note 7—Unitholders' Equity and Partnership Distributions. Basic net (loss) income per common unit is calculated by dividing net (loss) income by the weighted-average number of common units outstanding during the period. Diluted net (loss) income per common unit gives effect, when applicable, to unvested common units granted under the LTIP. A reconciliation of the components of basic and diluted earnings per common unit is presented in the table below: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands, except per unit amounts) Net (loss) income attributable to the period $ (21,752) $ 2,265 $ (163,921) $ 36,044 Less: net loss allocated to participating securities (1) (4) (21) (24) (63) Net (loss) income attributable to common unitholders $ (21,756) $ 2,244 $ (163,945) $ 35,981 Weighted average common units outstanding: Basic weighted average common units outstanding 67,831 62,628 67,827 59,058 Effect of dilutive securities: Potential common units issuable (2) — 36 — 36 Diluted weighted average common units outstanding 67,831 62,664 67,827 59,094 Net (loss) income per common unit, basic $ (0.32) $ 0.04 $ (2.42) $ 0.61 Net (loss) income per common unit, diluted $ (0.32) $ 0.04 $ (2.42) $ 0.61 (1) Distribution equivalent rights granted to employees are considered participating securities. (2) For the three and six months ended June 30, 2020, no p otential common units were included in the computation of diluted earnings per common unit because their inclusion would have been anti-dilutive under the treasury stock method for the periods presented but could potentially dilute basic earnings per common unit in future periods. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Partnership’s effective income tax rates were 0% and 0.4% for the three months ended June 30, 2020 and 2019, respectively, and (986.6)% a nd (39.5)% for the six months ended June 30, 2020 and 2019, respectively. Total income tax expense for the three and six months ended June 30, 2020 differed from amounts computed by applying the United States federal statutory tax rate to pre-tax loss for the period, primarily due to net income attributable to the non-controlling interest and the impact of recording a valuation allowance on the Partnership’s deferred tax assets. Total income tax benefit for the three and six months ended June 30, 2019 differed from amounts computed by applying the United States federal statutory rate to pre-tax income for the period primarily due to net income attributable to the non-controlling interest and, for the six months ended June 30, 2019, the revision of estimated deferred taxes recognized as a result of the Partnership’s election to be treated as a corporation for U.S. federal income tax purposes effective May 10, 2018. For the six months ended June 30, 2020, the Partnership’s total income tax provision includes a discrete income tax expense of approximately $142.5 million recorded for the three months ended March 31, 2020, related to application of a full valuation allowance on the Partnership’s beginning-of-the-year deferred tax assets, which consist primarily of its investment in the Operating Company and federal net operating loss carryforwards. A valuation allowance was also applied against the year-to-date tax benefit resulting from the Partnership’s projected pretax loss for the year. The determination to record a valuation allowance as of March 31, 2020 was based on its assessment of all available evidence, both positive and negative, supporting realizability of the Partnership’s deferred tax assets, as required by applicable financial accounting standards. In light of those criteria for recognizing the tax benefit of deferred tax assets, the Partnership’s assessment resulted in application of a full valuation allowance against its deferred tax assets as of March 31, 2020 and June 30, 2020. For the six months ended June 30, 2019, the Partnership recorded a discrete income tax benefit of approximately $35.2 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 consisted primarily of the sum of the Partnership’s unitholders’ tax basis 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 information available, the Partnership 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 |
DERIVATIVES
DERIVATIVES | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES | DERIVATIVES All derivative financial instruments are recorded at fair value. The Partnership has not designated its derivative instruments as hedges for accounting purposes and, as a result, marks its derivative instruments to fair value and recognizes the cash and non-cash changes in fair value in the combined consolidated statements of operations under the caption “Loss on derivative instruments, net.” Commodity Contracts The Partnership uses fixed price swap contracts, fixed price basis swap contracts and costless collars with corresponding put and call options to reduce price volatility associated with certain of its royalty income. With respect to the Partnership’s fixed price swap contracts and fixed price basis swap contracts, the counterparty is required to make a payment to the Partnership