Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 29, 2016 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Viper Energy Partners LP | |
Entity Central Index Key | 1,602,065 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Units, Units Outstanding | 79,726,006 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 4,663 | $ 539 |
Restricted cash | 500 | 500 |
Royalty income receivable | 6,454 | 9,369 |
Other current assets | 205 | 476 |
Total current assets | 11,822 | 10,884 |
Property and equipment | ||
Oil and natural gas interests, based on the full cost method of accounting ($86,993 and $85,329 excluded from depletion at March 31, 2016 and December 31, 2015, respectively) | 557,088 | 554,992 |
Accumulated depletion and impairment | (105,820) | (71,659) |
Oil and natural gas interests, net | 451,268 | 483,333 |
Other assets | 35,424 | 35,514 |
Total assets | 498,514 | 529,731 |
Current liabilities: | ||
Accounts payable | 0 | 1 |
Accounts payable—related party | 0 | 4 |
Other accrued liabilities | 910 | 82 |
Total current liabilities | 910 | 87 |
Long-term debt | 43,000 | 34,500 |
Total liabilities | $ 43,910 | $ 34,587 |
Commitments and contingencies | ||
Unitholders’ equity: | ||
Common units (79,726,006 units issued and outstanding as of both March 31, 2016 and December 31, 2015) | $ 454,604 | $ 495,144 |
Total unitholders’ equity | 454,604 | 495,144 |
Total liabilities and unitholders’ equity | $ 498,514 | $ 529,731 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Oil and natural gas interests, based on the full cost method of accounting, amount excluded from depletion | $ 86,993 | $ 85,329 |
Common units issued | 79,726,006 | 79,726,006 |
Common units outstanding | 79,726,006 | 79,726,006 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Royalty income | $ 14,086 | $ 16,545 |
Lease bonus | 108 | 0 |
Total operating income | 14,194 | 16,545 |
Costs and expenses: | ||
Production and ad valorem taxes | 1,302 | 1,328 |
Gathering and transportation | 86 | 0 |
Depletion | 8,150 | 8,901 |
Impairment | 26,011 | 0 |
General and administrative expenses | 1,749 | 1,552 |
Total costs and expenses | 37,298 | 11,781 |
Income (loss) from operations | (23,104) | 4,764 |
Other income (expense): | ||
Interest expense | (430) | (168) |
Other income | 199 | 486 |
Total other income (expense), net | (231) | 318 |
Net income (loss) | $ (23,335) | $ 5,082 |
Net income attributable to common limited partners per unit: | ||
Basic (dollars per unit) | $ (0.29) | $ 0.06 |
Diluted (dollars per unit) | $ (0.29) | $ 0.06 |
Weighted average number of limited partner units outstanding: | ||
Basic (in units) | 79,726 | 79,708 |
Diluted (in units) | 79,726 | 79,711 |
Statement of Consolidated Unith
Statement of Consolidated Unitholders' Equity and Members' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Limited Partner [Member] | Diamondback Energy, Inc. [Member] | Diamondback Energy, Inc. [Member]Limited Partner [Member] |
Common Stock, Shares, Outstanding at Dec. 31, 2014 | 79,709 | |||
Partners' capital at Dec. 31, 2014 | $ 535,351 | $ 535,351 | ||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||
Stock Issued During Period, Shares, Net of Forfeitures | 0 | |||
Unit-based compensation | 939 | $ 939 | ||
Distribution to public | (2,315) | (2,315) | ||
Distribution to Diamondback | $ (17,612) | $ (17,612) | ||
Net income (loss) | 5,082 | 5,082 | ||
Partners' capital at Mar. 31, 2015 | 521,445 | $ 521,445 | ||
Common Stock, Shares, Outstanding at Mar. 31, 2015 | 79,709 | |||
Common Stock, Shares, Outstanding at Dec. 31, 2015 | 79,726 | |||
Partners' capital at Dec. 31, 2015 | 495,144 | $ 495,144 | ||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||
Stock Issued During Period, Shares, Net of Forfeitures | 0 | |||
Unit-based compensation | 973 | $ 973 | ||
Distribution to public | (2,115) | (2,115) | ||
Distribution to Diamondback | $ (16,063) | $ (16,063) | ||
Net income (loss) | (23,335) | (23,335) | ||
Partners' capital at Mar. 31, 2016 | $ 454,604 | $ 454,604 | ||
Common Stock, Shares, Outstanding at Mar. 31, 2016 | 79,726 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (23,335) | $ 5,082 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depletion | 8,150 | 8,901 |
Impairment | 26,011 | 0 |
Amortization of debt issuance costs | 92 | 65 |
Non-cash unit-based compensation | 973 | 939 |
Changes in operating assets and liabilities: | ||
Royalty income receivable | 0 | 1,155 |
Accounts receivable | 2,915 | 0 |
Accounts payable—related party | (4) | (1,349) |
Accounts payable and other accrued liabilities | 827 | (240) |
Prepaid expenses and other current assets | 257 | 0 |
Net cash provided by operating activities | 15,886 | 14,553 |
Cash flows from investing activities: | ||
Acquisition of royalty interests | (2,082) | 0 |
Other | 0 | 85 |
Net cash provided by (used in) investing activities | (2,082) | 85 |
Cash flows from financing activities | ||
Proceeds from borrowings under credit facility | 8,500 | 0 |
Debt issuance costs | (2) | 0 |
Distribution to partners | (18,178) | (19,927) |
