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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
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DE
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83-1404608
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification Number)
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500 West Texas
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Suite 1200
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Midland,
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TX
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79701
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(Address of principal executive offices)
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(Zip code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Units
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RTLR
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The Nasdaq Stock Market LLC
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(NASDAQ Global Select Market)
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Large Accelerated Filer
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☐
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Accelerated Filer
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☐
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Non-Accelerated Filer
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☒
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Smaller Reporting Company
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☐
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Emerging Growth Company
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☒
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Page
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Basin
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A large depression on the earth’s surface in which sediments accumulate.
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Bbl or barrel
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One stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to crude oil, natural gas liquids or other liquid hydrocarbons.
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Bbl/d
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Bbl per day.
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BOE
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Barrels of crude oil equivalent, with six thousand cubic feet of natural gas being equivalent to one barrel of oil.
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BOE/d
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Boe per day.
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British thermal unit or Btu
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The quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
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Completion
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The process of treating a drilled well, followed by the installation of permanent equipment for the production of natural gas or oil or, in the case of a dry hole, the reporting of abandonment to the appropriate agency.
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Condensate
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Liquid hydrocarbons associated with production that is primarily natural gas.
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Crude oil
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Liquid hydrocarbons found in the earth, which may be refined into fuel sources.
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Dry hole
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A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes.
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Field
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The general area encompassed by one or more crude oil or natural gas reservoirs or pools that are located on a single geologic feature, or that are otherwise closely related to such geologic feature (either structural or stratigraphic).
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Fracturing
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The process of creating and preserving a fracture or system of fractures in a reservoir rock typically by injecting a fluid under pressure through a wellbore and into the targeted formation.
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Gross acres or gross wells
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The total acres or wells, as the case may be, in which a working interest is owned.
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Horizontal drilling
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A drilling technique used in certain formations where a well is drilled vertically to a certain depth and then drilled at a right angle with a specified interval.
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Hydraulic fracturing
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The process of creating and preserving a fracture or system of fractures in a reservoir rock, typically by injecting a fluid under pressure through a wellbore and into the targeted formation.
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Hydrocarbon
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An organic compound containing only carbon and hydrogen.
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MBbl
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One thousand barrels.
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MBbl/d
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One thousand barrels per day.
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MBoe
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One thousand barrels of crude oil equivalent, determined using a ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids.
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MBoe/d
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One thousand barrels of crude oil equivalent per day.
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Mcf
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One thousand cubic feet of natural gas.
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Mcf/d
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One thousand cubic feet of natural gas per day.
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MMBbl
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One million barrels.
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MMBbl/d
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One million barrels per day.
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MMBtu
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One million British thermal units.
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MMBtu/d
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One million British thermal units per day.
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Natural gas
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Hydrocarbon gas found in the earth, composed of methane, ethane, butane, propane and other gases.
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NGL
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Natural gas liquids; the combination of ethane, propane, butane and natural gasolines that, when removed from natural gas, becomes liquid under various levels of higher pressure and lower temperature.
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Operator
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The individual or company responsible for the exploration and/or production of a crude oil or natural gas well or lease.
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Plugging and abandonment
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Refers to the sealing off of fluids in the strata penetrated by a well so that the fluids from one stratum will not escape into another or to the surface. Regulations of all states require plugging of abandoned wells.
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Reserves
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Estimated remaining quantities of crude oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering crude oil and natural gas or related substances to the market and all permits and financing required to implement the project. Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., potentially recoverable resources from undiscovered accumulations).
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Throughput
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The volume of product transported or passing through a pipeline, plant, terminal or other facility.
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Tight formation
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A formation with low permeability that produces natural gas with very low flow rates for long periods of time.
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Working interest
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An operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and receive a share of production and requires the owner to pay a share of the costs of drilling and production operations.
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Delaware Act
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Delaware Revised Uniform Limited Partnership Act.
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Diamondback
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Diamondback Energy, Inc., a Delaware corporation, and its subsidiaries other than the Partnership and its subsidiaries (including the Operating Company).
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DOT
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The U.S. Department of Transportation.
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EPA
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U.S. Environmental Protection Agency.
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Exchange Act
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The Securities Exchange Act of 1934, as amended.
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FERC
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Federal Energy Regulatory Commission.
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GAAP
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Accounting principles generally accepted in the United States.
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General partner
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Rattler Midstream GP LLC, a Delaware limited liability company; the general partner of the Partnership and a wholly owned subsidiary of Diamondback.
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GHG
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Greenhouse gases.
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IPO
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The Partnership’s initial public offering.
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IRS
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Internal Revenue Service.
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JOBS Act
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The Jumpstart Our Business Startups Act of 2012.
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Nasdaq
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The Nasdaq Global Select Market.
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Operating Company or OpCo
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Rattler Midstream Operating LLC, a Delaware limited liability company and a consolidated subsidiary of the Partnership.
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OSHA
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Federal Occupational Safety and Health Act.
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Partnership
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Rattler Midstream LP, a Delaware limited partnership.
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Partnership agreement
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The first amended and restated agreement of limited partnership of Rattler Midstream LP, dated May 28, 2019.
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Predecessor
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The Operating Company, prior to May 28, 2019 for accounting purposes.
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SEC
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Securities and Exchange Commission.
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Securities Act
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The Securities Act of 1933, as amended.
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•
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Diamondback’s ability to meet its drilling and development plans on a timely basis or at all;
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changes in general economic conditions;
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competitive conditions in our industry;
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actions taken by third party operators, gatherers, processors and transporters;
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the demand for and costs of conducting midstream infrastructure services;
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our ability to successfully implement our business plan;
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our ability to complete internal growth projects on time and on budget;
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our ability to identify, complete and effectively integrate acquisitions into our operations;
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our ability to achieve anticipated synergies, system optionality and accretion associated with acquisitions;
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the results of our investments in joint ventures;
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the price and availability of debt and equity financing;
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the availability and price of crude oil and natural gas to the consumer compared to the price of alternative and competing fuels;
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competition from the same and alternative energy sources;
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energy efficiency and technology trends;
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operating hazards and other risks incidental to our midstream services;
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natural disasters, weather-related delays, casualty losses and other matters beyond our control;
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interest rates;
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labor relations;
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defaults by Diamondback under our commercial agreements;
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our lack of asset and geographic diversification;
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changes in availability and cost of capital;
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increases in our tax liability;
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the effect of existing and future laws and government regulations;
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terrorist attacks or cyber threats; and
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the effects of future litigation.
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(capacity/capability)(1)
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Delaware Basin
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Midland Basin
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Permian Total
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Utilization
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Crude oil gathering (Bbl/d)
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180,000
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56,000
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236,000
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42
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%
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Natural gas compression (Mcf/d)
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135,000
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—
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135,000
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70
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%
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Natural gas gathering (Mcf/d)
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150,000
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—
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150,000
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56
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%
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Produced water gathering and disposal (Bbl/d)
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1,576,500
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1,732,300
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3,308,800
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27
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%
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Sourced water (Bbl/d)
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120,000
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455,000
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575,000
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83
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%
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(1)
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Does not include any assets of the EPIC, Gray Oak, Wink to Webster, Amarillo Rattler or OMOG joint ventures.
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Year Ended December 31,
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(throughput)(1)
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2019
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2018
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Crude oil gathering volumes (Bbl/d)
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85,164
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47,338
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Natural gas gathering volumes (MMBtu/d)
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85,283
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39,252
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Produced water gathering and disposal volumes (Bbl/d)
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806,078
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281,916
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Sourced water gathering volumes (Bbl/d)
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415,939
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252,118
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(1)
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Does not include any volumes from the EPIC, Gray Oak, Wink to Webster, Amarillo Rattler or OMOG joint ventures.
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•
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Grow by leveraging our strategic relationship with Diamondback and through accretive acquisitions. We believe Diamondback, with its strong credit profile and well-capitalized balance sheet, is well positioned to pursue its growth-
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Serve as a significant provider of midstream services for Diamondback. We own and operate midstream infrastructure assets that handle a significant portion of Diamondback’s midstream gathering and water-related needs in the Midland and Delaware Basins. Our midstream assets were built or acquired to support Diamondback’s multi-year growth with minimal incremental operating capital expenditures. Diamondback has dedicated approximately 397,000 gross acres to us through the Acreage Dedications. Pursuant to this dedication, we will continue to provide water sourcing and handling for completion operations, produced water handling and disposal, crude oil transportation and gathering and natural gas gathering and compression services for Diamondback until 2034, when Diamondback has the option to extend the contract expiration date. We expect that Diamondback’s production, and therefore its need for midstream services, will grow on the Dedicated Acreage from the continued development of its core areas and we intend to utilize this relationship with Diamondback to drive free cash flow growth and the payment of distributions to our unitholders.
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Focus on cash flow generation to fund our capital plan, support our distribution policy and maximize unitholder returns. We expect that our growth will be underpinned by high-margin, stable cash flow as a result of our long-term, fixed-fee contracts with Diamondback. In addition, other than our equity commitments in connection with our joint ventures, we expect to have low future operating capital expenditure requirements, which will allow us to self-fund our capital program for our core business and make distribution payments to our unitholders while limiting our reliance on the capital markets. A core component of our strategy is to maximize free cash flow while maintaining a debt to equity ratio below 2.0.
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Emphasize providing midstream services under long-term, fixed-fee contracts to avoid direct commodity price exposure, mitigate volatility and enhance stability of our cash flow. Our commercial agreements with Diamondback are structured as 15-year, fixed-fee contracts, which mitigates our direct exposure to commodity prices and enhances stability and predictability of our cash flow. We intend to pursue future opportunities that primarily utilize fixed-fee structures to insulate our cash flow from direct commodity price exposure.
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Fundamental, strategic relationship with Diamondback. We believe we are integral to Diamondback’s strategy and we believe the fundamental role we play in Diamondback’s operational success allows us to capitalize on Diamondback’s expected Permian production growth. We plan to build our midstream infrastructure in concert with and in advance of Diamondback’s expected production growth ramp in order to allow Diamondback the operational flexibility to execute on its growth plan. We are a significant provider of midstream services to Diamondback with Acreage Dedications that spans a total of approximately 397,000 gross acres across all of our service lines and over the core of the Midland and Delaware Basins. Our visibility into Diamondback’s drilling and production plans allows us to utilize a synchronized midstream development plan that optimizes capital spending and free cash flow generation.
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Experienced management team with an extensive track record of value creation. The management team of our general partner consists of executives from Diamondback and the general partner of Viper, and we believe their significant experience, successful track record and discipline in deploying capital at Diamondback and Viper distinguish us from our peers. We believe that the growth-oriented approach, expertise and success in the Permian of our general partner’s management team helps us deliver attractive unitholder returns.
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Asset base located in the core of the Permian with highly visible underlying production growth. As of December 31, 2019, we have 867 miles of pipelines across the Midland and Delaware Basins with 236,000 Bbl/d of crude oil gathering capacity, 135,000 Mcf/d of natural gas compression capability, 150,000 Mcf/d of natural gas gathering
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Structural and strategic alignment with unitholders. We are focused on creating differentiated unitholder value and providing strong return on and return of capital to unitholders. Through its ownership of Class B and common units in us and its ownership of membership interests in the Operating Company, Diamondback is our largest unitholder and has a 71% ownership interest in us and owns 100% of our general partner. As a result, Diamondback will directly benefit if we grow free cash flow and distributions. We do not have incentive distribution rights or subordinated units, which we believe better align the interests of our unitholders with those of Diamondback. Additionally, we are structured as a partnership that elected to be treated as a corporation for tax purposes, which we believe will increase stability and create a more liquid trading market for our common units, given our access to a potentially broader unitholder base. We believe that our relationship with Diamondback and resulting alignment of strategic and operational interests is a differentiator in the public midstream sector and provides the optimal platform to pursue a balanced plan for future growth that benefits all unitholders equally.
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High-margin business that generates significant, predictable free cash flow. Our revenue is generated as a result of our commercial agreements, which are fee-based and, as of December 31, 2019, include dedications of acreage in the Delaware Basin (approximately 187,000 gross acres) and the Midland Basin (approximately 210,000 gross acres). The fees charged under our commercial agreements are based upon the prevailing market rates at the time of execution with annual escalators (subject to potential adjustment by regulators). We believe our commercial agreements with Diamondback, which have initial terms ending in 2034, provide exposure to Diamondback’s leading growth profile with no direct commodity price exposure, thus enhancing the predictability of free cash flow and our performance. We believe the current throughput of our assets relative to Diamondback’s total capacity positions us well to increase transported volumes as Diamondback increases production pursuant to its development programs. We believe that the operational leverage from increased utilization, along with minimal incremental operating capital expenditures to meet Diamondback’s anticipated volumes, will result in significant long-term free cash flow generation that supports a self-funding model for our core business which includes the return of capital to unitholders through a distribution.
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Financial flexibility and conservative capital structure. We have a conservative capital structure that we believe will provide us with the financial flexibility to execute our business strategies. As of December 31, 2019, we had $424 million of outstanding indebtedness and $187 million of liquidity, including $176 million of available borrowings under our credit agreement. We believe that our significant liquidity and strong capital structure will allow us to execute our strategy of self-funding our currently anticipated operating capital expenditures and our distributions to our unitholders while limiting our reliance on the capital markets.