if the settlement price for any settlement period is less than the swap or basis price, and the Partnership is required to make a payment to the counterparty if the settlement price for any settlement period is greater than the swap or basis price. The Partnership has fixed price basis swaps for the spread between the Cushing crude oil price and the Midland crude oil price as well as the spread between the Henry Hub natural gas price and the Waha Hub natural gas price. Under the Partnership’s costless collar contracts, each collar has an established floor price and ceiling price. When the settlement price is below the floor price, the counterparty is required to make a payment to the Partnership and when the settlement price is above the ceiling price, the Partnership is required to make a payment to the counterparty. When the settlement price is between the floor and the ceiling, there is no payment required. The Partnership’s derivative contracts are based upon reported settlement prices on commodity exchanges, with crude oil derivative settlements based on New York Mercantile Exchange West Texas Intermediate pricing (Cushing and Midland-Cushing) and with natural gas derivative settlements based on the New York Mercantile Exchange Henry Hub and Waha Hub pricing. By using derivative instruments to economically hedge exposure to changes in commodity prices, the Partnership exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Partnership, which creates credit risk. The Partnership’s counterparties are all participants in the secured second amended and restated credit agreement, which is secured by substantially all of the assets of the guarantor subsidiaries; therefore, the Partnership is not required to post any collateral. The Partnership’s counterparties have been determined to have an acceptable credit risk; therefore, the Partnership does not require collateral from its counterparties. As of June 30, 2020, the Partnership had the following outstanding derivative contracts. When aggregating multiple contracts, the weighted average contract price is disclosed. 2020 Swaps Volume Fixed Price Swap (per Bbl/MMBtu) Oil swaps - WTI Cushing (Bbls) 184,000 $ 27.45 Oil basis swaps - WTI Midland-Cushing (Bbls) 736,000 $ (2.60) Natural gas basis swaps - Waha Hub (MMBtu) 4,600,000 $ (2.07) Collars - WTI Cushing 2020 2021 Volume (Bbls) 2,576,000 3,650,000 Floor price (per Bbl) $ 28.86 $ 30.00 Ceiling price (per Bbl) $ 32.33 $ 43.05 Deferred premium call options - WTI Cushing 2020 Volume (Bbls) 736,000 Premium $ 1.89 Strike price (per Bbl) $ 45.00 Balance sheet offsetting of derivative assets and liabilities The fair value of swaps is generally determined using established index prices and other sources which are based upon, among other things, futures prices and time to maturity. These fair values are recorded by netting asset and liability positions, including any deferred premiums, that are with the same counterparty and are subject to contractual terms which provide for net settlement. See Note 11—Fair Value Measurements for further details. The following tables present the gross amounts of recognized derivative assets and liabilities, the amounts offset under master netting arrangements with counterparties and the resulting net amounts presented in the Partnership’s consolidated balance sheets as of June 30, 2020. June 30, 2020 (In thousands) Gross derivative assets $ 13,084 Amounts netted (13,084) Net derivative assets $ — Gross derivative liabilities $ 52,915 Amounts netted (13,084) Net derivative liabilities $ 39,831 The Partnership did not have any derivatives prior to February 2020. The net amounts are classified as current or noncurrent based on their anticipated settlement dates. The net fair value of the Partnership’s derivative assets and liabilities and their locations on the consolidated balance sheet are as follows: June 30, 2020 (In thousands) Current assets: derivative instruments $ — Noncurrent assets: derivative instruments — Total assets $ — Current liabilities: derivative instruments $ 33,956 Noncurrent liabilities: derivative instruments 5,875 Total liabilities $ 39,831 None of the Partnership’s derivatives have been designated as hedges. As such, all changes in fair value are immediately recognized in earnings. The following table summarizes the gains and losses on derivative instruments included in the consolidated statements of operations: Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Loss on derivative instruments $ (34,443) $ — $ (42,385) $ — Net cash payments on derivatives $ (2,101) $ — $ (2,554) $ — |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2020 | |