Net cash used in financing activities | (9,680) | (19,927) |
Net (decrease) increase in cash | 4,124 | (5,289) |
Cash and cash equivalents at beginning of period | 539 | 15,110 |
Cash and cash equivalents at end of period | 4,663 | 9,821 |
Supplemental disclosure of cash flow information: | ||
Interest paid, net of capitalized interest | $ 339 | $ 103 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | ORGANIZATION AND BASIS OF PRESENTATION Organization Viper Energy Partners LP (the “Partnership”) is a publicly traded Delaware limited partnership, the common units of which are listed on the NASDAQ Global Market under the symbol “VNOM”. The Partnership was formed by Diamondback Energy, Inc. (“Diamondback”) on February 27, 2014 to, among other things, own, acquire and exploit oil and natural gas properties in North America. The Partnership is currently focused on oil and natural gas properties in the Permian Basin. Unless the context requires otherwise, references to “we,” “us,” “our,” or “the Partnership” are intended to mean the business and operations of Viper Energy Partners LP and its consolidated subsidiary, Viper Energy Partners LLC (the “Predecessor”). As of March 31, 2016 , Viper Energy Partners GP LLC (the “General Partner”), held a 100% non-economic general partner interest in the Partnership and Diamondback had an approximate 88% limited partner interest in the Partnership. Diamondback owns and controls the General Partner. Basis of Presentation The accompanying consolidated financial statements and related notes thereto were prepared in conformity with GAAP. All material intercompany balances and transactions are eliminated in consolidation. These financial statements have been prepared by the Partnership without audit, pursuant to the rules and regulations of the SEC. They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations, although the Partnership believes the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10–Q should be read in conjunction with the Partnership’s most recent Annual Report on Form 10–K for the fiscal year ended December 31, 2015 , which contains a summary of the Partnership’s significant accounting policies and other disclosures. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates Certain amounts included in or affecting the Partnership’s financial statements and related disclosures must be estimated by management, requiring certain assumptions to be made with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared. These estimates and assumptions affect the amounts the Partnership reports for assets and liabilities and the Partnership’s disclosure of contingent assets and liabilities at the date of the financial statements. The Partnership evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Partnership considers reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from the Partnership’s estimates. Any effects on the Partnership’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas properties and unit–based compensation. New Accounting Pronouncements In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-03, “Interest–Imputation of Interest”. This update requires that debt issuance costs related to a recognized debt liability (except costs associated with revolving debt arrangements) be presented in the balance sheet as a direct deduction from that debt liability, consistent with the presentation of a debt discount, to simplify the presentation of debt issuance costs. This update is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early application was permitted for financial statements that have not previously been issued. The Partnership retrospectively adopted this new standard effective January 1, 2016. Adoption of this update does not have a material impact on the Partnership’s consolidated financial statements. In January 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-01, “Financial Instruments–Overall”. This update applies to any entity that hold financial assets or owe financial liabilities. This update requires equity investments (except for those accounted for under the equity method or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. This update will be effective for public entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. Entities should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Partnership will be required to mark its cost method investment to fair value with the adoption of this update. In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02, “Leases”. This update applies to any entity that enters into a lease, with some specified scope exemptions. Under this update, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. While there were no major changes to the lessor accounting, changes were made to align key aspects with the revenue recognition guidance. This update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Entities will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Partnership is currently evaluating the impact that the adoption of this update