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requiring the acquisition of permits to conduct regulated activities;
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restricting the way we can handle or dispose of our materials or wastes;
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limiting or prohibiting construction, expansion, modification and operational activities based on National Ambient Air Quality Standards, or NAAQS, and in sensitive areas, such as wetlands, coastal regions or areas inhabited by endangered species;
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requiring remedial action to mitigate pollution conditions caused by our operations or attributable to former operations;
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enjoining, or compelling changes to, the operations of facilities deemed not to be in compliance with permits issued pursuant to such environmental laws and regulations; and
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requiring noise, lighting, visual impact, odor or dust mitigation, setbacks, landscaping, fencing and other measures; and limiting or restricting water use.
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a reduction in or slowing of Diamondback’s drilling and development plan on the Dedicated Acreage, which would directly and adversely impact Diamondback’s demand for our midstream services;
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the volatility of crude oil, natural gas and NGL prices, which could have a negative effect on Diamondback’s drilling and development plan on the Dedicated Acreage or Diamondback’s ability to finance its operations and drilling and completion costs on that acreage;
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the availability of capital on an economic basis to fund Diamondback’s exploration and development activities, if needed;
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drilling and operating risks, including potential environmental liabilities, associated with Diamondback’s operations on the Dedicated Acreage;
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future wells, or wells that are currently in the process of being completed, on acreage that is dedicated to us do not produce sufficient hydrocarbons or are dry holes, which would directly and adversely impact the hydrocarbon volumes on our systems and our revenue;
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downstream processing and transportation capacity constraints and interruptions, including the failure of Diamondback to have sufficient contracted processing or transportation capacity; and
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adverse effects of increased or changed governmental and environmental regulation or enforcement of existing regulation.
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Diamondback’s financial condition, credit ratings, leverage, market reputation, liquidity and cash flow;
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Diamondback’s ability to maintain or replace its reserves;
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adverse effects of governmental and environmental regulation on Diamondback’s upstream operations; and
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losses from pending or future litigation.
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the volumes of crude oil we gather, the volumes of natural gas we gather, the volumes of produced water we collect, clean or dispose of and the volumes of sourced water we distribute and store;
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market prices of crude oil, natural gas and NGLs and their effect on Diamondback’s drilling and development plan on the Dedicated Acreage and the volumes of hydrocarbons that are produced on the Dedicated Acreage and for which we provide midstream services;
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Diamondback’s and our other customers’ ability to fund their drilling and development plan on the Dedicated Acreage;
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downstream processing and transportation capacity constraints and interruptions, including the failure of Diamondback and any other customers to have sufficient contracted processing or transportation capacity;
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the levels of our operating expenses, maintenance expenses and general and administrative expenses;
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regulatory action affecting:
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the supply of, or demand for, crude oil, natural gas, NGLs and water;
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the rates we can charge for our midstream services;
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the rates that EPIC, Gray Oak, Wink to Webster and OMOG can charge for their transportation, gathering, processing and terminal services, as applicable;
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the terms upon which we are able to contract to provide our midstream services;
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our existing gathering and other commercial agreements; or
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our operating costs or our operating flexibility;
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the rates we charge for our midstream services;
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the rates that EPIC, Gray Oak, Wink to Webster, Amarillo Rattler and OMOG charge for their gathering, transportation, processing and terminal services, as applicable;
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prevailing economic conditions; and
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adverse weather conditions.
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the level and timing of our capital expenditures, including capital calls associated with any investment we make in the EPIC, Gray Oak, Wink to Webster, Amarillo Rattler and OMOG joint ventures;
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our debt service requirements and other liabilities;
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our ability to borrow under our debt agreements to fund our capital expenditures and operating expenditures and to pay distributions;
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fluctuations in our working capital needs;
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restrictions on distributions contained in any of our debt agreements;
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the cost of acquisitions, if any;
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the fees and expenses of our general partner and its affiliates (including Diamondback) that we are required to reimburse;
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the amount of cash reserves established by our general partner; and
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other business risks affecting our cash levels.
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the availability and cost of capital;
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prevailing and projected crude oil, natural gas and NGL prices;
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demand for crude oil, natural gas and NGLs;
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levels of reserves;
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geologic considerations;
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changes in the strategic importance Diamondback assigns to development in the Delaware Basin or the Midland Basin as opposed to other potential future operations they may acquire, which could adversely affect the financial and operational resources Diamondback is willing to devote to development of our Dedicated Acreage;
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increased levels of taxation related to the exploration and production of crude oil, natural gas and NGLs in our areas of operation;
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environmental or other governmental regulations, including the availability of permits, the regulation of hydraulic fracturing and a governmental determination that multiple facilities are to be treated as a single source for air permitting purposes; and
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the costs of producing crude oil, natural gas and NGLs and the availability and costs of drilling rigs and other equipment.
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mistaken assumptions about volumes or the timing of those volumes, revenues or costs, including synergies;
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an inability to successfully integrate the acquired assets or businesses;
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the assumption of unknown liabilities;
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exposure to potential lawsuits;
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limitations on rights to indemnity from the seller;
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the diversion of management’s and employees’ attention from other business concerns;
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unforeseen difficulties operating in new geographic areas; and
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customer or key employee losses at the acquired businesses.
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damage to pipelines, centralized gathering facilities, pump stations, related equipment and surrounding properties caused by design, installation, construction materials or operational flaws, natural disasters, acts of terrorism or acts of third parties;
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leaks of crude oil, natural gas or NGLs or losses of crude oil, natural gas or NGLs as a result of the malfunction of, or other disruptions associated with, equipment or facilities;
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fires, ruptures and explosions; and
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other hazards that could also result in personal injury and loss of life, pollution and suspension of operations.
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injury or loss of life;
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damage to and destruction of property, natural resources and equipment;
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pollution and other environmental damage;
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regulatory investigations and penalties;
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suspension of our operations; and
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repair and remediation costs.
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incur or guarantee additional debt;
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redeem or repurchase units or make distributions under certain circumstances;
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make certain investments and acquisitions;
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incur certain liens or permit them to exist;
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enter into certain types of transactions with affiliates;
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merge or consolidate with another company; and
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transfer, sell or otherwise dispose of assets.
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our ability to obtain additional financing, if necessary, for working capital, capital expenditures (including building additional gathering pipelines needed for required connections and building additional centralized gathering facilities pursuant to our gathering agreements) or other purposes may be impaired or such financing may not be available on favorable terms;
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our funds available for operations, future business opportunities and distributions to unitholders will be reduced by that portion of our cash flow required to make interest payments on our debt;
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we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally; and
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our flexibility in responding to changing business and economic conditions may be limited.
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a cyber-attack on a vendor or other service provider could result in supply chain disruptions which could delay or halt development of additional infrastructure, effectively delaying the start of cash flow from the project;
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a cyber-attack on downstream pipelines could prevent us from delivering product at the tailgate of our facilities, resulting in a loss of revenues;
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a cyber-attack on a communications network or power grid could cause operational disruption resulting in loss of revenues;
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a deliberate corruption of our financial or operational data could result in events of non-compliance which could lead to regulatory fines or penalties; and
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business interruptions could result in expensive remediation efforts, distraction of management, damage to our reputation, or a negative impact on the price of our common units.
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our general partner is allowed to take into account the interests of parties other than us, such as Diamondback, in exercising certain rights under our partnership agreement;
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neither our partnership agreement nor any other agreement requires Diamondback to pursue a business strategy that favors us;
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•
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our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limits our general partner’s liabilities and restricts the remedies available to our unitholders for actions that, without such limitations, might constitute breaches of fiduciary duty;
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•
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except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval;
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our general partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional partnership securities and the level of cash reserves, each of which can affect the amount of cash that is distributed to our unitholders;
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our general partner determines which costs incurred by it and its affiliates are reimbursable by us;
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our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with its affiliates on our behalf;
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our general partner intends to limit its liability regarding our contractual and other obligations;
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•
|
our general partner may exercise its right to call and purchase common units if it and its affiliates own more than 97% of the common units and Class B units, taken together (which threshold will be permanently reduced to 80% if our general partner and its affiliates (including Diamondback) collectively own less than 75% of the common units and Class B units, taken together);
|
•
|
our general partner controls the enforcement of obligations that it and its affiliates owe to us; and
|
•
|
our general partner decides whether to retain separate counsel, accountants or others to perform services for us.
|
•
|
how to allocate business opportunities among us and its affiliates;
|
•
|
whether to exercise its call right;
|
•
|
how to exercise its voting rights with respect to the units it owns;
|
•
|
whether to exercise its registration rights; and
|
•
|
whether or not to consent to any merger or consolidation of us or any amendment to our partnership agreement.
|
•
|
whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is generally required to make such determination, or take or decline to take such other action, in good faith, and will not be subject to any higher standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;
|
•
|
our general partner and its executive officers and directors will not be liable for monetary damages or otherwise to us or our limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that such losses or liabilities were the result of conduct in which our general partner or its executive officers or directors engaged in bad faith, willful misconduct or fraud or, with respect to any criminal conduct, with knowledge that such conduct was unlawful; and
|
•
|
our general partner will not be in breach of its obligations under our partnership agreement or its duties to us or our limited partners if a transaction, even a transaction with an affiliate or the resolution of a conflict of interest, is:
|
•
|
approved by the conflicts committee of the board of directors of our general partner, although our general partner is not obligated to seek such approval; or
|
•
|
approved by the vote of a majority of the outstanding units, excluding any units owned by our general partner and its affiliates.
|
•
|
the proportionate ownership interest of common unitholders in us immediately prior to the issuance will decrease;
|
•
|
the amount of cash distributions on each common unit may decrease;
|
•
|
the relative voting strength of each previously outstanding common unit may be diminished; and
|
•
|
the market price of the common units may decline.
|
•
|
management of our business may no longer reside solely with our current general partner; and
|
•
|
affiliates of the newly admitted general partner may compete with us, and neither that general partner nor such affiliates will have any obligation to present business opportunities to us.
|
|
High
|
|
Low
|
|
Cash Distributions per Common Unit(1)
|
||||||
2019
|
|
|
|
|
|
||||||
2nd Quarter (beginning May 23, 2019)
|
$
|
20.00
|
|
|
$
|
17.49
|
|
|
$
|
—
|
|
3rd Quarter
|
$
|
20.24
|
|
|
$
|
16.25
|
|
|
$
|
0.34
|
|
4th Quarter(2)
|
$
|
18.41
|
|
|
$
|
14.01
|
|
|
$
|
0.29
|
|
(1)
|
Distributions are shown for the quarter in which they were generated; provided, however, the Q3 2019 distribution also includes amounts attributable to Q2 2019 commencing upon the closing of our IPO.
|
(2)
|
The Q4 2019 distribution is payable on March 10, 2020 to unitholders of record at the close of business on March 3, 2020.
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
(In thousands, except per unit data)
|
||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
Total revenues
|
$447,673
|
|
$184,467
|
|
$39,295
|
|
$10,607
|
Total costs and expenses
|
228,333
|
|
104,148
|
|
15,308
|
|
3,595
|
Income from operations
|
219,340
|
|
80,319
|
|
23,987
|
|
7,012
|
Total other income (expense), net
|
(7,368)
|
|
—
|
|
1,366
|
|
676
|
Net income before income taxes
|
211,972
|
|
80,319
|
|
25,353
|
|
7,688
|
Provision for income taxes
|
26,253
|
|
17,359
|
|
4,688
|
|
2,760
|
Net income after taxes
|
$185,719
|
|
$62,960
|
|
$20,665
|
|
$4,928
|
Net income attributable to non-controlling interest subsequent to IPO
|
90,922
|
|
|
|
|
|
|
Net income attributable to Rattler Midstream LP
|
$28,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income:
|
|
|
|
|
|
|
|
Net income before IPO
|
$65,995
|
|
|
|
|
|
|
Net income subsequent to IPO
|
119,724
|
|
|
|
|
|
|
Total net income
|
$185,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to limited partners per common unit - subsequent to IPO:
|
|
|
|
|
|
|
|
Basic
|
$0.64
|
|
|
|
|
|
|
Diluted
|
$0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of limited partner common units outstanding:
|
|
|
|
|
|
|
|
Basic
|
43,622
|
|
|
|
|
|
|
Diluted
|
43,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions declared per common unit
|
$0.63
|
|
|
|
|
|
|
|
|
As of December 31,
|
||||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
||||||||
Cash
|
|
$
|
10,633
|
|
|
$
|
8,564
|
|
|
$
|
8
|
|
|
$
|
—
|
|
Total property, plant and equipment, net
|
|
958,145
|
|
|
457,944
|
|
|
255,323
|
|
|
81,448
|
|
||||
Total real estate assets including intangible lease assets, net
|
|
106,749
|
|
|
103,977
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
|
1,636,393
|
|
|
604,017
|
|
|
299,605
|
|
|
95,683
|
|
||||
Long-term debt
|
|
424,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
|
520,553
|
|
|
76,891
|
|
|
6,997
|
|
|
2,954
|
|
||||
Total unitholders’ equity
|
|
739,537
|
|
|
527,126
|
|
|
292,608
|
|
|
92,729
|
|
||||
Total equity
|
|
$
|
1,115,840
|
|
|
$
|
527,126
|
|
|
$
|
292,608
|
|
|
$
|
92,729
|
|
|
|
Year Ended December 31,
|
||||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities
|
|
$
|
218,193
|
|
|
$
|
173,431
|
|
|
$
|
8
|
|
|
$
|
—
|
|
Net cash used in investing activities
|
|
(578,369
|
)
|
|
(164,876
|
)
|
|
—
|
|
|
—
|
|
||||
Net cash provided by financing activities
|
|
362,245
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
||||||||
Adjusted EBITDA(1)
|
|
$
|
264,724
|
|
|
$
|
105,453
|
|
|
$
|
28,839
|
|
|
$
|
8,561
|
|
(1)
|
For more information, please read “–Non-GAAP Financial Measure” below.