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. Assets and Liabilities Measured at Fair Value on a Recurring Basis Certain assets and liabilities are reported at fair value on a recurring basis, including the Partnership’s derivative instruments and investment, which is included in other assets on the consolidated balance sheets. The Partnership measures its investment utilizing the fair value option, and as such the investment is classified as Level 1 in the fair value hierarchy. The fair values of the Partnership’s fixed price swaps, fixed price basis swaps and costless collars are measured internally using established commodity futures price strips for the underlying commodity provided by a reputable third party, the contracted notional volumes, and time to maturity. These valuations are Level 2 in puts. The following table provides fair value measurement information for financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (In thousands) Assets: Investment $ 12,680 $ — $ — $ 19,357 $ — $ — Liabilities: Derivative instruments $ — $ (39,831) $ — $ — $ — $ — Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The following table provides the fair value of financial instruments that are not recorded at fair value in the consolidated balance sheets: June 30, 2020 December 31, 2019 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Debt: Revolving credit facility $ 153,500 $ 153,500 $ 96,500 $ 96,500 5.375% Senior Notes due 2027 (1) $ 477,007 $ 476,462 $ 490,274 $ 521,100 (1) The carrying value includes associated deferred loan costs and any discount. The fair value of the Operating Company’s revolving credit facility approximates the carrying value based on borrowing rates available to the Partnership for bank loans with similar terms and maturities and is classified as Level 2 in the fair value hierarchy. The fair value of the Notes was determined using the June 30, 2020 quoted market price, a Level 1 classification in the fair value hierarchy. Fair Value of Financial Assets The Partnership has other financial instruments consisting of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities. The carrying value of these instruments approximates fair value. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIESThe Partnership is a party to various routine legal proceedings, disputes and claims from time to time arising in the ordinary 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’s management believes that none of these matters, if ultimately decided adversely, will have a material adverse effect on the Partnership’s financial condition, results of operations or cash flows. 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 | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Cash Distribution On July 29, 2020, the board of directors of the General Partner approved a cash distribution for the second quarter of 2020 of $0.03 per common unit, payable on August 20, 2020, to eligible unitholders of record at the close of business on August 13, 2020. Repurchases of Notes After the second quarter of 2020, the Partnership repurchased $6.0 million of the outstanding principal of the Notes at a cash price of 98.5% of the aggregate principal amount, which resulted in an immaterial gain on extinguishment of debt. As of July 31, 2020, the remaining outstanding principal amount of Notes totaled $479.9 million. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements and related notes thereto were prepared in accordance with GAAP. All material intercompany balances and transactions have been eliminated upon consolidation. These consolidated 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 SEC rules and regulations, although the Partnership believes the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Partnership’s most recent Annual Report on Form 10–K for the fiscal year ended December 31, 2019, 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. Making accurate estimates and assumptions is particularly difficult as the oil and gas industry experiences challenges resulting from negative pricing pressure from the effects of COVID-19 and actions by OPEC members and other exporting nations on the supply and demand in global oil and natural gas markets. Many companies in the oil and natural gas industry have changed near term business plans in response to changing market conditions. The aforementioned circumstances generally increase the estimation uncertainty in the Partnership’s accounting estimates, particularly the accounting estimates involving financial forecasts. The Partnership evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Partnership considers reasonable in each particular circumstance. 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, the recoverability of costs of unevaluated properties, fair value estimates of commodity derivatives, unit–based compensation and estimate of income taxes. |
