Viper Energy Partners LP First Quarter 2023 Results

Viper Energy Partners LP, a subsidiary of Diamondback Energy, Inc., announced financial and operating results for the first quarter ended March 31, 2023.

Travis Stice, Chief Executive Officer of Viper's General Partner said: "The first quarter was a strong start to the year for Viper as oil production set a Company record for a fourth consecutive quarter. The advantaged nature of the royalty business model was highlighted during the quarter as we maintained our strong free cash flow conversion despite the volatility in commodity prices. We took advantage of this volatility through our flexible return of capital program by opportunistically repurchasing over one million common units while still being set to pay a distribution that provides an annualized yield of over four percent."

Mr. Stice continued, "Viper today also announced it completed a drop down transaction of certain royalty interests from Diamondback on operated properties located in Ward County. This transaction provides high NRI exposure to Diamondback's expected development plan in the Southern Delaware Basin over the next several years and will enhance Viper's growth profile over that same period. As a result of this acquisition, as well as continued outperformance from our legacy asset base, we have increased production guidance for 2023 by over two percent at the midpoint."

DROP DOWN TRANSACTION

On March 8, 2023, Viper completed the acquisition of certain royalty interests from subsidiaries of Diamondback for approximately $75.1 million in cash, subject to customary post-closing adjustments. The acquisition was funded through a combination of cash on hand and borrowings under the Company's revolving credit facility.

DROP DOWN HIGHLIGHTS

• 660 net royalty acres, 100% of which are operated by Diamondback, in Ward County
• Acreage provides a 6.9% average NRI across ten Diamondback operated units
• Q1 2023 average daily production of approximately 300 bo/d (72% oil); contributed approximately 80 bo/d of production to Q1 2023 financials given March 8, 2023 closing date
• Full year 2023 estimated average daily production of 525 bo/d
• Full year 2024 estimated average daily production of 550 bo/d

FINANCIAL UPDATE

Viper's first quarter 2023 average unhedged realized prices were $75.48 per barrel of oil, $2.13 per Mcf of natural gas and $24.45 per barrel of natural gas liquids, resulting in a total equivalent realized price of $51.19/boe.

Viper's first quarter 2023 average hedged realized prices were $74.30 per barrel of oil, $2.11 per Mcf of natural gas and $24.45 per barrel of natural gas liquids, resulting in a total equivalent realized price of $50.48/boe.

During the first quarter of 2023, the Company recorded total operating income of $169.0 million and consolidated net income (including non-controlling interest) of $88.3 million.

As of March 31, 2023, the Company had a cash balance of $9.1 million and total long-term debt outstanding (excluding debt issuance, discounts and premiums) of $700.4 million, resulting in net debt (as defined and reconciled below) of $691.2 million. Viper's outstanding long-term debt as of March 31, 2023 consisted of $430.4 million in aggregate principal amount of its 5.375% Senior Notes due 2027 and $270.0 million in borrowings on its revolving credit facility, leaving $230.0 million available for future borrowings and $239.1 million of total liquidity.

FIRST QUARTER 2023 CASH DISTRIBUTION & CAPITAL RETURN PROGRAM

Viper announced today that the Board of Directors (the "Board") of Viper Energy Partners General Partner declared a base distribution of $0.25 per common unit for the first quarter of 2023 payable on May 18, 2023 to eligible common unitholders of record at the close of business on May 11, 2023.

The Board also declared a variable cash distribution of $0.08 per common unit for the first quarter of 2023 payable on May 18, 2023 to eligible common unitholders of record at the close of business on May 11, 2023.

During the first quarter of 2023, Viper repurchased 1.1 million common units for an aggregate purchase price of $32.7 million, excluding excise tax, (average price of $29.33 per unit). In total, since the initiation of Viper's common unit repurchase program through March 31, 2023, the Company repurchased 11.2 million common units for an aggregate of $253.3 million, reflecting an average price of $22.68 per unit.

OPERATIONS UPDATE

During the first quarter of 2023, Viper estimates that 241 gross (6.0 net 100% royalty interest) horizontal wells with an average royalty interest of 2.5% were turned to production on its acreage position with an average lateral length of 10,384 feet. Of these 241 gross wells, Diamondback is the operator of 50 gross wells, with an average royalty interest of 6.4%, and the remaining 191 gross wells, with an average royalty interest of 1.4%, are operated by third parties.

Additionally, during the first quarter of 2023, Viper acquired 159 net royalty acres from third party sellers for an aggregate net purchase price of $40.7 million, subject to customary post-closing adjustments. Of the acquired properties, approximately 36 net royalty acres are operated by Diamondback. Including the drop down, during the first quarter, Viper acquired a total of 819 net royalty acres for an aggregate net purchase price of $115.8 million.

As a result of these acquisitions, Viper's footprint of mineral and royalty interests was 27,134 net royalty acres as of March 31, 2023.

The following table summarizes Viper's gross well information:

The 488 gross wells currently in the process of active development are those wells that have been spud and are expected to be turned to production within approximately the next six to eight months. Further in regard to the active development on Viper's asset base, there are currently 38 gross rigs operating on Viper's acreage, nine of which are operated by Diamondback. The 453 line-of-sight wells are those that are not currently in the process of active development, but for which Viper has reason to believe that they will be turned to production within approximately the next 15 to 18 months. The expected timing of these line-of-sight wells is based primarily on permitting by third party operators or Diamondback's current expected completion schedule. Existing permits or active development of Viper's royalty acreage does not ensure that those wells will be turned to production.

GUIDANCE UPDATE

Below is Viper's updated guidance for the full year 2023, as well as average production guidance for Q2 2023 and Q3 2023.