|
|
Year Ended December 31,
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Reconciliation of Net Income to Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
185,719
|
|
|
$
|
62,960
|
|
|
$
|
20,665
|
|
|
$
|
4,928
|
|
Depreciation, amortization and accretion
|
42,336
|
|
|
25,134
|
|
|
3,486
|
|
|
873
|
|
||||
Interest expense, net of amount capitalized
|
1,039
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Interest expense related to equity method investments
|
1,005
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Depreciation related to equity method investments
|
1,636
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Non-cash unit-based compensation expense
|
5,208
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other non-cash transactions
|
1,528
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Provision for income taxes
|
26,253
|
|
|
17,359
|
|
|
4,688
|
|
|
2,760
|
|
||||
Adjusted EBITDA
|
264,724
|
|
|
$
|
105,453
|
|
|
$
|
28,839
|
|
|
$
|
8,561
|
|
|
Less: Adjusted EBITDA prior to the IPO
|
(100,743
|
)
|
|
|
|
|
|
|
|||||||
Adjusted EBITDA subsequent to the IPO
|
163,981
|
|
|
|
|
|
|
|
|||||||
Less: Adjusted EBITDA attributable to non-controlling interest
|
(116,685
|
)
|
|
|
|
|
|
|
|||||||
Adjusted EBITDA attributable to Rattler Midstream LP
|
$
|
47,296
|
|
|
|
|
|
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
average crude oil gathering volumes were 85,164 Bbl/d, an increase of 80% year over year;
|
•
|
average natural gas gathering volumes were 85,283 MMBtu/d, an increase of 117% year over year;
|
•
|
average produced water gathering and disposal volumes were 806,078 Bbl/d, an increase of 186% year over year; and
|
•
|
average sourced water gathering volumes were 415,939 Bbl/d, an increase of 65% year over year.
|
(miles)(1)
|
Delaware Basin
|
|
Midland Basin
|
|
Permian Total
|
|||
Crude oil
|
104
|
|
|
44
|
|
|
148
|
|
Natural gas
|
148
|
|
|
—
|
|
|
148
|
|
Produced water
|
257
|
|
|
217
|
|
|
474
|
|
Sourced water
|
26
|
|
|
71
|
|
|
97
|
|
Total
|
535
|
|
|
332
|
|
|
867
|
|
(capacity/capability)(1)
|
Delaware Basin
|
|
Midland Basin
|
|
Permian Total
|
|
Utilization
|
||||
Crude oil gathering (Bbl/d)
|
180,000
|
|
|
56,000
|
|
|
236,000
|
|
|
42
|
%
|
Natural gas compression (Mcf/d)
|
135,000
|
|
|
—
|
|
|
135,000
|
|
|
70
|
%
|
Natural gas gathering (Mcf/d)
|
150,000
|
|
|
—
|
|
|
150,000
|
|
|
56
|
%
|
Produced water gathering and disposal (Bbl/d)
|
1,576,500
|
|
|
1,732,300
|
|
|
3,308,800
|
|
|
27
|
%
|
Sourced water (Bbl/d)
|
120,000
|
|
|
455,000
|
|
|
575,000
|
|
|
83
|
%
|
(1)
|
Does not include assets of EPIC, Gray Oak, Wink to Webster, Amarillo Rattler or OMOG joint ventures.
|
•
|
successful drilling activity by our customers on our dedicated acreage and our ability to fund the capital costs required to connect our infrastructure assets to new wells;
|
•
|
our ability to utilize the remaining uncommitted capacity on, or add additional capacity to, our infrastructure assets;
|
•
|
our ability to increase throughput volumes on our infrastructure assets by making outlet connections to existing or new third-party pipelines or other facilities, primarily driven by the anticipated supply of and demand for crude oil and natural gas;
|
•
|
our ability to identify and execute organic expansion projects to capture incremental volumes from Diamondback and third-parties;
|
•
|
our ability to compete for volumes from successful new wells in the areas in which we operate outside of our dedicated acreage; and
|
•
|
our ability to gather crude oil and natural gas and provide water services with respect to hydrocarbons produced on acreage that has been released from commitments with our competitors.
|
|
Year Ended December 31,
|
||||
(throughput)(1)
|
2019
|
|
2018
|
||
Crude oil gathering volumes (Bbl/d)
|
85,164
|
|
|
47,338
|
|
Natural gas gathering volumes (MMBtu/d)
|
85,283
|
|
|
39,252
|
|
Produced water gathering and disposal volumes (Bbl/d)
|
806,078
|
|
|
281,916
|
|
Sourced water gathering volumes (Bbl/d)
|
415,939
|
|
|
252,118
|
|
(1)
|
Does not include volumes from the EPIC, Gray Oak, Wink to Webster, Amarillo Rattler or OMOG joint ventures.
|
|
|
Ownership Interest
|
|
Acquisition Date
|
|
Cumulative Capital Contributions to Date
|
|
Anticipated Remaining Capital Commitment
|
|||||
|
|
|
|
|
|
(In thousands)
|
|||||||
EPIC Crude Holdings, LP
|
|
10
|
%
|
|
February 1, 2019
|
|
$
|
117,039
|
|
|
$
|
14,927
|
|
Gray Oak Pipeline, LLC
|
|
10
|
%
|
|
February 15, 2019
|
|
$
|
114,521
|
|
|
$
|
30,725
|
|
Wink to Webster Pipeline LLC
|
|
4
|
%
|
|
July 30, 2019
|
|
$
|
33,794
|
|
|
$
|
74,206
|
|
OMOG JV LLC
|
|
60
|
%
|
|
October 1, 2019
|
|
$
|
218,555
|
|
|
$
|
—
|
|
Amarillo Rattler, LLC
|
|
50
|
%
|
|
December 20, 2019
|
|
$
|
—
|
|
|
$
|
50,000
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Operating Results:
|
(In thousands, except operating data)
|
||||||
Revenues:
|
|
|
|
||||
Revenues—related party
|
$
|
409,120
|
|
|
$
|
169,396
|
|
Revenues—third party
|
24,324
|
|
|
3,292
|
|
||
Rental income—related party
|
4,771
|
|
|
2,383
|
|
||
Rental income—third party
|
7,890
|
|
|
8,125
|
|
||
Other real estate income—related party
|
379
|
|
|
228
|
|
||
Other real estate income—third party
|
1,189
|
|
|
1,043
|
|
||
Total revenues
|
447,673
|
|
|
184,467
|
|
||
Costs and expenses:
|
|
|
|
||||
Direct operating expenses
|
106,311
|
|
|
33,714
|
|
||
Cost of goods sold (exclusive of depreciation and amortization)
|
62,856
|
|
|
38,852
|
|
||
Real estate operating expenses
|
2,643
|
|
|
1,872
|
|
||
Depreciation, amortization and accretion
|
42,336
|
|
|
25,134
|
|
||
General and administrative expenses
|
12,663
|
|
|
1,999
|
|
||
Loss on disposal of property, plant and equipment
|
1,524
|
|
|
2,577
|
|
||
Total costs and expenses
|
228,333
|
|
|
104,148
|
|
||
Income from operations
|
219,340
|
|
|
80,319
|
|
||
Other expense:
|
|
|
|
||||
Interest expense, net
|
(1,039
|
)
|
|
—
|
|
||
Loss from equity method investments
|
(6,329
|
)
|
|
—
|
|
||
Total other expense
|
(7,368
|
)
|
|
—
|
|
||
Net income before income taxes
|
211,972
|
|
|
80,319
|
|
||
Provision for income taxes
|
26,253
|
|
|
17,359
|
|
||
Net income after taxes
|
$
|
185,719
|
|
|
$
|
62,960
|
|
|
|
|
|
||||
Net income before initial public offering
|
65,995
|
|
|
|
|||
|
|
|
|
||||
Net income subsequent to initial public offering
|
119,724
|
|
|
|
|||
Net income attributable to non-controlling interest subsequent to initial public offering
|
90,922
|
|
|
|
|||
Net income attributable to Rattler Midstream LP
|
$
|
28,802
|
|
|
|
||
|
|
|
|
||||
Operating Data:
|
|
|
|
||||
Throughput(1)
|
|
|
|
||||
Crude oil gathering volumes (Bbl/d)
|
85,164
|
|
|
47,338
|
|||
Natural gas gathering volumes (MMBtu/d)
|
85,283
|
|
|
39,252
|
|||
Produced water gathering and disposal volumes (Bbl/d)
|
806,078
|
|
|
281,916
|
|||
Sourced water gathering volumes (Bbl/d)
|
415,939
|
|
|
252,118
|
(1)
|
Does not include volumes from the EPIC, Gray Oak, Wink to Webster, Amarillo Rattler or OMOG joint ventures.
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Reconciliation of Net Income to Adjusted EBITDA:
|
|
|
|
||||
Net income
|
$
|
185,719
|
|
|
$
|
62,960
|
|
Depreciation, amortization and accretion
|
42,336
|
|
|
25,134
|
|
||
Interest expense, net of amount capitalized
|
1,039
|
|
|
—
|
|
||
Interest expense related to equity method investments
|
1,005
|
|
|
—
|
|
||
Depreciation related to equity method investments
|
1,636
|
|
|
—
|
|
||
Non-cash unit-based compensation expense
|
5,208
|
|
|
—
|
|
||
Other non-cash transactions
|
1,528
|
|
|
—
|
|
||
Provision for income taxes
|
26,253
|
|
|
17,359
|
|
||
Adjusted EBITDA
|
264,724
|
|
|
$
|
105,453
|
|
|
Less: Adjusted EBITDA prior to the IPO
|
(100,743
|
)
|
|
|
|||
Adjusted EBITDA subsequent to the IPO
|
163,981
|
|
|
|
|||
Less: Adjusted EBITDA attributable to non-controlling interest
|
(116,685
|
)
|
|
|
|||
Adjusted EBITDA attributable to Rattler Midstream LP
|
$
|
47,296
|
|
|
|
Declaration Date
|
|
Quarter
|
|
Amount per Common Unit(1)
|
|
Payment Date
|
||
October 31, 2019
|
|
Q3 2019
|
|
$
|
0.34
|
|
|
November 22, 2019
|
February 13, 2020
|
|
Q4 2019
|
|
$
|
0.29
|
|
|
March 10, 2020
|
(1)
|
Distributions are shown for the quarter in which they were generated; provided, however, the Q3 2019 distribution also includes amounts attributable to Q2 2019 commencing upon the closing of our IPO.
|
(2)
|
The Q4 2019 distribution is payable on March 10, 2020 to unitholders of record at the close of business on March 3, 2020.
|
Financial Covenant
|
|
Required Ratio
|
Consolidated Total Leverage Ratio
|
Not greater than 5.00 to 1.00 (or not greater than 5.50 to 1.00 for 3 fiscal quarters following certain acquisitions), but if the Consolidated Senior Secured Leverage Ratio (as defined in the credit agreement) is applicable, then not greater than 5.25 to 1.00)
|
|
Consolidated Senior Secured Leverage Ratio commencing with the last day of any fiscal quarter in which the Financial Covenant Election (as defined in the credit agreement) is made
|
Not greater than 3.50 to 1.00
|
|
Consolidated Interest Coverage Ratio (as defined in the credit agreement)
|
Not less than 2.50 to 1.00
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Net cash provided by operating activities
|
$
|
218,193
|
|
|
$
|
173,431
|
|
Net cash used in investing activities
|
(578,369
|
)
|
|
(164,876
|
)
|
||
Net cash provided by financing activities
|
362,245
|
|
|
1
|
|
||
Net increase in cash
|
$
|
2,069
|
|
|
$
|
8,556
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Credit agreement(1)
|
|
$
|
424,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
424,000
|
|
|
$
|
—
|
|
Commitment fees under the credit agreement(2)
|
|
1,938
|
|
|
440
|
|
|
880
|
|
|
618
|
|
|
—
|
|
|||||
Operating leases (3)
|
|
315
|
|
|
315
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
426,253
|
|
|
$
|
755
|
|
|
$
|
880
|
|
|
$
|
424,618
|
|
|
$
|
—
|
|
(1)
|
Includes the outstanding principal amount under the revolving credit facilities, the table does not include interest expense or other fees payable under this floating rate facility as we cannot predict the timing of future borrowings and repayments or interest rates to be charged.
|
(2)
|
This table reflects only the minimum amount of commitment fees due, which as of December 31, 2019 includes a commitment fee equal to 0.250% per year of the unused portion of the borrowing base of our credit agreement.
|
(3)
|
Operating lease obligations represent future commitments for equipment leases.