Accounts Receivable | Accounts Receivable Accounts receivable consist of receivables from oil and natural gas sales. The operators remit payment for production directly to the Partnership. Most payments for production are received within three months after the production date. Payments on new wells added organically or through acquisition may be further delayed due to title opinion work which is required to be completed by the operator before payments are released. The Partnership adopted Accounting Standards Update (“ASU”) 2016-13 and the subsequent applicable modifications to the rule on January 1, 2020. Accounts receivable are stated at amounts due from purchasers, net of an allowance for expected losses as estimated by the Partnership when collection is deemed doubtful. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Partnership determines its allowance by considering a number of factors, including the Partnership’s previous loss history, the debtor’s current ability to pay its obligation to the Partnership, the condition of the general economy and the industry as a whole. The Partnership writes off specific accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for expected losses. The adoption of ASU 2016-13 did not result in a material change to the Partnership’s allowance, and no cumulative-effect adjustment was made to beginning unitholders’ equity. At June 30, 2020, the Partnership recorded an immaterial allowance for expected losses and did not record such an allowance at December 31, 2019. |
Derivative Instruments | Derivative Instruments The Partnership is required to recognize its derivative instruments on the consolidated balance sheets as assets or liabilities at fair value with such amounts classified as current or long-term based on their anticipated settlement dates. The accounting for the changes in fair value of a derivative depends on the intended use of the derivative and resulting designation. The Partnership has not designated its derivative instruments as hedges for accounting purposes and, as a result, marks its derivative instruments to fair value and recognizes the cash and non-cash change in fair value on derivative instruments for each period in the consolidated statements of operations. |
Non-controlling interest | Non-controlling InterestNon-controlling interest in the accompanying consolidated financial statements represents Diamondback’s ownership in the net assets of the Operating Company. When Diamondback’s relative ownership interest in the Operating Company changes, adjustments to non-controlling interest and common unitholder equity, tax effected, will occur. Because these changes in the Partnership’s ownership interest in the Operating Company did not result in a change of control, the transactions were accounted for as equity transactions under ASC Topic 810, Consolidation, which requires that any differences between the carrying value of the Partnership’s basis in the Operating Company and the fair value of the consideration received are recognized directly in equity and attributed to the controlling interest. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Partnership considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or clarifications of ASUs previously disclosed. The following table provides a brief description of recent accounting pronouncements and the Partnership’s analysis of the effects on its financial statements: Standard Description Date of Adoption Effect on Financial Statements or Other Significant Matters Recently Adopted Pronouncements 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. Q1 2020 The Partnership adopted this update effective January 1, 2020. The adoption of this update did not have a material impact on its financial position, results of operations or liquidity since it does not have a history of credit losses. Pronouncements Not Yet Adopted ASU 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes” This update is intended to simplify the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance. Q1 2021 This update is effective for public business entities beginning after December 15, 2020 with early adoption permitted. 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 recogni zed at the point control of the product is transferred to the purchaser at the wellhead or at the gas processing facility based on the Partnership’s percentage ownership share of the revenue, net of any deductions for gathering and transportation. V irtually all of the pricing provisions in the Partnership’s contracts are tied to a market index. The following table disaggregates the Partnership’s total royalty income by product type: |
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. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following: June 30, December 31, 2020 2019 (In thousands) Interest payable $ 4,391 $ 6,718 Ad valorem taxes payable 3,324 5,632 Derivatives payable 4,627 — Other 97 932 Total accrued liabilities $ 12,439 $ 13,282 |
Recent Accounting Pronouncements | The Partnership considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or clarifications of ASUs previously disclosed. The following table provides a brief description of recent accounting pronouncements and the Partnership’s analysis of the effects on its financial statements: Standard Description Date of Adoption Effect on Financial Statements or Other Significant Matters Recently Adopted Pronouncements 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. Q1 2020 The Partnership adopted this update effective January 1, 2020. The adoption of this update did not have a material impact on its financial position, results of operations or liquidity since it does not have a history of credit losses. Pronouncements Not Yet Adopted ASU 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes” This update is intended to simplify the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance. Q1 2021 This update is effective for public business entities beginning after December 15, 2020 with early adoption permitted. 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 C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table disaggregates the Partnership’s total royalty income by product type: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Oil income $ 27,617 $ 65,863 $ 99,817 $ 117,850 Natural gas income 1,234 (1,074) 1,578 2,765 Natural gas liquids income 3,593 5,653 7,878 10,255 Total royalty income $ 32,444 $ 70,442 $ 109,273 $ 130,870 |