will have on the Partnership’s financial position, results of operations and liquidity. In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-08, “Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”. Under this update, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update will be effective for annual and interim reporting periods beginning after December 15, 2017, with early application not permitted. This update allows for either full retrospective adoption, meaning this update is applied to all periods presented in the financial statements, or modified retrospective adoption, meaning this update is applied only to the most current period presented. The Partnership is currently evaluating the impact, if any, that the adoption of this update will have on the Partnership’s financial position, results of operations and liquidity. In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-09, "Compensation - Stock Compensation". This update applies to all entities that issue share-based payment awards to their employees. Under this update, there were several areas that were simplified including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with early adoption permitted. The Partnership is currently evaluating the impact that the adoption of this update will have on the Partnership's financial position, results of operations and liquidity. |
Oil and Natural Gas Interests
Oil and Natural Gas Interests | 3 Months Ended |
Mar. 31, 2016 | |
Extractive Industries [Abstract] | |
Oil and Natural Gas Interests | OIL AND NATURAL GAS INTERESTS Oil and natural gas interests include the following: March 31, December 31, 2016 2015 (in thousands) Oil and natural gas interests: Subject to depletion $ 470,095 $ 469,663 Not subject to depletion-acquisition costs Incurred in 2016 1,664 — Incurred in 2015 39,693 39,693 Incurred in 2014 45,636 45,636 Total not subject to depletion 86,993 85,329 Gross oil and natural gas interests 557,088 554,992 Accumulated depletion and impairment (105,820 ) (71,659 ) Oil and natural gas interests, net $ 451,268 $ 483,333 Costs associated with unevaluated properties are excluded from the full cost pool until a determination as to the existence of proved reserves is able to be made. The inclusion of the Partnership’s unevaluated costs into the amortization base is expected to be completed within three to five years. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Credit Agreement-Wells Fargo Bank On July 8, 2014, the Partnership entered into a secured revolving credit agreement with Wells Fargo, as the administrative agent, sole book runner and lead arranger. The credit agreement, which was amended August 15, 2014 to add additional lenders to the lending group, provides for a revolving credit facility in the maximum amount of $500.0 million , subject to scheduled semi-annual and other elective collateral borrowing base redeterminations based on the Partnership’s oil and natural gas reserves and other factors. The borrowing base is scheduled to be re-determined semi-annually with effective dates of April 1st and October 1st. In addition, the Partnership may request up to three additional redeterminations of the borrowing base during any 12 -month period. The credit agreement was further amended on May 22, 2015 to, among other things, increase the borrowing base from $110.0 million to $175.0 million and to provide for certain restrictions on purchasing margin stock. On November 13, 2015, the borrowing base increased from $175.0 million to $200.0 million . As of March 31, 2016 , the borrowing base remained at $200.0 million . The Partnership had $43.0 million outstanding under its credit agreement as of March 31, 2016 . The outstanding borrowings under the credit agreement bear interest at a rate elected by the Partnership that is equal to an alternative base rate (which is equal to the greatest of the prime rate, the Federal Funds effective rate plus 0.50% and 3 -month LIBOR plus 1.0% ) or LIBOR, in each case plus the applicable margin. The applicable margin ranges from 0.50% to 1.50% in the case of the alternative base rate and from 1.50% to 2.50% in the case of LIBOR, in each case depending on the amount of the loan outstanding in relation to the borrowing base. The Partnership is obligated to pay a quarterly commitment fee ranging from 0.375% to 0.500% per year on the unused portion of the borrowing base, which fee is also dependent on the amount of the loan outstanding in relation to the borrowing base. Loan principal may be optionally repaid from time to time without premium or penalty (other than customary LIBOR breakage), and is required to be repaid (a) to the extent that the loan amount exceeds the borrowing base, whether due to a borrowing base redetermination or otherwise (in some cases subject to a cure period) and (b) at the maturity date of July 8, 2019. The loan is secured by substantially all of the assets of the Partnership and its subsidiary. The credit agreement contains various affirmative, negative and financial maintenance covenants. These