|
Name
|
Age
|
Position With Our General Partner
|
Travis D. Stice
|
58
|
Chief Executive Officer and Director
|
Kaes Van't Hof
|
33
|
President and Director
|
Teresa L. Dick
|
50
|
Chief Financial Officer, Executive Vice President and Assistant Secretary
|
Matt Zmigrosky
|
41
|
Executive Vice President, General Counsel and Secretary
|
Steven E. West
|
59
|
Chairman of the Board
|
Laurie H. Argo
|
47
|
Director
|
Arturo Vivar
|
57
|
Director
|
The Board of Directors of Rattler Midstream GP LLC
|
Travis D. Stice
|
Kaes Van't Hof
|
Steven E. West
|
Laurie H. Argo
|
Arturo Vivar
|
Name
|
Fees Earned or Paid in cash(a)
|
Unit Awards(b)
|
Total
|
||||||
Steven E. West(c)
|
$
|
50,000
|
|
$
|
103,195
|
|
$
|
153,195
|
|
Laurie H. Argo(c)
|
46,667
|
|
103,195
|
|
149,862
|
|
|||
Arturo Vivar(c)
|
46,667
|
|
103,195
|
|
149,862
|
|
(a)
|
This column reflects the value of a director’s annual retainer.
|
(b)
|
The amount in this column represents the aggregate grant date fair value of phantom units granted in the fiscal year calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation - Stock Compensation.” Distribution equivalent rights are not reflected in the aggregate grant date fair value of phantom unit awards.
|
(c)
|
Each of Ms. Argo and Messrs. West and Vivar received a grant of 5,714 phantom units on May 22, 2019, which will vest and settle on May 22, 2020, pursuant to the LTIP, with each unit having a grant date fair value of $18.06. Each phantom unit is the economic equivalent of one of our common units.
|
•
|
our general partner;
|
•
|
each of our general partner’s directors and executive officers; and
|
•
|
all of our general partner’s directors and executive officers as a group.
|
Name of Beneficial Owner
|
|
Common Units Beneficially Owned(1)
|
|
Percentage of Common Units Beneficially Owned
|
Rattler Midstream GP LLC
|
|
—
|
|
—
|
Travis D. Stice(2)
|
|
90,695
|
|
*
|
Kaes Van’t Hof(3)
|
|
—
|
|
—
|
Teresa L. Dick(4)
|
|
8,000
|
|
*
|
Matt Zmigrosky(5)
|
|
3,000
|
|
*
|
Laurie H. Argo(6)
|
|
500
|
|
*
|
Arturo Vivar(6)
|
|
14,250
|
|
*
|
Steven E. West(6)
|
|
28,550
|
|
*
|
All directors and executive officers of our general partner as a group (7 persons)
|
|
144,995
|
|
*
|
*
|
Less than 1%
|
(1)
|
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. In computing percentage ownership of each person, (i) common units subject to options held by that person that are exercisable as of January 31, 2020 and (ii) common units subject to options or phantom units held by that person that are exercisable or vesting within 60 days of January 31, 2020 are all deemed to be beneficially owned. These common units, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of common units beneficially owned is based on 43,700,000 common units outstanding as of January 31, 2020. Unless otherwise indicated, all amounts exclude common units issuable upon the exercise of outstanding options and vesting of phantom units that are not exercisable and/or vested as of January 31, 2020 or within 60 days of January 31, 2020. Unless otherwise noted, the address for each beneficial owner listed below is 500 West Texas Avenue, Suite 1200, Midland, Texas 79701. Except as noted, each unitholder in the above table is believed to have sole voting and sole investment power with respect to the units beneficially held.
|
(2)
|
All of these units are held by Stice Investments, Ltd., which is managed by Stice Management, LLC, its general partner. Mr. Stice and his spouse hold 100% of the membership interests in Stice Management, LLC, of which Mr. Stice is the manager. Excludes 114,286 phantom units, that are scheduled to vest in five equal installments beginning on May 28, 2020.
|
(3)
|
Excludes 1,142,857 phantom units, that are scheduled to vest in five equal installments beginning on May 28, 2020.
|
(4)
|
Excludes 57,143 phantom units, that are scheduled to vest in five equal installments beginning on May 28, 2020.
|
(5)
|
Excludes 22,857 phantom units, that are scheduled to vest in five equal installments beginning on May 28, 2020.
|
(6)
|
Excludes 5,714 phantom units, that are scheduled to vest on May 22, 2020.
|
|
|
Shares of Diamondback Common Stock Beneficially Owned(1)
|
||
Name of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership |
|
Percentage of
Class |
Travis D. Stice(2)
|
|
392,042
|
|
*
|
Kaes Van’t Hof(3)
|
|
13,548
|
|
*
|
Teresa L. Dick(4)
|
|
37,547
|
|
*
|
Matt Zmigrosky(5)
|
|
4,054
|
|
*
|
Laurie H. Argo
|
|
—
|
|
—
|
Arturo Vivar
|
|
—
|
|
—
|
Steven E. West(6)
|
|
7,461
|
|
*
|
All directors and executive officers as a group (7 persons)
|
|
454,652
|
|
*
|
*
|
Less than 1%.
|
(1)
|
Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, (i) shares of common stock subject to options held by that person that are exercisable as of January 31, 2020 and (ii) shares of common stock subject to options or restricted stock units held by that person that are exercisable or vesting within 60 days of January 31, 2020, are all deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares beneficially owned is based on 67,805,707 shares of common stock outstanding as of January 31, 2020. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that are not exercisable and/or vested as of January 31, 2020 or within 60 days of January 31, 2020. Except as noted, each unitholder in the above table is believed to have sole voting and sole investment power with respect to the units beneficially held.
|
(2)
|
All of these shares are held by Stice Investments, Ltd., which is managed by Stice Management, LLC, its general partner. Mr. Stice and his spouse hold 100% of the membership interests in Stice Management, LLC, of which Mr. Stice is the manager. Includes 6,797 restricted stock units, that are scheduled to vest on February 21, 2020 and (ii) 10,986 restricted stock units, that are scheduled to vest on March 1, 2020. Excludes 10,986 restricted stock units, that are scheduled to vest on March 1, 2021. Also excludes (i) 44,460 performance-based restricted stock units awarded to Mr. Stice on February 16, 2017, that will vest effective December 31, 2019 (representing 200% vesting of the originally reported amount) subject to final determination upon certification of certain stockholder return performance conditions relative to Diamondback’s peer group during the three-year performance period ended on December 31, 2019 by Diamondback’s compensation committee, (ii) 30,585 performance-based restricted stock units awarded to Mr. Stice on February 13, 2018, which awards are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s peer group during the three-year performance period ending December 31, 2020, and (iii) 49,436 performance-based restricted stock units awarded to Mr. Stice on March 1, 2019, which are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s peer group during the three-year performance period ending on December 31, 2021.
|
(3)
|
Includes (i) 1,333 restricted stock units, that are scheduled to vest on February 21, 2020 and (ii) 5,127 restricted stock units, that are scheduled to vest on March 1, 2020. Excludes (i) 5,127 restricted stock units, that are scheduled to vest on March 1, 2021, (ii) 8,790 restricted stock units, that are scheduled to vest in five equal annual installments beginning on March 1, 2025, (iii) 23,070 performance-based restricted stock units awarded on March 1, 2019, that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s peer group during the three-year performance period ending on December 31, 2021, and (iv) 13,183 performance-based restricted stock units awarded to Mr. Van’t Hof on March 1, 2019, that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s peer group during the three-year performance period ending on December 31, 2021 and are scheduled to vest in five equal annual installments beginning on March 1, 2025.
|
(4)
|
Includes (i) 1,866 restricted stock units, that are scheduled to vest on February 21, 2020 and (ii) 2,930 restricted stock units, that are scheduled to vest on March 1, 2020. Excludes 2,930 restricted stock units, that are scheduled to vest on March 1, 2021. Also excludes (i) 11,700 performance-based restricted stock units awarded to Ms. Dick on February 16, 2017, that will vest effective December 31, 2019 (representing 200% vesting of the originally reported amount) subject to final determination upon certification of certain stockholder return performance conditions relative to Diamondback’s peer group during the three-year performance period ended on December 31, 2019 by Diamondback’s compensation committee, (ii) 8,396 performance-based restricted stock units awarded to Ms. Dick on February 13, 2018, which awards are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s peer group during the three-
|
(5)
|
Includes 2,344 restricted stock units, that are scheduled to vest on March 1, 2020. Excludes 2,344 restricted stock units, that are scheduled to vest on March 1, 2021. Also excludes 10,546 performance-based restricted stock units awarded to Mr. Zmigrosky on March 1, 2019, that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s peer group during the three-year performance period ending on December 31, 2021.
|
(6)
|
Excludes 1,830 restricted stock units that are schedule to vest on the earlier of the one-year anniversary of the date of grant and the date of the 2020 annual meeting of stockholders of Diamondback.
|
|
|
Common Units
|
|
Class B Units
|
||||||||
Name and Address of Beneficial Owner
|
|
Amount and Nature of Beneficial Ownership(1)
|
|
Percentage of Class Beneficially Owned
|
|
Amount and Nature of Beneficial Ownership(1)
|
|
Percentage of Class Beneficially Owned
|
||||
Diamondback Energy, Inc.(2)
500 West Texas Avenue, Suite 1200
Midland, Texas 79701
|
|
—
|
|
|
—
|
|
|
107,815,152
|
|
|
100
|
%
|
Capital World Investors.(3)
333 South Hope Street
Los Angeles, CA 90071
|
|
4,028,333
|
|
|
9.2
|
%
|
|
—
|
|
|
—
|
|
Clearbridge Investments, LLC (4)
620 8th Avenue
New York, NY 10018
|
|
3,908,080
|
|
|
8.9
|
%
|
|
—
|
|
|
—
|
|
Tortoise Capital Advisors, L.L.C. (5)
5100 W. 115th Place
Leawood, Kansas 66211
|
|
2,975,676
|
|
|
6.8
|
%
|
|
—
|
|
|
—
|
|
HITE Hedge Asset Management LLC (6)
300 Crown Colony Drive, Suite 108
Quincy, MA 02169
|
|
2,380,436
|
|
|
5.4
|
%
|
|
—
|
|
|
—
|
|
(1)
|
Beneficial ownership is determined in accordance with SEC rules. The percentage of common units beneficially owned is based on 43,700,000 common units outstanding as of January 31, 2020. Except as noted, each unitholder in the above table is believed to have sole voting and sole investment power with respect to the common units and Class B units beneficially held.
|
(2)
|
Diamondback Energy, Inc. is a publicly traded company and holds no common units and no Class B units directly. Diamondback has the beneficial ownership of 107,815,152 Class B units, which are held by Energen Resources Corporation, its indirect wholly owned subsidiary (“Energen Resources”). The 107,815,152 Class B units, together with the same number of units of the Operating Company (each, an “OpCo unit”), held by Energen Resources, are exchangeable from time to time, at Diamondback’s discretion, for common units (that is, one OpCo unit and one Class B unit, together, are exchangeable for one common unit), and, as a result, Diamondback may be deemed to have the beneficial ownership of such common units. Diamondback also has shared voting and dispositive power of 107,815,152 Class B units held by Energen Resources, which represent 100% of the outstanding Class B units. The directors of Diamondback are Travis D. Stice, Steven E. West, Michael P. Cross, David L. Houston, Mark L. Plaumann and Melanie M. Trent. Travis D. Stice is the sole director of Energen Resources.
|
(3)
|
Based solely on Schedule 13G filed with the SEC on February 14, 2020 by Capital World Investors (“Capital World”), a division of Capital Research and Management Company. Capital World reported beneficial ownership of, as well as sole voting power and sole dispositive power over, 4,028,333 common units. No shared voting power and no shared dispositive power was reported by Capital World.
|
(4)
|
Based solely on Schedule 13G filed with the SEC on February 14, 2020 by Clearbridge Investments, LLC (“Clearbridge”). Clearbridge reported beneficial ownership of, as well as sole voting power and sole dispositive power over, 3,908,080 common units. No shared voting power and no shared dispositive power was reported by Clearbridge.
|
(5)
|
Based solely on Schedule 13G/A filed with the SEC on February 14, 2020 by Tortoise Capital Advisors, L.L.C. (“TCA”). These common units are owned of record by clients of TCA who have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such securities. No such client is known to have such right or power with respect to more than 5% of this class of securities. TCA reported sole voting power and sole dispositive power over 76,201 common units, shared voting power over 2,598,996 common units, shared dispositive power over 2,899,475 common units and beneficial ownership of 2,975,676 common units.
|
(6)
|
Based solely on Schedule 13G jointly filed with the SEC on February 13, 2020 by HITE Hedge Asset Management LLC, James M. Jampel, HITE Hedge LP, HITE MLP LP, HITE Hedge QP LP, HITE MLP Advantage LP, HITE Energy LP, and HITE Hedge Offshore Ltd. HITE Hedge Asset Management LLC reported beneficial ownership of, as well as shared voting power and shared dispositive power over, 2,380,436 common units. James M. Jampel reported beneficial ownership of, as well as shared voting power and shared dispositive power over, 2,380,436 common units. HITE Hedge LP reported beneficial ownership of, as well as shared voting power and shared dispositive power over, 392,254 common units. HITE MLP LP reported beneficial ownership of, as well as shared voting power and shared dispositive power over, 198,096 common units. HITE Hedge QP LP reported beneficial ownership of, as well as shared voting power and shared dispositive power over, 400,898 common units. HITE MLP Advantage LP reported beneficial ownership of, as well as shared voting power and shared dispositive power over, 123,314 common units. HITE Energy LP reported beneficial ownership of, as well as shared voting power and shared dispositive power over, 93,454 common units. HITE Hedge Offshore Ltd. reported beneficial ownership of, as well as shared voting power and shared dispositive power over, 1,172,420 common units. No sole voting power and no sole dispositive power was reported by any filer. HITE Hedge Asset Management LLC, for which Mr. Jampel is the managing member, is the investment advisor for HITE Hedge LP, HITE MLP LP, HITE Hedge QP LP, HITE MLP Advantage LP, HITE Energy LP, and HITE Hedge Offshore Ltd. Mr. Jampel disclaims beneficial ownership of any securities owned by the filers.
