Cover
Cover - shares | 9 Months Ended | ||
Sep. 30, 2020 | Oct. 30, 2020 | Dec. 31, 2019 | |
Entity Information [Line Items] | |||
Document Type | 10-Q | ||
Document Quarterly Report | true | ||
Document Period End Date | Sep. 30, 2020 | ||
Document Transition Report | false | ||
Entity File Number | 001-38919 | ||
Entity Registrant Name | Rattler Midstream LP | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 83-1404608 | ||
Entity Address, Address Line One | 500 West Texas | ||
Entity Address, Address Line Two | 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 | RTLR | ||
Security Exchange Name | NASDAQ | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 44,006,637 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | Q3 | ||
Entity Central Index Key | 0001748773 | ||
Current Fiscal Year End Date | --12-31 | ||
Class B Units | |||
Entity Information [Line Items] | |||
Units outstanding (in shares) | 107,815,152 | 107,815,152 | 107,815,152 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 16,576 | $ 10,633 |
Accounts receivable—related party | 39,560 | 50,270 |
Accounts receivable—third party, net | 8,138 | 9,071 |
Sourced water inventory | 9,678 | 14,325 |
Other current assets | 171 | 1,428 |
Total current assets | 74,123 | 85,727 |
Property, plant and equipment: | ||
Land | 85,826 | 86,072 |
Property, plant and equipment | 1,026,212 | 930,768 |
Accumulated depreciation, amortization and accretion | (90,456) | (61,132) |
Total property, plant and equipment, net | 1,021,582 | 955,708 |
Right of use assets | 738 | 418 |
Equity method investments | 532,008 | 479,558 |
Real estate assets, net | 97,815 | 101,116 |
Intangible lease assets, net | 5,745 | 8,070 |
Deferred tax asset | 75,255 | 0 |
Other assets | 4,977 | 5,796 |
Total assets | 1,812,243 | 1,636,393 |
Current liabilities: | ||
Accounts payable | 263 | 147 |
Accrued liabilities | 37,265 | 76,625 |
Taxes payable | 406 | 189 |
Short-term lease liability | 679 | 418 |
Total current liabilities | 38,613 | 77,379 |
Long-term debt | 575,454 | 424,000 |
Asset retirement obligations | 14,567 | 11,347 |
Long-term lease liability | 59 | 0 |
Deferred income taxes | 0 | 7,827 |
Total liabilities | 628,693 | 520,553 |
Commitments and contingencies (Note 15) | ||
Unitholders’ equity: | ||
General partner—Diamondback | 919 | 979 |
Common units—public (43,996,243 units issued and outstanding as of September 30, 2020 and 43,700,000 units issued and outstanding as of December 31, 2019) | 399,080 | 737,777 |
Class B units—Diamondback (107,815,152 units issued and outstanding as of September 30, 2020 and as of December 31, 2019) | 919 | 979 |
Accumulated other comprehensive income (loss) | (223) | (198) |
Total Rattler Midstream LP unitholders’ equity | 400,695 | 739,537 |
Non-controlling interest | 783,550 | 376,928 |
Non-controlling interest in accumulated other comprehensive loss | (695) | (625) |
Total equity | 1,183,550 | 1,115,840 |
Total liabilities and unitholders’ equity | $ 1,812,243 | $ 1,636,393 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - shares | Oct. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | May 28, 2019 |
Common Units | ||||
Common units issued (in shares) | 43,996,243 | 43,700,000 | ||
Units outstanding (in shares) | 43,996,243 | 43,700,000 | ||
Class B Units | ||||
Common units issued (in shares) | 107,815,152 | 107,815,152 | 107,815,152 | |
Units outstanding (in shares) | 107,815,152 | 107,815,152 | 107,815,152 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Revenues | $ 96,539 | $ 115,415 | $ 314,669 | $ 322,365 |
Costs and expenses: | ||||
Direct operating expenses | 31,173 | 29,789 | 101,425 | 76,381 |
Cost of goods sold (exclusive of depreciation and amortization) | 6,663 | 17,350 | 27,368 | 46,252 |
Real estate operating expenses | 494 | 742 | 1,812 | 1,963 |
Depreciation, amortization and accretion | 10,990 | 11,736 | 35,596 | 31,798 |
General and administrative expenses | 3,140 | 3,240 | 11,829 | 7,677 |
(Gain) loss on disposal of property, plant and equipment | (16) | 0 | 2,765 | (4) |
Total costs and expenses | 52,444 | 62,857 | 180,795 | 164,067 |
Income (loss) from operations | 44,095 | 52,558 | 133,874 | 158,298 |
Other income (expense): | ||||
Interest income (expense), net | (5,817) | (553) | (10,364) | (638) |
Income (loss) from equity method investments | 3,369 | (631) | (9,910) | (695) |
Total other income (expense), net | (2,448) | (1,184) | (20,274) | (1,333) |
Net income (loss) before income taxes | 41,647 | 51,374 | 113,600 | 156,965 |
Provision for (benefit from) income taxes | 2,851 | 3,294 | 7,754 | 22,850 |
Net income (loss) | 38,796 | 48,080 | 105,846 | 134,115 |
Less: Net income (loss) before initial public offering | 0 | 0 | 0 | 65,995 |
Net income (loss) subsequent to initial public offering | 0 | 0 | 0 | 68,120 |
Less: Net income (loss) attributable to non-controlling interest | 29,578 | 36,549 | 80,775 | 51,786 |
Net income (loss) attributable to Rattler Midstream LP | $ 9,218 | $ 11,531 | $ 25,071 | $ 16,334 |
Net income (loss) attributable to limited partners per common unit: | ||||
Basic (in dollars per share) | $ 0.20 | $ 0.26 | $ 0.53 | $ 0.37 |
Diluted (in dollars per share) | $ 0.20 | $ 0.26 | $ 0.53 | $ 0.37 |
Weighted average number of limited partner common units outstanding: | ||||
Basic (in shares) | 43,996 | 43,700 | 43,837 | 43,564 |
Diluted (in shares) | 43,996 | 44,836 | 43,837 | 44,710 |
Revenues—related party | ||||
Revenues: | ||||
Revenues | $ 85,846 | $ 104,866 | $ 280,460 | $ 296,508 |
Revenues—third party | ||||
Revenues: | ||||
Revenues | 7,229 | 6,840 | 23,504 | 15,405 |
Rental income—related party | ||||
Revenues: | ||||
Revenues | 2,282 | 1,399 | 5,101 | 3,370 |
Rental income—third party | ||||
Revenues: | ||||
Revenues | 867 | 1,894 | 4,653 | 5,999 |
Other real estate income—related party | ||||
Revenues: | ||||
Revenues | 149 | 111 | 318 | 265 |
Other real estate income—third party | ||||
Revenues: | ||||
Revenues | $ 166 | $ 305 | $ 633 | $ 818 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 38,796 | $ 48,080 | $ 105,846 | $ 134,115 |
Change in accumulated other comprehensive income (loss) of equity method investees attributable to non-controlling interest | 306 | 0 | (70) | 0 |
Change in accumulated other comprehensive income (loss) of equity method investees attributable to limited partner | 97 | 0 | (25) | 0 |
Total other comprehensive income (loss) | 403 | 0 | (95) | 0 |
Comprehensive income (loss) | $ 39,199 | $ 48,080 | $ 105,751 | $ 134,115 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Unitholders’ Equity (Unaudited) - USD ($) shares in Thousands | Total | Limited Partners | General Partner | Limited Partners Member's EquityLimited Partners | Common UnitsLimited Partners | Class B UnitsLimited Partners | Non-Controlling Interest | Accumulated Other Comprehensive Income | Non-Controlling Interest-Accumulated Other Comprehensive Income |
Beginning balance at Dec. 31, 2018 | $ 527,126,000 | $ 0 | $ 527,125,000 | $ 0 | $ 1,000 | $ 0 | |||
Beginning balance (in shares) at Dec. 31, 2018 | 0 | 0 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Contributions from Diamondback | 458,674,000 | 458,674,000 | |||||||
Net income (loss) | 39,356,000 | 39,356,000 | |||||||
Ending balance at Mar. 31, 2019 | 1,025,156,000 | 0 | 1,025,155,000 | $ 0 | $ 1,000 | 0 | |||
Ending balance (in shares) at Mar. 31, 2019 | 0 | 0 | |||||||
Beginning balance at Dec. 31, 2018 | 527,126,000 | 0 | 527,125,000 | $ 0 | $ 1,000 | 0 | |||
Beginning balance (in shares) at Dec. 31, 2018 | 0 | 0 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Less: Net income (loss) before initial public offering | 65,995,000 | ||||||||
Other comprehensive income (loss) | 0 | ||||||||
Net income (loss) subsequent to initial public offering | 68,120,000 | ||||||||
Net income (loss) | 134,115,000 | ||||||||
Ending balance at Sep. 30, 2019 | 1,115,148,000 | 1,000,000 | 0 | $ 738,699,000 | $ 1,000,000 | 374,449,000 | |||
Ending balance (in shares) at Sep. 30, 2019 | 43,700 | 107,815 | |||||||
Beginning balance at Mar. 31, 2019 | 1,025,156,000 | 0 | 1,025,155,000 | $ 0 | $ 1,000 | 0 | |||
Beginning balance (in shares) at Mar. 31, 2019 | 0 | 0 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Less: Net income (loss) before initial public offering | 26,639,000 | 26,639,000 | |||||||
Distributions | (33,712,000) | (33,712,000) | |||||||
Ending balance at May. 28, 2019 | 1,018,083,000 | 0 | 1,018,082,000 | $ 0 | $ 1,000 | 0 | |||
Ending balance (in shares) at May. 28, 2019 | 0 | 0 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Net proceeds from the offering - public | 719,627,000 | $ 719,627,000 | |||||||
Net proceeds from the offering - public (in shares) | 43,700 | ||||||||
Net proceeds from the offering - General Partner | 1,000,000 | 1,000,000 | |||||||
Net proceeds from the offering - Diamondback | 999,000 | $ 999,000 | |||||||
Net proceeds from the offering - Diamondback (in shares) | 107,815 | ||||||||
Unit-based compensation | 831,000 | $ 831,000 | |||||||
Elimination of current and deferred tax liabilities | 31,094,000 | 31,094,000 | |||||||
Allocation of net investment to unitholder | 0 | (322,663,000) | 322,663,000 | ||||||
Distributions to Diamondback | (726,513,000) | (726,513,000) | |||||||
Net income (loss) subsequent to initial public offering | 20,040,000 | 4,803,000 | 15,237,000 | ||||||
Change in ownership of consolidated subsidiaries | $ 0 | ||||||||
Ending balance at Jun. 30, 2019 | 1,065,161,000 | 1,000,000 | 0 | $ 725,261,000 | $ 1,000,000 | 337,900,000 | |||
Ending balance (in shares) at Jun. 30, 2019 | 43,700 | 107,815 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Less: Net income (loss) before initial public offering | 0 | ||||||||
Net proceeds from the offering - public | (251,000) | $ (251,000) | |||||||
Net proceeds from the offering - public (in shares) | 0 | ||||||||
Unit-based compensation | 2,158,000 | $ 2,158,000 | |||||||
Other comprehensive income (loss) | 0 | ||||||||
Net income (loss) subsequent to initial public offering | 0 | ||||||||
Net income (loss) | 48,080,000 | 11,531,000 | 36,549,000 | ||||||
Ending balance at Sep. 30, 2019 | 1,115,148,000 | 1,000,000 | $ 0 | $ 738,699,000 | $ 1,000,000 | 374,449,000 | |||
Ending balance (in shares) at Sep. 30, 2019 | 43,700 | 107,815 | |||||||
Beginning balance at Dec. 31, 2019 | 1,115,840,000 | 979,000 | $ 737,777,000 | $ 979,000 | 376,928,000 | $ (198,000) | $ (625,000) | ||
Beginning balance (in shares) at Dec. 31, 2019 | 43,700 | 107,815 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Unit-based compensation | 2,219,000 | $ 2,219,000 | |||||||
Distribution equivalent rights payments | (652,000) | (652,000) | |||||||
Other comprehensive income (loss) | (258,000) | (63,000) | (195,000) | ||||||
Distributions | (43,979,000) | (20,000) | (12,673,000) | $ (20,000) | (31,266,000) | ||||
Net income (loss) | 54,588,000 | 13,031,000 | 41,557,000 | ||||||
Ending balance at Mar. 31, 2020 | 1,127,758,000 | 959,000 | $ 739,702,000 | $ 959,000 | 387,219,000 | (261,000) | (820,000) | ||
Ending balance (in shares) at Mar. 31, 2020 | 43,700 | 107,815 | |||||||
Beginning balance at Dec. 31, 2019 | 1,115,840,000 | 979,000 | $ 737,777,000 | $ 979,000 | 376,928,000 | (198,000) | (625,000) | ||
Beginning balance (in shares) at Dec. 31, 2019 | 43,700 | 107,815 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Less: Net income (loss) before initial public offering | 0 | ||||||||
Other comprehensive income (loss) | (95,000) | ||||||||
Net income (loss) subsequent to initial public offering | 0 | ||||||||
Change in ownership of consolidated subsidiaries | (329,034,000) | ||||||||
Net income (loss) | 105,846,000 | ||||||||
Ending balance at Sep. 30, 2020 | 1,183,550,000 | 919,000 | $ 399,080,000 | $ 919,000 | 783,550,000 | (223,000) | (695,000) | ||
Ending balance (in shares) at Sep. 30, 2020 | 43,996 | 107,815 | |||||||
Beginning balance at Mar. 31, 2020 | 1,127,758,000 | 959,000 | $ 739,702,000 | $ 959,000 | 387,219,000 | (261,000) | (820,000) | ||
Beginning balance (in shares) at Mar. 31, 2020 | 43,700 | 107,815 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Unit-based compensation | 2,120,000 | $ 2,120,000 | |||||||
Unit-based compensation (in shares) | 450 | ||||||||
Distribution equivalent rights payments | (644,000) | $ (644,000) | |||||||
Other comprehensive income (loss) | (240,000) | (59,000) | (181,000) | ||||||
Distributions | (43,980,000) | (20,000) | (12,673,000) | $ (20,000) | (31,267,000) | ||||
Change in ownership of consolidated subsidiaries | 90,613,000 | (329,034,000) | 419,647,000 | ||||||
Units repurchased for tax withholding | (1,365,000) | $ (1,365,000) | |||||||
Units repurchased for tax withholding (in shares) | (154) | ||||||||
Net income (loss) | 12,462,000 | $ 2,822,000 | 9,640,000 | ||||||
Ending balance at Jun. 30, 2020 | 1,186,724,000 | 939,000 | $ 400,928,000 | $ 939,000 | 785,239,000 | (320,000) | (1,001,000) | ||
Ending balance (in shares) at Jun. 30, 2020 | 43,996 | 107,815 | |||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||
Less: Net income (loss) before initial public offering | 0 | ||||||||
Unit-based compensation | 2,216,000 | $ 2,216,000 | |||||||
Unit-based compensation (in shares) | 0 | ||||||||
Distribution equivalent rights payments | (524,000) | $ (524,000) | |||||||
Other comprehensive income (loss) | 403,000 | 97,000 | 306,000 | ||||||
Distributions | (44,065,000) | (20,000) | (12,758,000) | $ (20,000) | (31,267,000) | ||||
Net income (loss) subsequent to initial public offering | 0 | ||||||||
Change in ownership of consolidated subsidiaries | $ 0 | ||||||||
Net income (loss) | 38,796,000 | 9,218,000 | 29,578,000 | ||||||
Ending balance at Sep. 30, 2020 | $ 1,183,550,000 | $ 919,000 | $ 399,080,000 | $ 919,000 | $ 783,550,000 | $ (223,000) | $ (695,000) | ||