OIL AND NATURAL GAS INTERESTS (
OIL AND NATURAL GAS INTERESTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Extractive Industries [Abstract] | |
Aggregate capitalized costs related to oil and natural gas production activities | Oil and natural gas interests include the following: June 30, December 31, 2020 2019 (In thousands) Oil and natural gas interests: Subject to depletion $ 1,453,385 $ 1,316,692 Not subject to depletion 1,480,346 1,551,767 Gross oil and natural gas interests 2,933,731 2,868,459 Accumulated depletion and impairment (373,898) (326,474) Oil and natural gas interests, net 2,559,833 2,541,985 Land 5,688 5,688 Property, net of accumulated depletion and impairment $ 2,565,521 $ 2,547,673 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-Term Debt | June 30, December 31, 2020 2019 (In thousands) 5.375% Senior Notes due 2027 $ 485,938 $ 500,000 Revolving credit facility 153,500 96,500 Unamortized debt issuance costs (2,237) (2,458) Unamortized discount costs (6,694) (7,268) Total long-term debt $ 630,507 $ 586,774 |
UNITHOLDERS_ EQUITY AND PARTN_2
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Schedule of change in ownership interest | The following table summarizes the ownership interest in subsidiary changes during the period: Six Months Ended June 30, 2019 (In thousands) Net income attributable to the Partnership $ 36,044 Change in ownership of consolidated subsidiaries due to purchase of subsidiary shares in 2019 offering (71,195) Change from net loss attributable to the Partnership's shareholders and transfers to non-controlling interest $ (35,151) |
Schedule of cash distributions | 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 2019 $ 0.45 February 7, 2020 February 21, 2020 February 28, 2020 Q1 2020 $ 0.10 April 30, 2020 May 14, 2020 May 21, 2020 |
EARNINGS PER COMMON UNIT (Table
EARNINGS PER COMMON UNIT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net income per common unit | A reconciliation of the components of basic and diluted earnings per common unit is presented in the table below: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands, except per unit amounts) Net (loss) income attributable to the period $ (21,752) $ 2,265 $ (163,921) $ 36,044 Less: net loss allocated to participating securities (1) (4) (21) (24) (63) Net (loss) income attributable to common unitholders $ (21,756) $ 2,244 $ (163,945) $ 35,981 Weighted average common units outstanding: Basic weighted average common units outstanding 67,831 62,628 67,827 59,058 Effect of dilutive securities: Potential common units issuable (2) — 36 — 36 Diluted weighted average common units outstanding 67,831 62,664 67,827 59,094 Net (loss) income per common unit, basic $ (0.32) $ 0.04 $ (2.42) $ 0.61 Net (loss) income per common unit, diluted $ (0.32) $ 0.04 $ (2.42) $ 0.61 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative instruments | As of June 30, 2020, the Partnership had the following outstanding derivative contracts. When aggregating multiple contracts, the weighted average contract price is disclosed. 2020 Swaps Volume Fixed Price Swap (per Bbl/MMBtu) Oil swaps - WTI Cushing (Bbls) 184,000 $ 27.45 Oil basis swaps - WTI Midland-Cushing (Bbls) 736,000 $ (2.60) Natural gas basis swaps - Waha Hub (MMBtu) 4,600,000 $ (2.07) Collars - WTI Cushing 2020 2021 Volume (Bbls) 2,576,000 3,650,000 Floor price (per Bbl) $ 28.86 $ 30.00 Ceiling price (per Bbl) $ 32.33 $ 43.05 Deferred premium call options - WTI Cushing 2020 Volume (Bbls) 736,000 Premium $ 1.89 Strike price (per Bbl) $ 45.00 |
Schedule of netting offsets of derivative assets and liabilities | The following tables present the gross amounts of recognized derivative assets and liabilities, the amounts offset under master netting arrangements with counterparties and the resulting net amounts presented in the Partnership’s consolidated balance sheets as of June 30, 2020. June 30, 2020 (In thousands) Gross derivative assets $ 13,084 Amounts netted (13,084) Net derivative assets $ — Gross derivative liabilities $ 52,915 Amounts netted (13,084) Net derivative liabilities $ 39,831 |
Schedule of derivative instruments included in the consolidated balance sheet | The net amounts are classified as current or noncurrent based on their anticipated settlement dates. The net fair value of the Partnership’s derivative assets and liabilities and their locations on the consolidated balance sheet are as follows: June 30, 2020 (In thousands) Current assets: derivative instruments $ — Noncurrent assets: derivative instruments — Total assets $ — Current liabilities: derivative instruments $ 33,956 Noncurrent liabilities: derivative instruments 5,875 Total liabilities $ 39,831 |