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)
|
Weighted-average exercise price of outstanding options, warrants and rights (b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
|
|||
Equity compensation plans approved by security holders
|
—
|
|
—
|
|
—
|
|
Equity compensation plans not approved by security holders(1)
|
2,226,895
|
|
—
|
|
12,924,620
|
|
(1)
|
This information relates to our LTIP, which our general partner adopted at the closing of the IPO in May 2019. For a description of the LTIP, see “Item 11. Executive Compensation– Long-Term Incentive Plan.”
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Audit fees(1)
|
$
|
442
|
|
|
$
|
494
|
|
Audit-related fees(2)
|
—
|
|
|
—
|
|
||
Tax fees(3)
|
—
|
|
|
—
|
|
||
All other fees(4)
|
—
|
|
|
—
|
|
||
Total
|
$
|
442
|
|
|
$
|
494
|
|
(1)
|
Audit fees represent amounts billed for each of the periods presented for professional services rendered in connection with those services normally provided in connection with statutory and regulatory filings or engagements including comfort letters, consents and other services related to SEC matters.
|
(2)
|
Audit-related fees represent amounts billed in each of the years presented for assurance and related services that are reasonably related to the performance of the annual audit or quarterly reviews.
|
(3)
|
Tax fees represent amounts billed in each of the years presented for professional services rendered in connection with tax compliance, tax advice, and tax planning.
|
(4)
|
All other fees represent amounts billed in each of the years presented for services not classifiable under the other categories listed in the table above.
|
(a)
|
Documents included in this report:
|
|
|
1. Financial Statements
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
2. Financial Statement Schedules
|
|
|
Financial statement schedules have been omitted because they are either not required, not applicable or the information required to be presented is included in our consolidated financial statements and related notes.
|
|
3. Exhibits
|
||
Exhibit Number
|
|
Description
|
2.1#
|
|
|
2.2#
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
3.6
|
|
|
3.7
|
|
|
3.8
|
|
|
3.9
|
|
|
4.1*
|
|
3. Exhibits
|
||
Exhibit Number
|
|
Description
|
4.2
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.5
|
|
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
|
10.9
|
|
|
10.10
|
|
|
10.11
|
|
|
10.12
|
|
|
10.13
|
|
|
10.14
|
|
|
10.15
|
|
3. Exhibits
|
||
Exhibit Number
|
|
Description
|
10.16
|
|
|
10.17
|
|
|
10.18
|
|
|
10.19
|
|
|
10.20
|
|
|
10.21
|
|
|
10.22
|
|
|
10.23
|
|
|
10.24
|
|
|
10.25
|
|
|
10.26
|
|
|
10.27^
|
|
|
10.28^
|
|
|
10.29^
|
|
3. Exhibits
|
||
Exhibit Number
|
|
Description
|
10.30^
|
|
|
10.31
|
|
|
10.32
|
|
|
10.33
|
|
|
10.34+
|
|
|
10.35+
|
|
|
10.36
|
|
|
10.37
|
|
|
10.38
|
|
|
10.39+
|
|
|
10.40
|
|
|
10.41*+
|
|
|
21.1*
|
|
|
23.1*
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32.1++
|
|
|
101
|
|
The following financial information from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (iv) Consolidated Statement of Changes in Unitholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
*
|
Filed herewith.
|
#
|
The schedules (or similar attachments) referenced in this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule (or similar attachment) will be furnished supplementally to the Securities and Exchange Commission upon request.
|
^
|
Confidential treatment has been requested for certain portions thereof pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission. Such provisions have been filed separately with the Securities and Exchange Commission.
|
+
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Management contract, compensatory plan or arrangement.
|
++
|
The certifications attached as Exhibit 32.1 accompany this Annual Report on Form 10-K pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
|
|
RATTLER MIDSTREAM LP
|
|
Date:
|
February 25, 2020
|
|
|
|
|
By:
|
RATTLER MIDSTREAM GP LLC,
|
|
|
|
its general partner
|
|
|
|
|
|
|
By:
|
/s/ Travis D. Stice
|
|
|
Name:
|
Travis D. Stice
|
|
|
Title:
|
Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Travis D. Stice
|
|
Chief Executive Officer and Director
|
|
February 25, 2020
|
Travis D. Stice
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Teresa L. Dick
|
|
Chief Financial Officer
|
|
February 25, 2020
|
Teresa L. Dick
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Kaes Van’t Hof
|
|
President and Director
|
|
February 25, 2020
|
Kaes Van’t Hof
|
|
|
|
|
|
|
|
|
|
/s/ Laurie H. Argo
|
|
Director
|
|
February 25, 2020
|
Laurie H. Argo
|
|
|
|
|
|
|
|
|
|
/s/ Arturo Vivar
|
|
Director
|
|
February 25, 2020
|
Arturo Vivar
|
|
|
|
|
|
|
|
|
|
/s/ Steven E. West
|
|
Director
|
|
February 25, 2020
|
Steven E. West
|
|
|
|
|
|
December 31,
|
|
December 31,
|
||||
|
2019
|
|
2018*
|
||||
|
(In thousands)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash
|
$
|
10,633
|
|
|
$
|
8,564
|
|
Accounts receivable—related party
|
50,270
|
|
|
18,274
|
|
||
Accounts receivable—third party
|
9,071
|
|
|
1,849
|
|
||
Sourced water inventory
|
14,325
|
|
|
9,200
|
|
||
Other current assets
|
1,428
|
|
|
4,209
|
|
||
Total current assets
|
85,727
|
|
|
42,096
|
|
||
Property, plant and equipment:
|
|
|
|
||||
Land
|
88,509
|
|
|
70,373
|
|
||
Property, plant and equipment
|
930,768
|
|
|
415,888
|
|
||
Accumulated depreciation, amortization and accretion
|
(61,132
|
)
|
|
(28,317
|
)
|
||
Property, plant and equipment, net
|
958,145
|
|
|
457,944
|
|
||
Right of use assets
|
418
|
|
|
—
|
|
||
Equity method investments
|
479,558
|
|
|
—
|
|
||
Real estate assets, net
|
98,679
|
|
|
93,023
|
|
||
Intangible lease assets, net
|
8,070
|
|
|
10,954
|
|
||
Other assets
|
5,796
|
|
|
—
|
|
||
Total assets
|
$
|
1,636,393
|
|
|
$
|
604,017
|
|
|
December 31,
|
|
December 31,
|
||||
|
2019
|
|
2018*
|
||||
|
(In thousands, except unit amounts)
|
||||||
Liabilities and Unitholders’ Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
147
|
|
|
$
|
100
|
|
Accrued liabilities
|
76,625
|
|
|
51,804
|
|
||
Taxes payable
|
189
|
|
|
11,514
|
|
||
Short-term lease liability
|
418
|
|
|
—
|
|
||
Total current liabilities
|
77,379
|
|
|
63,418
|
|
||
Long-term debt
|
424,000
|
|
|
—
|
|
||
Asset retirement obligations
|
11,347
|
|
|
561
|
|
||
Deferred income taxes
|
7,827
|
|
|
12,912
|
|
||
Total liabilities
|
520,553
|
|
|
76,891
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
||||
Unitholders' equity:
|
|
|
|
||||
Limited partners member's equity—Diamondback
|
—
|
|
|
527,125
|
|
||
General partner—Diamondback
|
979
|
|
|
—
|
|
||
Common units—public (43,700,000 units issued and outstanding as of December 31, 2019)
|
737,777
|
|
|
—
|
|
||
Class B units—Diamondback (107,815,152 units issued and outstanding as of December 31, 2019)
|
979
|
|
|
1
|
|
||
Accumulated other comprehensive loss
|
(198
|
)
|
|
—
|
|
||
Total Rattler Midstream LP unitholders’ equity
|
739,537
|
|
|
527,126
|
|
||
Non-controlling interest
|
376,928
|
|
|
—
|
|
||
Non-controlling interest in accumulated other comprehensive loss
|
(625
|
)
|
|
—
|
|
||
Total equity
|
1,115,840
|
|
|
527,126
|
|
||
Total liabilities and unitholders’ equity
|
$
|
1,636,393
|
|
|
$
|
604,017
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018*
|
|
2017*
|
||||||
|
|
|
Predecessor
|
|
Predecessor
|
||||||
|
(In thousands, expect per unit amounts)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Revenues—related party
|
$
|
409,120
|
|
|
$
|
169,396
|
|
|
$
|
38,414
|
|
Revenues—third party
|
24,324
|
|
|
3,292
|
|
|
881
|
|
|||
Rental income—related party
|
4,771
|
|
|
2,383
|
|
|
—
|
|
|||
Rental income—third party
|
7,890
|
|
|
8,125
|
|
|
—
|
|
|||
Other real estate income—related party
|
379
|
|
|
228
|
|
|
—
|
|
|||
Other real estate income—third party
|
1,189
|
|
|
1,043
|
|
|
—
|
|
|||
Total revenues
|
447,673
|
|
|
184,467
|
|
|
39,295
|
|
|||
Costs and expenses:
|
|
|
|
|
|
||||||
Direct operating expenses
|
106,311
|
|
|
33,714
|
|
|
10,557
|
|
|||
Cost of goods sold (exclusive of depreciation and amortization)
|
62,856
|
|
|
38,852
|
|
|
—
|
|
|||
Real estate operating expenses
|
2,643
|
|
|
1,872
|
|
|
—
|
|
|||
Depreciation, amortization and accretion
|
42,336
|
|
|
25,134
|
|
|
3,486
|
|
|||
General and administrative expenses
|
12,663
|
|
|
1,999
|
|
|
1,265
|
|
|||
Loss on disposal of property, plant and equipment
|
1,524
|
|
|
2,577
|
|
|
—
|
|
|||
Total costs and expenses
|
228,333
|
|
|
104,148
|
|
|
15,308
|
|
|||
Income from operations
|
219,340
|
|
|
80,319
|
|
|
23,987
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense, net
|
(1,039
|
)
|
|
—
|
|
|
—
|
|
|||
Income (loss) from equity method investments
|
(6,329
|
)
|
|
—
|
|
|
1,366
|
|
|||
Total other income (expense), net
|
(7,368
|
)
|
|
—
|
|
|
1,366
|
|
|||
Net income before income taxes
|
211,972
|
|
|
80,319
|
|
|
25,353
|
|
|||
Provision for income taxes
|
26,253
|
|
|
17,359
|
|
|
4,688
|
|
|||
Net income after taxes
|
$
|
185,719
|
|
|
$
|
62,960
|
|
|
$
|
20,665
|
|
|
|
|
|
|
|
||||||
Net income before initial public offering
|
$
|
65,995
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||||
Net income subsequent to initial public offering
|
$
|
119,724
|
|
|
|
|
|
||||
Net income attributable to non-controlling interest subsequent to initial public offering
|
90,922
|
|
|
|
|
|
|||||
Net income attributable to Rattler Midstream LP
|
$
|
28,802
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||||
Net income attributable to limited partners per common unit - subsequent to initial public offering:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.64
|
|
|
|
|
|
|
|||
Diluted
|
$
|
0.64
|
|
|
|
|
|
|
|||
Weighted average number of limited partner common units outstanding:
|
|
|
|
|
|
||||||
Basic
|
43,622
|
|
|
|
|
|
|
||||
Diluted
|
43,622
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018*
|
|
2017*
|
||||||
|
|
|
Predecessor
|
|
Predecessor
|
||||||
|
(In thousands)
|
||||||||||
Net Income
|
$
|
185,719
|
|
|
$
|
62,960
|
|
|
$
|
20,665
|
|
Other comprehensive income:
|
|
|
|
|
|
||||||
Change in accumulated other comprehensive loss of equity method investees attributable to non-controlling interest
|
(625
|
)
|
|
—
|
|
|
—
|
|
|||
Change in accumulated other comprehensive loss of equity method investees attributable to limited partner
|
(198
|
)
|
|
—
|
|
|
—
|
|
|||
Total other comprehensive income
|
(823
|
)
|
|
—
|
|
|
—
|
|
|||
Comprehensive income
|
$
|
184,896
|
|
|
$
|
62,960
|
|
|
$
|
20,665
|
|
|
|
|
|
|
|
||||||
Comprehensive income before initial public offering
|
65,995
|
|
|
|
|
|
|||||
Comprehensive income attributable to non-controlling interest
|
90,297
|
|
|
|
|
|
|||||
Comprehensive income attributable to Rattler Midstream LP
|
$
|
28,604
|
|
|
|
|
|
|
Predecessor
|
|
Partnership
|
|
|
|
|
||||||||||||||||||||||
|
Limited Partners Member's Equity
|
|
Limited Partners
|
|
General Partner
|
|
Non-Controlling Interest
|
|
|
||||||||||||||||||||
|
Amount
|
|
Common Units
|
|
Amount
|
|
Class B Units
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Total
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Balance at December 31, 2018*
|
$
|
527,125
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
527,126
|
|
Contributions from Diamondback
|
458,674
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
458,674
|
|
||||||||
Net income
|
39,356
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,356
|
|
||||||||
Balance at March 31, 2019
|
1,025,155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1,025,156
|
|
||||||
Net income prior to the offering
|
26,639
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,639
|
|
||||||||
Distributions prior to the offering
|
(33,712
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,712
|
)
|
||||||||
Balance at May 28, 2019
|
1,018,082
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1,018,083
|
|
||||||
Net proceeds from the offering - public
|
—
|
|
|
43,700
|
|
|
719,627
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
719,627
|
|
|||||||
Net proceeds from the offering - General Partner
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
|
1,000
|
|
||||||||
Net proceeds from the offering - Diamondback
|
—
|
|
|
|
|
—
|
|
|
107,815
|
|
|
999
|
|
|
—
|
|
|
—
|
|
|
999
|
|
|||||||
Unit-based compensation
|
—
|
|
|
|
|
831
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
831
|
|
||||||||
Elimination of current and deferred tax liabilities
|
31,094
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,094
|
|
||||||||
Allocation of net investment to unitholder