Ending balance (in shares) at Sep. 30, 2020 | 43,996 | 107,815 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 105,846 | $ 134,115 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for deferred income taxes | 7,754 | 22,850 |
Depreciation, amortization and accretion | 35,596 | 31,798 |
Amortization of debt issuance costs | 467 | 0 |
(Gain) loss on disposal of property, plant and equipment | 2,765 | (4) |
Unit-based compensation expense | 6,555 | 2,989 |
(Income) loss from equity method investments | 9,910 | 695 |
Changes in operating assets and liabilities: | ||
Accounts receivable—related party | 1,649 | (45,297) |
Accounts receivable—third party | (314) | (1,045) |
Accounts payable, accrued liabilities and taxes payable | 117 | 30,791 |
Other | 7,029 | (13,028) |
Net cash provided by (used in) operating activities | 177,374 | 163,864 |
Cash flows from investing activities: | ||
Additions to property, plant and equipment | (124,989) | (187,544) |
Contributions to equity method investments | (89,751) | (76,141) |
Distributions from equity method investments | 27,490 | 0 |
Proceeds from the sale of fixed assets | 42 | 18 |
Net cash provided by (used in) investing activities | (187,208) | (263,667) |
Cash flows from financing activities: | ||
Proceeds from senior notes | 500,000 | 0 |
Proceeds from borrowings from credit facility | 179,000 | 112,000 |
Payments on credit facility | (518,000) | (9,000) |
Distribution equivalent rights | (1,820) | 0 |
Debt issuance costs | (10,014) | (3,929) |
Net proceeds from initial public offering—public | 0 | 719,376 |
Net proceeds from initial public offering—General Partner | 0 | 1,000 |
Net proceeds from initial public offering—Diamondback | 0 | 999 |
Units repurchased for tax withholding | (1,365) | 0 |
Distribution to General Partner (Note 1) | (60) | 0 |
Distribution to public (Note 1) | (38,104) | 0 |
Distribution to Diamondback (Note 1) | (93,860) | (726,513) |
Net cash provided by (used in) financing activities | 15,777 | 93,933 |
Net increase (decrease) in cash | 5,943 | (5,870) |
Cash at beginning of period | 10,633 | 8,564 |
Cash at end of period | 16,576 | 2,694 |
Supplemental disclosure of non-cash financing activity: | ||
Contributions from Diamondback | 0 | 456,055 |
Supplemental disclosure of non-cash investing activity: | ||
Increase in long term assets and inventory due to contributions from Diamondback | 0 | 456,055 |
Accounts payable related to capital expenditures | $ 13,689 | $ 57,002 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | ORGANIZATION AND BASIS OF PRESENTATION Organization Rattler Midstream LP (the “Partnership” and, prior to May 28, 2019 for accounting purposes, the “Predecessor”) is a publicly traded Delaware limited partnership. The Partnership was formed on July 27, 2018 by Diamondback Energy, Inc. (“Diamondback”) to, among other things, own, operate, develop and acquire midstream infrastructure assets in the Midland and Delaware Basins of the Permian Basin. The Predecessor’s assets, contributed from Diamondback, included (i) crude oil and natural gas gathering and transportation systems, (ii) produced water gathering and disposal systems, (iii) water sourcing and distribution systems and (iv) certain real property and related assets. All of the Partnership’s businesses are located or operate in the Permian Basin in West Texas. Prior to the closing on May 28, 2019 of the IPO, Diamondback owned all of the general and limited partner interests in the Predecessor. In connection with the IPO, the Partnership (i) issued 43,700,000 common units to the public at a price of $17.50 per common unit, representing a 29% voting limited partner interest in the Partnership, for net proceeds of approximately $719.4 million, (ii) issued 107,815,152 Class B units, representing an aggregate 71% voting limited partner interest in the Partnership, in exchange for a $1.0 million cash contribution from Diamondback, (iii) issued a general partner interest in the Partnership to Rattler Midstream GP LLC (the “General Partner”) in exchange for a $1.0 million cash contribution from the General Partner and (iv) caused Rattler Midstream Operating LLC (the “Operating Company”) to make a distribution of approximately $726.5 million to Diamondback. 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 cash preferred distributions equal to 8% per annum on the outstanding amount of their respective $1.0 million capital contributions, payable quarterly. As of September 30, 2020, the General Partner held a 100% general partner interest in the Partnership. Diamondback owns all of the Partnership’s 107,815,152 Class B units that provide a 71% voting interest. Diamondback owns and controls the General Partner. As of September 30, 2020, the Partnership owned a 29% controlling membership interest in the Operating Company and Diamondback owned, through its ownership of the Operating Company units, a 71% economic, non-voting interest in the Operating Company. However, as required by GAAP, the Partnership consolidates 100% of the assets and operations of the Operating Company in its financial statements and reflects a non-controlling interest attributable to Diamondback. In addition to the Operating Company, other consolidated subsidiaries of the Partnership include Tall City Towers LLC (“Tall Towers”), Rattler Ajax Processing LLC and Rattler OMOG LLC. The Partnership also owns indirect interests in Amarillo Rattler, LLC, OMOG JV LLC (“OMOG”), EPIC Crude Holdings, LP (“EPIC”), EPIC Crude Holdings GP, LLC, Wink to Webster Pipeline LLC (“Wink to Webster”) and Gray Oak Pipeline, LLC (“Gray Oak”), which are accounted for as equity method investments as discussed further in Note 7— Equity Method Investments. Basis of Presentation The consolidated results of operations following the completion of the IPO are presented together with the results of operations pertaining to the Predecessor. The assets of the Predecessor consist of produced water disposal wells and related gathering systems, office buildings, surface land, an oil gathering system and asset retirement obligations related to these assets, which were contributed effective January 1, 2019. See Note 4—Acquisitions. The capital contribution of the net proceeds from the IPO to the Operating Company in exchange for 29% of the limited liability company units of the Operating Company was accounted for as a combination of entities under common control, with assets and liabilities transferred at their carrying amounts in a manner similar to a pooling of interests. The Partnership did not own any assets prior to May 28, 2019, the date of the equity contribution agreement by and between the Partnership and the Predecessor. Prior to the IPO, the Predecessor was a wholly owned subsidiary of Diamondback. For periods prior to May 28, 2019, the accompanying condensed consolidated financial statements and related notes thereto represent the financial position, results of operations, cash flows and changes in members’ equity of the Predecessor and, for periods on and after May 28, 2019, the accompanying condensed consolidated financial statements and related notes thereto represent the financial position, results of operations, cash flows and changes in partners’ equity of the Partnership and its partially owned subsidiary. The Predecessor financial statements have been prepared from the separate records maintained by the Partnership and may not necessarily be indicative of the actual results of operations that might have occurred if the Predecessor had been operated separately during the periods reported. The accompanying condensed consolidated financial statements and related notes thereto were prepared in accordance with GAAP. All significant intercompany balances and transactions have been eliminated upon consolidation. These condensed 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 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, 2019, which contains a summary of the Partnership’s significant accounting policies and other disclosures. Reclassifications |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 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 notes 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 natural gas industry experiences challenges resulting from negative pricing pressure from the effects of COVID-19 and actions by OPEC members and other exporting nations affecting 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 uncertainty in the Partnership’s accounting estimates, particularly those involving financial forecasts. The Partnership evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods it 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, but are not limited to, (i) revenue accruals, (ii) the fair value of long-lived assets and (iii) asset retirement obligations (“ARO”). Accounts Receivable Accounts receivable consist primarily of receivables from gathering services, sourced water and rental agreements. The customers and lessees remit payment for services performed and/or goods received directly to the Partnership. Most payments for gathering services, sourced water and rental agreements are received within two months after the date of service performed or goods delivered. 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 customers and lessees, 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 length of time accounts receivable are past due, 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. As the adoption of ASU 2016-13 did not result in a material allowance, no cumulative-effect adjustment was made to beginning unitholders’ equity. At September 30, 2020 , the Partnership recorded an immaterial allowance for expected losses and did not record an allowance for expected losses at December 31, 2019. Accrued Liabilities Accrued liabilities consist of the following as of the dates indicated: September 30, 2020 December 31, 2019 (In thousands) Capital expenditures accrued $ 9,213 $ 42,160 Direct operating expenses accrued 19,638 22,119 Sourced water purchases accrued 2,524 9,531 Interest expense accrued 5,866 627 Other 24 2,188 Total accrued liabilities $ 37,265 $ 76,625 Accumulated Other Comprehensive Income The following table provides changes in the components of accumulated other comprehensive income, net of related income tax effects: (In thousands) Balance as of December 31, 2019 $ (823) Other comprehensive income (loss) (95) Balance as of September 30, 2020 $ (918) Non-controlling Interest Non-controlling interest in the accompanying condensed 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’s equity, tax effected, will occur. If the changes in the Partnership’s ownership interest in the Operating Company do not result in a change of control, the transactions are accounted for as equity transactions under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 810, “Consolidation.” This guidance 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 second quarter of 2020, the Partnership recorded an adjustment to non-controlling interest of $419.6 million, common unitholder equity of $(329.0) million, and deferred tax asset of $90.6 million to reflect the ownership structure that was effective at June 30, 2020. The adjustment had no impact on earnings for the nine months ended September 30, 2020 . See Note 10 —Unitholders’ Equity and Partnership Distributions for a presentation of the change in ownership. Income Taxes The Partnership is treated as a corporation for U.S. federal income tax purposes as a result of its election to be treated as a corporation effective May 24, 2019. Subsequent to the effective date of the Partnership’s election, it has been subject to U.S. federal and state income tax at corporate rates. 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 the tax sharing agreement with Diamondback. In addition to the Partnership’s 2019 tax year, the Predecessor’s 2016 through 2018 tax years, the periods during which the Predecessor’s sole owner, Diamondback, was responsible for federal income taxes on the Predecessor’s taxable income, remain open to examination by tax authorities. As of September 30, 2020, 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, 2020, there was no interest or penalties associated with uncertain tax positions recognized in the Partnership’s condensed consolidated financial statements. Capital Contributions For the nine months ended September 30, 2019, capital contributions from Diamondback to the Predecessor totaled $456.1 million, of which $228.3 million related to produced water disposal assets, $149.5 million related to the equity method investments in the EPIC and Gray Oak pipelines (defined below), $35.8 million related to crude oil assets, $31.1 million related to elimination of current and deferred liabilities, $18.1 million related to land, $9.4 million related to sourced water assets, $9.2 million related to an office building located in Midland Texas and $(25.3) million in additional assets and liabilities, net, related to operations. 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 an 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 | 9 Months Ended |