Summary of derivative contract gains and losses included in the consolidated statements of operations | None of the Partnership’s derivatives have been designated as hedges. As such, all changes in fair value are immediately recognized in earnings. The following table summarizes the gains and losses on derivative instruments included in the consolidated statements of operations: Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Loss on derivative instruments $ (34,443) $ — $ (42,385) $ — Net cash payments on derivatives $ (2,101) $ — $ (2,554) $ — |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Consolidated Balance Sheets | The following table provides fair value measurement information for financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (In thousands) Assets: Investment $ 12,680 $ — $ — $ 19,357 $ — $ — Liabilities: Derivative instruments $ — $ (39,831) $ — $ — $ — $ — |
Fair Value, Assets Measured on Recurring and Nonrecurring Basis | The following table provides the fair value of financial instruments that are not recorded at fair value in the consolidated balance sheets: June 30, 2020 December 31, 2019 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Debt: Revolving credit facility $ 153,500 $ 153,500 $ 96,500 $ 96,500 5.375% Senior Notes due 2027 (1) $ 477,007 $ 476,462 $ 490,274 $ 521,100 (1) The carrying value includes associated deferred loan costs and any discount. |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Details) - Viper Energy Partners LP - Diamondback Energy, Inc. | 1 Months Ended | 6 Months Ended |
Mar. 31, 2019 | Jun. 30, 2020 | |
Limited Partners' Capital Account [Line Items] | ||
Percent of General Partner interest | 100.00% | |
Percent of limited partnership interest | 54.00% | 58.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||||||
Allowance for doubtful accounts | $ 0 | |||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Change in ownership of consolidated subsidiaries, net | $ 18,925,000 | |||||
Non-Controlling Interest | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Change in ownership of consolidated subsidiaries, net | 90,120,000 | |||||
Limited Partner | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Change in ownership of consolidated subsidiaries, net | $ 0 | $ 0 | $ 0 | $ (71,195,000) | ||
Limited Partner | Common Units | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Change in ownership of consolidated subsidiaries, net | $ (71,195,000) |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Accrued Liabilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Interest payable | $ 4,391 | $ 6,718 |
Ad valorem taxes payable | 3,324 | 5,632 |
Derivatives payable | 4,627 | 0 |
Other | 97 | 932 |
Total accrued liabilities | $ 12,439 | $ 13,282 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Royalty income | $ 32,444 | $ 70,442 | $ 109,273 | $ 130,870 |
Oil income | ||||
Disaggregation of Revenue [Line Items] | ||||
Royalty income | 27,617 | 65,863 | 99,817 | 117,850 |
Natural gas income | ||||
Disaggregation of Revenue [Line Items] | ||||
Royalty income | 1,234 | (1,074) | 1,578 | 2,765 |
Natural gas liquids income | ||||
Disaggregation of Revenue [Line Items] | ||||
Royalty income | $ 3,593 | $ 5,653 | $ 7,878 | $ 10,255 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Millions | 6 Months Ended | ||
Jun. 30, 2020USD ($)a | Jun. 30, 2019USD ($)a | Dec. 31, 2019a | |
Business Acquisition [Line Items] | |||
Mineral properties, net royalty acres | 24,714 | 24,304 | |
Mineral interests in Permian Basin | |||
Business Acquisition [Line Items] | |||
Mineral interests acquired, gross acres (in acre) | 4,948 | ||
Mineral interests acquired, net royalty acres (in acre) | 410 | ||
Aggregate purchase price | $ | $ 63.4 | ||
Miscellaneous Mineral Interests Acquired | |||
Business Acquisition [Line Items] | |||
Mineral interests acquired, net royalty acres (in acre) | 1,028 | ||
Aggregate purchase price | $ | $ 126.9 |
OIL AND NATURAL GAS INTERESTS_2
OIL AND NATURAL GAS INTERESTS (Details) $ in Thousands | Jun. 30, 2020USD ($)a | Dec. 31, 2019USD ($)a |
Oil and natural gas interests: | ||
Subject to depletion | $ 1,453,385 | $ 1,316,692 |
Not subject to depletion | 1,480,346 | 1,551,767 |
Gross oil and natural gas interests | 2,933,731 | 2,868,459 |
Accumulated depletion and impairment | (373,898) | (326,474) |
Oil and natural gas interests, net | 2,559,833 | 2,541,985 |
Land | 5,688 | 5,688 |
Property, net | $ 2,565,521 | $ 2,547,673 |
Mineral properties, net royalty acres | a | 24,714 | 24,304 |
DEBT - Schedule of Debt (Detail
DEBT - Schedule of Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Oct. 16, 2019 |
Line of Credit Facility [Line Items] | |||
Unamortized debt issuance costs | $ (2,237) | $ (2,458) | |
Unamortized discount costs | (6,694) | (7,268) | |
Total long-term debt | 630,507 | 586,774 | |
5.375 % Senior Notes due 2027 | |||
Line of Credit Facility [Line Items] | |||