|
(322,663
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
322,663
|
|
|
—
|
|
||||||||
Distributions to Diamondback (Note 1)
|
(726,513
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(726,513
|
)
|
||||||||
Net income subsequent to the offering
|
—
|
|
|
|
|
4,803
|
|
|
|
|
—
|
|
|
—
|
|
|
15,237
|
|
|
20,040
|
|
||||||||
Balance at June 30, 2019
|
$
|
—
|
|
|
43,700
|
|
|
$
|
725,261
|
|
|
107,815
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
337,900
|
|
|
$
|
1,065,161
|
|
|
Partnership
|
|
|
|
|
||||||||||||||||||||
|
Limited Partners
|
General Partner
|
Non-Controlling Interest
|
Accumulated Other Comprehensive Income
|
Non-Controlling Interest-Accumulated Other Comprehensive Income
|
|
|||||||||||||||||||
|
Common Units
|
Amount
|
Class B Units
|
Amount
|
Amount
|
Amount
|
Amount
|
Amount
|
Total
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
Balance at June 30, 2019
|
43,700
|
|
$
|
725,261
|
|
107,815
|
|
$
|
1,000
|
|
$
|
1,000
|
|
$
|
337,900
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,065,161
|
|
Net proceeds from the offering - public
|
|
(251
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(251
|
)
|
|||||||||
Unit-based compensation
|
|
2,158
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,158
|
|
|||||||||
Net income
|
|
11,531
|
|
|
—
|
|
—
|
|
36,549
|
|
—
|
|
—
|
|
48,080
|
|
|||||||||
Balance at September 30, 2019
|
43,700
|
|
738,699
|
|
107,815
|
|
1,000
|
|
1,000
|
|
374,449
|
|
—
|
|
—
|
|
1,115,148
|
|
|||||||
Unit-based compensation, net of distribution equivalent right payments
|
|
1,468
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,468
|
|
|||||||||
Distributions to public
|
|
(14,858
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(14,858
|
)
|
|||||||||
Distributions to Diamondback (Note 1)
|
|
—
|
|
|
(21
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(21
|
)
|
|||||||||
Distributions to General Partner
|
|
—
|
|
|
—
|
|
(21
|
)
|
—
|
|
—
|
|
—
|
|
(21
|
)
|
|||||||||
Distributions to non-controlling interest
|
|
—
|
|
|
—
|
|
—
|
|
(36,657
|
)
|
—
|
|
—
|
|
(36,657
|
)
|
|||||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(198
|
)
|
(625
|
)
|
(823
|
)
|
|||||||||
Net income
|
|
12,468
|
|
|
—
|
|
—
|
|
39,136
|
|
—
|
|
—
|
|
51,604
|
|
|||||||||
Balance at December 31, 2019
|
43,700
|
|
$
|
737,777
|
|
107,815
|
|
$
|
979
|
|
$
|
979
|
|
$
|
376,928
|
|
$
|
(198
|
)
|
$
|
(625
|
)
|
$
|
1,115,840
|
|
|
Predecessor
|
|
Partnership
|
|
|
|
|
||||||||||||||||||||||
|
Limited Partners Member's Equity
|
|
Limited Partners
|
|
General Partner
|
|
Non-Controlling Interest
|
|
|
||||||||||||||||||||
|
Amount
|
|
Common Units
|
|
Amount
|
|
Class B Units
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Total
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Balance at December 31, 2017*
|
$
|
292,608
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
292,608
|
|
Contributions from Diamondback
|
175,100
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
175,100
|
|
||||||||
Net income
|
14,396
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,396
|
|
||||||||
Balance at March 31, 2018*
|
482,104
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
482,104
|
|
||||||
Contributions from Diamondback
|
3,417
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,417
|
|
||||||||
Net income
|
15,472
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,472
|
|
||||||||
Balance at June 30, 2018*
|
500,993
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500,993
|
|
||||||
Contributions from Diamondback
|
(1,982
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,982
|
)
|
||||||||
Net income
|
17,780
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,780
|
|
||||||||
Balance at September 30, 2018*
|
516,791
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
516,791
|
|
||||||
Contributions from Diamondback
|
(4,978
|
)
|
|
|
|
—
|
|
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(4,977
|
)
|
||||||||
Net income
|
15,312
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,312
|
|
||||||||
Balance at December 31, 2018*
|
$
|
527,125
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
527,126
|
|
|
Predecessor
|
|
Partnership
|
|
|
|
|
||||||||||||||||||||||
|
Limited Partners Member's Equity
|
|
Limited Partners
|
|
General Partner
|
|
Non-Controlling Interest
|
|
|
||||||||||||||||||||
|
Amount
|
|
Common Units
|
|
Amount
|
|
Class B Units
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Total
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Balance at December 31, 2016*
|
$
|
92,729
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
92,729
|
|
||
Contributions from Diamondback
|
58,742
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58,742
|
|
||||||||
Net income
|
2,938
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,938
|
|
||||||||
Balance at March 31, 2017*
|
154,409
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
154,409
|
|
||||||
Contributions from Diamondback
|
(3,679
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,679
|
)
|
||||||||
Net income
|
5,146
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,146
|
|
||||||||
Balance at June 30, 2017*
|
155,876
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
155,876
|
|
||||||
Contributions from Diamondback
|
70,116
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70,116
|
|
||||||||
Net income
|
3,185
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,185
|
|
||||||||
Balance at September 30, 2017*
|
229,177
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
229,177
|
|
||||||
Contributions from Diamondback
|
54,035
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54,035
|
|
||||||||
Net income
|
9,396
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,396
|
|
||||||||
Balance at December 31, 2017*
|
$
|
292,608
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
292,608
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018*
|
|
2017*
|
||||||
|
|
|
Predecessor
|
|
Predecessor
|
||||||
|
(In thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
185,719
|
|
|
$
|
62,960
|
|
|
$
|
20,665
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Provision for deferred income taxes
|
26,253
|
|
|
5,845
|
|
|
4,471
|
|
|||
Depreciation, amortization and accretion
|
42,336
|
|
|
25,134
|
|
|
3,486
|
|
|||
Loss on disposal of property, plant and equipment
|
1,524
|
|
|
2,577
|
|
|
—
|
|
|||
Unit-based compensation expense
|
5,208
|
|
|
—
|
|
|
—
|
|
|||
Loss (Income) from equity method investments
|
6,329
|
|
|
—
|
|
|
(1,366
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable—related party
|
(65,032
|
)
|
|
17,625
|
|
|
(29,108
|
)
|
|||
Accounts receivable—third party
|
(1,212
|
)
|
|
(1,849
|
)
|
|
—
|
|
|||
Accounts payable, accrued liabilities and taxes payable
|
34,299
|
|
|
61,139
|
|
|
2,143
|
|
|||
Other
|
(17,231
|
)
|
|
—
|
|
|
(283
|
)
|
|||
Net cash provided by operating activities
|
218,193
|
|
|
173,431
|
|
|
8
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Additions to property, plant and equipment
|
(241,786
|
)
|
|
(164,876
|
)
|
|
—
|
|
|||
Contributions to equity method investments
|
(336,601
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from the sale of fixed assets
|
18
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(578,369
|
)
|
|
(164,876
|
)
|
|
—
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from borrowings from credit facility
|
463,000
|
|
|
—
|
|
|
—
|
|
|||
Payments on credit facility
|
(39,000
|
)
|
|
—
|
|
|
—
|
|
|||
Distribution equivalent rights
|
(751
|
)
|
|
—
|
|
|
—
|
|
|||
Debt issuance costs
|
(4,310
|
)
|
|
—
|
|
|
—
|
|
|||
Net proceeds from initial public offering—public
|
719,377
|
|
|
—
|
|
|
—
|
|
|||
Net proceeds from initial public offering—General Partner
|
1,000
|
|
|
—
|
|
|
—
|
|
|||
Net proceeds from initial public offering—Diamondback
|
999
|
|
|
1
|
|
|
—
|
|
|||
Distribution to General Partner (Note 1)
|
(21
|
)
|
|
—
|
|
|
—
|
|
|||
Distribution to public (Note 1)
|
(14,858
|
)
|
|
—
|
|
|
—
|
|
|||
Distribution to Diamondback (Note 1)
|
(763,191
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
362,245
|
|
|
1
|
|
|
—
|
|
|||
Net increase in cash
|
2,069
|
|
|
8,556
|
|
|
8
|
|
|||
Cash at beginning of period
|
8,564
|
|
|
8
|
|
|
—
|
|
|||
Cash at end of period
|
$
|
10,633
|
|
|
$
|
8,564
|
|
|
$
|
8
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
2,707
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Supplemental disclosure of non-cash financing activity:
|
|
|
|
|
|
||||||
Contributions from Diamondback
|
$
|
456,055
|
|
|
$
|
171,557
|
|
|
$
|
179,214
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018*
|
|
2017*
|
||||||
|
|
|
Predecessor
|
|
Predecessor
|
||||||
|
(In thousands)
|
||||||||||
|
|
|
|
|
|
||||||
Supplemental disclosure of non-cash investing activity:
|
|
|
|
|
|
||||||
Increase in long term assets and inventory due to contributions from Diamondback
|
$
|
456,055
|
|
|
$
|
171,557
|
|
|
$
|
179,214
|
|
Change in accrued liabilities related to property, plant and equipment
|
$
|
4,176
|
|
|
$
|
2,693
|
|
|
$
|
—
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Capital expenditures accrued
|
$
|
42,160
|
|
|
$
|
37,984
|
|
Direct operating expense accrued
|
22,119
|
|
|
7,541
|
|
||
Sourced water purchases accrued
|
9,531
|
|
|
4,670
|
|
||
Other
|
2,815
|
|
|
1,609
|
|
||
Total accrued liabilities
|
$
|
76,625
|
|
|
$
|
51,804
|
|
|
(In thousands)
|
||
Balance as of December 31, 2018
|
$
|
—
|
|
Other comprehensive loss before reclassifications
|
(823
|
)
|
|
Change in accumulated other comprehensive income
|
(823
|
)
|
|
Balance as of December 31, 2019
|
$
|
(823
|
)
|
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.
|
ASU 2018-13, “Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”
|
This update modifies the fair value measurement disclosure requirements specifically related to Level 3 fair value measurements and transfers between levels.
|
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 transfers between fair value levels.
|
ASU 2018-15, “Intangibles - Goodwill and Other - Internal - Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”
|
This update requires the capitalization of implementation costs incurred in a hosting arrangement that is a service contract for internal-use software. Training and certain data conversion costs cannot be capitalized. The entity is required to expense the capitalized implementation costs over the term of the hosting agreement.
|
Q1 2020
|
The Partnership adopted this update prospectively 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 any capitalized implementation costs.
|
ASU 2019-05, “Financial Instruments-Credit Losses (Topic 326)”
|
This update allows a fair value option to be elected for certain financial assets, other than held-to-maturity debt securities, that were previously required to be measured at amortized cost basis.
|
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 any cost method investments.
|
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.
|
•
|
Crude Oil Gathering Agreement. Under the crude oil gathering agreements, the Partnership receives a volumetric fee per Bbl for gathering and delivering crude oil produced within the dedicated acreage.
|
•
|
Gas Gathering and Compression Agreement. Under the gas gathering and compression agreement, the Partnership receives a volumetric fee per MMBtu for gathering and processing all natural gas produced by Diamondback within the dedicated acreage.
|
•
|
Produced and Flowback Water Gathering and Disposal Agreements. Under the produced and flowback water gathering and disposal agreements, the Partnership receives a fee for gathering or disposing of water produced from operating crude oil and natural gas wells within the dedicated acreage. The fee is comprised of a volumetric fee per Bbl for the produced water services the Partnership provides. In addition, the Partnership retains the skim oil that is a part of the produced water. The skim oil is processed by a third party, which provides the Partnership a volumetric fee per Bbl.
|
•
|
Sourced Water Purchase and Services Agreements. Under the sourced water purchase and services agreements, the Partnership receives a fee for sourcing, transporting and delivering all raw sourced water and recycled sourced water required by Diamondback and third parties to carry out its oil and natural gas activities within the dedicated acreage. The fee is comprised of a volumetric fee per Bbl for the type of sourced water services the Partnership provides.