Sep. 30, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS The Partnership generates revenues by charging fees on a per unit basis for gathering crude oil and natural gas, delivering and storing sourced water, and collecting, recycling and disposing of produced water. It is noted that surface revenue, rental and real estate income and amortization of out of market leases are outside the scope of ASC Topic 606, “Revenue from Contracts with Customers.” Disaggregation of Revenue In the following table, revenue is disaggregated by type of service and type of fee. The table also identifies the operating segment to which the disaggregated revenues relate. For more information on operating segments, see Note 17—Segment Information. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Segment (In thousands) Type of Service: Sourced water gathering $ 12,653 $ 26,485 $ 48,308 $ 83,966 Midstream Produced water gathering and disposal 67,800 73,928 217,646 198,344 Midstream Crude oil gathering 7,531 7,248 22,617 19,231 Midstream Natural gas gathering 5,076 3,871 14,506 9,908 Midstream Surface revenue (non ASC 606 revenues) 15 174 887 464 Midstream Real estate contracts (non ASC 606 revenues) 3,464 3,709 10,705 10,452 Real Estate Total revenues $ 96,539 $ 115,415 $ 314,669 $ 322,365 |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS Ajax and Energen Assets Effective January 1, 2019, Diamondback contributed to the Predecessor certain midstream assets (the “Ajax Assets”) within the Permian Basin that it acquired from Ajax Resources LLC (“Ajax”) as part of an upstream acquisition in the fourth quarter of 2018. These assets included 17 water wells, four produced water disposal wells and one related gathering system, a field office, surface land, five hydraulic fracturing pits and one related sourced water transportation system. Prior to their contribution, these assets were fully integrated into the upstream business acquired from Ajax. The carrying value of assets included in this contribution was $21.5 million. The contributed assets were recognized by the Predecessor at Diamondback’s historical basis due to the entities being under common control. Effective January 1, 2019, Diamondback contributed to the Predecessor certain midstream assets (the “Energen Assets”) within the Permian Basin that it acquired from Energen Corporation (“Energen”) as part of an upstream acquisition in the fourth quarter of 2018. These assets included 56 produced water disposal wells and related gathering systems, an office building located in Midland Texas, surface land and an oil gathering system and asset retirement obligations related to these assets. Prior to their contribution, these assets were fully integrated into the upstream business acquired from Energen. The carrying value of assets included in this contribution was $279.0 million, net of $3.0 million in associated asset retirement obligations. The contributed assets were recognized by the Predecessor at Diamondback’s historical basis due to the entities being under common control. |
REAL ESTATE ASSETS
REAL ESTATE ASSETS | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate [Abstract] | |
REAL ESTATE ASSETS | REAL ESTATE ASSETS In conjunction with Diamondback’s contribution of Tall Towers, the Predecessor allocated the $110.0 million purchase price between real estate assets and intangible lease assets related to in-place and above-market leases. During the three months ended March 31, 2019, as part of the Energen contribution, Diamondback contributed an office building located in Midland Texas with a value of $9.2 million. The following schedules present the cost and related accumulated depreciation or amortization (as applicable) of the Partnership’s real estate assets and intangible lease assets: As of Estimated Useful Lives September 30, 2020 December 31, 2019 (Years) (In thousands) Buildings 20-30 $ 102,553 $ 102,375 Tenant improvements 15 4,506 4,501 Land N/A 2,437 2,437 Land improvements 15 484 484 Total real estate assets 109,980 109,797 Less: accumulated depreciation (12,165) (8,681) Total investment in real estate, net $ 97,815 $ 101,116 As of Weighted Average Useful Lives September 30, 2020 December 31, 2019 (Months) (In thousands) In-place lease intangibles 45 $ 11,275 $ 11,389 Less: accumulated amortization (7,687) (5,927) In-place lease intangibles, net 3,588 5,462 Above-market lease intangibles 45 3,623 3,623 Less: accumulated amortization (1,466) (1,015) Above-market lease intangibles, net 2,157 2,608 Total intangible lease assets, net $ 5,745 $ 8,070 Depreciation and amortization expense for real estate assets was $1.7 million and $1.9 million for the three months ended September 30, 2020 and 2019, respectively. Depreciation and amortization expense for real estate assets was $5.2 million and $5.8 million for the nine months ended September 30, 2020 and 2019, respectively. The following table presents the Partnership’s estimated amortization expense related to lease intangibles for the periods indicated (in thousands): Remainder of 2020 2021 2022 2023 2024 Thereafter $ 583 $ 1,779 $ 663 $ 728 $ 814 $ 1,178 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT The following table sets forth the Partnership’s property, plant and equipment: As of Estimated September 30, December 31, Useful Lives 2020 2019 (Years) (In thousands) Produced water disposal systems 10-30 $ 669,825 $ 600,797 Crude oil gathering systems (1) 30 133,203 129,658 Natural gas gathering and compression systems (1) 10-30 111,830 98,426 Sourced water gathering systems (1) 30 111,354 101,887 Total property, plant and equipment 1,026,212 930,768 Less: accumulated depreciation, amortization and accretion (90,456) (61,132) Land N/A 85,826 86,072 Total property, plant and equipment, net $ 1,021,582 $ 955,708 (1) Included in gathering systems are $71.9 million and $138.6 million of assets at September 30, 2020 and December 31, 2019, respectively, that are not subject to depreciation, amortization and accretion as the systems were under construction and had not yet been put into service. Depreciation expense related to property, plant and equipment was $8.9 million and $8.7 million for the three months ended September 30, 2020 and 2019, respectively. Depreciation expense related to property, plant and equipment was $29.4 million and $24.9 million for the nine months ended September 30, 2020 and 2019, respectively. Internal costs capitalized to property, plant and equipment represent management’s estimate of costs incurred directly related to construction activities. Capitalized internal costs were immaterial for the nine months ended September 30, 2020 and 2019. Capitalized interest related to property, plant and equipment was immaterial for the nine months ended September 30, 2020 and 2019. |
EQUITY METHOD INVESTMENTS
EQUITY METHOD INVESTMENTS | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
EQUITY METHOD INVESTMENTS | EQUITY METHOD INVESTMENTS The following table presents the carrying values of the Partnership’s equity method investments as of the dates indicated: Ownership Interest September 30, 2020 December 31, 2019 (In thousands) EPIC Crude Holdings, LP 10 % $ 123,002 $ 109,806 Gray Oak Pipeline, LLC 10 % 134,555 115,840 Wink to Webster Pipeline LLC 4 % 74,611 34,124 OMOG JV LLC 60 % 195,744 219,098 Amarillo Rattler, LLC 50 % 4,096 690 Total $ 532,008 $ 479,558 The following table summarizes the income (loss) of equity method investees reflected in the Condensed Consolidated Statement of Operations for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (In thousands) EPIC Crude Holdings, LP $ (1,904) $ (529) $ (4,703) $ (532) Gray Oak Pipeline, LLC 3,832 (128) 5,585 (189) Wink to Webster Pipeline LLC (127) 26 73 26 OMOG JV LLC 1,499 — (10,681) — Amarillo Rattler, LLC 69 — (184) — Total $ 3,369 $ (631) $ (9,910) $ (695) On February 1, 2019, Diamondback funded and the Predecessor acquired a 10% equity interest in EPIC, which owns and operates a pipeline (the “EPIC pipeline”) that transports crude oil and natural gas liquids across Texas for delivery into the Corpus Christi market. The EPIC pipeline became fully operational in April 2020. On February 15, 2019, Diamondback funded and the Predecessor acquired a 10% equity interest in Gray Oak, which owns and operates a pipeline (the “Gray Oak pipeline”) that transports crude oil from the Permian to Corpus Christi on the Texas Gulf Coast. The Gray Oak pipeline became fully operational in April 2020. On March 29, 2019, the Predecessor executed a short-term promissory note to Gray Oak. The note allowed for borrowing by Gray Oak of up to $123.0 million at a 2.52% interest rate with a maturity date of March 31, 2022. The short-term promissory note was repaid on May 31, 2019. On June 4, 2019, the Partnership entered into an equity contribution agreement with respect to Gray Oak. The equity contribution agreement required the Partnership to contribute equity or make loans to Gray Oak so that Gray Oak could, to the extent necessary, cure payment defaults under Gray Oak’s credit agreement and, in certain instances, repay Gray Oak’s credit agreement in full. The Partnership’s obligations under the equity contribution agreement were limited to its proportionate ownership interest in Gray Oak, and such obligations were guaranteed by the Operating Company, Tall Towers, Rattler OMOG LLC and Rattler Ajax Processing LLC. The equity contribution agreement and the Partnership’s obligations under the agreement were terminated in September 2020. On July 30, 2019, the Operating Company joined Wink to Webster as a 4% member, together with affiliates of ExxonMobil, Plains All American Pipeline, Delek US, MPLX LP, and Lotus Midstream. The joint venture is developing a crude oil pipeline with origin points at Wink and Midland in the Permian Basin for delivery to multiple Houston area locations (the “Wink to Webster pipeline”). The Wink to Webster pipeline is expected to begin service in the first half of 2021. On October 1, 2019, the Partnership acquired a 60% equity interest in OMOG. On November 7, 2019, OMOG acquired 100% of Reliance Gathering, LLC, which owns and operates a crude oil gathering system in the Permian Basin and was renamed as Oryx Midland Oil Gathering LLC following the acquisition. On December 20, 2019, the Operating Company acquired a 50% equity interest in Amarillo Rattler, LLC, which currently owns and operates the Yellow Rose gas gathering and processing system with estimated total processing capacity of 40,000 Mcf/d and over 84 miles of gathering and regional transportation pipelines in Dawson, Martin and Andrews Counties, Texas. This joint venture also intends to construct and operate a new 60,000 Mcf/d cryogenic natural gas processing plant in Martin County, Texas, as well as incremental gas gathering and compression and regional transportation pipelines. However, development of the new processing plant has been postponed pending a recovery in commodity prices and activity levels. Diamondback has contracted for up to 30,000 Mcf/d of the capacity of the new processing plant pursuant to a gas gathering and processing agreement entered into with the joint venture in exchange for Diamondback’s dedication of certain leasehold interests to that agreement. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Long-term debt consisted of the following as of the dates indicated: September 30, 2020 December 31, 2019 (In thousands) 5.625% Senior Notes due 2025 $ 500,000 $ — Operating Company revolving credit facility 85,000 424,000 Unamortized debt issuance costs (9,546) — Total long-term debt $ 575,454 $ 424,000 2025 Senior Notes On July 14, 2020, the Partnership completed a notes offering (the “Notes Offering”) of $500.0 million in aggregate principal amount of its 5.625% Senior Notes due 2025 (the “Notes”). Interest on the Notes is payable on January 15 and July 15 of each year, beginning on January 15, 2021. The Notes mature on July 15, 2025. The Partnership received net proceeds of approximately $489.5 million from the Notes Offering. The Partnership loaned the gross proceeds to the Operating Company, which used such proceeds to pay down borrowings under the Credit Agreement (defined below). The Notes are senior unsecured obligations of the Partnership, rank equally in right of payment with all of the Partnership’s existing and future senior indebtedness it may incur and initially are guaranteed on a senior unsecured basis by the Operating Company, Tall Towers, Rattler OMOG LLC and Rattler Ajax Processing LLC. Neither Diamondback nor the General Partner 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 classified as a domestic restricted subsidiary under the indenture governing the Notes and is an obligor with respect to any indebtedness under any credit facility will be required to guarantee the Notes. 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 a subordinated promissory note, dated as of July 14, 2020, made by the Operating Company payable to the Partnership (the “Intercompany Promissory Note”). The Intercompany Promissory Note requires the Operating Company to repay the intercompany 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 its obligations under the Credit Agreement. The Operating Company’s Revolving Credit Facility On May 28, 2019, the Partnership, as parent, and the Operating Company, as borrower, entered into a credit agreement (as amended, the “Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and a syndicate of banks, including Wells Fargo, as lenders party thereto. The Credit Agreement provides for a revolving credit facility in the maximum amount of $600.0 million, which is expandable to $1.0 billion upon the Partnership’s election, subject to obtaining additional lender commitments and satisfaction of customary conditions. Loan principal may be optionally repaid from time to time without premium or penalty (other than customary LIBOR breakage), and is required to be paid at the maturity date of May 28, 2024. As of September 30, 2020, the Operating Company had $85.0 million of outstanding borrowings and $515.0 million available for future borrowings under the Credit Agreement. During the three and nine months ended September 30, 2020, the weighted average interest rate on borrowings under the Credit Agreement was 1.46% and 2.18%, respectively. |
UNIT-BASED COMPENSATION
UNIT-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