covenants, among other things, limit additional indebtedness, purchases of margin stock, additional liens, sales of assets, mergers and consolidations, dividends and distributions, transactions with affiliates and entering into certain swap agreements and require the maintenance of the financial ratios described below. Financial Covenant Required Ratio Ratio of total debt to EBITDAX Not greater than 4.0 to 1.0 Ratio of current assets to liabilities, as defined in the credit agreement Not less than 1.0 to 1.0 The covenant prohibiting additional indebtedness allows for the issuance of unsecured debt of up to $250.0 million in the form of senior unsecured notes and, in connection with any such issuance, the reduction of the borrowing base by 25% of the stated principal amount of each such issuance. A borrowing base reduction in connection with such issuance may require a portion of the outstanding principal of the loan to be repaid. The lenders may accelerate all of the indebtedness under the Partnership’s credit agreement upon the occurrence and during the continuance of any event of default. The Partnership’s credit agreement contains customary events of default, including non-payment, breach of covenants, materially incorrect representations, cross-default, bankruptcy and change of control. There are no cure periods for events of default due to non-payment of principal and breaches of negative and financial covenants, but non-payment of interest and breaches of certain affirmative covenants are subject to customary cure periods. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS Partnership Agreement In connection with the closing of the IPO, the General Partner and Diamondback entered into the first amended and restated agreement of limited partnership, dated June 23, 2014 (the “Partnership Agreement”). The Partnership Agreement requires the Partnership to reimburse the General Partner for all direct and indirect expenses incurred or paid on the Partnership’s behalf and all other expenses allocable to the Partnership or otherwise incurred by the General Partner in connection with operating the Partnership’s business. The Partnership Agreement does not set a limit on the amount of expenses for which the General Partner and its affiliates may be reimbursed. These expenses include salary, bonus, incentive compensation and other amounts paid to persons who perform services for the Partnership or on the Partnership’s behalf and expenses allocated to the General Partner by its affiliates. The General Partner is entitled to determine the expenses that are allocable to the Partnership. For both the three months ended March 31, 2016 and 2015 , no expenses were allocated to the Partnership by the General Partner. Advisory Services Agreement In connection with the closing of the IPO, the Partnership and General Partner entered into an advisory services agreement with Wexford Capital LP (“Wexford”) dated as of June 23, 2014 (the “Advisory Services Agreement”), under which Wexford provides the Partnership and the General Partner with general financial and strategic advisory services related to the Partnership’s business in return for an annual fee of $0.5 million , plus reasonable out-of-pocket expenses. The Advisory Services Agreement has an initial term of two years commencing on June 23, 2014, and continues for additional one -year periods unless terminated in writing by either party at least ten days prior to the expiration of the then current term. It may be terminated at any time by either party upon 30 days prior written notice. In the event the Partnership terminates the Advisory Services Agreement, the Partnership is obligated to pay all amounts due through the remaining term. In addition, the Partnership has agreed to pay Wexford to-be-negotiated market-based fees approved by the conflict committee of the board of directors of the General Partner for such services as may be provided by Wexford at the Partnership’s request in connection with future acquisitions and divestitures, financings or other transactions in which the Partnership may be involved. The services provided by Wexford under the Advisory Services Agreement do not extend to the Partnership’s day-to-day business or operations. The Partnership has agreed to indemnify Wexford and its affiliates from any and all losses arising out of or in connection with the Advisory Services Agreement except for losses resulting from Wexford’s or its affiliates’ gross negligence or willful misconduct. For the three months ended March 31, 2016 and 2015 , the Partnership paid costs of less than $0.1 million and $0.1 million , respectively, under the Advisory Services Agreement. Tax Sharing In connection with the closing of the IPO, the Partnership entered into a tax sharing agreement with Diamondback, dated June 23, 2014, pursuant to which the Partnership agreed to reimburse Diamondback for its share of state and local income and other taxes for which the Partnership’s results are included in a combined or consolidated tax return filed by