|
|
Year Ended December 31,
|
|
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
Segment
|
||||||
|
(In thousands)
|
|
|
||||||||||
Type of Service:
|
|
|
|
|
|
|
|
||||||
Sourced water gathering
|
$
|
115,135
|
|
|
$
|
76,976
|
|
|
$
|
—
|
|
|
Midstream
|
Produced water gathering and disposal
|
275,882
|
|
|
72,352
|
|
|
27,864
|
|
|
Midstream
|
|||
Crude oil gathering
|
27,206
|
|
|
16,038
|
|
|
7,641
|
|
|
Midstream
|
|||
Natural gas gathering
|
14,317
|
|
|
6,447
|
|
|
2,909
|
|
|
Midstream
|
|||
Surface revenue (non ASC 606 revenues)
|
904
|
|
|
875
|
|
|
881
|
|
|
Midstream
|
|||
Real estate contracts (non ASC 606 revenues)
|
14,229
|
|
|
11,779
|
|
|
—
|
|
|
Real Estate
|
|||
Total revenues
|
$
|
447,673
|
|
|
$
|
184,467
|
|
|
$
|
39,295
|
|
|
|
|
|
|
As of December 31,
|
||||||
|
Weighted Average Useful Lives
|
|
2019
|
|
2018
|
||||
|
(Years)
|
|
(In thousands)
|
||||||
Buildings
|
20-30
|
|
$
|
102,375
|
|
|
$
|
92,349
|
|
Tenant improvements
|
15
|
|
4,501
|
|
|
4,160
|
|
||
Land improvements
|
15
|
|
484
|
|
|
484
|
|
||
Total real estate assets
|
|
|
107,360
|
|
|
96,993
|
|
||
Less: accumulated depreciation
|
|
|
(8,681
|
)
|
|
(3,970
|
)
|
||
Total investment in real estate, net
|
|
|
$
|
98,679
|
|
|
$
|
93,023
|
|
|
|
|
As of December 31,
|
||||||
|
Weighted Average Useful Lives
|
|
2019
|
|
2018
|
||||
|
(Months)
|
|
(In thousands)
|
||||||
In-place lease intangibles
|
45
|
|
$
|
11,389
|
|
|
$
|
10,866
|
|
Less: accumulated amortization
|
|
|
(5,927
|
)
|
|
(3,076
|
)
|
||
In-place lease intangibles, net
|
|
|
5,462
|
|
|
7,790
|
|
||
|
|
|
|
|
|
||||
Above-market lease intangibles
|
45
|
|
3,623
|
|
|
3,623
|
|
||
Less: accumulated amortization
|
|
|
(1,015
|
)
|
|
(459
|
)
|
||
Above-market lease intangibles, net
|
|
|
2,608
|
|
|
3,164
|
|
||
Total intangible lease assets, net
|
|
|
$
|
8,070
|
|
|
$
|
10,954
|
|
|
Estimated
|
|
As of December 31,
|
||||||
|
Useful Lives
|
|
2019
|
|
2018
|
||||
|
(Years)
|
|
(In thousands)
|
||||||
Produced water disposal systems
|
10-30
|
|
$
|
600,797
|
|
|
$
|
220,084
|
|
Crude oil gathering systems(1)
|
30
|
|
129,658
|
|
|
66,760
|
|
||
Natural gas gathering and compression systems(1)
|
10-30
|
|
98,426
|
|
|
60,350
|
|
||
Sourced water gathering systems(1)
|
30
|
|
101,887
|
|
|
68,694
|
|
||
Total property, plant and equipment
|
|
|
930,768
|
|
|
415,888
|
|
||
Land
|
N/A
|
|
88,509
|
|
|
70,373
|
|
||
Less: accumulated depreciation, amortization and accretion
|
|
|
(61,132
|
)
|
|
(28,317
|
)
|
||
Total property, plant and equipment, net
|
|
|
$
|
958,145
|
|
|
$
|
457,944
|
|
|
|
|
|
|
|
(1)
|
Included in gathering systems are $138.6 million and $55.2 million of assets at December 31, 2019 and December 31, 2018, respectively, that are not subject to depreciation, amortization and accretion as the systems were under construction and had not yet been put into service.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In thousands)
|
||||||||||
Asset retirement obligation, beginning of period
|
$
|
561
|
|
|
$
|
383
|
|
|
$
|
194
|
|
Liabilities incurred
|
9,188
|
|
|
143
|
|
|
166
|
|
|||
Liabilities settled
|
(21
|
)
|
|
—
|
|
|
—
|
|
|||
Estimates revised
|
5
|
|
|
—
|
|
|
—
|
|
|||
Accretion expense during period
|
1,614
|
|
|
35
|
|
|
23
|
|
|||
Asset retirement obligation, end of period
|
$
|
11,347
|
|
|
$
|
561
|
|
|
$
|
383
|
|
|
|
Ownership Interest
|
|
December 31, 2019
|
|
December 31, 2018
|
|||||
|
|
|
|
(In thousands)
|
|||||||
EPIC Crude Holdings, LP
|
|
10
|
%
|
|
$
|
109,806
|
|
|
$
|
—
|
|
Gray Oak Pipeline, LLC
|
|
10
|
%
|
|
115,840
|
|
|
—
|
|
||
Wink to Webster Pipeline LLC
|
|
4
|
%
|
|
34,124
|
|
|
—
|
|
||
OMOG JV LLC
|
|
60
|
%
|
|
219,098
|
|
|
—
|
|
||
Amarillo Rattler, LLC
|
|
50
|
%
|
|
690
|
|
|
—
|
|
||
Total
|
|
|
|
$
|
479,558
|
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(In thousands)
|
||||||||||
EPIC Crude Holdings, LP
|
|
$
|
(6,597
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Gray Oak Pipeline, LLC
|
|
831
|
|
|
—
|
|
|
—
|
|
|||
Wink to Webster Pipeline LLC
|
|
(539
|
)
|
|
—
|
|
|
—
|
|
|||
OMOG JV LLC
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|||
HMW LLC
|
|
—
|
|
|
—
|
|
|
1,366
|
|
|||
Total
|
|
$
|
(6,329
|
)
|
|
$
|
—
|
|
|
$
|
1,366
|
|
|
|
As of
|
||
|
|
December 31,
|
||
|
|
2019
|
||
|
|
(In thousands)
|
||
Balance Sheet
|
|
|
||
Current assets
|
|
$
|
550,624
|
|
Property, plant and equipment
|
|
5,190,371
|
|
|
Other assets
|
|
196,470
|
|
|
Total assets
|
|
5,937,465
|
|
|
Current liabilities
|
|
516,155
|
|
|
Other liabilities
|
|
2,051,110
|
|
|
Member's Equity
|
|
3,370,200
|
|
|
Total liabilities and member's equity
|
|
$
|
5,937,465
|
|
|
|
Year Ended
|
||
|
|
December 31,
|
||
|
|
2019
|
||
Income Statement
|
|
(In thousands)
|
||
Revenue
|
|
$
|
53,898
|
|
Operating expenses
|
|
$
|
116,400
|
|
Net income
|
|
$
|
(72,227
|
)
|
|
|
Year Ended
|
||
|
|
December 31,
|
||
|
|
2019
|
||
|
|
(In thousands)
|
||
Carrying value of equity method investments
|
|
$
|
479,558
|
|
|
As of
|
|||||
|
December 31, 2019
|
December 31, 2018
|
||||
|
(In thousands)
|
|||||
Operating Company revolving credit facility
|
$
|
424,000
|
|
$
|
—
|
|
Total long-term debt
|
$
|
424,000
|
|
$
|
—
|
|
Financial Covenant
|
|
Required Ratio
|
Consolidated Total Leverage Ratio
|
Not greater than 5.00 to 1.00 (or not greater than 5.50 to 1.00 for 3 fiscal quarters following certain acquisitions), but if the Consolidated Senior Secured Leverage Ratio (as defined in the Credit Agreement) is applicable, then not greater than 5.25 to 1.00)
|
|
Consolidated Senior Secured Leverage Ratio commencing with the last day of any fiscal quarter in which the Financial Covenant Election (as defined in the Credit Agreement) is made
|
Not greater than 3.50 to 1.00
|
|
Consolidated Interest Coverage Ratio (as defined in the Credit Agreement)
|
Not less than 2.50 to 1.00
|
|
Phantom
Units |
|
Weighted Average
Grant-Date Fair Value |
|||
Unvested at May 28, 2019
|
—
|
|
|
$
|
—
|
|
Granted
|
2,284,038
|
|
|
$
|
19.14
|
|
Forfeited
|
(57,143
|
)
|
|
$
|
19.21
|
|
Unvested at December 31, 2019
|
2,226,895
|
|
|
$
|
19.14
|
|
|
Common Units
|
|
Balance at May 28, 2019
|
—
|
|
Common units issued in public offerings
|
43,700,000
|
|
Balance at December 31, 2019
|
43,700,000
|
|
|
Class B Units
|
|
Balance at May 28, 2019
|
—
|
|
Units related to tax conversion
|
107,815,152
|
|
Balance at December 31, 2019
|
107,815,152
|
|
Declaration Date
|
|
Quarter
|
|
Amount per Common Unit
|
|
Payment Date
|
||
October 31, 2019
|
|
Q3 2019
|
|
$
|
0.34
|
|
|
November 22, 2019
|
February 13, 2020
|
|
Q4 2019
|
|
$
|
0.29
|
|
|
March 10, 2020
|
|
May 28, 2019 to
|
||
|
December 31, 2019
|
||
|
(In thousands, except per unit amounts)
|
||
Net income attributable to Rattler Midstream LP
|
$
|
28,802
|
|
Less: net income allocated to participating securities(1)
|
(751
|
)
|
|
Net income attributable to common unitholders
|
28,051
|
|
|
Weighted average common units outstanding:
|
|
||
Basic weighted average common units outstanding
|
43,622
|
|
|
Diluted weighted average common units outstanding
|
43,622
|
|
|
Net income per common unit, basic
|
$
|
0.64
|
|
Net income per common unit, diluted
|
$
|
0.64
|
|
(1)
|
Distribution equivalent rights granted to employees are considered participating securities.