UNIT-BASED COMPENSATION | UNIT-BASED COMPENSATION On May 22, 2019, the board of directors of the General Partner adopted the Rattler Midstream LP Long Term Incentive Plan (“LTIP”), for employees, 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, 2020, a total of 14,856,026 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, 2020, the Partnership incurred $2.2 million and $6.6 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 based on the closing price of the Partnership’s common units on the grant date of the award, and expenses this value 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 recipients are also entitled to distribution equivalent rights, which represent the right to receive a cash payment equal to the value of the distributions paid on one phantom unit between the grant date and the vesting date. The following table presents the phantom unit activity under the LTIP for the nine months ended September 30, 2020: Phantom Weighted Average Unvested at December 31, 2019 2,226,895 $ 19.14 Granted 53,943 $ 10.41 Vested (449,633) $ 19.14 Forfeited (23,442) $ 18.23 Unvested at September 30, 2020 1,807,763 $ 18.89 The aggregate fair value of phantom units that vested during the nine months ended September 30, 2020 was $8.6 million. As of September 30, 2020, the unrecognized compensation cost related to unvested phantom units was $31.0 million. Such cost is expected to be recognized over a weighted-average period of 3.56 years. |
UNITHOLDERS_ EQUITY AND PARTNER
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS | UNITHOLDERS’ EQUITY AND DISTRIBUTIONS The Partnership has general partner and limited partner units. At September 30, 2020, the Partnership had a total of 43,996,243 common units issued and outstanding and 107,815,152 Class B units issued and outstanding, of which no common units and 107,815,152 Class B units, representing approximately 71% of the Partnership’s total units outstanding, were beneficially owned by Diamondback. Diamondback also beneficially owns 107,815,152 Operating Company units, representing a 71% economic, non-voting interest in the Operating Company. The Operating Company units and the Partnership’s Class B units beneficially 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 ownership interest in consolidated subsidiaries during the period: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 (In thousands) Net income attributable to the Partnership $ 9,218 $ 25,071 Change in ownership of consolidated subsidiaries — (329,034) Change from net income (loss) attributable to the Partnership's unitholders and transfers to non-controlling interest $ 9,218 $ (303,963) There were no c hanges in the ownership interests in consolidated subsidiaries during the period between the closing of the IPO on May 28, 2019 and September 30, 2019. See Note 2 —Summary of Significant Accounting Policies—Non-controlling Interest for a discussion of the changes in the ownership interests in consolidated subsidiaries during the nine months ended September 30, 2020. On February 13, 2020, the board of directors of the General Partner revised the Partnership’s cash distribution policy to provide for the Operating Company to distribute $0.29 per Operating Company unit each quarter to its unitholders (including Diamondback and the Partnership), and for the Partnership to pay, to the extent legally available, cash distributions of $0.29 per common unit to common unitholders of record on the applicable record date within 65 days after the end of each quarter beginning with the quarter ended December 31, 2019. On October 29, 2020, the board of directors of the General Partner further revised the Partnership’s cash distribution policy, reducing the quarterly distribution per Operating Company unit and Partnership common unit to $0.20 beginning with the quarter ended September 30, 2020. The board of directors of the General Partner may change the Partnership’s distribution policy at any time and from time to time. The partnership agreement does not require the Partnership to pay cash distributions on the Partnership’s common units on a quarterly or other basis. The following table presents cash distributions approved by the board of directors of the General Partner for the periods indicated: Declaration Date Quarter (1) Amount per Common Unit Payment Date October 31, 2019 Q3 2019 (2) $ 0.34 November 22, 2019 February 13, 2020 Q4 2019 $ 0.29 March 10, 2020 April 30, 2020 Q1 2020 $ 0.29 May 26, 2020 July 31, 2020 Q2 2020 $ 0.29 August 24, 2020 October 29, 2020 Q3 2020 $ 0.20 November 23, 2020 (1) Distributions are shown for the quarter in which they were generated. (2) The Q3 2019 distribution also includes amounts attributable to Q2 2019 commencing upon the closing of the IPO. |
EARNINGS PER COMMON UNIT
EARNINGS PER COMMON UNIT | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER COMMON UNIT | EARNINGS PER COMMON UNIT Earnings per common unit on the condensed consolidated statements of operations is based on the net income of the Partnership for the three and nine months ended September 30, 2020 and 2019, 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, as the General Partner does not have an economic interest. Basic and diluted earnings per common unit is calculated using the two-class method. The two-class method is an earnings allocation proportional to the respective ownership among holders of common units and participating securities. Basic earnings per common unit is calculated by dividing net income by the weighted-average number of common units outstanding during the period. Diluted earnings per common unit also considers the dilutive effect of unvested common units granted under the LTIP, calculated using the treasury stock method. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (In thousands, except per unit amounts) Net income (loss) attributable to Rattler Midstream LP $ 9,218 $ 11,531 $ 25,071 $ 16,334 Less: net (income) loss allocated to participating securities (1) (524) — (1,820) — Net income (loss) attributable to common unitholders $ 8,694 $ 11,531 $ 23,251 $ 16,334 Weighted average common units outstanding: Basic weighted average common units outstanding 43,996 43,700 43,837 43,564 Effect of dilutive securities: Potential common units issuable (2) — 1,136 — 1,146 Diluted weighted average common units outstanding 43,996 44,836 43,837 44,710 Net income per common unit, basic $ 0.20 $ 0.26 $ 0.53 $ 0.37 Net income per common unit, diluted $ 0.20 $ 0.26 $ 0.53 $ 0.37 (1) Distribution equivalent rights granted to employees are considered participating securities. (2) For the three and nine months ended September 30, 2020, no potential common units were included in the computation of diluted earnings per unit because their inclusion would have been anti-dilutive under the treasury stock method for the periods presented. However, such potential common units could dilute basic earnings per unit in future periods. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONSRelated party transactions include transactions with Diamondback. Among other agreements, the Partnership is a party to the following related party agreements with Diamondback. Commercial Agreements The Partnership derives substantially all of its revenue from its commercial agreements with Diamondback for the provision of midstream services. On May 5, 2020, the Partnership amended its commercial agreements to, among other things, in certain cases add new areas to the dedication and commitment of Diamondback and its affiliates and revise the threshold for permitting releases of dedications in connection with transfers or swaps by Diamondback or its affiliates. Revenues generated from commercial agreements with Diamondback consist of the following: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (In thousands) Crude oil gathering $ 2,745 $ 2,626 $ 7,730 $ 7,278 Natural gas gathering 5,076 3,870 14,506 9,908 Produced water gathering and disposal 66,067 72,917 211,353 196,213 Sourced water gathering 11,948 25,452 46,845 82,933 Surface revenue 10 1 26 176 Total $ 85,846 $ 104,866 $ 280,460 $ 296,508 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Prior to the IPO, all of the membership interests of the Predecessor were owned by a single member. Under applicable federal income tax provisions, the Predecessor’s legal existence as an entity separate from its sole owner was disregarded for U.S. federal income tax purposes. As a result, the Predecessor’s owner, Diamondback, was responsible for federal income taxes on its share of the Predecessor’s taxable income. Similarly, the Predecessor had no tax attributes such as net operating loss carryforwards because such tax attributes are treated for federal income tax purposes as attributable to the Predecessor’s owner. In certain circumstances, GAAP requires or permits entities such as the Predecessor to account for income taxes under the principles of ASC Topic 740, “Income Taxes” (“ASC Topic 740”), notwithstanding the fact that the separate legal entity’s activity is attributed to its owner for income tax purposes. Accordingly, the Predecessor has applied the principles of ASC Topic 740 to its financial statements herein, for periods prior to the IPO, as if the Predecessor had been subject to taxation as a corporation. Consistent with the overall basis of presentation as described in Note 1—Organization and Basis of Presentation, for the three and nine months ended September 30, 2019, net income for the period prior to the IPO reflects income taxes based on federal and state income tax rates, net of federal benefit, applicable to the Predecessor as if it had been subject to taxation as a corporation. In connection with the completion of the IPO, an adjustment of $31.1 million to equity of the Predecessor was recorded for the elimination of current and deferred tax liabilities related to the period prior to the IPO. For the three and nine months ended September 30, 2020, net income from continuing operations reflects income tax expense of $2.9 million and $7.8 million, respectively. For the nine months ended September 30, 2019, net income for the period prior to the IPO reflects income tax expense of $18.2 million and for the three and nine months ended September 30, 2019, net income for the period subsequent to the IPO reflects income tax expense of $3.3 million and $4.7 million, respectively. Total income tax expense for these periods differed from applying the U.S. statutory corporate income tax rate to pre-tax income primarily due to state income taxes, net of federal benefit, and due to net income attributable to the non-controlling interest for the period subsequent to the IPO. For the three and nine months ended September 30, 2020, the Partnership’s total income tax provision also included discrete income tax expense of approximately $0.2 million and $0.5 million, respectively, primarily related to excess tax deficiencies on unit-based compensation. The effective income tax rates for the three and nine months ended September 30, 2020, were 6.8% and 6.8%, respectively. The effective income tax rates for the three and nine months ended September 30, 2019, including periods prior to the IPO, were 6.4% and 14.6%, respectively. The increase in the effective income tax rate for the three months ended September 30, 2020, as compared to the three months ended September 30, 2019, is primarily due to discrete tax expense for the period. The decrease in the effective income tax rates for the nine months ended September 30, 2020, as compared to the nine months ended September 30, 2019, is primarily due to net income attributable to the non-controlling interest in periods subsequent to the IPO. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 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 Nonrecurring Basis The following table provides the fair value of financial instruments that are not recorded at fair value in the condensed consolidated balance sheets: September 30, 2020 December 31, 2019 Carrying Value (1) Fair Value Carrying Value (1) Fair Value (In thousands) Debt: 5.625% Senior Notes due 2025 $ 490,454 $ 504,605 $ — $ — Operating Company revolving credit facility 85,000 85,000 424,000 424,000 (1) The carrying value includes associated deferred loan costs and any remaining discount or premium, if any. The fair value of the Operating Company’s revolving credit facility approximates its 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 September 30, 2020 quoted market price, a Level 1 classification in the fair value hierarchy. The Partnership estimates asset retirement obligations pursuant to the provisions of ASC Topic 410, “Asset Retirement and Environmental Obligations.” The initial measurement of asset retirement obligations at fair value is calculated using discounted cash flow techniques and based on internal estimates of future retirement costs associated with produced water disposal wells. Given the unobservable nature of the inputs, including plugging costs and useful lives, the initial measurement of the ARO liability is deemed to use Level 3 inputs. Fair Value of Financial Assets The Partnership has other financial instruments consisting of cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued liabilities and various other current liabilities. The carrying value of these instruments approximates fair value. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIESThe Partnership may be 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 regarding air and water quality, hazardous and solid waste disposal and other environmental matters. The Partnership’s management believes there are currently no such matters that, if decided adversely, will have a material adverse effect on the Partnership’s financial condition, results of operations or cash flows.As of September 30, 2020, the Partnership’s anticipated future capital commitments for its equity method investments include $14.1 million for the remainder of 2020 and total $82.4 million in aggregate. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Cash Distribution On October 29, 2020, the board of directors of the General Partner approved a cash distribution for the third quarter of 2020 of $0.20 per common unit, payable on November 23, 2020, to unitholders of record at the close of business on November 16, 2020. Implementation of Common Unit Repurchase Program On October 29, 2020, the board of directors of the General Partner approved a common unit repurchase program to acquire up to $100 million of the Partnership’s outstanding common units. The common unit repurchase program is authorized to extend through December 31, 2021 and the Partnership intends to purchase common units under the repurchase program opportunistically with cash on hand and free cash flow from operations. This repurchase program may be suspended from time to time, modified, extended or discontinued by the board of directors of the General Partner at any time. Purchases under the repurchase program may be made from time to time in open market or privately negotiated transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and will be subject to market conditions, applicable legal requirements, contractual obligations and other factors. Amendment to Credit Agreement On November 2, 2020, the Partnership and the Operating Company entered into a second amendment (the “Second Amendment”) to the Credit Agreement with Wells Fargo, as the administrative agent, and the lenders party thereto. The Second Amendment permits the Partnership to conduct common unit repurchases in connection with the common unit repurchase program described above. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Partnership’s operations are reported in two operating segments: (i) midstream services and (ii) real estate operations. The following tables summarize the results of the Partnership’s operating segments during the periods presented: Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Midstream Services Real Estate Operations Total Midstream Services Real Estate Operations Total (In thousands) Revenues—related party $ 85,846 $ — $ 85,846 $ 104,866 $ — $ 104,866 Revenues—third party 7,229 — 7,229 6,840 — 6,840 Rental income—related party — 2,282 2,282 — 1,399 1,399 Rental income—third party — 867 867 — 1,894 1,894 Other real estate income—related party — 149 149 — 111 111 Other real estate income—third party — 166 166 — 305 305 Total revenues 93,075 3,464 96,539 111,706 3,709 115,415 Direct operating expenses 31,173 — 31,173 29,789 — 29,789 Cost of goods sold (exclusive of depreciation and amortization) 6,663 — 6,663 17,350 — 17,350 Real estate operating expenses — 494 494 — 742 742 Depreciation, amortization and accretion 9,255 1,735 10,990 9,835 1,901 11,736 (Gain) loss on disposal of property, plant and equipment (16) — (16) — — — (Income) loss from equity method investments (3,369) — (3,369) 631 — 631 Segment profit 49,369 1,235 50,604 54,101 1,066 55,167 General and administrative expenses — — (3,140) — — (3,240) Interest income (expense), net — — (5,817) — — (553) Net income (loss) before income taxes 49,369 1,235 41,647 54,101 1,066 51,374 Provision for (benefit from) income taxes — — 2,851 — — 3,294 Net income (loss) $ 49,369 $ 1,235 $ 38,796 $ 54,101 $ 1,066 $ 48,080 As of September 30, 2020 As of December 31, 2019 Segment assets $ 1,552,100 $ 105,050 $ 1,812,243 $ 1,436,213 $ 108,239 $ 1,636,393 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Midstream Services Real Estate Operations Total Midstream Services Real Estate Operations Total (In thousands) Revenues—related party $ 280,460 $ — $ 280,460 $ 296,508 $ — $ 296,508 Revenues—third party 23,504 — 23,504 15,405 — 15,405 Rental income—related party — 5,101 5,101 — 3,370 3,370 Rental income—third party — 4,653 4,653 — 5,999 5,999 Other real estate income—related party — 318 318 — 265 265 Other real estate income—third party — 633 633 — 818 818 Total revenues 303,964 10,705 314,669 311,913 10,452 322,365 Direct operating expenses 101,425 — 101,425 76,381 — 76,381 Cost of goods sold (exclusive of depreciation and amortization) 27,368 — 27,368 46,252 — 46,252 Real estate operating expenses — 1,812 1,812 — 1,963 1,963 Depreciation, amortization and accretion 30,351 5,245 35,596 26,028 5,770 31,798 (Gain) loss on disposal of property, plant and equipment 2,765 — 2,765 (4) — (4) (Income) loss from equity method investments 9,910 — 9,910 695 — 695 Segment profit 132,145 3,648 135,793 162,561 2,719 165,280 General and administrative expenses — — (11,829) — — (7,677) Interest income (expense), net — — (10,364) — — (638) Net income (loss) before income taxes 132,145 3,648 113,600 162,561 2,719 156,965 Provision for (benefit from) income taxes — — 7,754 — — 22,850 Net income (loss) $ 132,145 $ 3,648 $ 105,846 $ 162,561 $ 2,719 $ 134,115 As of September 30, 2020 As of December 31, 2019 Segment assets $ 1,552,100 $ 105,050 $ 1,812,243 $ 1,436,213 $ 108,239 $ 1,636,393 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated results of operations following the completion of the IPO are presented together with the results of operations pertaining to the Predecessor. The assets of the Predecessor consist of produced water disposal wells and related gathering systems, office buildings, surface land, an oil gathering system and asset retirement obligations related to these assets, which were contributed effective January 1, 2019. See Note 4—Acquisitions. The capital contribution of the net proceeds from the IPO to the Operating Company in exchange for 29% of the limited liability company units of the Operating Company was accounted for as a combination of entities under common control, with assets and liabilities transferred at their carrying amounts in a manner similar to a pooling of interests. The Partnership did not own any assets prior to May 28, 2019, the date of the equity contribution agreement by and between the Partnership and the Predecessor. Prior to the IPO, the Predecessor was a wholly owned subsidiary of Diamondback. For periods prior to May 28, 2019, the accompanying condensed consolidated financial statements and related notes thereto represent the financial position, results of operations, cash flows and changes in members’ equity of the Predecessor and, for periods on and after May 28, 2019, the accompanying condensed consolidated financial statements and related notes thereto represent the financial position, results of operations, cash flows and changes in partners’ equity of the Partnership and its partially owned subsidiary. The Predecessor financial statements have been prepared from the separate records maintained by the Partnership and may not necessarily be indicative of the actual results of operations that might have occurred if the Predecessor had been operated separately during the periods reported. The accompanying condensed consolidated financial statements and related notes thereto were prepared in accordance with GAAP. All significant intercompany balances and transactions have been eliminated upon consolidation. These condensed 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 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, 2019, which contains a summary of the Partnership’s significant accounting policies and other disclosures. |
Reclassifications | ReclassificationsCertain prior period amounts have been reclassified to conform to the current period financial statement presentation. These reclassifications had no effect on the previously reported total assets, total liabilities, unitholders’ equity, results of operations or cash flows. |
Use of Estimates | Use of Estimates Certain amounts included in or affecting the Partnership’s financial statements and related notes 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 natural gas industry experiences challenges resulting from negative pricing pressure from the effects of COVID-19 and actions by OPEC members and other exporting nations affecting 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 uncertainty in the Partnership’s accounting estimates, particularly those involving financial forecasts. |
Accounts Receivable | Accounts Receivable Accounts receivable consist primarily of receivables from gathering services, sourced water and rental agreements. The customers and lessees remit payment for services performed and/or goods received directly to the Partnership. Most payments for gathering services, sourced water and rental agreements are received within two months after the date of service performed or goods delivered. 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 customers and lessees, 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 length of time accounts receivable are past due, 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. As the adoption of ASU 2016-13 did not result in a material allowance, no cumulative-effect adjustment was made to beginning unitholders’ equity. At September 30, 2020 , the Partnership recorded an immaterial allowance for expected losses and did not record an allowance for expected losses at December 31, 2019. |
Non-controlling Interest | Non-controlling InterestNon-controlling interest in the accompanying condensed 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’s equity, tax effected, will occur. If the changes in the Partnership’s ownership interest in the Operating Company do not result in a change of control, the transactions are accounted for as equity transactions under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 810, “Consolidation.” This guidance 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. |
Income Taxes | Income Taxes The Partnership is treated as a corporation for U.S. federal income tax purposes as a result of its election to be treated as a corporation effective May 24, 2019. Subsequent to the effective date of the Partnership’s election, it has been subject to U.S. federal and state income tax at corporate rates. 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 the tax sharing agreement with Diamondback. In addition to the Partnership’s 2019 tax year, the Predecessor’s 2016 through 2018 tax years, the periods during which the Predecessor’s sole owner, Diamondback, was responsible for federal income taxes on the Predecessor’s taxable income, remain open to examination by tax authorities. As of September 30, 2020, 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, 2020, there was no interest or penalties associated with uncertain tax positions recognized in the Partnership’s condensed consolidated financial statements. |
Capital Contributions | Capital ContributionsFor the nine months ended September 30, 2019, capital contributions from Diamondback to the Predecessor totaled $456.1 million, of which $228.3 million related to produced water disposal assets, $149.5 million related to the equity method investments in the EPIC and Gray Oak pipelines (defined below), $35.8 million related to crude oil assets, $31.1 million related to elimination of current and deferred liabilities, $18.1 million related to land, $9.4 million related to sourced water assets, $9.2 million related to an office building located in Midland Texas and $(25.3) million in additional assets and liabilities, net, related to operations. |
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 an 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 Contract with Customers | The Partnership generates revenues by charging fees on a per unit basis for gathering crude oil and natural gas, delivering and storing sourced water, and collecting, recycling and disposing of produced water. It is noted that surface revenue, rental and real estate income and amortization of out of market leases are outside the scope of ASC Topic 606, “Revenue from Contracts with Customers.” |
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. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following as of the dates indicated: September 30, 2020 December 31, 2019 (In thousands) Capital expenditures accrued $ 9,213 $ 42,160 Direct operating expenses accrued 19,638 22,119 Sourced water purchases accrued 2,524 9,531 Interest expense accrued 5,866 627 Other 24 2,188 Total accrued liabilities $ 37,265 $ 76,625 |
Schedule of Accumulated Other Comprehensive Income | The following table provides changes in the components of accumulated other comprehensive income, net of related income tax effects: (In thousands) Balance as of December 31, 2019 $ (823) Other comprehensive income (loss) (95) Balance as of September 30, 2020 $ (918) |
Accounting Standards Update and Change in Accounting Principle | 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 an 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) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Disaggregation of revenue | In the following table, revenue is disaggregated by type of service and type of fee. The table also identifies the operating segment to which the disaggregated revenues relate. For more information on operating segments, see Note 17—Segment Information. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Segment (In thousands) Type of Service: Sourced water gathering $ 12,653 $ 26,485 $ 48,308 $ 83,966 Midstream Produced water gathering and disposal 67,800 73,928 217,646 198,344 Midstream Crude oil gathering 7,531 7,248 22,617 19,231 Midstream Natural gas gathering 5,076 3,871 14,506 9,908 Midstream Surface revenue (non ASC 606 revenues) 15 174 887 464 Midstream Real estate contracts (non ASC 606 revenues) 3,464 3,709 10,705 10,452 Real Estate Total revenues $ 96,539 $ 115,415 $ 314,669 $ 322,365 |
REAL ESTATE ASSETS (Tables)
REAL ESTATE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate [Abstract] | |