Long term debt gross | 485,938 | 500,000 | |
5.375 % Senior Notes due 2027 | Senior Notes | |||
Line of Credit Facility [Line Items] | |||
Long term debt gross | 485,900 | ||
Debt instrument, interest rate, stated percentage | 5.375% | ||
Revolving credit facility | |||
Line of Credit Facility [Line Items] | |||
Long term debt gross | $ 153,500 | $ 96,500 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) | Oct. 16, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($)redetermindation | Dec. 31, 2019USD ($) | Jul. 20, 2018USD ($) |
Revolving credit facility | |||||
Line of Credit Facility [Line Items] | |||||
Debt outstanding | $ 153,500,000 | $ 153,500,000 | $ 96,500,000 | ||
Credit facility maximum borrowing capacity | $ 2,000,000,000 | ||||
Credit facility borrowing base | 580,000,000 | $ 580,000,000 | $ 775,000,000 | ||
Number of interim redeterminations that may be requested | redetermindation | 3 | ||||
Period of redeterminations of borrowing base | 12 months | ||||
Credit facility remaining borrowing capacity | $ 426,500,000 | $ 426,500,000 | |||
Weighted average interest rate | 2.41% | 2.82% | |||
5.375 % Senior Notes due 2027 | |||||
Line of Credit Facility [Line Items] | |||||
Debt outstanding | $ 485,938,000 | $ 485,938,000 | $ 500,000,000 | ||
5.375 % Senior Notes due 2027 | Senior Notes | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, face amount | $ 500,000,000 | ||||
Debt instrument, interest rate, stated percentage | 5.375% | ||||
Proceeds from issuance of senior long-term debt | $ 490,000,000 | ||||
Debt repurchased | 14,100,000 | 14,100,000 | |||
Debt outstanding | $ 485,900,000 | $ 485,900,000 | |||
5.375 % Senior Notes due 2027 | Senior Notes | Minimum | |||||
Line of Credit Facility [Line Items] | |||||
Discount rate | 97.50% | 97.50% | |||
5.375 % Senior Notes due 2027 | Senior Notes | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Discount rate | 98.50% | 98.50% |
UNITHOLDERS_ EQUITY AND PARTN_3
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2020 | Jun. 30, 2020 | Jul. 31, 2020 | Dec. 31, 2019 | |
Limited Partners' Capital Account [Line Items] | |||||
Dedication period remaining | 2 years | 4 years | |||
Cash Distribution | |||||
Limited Partners' Capital Account [Line Items] | |||||
Percentage of cash available | 25.00% | ||||
Cash distributions, period after end of each quarter | 60 days | ||||
Common Units | |||||
Limited Partners' Capital Account [Line Items] | |||||
Limited partners' capital account, units issued (in shares) | 67,831,342 | 67,805,707 | |||
Limited partners' capital account, units outstanding (in shares) | 67,831,342 | 67,805,707 | |||
Common Units | Follow-on Public Offering | |||||
Limited Partners' Capital Account [Line Items] | |||||
Common units issued in public offerings (in shares) | 10,925,000 | ||||
Net proceeds from offering | $ 340.6 | ||||
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 | ||||
Class B Units | |||||
Limited Partners' Capital Account [Line Items] | |||||
Limited partners' capital account, units issued (in shares) | 90,709,946 | 90,709,946 | |||
Limited partners' capital account, units outstanding (in shares) | 90,709,946 | 90,709,946 | 90,709,946 | ||
Class B Units | Diamondback Energy, Inc. | |||||
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 | 54.00% | 58.00% |
UNITHOLDERS_ EQUITY AND PARTN_4
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS - Ownership Interest in Subsidiary Changes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||
Net (loss) income attributable to the period | $ (21,752) | $ 2,265 | $ (163,921) | $ 36,044 | |
Change in ownership of consolidated subsidiaries due to purchase of subsidiary shares in 2019 offering | $ 18,925 | ||||
Limited Partner | |||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||
Net (loss) income attributable to the period | 36,044 | ||||
Change in ownership of consolidated subsidiaries due to purchase of subsidiary shares in 2019 offering | $ 0 | $ 0 | $ 0 | (71,195) | |
Change from net loss attributable to the Partnership's shareholders and transfers to non-controlling interest | $ (35,151) |
UNITHOLDERS_ EQUITY AND PARTN_5
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS - Partnership Distributions (Details) - $ / shares | Apr. 30, 2020 | Feb. 07, 2020 |
Cash Distribution | ||
Limited Partners' Capital Account [Line Items] | ||
Cash distributions, amount per common unit (in USD per unit) | $ 0.10 | $ 0.45 |
EARNINGS PER COMMON UNIT (Detai
EARNINGS PER COMMON UNIT (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Net (loss) income attributable to the period | $ (21,752) | $ 2,265 | $ (163,921) | $ 36,044 |
Less: net income allocated to participating securities | (4) | (21) | (24) | (63) |
Net (loss) income attributable to common unitholders | $ (21,756) | $ 2,244 | $ (163,945) | $ 35,981 |
Basic weighted average common units outstanding (in shares) | 67,831,000 | 62,628,000 | 67,827,000 | 59,058,000 |
Effect of dilutive securities: | ||||
Effect of dilutive securities: Potential common units issuable (in shares) | 0 | 36,000 | 0 | 36,000 |