|
|
May 28, 2019 to
|
|
|
December 31, 2019
|
|
|
(in thousands)
|
|
Phantom units
|
44
|
|
|
Year Ended December 31,
|
||||||||||||||
|
2019 Subsequent to IPO
|
|
2019 Prior to IPO
|
|
2018
|
|
2017
|
||||||||
|
|
|
Predecessor
|
|
Predecessor
|
|
Predecessor
|
||||||||
|
(In thousands)
|
||||||||||||||
Current income tax provision:
|
|
|
|
|
|
|
|
||||||||
Federal
|
$
|
—
|
|
|
$
|
7,694
|
|
|
$
|
11,089
|
|
|
$
|
—
|
|
State
|
189
|
|
|
270
|
|
|
425
|
|
|
217
|
|
||||
Total current income tax provision
|
189
|
|
|
7,964
|
|
|
11,514
|
|
|
217
|
|
||||
Deferred income tax provision:
|
|
|
|
|
|
|
|
||||||||
Federal
|
7,600
|
|
|
9,983
|
|
|
5,689
|
|
|
4,237
|
|
||||
State
|
282
|
|
|
235
|
|
|
156
|
|
|
234
|
|
||||
Total deferred income tax provision
|
7,882
|
|
|
10,218
|
|
|
5,845
|
|
|
4,471
|
|
||||
Total provision for income taxes
|
$
|
8,071
|
|
|
$
|
18,182
|
|
|
$
|
17,359
|
|
|
$
|
4,688
|
|
|
Year Ended December 31,
|
||||||||||||||
|
2019 Subsequent to IPO
|
|
2019 Prior to IPO
|
|
2018
|
|
2017
|
||||||||
|
(In thousands)
|
||||||||||||||
Income tax expense at the federal statutory rate (1)
|
$
|
26,679
|
|
|
$
|
17,677
|
|
|
$
|
16,867
|
|
|
$
|
8,873
|
|
Impact of nontaxable noncontrolling interest
|
(18,982
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
State income tax expense, net of federal tax effect
|
372
|
|
|
505
|
|
|
492
|
|
|
317
|
|
||||
Income tax benefit relating to change in statutory tax rate
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,502
|
)
|
||||
Other, net
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Provision for income taxes
|
$
|
8,071
|
|
|
$
|
18,182
|
|
|
$
|
17,359
|
|
|
$
|
4,688
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018 Predecessor
|
||||
|
(In thousands)
|
||||||
Deferred tax assets
|
|
|
|
||||
Net operating loss and other carryforwards (indefinite life)
|
$
|
232
|
|
|
$
|
—
|
|
Investment in the Operating Company
|
—
|
|
|
—
|
|
||
Other
|
—
|
|
|
—
|
|
||
Total deferred tax assets
|
232
|
|
|
—
|
|
||
Deferred tax liabilities
|
|
|
|
||||
Investment in the Operating Company
|
8,059
|
|
|
—
|
|
||
Midstream assets
|
—
|
|
|
12,912
|
|
||
Other
|
—
|
|
|
—
|
|
||
Total deferred tax liabilities
|
8,059
|
|
|
12,912
|
|
||
Net deferred tax liabilities
|
$
|
7,827
|
|
|
$
|
12,912
|
|
|
Year Ended December 31, 2019
|
||
|
(In thousands)
|
||
Operating lease costs
|
$
|
1,890
|
|
|
As of December 31, 2019
|
||
|
(In thousands)
|
||
2020
|
$
|
426
|
|
2021
|
—
|
|
|
2022
|
—
|
|
|
2023
|
—
|
|
|
2024
|
—
|
|
|
Thereafter
|
—
|
|
|
Total lease payments
|
426
|
|
|
Less: interest
|
8
|
|
|
Present value of lease liabilities
|
$
|
418
|
|
|
Year Ended December 31, 2019
|
||||||||||
|
Midstream Services
|
|
Real Estate Operations
|
|
Total
|
||||||
|
(In thousands)
|
||||||||||
Revenues—related party
|
$
|
409,120
|
|
|
$
|
—
|
|
|
$
|
409,120
|
|
Revenues—third party
|
24,324
|
|
|
—
|
|
|
24,324
|
|
|||
Rental income—related party
|
—
|
|
|
4,771
|
|
|
4,771
|
|
|||
Rental income—third party
|
—
|
|
|
7,890
|
|
|
7,890
|
|
|||
Other real estate income—related party
|
—
|
|
|
379
|
|
|
379
|
|
|||
Other real estate income—third party
|
—
|
|
|
1,189
|
|
|
1,189
|
|
|||
Total revenues
|
433,444
|
|
|
14,229
|
|
|
447,673
|
|
|||
Direct operating expenses
|
106,311
|
|
|
—
|
|
|
106,311
|
|
|||
Cost of goods sold (exclusive of depreciation and amortization)
|
62,856
|
|
|
—
|
|
|
62,856
|
|
|||
Real estate operating expenses
|
—
|
|
|
2,643
|
|
|
2,643
|
|
|||
Loss on disposal of property, plant and equipment
|
1,524
|
|
|
—
|
|
|
1,524
|
|
|||
Depreciation, amortization and accretion
|
34,775
|
|
|
7,561
|
|
|
42,336
|
|
|||
Loss from equity method investments
|
6,329
|
|
|
—
|
|
|
6,329
|
|
|||
Segment profit
|
221,649
|
|
|
4,025
|
|
|
225,674
|
|
|||
General and administrative expenses
|
|
|
|
|
(12,663
|
)
|
|||||
Interest expense, net
|
|
|
|
|
(1,039
|
)
|
|||||
Net income before income taxes
|
221,649
|
|
|
4,025
|
|
|
211,972
|
|
|||
Provision for income taxes
|
|
|
|
|
26,253
|
|
|||||
Net income
|
$
|
221,649
|
|
|
$
|
4,025
|
|
|
$
|
185,719
|
|
|
|
|
|
|
|
||||||
Segment assets
|
$
|
1,435,659
|
|
|
$
|
108,239
|
|
|
$
|
1,636,393
|
|
|
Year Ended December 31, 2018
|
||||||||||
|
Midstream Services
|
|
Real Estate Operations
|
|
Total
|
||||||
|
(In thousands)
|
||||||||||
Revenues—related party
|
$
|
169,396
|
|
|
$
|
—
|
|
|
$
|
169,396
|
|
Revenues—third party
|
3,292
|
|
|
—
|
|
|
3,292
|
|
|||
Rental income—related party
|
—
|
|
|
2,383
|
|
|
2,383
|
|
|||
Rental income—third party
|
—
|
|
|
8,125
|
|
|
8,125
|
|
|||
Other real estate income—related party
|
—
|
|
|
228
|
|
|
228
|
|
|||
Other real estate income—third party
|
—
|
|
|
1,043
|
|
|
1,043
|
|
|||
Total revenues
|
172,688
|
|
|
11,779
|
|
|
184,467
|
|
|||
Direct operating expenses
|
33,714
|
|
|
—
|
|
|
33,714
|
|
|||
Cost of goods sold (exclusive of depreciation and amortization)
|
38,852
|
|
|
—
|
|
|
38,852
|
|
|||
Real estate operating expenses
|
—
|
|
|
1,872
|
|
|
1,872
|
|
|||
Loss on disposal of property, plant and equipment
|
2,577
|
|
|
—
|
|
|
2,577
|
|
|||
Depreciation, amortization and accretion
|
18,088
|
|
|
7,046
|
|
|
25,134
|
|
|||
Segment profit
|
79,457
|
|
|
2,861
|
|
|
82,318
|
|
|||
General and administrative expenses
|
|
|
|
|
(1,999
|
)
|
|||||
Net income before income taxes
|
79,457
|
|
|
2,861
|
|
|
80,319
|
|
|||
Provision for income taxes
|
|
|
|
|
17,359
|
|
|||||
Net income
|
$
|
79,457
|
|
|
$
|
2,861
|
|
|
$
|
62,960
|
|
|
|
|
|
|
|
||||||
Segment assets
|
$
|
456,997
|
|
|
$
|
104,923
|
|
|
$
|
604,017
|
|
|
2019
|
||||||||||||||
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter |
||||||||
|
(In thousands, except per unit amounts)
|
||||||||||||||
Revenues
|
$
|
95,176
|
|
|
$
|
111,774
|
|
|
$
|
115,415
|
|
|
$
|
125,308
|
|
Income from operations
|
50,138
|
|
|
55,602
|
|
|
52,558
|
|
|
61,042
|
|
||||
Income tax expense
|
10,832
|
|
|
8,724
|
|
|
3,294
|
|
|
3,403
|
|
||||
Net income after taxes
|
39,356
|
|
|
46,679
|
|
|
48,080
|
|
|
51,604
|
|
||||
Net income before initial public offering
|
39,356
|
|
|
26,639
|
|
|
—
|
|
|
—
|
|
||||
Net income subsequent to initial public offering
|
—
|
|
|
20,040
|
|
|
48,080
|
|
|
51,604
|
|
||||
Net income attributable to non-controlling interest subsequent to initial public offering
|
—
|
|
|
15,237
|
|
|
36,549
|
|
|
39,136
|
|
||||
Net income (loss) attributable to Rattler Midstream LP
|
$
|
—
|
|
|
$
|
4,803
|
|
|
$
|
11,531
|
|
|
$
|
12,468
|
|
Net income (loss) attributable to limited partners per common unit:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
—
|
|
|
$
|
0.11
|
|
|
$
|
0.26
|
|
|
$
|
0.27
|
|
Diluted
|
$
|
—
|
|
|
$
|
0.11
|
|
|
$
|
0.26
|
|
|
$
|
0.27
|
|
|
2018
|
||||||||||||||
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter |
||||||||
|
(In thousands)
|
||||||||||||||
Revenues
|
$
|
33,875
|
|
|
$
|
49,788
|
|
|
$
|
49,301
|
|
|
$
|
51,503
|
|
Income from operations
|
17,070
|
|
|
21,020
|
|
|
22,672
|
|
|
19,557
|
|
||||
Income tax expense
|
4,133
|
|
|
4,089
|
|
|
4,892
|
|
|
4,245
|
|
||||
Net income after taxes
|
$
|
14,396
|
|
|
$
|
15,472
|
|
|
$
|
17,780
|
|
|
$
|
15,312
|
|
•
|
enlarge the obligations of any limited partner without such limited partner’s consent, unless approved by at least a majority of the type or class of limited partner interests so affected; or
|
•
|
enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by us to our general partner or any of its affiliates without the consent of our general partner, which consent may be given or withheld in its sole discretion.
|
•
|
a change in our name, the location of our principal place of business, our registered agent or our registered office;
|
•
|
the admission, substitution, withdrawal or removal of partners in accordance with our partnership agreement;
|
•
|
a change that our general partner determines to be necessary or appropriate to qualify or continue our qualification as a limited partnership or other entity in which the limited partners have limited liability under the laws of any state;
|
•
|
a change in our fiscal year or taxable year and related changes;
|
•
|
an amendment that is necessary, in the opinion of our counsel, to prevent us or our general partner or Diamondback or their directors, officers, trustees or agents from in any manner being subjected to the provisions of the Investment Company Act of 1940, the Investment Advisers Act of 1940 or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974 (“ERISA”), whether or not substantially similar to plan asset regulations currently applied or proposed;
|
•
|
an amendment that our general partner determines to be necessary or appropriate in connection with the creation, authorization or issuance of additional partnership interests or the right to acquire partnership interests;
|
•
|
any amendment expressly permitted in our partnership agreement to be made by our general partner acting alone;
|
•
|
an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our partnership agreement;
|
•
|
any amendment that our general partner determines to be necessary or appropriate for the formation by us of, or our investment in, any corporation, partnership or other entity, as otherwise permitted by our partnership agreement;
|
•
|
merger or conveyance pursuant to our partnership agreement; or
|
•
|
any other amendments substantially similar to any of the matters described in the clauses above.
|
•
|
do not adversely affect the limited partners (including any particular class of partnership interests as compared to other classes of partnership interests) in any material respect;
|
•
|
are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute;
|
•
|
are necessary or appropriate to facilitate the trading of limited partner interests or to comply with any rule, regulation, guideline or requirement of any securities exchange on which the limited partner interests are or will be listed for trading;
|
•
|
are necessary or appropriate for any action taken by our general partner relating to splits or combinations of units under the provisions of our partnership agreement; or
|
•
|
are required to effect the intent expressed in this prospectus or the intent of the provisions of our partnership agreement or are otherwise contemplated by our partnership agreement.
|
•
|
surety bond premiums to replace lost or stolen certificates, or to cover taxes and other governmental charges in connection therewith;
|
•
|
special charges for services requested by a holder of a common unit or Class B unit; and
|
•
|
other similar fees or charges.
|
•
|
represents that the transferee has the capacity, power and authority to become bound by our partnership agreement;
|
•
|
automatically agrees to be bound by the terms and conditions of, and is deemed to have executed, our partnership agreement; and
|
•
|
gives the consents and approvals contained in our partnership agreement, such as the approval of all transactions and agreements entered into in connection with our formation.
|
•
|
to remove or replace our general partner;
|
•
|
to approve some amendments to our partnership agreement; or
|
•
|
to take other action under our partnership agreement
|
•
|
the election of our general partner to dissolve us, if approved by the holders of units representing a unit majority;
|
•
|
there being no limited partners, unless we are continued without dissolution in accordance with applicable Delaware law;
|
•
|
the entry of a decree of judicial dissolution of our partnership; or
|
•
|
the withdrawal or removal of our general partner or any other event that results in its ceasing to be our general partner other than by reason of a transfer of its general partner interest in accordance with our partnership agreement or its withdrawal or removal following the approval and admission of a successor.
|
•
|
a current list of the name and last known address of each record holder;
|
•
|
copies of our partnership agreement, our certificate of limited partnership, related amendments and powers of attorney under which they have been executed; and
|
•
|
such other information regarding our affairs as our general partner determines is just and reasonable.
|
•
|
arising out of or relating in any way to the partnership agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of the partnership agreement or the duties, obligations or liabilities among limited partners or of limited partners to us, or the rights or powers of, or restrictions on, the limited partners or us);
|
•
|
brought in a derivative manner on our behalf;
|
•
|
asserting a claim of breach of a duty owed by any director, officer or other employee of us or our general partner, or owed by our general partner, to us or the limited partners;
|
•
|
asserting a claim arising pursuant to any provision of the Delaware Act; or
|
•
|
asserting a claim governed by the internal affairs doctrine
|
•
|
the highest price paid by our general partner or any of its affiliates for any limited partner interests of the class purchased within the 90 days preceding the date on which our general partner first mails notice of its election to purchase those limited partner interests; and
|
•
|
the average of the daily closing prices of the partnership securities of such class over the 20 trading days preceding the date that is three days before the date the notice is mailed.
|
Date Phantom Units Become Vested Phantom Units
|
Number of Phantom Units that Become Vested Phantom Units
|
|
|
|
|
|
|
Date Phantom Units are Settled
|
Number of Phantom Units that are Settled by Issuance of Units
|
|
|
|
|
|
|
|
|
|
RATTLER MIDSTREAM GP LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
_________________
|
By:
|
________________________________
|
|
|
|
Travis D. Stice, Chief Executive Officer
|
|
|
|
AWARD RECIPIENT
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
_________________
|
|
________________________________
|
1.
|
I have reviewed this Annual Report on Form 10-K of Rattler Midstream LP (the “registrant”).
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
Date:
|
February 25, 2020
|
|
/s/ Travis D. Stice
|
|
|
|
Travis D. Stice
|
|
|
|
Chief Executive Officer
|
|
|
|
Rattler Midstream GP LLC
|
|
|
|
(as general partner of Rattler Midstream LP)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Rattler Midstream LP (the “registrant”).
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
Date:
|
February 25, 2020
|
|
/s/ Teresa L. Dick
|
|
|
|
Teresa L. Dick
|
|
|
|
Chief Financial Officer
|
|
|
|
Rattler Midstream GP LLC
|
|
|
|
(as general partner of Rattler Midstream LP)
|
|
|
|
|
Date:
|
February 25, 2020
|
|
/s/ Travis D. Stice
|
|
|
|
Travis D. Stice
|
|
|
|
Chief Executive Officer
|
|
|
|
Rattler Midstream GP LLC
|
|
|
|
(as general partner of Rattler Midstream LP)
|
|
|
|
|
Date:
|
February 25, 2020
|
|
/s/ Teresa L. Dick
|
|
|
|
Teresa L. Dick
|
|
|
|
Chief Financial Officer
|
|
|
|
Rattler Midstream GP LLC
|
|
|
|
(as general partner of Rattler Midstream LP)
|
|
|
|
|
|
|
|
|
|
|
|
|