Schedule of real estate assets and intangible lease assets | The following schedules present the cost and related accumulated depreciation or amortization (as applicable) of the Partnership’s real estate assets and intangible lease assets: As of Estimated Useful Lives September 30, 2020 December 31, 2019 (Years) (In thousands) Buildings 20-30 $ 102,553 $ 102,375 Tenant improvements 15 4,506 4,501 Land N/A 2,437 2,437 Land improvements 15 484 484 Total real estate assets 109,980 109,797 Less: accumulated depreciation (12,165) (8,681) Total investment in real estate, net $ 97,815 $ 101,116 As of Weighted Average Useful Lives September 30, 2020 December 31, 2019 (Months) (In thousands) In-place lease intangibles 45 $ 11,275 $ 11,389 Less: accumulated amortization (7,687) (5,927) In-place lease intangibles, net 3,588 5,462 Above-market lease intangibles 45 3,623 3,623 Less: accumulated amortization (1,466) (1,015) Above-market lease intangibles, net 2,157 2,608 Total intangible lease assets, net $ 5,745 $ 8,070 |
Schedule of amortization expense | The following table presents the Partnership’s estimated amortization expense related to lease intangibles for the periods indicated (in thousands): Remainder of 2020 2021 2022 2023 2024 Thereafter $ 583 $ 1,779 $ 663 $ 728 $ 814 $ 1,178 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | The following table sets forth the Partnership’s property, plant and equipment: As of Estimated September 30, December 31, Useful Lives 2020 2019 (Years) (In thousands) Produced water disposal systems 10-30 $ 669,825 $ 600,797 Crude oil gathering systems (1) 30 133,203 129,658 Natural gas gathering and compression systems (1) 10-30 111,830 98,426 Sourced water gathering systems (1) 30 111,354 101,887 Total property, plant and equipment 1,026,212 930,768 Less: accumulated depreciation, amortization and accretion (90,456) (61,132) Land N/A 85,826 86,072 Total property, plant and equipment, net $ 1,021,582 $ 955,708 |
EQUITY METHOD INVESTMENTS (Tabl
EQUITY METHOD INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity method investments | The following table presents the carrying values of the Partnership’s equity method investments as of the dates indicated: Ownership Interest September 30, 2020 December 31, 2019 (In thousands) EPIC Crude Holdings, LP 10 % $ 123,002 $ 109,806 Gray Oak Pipeline, LLC 10 % 134,555 115,840 Wink to Webster Pipeline LLC 4 % 74,611 34,124 OMOG JV LLC 60 % 195,744 219,098 Amarillo Rattler, LLC 50 % 4,096 690 Total $ 532,008 $ 479,558 The following table summarizes the income (loss) of equity method investees reflected in the Condensed Consolidated Statement of Operations for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (In thousands) EPIC Crude Holdings, LP $ (1,904) $ (529) $ (4,703) $ (532) Gray Oak Pipeline, LLC 3,832 (128) 5,585 (189) Wink to Webster Pipeline LLC (127) 26 73 26 OMOG JV LLC 1,499 — (10,681) — Amarillo Rattler, LLC 69 — (184) — Total $ 3,369 $ (631) $ (9,910) $ (695) |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consisted of the following as of the dates indicated: September 30, 2020 December 31, 2019 (In thousands) 5.625% Senior Notes due 2025 $ 500,000 $ — Operating Company revolving credit facility 85,000 424,000 Unamortized debt issuance costs (9,546) — Total long-term debt $ 575,454 $ 424,000 |
UNIT-BASED COMPENSATION (Tables
UNIT-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020: Phantom Weighted Average Unvested at December 31, 2019 2,226,895 $ 19.14 Granted 53,943 $ 10.41 Vested (449,633) $ 19.14 Forfeited (23,442) $ 18.23 Unvested at September 30, 2020 1,807,763 $ 18.89 |
UNITHOLDERS_ EQUITY AND PARTN_2
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of change in ownership interest | The following table summarizes changes in the ownership interest in consolidated subsidiaries during the period: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 (In thousands) Net income attributable to the Partnership $ 9,218 $ 25,071 Change in ownership of consolidated subsidiaries — (329,034) Change from net income (loss) attributable to the Partnership's unitholders and transfers to non-controlling interest $ 9,218 $ (303,963) |
Schedule of cash distributions | The following table presents cash distributions approved by the board of directors of the General Partner for the periods indicated: Declaration Date Quarter (1) Amount per Common Unit Payment Date October 31, 2019 Q3 2019 (2) $ 0.34 November 22, 2019 February 13, 2020 Q4 2019 $ 0.29 March 10, 2020 April 30, 2020 Q1 2020 $ 0.29 May 26, 2020 July 31, 2020 Q2 2020 $ 0.29 August 24, 2020 October 29, 2020 Q3 2020 $ 0.20 November 23, 2020 (1) Distributions are shown for the quarter in which they were generated. (2) The Q3 2019 distribution also includes amounts attributable to Q2 2019 commencing upon the closing of the IPO. |
EARNINGS PER COMMON UNIT (Table
EARNINGS PER COMMON UNIT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net income per common unit | Basic and diluted earnings per common unit is calculated using the two-class method. The two-class method is an earnings allocation proportional to the respective ownership among holders of common units and participating securities. Basic earnings per common unit is calculated by dividing net income by the weighted-average number of common units outstanding during the period. Diluted earnings per common unit also considers the dilutive effect of unvested common units granted under the LTIP, calculated using the treasury stock method. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (In thousands, except per unit amounts) Net income (loss) attributable to Rattler Midstream LP $ 9,218 $ 11,531 $ 25,071 $ 16,334 Less: net (income) loss allocated to participating securities (1) (524) — (1,820) — Net income (loss) attributable to common unitholders $ 8,694 $ 11,531 $ 23,251 $ 16,334 Weighted average common units outstanding: Basic weighted average common units outstanding 43,996 43,700 43,837 43,564 Effect of dilutive securities: Potential common units issuable (2) — 1,136 — 1,146 Diluted weighted average common units outstanding 43,996 44,836 43,837 44,710 Net income per common unit, basic $ 0.20 $ 0.26 $ 0.53 $ 0.37 Net income per common unit, diluted $ 0.20 $ 0.26 $ 0.53 $ 0.37 (1) Distribution equivalent rights granted to employees are considered participating securities. (2) For the three and nine months ended September 30, 2020, no potential common units were included in the computation of diluted earnings per unit because their inclusion would have been anti-dilutive under the treasury stock method for the periods presented. However, such potential common units could dilute basic earnings per unit in future periods. |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | On May 5, 2020, the Partnership amended its commercial agreements to, among other things, in certain cases add new areas to the dedication and commitment of Diamondback and its affiliates and revise the threshold for permitting releases of dedications in connection with transfers or swaps by Diamondback or its affiliates. Revenues generated from commercial agreements with Diamondback consist of the following: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (In thousands) Crude oil gathering $ 2,745 $ 2,626 $ 7,730 $ 7,278 Natural gas gathering 5,076 3,870 14,506 9,908 Produced water gathering and disposal 66,067 72,917 211,353 196,213 Sourced water gathering 11,948 25,452 46,845 82,933 Surface revenue 10 1 26 176 Total $ 85,846 $ 104,866 $ 280,460 $ 296,508 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value measurement information for financial instruments measured on a nonrecurring basis | The following table provides the fair value of financial instruments that are not recorded at fair value in the condensed consolidated balance sheets: September 30, 2020 December 31, 2019 Carrying Value (1) Fair Value Carrying Value (1) Fair Value (In thousands) Debt: 5.625% Senior Notes due 2025 $ 490,454 $ 504,605 $ — $ — Operating Company revolving credit facility 85,000 85,000 424,000 424,000 (1) The carrying value includes associated deferred loan costs and any remaining discount or premium, if any. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of operating business segments | The following tables summarize the results of the Partnership’s operating segments during the periods presented: Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Midstream Services Real Estate Operations Total Midstream Services Real Estate Operations Total (In thousands) Revenues—related party $ 85,846 $ — $ 85,846 $ 104,866 $ — $ 104,866 Revenues—third party 7,229 — 7,229 6,840 — 6,840 Rental income—related party — 2,282 2,282 — 1,399 1,399 Rental income—third party — 867 867 — 1,894 1,894 Other real estate income—related party — 149 149 — 111 111 Other real estate income—third party — 166 166 — 305 305 Total revenues 93,075 3,464 96,539 111,706 3,709 115,415 Direct operating expenses 31,173 — 31,173 29,789 — 29,789 Cost of goods sold (exclusive of depreciation and amortization) 6,663 — 6,663 17,350 — 17,350 Real estate operating expenses — 494 494 — 742 742 Depreciation, amortization and accretion 9,255 1,735 10,990 9,835 1,901 11,736 (Gain) loss on disposal of property, plant and equipment (16) — (16) — — — (Income) loss from equity method investments (3,369) — (3,369) 631 — 631 Segment profit 49,369 1,235 50,604 54,101 1,066 55,167 General and administrative expenses — — (3,140) — — (3,240) Interest income (expense), net — — (5,817) — — (553) Net income (loss) before income taxes 49,369 1,235 41,647 54,101 1,066 51,374 Provision for (benefit from) income taxes — — 2,851 — — 3,294 Net income (loss) $ 49,369 $ 1,235 $ 38,796 $ 54,101 $ 1,066 $ 48,080 As of September 30, 2020 As of December 31, 2019 Segment assets $ 1,552,100 $ 105,050 $ 1,812,243 $ 1,436,213 $ 108,239 $ 1,636,393 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Midstream Services Real Estate Operations Total Midstream Services Real Estate Operations Total (In thousands) Revenues—related party $ 280,460 $ — $ 280,460 $ 296,508 $ — $ 296,508 Revenues—third party 23,504 — 23,504 15,405 — 15,405 Rental income—related party — 5,101 5,101 — 3,370 3,370 Rental income—third party — 4,653 4,653 — 5,999 5,999 Other real estate income—related party — 318 318 — 265 265 Other real estate income—third party — 633 633 — 818 818 Total revenues 303,964 10,705 314,669 311,913 10,452 322,365 Direct operating expenses 101,425 — 101,425 76,381 — 76,381 Cost of goods sold (exclusive of depreciation and amortization) 27,368 — 27,368 46,252 — 46,252 Real estate operating expenses — 1,812 1,812 — 1,963 1,963 Depreciation, amortization and accretion 30,351 5,245 35,596 26,028 5,770 31,798 (Gain) loss on disposal of property, plant and equipment 2,765 — 2,765 (4) — (4) (Income) loss from equity method investments 9,910 — 9,910 695 — 695 Segment profit 132,145 3,648 135,793 162,561 2,719 165,280 General and administrative expenses — — (11,829) — — (7,677) Interest income (expense), net — — (10,364) — — (638) Net income (loss) before income taxes 132,145 3,648 113,600 162,561 2,719 156,965 Provision for (benefit from) income taxes — — 7,754 — — 22,850 Net income (loss) $ 132,145 $ 3,648 $ 105,846 $ 162,561 $ 2,719 $ 134,115 As of September 30, 2020 As of December 31, 2019 Segment assets $ 1,552,100 $ 105,050 $ 1,812,243 $ 1,436,213 $ 108,239 $ 1,636,393 |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Details) - USD ($) $ / shares in Units, $ in Thousands | May 28, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Oct. 30, 2020 | Dec. 31, 2019 |
Limited Partners' Capital Account [Line Items] | |||||
Cash contribution from Diamondback | $ 1,000 | ||||
Cash contribution from the general partner | 1,000 | ||||
Payments of distributions to affiliates | $ 726,500 | $ 1,820 | $ 0 | ||
General partners capital account, percentage of preferred cash distribution received | 8.00% | ||||
Class B Units | |||||
Limited Partners' Capital Account [Line Items] | |||||
Common units issued (in shares) | 107,815,152 | 107,815,152 | 107,815,152 | ||
Units outstanding (in shares) | 107,815,152 | 107,815,152 | 107,815,152 | ||
Class B Units | Diamondback Energy, Inc. | |||||
Limited Partners' Capital Account [Line Items] | |||||
Units outstanding (in shares) | 107,815,152 | ||||
Rattler Midstream Partners LLC | |||||
Limited Partners' Capital Account [Line Items] | |||||
General partners, ownership interest | 29.00% | ||||
Rattler Midstream Partners LLC | Diamondback Energy, Inc. | |||||
Limited Partners' Capital Account [Line Items] | |||||
Limited partners, ownership interest | 71.00% | ||||
Rattler MIdstream LP | |||||
Limited Partners' Capital Account [Line Items] | |||||
General partners, ownership interest | 100.00% | ||||
Limited partners, ownership interest | 71.00% | ||||
Rattler MIdstream LP | Diamondback Energy, Inc. | |||||
Limited Partners' Capital Account [Line Items] | |||||
Limited partners, ownership interest | 71.00% | ||||
IPO | |||||
Limited Partners' Capital Account [Line Items] | |||||
Common units issued (in shares) | 43,700,000 | ||||
Shares price (in dollars per share) | $ 17.50 | ||||
Net proceeds received from sale of common units | $ 719,400 | ||||
IPO | Rattler Midstream Partners LLC | |||||
Limited Partners' Capital Account [Line Items] | |||||
General partners, ownership interest | 29.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2019 | Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Contributed Assets [Line Items] | ||||||
Allowance for doubtful accounts | $ 0 | |||||
Change in ownership of consolidated subsidiaries | $ 90,613,000 | |||||
Unrecognized tax benefits material impact on the effective tax rate | $ 0 | $ 0 | ||||
Unrecognized tax benefits, income tax penalties and interest expense | 0 | |||||
Contribution of property | $ 456,100,000 | |||||
Capital contribution related to equity method investments | 149,500,000 | |||||
Capital contribution related to elimination of current and deferred liabilities | 31,100,000 | |||||