Diluted weighted average common units outstanding (in shares) | 67,831,000 | 62,664,000 | 67,827,000 | 59,094,000 |
Net income per common unit, basic (in USD per share) | $ (0.32) | $ 0.04 | $ (2.42) | $ 0.61 |
Net income per common unit, diluted (in USD per share) | $ (0.32) | $ 0.04 | $ (2.42) | $ 0.61 |
Anti-dilutive for potentially dilute basic earnings per common unit (in shares) | 0 | 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate reconciliation, percent | 0.00% | 0.40% | (986.60%) | (39.50%) |
Discrete income tax benefit related to deferred taxes recorded during the period | $ 142.5 | $ 35.2 |
DERIVATIVES - Open Derivative P
DERIVATIVES - Open Derivative Positions (Details) | 6 Months Ended |
Jun. 30, 2020MMBTU$ / bbl$ / MMBTUbbl | |
Oil swaps - WTI Cushing (Bbls) | |
Derivative [Line Items] | |
Volume (Bbls) | bbl | 184,000 |
Fixed Price Swap (per Bbl/MMBtu) | 27.45 |
Oil basis swaps - WTI Midland-Cushing (Bbls) | |
Derivative [Line Items] | |
Volume (Bbls) | bbl | 736,000 |
Fixed Price Swap (per Bbl/MMBtu) | (2.60) |
Collars - WTI (Cushing) 2020 | |
Derivative [Line Items] | |
Volume (Bbls) | bbl | 2,576,000 |
Floor price (per Bbl) | 28.86 |
Ceiling price (per Bbl) | 32.33 |
Collars - WTI (Cushing) 2021 | |
Derivative [Line Items] | |
Volume (Bbls) | bbl | 3,650,000 |
Floor price (per Bbl) | 30 |
Ceiling price (per Bbl) | 43.05 |
Natural Gas Swaps Waha Hub 2020 | |
Derivative [Line Items] | |
Volume, energy measure (MMBtu) | MMBTU | 4,600,000 |
Fixed Price Swap (per Bbl/MMBtu) | $ / MMBTU | (2.07) |
Deferred Premium Call Options - WTI (Cushing) | |
Derivative [Line Items] | |
Volume (Bbls) | bbl | 736,000 |
Premium | 1.89 |
Strike price (per Bbl) | 45 |
DERIVATIVES - Offsetting Deriva
DERIVATIVES - Offsetting Derivative Instruments (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Gross derivative assets | $ 13,084 |
Amounts netted in the Consolidated Balance Sheet | (13,084) |
Total assets | 0 |
Gross amounts of liabilities presented in the Consolidated Balance Sheet | 52,915 |
Amounts netted in the Consolidated Balance Sheet | (13,084) |
Total liabilities | $ 39,831 |
DERIVATIVES - Derivative Assets
DERIVATIVES - Derivative Assets and Liabilities on Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Current assets: derivative instruments | $ 0 | |
Noncurrent assets: derivative instruments | 0 | |
Total assets | 0 | |
Current liabilities: derivative instruments | 33,956 | $ 0 |
Noncurrent liabilities: derivative instruments | 5,875 | $ 0 |
Total liabilities | $ 39,831 |
DERIVATIVES - Gains and Losses
DERIVATIVES - Gains and Losses on Derivative Instruments Included in Statement of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Loss on derivative instruments | $ (34,443) | $ 0 | $ (42,385) | $ 0 |
Net cash payments on derivatives | $ (2,101) | $ 0 | $ (2,554) | $ 0 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in Fair Value of the Partnership's Investment (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Liabilities: | ||
Derivative instruments | $ 39,831 | |
Fair Value, Recurring | Fair Value, Inputs, Level 1 | ||
Assets: | ||
Investment | 12,680 | $ 19,357 |
Liabilities: | ||
Derivative instruments | 0 | 0 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | ||
Assets: | ||
Investment | 0 | 0 |
Liabilities: | ||
Derivative instruments | (39,831) | 0 |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | ||
Assets: | ||
Investment | 0 | 0 |
Liabilities: | ||
Derivative instruments | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value of Financial Instruments Not Recorded at Fair Value (Details) - Fair Value, Nonrecurring - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Carrying Value | 5.375 % Senior Notes due 2027 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instrument, fair value | $ 477,007 | $ 490,274 |
Carrying Value | Revolving credit facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instrument, fair value | 153,500 | 96,500 |
Fair Value | 5.375 % Senior Notes due 2027 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instrument, fair value | 476,462 | 521,100 |
Fair Value | Revolving credit facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instrument, fair value | $ 153,500 | $ 96,500 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 29, 2020 | Apr. 30, 2020 | Feb. 07, 2020 | Jul. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
5.375 % Senior Notes due 2027 | ||||||
Subsequent Event [Line Items] | ||||||
Long term debt gross | $ 485,938 | $ 500,000 | ||||
5.375 % Senior Notes due 2027 | Senior Notes | ||||||
Subsequent Event [Line Items] | ||||||
Debt repurchased | 14,100 | |||||
Long term debt gross | $ 485,900 | |||||
5.375 % Senior Notes due 2027 | Senior Notes | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Debt repurchased | $ 6,000 | |||||
Discount rate | 98.50% | |||||
Long term debt gross | $ 479,900 | |||||
Cash Distribution | ||||||
Subsequent Event [Line Items] | ||||||
Cash distributions, amount per common unit (in USD per unit) | $ 0.10 | $ 0.45 | ||||
Cash Distribution | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Cash distributions, amount per common unit (in USD per unit) | $ 0.03 |