Diamondback with respect to taxable periods including or beginning on June 23, 2014. The amount of any such reimbursement is limited to the tax the Partnership would have paid had it not been included in a combined group with Diamondback. Diamondback may use its tax attributes to cause its combined or consolidated group, of which the Partnership may be a member for this purpose, to owe less or no tax. In such a situation, the Partnership agreed to reimburse Diamondback for the tax the Partnership would have owed had the tax attributes not been available or used for the Partnership’s benefit, even though Diamondback had no cash tax expense for that period. Lease Bonus During the three months ended March 31, 2016 , Diamondback paid the Partnership $0.1 million in lease bonus payments under one lease to extend the term of the lease, reflecting an average bonus of $2,500 per acre. |
Partners' Capital and Partnersh
Partners' Capital and Partnership Distributions | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Partners' Capital and Partnership Distributions | PARTNERS’ CAPITAL AND PARTNERSHIP DISTRIBUTIONS The Partnership has general partner and common unit partnership interests. The general partner interest is a non-economic interest and is not entitled to any cash distributions. At March 31, 2016 , the Partnership had a total of 79,726,006 common units issued and outstanding, of which 70,450,000 common units were owned by Diamondback, representing approximately 88% of the total Partnership common units outstanding. The following table summarizes changes in the number of the Partnership’s common units: Common Units Balance at December 31, 2015 79,726,006 Common units vested and issued under the LTIP — Balance at March 31, 2016 79,726,006 The board of directors of the General Partner has adopted a policy for the Partnership to distribute all available cash generated on a quarterly basis, beginning with the quarter ended September 30, 2014. On February 12, 2016 , the board of directors of the General Partner approved a cash distribution for the fourth quarter of 2015 of $0.228 per common unit, payable on February 26, 2016 , to unitholders of record at the close of business on February 19, 2016. Cash distributions will be made to the common unitholders of record on the applicable record date, generally within 60 days after the end of each quarter. Available cash for each quarter will be determined by the board of directors of the General Partner following the end of such quarter. Available cash for each quarter will generally equal Adjusted EBITDA reduced for cash needed for debt service and other contractual obligations and fixed charges and reserves for future operating or capital needs that the board of directors of the General Partner deems necessary or appropriate, if any. |
Earnings Per Unit
Earnings Per Unit | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Unit | EARNINGS PER UNIT The net income per common unit on the consolidated statements of operations is based on the net income of the Partnership for the three months ended March 31, 2016 and 2015 , 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. Payments made to the Partnership’s unitholders are determined in relation to the cash distribution policy described in Note 6—Partners’ Capital and Partnership Distributions. Basic net income per common unit is calculated by dividing net income by the weighted-average number of common units outstanding during the period. Diluted net income per common unit gives effect, when applicable, to unvested common units granted under the LTIP. Three Months Ended March 31, 2016 2015 (In thousands, except per unit amounts) Net income attributable to the period $(23,335) $5,082 Net income per common unit, basic $(0.29) $0.06 Net income per common unit, diluted $(0.29) $0.06 Weighted-average common units outstanding, basic 79,726 79,708 Weighted-average common units outstanding, diluted 79,726 79,711 For the three months ended March 31, 2016 , there were 2,134,291 shares that were not included in the computation of diluted earnings per share because their inclusion would have been anti-dilutive for the periods presented but could potentially dilute basic earnings per share in future periods. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES The Partnership could be subject to various possible loss contingencies which arise primarily from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry. Such contingencies include differing interpretations as to the prices at which natural gas and crude oil sales may be made, the prices at which royalty owners may be paid for production from their leases, environmental issues and other matters. Management believes it has complied with the various laws and regulations, administrative rulings and interpretations. Litigation The Partnership filed an action in October 2014 to recover $0.5 million held in escrow in connection with a purchase and sale agreement. The escrow agent interpleaded the funds, and the other parties to the agreement have filed a counterclaim to recover the escrow. Both sides also seek recovery of their attorneys’ fees. The case is expected to be scheduled for trial in the third quarter of 2016. It is not possible to predict the outcome with reasonable certainty, but the Partnership does not believe that an adverse outcome would have a material adverse effect on the Partnership’s financial statements and has not included a loss contingency reserve for this matter. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Cash Distribution On May 2, 2016, the board of directors of the General Partner approved a cash distribution for the first quarter of 2016 of $0.149 per common unit, payable on May 23, 2016 , to unitholders of record at the close of business on May 16, 2016 . Credit Facility In connection with the Partnership’s spring 2016 redetermination, the agent lender under the credit agreement has recommended that the Partnership’s borrowing base be reduced to $175.0 million due to a decline in pricing. This reduction is subject to the approval of the required other lenders. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Accounting [Text Block] | Basis of Presentation The accompanying consolidated financial statements and related notes thereto were prepared in conformity with GAAP. All material intercompany balances and transactions are eliminated in consolidation. These financial statements have been prepared by the Partnership without audit, pursuant to the rules and regulations of the SEC. They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations, although the Partnership believes the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10–Q should be read in conjunction with the Partnership’s most recent Annual Report on Form 10–K for the fiscal year ended December 31, 2015 , which contains a summary of the Partnership’s significant accounting policies and other disclosures. |
Use of Estimates | Use of Estimates Certain amounts included in or affecting the Partnership’s financial statements and related disclosures must be estimated by management, requiring certain assumptions to be made with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared. These estimates and assumptions affect the amounts the Partnership reports for assets and liabilities and the Partnership’s disclosure of contingent assets and liabilities at the date of the financial statements. The Partnership evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Partnership considers reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from the Partnership’s estimates. Any effects on the Partnership’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas properties and unit–based compensation. |
New Accounting Pronouncements | New Accounting Pronouncements In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-03, “Interest–Imputation of Interest”. This update requires that debt issuance costs related to a recognized debt liability (except costs associated with revolving debt arrangements) be presented in the balance sheet as a direct deduction from that debt liability, consistent with the presentation of a debt discount, to simplify the presentation of debt issuance costs. This update is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early application was permitted for financial statements that have not previously been issued. The Partnership retrospectively adopted this new standard effective January 1, 2016. Adoption of this update does not have a material impact on the Partnership’s consolidated financial statements. In January 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-01, “Financial Instruments–Overall”. This update applies to any entity that hold financial assets or owe financial liabilities. This update requires equity investments (except for those accounted for under the equity method or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. This update will be effective for public entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. Entities should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Partnership will be required to mark its cost method investment to fair value with the adoption of this update. In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02, “Leases”. This update applies to any entity that enters into a lease, with some specified scope exemptions. Under this update, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. While there were no major changes to the lessor accounting, changes were made to align key aspects with the revenue recognition guidance. This update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Entities will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Partnership is currently evaluating the impact that the adoption of this update will have on the Partnership’s financial position, results of operations and liquidity. In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-08, “Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”. Under this update, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update will be effective for annual and interim