Capital contribution in additional assets and liabilities, net, related to operations | (25,300,000) | |||||
Produced Water Disposal Assets | ||||||
Contributed Assets [Line Items] | ||||||
Contribution of property | 228,300,000 | |||||
Crude oil assets | ||||||
Contributed Assets [Line Items] | ||||||
Contribution of property | 35,800,000 | |||||
Land | ||||||
Contributed Assets [Line Items] | ||||||
Contribution of property | 18,100,000 | |||||
Fresh water asset | ||||||
Contributed Assets [Line Items] | ||||||
Contribution of property | 9,400,000 | |||||
Office building | ||||||
Contributed Assets [Line Items] | ||||||
Contribution of property | $ 9,200,000 | |||||
Other Ownership Interest | ||||||
Contributed Assets [Line Items] | ||||||
Change in ownership of consolidated subsidiaries | 419,600,000 | |||||
Limited Partners | ||||||
Contributed Assets [Line Items] | ||||||
Change in ownership of consolidated subsidiaries | $ 0 | $ 0 | $ (329,034,000) | |||
Limited Partners | Common Units | ||||||
Contributed Assets [Line Items] | ||||||
Change in ownership of consolidated subsidiaries | $ (329,034,000) |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Accrued Liabilities) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Capital expenditures accrued | $ 9,213 | $ 42,160 |
Direct operating expenses accrued | 19,638 | 22,119 |
Sourced water purchases accrued | 2,524 | 9,531 |
Interest expense accrued | 5,866 | 627 |
Other | 24 | 2,188 |
Total accrued liabilities | $ 37,265 | $ 76,625 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
AOCI | ||||||
Beginning balance | $ 1,186,724 | $ 1,127,758 | $ 1,115,840 | $ 1,065,161 | $ 1,115,840 | $ 527,126 |
Other comprehensive income (loss) | 403 | (240) | (258) | 0 | (95) | 0 |
Ending balance | 1,183,550 | $ 1,186,724 | 1,127,758 | $ 1,115,148 | 1,183,550 | $ 1,115,148 |
AOCI | ||||||
AOCI | ||||||
Beginning balance | $ (823) | (823) | ||||
Ending balance | $ (918) | $ (918) |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Surface revenue (non ASC 606 revenues) | $ 15 | $ 174 | $ 887 | $ 464 |
Real estate contracts (non ASC 606 revenues) | 3,464 | 3,709 | 10,705 | 10,452 |
Total revenues | 96,539 | 115,415 | 314,669 | 322,365 |
Sourced water gathering | ||||
Disaggregation of Revenue [Line Items] | ||||
ASC 606 revenues | 12,653 | 26,485 | 48,308 | 83,966 |
Produced water gathering and disposal | ||||
Disaggregation of Revenue [Line Items] | ||||
ASC 606 revenues | 67,800 | 73,928 | 217,646 | 198,344 |
Crude oil gathering | ||||
Disaggregation of Revenue [Line Items] | ||||
ASC 606 revenues | 7,531 | 7,248 | 22,617 | 19,231 |
Natural gas gathering | ||||
Disaggregation of Revenue [Line Items] | ||||
ASC 606 revenues | $ 5,076 | $ 3,871 | $ 14,506 | $ 9,908 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Millions | Jan. 01, 2019USD ($)SWDwellPWD_wellsystempit | Sep. 30, 2019USD ($) |
Property, Plant and Equipment [Line Items] | ||
Contribution of property | $ 456.1 | |
Ajax | Water Wells | ||
Property, Plant and Equipment [Line Items] | ||
Number of oil and gas properties | well | 17 | |
Ajax | Gathering system | ||
Property, Plant and Equipment [Line Items] | ||
Number of oil and gas properties | system | 1 | |
Ajax | Hydraulic Fracturing Pits | ||
Property, Plant and Equipment [Line Items] | ||
Number of oil and gas properties | pit | 5 | |
Ajax | Fresh Water Transportation System | ||
Property, Plant and Equipment [Line Items] | ||
Number of oil and gas properties | system | 1 | |
Ajax | Ajax Contribution | ||
Property, Plant and Equipment [Line Items] | ||
Contribution of property | $ 21.5 | |
Ajax | Produced Water Disposal | ||
Property, Plant and Equipment [Line Items] | ||
Number of oil and gas properties | SWD | 4 | |
Energen | ||
Property, Plant and Equipment [Line Items] | ||
Asset retirement obligations, associated with assets contribution | $ 3 | |
Energen | Produced Water Disposal | ||
Property, Plant and Equipment [Line Items] | ||
Number of oil and gas properties | PWD_well | 56 | |
Energen | Energen Contribution | ||
Property, Plant and Equipment [Line Items] | ||
Contribution of property | $ 279 |
REAL ESTATE ASSETS (Details)
REAL ESTATE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Real Estate [Line Items] | ||||||
Payments to acquire real estate and real estate joint ventures | $ 456,100 | |||||
Buildings | $ 102,553 | $ 102,553 | $ 102,375 | |||
Tenant improvements | 4,506 | 4,506 | 4,501 | |||
Land | 2,437 | 2,437 | 2,437 | |||
Land improvements | 484 | 484 | 484 | |||
Total real estate assets | 109,980 | 109,980 | 109,797 | |||
Less: accumulated depreciation | (12,165) | (12,165) | (8,681) | |||
Total investment in real estate, net | 97,815 | 97,815 | 101,116 | |||
Finite-lived intangibles assets, net | 5,745 | 5,745 | 8,070 | |||
Depreciation and amortization expense for real estate assets | 1,700 | $ 1,900 | $ 5,200 | $ 5,800 | ||
In-place lease intangibles | ||||||
Real Estate [Line Items] | ||||||
Intangible assets, weighted average useful lives (in years) | 45 months | |||||
Finite-lived intangible assets, gross | 11,275 | $ 11,275 | 11,389 | |||
Less: accumulated amortization | (7,687) | (7,687) | (5,927) | |||
Finite-lived intangibles assets, net | 3,588 | $ 3,588 | 5,462 | |||
Above-market lease intangibles | ||||||
Real Estate [Line Items] | ||||||
Intangible assets, weighted average useful lives (in years) | 45 months | |||||
Finite-lived intangible assets, gross | 3,623 | $ 3,623 | 3,623 | |||
Less: accumulated amortization | (1,466) | (1,466) | (1,015) | |||
Finite-lived intangibles assets, net | $ 2,157 | 2,157 | $ 2,608 | |||
Tall Tower | ||||||
Real Estate [Line Items] | ||||||
Payments to acquire real estate and real estate joint ventures | $ 110,000 | |||||
A-Street Building | ||||||
Real Estate [Line Items] | ||||||
Payments to acquire real estate and real estate joint ventures | $ 9,200 | |||||
Tenant improvements | ||||||
Real Estate [Line Items] | ||||||
Property and equipment estimated useful lives (in years) | 15 years | |||||
Land improvements | ||||||
Real Estate [Line Items] | ||||||
Property and equipment estimated useful lives (in years) | 15 years | |||||
Minimum | Buildings | ||||||
Real Estate [Line Items] | ||||||
Property and equipment estimated useful lives (in years) | 20 years | |||||
Maximum | Buildings | ||||||
Real Estate [Line Items] | ||||||
Property and equipment estimated useful lives (in years) | 30 years |
REAL ESTATE ASSETS (Estimated A
REAL ESTATE ASSETS (Estimated Amortization Expense) (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Real Estate [Abstract] | |
Remainder of 2020 | $ 583 |
2021 | 1,779 |
2022 | 663 |
2023 | 728 |
2024 | 814 |
Thereafter | $ 1,178 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment | $ 1,026,212,000 | $ 1,026,212,000 | $ 930,768,000 | ||
Less: accumulated depreciation, amortization and accretion | (90,456,000) | (90,456,000) | (61,132,000) | ||
Land | 85,826,000 | 85,826,000 | 86,072,000 | ||
Total property, plant and equipment, net | 1,021,582,000 | 1,021,582,000 | 955,708,000 | ||
Property, plant and equipment, assets | 71,900,000 | 71,900,000 | 138,600,000 | ||
Depreciation expense | 8,900,000 | $ 8,700,000 | 29,400,000 | $ 24,900,000 | |
Impairment charges | 0 | $ 0 | 0 | $ 0 | |
Produced water disposal systems | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment | 669,825,000 | $ 669,825,000 | 600,797,000 | ||
Crude oil gathering systems | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment estimated useful lives (in years) | 30 years | ||||
Property, plant and equipment | 133,203,000 | $ 133,203,000 | 129,658,000 | ||
Natural gas gathering and compression systems | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment | 111,830,000 | $ 111,830,000 | 98,426,000 | ||
Sourced water gathering | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment estimated useful lives (in years) | 30 years | ||||
Property, plant and equipment | $ 111,354,000 | $ 111,354,000 | $ 101,887,000 | ||
Minimum | Produced water disposal systems | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment estimated useful lives (in years) | 10 years | ||||
Minimum | Natural gas gathering and compression systems | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment estimated useful lives (in years) | 10 years | ||||
Maximum | Produced water disposal systems | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment estimated useful lives (in years) | 30 years | ||||
Maximum | Natural gas gathering and compression systems | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment estimated useful lives (in years) | 30 years |
EQUITY METHOD INVESTMENTS (Deta
EQUITY METHOD INVESTMENTS (Details) Mcf in Thousands | 3 Months Ended | 9 Months Ended | ||||||||||
Sep. 30, 2020USD ($)Mcf | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)Mcf | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 20, 2019Mcfmi | Nov. 07, 2019 | Oct. 01, 2019 | Jul. 30, 2019 | Mar. 29, 2019USD ($) | Feb. 15, 2019 | Feb. 01, 2019 | |
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Equity method investments | $ 532,008,000 | $ 532,008,000 | $ 479,558,000 | |||||||||
Income (expense) from equity method investment | 3,369,000 | $ (631,000) | (9,910,000) | $ (695,000) | ||||||||
Goodwill impairment charge | $ 0 | 0 | $ 0 | 0 | ||||||||
Joint Venture of Wink to Webster Project | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Member ownership percentage | 4.00% | |||||||||||
Gray Oak Pipeline, LLC | 2.52% Short-Term Promissory Note | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Borrowing amount | $ 123,000,000 | |||||||||||
Promissory note stated interest rate | 2.52% | |||||||||||
OMOG JV LLC | Reliance Gathering | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Percentage of interests acquired | 100.00% | |||||||||||
Amarillo Rattler, LLC | Dawson, Martin And Andrews Counties, Texas | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Distance of gathering and regional transportation pipelines (in miles) | mi | 84 | |||||||||||
EPIC Crude Holdings, LP | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Ownership Interest | 10.00% | 10.00% | 10.00% | |||||||||
Equity method investments | $ 123,002,000 | $ 123,002,000 | 109,806,000 | |||||||||
Income (expense) from equity method investment | $ (1,904,000) | (529,000) | $ (4,703,000) | (532,000) | ||||||||
Gray Oak Pipeline, LLC | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Ownership Interest | 10.00% | 10.00% | 10.00% | |||||||||
Equity method investments | $ 134,555,000 | $ 134,555,000 | 115,840,000 | |||||||||
Income (expense) from equity method investment | $ 3,832,000 | (128,000) | $ 5,585,000 | (189,000) | ||||||||
Wink to Webster Pipeline LLC | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Ownership Interest | 4.00% | 4.00% | ||||||||||
Equity method investments | $ 74,611,000 | $ 74,611,000 | 34,124,000 | |||||||||
Income (expense) from equity method investment | $ (127,000) | 26,000 | $ 73,000 | 26,000 | ||||||||
OMOG JV LLC | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Ownership Interest | 60.00% | 60.00% | 60.00% | |||||||||
Equity method investments | $ 195,744,000 | $ 195,744,000 | 219,098,000 | |||||||||
Income (expense) from equity method investment | $ 1,499,000 | 0 | (10,681,000) | 0 | ||||||||
Goodwill impairment charge | $ 15,800,000 | |||||||||||
Amarillo Rattler, LLC | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Ownership Interest | 50.00% | 50.00% | 50.00% | |||||||||
Equity method investments | $ 4,096,000 | $ 4,096,000 | $ 690,000 | |||||||||
Income (expense) from equity method investment | $ 69,000 | $ 0 | $ (184,000) | $ 0 | ||||||||
Gas gathering and cryogenic processing system capacity (in Mcf/d) | Mcf | 30 | 30 | ||||||||||
Amarillo Rattler, LLC | Dawson, Martin And Andrews Counties, Texas | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Gas gathering and cryogenic processing system capacity (in Mcf/d) | Mcf | 40 | |||||||||||
Amarillo Rattler, LLC | Martin County, Texas | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||
Gas gathering and cryogenic processing system capacity (in Mcf/d) | Mcf | 60 |
DEBT (Details)
DEBT (Details) - USD ($) | Jul. 14, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | May 28, 2019 |
Line of Credit Facility [Line Items] | |||||
Unamortized debt issuance costs | $ (9,546,000) | $ (9,546,000) | $ 0 | ||
Total long-term debt | 575,454,000 | 575,454,000 | 424,000,000 | ||
5.625% Senior Notes due 2025 | |||||
Line of Credit Facility [Line Items] | |||||
Long-term debt, gross | $ 500,000,000 | $ 500,000,000 | 0 | ||
Interest rate | 5.625% | 5.625% | |||
Principal amount | $ 500,000,000 | ||||
Proceeds from issuance of debt | $ 489,500,000 | ||||
Rattler Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Long-term debt, gross | $ 85,000,000 | $ 85,000,000 | $ 424,000,000 | ||
Revolving credit facility maximum borrowing capacity | $ 600,000,000 | ||||
Revolving credit facility maximum borrowing capacity, subject to commitments | $ 1,000,000,000 | ||||
Available borrowings capacity | $ 515,000,000 | $ 515,000,000 | |||
Weighted average interest rate | 1.46% | 2.18% |
UNIT-BASED COMPENSATION - Addit
UNIT-BASED COMPENSATION - Additional Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020USD ($)shares | Sep. 30, 2020USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of common units reserved for issuance (in shares) | shares | 14,856,026 | 14,856,026 |
Unit-based compensation expenses | $ 2.2 | $ 6.6 |
Phantom Share Units (PSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Fair value | 8.6 | |
Unrecognized compensation cost related to unvested phantom units | $ 31 | $ 31 |
Unrecognized compensation cost related to unvested phantom units, period for recognition | 3 years 6 months 21 days |
UNIT-BASED COMPENSATION - Phant
UNIT-BASED COMPENSATION - Phantom Units (Details) - Phantom Share Units (PSUs) - $ / shares | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Phantom Units | ||
Unvested beginning balance (in shares) | 2,226,895 | |
Granted (in shares) | 53,943 | |
Vested (in shares) | (449,633) | |
Forfeited (in shares) | (23,442) | |
Unvested ending balance (in shares) | 1,807,763 | |
Weighted Average Grant-Date Fair Value | ||
Unvested beginning balance (in USD Per share) | $ 18.89 | $ 19.14 |
Granted (in USD Per share) | 10.41 | |
Vested (in USD Per share) | 19.14 | |
Forfeited (in USD Per share) | 18.23 | |
Unvested ending balance (in USD Per share) | $ 18.89 | $ 19.14 |
UNITHOLDERS_ EQUITY AND PARTN_3
UNITHOLDERS’ EQUITY AND PARTNERSHIP DISTRIBUTIONS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||
Jun. 30, 2019 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Oct. 30, 2020 | Oct. 29, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Feb. 13, 2020 | Oct. 31, 2019 | May 28, 2019 | |
Limited Partners' Capital Account [Line Items] | ||||||||||||||
Net income (loss) attributable to Rattler Midstream LP | $ 9,218,000 | $ 11,531,000 | $ 25,071,000 | $ 16,334,000 | ||||||||||
Change in ownership of consolidated subsidiaries | $ 90,613,000 | |||||||||||||
Limited Partners | ||||||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||||||
Net income (loss) attributable to Rattler Midstream LP | 9,218,000 | 25,071,000 | ||||||||||||
Change in ownership of consolidated subsidiaries | $ 0 | 0 | (329,034,000) | |||||||||||
Change from net income (loss) attributable to the Partnership's unitholders and transfers to non-controlling interest | $ 9,218,000 | $ (303,963,000) | ||||||||||||
Rattler Midstream Partners LLC | ||||||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||||||
Conversion of stock, shares converted | 1 | |||||||||||||
Rattler Midstream Partners LLC | Diamondback Energy, Inc. | ||||||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||||||
Limited partners, ownership interest | 71.00% | |||||||||||||
Member ownership percentage | 71.00% | 71.00% | ||||||||||||
Common Units | ||||||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||||||
Common units issued (in shares) | 43,996,243 | 43,700,000 | 43,996,243 | |||||||||||
Units outstanding (in shares) | 43,996,243 | 43,700,000 | 43,996,243 | |||||||||||
Conversion of stock, shares issued | 1 | |||||||||||||
Partners' capital, cash distribution (in USD per common unit) | $ 0.29 | $ 0.29 | $ 0.29 | $ 0.34 | ||||||||||
Partners' capital, cash distribution, period of record date after quarter end | 65 days | |||||||||||||
Common Units | Subsequent Event | ||||||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||||||
Partners' capital, cash distribution (in USD per common unit) | $ 0.20 | |||||||||||||
Common Units | Diamondback Energy, Inc. | ||||||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||||||
Units outstanding (in shares) | 0 | 0 | ||||||||||||
Class B Units | ||||||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||||||
Common units issued (in shares) | 107,815,152 | 107,815,152 | 107,815,152 | 107,815,152 | ||||||||||
Units outstanding (in shares) | 107,815,152 | 107,815,152 | 107,815,152 | 107,815,152 | ||||||||||
Conversion of stock, shares converted | 1 | |||||||||||||
Class B Units | Diamondback Energy, Inc. | ||||||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||||||
Units outstanding (in shares) | 107,815,152 | 107,815,152 | ||||||||||||
Operating Company Units | Diamondback Energy, Inc. | ||||||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||||||
Units outstanding (in shares) | 107,815,152 | 107,815,152 |
EARNINGS PER COMMON UNIT (Detai
EARNINGS PER COMMON UNIT (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to Rattler Midstream LP | $ 9,218 | $ 11,531 | $ 25,071 | $ 16,334 |
Less: net income allocated to participating securities | (524) | 0 | (1,820) | 0 |
Net income (loss) attributable to common unitholders | $ 8,694 | $ 11,531 | $ 23,251 | $ 16,334 |
Basic weighted average common units outstanding (in shares) | 43,996,000 | 43,700,000 | 43,837,000 | 43,564,000 |
Potential common units issuable (in shares) | 0 | 1,136,000 | 0 | 1,146,000 |
Diluted weighted average common units outstanding (in shares) | 43,996,000 | 44,836,000 | 43,837,000 | 44,710,000 |
Net income per common unit, basic (in USD per share) | $ 0.20 | $ 0.26 | $ 0.53 | $ 0.37 |
Net income per common unit, diluted (in USD per share) | $ 0.20 | $ 0.26 | $ 0.53 | $ 0.37 |
Phantom units (in shares) | 0 | 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Related Party Transaction [Line Items] | ||||
Revenue from related parties | $ 85,846 | $ 104,866 | $ 280,460 | $ 296,508 |
Crude oil gathering | ||||
Related Party Transaction [Line Items] | ||||
Revenue from related parties | 2,745 | 2,626 | 7,730 | 7,278 |
Natural gas gathering | ||||
Related Party Transaction [Line Items] | ||||
Revenue from related parties | 5,076 | 3,870 | 14,506 | 9,908 |
Produced water gathering and disposal | ||||
Related Party Transaction [Line Items] | ||||
Revenue from related parties | 66,067 | 72,917 | 211,353 | 196,213 |
Sourced water gathering | ||||
Related Party Transaction [Line Items] | ||||
Revenue from related parties | 11,948 | 25,452 | 46,845 | 82,933 |
Surface revenue | ||||
Related Party Transaction [Line Items] | ||||
Revenue from related parties | $ 10 | $ 1 | $ 26 | $ 176 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2019 | May 28, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||||
Elimination of current and deferred tax liabilities | $ 31,100 | |||||
Income tax expense | $ 2,851 | $ 3,294 | $ 4,700 | $ 18,200 | $ 7,754 | $ 22,850 |
Income tax expense from excess tax deficiencies from unit based compensation | $ 200 | $ 500 | ||||
Effective income tax rates | 6.80% | 6.40% | 6.80% | 14.60% |
FAIR VALUE MEASUREMENTS - Nonre
FAIR VALUE MEASUREMENTS - Nonrecurring Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
5.625% Senior Notes due 2025 | ||
Fair value of assets and liabilities measured on a recurring and nonrecurring basis | ||
Interest rate | 5.625% | |
Reported Value Measurement | 5.625% Senior Notes due 2025 | Nonrecurring | ||
Fair value of assets and liabilities measured on a recurring and nonrecurring basis | ||
Senior notes due | $ 490,454 | $ 0 |
Reported Value Measurement | Rattler Credit Facility | Nonrecurring | ||
Fair value of assets and liabilities measured on a recurring and nonrecurring basis | ||
Revolving credit facility | 85,000 | 424,000 |
Estimate of Fair Value Measurement | 5.625% Senior Notes due 2025 | Nonrecurring | ||
Fair value of assets and liabilities measured on a recurring and nonrecurring basis | ||
Senior notes due | 504,605 | 0 |
Estimate of Fair Value Measurement | Rattler Credit Facility | Nonrecurring | ||
Fair value of assets and liabilities measured on a recurring and nonrecurring basis | ||
Revolving credit facility | $ 85,000 | $ 424,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Sep. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Future capital commitments for investments includes for the remainder of 2020 | $ 14.1 |
Contractual obligation | $ 82.4 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Common Unit - USD ($) | Oct. 29, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Feb. 13, 2020 | Oct. 31, 2019 |
Subsequent Event [Line Items] | |||||
Partners' capital, cash distribution (in USD per common unit) | $ 0.29 | $ 0.29 | $ 0.29 | $ 0.34 | |
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Partners' capital, cash distribution (in USD per common unit) | $ 0.20 | ||||
Stock repurchase program, authorized amount | $ 100,000,000 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Sep. 30, 2019USD ($) | May 28, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||||||||
Number of operating segments | segment | 2 | |||||||||
Total revenues | $ 96,539 | $ 115,415 | $ 314,669 | $ 322,365 | ||||||
Direct operating expenses | 31,173 | 29,789 | 101,425 | 76,381 | ||||||
Cost of goods sold (exclusive of depreciation and amortization) | 6,663 | 17,350 | 27,368 | 46,252 | ||||||
Real estate operating expenses | 494 | 742 | 1,812 | 1,963 | ||||||
Depreciation, amortization and accretion | 10,990 | 11,736 | 35,596 | 31,798 | ||||||
(Gain) loss on disposal of property, plant and equipment | (16) | 0 | 2,765 | (4) | ||||||
(Income) loss from equity method investments | (3,369) | 631 | 9,910 | 695 | ||||||
General and administrative expenses | (3,140) | (3,240) | (11,829) | (7,677) | ||||||
Interest income (expense), net | (5,817) | (553) | (10,364) | (638) | ||||||
Net income (loss) before income taxes | 41,647 | 51,374 | 113,600 | 156,965 | ||||||
Provision for (benefit from) income taxes | 2,851 | 3,294 | $ 4,700 | $ 18,200 | 7,754 | 22,850 | ||||
Net income (loss) | 38,796 | $ 12,462 | $ 54,588 | 48,080 | $ 39,356 | 105,846 | 134,115 | |||
Segment assets | 1,812,243 | 1,812,243 | $ 1,636,393 | |||||||
Midstream Services | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 93,075 | 111,706 | 303,964 | 311,913 | ||||||
Direct operating expenses | 31,173 | 29,789 | 101,425 | 76,381 | ||||||
Cost of goods sold (exclusive of depreciation and amortization) | 6,663 | 17,350 | 27,368 | 46,252 | ||||||
Real estate operating expenses | 0 | 0 | 0 | 0 | ||||||
Depreciation, amortization and accretion | 9,255 | 9,835 | 30,351 | 26,028 | ||||||
(Gain) loss on disposal of property, plant and equipment | (16) | 0 | 2,765 | (4) | ||||||
(Income) loss from equity method investments | (3,369) | 631 | 9,910 | 695 | ||||||
Net income (loss) before income taxes | 49,369 | 54,101 | 132,145 | 162,561 | ||||||
Net income (loss) | 49,369 | 54,101 | 132,145 | 162,561 | ||||||
Real Estate Operations | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 3,464 | 3,709 | 10,705 | 10,452 | ||||||
Direct operating expenses | 0 | 0 | 0 | 0 | ||||||
Cost of goods sold (exclusive of depreciation and amortization) | 0 | 0 | 0 | 0 | ||||||
Real estate operating expenses | 494 | 742 | 1,812 | 1,963 | ||||||
Depreciation, amortization and accretion | 1,735 | 1,901 | 5,245 | 5,770 | ||||||
(Gain) loss on disposal of property, plant and equipment | 0 | 0 | 0 | 0 | ||||||
(Income) loss from equity method investments | 0 | 0 | 0 | 0 | ||||||
Net income (loss) before income taxes | 1,235 | 1,066 | 3,648 | 2,719 | ||||||
Net income (loss) | 1,235 | 1,066 | 3,648 | 2,719 | ||||||
Revenues—related party | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 85,846 | 104,866 | 280,460 | 296,508 | ||||||
Revenues—related party | Midstream Services | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 85,846 | 104,866 | 280,460 | 296,508 | ||||||
Revenues—related party | Real Estate Operations | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 0 | 0 | 0 | 0 | ||||||
Revenues—third party | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 7,229 | 6,840 | 23,504 | 15,405 | ||||||
Revenues—third party | Midstream Services | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 7,229 | 6,840 | 23,504 | 15,405 | ||||||
Revenues—third party | Real Estate Operations | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 0 | 0 | 0 | 0 | ||||||
Rental income—related party | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 2,282 | 1,399 | 5,101 | 3,370 | ||||||
Rental income—related party | Midstream Services | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 0 | 0 | 0 | 0 | ||||||
Rental income—related party | Real Estate Operations | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 2,282 | 1,399 | 5,101 | 3,370 | ||||||
Rental income—third party | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 867 | 1,894 | 4,653 | 5,999 | ||||||
Rental income—third party | Midstream Services | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 0 | 0 | 0 | 0 | ||||||
Rental income—third party | Real Estate Operations | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 867 | 1,894 | 4,653 | 5,999 | ||||||
Other real estate income—related party | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 149 | 111 | 318 | 265 | ||||||
Other real estate income—related party | Midstream Services | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 0 | 0 | 0 | 0 | ||||||
Other real estate income—related party | Real Estate Operations | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 149 | 111 | 318 | 265 | ||||||
Other real estate income—third party | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 166 | 305 | 633 | 818 | ||||||
Other real estate income—third party | Midstream Services | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 0 | 0 | 0 | 0 | ||||||
Other real estate income—third party | Real Estate Operations | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues | 166 | 305 | 633 | 818 | ||||||
Operating Segments | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net income (loss) before income taxes | 50,604 | 55,167 | 135,793 | 165,280 | ||||||
Provision for (benefit from) income taxes | 2,851 | 3,294 | ||||||||
Segment assets | 1,812,243 | 1,812,243 | 1,636,393 | |||||||
Operating Segments | Midstream Services | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net income (loss) before income taxes | 49,369 | 54,101 | 132,145 | 162,561 | ||||||
Provision for (benefit from) income taxes | 0 | 0 | ||||||||
Segment assets | 1,552,100 | 1,552,100 | 1,436,213 | |||||||
Operating Segments | Real Estate Operations | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net income (loss) before income taxes | 1,235 | 1,066 | 3,648 | 2,719 | ||||||
Provision for (benefit from) income taxes | 0 | 0 | ||||||||
Segment assets | 105,050 | 105,050 | $ 108,239 | |||||||
Segment Reconciling Items | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
General and administrative expenses | (3,140) | (3,240) | (11,829) | (7,677) | ||||||
Interest income (expense), net | $ (5,817) | $ (553) | $ (10,364) | $ (638) |