reporting periods beginning after December 15, 2017, with early application not permitted. This update allows for either full retrospective adoption, meaning this update is applied to all periods presented in the financial statements, or modified retrospective adoption, meaning this update is applied only to the most current period presented. The Partnership is currently evaluating the impact, if any, that the adoption of this update will have on the Partnership’s financial position, results of operations and liquidity. In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-09, "Compensation - Stock Compensation". This update applies to all entities that issue share-based payment awards to their employees. Under this update, there were several areas that were simplified including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with early adoption permitted. The Partnership is currently evaluating the impact that the adoption of this update will have on the Partnership's financial position, results of operations and liquidity. |
Oil and Natural Gas Interests (
Oil and Natural Gas Interests (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Extractive Industries [Abstract] | |
Aggregate capitalized costs related to oil and natural gas production activities | Oil and natural gas interests include the following: March 31, December 31, 2016 2015 (in thousands) Oil and natural gas interests: Subject to depletion $ 470,095 $ 469,663 Not subject to depletion-acquisition costs Incurred in 2016 1,664 — Incurred in 2015 39,693 39,693 Incurred in 2014 45,636 45,636 Total not subject to depletion 86,993 85,329 Gross oil and natural gas interests 557,088 554,992 Accumulated depletion and impairment (105,820 ) (71,659 ) Oil and natural gas interests, net $ 451,268 $ 483,333 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of financial covenants | The credit agreement contains various affirmative, negative and financial maintenance covenants. These covenants, among other things, limit additional indebtedness, purchases of margin stock, additional liens, sales of assets, mergers and consolidations, dividends and distributions, transactions with affiliates and entering into certain swap agreements and require the maintenance of the financial ratios described below. Financial Covenant Required Ratio Ratio of total debt to EBITDAX Not greater than 4.0 to 1.0 Ratio of current assets to liabilities, as defined in the credit agreement Not less than 1.0 to 1.0 |
Partners' Capital and Partner19
Partners' Capital and Partnership Distributions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Schedule of changes in common units | The following table summarizes changes in the number of the Partnership’s common units: Common Units Balance at December 31, 2015 79,726,006 Common units vested and issued under the LTIP — Balance at March 31, 2016 79,726,006 |
Earnings Per Unit (Tables)
Earnings Per Unit (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net income per common unit | Three Months Ended March 31, 2016 2015 (In thousands, except per unit amounts) Net income attributable to the period $(23,335) $5,082 Net income per common unit, basic $(0.29) $0.06 Net income per common unit, diluted $(0.29) $0.06 Weighted-average common units outstanding, basic 79,726 79,708 Weighted-average common units outstanding, diluted 79,726 79,711 |
Organization and Basis of Pre21
Organization and Basis of Presentation (Details) | 3 Months Ended |
Mar. 31, 2016 | |
Wexford [Member] | |
Limited Partners' Capital Account [Line Items] | |
Percent of General Partner interest | 100.00% |
Diamondback Energy, Inc. [Member] | Limited Partner [Member] | |
Limited Partners' Capital Account [Line Items] | |
Percent of limited partnership interest | 88.00% |
Oil and Natural Gas Interests22
Oil and Natural Gas Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Oil and Natural gas interests subject to depletion | $ 470,095 | $ 469,663 |
Oil and natural gas not subject to depletion | 86,993 | 85,329 |
Gross oil and natural gas interests | 557,088 | 554,992 |
Accumulated depletion and impairment | (105,820) | (71,659) |
Oil and natural gas interests, net | 451,268 | 483,333 |
Incurred in 2016 [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Oil and natural gas not subject to depletion | 1,664 | 0 |
Incurred in 2015 [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Oil and natural gas not subject to depletion | 39,693 | 39,693 |
Incurred in 2014 [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Oil and natural gas not subject to depletion | $ 45,636 | $ 45,636 |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Number of years until unevaluated properties are included in full cost pool | 3 years | |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Number of years until unevaluated properties are included in full cost pool | 5 years |
Debt - Credit Facility (Details
Debt - Credit Facility (Details) - Wells Fargo [Member] - Revolving Credit Agreement [Member] $ in Thousands | 3 Months Ended | |||
Mar. 31, 2016USD ($)redetermindation | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | |
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 500,000 | |||
Number of additional redeterminations that may be requested | redetermindation | 3 | |||
Period of redeterminations | 12 months | |||
Current borrowing capacity | $ 200,000 | $ 200,000 | $ 175,000 | $ 110,000 |
Amount outstanding under credit facility | $ 43,000 | |||
Federal Funds Effective Swap Rate [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
LIBOR, 3-month [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
Minimum [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Commitment fee on the unused portion of the borrowing base | 0.375% | |||
Minimum [Member] | Base Rate [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Minimum [Member] | LIBOR [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.50% | |||
Maximum [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Commitment fee on the unused portion of the borrowing base | 0.50% | |||
Maximum [Member] | Base Rate [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.50% | |||
Maximum [Member] | LIBOR [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.50% |
Debt - Financial Covenants (Det
Debt - Financial Covenants (Details) - Wells Fargo [Member] - Revolving Credit Agreement [Member] $ in Thousands | Mar. 31, 2016USD ($) |
Line of Credit Facility [Line Items] | |
Ratio of total debt to EBITDAX, not greater than 4.0 | 4 |
Ratio of current assets to liabilities, not less than 1.0 | 1 |
Maximum issuance of unsecured debt | $ 250,000 |
Reduction of borrowing base | 25.00% |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | |
Related Party Transaction [Line Items] | ||
Number of leases extended | 1 | |
Lease bonus | $ 108 | $ 0 |
Average price per acre | 2,500 | |
General Partner | Partnership Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incurred costs for transactions with related party | $ 0 | 0 |
Affiliated Entity, Wexford [Member] | Advisory Services Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Advisory services agreement, annual fee | $ 500 | |
Term of advisory services agreement | 2 years | |
Renewal term of advisory services agreement | 1 year | |
Minimum period for cancellation of additional one-year periods | 10 days | |
Agreement termination, written notice period | 30 days | |
Incurred costs for transactions with related party | $ 125 | |
Maximum [Member] | Affiliated Entity, Wexford [Member] | Advisory Services Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incurred costs for transactions with related party | $ 50 |
Partners' Capital and Partner26
Partners' Capital and Partnership Distributions (Details) - shares | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Limited Partners' Capital Account [Line Items] | ||
Total common units issued | 79,726,006 | 79,726,006 |
Common units issued during the period | 0 | |
Common units outstanding | 79,726,006 | 79,726,006 |
Diamondback Energy, Inc. [Member] | Limited Partner [Member] | ||
Limited Partners' Capital Account [Line Items] | ||
Units of Partnership Interest, Amount | 70,450,000 | |
Percent of limited partnership interest | 88.00% |
Partners' Capital and Partner27
Partners' Capital and Partnership Distributions Partnership Distributions (Details) - Cash Distribution [Member] - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Distribution Made to Limited Partner [Line Items] | ||
Distribution Made to Limited Partner, Distribution Date, Period after Quarter End | 60 days | |
Diamondback Limited Partner [Member] | ||
Distribution Made to Limited Partner [Line Items] | ||
Distribution Made to Limited Partner, Distributions Declared, Per Unit | $ 0.228 |
Earnings Per Unit (Details)
Earnings Per Unit (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Net income attributable to the period | $ (23,335) | $ 5,082 |
Net income per common unit, basic | $ (0.29) | $ 0.06 |
Net income per common unit, diluted | $ (0.29) | $ 0.06 |
Weighted-average common units outstanding, basic | 79,726,000 | 79,708,000 |
Weighted-average common units outstanding, diluted | 79,726,000 | 79,711,000 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,134,291 |
Commitments and Contingencies C
Commitments and Contingencies Commitments and Contingencies (Details) $ in Thousands | Mar. 31, 2016USD ($) |
Pending Litigation [Member] | |
Loss Contingencies [Line Items] | |
Possible Judgment or Settlement | $ 500 |
Subsequent Events Subsequent Ev
Subsequent Events Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2015 | Apr. 20, 2016 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Current borrowing capacity | $ 175 | ||
Diamondback Limited Partner [Member] | Cash Distribution [Member] | |||
Subsequent Event [Line Items] | |||
Distribution Made to Limited Partner, Distributions Declared, Per Unit | $ 0.228 | ||
Diamondback Limited Partner [Member] | Cash Distribution [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Distribution Made to Limited Partner, Distributions Declared, Per Unit | $ 0.149 |